March 18 2008

Tory, or no Tory

Hardly was the metaphorical ink dry on last week's column (Stock shock - no Tory he) than I received an e-mail from SF in which he claimed that Cllr Stock's entry in the councillors' register of interests included membership of the Conservative party.
On top of that, SF provided a link to the BBC's website for the 1999 Welsh Assembly elections which clearly show a Peter Stock as one of the Conservative candidates on the party list (http://news.bbc.co.uk//hi/english/static/vote_99/wales_99/html/region/2.stm).
"So must we conclude either that the Tories allow non-members to stand as candidates under the party's banner, or, heaven help us, there are two Peter Stocks?" SF asks.
"Or is it more likely that, when he denies ever being a member of the party, he is being economical with the truth?"


Headage payments

Under the headline: "Council boss paid more than the PM" the Daily Telegraph reported that Suffolk County Council's recently appointed chief executive Andrea Hill was to receive a salary of £220,000.
The Conservative leader of the council, Cllr Jeremy Pembroke, defended Ms Hill's mammoth pay cheque with the standard formula: "People who live in Suffolk deserve the very best" i.e we're doing the people a favour.
I seem to remember that the series of huge hikes in the salary of PCC's chief executive Bryn Parry-Jones have brought a similar response (Fools and our money).
And, compared to what Ms Hill is being paid, at a mere £160,000 (three grand a week), we would seem to be having BPJ on the cheap.
However, there is another way to look at these numbers.
Suffolk has a population of 700,000, so Ms Hill's salary works out at roughly 30p per head, while the people of Pembrokeshire's (population 115,000) each pay £1.40; making Mr BPJ almost five times as costly.
Indeed, I would bet that, on a per capita basis, Pembrokeshire's chief executive is the most expensive in the UK.
A bottle of £3.99 (£4.13 following last week's budget) Chilean Merlot awaits the first person to e-mail me with proof of the contrary.

Secret Tories

While on the subject of Merlot, I have to say that Saturday was not a good day for Old Grumpy's wine cellar as the two bottles I won on the England-France game disappeared down the double or quits chute.
However, there is better news on the political front where a bottle rides on the number of Tory candidates in the upcoming county council elections when I have bet there will be fewer than 19.
It seems that earlier reports of as many as 26 candidates were a gross exaggeration and the word on the street is that ten to a dozen is nearer the mark.
It will be interesting to see if these include some of the party's leading intellectuals (only joking) such as Cllrs David Wildman, Mark Edwards, David Bryan and, dare I say, Peter Stock, who currently nestle in the comfortable bosom of the Independent Political Group.
My money says they will conclude that their political bread is more likely to be buttered with a special responsibility allowance if they stay put.

Drowning in debt

 

As I wrote recently, what appeared to be buoyant world economy was floating on a sea of debt.
Now the tide has gone out and, in the words of Warren Buffet, we can now see who has been skinny dipping.
Unfortunately, it would appear that the nude bathers include some of the world's major financial institutions, including the giant American bank Bear Stearns.
Grumpette can never have anticipated such dramatic consequences when she closed her Northern Rock account (Madam Butterfly).
Six months ago, the so-called carry trade was seen as the major threat to the stability of world financial system (Carried away) but it was beaten to the punch by the sub-prime mortgage crisis.
But the carry trade problem - borrowing in a low interest currency to invest in a high interest currency - has not gone away.
For instance it was possible to borrow Yen at 0%, convert them into Dollars and invest at in US assets at 5%.
A licence to print money you might think.
And so did the financial whizz kids.
Unfortunately, the recent plunge in the Dollar's value against the Yen means that to pay back your original $100 loan now requires something like $130 - wiping out your profits, and more.
Attempts by the Fed to head off a recession by slashing interest rates (making the Dollar an even less attractive currency) only makes the problem worse.
It could get exceedingly bloody as hedge funds and the like are forced into fire sales in order to unwind their positions.
I hope Grumpette put her five grand in a safe place.
Under the mattress, for instance.


Entrepreneurial toff

 

I hear that the trial in Nuremburg of the Hon Rhodri Philipps has ended with him getting a two year suspended sentence and an order to pay £14,000 in costs after he pleaded guilty to fraudulent breach of trust and embezzlement..
The Hon Rhodri is of interest to Pembrokeshire readers because of his doomed steel-making venture at he former mine depot at Blackbridge which went bust after little more than a year's trading with debts of £5 million.
Among the creditors were Pembrokeshire County Council which vowed to pursue the Hon Rhodri, who had personally guaranteed the company's debts, but never did, and Eddie Setterfield who lent Rhodri an £800 caravan that was seized by the liquidators (Polo neck).
Considering the amount of money he looted from the German company Hans Brochier (£7 million) he got off lightly, though on the other side of the balance is the almost twelve months he spent in jail on remand.
Philipps and his associates bought the failing Brochier business for a token one euro.
Part of the deal was an 11 million Euro (£7 million) trust fund designed to help Brochier back on to its feet.
By all accounts, Philipps transferred this money into a London account where it was used to purchase the German chemical company L11 (8 million Euro) and fund his lavish lifestyle.
This included running up bills of 275,000 Euro on a company credit card before his fellow directors woke up to what was going on and stopped the card.
Never one to be stingy with other people's money, he set up shop in expensive offices in Belgravia which were lavishly furnished.(Full drop double interlined silk curtains, hand made furniture etc) all supplied, at great cost by his wife's interior design company.
Other items of expenditure included £350,000 to promote a German opera singer, £12,000 on private jets and a £5,000 Purdy shotguns.In addition he sponsored a polo team appropriately named The Prodigals which included Jack Kidd, brother of the fragrant Jodie.
Apparently there was outrage from Brochier workers, who had nicknamed him "The Job Killer", when the judge said there was "no legal basis" for imposing a harsher sentence.
But the last word must go to the Hon Rhodri's lawyer who claimed that his clients behaviour had been "entrepreneurial".
As a serial entrepreneur, myself, I have obviously been missing out.

