I sent a link to my previous post on the council tax to the Pembrokeshire Herald’s grandly-named “Chief Political Writer”.
It occurred to me that he might either give my thoughts on the matter a wider airing or, if he disagreed with me, provide his readers with his more nuanced evaluation.
I received a response dripping with sarcasm, which clearly indicated that he thought I was talking through my hat.
After toying with the idea of sending a detailed reply, I opted to email back saying I looked forward to reading his superior analysis in the next edition and we would take it from there.
Sadly, when the next edition of the Herald landed in my inbox I found that Badger had retreated into the dark recesses of his sett from where, instead of addressing the pressing question of the amount of council tax his readers will soon be forced to pay, he resorted to taking potshots at our hapless MP Henry Tufnell. Two more editions followed and still no sign of Badger’s thoughts on why I am wrong, so I have decided to get my retaliation in first.
The chief political writer’s original dismissive email started: “Thanks for this, Mike” and ended: “I look forward to your further input and advice.”
In between, Badger posed a series of questions the tone of which suggested he wasn’t too impressed with my analysis.
There’s nothing I like better than a good argument, so here’s my “further input and advice”.
Badger’s questions are in italics.
Q: Does the Bank of England’s cumulative rate of inflation follow consumer prices, or does it also account for the costs to local authorities of supplying services (for example costs of employment including pensions, and the cost of commissioning external providers to provide (eg) domiciliary care?
Ans: This is a reference to the fact that I compared PCC’s increase in spending at 45% with the Bank of England’s inflation rate of 35% for the same period and that in the seven year that the present administration has been in control, council tax had increased by 76% compared to CPI of 35%. All this while at the same time, making cumulative budget cuts of £110m, or more than 33% of its net budget (allegedly).
As any clued-up chief political writer should know, none of the BoE’s inflation measures include things like “commissioning external providers” so this is a clever-clever, roundabout way of saying that BoE’s inflation rate is not a fair comparison.
Up to a point that is right, but it is common practice for such comparisons to be made in all sorts of circumstances. For instance, if the government gives the NHS a funding increase less than CPI you will often hear commentators and opposition members claiming that it amounts to “a real terms” cut. That doesn’t mean that NHS spending on drugs, medical equipment and consultants’ salaries is part of the BoE’s inflation calculation – simply that CPI is a useful indicator of the general direction of travel.
And, of course, the increases in the income of the Herald’s readers, who are being called upon to pay these huge council tax increases, are often tied to movements in CPI.
Q: Bearing in mind the huge increase in construction costs, materials, and labour shortages since c.2017, does the BoE calculation account for those increases?
Ans: This is in the same vein as the first question because Jon Coles knows full well that CPI does not include these costs. The clue is in the full title Consumer Prices Index which obviously wouldn’t include “labour shortages”. However, this is a case of someone being too clever by half and not half as clever as they think they are, because construction costs are reflected in the council’s capital budget and Housing Revenue Account (HRA) – neither of which are funded through the council tax.
Q: If the BoE inflation measure does not account for the whole of the increased costs borne by local authorities, which measure does?
Ans: Another example of following Mark Twain’s dictum: never ask a question unless you already know the answer. As Badger is aware, there is no single measure equivalent to CPI that encompasses these costs. With regard to budget setting, the council itself decides how much its costs will increase in the coming year. This will be an amalgam of real numbers (pay increases, pension contributions) and estimates (future service pressures. tax collection rates, cost inflation and a host of others). Within reason, a local authority can set whatever budget it likes – even to the extent of standing up high cost straw men which can then be chopped down to produce painless savings.
Q: Are you suggesting the local government funding settlement for Pembrokeshire has significantly outstripped inflationary pressures, rendering past and future cuts unnecessary?
Ans: It is not entirely clear what is meant by “local government settlement”, but as this is a term often used to denote Aggregate External Finance (AEF) – the amount granted to the authority by Welsh Government – I will take it as that.
I accept that there are service pressures especially with the increase in the number of old fogeys like me who cost social services an arm and a leg.
On the other hand, school numbers are falling so there should be savings there and you might expect the increasing use of IT to lead to efficiency savings.
However, the point I was making is that it is not easy to see where the council has made £110m of cumulative cuts and savings over the past 11 years while at the same time increasing its spending by more than the general rate of inflation.
As I pointed out, £110 m at a 70%:30% ratio of staff to other costs, would lead to £77m saving on salaries, or almost 2,000 posts at 40 grand a shot. And, as I pointed out, the reason for this discrepancy is that these so-called “cumulative” spending cuts include phantom savings and an element of double-counting. Indeed, had Badger emerged from his den to watch the recent meeting of the corporate overview and scrutiny committee, he would have heard the cabinet member for finance, Cllr Josh Beynon, accept that my analysis was correct and that the “cumulative savings” terminology would no longer be employed.
And, if Badger spent less time snuffling around in the middle of the night looking for hedgehogs, he might have noticed that the budget reports sent to cabinet had undergone a subtle but significant change.
The report to Cabinet in December 2024 is reproduced below:
While that for the February 2025 meeting has been slimmed down to:
As well as an almost magical £6.7m decrease in the funding gap, gone is all mention of “cumulative” funding gaps and budget savings.
These changes were made without comment by either officers or Cabinet members, which is in keeping with PCC’s long-standing policy of “never apologise, never explain”.
However, there may be light at the end of the tunnel (or sett) because, when I sent copies of the two widely-different Cabinet reports to the editor of the Herald, he immediately responded by forwarding me a copy of the paper’s draft article which was awaiting PCC’s response to my recent post.
The Herald has now arrived in my inbox – rather later than usual.
I notice the chief political takes a dim view of my analysis, though his critique is more froth than substance.
I will respond in due course.