Liverpool Council has confirmed that council tax will see another increase next year as the local authority grapples with the need to save millions over the next two years. This announcement comes after a slightly more favorable financial settlement last year, which allowed the council to reduce its required savings from an anticipated £73 million to £49 million.
In an effort to balance the budget, the council had previously implemented a 4.99% increase in council tax – the maximum allowable without triggering a referendum. As the budget-setting period approaches, residents can expect another increase, although the exact magnitude remains undisclosed.
A heated budget meeting held in March outlined a three-year plan aiming to achieve a cumulative savings target of £85 million. This comprehensive approach included cutbacks in discretionary spending, notably impacting the Liverpool Citizens Support Scheme (LCSS).
To provide transparency and insight into their financial strategy, the local authority has introduced a dedicated online page outlining their approach for the upcoming financial year. The council stated, “Throughout the current financial year, we have been advancing our Financial Improvement Plan. This plan involves establishing a new mechanism for financial management to ensure that we live within our means.”
This Financial Improvement Plan encompasses measures such as debt write-offs, enhanced income collection, development of the capital program, and the formulation of a new reserves policy. Recognizing the challenges posed by economic volatility and inflation, the council highlighted the difficulties faced by local government during these times.
The council acknowledged that a surge in homelessness on a national scale, significantly felt within Liverpool, has strained financial resources. Additionally, an increased demand for social care has added to the fiscal pressure. Despite these challenges, the council affirmed its commitment to managing the situation diligently, expressing confidence in setting a balanced budget by 2024/25 through meticulous planning.
However, the scale of the financial burden indicates that the council is not ruling out another substantial increase in council tax rates come April. The council’s warning is clear – failure to raise council tax could result in a reduction of essential services. The council stated, “The budget will also propose an increase in Council Tax.”
Considering the gravity of the situation, the council is contemplating the maximum allowable increase – a 2.99% rise in Council Tax, coupled with an additional 2% to contribute to adult social care costs, making a total increase of 4.99%. The government’s assumption that councils will incrementally raise bills annually is emphasized in the Local Government Finance Settlement, reinforcing the council’s stance.
The council’s cautionary note emphasizes that a failure to implement an increase could have detrimental effects on essential services, potentially causing severe consequences for the city’s most vulnerable residents. As Liverpool Council grapples with these fiscal challenges, the looming decision on council tax will undoubtedly have far-reaching implications for both the council and the community it serves.
