Thursday, 6 October 2011

Small sums, much fuss

Council and Government budgets are lengthy and complex, and I very much doubt whether more than a handful of those who vote on them can honestly say that they really know exactly what they’re voting for or against.  They have to pretend that they do, of course.  That’s politics.
There’s also a natural human tendency to concentrate on what we can easily grasp.  In one of my first meetings as a new councillor in 1979, I remember sitting in a council Personnel Committee and being stunned at how much debate there was about the expenditure of a few hundred pounds on a course here or there for a member of staff, whilst across the Council, expenditures of millions of pounds were nodded through with no scrutiny at all.
It doesn’t surprise me, therefore, that the political debate on the Assembly’s budget has concentrated on comparatively small sums rather than on the main thrust of the budget (a point which was also made on the Bevan Foundation blog today).
It’s partly down to the difficulty which most of us have with grasping a large and complex set of numbers; but it’s also partly about the difficulty of expressing complex alternatives to the public through the media.  Simple points hit home more readily than complicated debates.
One of the issues which has been thrown to the fore this year has been about the extent to which the Government is right to use its reserves to maintain expenditure.  (I’ll admit that I hadn’t understood until reading the Bevan Foundation article that the use of these reserves was a matter for the UK Treasury rather than the Welsh Government.  Update:  See comment from Peter Black below; this appears to be a misunderstanding by the author of the post at the Bevan Foundation.)
‘Reserves’ are always a thorny issue when budgets are discussed.  Typically, oppositions suggest that they should be used and ruling parties like to sit on them for a rainy day (or, more cynically, an election year).  There isn’t a ‘right’ amount to hold in reserve; whether using them is a ‘prudent way of trying to maintain services’ (or reduce precepts) in difficult times or a ‘raid on the piggy bank’ is a matter of opinion rather than fact.
What parties are trying to do in concentrating on the (comparatively) small, of course, is to use specific comprehensible examples to display their own values and approach.  I can’t help wondering, though, whether there isn’t a parallel with that Personnel Committee all those years ago.  Are the big sums really getting the scrutiny that they deserve?


Glyndo said...

It's all to do with Maths John, people aren't good at Maths.

Peter Black said...

The Bevan Foundation are confused on the reserves. They are confusing them with End Year Flexibility. An issue that has now been largely settled.

John Dixon said...


Thanks for the clarification; that makes much more sense to me. Shouldn't believe everything I read, obviously...

You mean there's more??? said...

Many years ago I worked for a council at a time of change. The civil servants did not offer up to the elected members the full range of options, rather they screened them. They chose a couple of options then, subtly, skewed the case so that one seemed sensible over all the others.

I dare say the councillors got stuck into the detail in that debate too whilst the bigger case slipped them by.

You have to look at Foucault about power and of course Gramsci

Peter Freeman said...

Shocked and stunned as I am by the fact that you have agreed with Peter Black, that doesn't alter the main thrust of your post, that smaller sums are the subject of intense debate while the larger items are nodded through.
There is a deeper problem here and it is one that any democracy must struggle with. Showing yourself to be a concerned politician and mindful of the public purse is a much easier task when you are debating minor issues. The opportunity of presenting yourself in a favorable light seems to diminish with the complexity of the issue. So how does the ambitious politician get re-elected? Only through arguing for easily identifiable issues and letting "Experts" tell him how to vote on the big ones.
It seems to be more about getting elected than about responsible book-keeping.
Incidentally I find myself agreeing with Peter Black more times than I disagree, it's just that the disagreements are on major issues and the agreements are on minor ones.
Kinda brings us back to the point of your post.

Anonymous said...

I'm always baffled by instances when local authorities have to dip into an amount set aside for 'reserves'. It's supposed to be there for events such as flooding, civil unrest, pandemics, schools being bombed while at war, terrorism, or environmental catastrophe. But all examples I find is due to an overspend in the IT department.

Boncath said...

Can any one tell me what the likely expenditure and income would be of a totally independent Wales.
I am sure the facts are out there but being clouded in a sea of political and other mists.

On the suject of small sums but gerating much angst

Business in Wales Oct/Nov 2011 Page 5 reveals the Counties of Wales with the highest domestic consumption in 2009
1st or is it worst. Ceredigion 5213 kw per annum
14 kw per day 443 kw per mth
This should tell us what the total electricity requirement is for domestic use in Wales and its cost impact on consumers

Peter Black said...

I have to say for the benefit of Peter Freeman that I only posted that clarification and did not comment on the post was because I too agreed with the thrust of this post.

I think the issue here is the complexity of the budget and the degree of consensus that exists in Welsh politics. It is not that the budget is difficult to understand, though greater transparency would help, but that the procedures make it almost impossible to move large scale amendments to it.

Where amendments are tabled (and only the Welsh Liberal Democrats in the last two years have tabled detailed proposals including saying how they will be paid for) parties tend to focus on key messages because it is easier to get them across to the public. Too many proposed changes and the message is lost.

That does not mean that detailed scrutiny does not go on. That tends to happen in Committee but even there time constraints reduce the effectiveness of that work.

John Dixon said...

Peter (B),

All this agreeing is not good for either of us!

