March 3 2009

 

Reserved judgement

 

You may have read on the Western Telegraph website that, during the debate on the county council's budget, Old Grumpy proposed that £1 million be transferred from reserves in order that the projected 4.2% increase in council tax be limited to 1%.
Unfortunately, the WT's report is rather short on details.
My argument is that 4.2% is misleading because, with inflation forecast to turn negative later this year, the real rate of increase is likely to be 5-6%.
The council has some £30 million in reserves and the question is whether this money would do more good in the pockets of the people than sitting in a bank account in London earning ever decreasing amounts of interest as the base rate heads for zero.
The economic case is that this £1 million would benefit local businesses by providing a fiscal stimulus through the resulting increase in spending power.
If I'd really wanted to be radical, I would have suggested transferring £2 million from the reserves and a 2% decrease in council tax.
What is missing from the Western Telegraph's report is the Leader's response to this proposal.
Firstly, he questioned whether my business experience qualified me to speak on the subject of council finance before going on to accuse me of trying to grab the headlines.
Judging from the Western Telegraph's feeble report, I have failed miserably in this last objective.
But why shouldn't I try to get my point of view across to a wider audience?
Surely, giving the public the chance to choose between different options is what democratic politics is all about.
And seeing that the council has a department dedicated to plying the local papers with press releases - complete with taxpayer-funded photos - designed to persuade the public that he and his Cabinet are doing a wonderful job, it is a bit rich for Cllr Davies to complain about others seeking to get their name in lights.
I'm afraid his reaction only betrays his authoritarian tendencies - he knows he is right and anyone who holds a contrary view must be either mad, or bad, or both.
His own business experience, he told the meeting, had taught him that prudence was the watchword, and to dip into the reserves to fund current spending would be reckless.
Interestingly, schools which hold reserves are under constant pressure from county hall to reduce them, even though the governors believe that it is prudent to have some cash set aside for a rainy day.
He then went on to say that local government was facing hard times over the coming years and that, in the face of such a prospect, it was important to take the long term view.
At least he is right about that.
When this credit crunch is over, steps will have to be taken to repair the damage inflicted on the public finances by the massive borrowing used to fund the bank bail out.
That will inevitably mean tax increases and cuts in public spending, with local government expected to take its share of the pain.
Old Grumpy will be watching carefully to see if the doctrine: that reserves shall not be used to alleviate council tax rises, survives the expected cut in the government's grant to local authorities; especially as it is likely to coincide with the next round of local government elections.
I notice that Wrexham AM Lesley Griffiths has also suggested that council reserves should be used to stimulate local economies.
She has met with a similar put down by Cllr Davies, now in his other role as Leader of WLGA..
The BBC reports http://news.bbc.co.uk/1/hi/wales/wales_politics/7914591.stm that: "WLGA leader Cllr John Davies said it was 'incredulous' that councils were being questioned over their reserve levels 'when it is these same reserves that will play such a vital role in ensuring financial risks can be managed' ".
Why should it be 'incredulous' [incredible, even] for someone to question the level of council reserves?
Their appropriate level isn't an established scientific fact like Boltzman's constant, so why shouldn't the public, whose money it is, ask questions?
According to the BBC, which obtained the information through an FoI request, reserves in Wales range from 7% of annual budget (Bridgend, Caerphilly) through 18% (Pembrokeshire) to Gwynedd ((24%).
It would be surprising if all these levels were appropriate.
I suppose what was dissapointing was that my amendment didn't receive support from the offical conservative group who, rumour has it, believe in reducing taxes.
As for the unofficial conservatives, aka Independent Political Group, I realised some time ago that, apart from hanging on to power, they have long abandoned belief in anything.
PS. My attention has been drawn to another article on the WT website which reports on the Cabinet "debate" on the budget. http://www.westerntelegraph.co.uk/news/4112359.Cabinet_agrees_4_2__council_tax_rise_recommendation/.
The Leader is quoted as saying: "What we are looking at is a 4.2% increase in council tax, which some would argue is around the inflationary rate at the moment."
Unfortunately, Cllr Davies doesn't elaborate on who these "some" are, so might we conclude they are a figment of his imagination?
Whoever they are, they are certainly wrong because the according to the Office of National Statistics http://www.statistics.gov.uk/cci/nugget.asp?ID=19 the rise in the consumer price index (CPI) for January 2009 was 3% and the retail price index (RPI) a mere 0.1%.
The council's budget is for the year 1 April 2009 - 31 March 2010 when RPI is widely expected to become negative.
The idea of stimulating the local economy by putting money in people's pockets is not a new one.
Old Grumpy remembers attending a meeting as a reporter where the, then, head of personnel, Francis Maull, told members that the council paid its staff more than the going rate and that this increased spending power boosted local businesses.
Members nodded their approval at what they clearly thought was a piece of economic wizardry, but, as I pointed out at the time, it was in fact economic illiteracy because the extra spending power came straight out of the taxpayer's pocket and it was, therefore, a redistribution of spending power, not an increase.
On the other hand, the cash in the reserves has already been extracted from taxpayers' wallets, and to use it to reduce council tax would simply return it whence it came.

