£20million culture cash lifeline delivered by Government

Mar 5 2008

THE government has agreed a rescue plan to pay for Liverpool’s Capital of Culture celebrations - with tough strings attached.

Ministers will let the council borrow £20m via a process called capitalisation, provided it can show it is not financially incompetent.

The breakthrough was announced by local government minister John Healey after months of lobbying from city councillors and MPs.

It came a year after the council revealed it still had to find £20m to pay for the showpiece event - and just a week after it announced a “plan B” to come up with the cash.

Walton MP Peter Kilfoyle said: “The ball is now very firmly and squarely in the council’s court.

“The council must now show it can be trusted and that they are not using 2008 as a political football.”

Council bosses needed to know by today whether the government would agree to capitalisation on the basis that Capital of Culture is a one-off event.

But the ECHO understands ministers were wary, not least because of an Audit Commission report shaming the council as England’s worst-performing for financial management.

Last week, Mr Healey told MPs that the government, which has already provided £11.2m towards 2008, could not provide more direct Treasury cash - but would consider the capitalisation option.

In a letter forwarded to Liverpool council leader Warren Bradley today, the minister said that since auditors raised “serious concerns” about underlying financial management problems, his officials have been in constant touch with council officials.

The aim was to “help them find a way forward that would tackle the serious issues raised by the auditor”.

Mr Healey said it would require “tough choices”, but the council needs to put together a sound financial framework and restore sound financial management.

He said if that is done, it would give the Department for Communities and Local Government “a new context for considering a further capitalisation application for Liverpool”.

He added: “Of course, any new application would need to be considered on its merits.”

Mr Healey said: “I have asked officials here to offer whatever help we can to Liverpool council.

“But the next step on capitalisation will need to lie with the council itself, which needs to see whether it wants to make a new application and on what grounds.

“The success this year as European Capital of Culture is important to the government, as well as having great potential to boost Liverpool’s reputation, regeneration and social and cultural life.”