The extraordinary council meeting called to consider the Cabinet’s budget proposals broke up in disarray when former leader of the Independent Political Group, Cllr Jamie Adams, proposed that proceedings should be adjourned in order that possible further funding from Welsh Government, due to be announced later that same day, could be factored into the council tax calculation.
After a bit of argie bargie the meeting was put off until March 6 – just five days before the 11 March deadline by which time the council is legally obliged to set a budget.
However, from the point of view of the ruling administration, this stay of execution – it was almost certain to lose the vote on its proposal to increase council tax by 9.8% – gave it time to put forward a more palatable alternative.
We now know how much extra cash is involved: an extra half a million pounds and the possibility of some further grant funding, and the opposition IPG has again come riding to the rescue with a proposal for a reduced council tax increase of 9.35% together with some tweaks involving the retention of three-weekly black bag collections and a couple of public toilets.
It seems the present administration has decided to row in behind this proposal, but they would do well to follow the standard advice to those who would sup with the Devil: use a long spoon.
I will deal with the constitutional issues surrounding this deferral in a later post, but in the meantime I want to concentrate on the reasons for these huge hikes in council tax over the years.
The usual excuse is that Pembrokeshire has, or had, the lowest council tax in Wales.
It is true that, up to a year or so ago the council had the lowest Band D rate in the principality, but it has now hauled itself above Caerphilly, Cardiff and Newport.
It is also true that, in order to raise a certain fixed sum, a lower council tax area has to impose a higher percentage increase than its more expensive neighbour.
This is exactly the same arithmetic that I have been promoting for the past few years with regard to council house rents.
If you impose a uniform 10% increase on rents of £80 and £100 they increase to £88 and £110 and the gap between them widens from £20 to £22, and if you keep on doing that year after year the gap becomes an unbridgeable chasm.
I have long argued that, in the interests of equity, the lower rents should be increased at a faster rate, but until very recently, the Cabinet member for housing, with, it should be said, the support of the majority of the members, has steadfastly resisted.
However, while this arithmetic justification for larger council tax increases in Pembrokeshire is undoubtedly valid, it goes no further than that.
Unless PCC is experiencing higher cost pressures than other authorities, there is no reason why its council tax should increase at a faster rate than that required to correct the arithmetical imbalance described above.
But, of course, over the past several years, PCC has leaned heavily on this lowest-council-tax-in-Wales argument to justify a series of above-inflation increases, with the result that it has now overtaken Caerphilly, Cardiff and Newport and is hot on the heels of Torfaen and the Vale of Glamorgan.
What should also be borne in mind is that what is being compared is the Band D rate, which, in these days of second home and empty property premiums, is not necessarily the same as the important metric: the amount of money collected.
PCC’s budget is supplemented by some £7 million of second homes premiums – not a luxury enjoyed, one would imagine, by the likes of Blaenau Gwent, Rhondda Cynon Taf and Merthyr Tydfil.
So, a much fairer comparison would be a notional Band D rate, calculated by dividing the total council tax take (including premiums) by the tax base.
And, if you do that calculation, you find Pembrokeshire takes up a mid-table position, well above the relegation zone.
At a recent budget seminar, I heard a senior council officer declare that it would be “great” if PCC could increase its Band D rate to the level required to meet its Standard Spending Assessment (SSA).
I’m not sure that’s an ambition shared with the taxpayers of Pembrokeshire and, in any case, if you factor in the second and empty homes premiums, we are probably already quite close to this hallowed ground.
Another aspect of playing catch up is that once one authority hauls itself off the foot of the table another takes its place and the whole routine has to start again.
This is a process I have written about previously with respect to chief executives’ pay – a process to which I gave the name “salary leapfrog”.
These articles can be found at Ever Upwards and Salary Leapfrog from 2006 and 2012. If you have half an hour to spare, they are well worth reading if only to show how little has changed in Pembrokeshire in the past 20 years.
Footnotes
1.For those of you with better things to do with your lives than study the minutiae of local government finance, SSA is the amount Welsh Government (WG) calculates a local authority should spend in order to provide a reasonable standard of service to its inhabitants.
WG then allocates a certain proportion of this sum as Aggregate External Finance (AEF) and expects the local authority to raise the rest of its budget from council tax, charges for services, grants and other sources of income.
For many years, PCC’s gross revenue budget has been considerably less than SSA, but what is not clear is how much of the shortfall is made up by grants and charges.
2. I have written before about the Pembrokeshire Herald’s Badger’s dislike of my use of the rate of inflation (CPI) as a comparator for increases in council tax. However, while I accept that there is no necessary connection between the two, it is common for such comparisons to be made, if for no other reason that CPI is often factored in to increases in the wages and salaries of those called upon to pay these taxes. Only this morning, on the Today Programme, I heard it said that rail fares were to go up by an above-inflation 4.6%. We all accept these comparisons, though that doesn’t mean we think there is any connection between the cost of running a railway and the price of eggs and butter. Still, when you spend all your life down a hole in the ground talking to yourself, it would be surprising if you didn’t become just a little bit pedantic.