Transcript Slide 1

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Conference Welcome
Michael Burton
Chairperson
CIPFA Northern Ireland
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Key finance and
policy developments
Simon Hamilton MLA
Minister of Finance & Personnel
Northern Ireland Executive
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Economic overview
Tony Travers
Professor
London School of Economics
The wider context
• The UK suffered a deep recession, followed by
a return to relatively strong growth
• 2.4% in 2014 and 2.2% in 2015
• Global growth at 3.7% in 2014 and 3.9% in
2015, according to IMF
• US growing at 2.8% (2014) and 3.0% (2015)
• The Eurozone is showing slower growth,
coupled with continuing challenges to the
Euro: 1.0% (2014) and 1.4% (2015)
UK GDP, quarter on previous quarter
Source: BBC, ONS
Forecasts for 2014
Source: HM Treasury
Forecasts for 2015
Source: HM Treasury
How we got here….
• The post-1945 political and economic settlement
– Welfare State/nationalisation
– Development of powerful ‘social democratic’
expectations of consistent services throughout the
country
• Contemporary challenge is how to retain a State
of 42-42% of GDP while deficit reduction requires
100% of public expenditure to be financed from
current taxation
• Taxation = 38% of GDP
Taxation and public expenditure
as % of GDP
49
Forecast
47
Per cent of GDP
45
43
41
39
37
35
33
1978-79
1982-83
1986-87
1990-91
1994-95
Current receipts
1998-99
2002-03
2006-07
2010-11
2014-15
2018-19
Total managed expenditure
Source: O NS, O BR. Excludes Royal Mail and APF transfers.
Source: Office for Budget Responsibility, Economic and fiscal outlook Charts and Tables, March 2014, Chart 1.1
Local government’s position
• UK consists of four highly-centralised nations
– over 95% of all taxation set by Chancellor
• Gradual shift of powers, particularly within England, from local to
central control
• Northern Ireland has a local government system with relatively
modest powers compared to the rest of the UK
• Scotland and Wales have seen reduced local autonomy, but remain
slightly more autonomous than England or Northern Ireland
• Northern Ireland retains domestic rates, last revalued in 2005
• Local taxation has become problematic in Scotland, England and
Wales
– Only Wales has had a council tax revaluation, and then not since 2005
• But not capped or frozen
– Scotland’s council tax frozen since 2007
– England: capping and freezing
Local domestic tax vs tax receipts, UK
Council tax/Domestic rates
Total UK tax
2009-10
25.0
513.3
2010-11
25.7
550.8
2011-12
26.0
572.6
2012-13
26.3
593.3
2013-14
27.1
618.8
8.4%
20.6%
Increase:
2009-10 to 2013-14
Local government and other services
• The UK government has prioritised
International Development, welfare, NHS and
schools
• Similar pattern within devolved governments for health
and education
• Local government, inevitably, has faced a
greater spending squeeze so as to protect
other programmes
• ‘Austerity’ slightly less for NI local government, but not
by much
Current spending, by service group
All GB property taxes require reform
• Council tax
• Revaluation, at the very least
• Needs to accommodate the increase in very high value homes
– Northern Ireland ‘£400,000 capped value’ and England Band H create a
‘flat’ rate for very high value homes
• Non-domestic rates
• Revaluations due in NI (2015) and E, W & S (2017)
• Stamp Duty land tax
• Significantly increased tax rates to capture part of capital gain on
property
• Capital gains tax on property
• Used in addition to SDLT
And now….Mansion Tax
• The Liberal Democrats and Labour now favour
a ‘mansion tax’ as an add on to council tax for
homes worth (at today’s prices) over £2m
• Such a tax would have to be grafted onto domestic
rates/council tax
– Decision required as to whether it would operate in Northern
Ireland, Wales, Scotland
• Yield to be used to fund national government services
– NHS (Labour conference)
• No fiscal gain to councils
Other possible revenue sources
• Levies on development
– ‘Article 40’ Agreements (Northern Ireland)/‘Section 106’ (E&W)/‘Section 75’ (Scotland)
– Community Infrastructure Levy (E&W only)
• Road charges
– Congestion Charge (London)
– Workplace parking levy (Nottingham)
• Business Rate Supplement
– London (Crossrail)
• Tax Increment Finance, eg
– Edinburgh: Waterfront
– London: Northern Line extension to Battersea
• Fees and charges
• Business Improvement Districts
– Not part of local government, but may provide services; uses NDR base
Possible reforms
• London Finance Commission proposals
• Devolve all property taxation to local government
– Council tax, NDR, Stamp Duty, CGT and others
• CIPFA/LGA commission on local government
funding: UK-wide
• Government and Opposition have discussed the
possibility of giving greater freedom to city
regions
• ‘City Deals’ in a number of cities in England plus Glasgow
allow some financial freedoms
• Belfast and Cardiff to join Core Cities?
