1. The 2011-12 Budget Presentation to the JCC By Hon A. Craine MHK, Treasury Minister Date 16 th February 2011

2. Introduction Progress on Five year rebalancing plan. Impact of Increase in VAT to 20%. Local Economy update. Tax and National Insurance changes. International Issues.

3. Medium Term Strategy - Reminder  Rebalance budgets by 2014-15.  Use £114 million of Reserves, with a  £35m deficit in 2011-12.  But –  Rate of VAT has increased.  Savings have been greater than forecast. Last Year we said the plan was to -

4. Revised Medium Term Plan Medium Term Rebalancing £ million2010-112011-122012-132013-14 Capital transfers244439 Spending reductions26515457 Taxation/charges2021 Reserves/surplus-2 0-3 Total68114 Last year85142 Improvement1728

5. Customs and Excise Forecasts Customs and Excise - Changes in receipts £ million 2010/11 2011/122012/132013/14 2010 Budget338312340370 Rise in rate of VAT to 20%22830 Arrears/Other10200 2011 Budget350342370400 Change1230

6. Update on Local Economy  Growth of 4-5% in real terms this year.  Unemployment has fallen not risen as projected last year, 1.9%.  Inflation remains high on global pressures now (RPI) 5.5%.  Stable level of Banking Deposits (down 2% in year).  Strong growth in personal and Corporate Tax receipts for 2009-10, paid this year.

7. Current Year Forecasts 2010/11

8. Future Year Forecasts

9. Departmental Estimates (£m) DepartmentBudgetAdjusted Budget Increase/ Decrease % DCCL 17.417.7(0.5)(2.5) DED 15.015.2(0.2)(1.4) DEC 95.796.3(2.9) DEFA 15.3 (1.0)(6.3) DOH 121.4123.07.56.5 DHA 31.631.8(2.2)(6.6) DOI 34.735.4(2.2)(5.9) DSC 136.2 (0.5)(0.4) Treasury 19.016.5(1.2)(7.0) Other 46.945.61.53.3 Total 533.2 (1.8)(0.3)

10. Benefit increases  £10m budgeted spend on benefits  Retirement Pension 4.6%.  Income Support, Family Income Supplement and Job Seekers allowance 4.5%  Child benefit remains the same.

11. Capital Expenditure  83% delivery in current year (£80m).  £101m programme next year.  £9m for Natural Gas extension, £10m for Bemahague.  £67m of construction, including £32m on Housing including continued financing of Local Authority Programme.

12. Existing Reserves ReserveMarch Book Bal c/f 11/12 est Dec Market Value NI Fund £583m £2m £655m Reserve Fund £356m £0m £426m Public Sector Pensions £209m(£3m) £243m Notes Fund £32m - £32m Capital Fund £78m(£59m) Housing Reserve £ 13m (£9m) HEDF £ 44m (£2m) £48m Economic Development £12m £3m £12m Other Internal Funds £95m(£21m) Total £1,467m(£89m)

13. KSF Update  Current Position - £214m advanced in respect of Early payment schemes and Depositors Compensation Scheme  £163m repaid or held by DCS Manager. All claims now in and vast majority paid.  £51m current exposure. Future liquidation proceeds to reduce this to net £5m by 2017.  £5m written off against Reserve Fund as eventual cost, could be lower.

14. Taxation and Charges  10%/20% rates unchanged.  Personal Allowances unchanged.  Further limit on mortgage and loan interest relief to £7,500 per person per annum (equates to £150,000 of mortgage/loan per person).  Personal Allowance Credit up 8% (£50) to £700 per person, Qualifying limit up to £9,300.  Removal of tax relief on educational deeds of covenant and Class 4 National Insurance payments.

15. Summary  Have benefited from VAT rate rise to 20%, but  Have also brought spending down faster.  As a result we have a balanced budget.  Have protected spending in Health services, Social Security and Capital Programme.  Have avoided further tax rises (ie National Insurance).  Need to maintain confidence against future “shocks”.

16. International Issues  Zero ten applies equally to all companies, and is code compliant.  EU working group have considered ARI (Attribution regime) within personal tax, and have concluded that it does in conjunction with zero-ten give rise to harmful effects.  This could widen scope of code group, or create conflict with EU.  We are proposing abolition of ARI from April 2012.

17. Budget 2011-12  Any questions ?