SR13: Implications for Essex A SOLACE Business Partner Briefing

1. SR13: Implications for EssexA SOLACE Business Partner Briefing Robert Overall Deputy Chief Executive Essex County Council

2. 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

3. 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).

4. 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

5. The Projected Gap to 2016/17 (takes account of SR13) £1100m Increased Demand + inflation £73m Increased Demand + inflation £122m Increased Demand + inflation £34m £215m £967m Projected Funding Reduced Income - £59m Reduced Income - £81m Reduced Income - £93m £908m Projected Funding £886m Projected Funding £874m Projected Funding Budget £0m 2013/14 2014/15 2015/16 2016/17 £967m Draft Budget £1001m Draft Budget £1040m Draft Budget £1089m Draft Budget Budget Gap: £0m -£93m -£154m -£215m 5

6. Funding gap drivers (post SR13) • 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

7. But there is some good news for Essex; infrastructure improvements • Crossrail2 – £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.

8. 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.

9. Single Local Growth Fund for 2015/16: Breakdown SLGF 2016/17 to 2020/21 – minimum of £2bn pa but includes £1bn pa from Transport Majors (available for allocation) 9

10. 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 controland 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.

11. 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)

12. 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

13. 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.

14. 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!

15. 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.

16. 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.