Transcript SR13 implications for Essex: A SOLACE Business Partner

SR13: Implications for Essex
A SOLACE Business Partner Briefing
Robert Overall
Deputy Chief Executive
Essex County Council
Today’s briefing
• The big picture - and the challenges
• Implications for the Essex economy and
Essex businesses
• How we’re coping by transforming ourselves
• The future is partnership
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The big picture (and the bad news)
• Poorer than expected economic performance has affected the
government’s receipts; the desire to contain borrowing has led to
further reductions in public spending for 2015-16 and beyond.
• SR 13 set plans for one year only (2015-16) with the promise of
a further spending round after the next General Election
• Spending reductions shaped by “protected” areas: schools, the
NHS and Overseas Aid
• Local authority funding from central government has been
reduced by 10 per cent in real terms, compared with an average
of 2.7 per cent for other departments, and 1 per cent for annually
managed expenditure (which includes debt interest and welfare
expenditure).
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Challenges within that
• The funding gap is not mitigated by some of the
“better news”:
 £3.8bn pooled funding between NHS and social care to
support integration of which £1bn is on a payment by results
model
 Troubled families: additional £200m 2015/16
 £100m collaboration & efficiency fund
 £335m support for reforms to social care funding
 £150m for health research infrastructure
 Real terms protection of schools budget
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The Projected Gap to 2016/17 (takes account of
SR13)
£1100m
Increased Demand +
inflation £34m
Increased Demand +
inflation £122m
Reduced Income - £81m
Reduced Income - £93m
£886m
Projected Funding
£874m
Projected Funding
£215m
Budget
Reduced Income - £59m
Increased Demand +
inflation £73m
£967m
Projected Funding
£908m
Projected Funding
£0m
2013/14
£967m Draft Budget
Budget Gap:
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£0m
2014/15
£1001m Draft Budget
-£93m
2015/16
2016/17
£1040m Draft Budget
£1089m Draft Budget
-£154m
-£215m
Funding gap drivers (post SR13)
300
250
215.9
200
Other pressures
savings & efficiencies
153.6
150
£m
Demographic increases
Inflation
100
Funding reduction
92.8
cumulative gap
50
0
£m
£m
£m
£m
2014/15
2015/16
2016/17
Cumulative total
-50
• Savings & efficiencies are those plans already committed in MTRS flowing through into future years
• Other pressures include Council Tax arrangements & new pressures from Chancellor’s budget and SR13
• Inflation is primarily contract related
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But there is some good news for Essex;
infrastructure improvements
•
Crossrail 2 – £2m to support a funding and financing study. The
potential to extend Crossrail 2, or rather the doubling of the current
tracking from two to four, to Stansted is an important part of the potential
role of Stansted in future aviation capacity.
•
Government committed to fund A14 improvements (£1.5bn) between
Huntingdon and Cambridge, starting in 2016.
•
M25 J30 referenced in main paper as starting in 2014/15 (already
announced in the last spending review), with no completion date.
•
The electrification of the Barking to Gospel Oak rail line, an important
rail freight access route to the London Gateway Port.
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Implications for Essex businesses
• There isn’t much money – you already know that!
• ECC has responded early: making savings of £365m between
2009-2012 with plans in place to save £215m over next 3 years.
• General impact is that local authorities and other public sector
organisations are going to be heavily prioritising their spend.
• Vitally, the public sector may well only provide smaller elements
of funding for future infrastructure projects - revenue pay back
mechanisms for projects will therefore be ever more important.
• So, we all need to be clearer about what we need, evidence why
its important and be clear on what will be delivered for money
invested.
• For economic growth, this will increasingly be focussed through
Local Enterprise Partnerships, who will gain control of elements
of local authority, central government and European spending.
• Requires a new way of working with the private sector where
economic development needs are jointly defined and jointly
delivered.
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Single Local Growth Fund for 2015/16:
Breakdown
AREA
TRANSPORT
FUNDING STREAMS
Local Authority Transport Majors
819
Local Sustainable Transport Fund
100
Integrated Transport Block
200
SUB-TOTAL
SKILLS
15/16
(£M)
1,119
Further Education capital
330
ESF skills match funding
170
SUB-TOTAL
500
New Homes Bonus
HOUSING
SUB-TOTAL
TOTAL
400
400
2,019
SLGF 2016/17 to 2020/21 – minimum of £2bn pa but includes £1bn pa
from Transport Majors (available for allocation)
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But it’s mostly not new money which may have
been earmarked already…….
