Finance and Resources 2023-24 budget proposals

This directorate is led by the Director of Finance and Resources, who is the Council’s Chief Finance Officer.

The responsibilities of the Chief Finance Officer include:

  • Leading and managing an effective and responsive financial service by maintaining strong financial management and effective financial controls.
  • Contributing to corporate management and leadership
  • Supporting and advising both elected members and council officers in their roles and leading to the promotion and delivery by the whole organisation of good financial management, so that public money is safeguarded at all times and used appropriately, economically, efficiently and effectively.

The main services within the Finance & Resources Directorate include:

  • Financial Management – the service is responsible for the co-ordination of the council’s financial planning and resource allocation processes, together with the preparation of service department budgets. Budget monitoring and control of gross annual revenue expenditure totalling over £1.5 billion and a five-year capital programme of £300M. In addition, the service provides financial management and advice to all other council services and a support and challenge function for the council and a Treasury Management function.
  • Revenues & Benefits – the service is responsible for maximising the council’s income from Council Tax and Business Rates. There is therefore a focus on Council Tax collection performance and actions to mitigate performance fluctuations. The service collects c£400M every year in Council Tax and Business Rates and pays c£180M in Housing Benefit. The service also provides advice and support for Liverpool residents to help them maximise their entitlement to national and local benefits. The service is responsible for the administration of a number of welfare support schemes, including Discretionary Housing Payments and the Liverpool Citizen Support Scheme.
  • Corporate Landlord – the Corporate Landlord service is responsible for the management and maintenance of all of the council property assets and is designed to enable the council to utilise these assets to deliver better, more efficient services to communities. The landlord’s function is to ensure the service departments are accommodated and to maintain and manage the property assets with regard to the law of property.
  • Procurement – the service is responsible for ensuring that commercial arrangements and contracts awarded by Liverpool City Council and its partners and that they provide quality, value for money solutions, whilst promoting the fair city objectives for the city and local region. Providing professional procurement advice on all commercial options, managing markets and suppliers, making sure that all activity adheres to Liverpool City Council’s Contract Standing Orders and European Procurement rules and the payment of invoices within agreed timeframes to support suppliers.
  • Internal Audit – In accordance with the Local Government Act 1972, the Accounts and Audit Regulation 2015 specifically requires that the council must have an effective internal audit function. The Internal Audit team provide an independent and objective opinion on the adequacy and effectiveness of the council's governance, internal control and risk management arrangements and how well the council controls its activity to avoid loss or wastage and to protect the public money the council spends and the assets it owns.

Financial pressures

Liverpool City Council faces a great amount of uncertainty at the present time with the following being the major financial risks:

  1. Unachieved savings in 2022/23 and prior years.
  2. Demand pressures on services.
  3. Inflationary increases above the provisions already made and on household income for the city’s residents which may increase demand for services further, or limit their ability to pay for any chargeable services.
  4. Local government finance settlement below expectations.
  5. Limits to the amount of Council Tax and adult social care precept that can be raised.

The council is proposing a significant number of budget proposals for next financial year and beyond as well as taking corrective actions to minimise the forecast financial overspend in 2022/23.

Approach to savings and transformation

The Finance & Resources Directorate transformation will be delivered through the eight work-streams of the Finance Improvement Programme (FIP).

This programme provides the opportunity to strengthen the department which will enhance its resilience, performance and leadership capacities so that it can spearhead a culture of change within the whole council, ensure that the CIPFA (Chartered Institute of Public Finance and Accountancy) Financial Management and Financial Resilience review recommendations are implemented and contribute to the achievement of the council’s wider Strategic Improvement Priority objectives.

There is a need, in the first instance, to ensure that the basics of good financial management are right, and then to focus on transformation. The FIP programme will therefore focus initially on six key areas to ensure stabilisation and then progress to improvement of services in the short and medium-term as well as planning ahead to deliver transformation. This work will be delivered by the following work-streams:

