Liverpool - the council which John Healey, the local government minister, said could save its council tax payers more than £100 a year each - was named as the worst financially managed local authority in England by an independent watchdog yesterday.

The Liberal Democrat-controlled authority comes out alongside Southend and the Isles of Scilly as the worst in the country in an analysis by the Audit Commission.

The findings come days after Healey listed savings which could be made by the 10 highest spending authorities in England to meet government targets to save £4.9bn, and how much cash could be saved by an average band D council tax payer.

Liverpool was the highest in the country.