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Businesses and Strategic Partners, and to Maintain the Public Transport Network

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Businesses and Strategic Partners, and to Maintain the Public Transport Network INTRODUCTION We face the biggest challenge in the UK and across our local authorities since 1945. The scale of the task ahead of us requires a monumental, determined and coordinated effort by local and central government to lead in rebuilding our economy, giving hope to communities, and supporting local people as we recover from COVID-19. It is clear that COVID-19 presents an even greater risk to the Liverpool City Region than it does to the rest of the country. Infection and mortality rates are both substantially higher in the City Region than they are elsewhere – likely a consequence of the higher incidence of COPD and higher levels of deprivation. These significant risk factors mean that the economic, health and social impacts of COVID-19 are being felt more desperately and acutely in the City Region. If the City Region’s local authorities are to continue to respond effectively to the challenges of COVID-19 and then take forward the essential leadership of the recovery effort, they must be resourced to do so. Building on its promise to do “whatever it takes” to support our nation through this crisis, the Government has said that it will work with local authorities to help build its understanding of COVID-19 pressures. The purpose of this report is to help inform that understanding and set out the full financial and real “on the ground” impact of COVID-19 in the Liverpool City Region – across both the six local authorities and also the Combined Authority. The purpose of this report is not to complain about these efforts – delivering for local people is what we do best. We are extremely proud of how we – alongside our partners and our communities - have mobilised in response to the pandemic and we continue to stand ready to do “whatever it takes”. But the detail in this report demonstrates how the Government funding allocated to our local authorities to date is wholly insufficient to meet the existing and growing demands on our services. Latest estimates indicate that the City Region will face financial pressures of £341m due to COVID-19; the funding allocated to date will cover only 30% of local need and this fiscal gap will worsen should circumstances persist beyond the six-month period which has underpinned our assumptions. This financial challenge not only puts the response at risk, but it damages the prospects of a swift recovery. 1 The Combined Authority has likewise taken necessary steps to support key workers, vulnerable businesses and strategic partners, and to maintain the public transport network. This comes at a substantial impact to its operational income. The collapse of public transport alongside the curtailment of normal economic activity has cost the Liverpool City Region an additional £5 million per month alone in transport revenues during the initial response, and these losses look set to continue as the lockdown is eased with social distancing maintained – income which it cannot afford to lose. Our local authorities entered this pandemic with a decade of year-on-year decline in funding and consequently low reserves. Gross current expenditure on Adult Social Care per 100,000 adults is substantially higher in every local authority in the City Region than nationally. Over the next two years, the social care needs arising from COVID-19 will be severe and will require a greater than bearable portion of local authority budgets. Neither Business Rates, Council Tax nor commercial income will be available to meet the increase in costs, because each one of these income streams is forecast to decline over the same period. Our City Region economy is not facing the pandemic from a position of strength. It relies heavily on Liverpool city centre - an important leisure, cultural, retail and tourism centre – as well as its significant manufacturing base. This sectoral composition increases the severity of impact significantly, including in manufacturing, wholesale, retail and motor trades, and education - all of which are forecasted to see a fall in output of at least 50%. This report makes the case that we therefore require additional funding for our local authorities which reflects the existing and additional service delivery we have assumed and the particular needs of our City Region. Our local authorities are not making “local choices” to spend money or forego income – the financial consequences evidenced in this paper are each and every one a direct consequence of national Government policy and decisions in relation to the COVID- 19 pandemic. It is essential that the Government recognises openly and publicly that the £3.2 billion allocated to local government across the country is not going to be enough. The Government must deliver on its promise to do “whatever it takes”. Given our long experience of local economic policies and clear understanding of routes to economic impacts, the Combined Authority and local authorities want to collaborate with the Government to develop a local economic response which feeds the national response. Navigating the complex path towards recovery and working alongside the Government in this respect will only be possible if the short-term financial risks to local authorities arising from COVID-19 are removed and some degree of certainty can be established through a longer-term, needs-led funding settlement which goes beyond the current year. The Government is calling for the recovery to be swift, but this requires a monumental effort at a time when we face unprecedented challenges and from a position of substantial financial deficit. 2 Economic, social and health inequalities have each contributed to the severity of the impact of COVID-19 within our City Region. If funding distributions fail to recognise this, then those same inequalities will become even further entrenched and will impede our ability to progress proactively into the recovery phase of this pandemic. Together, we can lead a fightback for the people of this City Region who have made massive sacrifices, lost loved ones, jobs and businesses and have given so much in their communities as part of this huge national effort. We now need to work together to help secure their future. We need the tools to do the job. MAYOR JOE ANDERSON COUNCILLOR DAVID BAINES Mayor of Liverpool City Council Leader of St Helens Council COUNCILLOR PAT HACKETT COUNCILLOR IAN MAHER Leader of Wirral Council Leader of Sefton Council COUNCILLOR GRAHAM MORGAN COUNCILLOR ROB POLHILL Leader of Knowsley Council Leader of Halton Council STEVE ROTHERAM Liverpool City Region Metro Mayor 3 The Economic, Social and Financial Impacts of COVID-19 in the Liverpool City Region Overview 1. The Liverpool City Region has been hit particularly hard by COVID-19. Longstanding local health inequalities mean that residents across the City Region are significantly more likely to be impacted by, and die because of, COVID-19. As at 5 May 2020, Merseyside had 4,675 positive diagnoses of COVID-19, with a diagnosis rate of 341 per 100,000 population – almost 50% higher than the England rate of 232 per 100,000 population. To date, there have been 1,000 deaths recorded across Merseyside and recent analysis shows that the overall mortality rate from COVID-19 locally is significantly higher than across England. The mortality rate in Liverpool (81.8 per 100,000 population) is the highest amongst all of England’s core cities and more than twice the national rate (36.6 per 100,000 population). 2. Whilst infections and deaths are seen to be reducing, it is not yet possible to confidently predict whether the local “R value” is below 1 and analysis suggests that rates are not falling as fast as within other regions. The impact of these trends is wide-ranging and goes beyond the significant short-term pressure on core local services and the sustainability of the care home sector. As set out below, excess mortality rates and related health and wellbeing issues (e.g. mental health impacts) could compound the longstanding health inequalities across the City Region which, as set out in our Local Industrial Strategy, are linked with local economic challenges. 3. While the health impact has been severe, so too has the financial and economic impact. The Government acknowledges that the pandemic has led to an unprecedented increase in Universal Credit claims across the country and this trend has been evident in the Liverpool City Region – placing direct pressure on our communities and the local economy. This increase in benefit applicants presents the City Region’s local authorities with a number of challenges, including a direct increase in demand for our already-stretched support services and resources. This pressure will be compounded further by a subsequent reduction in Council Tax revenue across all of the local authorities as a consequence of new Universal Credit recipients being eligible for local Council Tax Reduction schemes. 4 4. Analysis of additional costs and spend by our six local authority areas shows additional costs of £148 million and lost revenues of £193 million assuming the impact of the virus continues for six months. This total pressure of £341m will be even more severe if the impact continues for longer than six months. Pressures on the local social care sector are particularly severe but areas such as business rates and council tax collection rates are also significantly impacted. This is compounded by the collapse of public transport revenues alongside the curtailment of normal economic activity. The reduction in mobility is costing the City Region an additional £5m per month in lost transport revenues. 5. Although it is too early to estimate with any certainty the impact COVID-19 will have on the economy, we understand the factors that will make us predisposed to a particularly challenging economic environment in the short and medium term.
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