Friday, November 30, 2007
Budgets and the blame game
Another day, another letter from Plaid Cymru AM, Dai Lloyd in the Western Mail seeking to defend the Government's budget. It was a very tight settlement, don't you know, and all the evil Labour Government's fault in Westminster. Thank goodness for Plaid Cymru and the review that has been set up into the Barnett formula, which will deliver unlimited manna to Wales for years to come.
Never mind that the funding formula review came about as a result of a Welsh Liberal Democrat motion, Dai has elevated it to the status of a nationalist Holy Grail. Important as it is that we try, as Normal Mouth explains the outcome of this review may prove as equally unsatisfactory as that of the quest for the mythical chalice.
Dai Lloyd would also like the opposition to put forward their own alternatives to his party's budget, which seems like a reasonable proposition until one realises that standing orders prevents the budget being amended.
Unfortunately for Dai, his crusade to defend the indefensible is a lonely task. Not only are other Government backbenchers in open revolt about the allocations of funding to disabled children, but all parties (including Labour and Plaid) have united at a local government level to condemn One Wales' churlish attitude to Council taxpayers and vital local services:
The Labour leader of the Welsh Local Government Association has launched a scathing attack on WAG in a letter to all councillors.
Derek Vaughan – also leader of Neath Port Talbot council – accuses it of raising the budgets of its favourite schemes while forcing local government into a “dire predicament”.
The Assembly Government’s draft Budget gives councils an average rise in funding of 2.3%. Council chiefs argue this will not allow them to keep up with inflation and will result in job cuts and tax rises.
Mr Vaughan writes, “This is an ‘us and them’ budget. The services that have received ‘generous’ settlements tend to be those that are directly managed by the Assembly, rather than run by third parties like local councils.
“There is a large growth in the central administration cost of the Assembly over the next three years and next year’s increases for selected service including health (4.2%), environment, sustainability and housing (14%), rural affairs (9.5%) and heritage (5.2%).
“Examine the increases on individual budget lines and you will see increases for local government services barely touching inflation while Assembly services are generally above 4%.”
The Assembly Government argues that councils will receive extra funding to carry out specific projects, equating to an overall increase of 3%.
However, Mr Vaughan continues, “The outcome of the poor settlement will be that council tax payers will be expected to make good the shortfall caused by the Assembly Government’s decisions. Furthermore, no council is expected to avoid job losses and cuts in services.
“For education and social services in particular this is a massive problem. The gap in funding children between England and Wales will grow at pace and already sees a difference of £355 per pupil in 2006-07.”
The Assembly Government's estimate of a 3% increase is just spin. It is based on a calculation that includes all the specific grants that are being given to local Councils to promote Government policies even though those grants cannot be spent on other services and will not impact on the level of Council tax. The bald facts are that the Assembly Government had a 3.4% uplift to its grant, inflation is running at 2.7%, local government received an average increase of 2.3%.
As if to underline the severity of the problem, the Government's Director of Finance told the Finance Committee this week that the budget had been set on the assumption that the cost of public sector pay will rise by 4% next year. She argued that this had been built into all budgets. It has not.
Given that 80-85% of the money spent by local Councils goes to pay their staff, it would be expected that they too should have had sufficient money from WAG to meet a 4% increase in their pay bill. The 2.3% they got instead does not cover it and no efficiency drive in the world is going to cover that funding gap without vital services being hit, redundancies and higher Council Tax bills. Brave as he is, Dai Lloyd is whistling in the wind if he thinks his party is going to come out of this one smelling of roses.
Never mind that the funding formula review came about as a result of a Welsh Liberal Democrat motion, Dai has elevated it to the status of a nationalist Holy Grail. Important as it is that we try, as Normal Mouth explains the outcome of this review may prove as equally unsatisfactory as that of the quest for the mythical chalice.
Dai Lloyd would also like the opposition to put forward their own alternatives to his party's budget, which seems like a reasonable proposition until one realises that standing orders prevents the budget being amended.
Unfortunately for Dai, his crusade to defend the indefensible is a lonely task. Not only are other Government backbenchers in open revolt about the allocations of funding to disabled children, but all parties (including Labour and Plaid) have united at a local government level to condemn One Wales' churlish attitude to Council taxpayers and vital local services:
The Labour leader of the Welsh Local Government Association has launched a scathing attack on WAG in a letter to all councillors.
Derek Vaughan – also leader of Neath Port Talbot council – accuses it of raising the budgets of its favourite schemes while forcing local government into a “dire predicament”.
The Assembly Government’s draft Budget gives councils an average rise in funding of 2.3%. Council chiefs argue this will not allow them to keep up with inflation and will result in job cuts and tax rises.
Mr Vaughan writes, “This is an ‘us and them’ budget. The services that have received ‘generous’ settlements tend to be those that are directly managed by the Assembly, rather than run by third parties like local councils.