You tax - we'll spend

 

By happy coincidence, the latest edition of "Next", the Local Government Association's newsletter has just landed on the doormat.
It reports on a meeting local government leaders have had with government ministers to explore ". . . ways the government can take uncomplicated steps to help local government support individuals and businesses through the credit crunch."
Steps proposed so far are: ""making entitlement to small business rate relief automatic, promoting benefits and tax credit take up, and making it easier for local government to keep empty shops in use."
The first two would involve central government dipping its hand in its pocket to make up the shortfall in business rate income and to pay the extra benefits.
It is interesting that local government is keen for the Exchequer to fund its spending while hanging on limpet-like to its own reserves.
You tax - we'll spend seems to be the message but, as the government is already up to its gills in debt they are unlikely to get a sympathetic hearing.
As for the third initiative: "Council leaders are calling for powers that would allow them to use vacant premises to provide services such as training centres, libraries or youth clubs." and, elsewhere in the report, "bring and buy sales."
It is reassuring to know that we have such blue-sky thinkers in the top ranks of local government.
Of course, everyone is concerned about the dilapidated state of our town centres where empty boarded-up shops give a flavour of downtown Beirut.
But whether anyone can do much about the problem is another question.
The simple fact is that retail space has far outstripped demand.
In Milford Haven, for instance, there are now two shopping centres: one based on the docks and the other in Charles Street.
But there has been no corresponding increase in the spending power of the population.
Indeed, it is the policy of the county council to promote Haverfordwest as a regional shopping centre i.e. a place where people will shop in preference to their home town.
As the LEA says, in an article headlined "Act now to avoid ghost towns": "The millions of pounds spent resuscitating town centres must not go to waste."
If, as seems to be the case, these resuscitated town centres are full of boarded up shops, it would seem to indicate that the money has been wasted already and there is a danger of throwing good money after bad.
And, while it is easy to blame this situation entirely on the credit crunch, it must be remembered that this problem goes back to long before the sub-prime crisis was even a gleam in Freddie Mack and Fannie May's eyes.
The extent to which local government's promotion of out of town and edge of town shopping centres is the proximate cause of the decline of town centres should also be borne in mind.

 

Mad Hattie

 

It is impossible not to feel outrage at Sir Fred Goodwin's £6,000-a-week pension.
He has been nicknamed "Fred the Shred", but "Fred the Shed" would be more appropriate seeing that he has Madoff with enough cash to fill one.
However, a sense of outrage shouldn't lead us to losing our sense of proportion and the amount of money in Fred's pension pot is mere petty cash compared to the vast sums thrown at the banks to ward off their imminent collapse.
Of course, as many commentators have pointed out, whipping up public feeling against Sir Fred and his ilk is a good way to 'bury bad news' about the government's role in the credit crisis.
It all has rather uncomfortable echoes of the way blame for Germany's economic problems in the 1930s was heaped on the heads of Jewish financiers.
Harriet Harman - 'Mad Hattie' as she is coming to be known - says that, even if legally entitled, Sir Fred will not enjoy his massive pension because it will not be accepted by "the court of public opinion".
This is dangerously populist talk - more echoes of 1930s Germany - because it elevates the rule of the mob above the Rule of Law.
The role of public opinion in a democracy is not to usurp the law, but to persuade elected politicians to change it.
Of course, the government is entitled to take whatever legal steps it can to recover what is, after all, taxpayers' money.
But Mad Hattie's suggestion that a retrospective law might be brought in to lighten Sir Fred's pocket is clearly contrary to democratic principle.
And, as a prominent lawyer, she will know that such a law would, anyway, fall foul of the Human Rights Act.
Which probably mean she is playing to gallery in pursuit of her ambition to lead the Labour Party after the recession/depression eventually leads to Gordon Brown's demise.