"It is not that the budget is difficult to understand, though greater transparency would help, but that the procedures make it almost impossible to move large scale amendments to it."

Don't entirely concur with that though. Having sat through council meetings at budget time, the usual response of the ruling group to any proposal to 'save' some expenditure or other is 'tell us what we should cut instead'. It's a good question; but not that easy to answer. There's a huge amount of detail lying behind the summary which actually gets presented, and it's difficult for elected members - even the numerate ones, to take Glyndo's point on board - to have anything like the command of those numbers as the officers have. And the officers, of course, will back up the ruling parties' interpretation of the numbers (or more accurately, perhaps, it's the officers' numbers which the ruling party is presenting anyway).

For an opposition councillor, or group, to be able to debate at that level of detail against an administration which has an army of staff to advise it is no easy matter, and it's part of the reason for what is often ineffective opposition at council level. If you can't change the budget, any other changes are just fiddling at the fringes.

Now clearly I'm not as au fait as you with Assembly processes, but I doubt that it's very much different. AMs have the benefit of support staff, of course, in a way that councillors don't, but they're more likely to be employed looking for the political 'hits' in the budget than really combing through it.

John Dixon said...


"Can any one tell me what the likely expenditure and income would be of a totally independent Wales."

The question is a good one, but the answer is never going to be straightforward, because it depends on a whole set of assumptions. And the budget for a Labour-led indepeendent Wales would not be the same as the budget for a Tory-led Wales (if such a thing is imaginable); the policies of the independent government are as important in answering the question as the mere fact of independence itself. How much, for instance, would a Welsh Government decide to spend on 'defence'? Would it increase or reduce Corporation Tax? What would be its policy on borrowing to invest? None of these questions have 'right' answers; they simply have different answers depending on political philosophy.

What we can say is that, on the very best estimates available, public expenditure in Wales is currently higher than the taxation revenue raised in Wales, by a figure of probably somewhere between £5billion and £9billion. Opponents of independence get that far in their analysis and stop; but it is never that simple.

UK annual expenditure is currently somewhere around £180billion per annum above the amount of tax revenue collected. On a population basis, Wales' share of that would be around 5%, or £9billion. So if Wales is unviable, so is the UK, at a headline level.

Again, not that simple. The difference between income and expenditure is made up of a number of different elements; for simplicity, let's say that there is a 'cyclical' element - high payments on things like JSA at a time of recession coupled with lower receipts from income tax - and a 'structural' element - a long term underlying trend. I don't think that there's much argument that the 'structural' element of the Welsh deficit is higher than the corresponding element of the UK deficit, and in that sense, the opponents of independence have a point in drawing attention to it.

The question, though, is political, not economic. Is that deficit an obstacle to being independent, or is it a reason for taking more control ourselves? Is it more likely to be rectified by continued membership of the union, or by independence? Personally, I came to the conclusion a long time ago that a Welsh Government, focussed on the needs of Wales, is more likely to tackle that issue than a UK Government which is ultimately more concerned with the overall position of the whole than with the relative position of the parts.

It doesn't answer your question, but it does, I hope, explain why there is never going to be one, single answer. Independence would not need to the disaster predicted by some, but neither is it the magic wand which others seem to believe. And, actually, it's not an easy choice - learning to stand on our own feet would be a challenging process.

Glyndo said...

Boncath said...

Can any one tell me what the likely expenditure and income would be of a totally independent Wales.

John has given a comprensive answer to this, but ....

My view is that the people that discuss it always assume that come independence nothing will change, except for the fact that we have become independent. So, all arguments and calculations are based on current criteria.
This, to my mind, is obviously rubbish. An independent Wales, led by whichever Party, would have its own priorities. Hence the stupidity of the question "How many aircraft carriers?"

Boncath said...

Point me in the direction of the very best estimates that show Wales to have a higher spend than tax take
This is a real challenge

Yes things will be different in a independent Wales but think of all the fun in getting there and securing our future under our own control warts and all

Spirit of BME said...

Small sum and large sums, all was revealed years ago in Professor Parkinson`s book Parkinson`s Law and the case of the cycle shed approval and the multimillion pound expenditure. However, when politicians get involved the problems get more difficult and this was neatly summed up by the Luxembourg Prime Minister recently countering the charge that the EU leadership are lost on the current crisis, he stated “we know exactly what to do; what we have not figured out is how we get re-elect after we have done it”.

Glyndo said...

“we know exactly what to do; what we have not figured out is how we get re-elect after we have done it”.

Love it.

John Dixon said...


I blogged on a report from Oxford Economics about three years ago - the post is here, and it includes a link to the figures I was discussing. Bear in mind, though, as I pointed out at the time, these figures were never intended to answer the question about the viability of independence; they were produced for quite a different purpose. In that sense, the comment of Glyndo earlier in this thread ("the people that discuss it always assume that come independence nothing will change, except for the fact that we have become independent. So, all arguments and calculations are based on current criteria.") is very relevant.

It's the point that I've made whenever I've discussed the economics of independence - figures aren't absolute, they depend on the assumptions you make about a whole host of policy issues.

With all those caveats, the OE paper is a good attempt to estimate what is currently raised by taxes in Wales and how that is spent, even if it's now three years old.