From the TUC

The impacts of cuts in Liverpool and the North West

21 Sep 2010, by in Economics

As attention focuses on Liverpool this week with the Liberal Democratic Party conference taking place in the city, we look at the impact of cuts in Liverpool and the North West.

The coalition Government argues that cuts can be made in spending through efficiency savings without damaging the quality of public services. They also stress that these cuts will be fair and progressive and maintain that the most vulnerable will be protected. Our analysis shows us that spending reductions have been about far more than about reducing waste and that cuts have impacted on front line services, and on the most vulnerable.

As part of the £6.2 billion in year cuts announced by the coalition Government on the 24th of May, £1.166bn is being cut in local government spending through reductions in individual grants given to local authorities. Liverpool City Council has established that this will mean an impact of £20.1m in ongoing annual reductions. The bulk of this will come from a saving of £9.288 m from the 2010/11 Area Based Grant programme: an 8.5% reduction in the funding.

Area Based Grants (ABGs) are given to councils to help support deprived communities, the amount given is therefore reflective of the individual needs and circumstances of the local area. But in applying the cut to the ABG the Government has not taken in to account the particular circumstances of local areas: those in areas that are already badly off are more likely to feel the impact of reductions in these grants.

In our analysis of the ABG cuts we find that children and young people have been hit disproportionally hard. Our analysis (download Excel sheet) has found that around £3.5 million of cuts in Liverpool have been made in area based grants which affect children and young people directly; well over a third of the budget. Cuts in the ABG affecting children and young people include:

  • £150,000 from the budget for free fruit and vegetables for Key Stage 2 school pupils. (50% cut)
  • £53,000 reduction in the carers grant that helps provide emergency carers for children with special educational needs and other disabilities. (10% cut)
  • £18,000 from improving Access to Primary Health Care for disaffected children and young people. (40% cut)

Councillors in Liverpool have attempted to minimise the impact on front line services and jobs by developing proposals which maximise the potential for budget savings from uncommitted and savings expenditure. Nevertheless, the largest proportion of cuts to the ABG has been made by scaling down projects (50%): cuts will inevitably impact on front line services.

The cuts to ABGs are only one of a series of the cuts being made by Government: a large number of national cuts will also affect households across Liverpool and the North West.

  • Playgrounds – Grants of around £1.1m to 132 councils across England have been frozen. Liverpool City Council has warned that it may have to handback £400,000 which will affect planned improvements to nine parks.
  • Schools– With the cancelation of the Building schools for the Future Programme, plans for 26 schools in Liverpool to be rebuilt or modernised have been abandoned. Liverpool City Council have reported that this cut will cost the city’s secondary schools £350 million. In addition it has estimated 1,000 full time equivalent construction jobs would have been created in the design, construction and maintenance of the schools.
  • Housing Shelter has warned that any Government cuts to housing investment could place jobs at risk in Liverpool, where 15,700 people are employed in the construction industry, 9 percent of all those in work. This is above the national average of 7.7 per cent.
  • Police Liverpool Echo reports that police funding in Merseyside will be cut by more than £4m
  • Future Jobs Fund – £290 million has been cut nationally from the programme. Liverpool’s Regeneration Director John Kelly has written to Treasury Ministers, warning that cutting the Future Jobs Fund could have a damaging effect. With 5,925 18 to 24-year-olds claiming unemployment benefits, cutting the scheme would have a “disproportionate” effect on the city, he warned.
  • Regional Development Agencies – the North West Development Agency will close in April 2012, to date funding for the NWDA has been cut back by £52m – 18% of its overall budget. The NWDA has confirmed more than 100 projects will lose out as a result of the budget cuts.

Many other national cuts will affect public services in the Liverpool area (for further details download the full report), and families across the NW will also be affected by cuts in welfare and social security expenditure. Previously we reported that the cumulative loss that children and families will have experienced by 2012/13, from the national cuts to services and benefits announced so far, is just over £13 billion.

Other research shows why Liverpool and the Northwest are particularly vulnerable to cuts. TUC research has shown the Northwest is likely to be particularly hard hit by cuts and that regions with lower average household incomes and more deprivation (including the North West) tend to make greater use of public services than more affluent regions (such as the South East and East of England).  The Centre for Local Economic Strategies (CLES) have looked at how regions will be affected by the cuts announced so far. They note that areas that are most at risk are those where there are relatively few private sector jobs; high levels of unemployment; poor transport links; and high vulnerability to national public sector job losses. The data shows that to date, the largest proportion of cuts have been in the North West (17.9%).  Recent independent research undertaken for the BBC considered the ability of each local authority to withstand sudden changes in public spending; the data showed that Liverpool is a high risk area, ranking 287th least resilient out of 324 areas.

Unemployment in Liverpool is already high. There are 19,209 people claiming JSA in the Liverpool area alone, and the ratio of jobs to jobseekers is 1:7.4 compared to the NW average of 1:4.3. Data from the Annual Business Inquiry suggests that around 39% of workers in Liverpool are employed in public sector occupations, compared to a national average of 27% and a NW average of 28%. With unemployment already high, further job losses in the public sector will hit Liverpool hard.

This analysis is an example of how one community will be hit by cuts announced to date. When you consider the scale of the cuts that are likely to come in the CSR, and that the experience of Liverpool is being replicated up and down the country, the impact of the coalition’s cuts starts to become clear.

2 Responses to The impacts of cuts in Liverpool and the North West

  1. Tweets that mention The impacts of cuts in Liverpool and the North West | ToUChstone blog: A public policy blog from the TUC —
    Sep 21st 2010, 10:16 am

    […] This post was mentioned on Twitter by John and ToUChstone blog, Nigel Stanley. Nigel Stanley said: New TUC analysis of cuts in Liverpool and NW – entire coincidence that Lib Dem conference is in Liverpool of course […]

  2. Cuts Watch #274: Regional reports on cuts and young people | ToUChstone blog: A public policy blog from the TUC
    Oct 7th 2010, 1:39 pm

    […] a previous blog, outlining our analysis of the Area Based Grant cuts in Liverpool, we found that children and young […]