Bread (or council income has not kept up with inflation)

Part of my role is to support the County Council’s Business Planning process and I’ve used this graph a couple of times recently to explain the impact of just one of the pressures on the County Council’s budget; inflation.

The concept is straight forward. We look at how much per head the County Council received fifteen years ago compared to today and then take an everyday item (bread) to show how inflation has eaten away at the value of that income.

how much per head the County Council received fifteen years ago compared to today and then take an everyday item (bread) to show how inflation has eaten away at the value of that income

In 2001/02 the County received approximately £400 per head of total population from Council Tax, Business Rates and Revenue Support Grant (money received from central government).   Fast forward to 2013/14 and even with the economic slowdown and a rapidly rising population the figure per head has increased to nearly £600 per head.

The bad news is however is that the increase in income had fallen significantly behind inflation which has more than eaten away at its value.  Using Bread to illustrate this, an ‘average loaf’[1] cost 51pence at the turn of the century (the year 2000) compared to around £1.30 today.  Meaning in 2000 the County (if it wished) could have purchased over 750 loaves per person whilst today, although it has more money, it can only afford 460 loaves.

Unfortunately inflation isn’t the only pressure on the County Council’s budget.  This graph from the current Business Plan shows that inflation made up only 33% of the annual savings requirement of £35million. We also need to take into account the additional pressure created by increased demand created by demographic changes such as the aging population as well as funding capital projects to support economic growth.

County council savings requirement

In practice this means that the organisation is faced with really difficult decisions about which services to reduce in order to balance the budget.  Rather than fewer loaves of bread…decision makers have to confront the prospect of significant innovation/change in order to save money as well as cuts to much valued local services.

Michael Soper

Cambridgeshire Research Group Cambridgeshire Research Group logo

 

[1] I’m indebted to the Office for National Statistics which tracks such things