“There is a large growth in the central administration cost of the Assembly over the next three years and next year’s increases for selected service including health (4.2%), environment, sustainability and housing (14%), rural affairs (9.5%) and heritage (5.2%).
“Examine the increases on individual budget lines and you will see increases for local government services barely touching inflation while Assembly services are generally above 4%.”
The Assembly Government argues that councils will receive extra funding to carry out specific projects, equating to an overall increase of 3%.
However, Mr Vaughan continues, “The outcome of the poor settlement will be that council tax payers will be expected to make good the shortfall caused by the Assembly Government’s decisions. Furthermore, no council is expected to avoid job losses and cuts in services.
“For education and social services in particular this is a massive problem. The gap in funding children between England and Wales will grow at pace and already sees a difference of £355 per pupil in 2006-07.”
The Assembly Government's estimate of a 3% increase is just spin. It is based on a calculation that includes all the specific grants that are being given to local Councils to promote Government policies even though those grants cannot be spent on other services and will not impact on the level of Council tax. The bald facts are that the Assembly Government had a 3.4% uplift to its grant, inflation is running at 2.7%, local government received an average increase of 2.3%.
As if to underline the severity of the problem, the Government's Director of Finance told the Finance Committee this week that the budget had been set on the assumption that the cost of public sector pay will rise by 4% next year. She argued that this had been built into all budgets. It has not.
Given that 80-85% of the money spent by local Councils goes to pay their staff, it would be expected that they too should have had sufficient money from WAG to meet a 4% increase in their pay bill. The 2.3% they got instead does not cover it and no efficiency drive in the world is going to cover that funding gap without vital services being hit, redundancies and higher Council Tax bills. Brave as he is, Dai Lloyd is whistling in the wind if he thinks his party is going to come out of this one smelling of roses.
Comments:
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Your post is entirely correct regarding the budget and its effect on local government services. What I find strange in all of this is the way in which it is being defended by Plaid AMs with Labour AMs being conspicuous by their silence. The tone of the letter from the WLGA is a clear indication of the plight of local government given the almost poddlelike acceptance of budgets since 2004 by the organisation. Only one thing that I would quarrel with you over is the rate of inflation affecting local government. It is more likely to be over 4% than the under 3% assumption in Assembly calculations.
# posted by 
: 10:40 AM
: 10:40 AM
I accept that public sector inflation tends to be higher and is most probably around 6%, however it is often difficult to convince lay people about this.
I have used the RPI figure of 2.7% therefore as this tends to reflect people's own experience and is a figure they can relate to. The 4% figure is one produced by the Assembly Government itself and has been used to underpin the assumptions made in their budgeting process. It is their calculation of the increase in the public sector pay bill if unions accept a 2% pay rise. It also takes account of increments and on-costs.
I have used the RPI figure of 2.7% therefore as this tends to reflect people's own experience and is a figure they can relate to. The 4% figure is one produced by the Assembly Government itself and has been used to underpin the assumptions made in their budgeting process. It is their calculation of the increase in the public sector pay bill if unions accept a 2% pay rise. It also takes account of increments and on-costs.
This is getting boring and tedious. We all know that Dr Dai Lloyd AM is an arch hypocrite politically. When he rarely ever attended to Swansea Council meetings in his previous life he was always critical of low budgets
(rarely of course) shouting that Local Government needed more.I wonder what Cllr Darren Price and Cllr Del Morgan have to say about all this? (For those who don't know them - they are the Leaders of the Plaid Cymru Groups in Swansea and Neath Port Talbot Councils). Probably Cllr Del Morgan might rebel a bit, but Cllr Darren Price is in the Swansea PLC - Plaid / Labour / Conservative Coalition in Swansea so he will be under a Labour whip to keep silent.
(rarely of course) shouting that Local Government needed more.I wonder what Cllr Darren Price and Cllr Del Morgan have to say about all this? (For those who don't know them - they are the Leaders of the Plaid Cymru Groups in Swansea and Neath Port Talbot Councils). Probably Cllr Del Morgan might rebel a bit, but Cllr Darren Price is in the Swansea PLC - Plaid / Labour / Conservative Coalition in Swansea so he will be under a Labour whip to keep silent.
# posted by : 4:50 PM
: 4:50 PM
You mention a 4% pay rise as fact. Can you explain who in Welsh councils are getting a 4% pay rise this year?
Sorry I did not mention a 4% pay rise at all. Read it again and in particular read my comment above.
Peter - how do you mean the budget cannot be amended? That can't be right surely? What is the point of the debate otherwise?
# posted by : 4:04 PM
: 4:04 PM
OK, slightly misleading. An amendment can be tabled to the draft budget but only if the 'net effect of any changes would not increase or decrease the aggregate amounts of resources or cash proposed in the draft budget for the government.'
The final budget cannot be amended.
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The final budget cannot be amended.
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