Inflation-Busting Allotment Rent Increase, Town Council propose increase of twice the rate of inflation. Options

[Simon Kirby]

The Town Council have probably now set the allotment rent increase for this coming year, but this is what they were proposing last week:

Allotment Charges - Officers recommend an increase from 30p per sq metre to 31p per sq metre (3.3%) in line with current annual inflation indices.

As with everything town-council, you can't take anything on trust, so I wanted to see whether their facts and figures here were right.

The Council claim that upping the rent from 30p to 31p is a 3.3% increase. This is false.

Actually last year's rent was set at £7.50 per pole (minute #50, Community Services Committee 10 December 2012), and that's 29.65p/m². So the proposed rate of 31p/m² is actually a 4.55% increase.

The Council claim that inflation is currently 3.3%. This is false.

The Office of National Statistics' headline figure Consumer Price Index (CPI) for November was announced today to be a four-year low of 2.1%. At the time of the proposal the October rate was 2.2%.

So in actual fact setting a rate of 31p/m² represents a 4.55% increase on last year, and that was more than twice the current inflation rate. The October Retail Price Index (RPIJ) was even lower at 1.9%, making the proposed change around two and a half times the rate of inflation. I just find this kind of casual dishonesty so typical of Newbury Town Council.

But I also despair at their attitude: The town council is not a commercial business, it is a public service authority. If they are to set a fair rent then the question they should be asking is how the affordability of their service has changed.

The Consumer Price Index measures the rate of price inflation, but the latest figures for the Index of Labour Costs per Hour (ILCH) tell a different story with annual wage growth just 0.3%. From a public service authority this should be the steady-state increase in their service charge because it reflects the ability of the service users to afford the service. They should have been proposing a revised rate of 29.74p/m².

If the Council agreed that they would increase rents at the rate of ILCH they could have avoided the awful mess they got themselves into with an unenforceable rent revision clause in their tenancy agreement and the subsequent embarrassment of Trading Standards obliging them to amend the agreement on threat of civil enforcement action. As it is the Council now have a clause that obliges them to give 13 months notice of any increase, although that appears to be more due to imprecise drafting than anything else as they insist they only need to give one month under the agreement.

More troubling is that, despite their grudging compliance with Trading Standards, they insist that the consumer protection legislation doesn't actually apply to them relying on a spurious construction of the allotments legislation, claiming that the clause of the 1950 act that says "Land let by a council ... shall be let at such rent as a tenant may reasonably be expected to pay ..." gives them the statutory right to increase the rent of a plot they have already let whereas it is simply amending the rationale for deciding the rent at which to let plots, because the 1922 and 1908 acts both set different formula - but once the plot is let it doesn't create a free-standing right to increase that rent, and that's why tenancy agreements have to have a rent review clause, just as the town council's agreement does.

The legislation seeks to impose a minimum level of fairness in contracts with consumers, and it is really grubby that the council should want to avoid that minimum standard as I would really expect a decent local council to be embracing standards rather then weaselling out of them.

[Andy Capp]

My first question would be, is the town council using methods to set rates consistant with most, or even many counicls? Also, is it not standard practrice to round pennies up?

[motormad]

To me when it comes to money the percentages should be correct even if the calculations are rounded up.

I am not impressed with this to be honest.

[Simon Kirby]

My first question would be, is the town council using methods to set rates consistant with most, or even many counicls?

Very difficult to know. Self-managed sites will typically set a rent that allows them to run the site with a bit in hand for capital investment, but that generally results in a perfectly affordable.

From various surveys of council allotment rents what becomes apparent is that there is no consistent method of setting rent. Some councils set virtually a peppercorn rent, and some set an unaffordably high rent, and the rent typcially is no indication of the quality of the allotment service of the council's costs in providing it, it's really rather arbitrary.

The allotments act is relatively prescriptive about how a council should arrive at its allotment rent, but it still leaves considerable latitude for a council to decide "what an tenant might reasonably be expected to pay", and I suspect in very many cases councils don't make any effort to answer that question.