After Scotland’s referendum
• Commitment to further devolution to Edinburgh
• Tax-raising powers, borrowing, welfare (part)
• Wales
• Similar tax proposals to Scotland already in place
• Northern Ireland
• Will the government request parity with Scotland and/or
Wales?
• England
• Barnett Formula concerns; English Parliament?; Regions?
City regions?
The future
• UK economy now growing, though some uncertainty
remains
• Northern Ireland, England, Wales, Scotland all operate
relatively centralised systems of local government
• Domestic rates/council tax = 5% of all UK taxation
• Additional devolutionary tax-raising powers for Scotland
and Wales do not affect this within-nation centralisation
• Need for a wider acceptance that the UK is out of line by
international standards
• Has the UK simply become so fiscally centralised that some
form of tax decentralisation is inevitable?
• Debate about Scotland, Wales will affect Northern Ireland
and England
Economic Overview – international,
national and local issues
Tony Travers
London School of Economics
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Refreshments
11.00 to 11.30
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The politics of change
Quintin Oliver
Joseph Rowantree Foundation
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Tracks
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Managing demand
Ben Lucas
Director
2020 Public Services Trust
Building future public services – the role of
demand management
Presentation to CIPFA NI Conference,
Belfast, 25 September 2014
By Ben Lucas – Chair of Public Services at the
RSA
Two possible futures…
Retrenchment and
residualisation
Redefining relationships
& citizen engagement
New Times
What do we mean by demand
management?
Use new technology
• New channels of
‘conversation’ with
citizens
• Potential of analytics,
data integration &
connected services
• Managing demand
through better service
design
Understand how to work with the grain
#1 RSA finding: “we
don’t know!”
#2 “social support &
community is not
always what we think
it is…”
#3: “everything is
linked…”
Get beyond the services
• What makes a meaningful
difference to peoples
lives?
• How can local authorities
use their socio-economic
clout?
• Not just about behaviour
change, but building
capacity and supporting
citizens
Public Services and Growth: two sides of the
same coin
• Growth and demand
management as
interdependent
• City growth and fiscal
rebalancing deals – Devo
Met
• Developing the ‘social’ role
of business & the growth
potential of public services
Local leadership – the politics
• Community
leadership as a driver
of demand
management
• Co-operative
Innovation
• Creating a ‘shallow
end’ and a sense of
togetherness
Whole place system change
Reactive/Proactive Split 2011/12 in Greater Manchester
GM Revenue budget 2011/12
Reactive spend by agency (£m)
GM Revenue budget 2011/12
Reactive spend by category (£m)
R Visio
http://www.oldham.gov.uk/letstalkbudget
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Overcoming conflict
to improve public
services
Rena Shepherd
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Refreshments
15.15 to 15.30
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Mike Stevenson - Managing Director
[email protected]
Follow us on Twitter @thinktastic
www.thinktastic.co.uk
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Close and Reception