Former Council Leader Mike Storey, who is now a Liberal Democrat Member of the House of Lords, has written to a Government Minister asking him to consider intervention into Liverpool City Council.
In his letter Lord Storey suggests two main areas of concern. Firstly, that the Council is approaching the setting of a budget with the Director of Resources on long-term sick leave and with no Chief Executive. Secondly, because research by Liberal Democrat Councillors has shown that the debts of the Council have gone up by 35% in less than 18 months and if the Council finances the Everton deal will expand to around £1 billion which he describes as a “staggering Carillion style level of debt”.
The full letter to House of Lords Minister Local Government Minister, Lord Bourne, is below:
Minister for Local Government,
House of Lords,
London S1A 0AA
5th February 2018
Dear Lord Bourne,
I am writing to you to suggest that the situation inside Liverpool City Council is at such a low level that the Government needs to intervene with the creation of the same sort of supervisory committee that it created in Birmingham
You may be aware that the mayor of Liverpool, Mr Joe Anderson has recently been interviewed under caution in connection with a three-year-old enquiry into financial irregularities at Lancashire County Council. Liverpool Council is involved in this matter for a number of reasons not least of which is that most of the senior team at OCL the Lancashire/BT subsidiary were seconded from Liverpool Council. We know that at least 2 chief officers have also been interviewed under caution at the council and there may be more.
This is only one of the problems that Liverpool faces. They are approaching the budget setting period with no Chief Executive in place and with a Director of Resources (the 151 Officer) who appears to be on long-term sick leave. There is an acting Head of the Paid Service who is at a much lower grade than one would expect for such an interim appointment.
The Council is facing major challenges to its budget and needs to find more than £30 million of savings in the next financial year when it meets in early March to finalise its budget. At the same time debt is escalating at an alarming level.
We have done some basic research into the Council’s debt levels. We found that if the Council invests in Everton’s new Ground at Bramley Moore Dock our total borrowing will exceed £1 billion. It is already £653 million that’s more than £2,500 for every household in the City. The Council has already agreed a further £100,000,000 by 2020 and that’s still two years off so doubtless there will be other pressures that need funding.
We also have no idea of the totality of the project. The figures given by the Mayor of Liverpool appear to be different than those suggested by Everton. There has also been no recognition of the huge costs associated with providing infrastructural improvement to all services in an area which was constructed more than 150 years ago.
Liverpool City Council’s debt has soared by 35% in less than 18 months - And that’s before any money is borrowed to finance Everton’s new stadium. The council has increased the city’s total debt levels by £164 Million, just in the 17 months between June 2016 and October 2017.
Of course, the Council says that each investment it makes is sound and either saves money or makes money. It also says that each deal is scrutinised by our external auditors who are one of the Big 4 accountancy chains. Of course, that is exactly what the management of Carillion said and their books and deals were also looked over by a Big 4 accountancy practice!
Liverpool’s record is not great. On the day that details of the Everton deal were announced (there are let us not forget two different views of what that deal is one from the Mayor and none from Everton) a report went through the Council says that on just one project, the Parklife Project, the Council’s projected borrowing had gone up by 63% in just 9 months.
Parklife is also a football deal. This time with the FA. Over the course of the design and preparatory work the costs had gone up. The FA put no more money in as all the risk had been transferred to the Council so our borrowing shot up. This deal did not come to committee so that we could scrutinise it as the Council claimed it had to be dealt with as a matter of urgency some three years after the deal was first approved and 9 months after unreliable figures were put forward
The fact is that all borrowing has an element of risk. At the level of indebtedness projected one bad deal could trigger other needs to refinance deals and we could be talking about taking money as a first charge on our income.
We must also ask if the deal is so good for Liverpool Council why is the billionaire owner of Everton FC given us such apparently generous terms!
I am deeply worried about this level of debt which will be the equivalent of almost three years of the council’s revenue budget.
As I indicated in my opening paragraph I believe that intervention in the Council is now necessary. I look forward to hearing from you about your suggestions as to a way forward.
Lord Storey of Childwall