  • Strengthening financial position and planning – which will redesign the budget timetable and planning processes to deliver a more strategic approach to the Medium-Term Financial Strategy (MTFS), including savings.
  • Improving income recovery and debt recovery – which will include short and medium-term improvements, a review of Council Tax and business rate policies, the processes and procedures currently in use and authorisation levels and governance arrangements to deliver improvements in performance and collection rates. Through this work-stream the improved income collection to recovery is expected to generate an additional £7.0M in revenue income in 2023/24 for the council, increasing to £18.0M in 2025/26.
  • Improving Procurement - an end-to-end diagnostic has been undertaken to enable a clearer understanding of where there are issues. This will be used to support a redesign of the process and any further improvements will be incorporated into a short/medium term action plan. The diagnostic has identified a number of lines of enquiry for further investigation to deliver cost savings and efficiencies in contract spend. The savings proposal would require cross-departmental support to review all third-party contracts. The proposed saving is modelled on 5% reduction across all third parties which equates to £2.5M for 2023/24 increasing to £4.5M in 2024/25.
  • Improving the oversight and finances of Council companies - this will deliver assurance, better governance and improved outcomes. The next steps will be reviewing the actions from the independent reviews of each Council company, completed in 2022/23 and incorporating these into a delivery plan and undertaking options appraisals where required, to determine the most appropriate form for the Council’s companies.
  • Developing reliable and easy to use systems - this will deliver improvements in the performance of the Finance team in its transactional business within the council and with external providers through a diagnostic review of finance, HR and payroll and procurement systems, a review of the current HR, Payroll and Finance contracts and any wider finance related systems. An action plan outlining short-and medium-term improvements will be developed and implemented.
  • Improving Internal Audit - a peer review has been undertaken to enable a clearer understanding of where there are issues. This will be used to support a redesign of the process and any further improvements will be incorporated into a short/medium term action plan. There are no proposed savings for this service as this is a key improvement priority following the Best Value Inspection published in March 2021

The timescale to mobilise the FIP programme commenced in August 2022; in December 2022 there will be a review point, at which point the scope of the FIP will be expanded to include two further work-streams focusing on building excellence in financial support and empowering budget holders once the required changes to deliver the basics of good financial management are in place. The FIP programme will support the Council’s wider transformation and improvement programme and seek to support the delivery of a long-term sustainable financial position for the organisation.

Welfare support

The council currently provides a number of discretionary welfare support schemes to Liverpool residents. In developing options for how the council could close the budget gap a review of each scheme has been undertaken and the following budget savings have been proposed for consultation as part of the budget setting process:

  • The Liverpool Citizens’ Support Scheme (LCSS) - is a discretionary Local Welfare Provision Scheme delivered by the council. LCSS provides support for Liverpool residents who find themselves in an emergency or crisis. The budget savings proposal is to review the scope of LCSS and introduce a repair or replace element for domestic appliances, remove furniture packages for tenants of registered providers and remove home starter packs saving £1.1M a year.

  • The Benefits Maximisation Service - is a discretionary service that provides advice and support to Liverpool residents to help them maximise their entitlement to national and local benefits. However, there are a number of external advice agencies that provide the same and, in some cases, a more extensive service than that provided by the Benefits Maximisation Team. For example, the Benefits Maximisation Team does not provide debt advice or advocacy, although this is offered externally by other organisations including Citizens Advice Liverpool. The current proposal is to cease to maintain the current service saving £1M a year.

  • Discretionary Housing Payments (DHPs) - provide financial help to low income and vulnerable households. DHPs assist Liverpool residents in meeting any shortfalls in state benefits by providing extra help with the cost of rent, thereby preventing rent arrears, protecting their tenancy and thereby reducing the risk of severe hardship and homelessness.

    Discretionary Housing Payments are funded by the Department for Work and Pensions (DWP) and local authorities receive an annual grant allocation every year. Liverpool has consistently provided additional funding from its own budget in recent years, in order to protect vulnerable citizens and reduce the risks of hardship and homelessness. In 2022/23 the Government provided £1.15M in funding and the Council added an additional £1M. The budget savings proposal is to remove the additional council funding of £1M per year.
  • Corporate Landlord – the significant saving proposed will be through the provision of energy performance management against benchmarks to drive behaviour change and a sustainable reduction in energy consumption and deliver savings. The target is to reduce the council’s electricity and gas consumption of the operational estate by 10%. This includes the application of temperature standards to drive building efficiency savings such as driving down usage in highest charge periods (4.30-7.30pm). In addition, the council will continue working in collaboration with the Combined Authority to apply for and obtain capital funding to accelerate the de-carbonisation of council property assets.