The first of this year’s quarterly Lloyds TSB Business Breakfasts met with significant success last week as a record number of delegates joined Treasury Minister, the Hon. Eddie Teare MHK, to discuss the finer points of the 2013 Budget Report.
Close to 100 key representatives of Lloyds TSB, Government figures and local business leaders gathered together at The Claremont’s Sanderson Suite to enjoy an opening presentation by Minister Teare followed by an open-forum question and answer session which tackled issues as diverse as corporate taxation, the public sector deficit, scope of Government and potential threats to the Island’s significant insurance sector.
Head of Corporate Banking for Lloyds TSB, Mr Trevor Kirk, opened the morning’s proceedings with a welcome address which outlined his support of Government’s plans for the next few years. Having expressed his thanks to the Minister for his attendance, Mr Kirk first expressed his approval of Government’s plans to introduce an additional tax upon larger retailers before emphasising the need to consider the Island’s relatively small population when facing issues such as subsidisation and privatisation. A brief allusion to the Island’s international relations followed after which Mr Kirk remarked that the answer to sustaining the Island’s economic stability lies in maintaining both internal and external confidence whilst identifying deficiencies in spending, enhancing the Island’s profile overseas, and aiding the growth and traction of new businesses locally. Mr Kirk also welcomed confirmation that the Island is well on track in terms of timing the transitional periods surrounding international information sharing agreements such as FATCA and the UK equivalent, after which he introduced the morning’s presentation as consisting of an update on public finances, progress on Government’s rebalancing plan, an overview of tax and NI, and a summary of impacts upon services.
Minister Teare took over with allusion to overall development within the Island’s economy over the current year, noting in particular a 3% rate of growth in real terms as well as ongoing stability in banking deposits and the rate of inflation, at 2.5%. He continued with reference to domestic employment figures, which are currently at a record level of 48,000 persons (up 1,000 in the past two years), before emphasising a significant increase in the number of self employed persons over the past 2 years, at an additional 300 individuals. Similarly, a 35% increase in VAT registrations signifies a marked increase in economic activity, a figure which is particularly pertinent given the Department of Economic Development’s recent emphasis upon economic diversification over recent years.
Minister Teare then went on to provide a brief outline of Government’s medium-term strategy, which includes measures to rebalance budgets by 2015/16 and use £ 89 million of reserves (previous estimate £92 million), before providing delegates with a detailed insight into past and present measures to cut staffing numbers from just over 8,000 persons in 2010 to fewer than 7,400 persons by 2016. Despite decreasing staff numbers, Mr Teare demonstrated that Government cuts have been achieved largely without impacting unemployment levels or domestic growth, noting that the Island maintains a relatively healthy unemployment rate at 2.6% in comparison to Jersey (3.3%), the UK (4.7%) and the Republic of Ireland (8.9%).
This year’s Budget was also the first in which Government has presented a three, rather than one, year strategy, enabling Minister Teare to provide an insight into the future year forecasts up to 2015-16. Domestic income was expected to increase from approximately £517million in 2013/14, to £537milion in 2014/15, and to £560million in 2015/16; while expenditure rates are expected to remain at £548million in 2013/14, and £548million in 2014/15, and to a balanced £560million in 2015/16.
An overview of departmental spending and capital expenditure followed coupled with a reiteration on behalf of Minister Teare that taxation and NI frameworks remain largely unchanged. The issue of FATCA, or the US’s Foreign Account Tax Compliance Act, was an item of particular interest and Minister Teare confirmed to the floor that negotiations with the US are progressing well and that an agreement is expected to be signed soon. Similarly, a package of measures has now been agreed which includes an Isle of Man disclosure facility with the UK, which is akin to the UK’s Lichtenstein Facility and which extends the Island’s double taxation agreement to include the automatic exchange of taxation information.
Moving towards a conclusion, Minister Teare referred the floor to a series what he termed potential ‘clouds on the horizon’. The rebuilding of capital transfers and the removal of current reliance upon internal funds featured heavily while continued uncertainty in the global economy was described as being irrevocably linked to the Island’s future growth, post 2015/16. Overall, the outlook for the Island remains relatively positive, significantly so given a context of ongoing economic uncertainty, and Minister Teare congratulated the floor and Lloyds TSB for reflecting the solidarity of the Island’s business community in meeting the challenges faced thus far.
A short word from Mr Kirk closed the morning proceedings, during which Mr Kirk thanked the Minister and attendees and confirmed Lloyds TSB’s commitment to continuing to help with the Isle of Man’s growth story. “The message I would really like you all to go home with today”, he continued, “is that not only will we remain very attentive from a personal and corporate service perspective but we have also experienced the same tribulations as many here today. But not only are we seeing significantly improved figures for lending, we are also seeing improvements in personal savings and stability. We have always been a community bank and very much understand our role in helping economic growth throughout the UK and British Isles and in repairing of the situation in which we all find ourselves. Thank you.”
Category: Editor's Choice