SPEECH FOR RYDE PUBLIC MEETING 22 OCT 2003
PAUL BIRCH
Unaccustomed as I am to public speaking … Oh, sorry, wrong speech! …
Way back when I first came to the Island, to work as a systems engineer at Plessey Radar, in the years of the dragon lady when Maggie Thatcher was in power, Council spending across the country amounted to only 4 or 5% of national product. On the Island it was even less. That spending was funded almost entirely by local rates — domestic and business — with only a modicum of government grants. Yet we had schools and hospitals, and roads without too many potholes. There were enough doctors and dentists to go round and the rubbish was collected every week. We exercised our traditional right to grumble, and didn't realise just how well off we were.
But while Maggie was reining in the excesses of central government spending, she took her eyes off the local ball. Every year, rain or shine, the rates went up by around three times the rate of inflation. To some extent this was masked by the introduction of the community charge, which changed the way local revenue was collected and made direct comparison difficult; then by the large hike in grants through which the government tried to buy off poll tax opposition; finally by the replacement of the community charge with the present system of council taxes.
By the time an ungrateful Conservative party had stabbed Mrs Thatcher in the back, letting us in for a decade of weak Tory leaders and New Labour cronyism, real expenditure by local government had more than doubled. Soon it reached 10% of national product. And still it rose. Whichever party strutted upon the parliamentary stage or camped in County Hall, the inexorable and wasteful rise continued — each as liberal with our money and as undemocratic with our liberties as the next. Come the millennium, and local government, greedier than ever, is knocking on the threshold of 15%. One day in every seven we work to satisfy their unsatisfiable demands.
Now, in itself perhaps it doesn't much matter what proportion of total government spending is handled by local government, or what proportion of local government spending is funded by central government grants. Whatever the technical arrangements, it's the taxpayers who ultimately foot the bill. But we have to ask: what are we getting for our money? Is the Council providing three times the services it used to? Or are we paying three times as much for the same less-than-adequate provision? To me, it feels like the latter. If that. Sometimes we seem to be getting less and less, even as taxes go up and up.
All too often, the money seems to be spent on things that didn't need doing at all. Like the new sea wall along to Gurnard. It was fine as it was. Sure, the road occasionally flooded — it still does — but it didn't really threaten any properties. There used to be a pleasant walk along the front; now, with an outer pavement that slopes steeply up to a quite unnecessary balustrade, the pleasure, like the once-open view, is gone. No doubt you can all think of many similar examples.
I suppose one might be forgiven for imagining that with ever-rising taxes and government grants the Council has so much cash sloshing around that it can't avoid frittering some of it away on superfluous projects — since we could hardly expect it to give us our own money back, could we now? But no. Despite a huge income, it has even huger debts. In the year to April 2003 there was £12.5 million of new borrowing (that's £250 for every Band D household on the Island), bringing the total amount owed to £109,533,655 (or £2000 per household), up 12.8% on the previous year. If council tax were increased by another 25% it would still take around 16 years to pay off the debt; we'd need half of that increase just to prevent the debt from escalating further. And this is without including unfunded liabilities, such as the obligation to look after the elderly as the weight of new legislation forces more and more residential and nursing homes to close; nor does it include the pensions black hole.
In April 2002 the net pension liability of the IOW Council Pension Fund amounted to £19,537,000 — that's nineteen and a half million pounds. For April 2003, just a year later, the Council's not-yet-audited accounts reveal a net pension liability that has more than quadrupled to £82,100,000 (that's over eighty-two million pounds, equivalent to £1,650 for every Band D household on the Island). The explanatory text calmly notes that "If the net pension liability position reported above persists, this will in due course raise the long-term cost of pensions".
Will this liability persist? Most of the increase is admittedly due to the recent collapse of the stock market, which has already staged a modest recovery. However, the pension liabilities themselves have increased by some £28,621,000 over the year, due to rising salary rates, an ageing work force, and increased numbers of council employees. This does not bode well for the future.
Furthermore, when we compare investment income with annual payouts, which is arguably the best way of judging the solvency of a final-salary pension scheme, we find a worrying shortfall. Ideally investment income should at least cover payouts, in the average year, for a fully funded scheme. Instead we find that this income, which despite stock market volatility remained fairly constant at just over £5 million (or, after expenses, just under £5 million) — this income is only half that necessary to meet the £9.5 million payouts (up 12% from £8.5 million the previous year). This means that pensions have had to be met out of current contributions, which ought to have been invested to build up the fund for the current contributors and future pensioners.
All the evidence suggests that the problem is only going to get worse. I calculate that to make up the shortfall, Band D council tax payers would need to contribute something like an extra £100 every year from now on. If the runaway is not tackled soon this could rise to £200 a year or even more.
On a smaller scale and a lighter note, members' allowances have risen by 8.2% over the year, well above the rise in wages, to £416,808 — over £8 per household and nearly £8,700 per county councillor. Those of us who freely donate our time and energy to the town and parish councils, without any form of remuneration, can only gasp in admiration at our more influential counterparts' capacity for lining their own pockets — without even having to turn up to council meetings! Yet one such councillor complained that he couldn't afford to attend Cowes Town Council meetings, and report on what he had been doing for his Cowes constituency, on account of the £8 or so it would cost him to get there from Ventnor. What on earth are we paying them for?
So, what can we say? Is it true, as the councillors and bureaucrats of the Isle of Wight Council would contend, that it's all the fault of central government for messing around with their grants? No. I yield to no one in my contempt for the present government, but there's more than enough blame to go round. Most of the additional burdens placed upon local authorities by central government come with their own hypothecated funding, and although direct government grants fell by some £3,935,765 in the year to April 2003, the £3,754,400 increase in business rates more or less made up for it. Over the years, the scale of government grants has in real terms increased substantially; what may be a halfway valid excuse for part of the rise in council tax in one particular year does not exonerate the local authority from blame for the decades' long exponential growth in its spending, debts, liabilities and taxes.
Let it be admitted that the Council faces some difficult problems. Yet do we see any attempt to get to grips with them? Precious little. Recently, in Cowes Town Council, we voted down a grant of £500 for a yachties' knees-up. Not a lot, you might say, but think about it. Similar measures by the IOW Council, in proportion to the respective budgets, could have saved some £1,500,000. Not to be sneezed at. It could go further. In that meeting of Cowes Town Council, I proposed — and it was agreed — that grant applicants should have to show us their accounts first; in future wealthy clubs should find it that much harder to con us into squandering the public's hard-earned money. With far more at stake, the IOW Council should be a thousand times keener on crushing waste and profligacy. I wonder if they are.
This, then, is where we stand today. We have already been told that the massive tax rises will continue. This year, they say we'll be let off lightly, with "only" a single-figure increase. What's the betting that single figure will be 9%? It will almost certainly be at least three times the rate of inflation. And the year after that? And the year after that? When will it end? Never, if the growth of borrowing, spiralling costs and burgeoning pension liabilities are anything to go by. There's a nettle to be grasped and the Council won't grasp it. Can we force them to grasp it? Or grasp it ourselves?
Soon CTAG will be marching through Newport to deliver a petition signed by many thousands of Isle of Wight council tax payers, demanding action. Will that be enough? I doubt it. Can't you just hear the flood of weasel words, ducking responsibility? What next? Let's throw the scallywags out! That's your job — the public's duty. So stand up and be counted at the next council elections; vote for UKIP candidates and true independents. But here on the Island those elections are almost two years away, and council tax payers are angrier than ever before. More and more are threatening not to pay. Will we see a taxpayers' revolt? Who knows? Who knows what it will take finally to rid us of the Old Man of the Sea at County Hall?
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