Someone raised this point over on Oscars blog, I noticed.
Christmas lights are the responsibility of the Town Council, not the County Council (who are responsible for social services) and, so, it's not a case of spending on one rather than the other.
One other point worth mentioning is that a lot of jobs depend on making Llandudno an attractive place for people to visit and spend money. All the workers employed by businesses in the town use their wages to pay council tax and businesses pay business rates, all of which then are used to pay for things such as social services.