 

Sporting Belgians

 

The challenge is to name two famous Belgians.
Most people come to a halt after Hercule Poirot, but recent events indicate that we may have underestimated the peculiar little state wedged between France and Holland.
Firstly, I read in the papers that the Belgian postal group De Post-La Poste has become the latest in a string of overseas companies to register interest in acquiring a stake in Royal Mail.
And, if the prospect of our posties talking with a Belgian accent wasn't enough, we now learn that it was Flemish weavers who introduced cricket to these islands.
Mind you, this last piece of information is the result of research by an Australian academic. so the possibility that it is all part of a devious plot to undermine the national psyche ahead of this summer's Ashes series can't be entirely ruled out.
And the Australian's research is based on earlier work by a German linguist who claims that "golf", and "love" in tennis, are also of Flemish origin.
When did they find the time to do any work, I wonder.

Converted?

This is a picture you never thought you'd live to see - Old Grumpy celebrating St David's Day in his recently acquired Welsh rugby shirt.
Unfortunately, I couldn't find a daffodil, and Grumpette had put all the leeks in the cawl.

I should explain that this garment is a gift from my old adversary WS, who thought wearing it on match days and other national festivals would help me to bond more closely with my Welsh-born grandchildren (Tries count) (Welsh dresser).
The condition for my keeping it was that I put the above picture on my website.
Naturally, this caused some heart searching but the chance of free clothing, especially as Grumpette tells me of steep price increases at my Italian tailors - Paul Sartori and Barnados - proved irresistible.
The blow was softened somewhat by WS's admission that, on its debut, the shirt witnessed an England victory over Wales.
And, of course, this week, the Welsh and English are united in the pain of defeat.
I look forward to the spring of 2010 when I hope to retaliate by publishing a picture of WS wearing a brand new England Grand Slam sweater.

Woad is me

 

My piece last week on the alternative version of Men of Harlech (Welsh dresser) brought forth two e-mails - the first from local boy David Jones who is working on an oil field in the desolate wastelands of Kazakhstan, and the second from Michael Ritchie, who lives in the even more desolate wastelands around Letterston.
Both e-mails contained the complete set of verses which are printed below.

What's the use of wearing braces
Hats and spats and shoes with laces
Vests and coats you buy in places
Down on Brompton Road

What's the use of shirts of cotton
Studs that always get forgotten
Such affairs are simply rotten
Better far is Woad

Woad's the stuff to show men
Woad to scare your foemen
Boil it to a brilliant blue
And rub it on your legs and your abdomen

Ancient Britons never hit on
Anything as good as Woad to fit on
Neck and knees and where you sit on
Tailors, you be blowed

Romans came across the channel
All dressed up in tin and flannel
Half a pint of Woad per man'll
Clothe us more than these

Saxons, ye may save your stitches
Building beds for bugs in britches
We have Woad to clothe us, which is
Not a nest for fleas

Romans, save your armour
Saxons, your pajamas
Hairy coats were made for goats
Gorillas, yaks, retriever dogs, and llamas

So march on Snowdon with your Woad on
Never mind if you get rained or snowed on
Never need a button sewed on
Woad for us today

Blood-letting

Last week I had to have a routine blood test.
"Only a little scratch", said the nurse as she prepared to insert the needle into my arm.
I am proud to say I was really brave - didn't faint, or cry out with pain, or anything.
I glanced down to see plastic syringe filling up with the red stuff and then she attached another and another after that.
Tony Hancock's remark: "That's an armful" came to mind but I remained stoically silent, though I did wonder whether the Robert Street practice might be selling the stuff on the black market.
Or, perhaps, the ancient practice of blood-letting was back in fashion!
One thing that struck me was that its colour was remarkably similar to that of Chilean Merlot.
This is rather worrying.
If any Chardonnay drinker has had a blood test recently, I would be interested to hear from them.

Back to home page