Some councils have clearly been upping rents considerably in the last couple of years, this last year most noticeably, and that is rather obviously a reaction to the economic squeeze. They aren't actually supposed to do this but it is an expensive business challenging a council through the courts so mostly they go unchallenged.

Also, is it not standard practrice to round pennies up?

One issue is that last year's rate wasn't set per m², it was set per pole, so it's not right to round the conversion. The Council is at liberty to set the new rate in whole pennies, but it can't mislead about the actual increase.

[Simon Kirby]

To me when it comes to money the percentages should be correct even if the calculations are rounded up.

I am not impressed with this to be honest.

That's my feeling.

If I was a councillor making a decision and I was told on the night the proposed increased was "in line with inflation" then I'd likely go with that on the basis of what I was told. If I went home and checked the Consumer Price Index and the actual rate that was set last year and found that the increase I'd just voted for was more than double the rate of inflation I would be pretty cross and feel seriously mislead.

[On the edge]

Have we any allotmenteers up for a little fun.

Given his great interest in the law, NTC's CEO must respect precedent. So, the allotmenteers should accept the latest increase, but delay payment. When the final demand is made, send a note saying that their domestic budget does not enable them to pay, so in accordance with the precedent set when the Christmas Fair operator was let off a far greater sum of rent for Council owned land. The allotmenteers can also claim they are using their allotment 'for the good of the Town' as the District strongly encourages green initiatives.

Seriously, he'd have some trouble turning such requests down.

It would help, of course, if we had some Councillors with the guts and leadership ability to help here; rather than just following the party line.

[dannyboy]

I'm guessing that the talks with NTC about getting the allotment back have come to nothing.

Still, maybe if NTC took a leaf out of Wilts' book they'd be able to show a healthy profit on the allotments.

Keep up the good work.

[Andy Capp]

The Council claim that inflation is currently 3.3%. This is false.

The Office of National Statistics' headline figure Consumer Price Index (CPI) for November was announced today to be a four-year low of 2.1%. At the time of the proposal the October rate was 2.2%.

That's naughty if CPI is the correct measure as CPI has not been 3% or higher for over a year; however, if it is RPI, then it has been over 3% until very recently.

http://www.bbc.co.uk/news/10612209

Simon, would you confirm which index they are ment to use?

[Strafin]

Maybe Ruwan can comment on this? He is always keen to engage on this forum.

[Simon Kirby]

That's naughty if CPI is the correct measure as CPI has not been 3% or higher for over a year; however, if it is RPI, then it has been over 3% until very recently.

http://www.bbc.co.uk/news/10612209

Simon, would you confirm which index they are ment to use?

They don't say which index they're using, they just refer to the increase being "in line with current annual inflation indices".

CPI is most meaningful because of the basket of goods it measures and it is the Office for National Statistics (ONS) headline rate for consumer price inflation. The old RPI is deprecated and is not a National Statistic. Its replacement is the RPIJ.

The indices current at the time of the meeting were the October figures (November's came out today)

CPI for October was 2.2%
RPIJ for October was 1.9%

There is also a National Statistic called the CPIH which includes housing costs, though that's not a particularly comparable basket.

CPIH for October was 2.0%

[Andy Capp]

So either way, it looks as though the council have tabled an untruth? By the way, what does "in line with current annual inflation indices" mean, that cant be right because those indices have different figures. Do they know what they are doing?

Our council don't look very good at this sort of thing if they can't be trusted to get simple maths right, can they?

[dannyboy]

2012 rate = £0.2965 / m², or in other words £0.30. The rate has gone by a penny to £0.31 .Probably as a penny is a rational amount to increase a rent by rather than a fraction of a penny. Who knows.

Expressed as a % is just over 3.3%. Whilst not exactly the same as the current UK rate of inflation, it is in line with it -ie is it is pretty close to the current Uk rate of inflation.

