Transcript View - Suffolk County Council

Chancellors Autumn Statement –
23 November 2016
Scrutiny Committee
30th November 2016
Geoff Dobson
Director of Resource Management
Autumn Statement key points
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In future budgets will be delivered in the Autumn starting in 2017 and the OBR
will produce a Spring forecast (starting in 2018) which the government will
respond to in terms of economic and fiscal challenges.
The government does not expect to balance the budget by 2020. Over the last
6 years the deficit has been cut by almost two thirds from its 2009-10 post-war
peak of 10.1% of GDP to 4.0% last year.
The Charter for Budget Responsibility has been updated and is based on three
targets.
– To get the budget in surplus in the next parliament, and borrowing down to
2% of GDP by the end of this parliament.
– To get public sector net debt as a share of GDP falling by the end of this
parliament.
– To keep welfare spending below a limit (set by the government)
Economy
• Growth is forecast to be 2.1% this year (up from 2% before
referendum) and 1.4% in 2017 (down from 2.2%).
• Lower investment and weaker demand, caused by greater uncertainty
and higher inflation.
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
Real Gross Domestic Product (GDP)
Summer
Autumn
March
Autumn
Budget
Statement
Budget Statement
2015
2015
2016
2016
2.5%
2.5%
2.0%
2.1%
2.4%
2.4%
2.2%
1.4%
2.4%
2.4%
2.1%
1.7%
2.1%
2.4%
2.3%
2.1%
2.1%
2.4%
2.3%
2.1%
N/A
N/A
N/A
2.0%
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Inflation
• Inflation (measured by CPI, consumer price index) has been falling
since its peak of 5.2% in September 2011.
• Inflation has been rising in recent months, in part, due to higher fuel
costs coupled with the depreciation of the pound against the dollar.
Year
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
CPI Inflation
March
Autumn
Budget Statement
2016
2016
0.0%
0.0%
0.7%
0.7%
1.6%
2.3%
2.0%
2.5%
2.1%
2.1%
2.0%
2.0%
• The weaker exchange rate has a
material effect on the OBR’s forecast
for consumer prices which is
expected to put an upward pressure
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on inflation, coupled with higher fuel

prices.
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Announcements
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New National Productivity Investment Fund commits £23bn of funding
between 2017-18 and 2020-21 targeted at housing, transport, digital
communications (5G and fibre) and research & development.
2017-18
2018-19
2019-20
2020-21
2021-22
285
635
665
380
*
1,120
1,125
880
340
*
60
300
945
1,425
*
Roads and Local Transport
365
500
430
650
*
Next Generation Vehicles
75
100
110
115
*
Digital Railways Enhancements
30
55
165
285
*
Cambridge – Oxford Corridor
5
135
0
0
*
25
150
275
290
*
425
820
1,500
2,000
*
Housing
Accelerated Construction
Affordable Housing
Housing Infrastructure Fund
Transport
Digital Communications
Fibre and 5-G Investment
Research & Development
R&D Funding
* Allocations to be made in due course, when departmental budgets have been set.
Announcements cont…
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Corporation tax will be reduced to 17% by 2020.
From April 2017 employers and employees who use benefits in kind
schemes will pay the same tax as everyone else, to promote fairness and
broaden the tax base. But there will be exceptions, including for childcare
and cycling.
National Living Wage to rise to £7.50 from April next year (£7.20 April
2016) for the over 25 year olds. Government’s target is £9 by 2020.
Flood defence and resilience – £170m investment in flood defence and
resilience measures.
A new penalty for people who use a tax avoidance scheme. All these tax
avoidance measures will save £2bn over the forecast period.
Announcements cont…
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Personal allowance - will rise to £11,500 in April. Government is still committed to
taking the allowance up to £12,500 by the end of this parliament. And the 40p
threshold will rise to £50,000 over the same period.
Broadband - A pledge of more than £1bn for broadband and 5G.
The government will also offer business rates relief on new fibre infrastructure from
April 2017 for 5 years.
Rural rate relief will be increased to 100%, giving businesses in rural areas a boost,
worth up to £2,900 per year.
Grammar schools capital – £50m of new capital funding to support the expansion of
existing grammar schools in each year from 2017-18.
Mayoral Combined Authorities will have the power to borrow for their new functions,
subject to agreeing a cap with HM Treasury. The government will consult on lending
local authorities up to £1bn at a new local infrastructure rate to support projects that
offer high value for money.
As announced at Budget 2016, from April 2018, termination payments over £30,000
that are subject to Income Tax will also be subject to employer NI.
Suffolk
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Funding for the feasibility study of the Suffolk Energy Gateway new road
improvements (£1m)
Local Enterprise Partnerships – Allocation for the East of England £151m
Infrastructure project lending - The government will consult on lending local
authorities up to £1bn at a new local infrastructure rate of gilts + 60 basis points
for three years to support infrastructure projects that are high value for money.
Rural rate relief will be increase to 100%, giving businesses in rural areas a
boost, worth up to £2,900 per year. The impact on rates in the county will be
considered with rates retention from 2020.
Increase in the National Living Wage will impact mainly on the ACS budget
and the care sector.
Pothole funding £1.7m in 2017-18 (£1.4m in 2016-17)
Any Questions