 

Taxing truths

By now you should have received your council tax bill together with the pamphlet ""Value for your money" which, presumably following the theory that if you repeat something often enough people will eventually believe it, takes almost exactly the same format as in previous years.
I have previously drawn attention to this less than honest document (Propaganda on the rates) but, as this is an election year, it deserves more detailed analysis.
Firstly, it is questionable whether public money should be spent to give the Leader, Cllr John Davies, the opportunity to tell every household in the county: "Pembrokeshire is one of the best-performing Councils in Wales and we shall ensure this continues."
We, of course, being the ruling Independent Political Group [party] of which Cllr Davies is the Leader.
In the bottom left hand corner is a box headed "Where does your money go?" which is followed "Education £104.1 million etc.
But this is the gross amount in the education budget and bears little relationship to your council tax.
Like all the best propaganda, this document contains enough truth to avoid accusations of outright lying - but only just.
On page five you will see that, after taking income into account, the net education budget is £82.29 million.
And, if you look further down that page, you will see that the total net expenditure of £187 million is met by Welsh Assembly's revenue support grant (£123.7 million) Non-domestic [business] rates (£30.7 million) and council tax (£32.6 million).
What these figures show is that council tax finances a mere 17% of net expenditure - or £14 million in the case of education.
And that is just 13.5% of the £104.1 million gross education expenditure under "Where does your money go?" on page 1.
Since I last wrote about this (Propaganda on the rates) a footnote has appeared under housing services on page 3 which reads "Council housing is funded in whole by the rent paid and does not have an impact on council tax".
But that is not the impression given by a cursory glance at "Where does your money go?" where people are informed that it goes to financing "Housing services £44 million".
Then there is the question of comparing the council tax paid by people in Pembrokeshire with those in other authorities which is presented as a bar chart.
This bar chart uses one of the oldest tricks in the statistical snake-oil salesman's repertoire: the non-zero origin.
If the graph is redrawn using zero as the starting point (the columns stretch to within two inches of the bottom of the page) the comparison with other authorities is significantly less dramatic.
In any case, comparing tax rates from one area to another is a tricky business unless you can be sure you are comparing like with like.
As the as the budget summary on page 5 shows, "income" accounts for a large proportion of the council's funds (£112.1 million or roughly three-and-a-half times the amount raised from council tax).
This income comes from many sources: council house rents; one-off government grants; agency agreements such as that with the Welsh Assembly for the maintenance of the trunk road network and charges to service users.
Unfortunately, it is nigh on impossible to discover the relative contributions of these various income streams, but, as I've said many times before, a council that charges for a services that another funds through taxation will naturally have a lower rate of council tax.
For instance the USA has a tax burden of roughly 30% of GDP compared to something nearer 40% in the UK.
But a straight comparison is flawed because health care in the USA is mainly funded through private insurance while in the UK it is the taxpayer that picks up the bill.
It is also worth remembering that, while it is true that Pembrokeshire has the lowest band D rate in Wales, it doesn't necessarily mean it has the lowest rate of tax per household.
That is because the band D rate depends on the tax base which in turn depends on property values in the area.
To give a hypothetical example, in order to raise £60,000, an authority with 100 band H properties ( 2x band D) would need to set a band D rate of £300, while to raise the same amount of money an authority with 100 band A dwellings (6/9 of band D) would need a band D rate of £900.
However, despite this huge disparity in band D rates, households in both areas will face exactly identical council tax bills (£600).
This is part of the reason why authorities such as Neath Port Talbot, which have a preponderance of low value housing, have such high band D rates.


Slammed!

I can hardly let this week pass without mentioning Wales' Gland Slam triumph.
Firstly, it was thoughtful of the Welsh team to keep piling on the points when could have closed the game down, hence ensuring England edged into second place.
Secondly, it is difficult to believe that this is the same outfit that made an early exit from the World Cup less than six months ago.
It surely can't be all down to a change in coaching staff.
I suppose what was remarkable was that, except for a dodgy first half at Twikkers, Wales never looked in danger of losing any of their games.
Winning a Grand Slam is a very tough assignment and is rarely achieved without a couple of slices of luck along the way.
So Wales are to be congratulated for making it look relatively easy.
It should be even easier next year when their only difficult away game is in Paris.

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