Earlier this year I posted a critique of the council’s practice of including references to “cumulative” funding gaps and savings/cuts in budget reports. I pointed out that the amounts stated were not “cumulative” and were, therefore, mathematically meaningless.
I also speculated that these misleading statistics were included in the reports in order to give the false impression that the pain was being equally shared between huge increases in council tax and the council establishment.
I sent a link to my post to the Pembrokeshire Herald’s Jon Coles (aka Badger) who responded with a series of questions regarding my use of Consumer Prices Index (CPI) as a comparator for increases in the council tax – of which more later.
This little joust was the subject of my most recent post.
When nothing appeared in the Herald for almost a month, I emailed the editor pointing out that PCC now agreed with me on the “cumulative” point and had since erased it from the latest budget report (see difference between budget report on December 2 2024 and February 10 2025).
Last Friday the Herald burst into song on the subject with Badger – having seen the copies of the latest budget report that I had sent him, with all mention of “cumulative” expunged, holding forth on page 5. He had now come round to agreeing with me: “There is no doubt” he thundered, “that the idea of a ‘cumulative funding gap’ is nonsense in accounting terms.”
Old Grumpy would point out that this hasn’t always been obvious to the Herald because, even though I had alerted them to this piece of “nonsense” on 13 January with a link to my post on the subject, two weeks later, on 27 January, the Herald published a lengthy article explaining how Carmarthenshire county council had endured cumulative funding cuts of £150 million over the past fourteen years.
I emailed the paper to point out this error, but I don’t recall seeing a correction.
Still I’m pleased to see that the penny has now dropped – more rejoicing in Heaven over one sinner that repenteth, and all that.
Which brings me to CPI.
Of course, Jon Coles/Badger is correct that there is no exact match between CPI and the cost of provision of council services. But CPI gives the direction of travel where prices are concerned and it is frequently used in calculating the wage settlements of those who have to pay these tax increases.
Badger is merciless towards those like Old Grumpy who oppose these massive increases: “Anyone with experience of business knows that higher input costs leads to higher costs of production or service production. It is financially illiterate to argue otherwise,” he proclaims.
I think I can pull rank on Badger when it comes to business experience, and while he’s right about the link between input and output costs what he forgets to mention is that, unlike the public sector, a private business can’t force its customers to pay the additional costs. If customers won’t wear the increased prices, the business has either to cut its profit margin; find a more efficient way of working; or go bust. The local council justs sends you a bigger council tax bill and takes you to court if you fail to cough up.
Financial illiteracy is to believe that taxes can forever go up faster than incomes. That is not a matter of opinion, it is a matter of arithmetic. Nationally we are now taxed and borrowed up to the gunwales, and, while nobody likes to use the word “austerity”, something like it is on the cards for both Westminster and a Town Hall near you.
Below is a comparison between PCC council tax increases and CPI.
The increases for the past eight years are listed below – well above CPI in almost every year.
If, with Badger, you don’t like CPI, you could try GDP (average over past ten years 1.25%) where the comparison is even worse.
PCC- CTax increase. CPI Sept
2018/19 12.5% 2.4%
2019/20 9.9% 1.7 %
2020/21 5% 0.5%
2021/22 3.8% 3.1%
2022/23 5% 10.1%
2023/24 7.5% 6.7%
2024/25 12.5% 1.7%
2025/26 9.8% (proposed)
And, of course, if you compound these figures, the situation is even more heavily weighted against the taxpayer.