[Andy Capp]

2012 rate = £0.2965 / m², or in other words £0.30. The rate has gone by a penny to £0.31 .Probably as a penny is a rational amount to increase a rent by rather than a fraction of a penny. Who knows.

It would have been sensible to have expressed it as a pole, like last year; presumably they were eager to express a smaller unit to make it look more palitable.

Expressed as a % is just over 3.3%. Whilst not exactly the same as the current UK rate of inflation, it is in line with it -ie is it is pretty close to the current Uk rate of inflation.

3.3 is not inline with 2.6.

[Simon Kirby]

2012 rate = £0.2965 / m², or in other words £0.30. The rate has gone by a penny to £0.31 .Probably as a penny is a rational amount to increase a rent by rather than a fraction of a penny. Who knows.

Expressed as a % is just over 3.3%. Whilst not exactly the same as the current UK rate of inflation, it is in line with it -ie is it is pretty close to the current Uk rate of inflation.

Your arithmetic is wrong.
2012/13 rate = £0.2965 / m². Proposed 2013/14 rate = £0.3100 / m²

The percentage increase is (0.3100 - 0.2965) / 0.2965 = 4.55% That's double the rate of inflation using any combination of the National Statistics of CPI, RPIJ, or even CPIH.

[Andy Capp]

You're arithmetic is wrong. 2012/13 rate = £0.2965 / m². Proposed 2013/14 rate = £0.3100 / m²

The percentage increase is (0.3100 - 0.2965) / 0.2965 = 4.55% That's double the rate of inflation using any combination of the National Statistics of CPI, RPIJ, or even PIH.

Simon, are all the data you have posted fact, including the statements? I can see the only out the council have on this is if the compiler was using RPI for August (or maybe September) when drafting the text.

Bye-the-way, I understrand that the rate hasn't been disclosed yet, so do we know that the increase has gone through? The rate increase was a proposal.

[dannyboy]

You're arithmetic is wrong.
2012/13 rate = £0.2965 / m². Proposed 2013/14 rate = £0.3100 / m²

The percentage increase is (0.3100 - 0.2965) / 0.2965 = 4.55% That's double the rate of inflation using any combination of the National Statistics of CPI, RPIJ, or even CPIH.

if you want to be anal and split pennies down to 1/100ths you would be correct.

however, probably for the sake of practicality, 0.2965 has been rounded up to 0.3.

the increase is a penny.

it really is that simple.

[dannyboy]

It would have been sensible to have expressed it as a pole, like last year; presumably they were eager to express a smaller unit to make it look more palitable.


3.3 is not inline with 2.6.

is there a definition of 'in line' or is it one of those terms which mean nothing?

It would have been simpler for the council not to have proffered any explanation.

They should have remembered that 99.9% of the alomment holders don't care & that there are those that have nothing better to do than picking apart any council missive for the studiest of alleged inacuracies.

[Simon Kirby]

if you want to be anal and split pennies down to 1/100ths you would be correct.

however, probably for the sake of practicality, 0.2965 has been rounded up to 0.3.

the increase is a penny.

it really is that simple.

Thanks for the gratuitous insult, but I can see what they've done. They've incorporated a rounding error and their result is simply wrong.

Last year's rate was set at £7.50/pole, and that's 29.65p/m². This year they proposed a rate of 31p/m², and that's a 4.55% increase on last year's rate. There's no trickery involved here, it's simple maths.

4.55% is not "in line" with current inflation of around 2.0%, it's actually double the rate of inflation (by any reasonable measure), and that's a significant misrepresentation.

[Andy Capp]

if you want to be anal and split pennies down to 1/100ths you would be correct.

however, probably for the sake of practicality, 0.2965 has been rounded up to 0.3.

the increase is a penny.

it really is that simple.

So how much per pole is the increase? At 31p/m²

[Simon Kirby]

So how much per pole is the increase? At 31p/m²

£7.84/pole.