• The pot is formed through contributions related to skills, transport
and housing. However, it consists mostly of money that is
already under LEP control and taken from local authority
budgets.
• For example, £819m Local Authority Majors is included but is
already under Local Transport Body control – and we now know
that LTB will retain 65% of its current funding with the rest having
to be bid for.
• Housing funding relates to £400m New Homes Bonus; money
already in the system.
• Skills funding consists of a “Further Education capital” pot of
£330m, and £170m ESF skills match funding.
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How can Essex get the best deal from the
Fund (not just for 2015-16)?
• Big emphasis on competitive bids and high hurdles to jump:
Evidence base
• Inspiring proposals for growth
• Proven track record of delivery
• Aligned local investment (local match)
• Clear decision making structures
• Counterweight to other proposals, e.g. Manchester
requires scale
• Strong steer towards:
• Pooled budgets (including with private sector)
• Partnership working (combined authorities and working
with business)
• Additional leverage (list own resources)
• Creativity, what else do we want (freedoms and
flexibilities)
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By demonstrating our appetite for growth:
potential strengths
• Best International Airport Facilities in the UK
• Best Port Complex in the UK
• Excellent Motorway Links to UK and European Markets
• Good Universities and Colleges
• A Potential Skilled Workforce Now Commuting to London
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And our ambition
• Published the Essex Economic Growth Strategy in September
2012.
• Statement of intent and ambition on what the Essex economy
could and should be, marshalling ECC resources to deliver.
• Supporting our 96% SMEs to exploit their ‘local specialisation of
global importance’ within the global economy (growth will not
come from a UK market focus alone).
• Building on our strengths
– Health and care economy, banking and finance, transport
and logistics, renewable energy and low carbon technologies,
advanced manufacturing and technology sectors.
• Recognising our weaknesses
– Skills shortages in high level technical skills and advanced IT,
language skills and literacy and numeracy (in young and
adults), improvements needed to the strategic road and
rail network, ageing population.
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And by demonstrating our ambition to
transform ourselves
• We will coordinate our activities around the outcomes we seek,
(as opposed to the services we deliver).
• Our Skills & Employability activities, Innovation & Enterprise
Services, Investment in Locations for Growth and Infrastructure
pipeline will be ruthlessly focused on delivering growth
outcomes.
• We will look at new forms of delivery (for example, using our own
procurement challenges as drivers for innovation in the local firm
base).
• We will adopt new frameworks for performance monitoring and
reporting (continually refining our activities along with those of
others).
• We will seek to align others to our ambition through strong and
effective partnership working: we cannot and do not want to do it
on our own. Welcome, private sector challenge/endorsement!
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We need to do it together
• Ambition for growth needs to be shared.
• Government want to see business at the forefront of driving
actions and decisions on resources to support growth.
• South East LEP is the focal point of that partnership at a regional
level, but we need to get better at local level.
• New model for how SELEP will operate gives us the opportunity
to work better together.
• Alongside business, we will revitalise the Greater Essex
Business Group to engage business in the debate on priorities
and actions required.
• Whole Essex Community Budget pilot has helped us link the
public sector together better. Our ambition is to link that better
with the private sector.
• In this way we can put a joint pitch to Government that is
‘investable’, i.e. Government can see growth outcomes it will
get from investment together with local leverage.
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To conclude
• We are all facing big budgetary challenges.
• ECC and other public sector partners are reacting – savings
found and efficiency programmes in place.
• We’re doing all we can to demonstrate our capacity to deliver –
evidenced through our Transformation journey and Whole Essex
Community Budget programme.
• In this light, partnership is the key – to deliver things together as
well as commissioning those who are best placed to deliver
across the public, third and private sectors.
• In support of economic growth, there will be some new money to
go for, especially after 2015-2016.
• The public sector relationship with the private sector is therefore
more important now than ever before.
• We want to work with and beside you to do the best we can
for your business and deliver our vision for the residents of
Essex.
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