Quarterly Economic to the Q4 2017 · Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17

Isle of Man

Quarterly Economic

Report to the

Council of Ministers

Q4 2017

Economic Affairs

Cabinet Office

March 2018

The oil price has continued to rise, touching $70 a barrel at time of writing. This coincides with an increase in CPI inflation on the Island to 4.1%. There is positive news regarding unemployment which continues to be low, with high numbers of job vacancies throughout the quarter.

The 2017 Earnings survey showed wage growth to be uneven. In some sectors salaries are rising at a significant rate, in others no increase at all. This rising pay inequality presents a challenge in the short term.

Employment growth has primarily been driven by falling unemployment and may slow without an increase in inward migration. Attracting skilled workers seems to remain the largest challenge to growing the economy.

International Commentators are predicting the UK is to grow more slowly than other areas as it works through the Brexit negotiations. The FTSE 100 and the £/USD exchange have however recovered after slight falls at the beginning of the quarter.

Growth Forecasts 2017

OECD EO Nov

-17

IEO Sep-

17

Movement

Global 3.6 3.5 0.1

US 2.2 2.1 0.1

EU 2.4 2.1 0.3

UK 1.5 1.6 -0.1

IMF WEO WEO Oct Movement

Global 3.7 3.6 0.1

US 2.3 2.2 0.1

EU 2.4 2.1 0.3

UK 1.7 1.7 0.0

Growth Forecasts 2018

OECD EO Nov

-17

IEO Sep-

17

Movement

Global 3.7 3.7 0.0

US 2.5 2.4 0.1

EU 2.1 1.9 0.2

UK 1.2 1.0 0.2

IMF WEO

Oct-17

WEO Jul

-17

Movement

Global 3.9 3.7 0.2

US 2.7 2.3 0.4

EU 2.2 1.9 0.3

UK 1.5 1.5 0.0

Source: IMF World Economic Outlook (WEO) and OECD (Interim) Economic Outlook

Oil Price - Brent Crude Oil Price ($ per barrel)

Source: https://www.investing.com/commodities/brent-oil-historical-data

Equities - FTSE 100

Source: https://uk.investing.com/indices/uk-100-historical-data

Global Trends

Growth

Oil Price

Equities

UK Interest

Rates

Pound

Executive Summary Growth unchanged.

Oil price rising bringing inflationary

pressures.

Pound stable against Euro,up against dollar.

Equities up by small percentage.

Interest rates predicted to rise

faster to 1% than previously forecast, but then slower increases therafter.

UK inflation still high CPI 3%.

$0

$10

$20

$30

$40

$50

$60

$70

$80

Jan-16

Feb-16

Mar-16

Apr-16

May-16

Jun-16

Jul-16

Aug-16

Sep-16

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-17

Oct-17

Nov-17

Dec-17

6,000

6,200

6,400

6,600

6,800

7,000

7,200

7,400

7,600

7,800

Jan-1

6

Feb-1

6

Mar-

16

Apr-

16

May-1

6

Jun-1

6

Jul-16

Aug-1

6

Sep-1

6

Oct-

16

Nov-1

6

Dec-

16

Jan-1

7

Feb-1

7

Mar-

17

Apr-

17

May-1

7

Jun-1

7

Jul-17

Aug-1

7

Sep-1

7

Oct-

17

Nov-1

7

Dec-

17

Interest Rate Projections

Source: Bank of England Yield Curves

Exchange Rates

Source: http://www.ukforex.co.uk/forex-tools/historical-rate-tools/historical-exchange-rates

Data correct as of 30 January 2018

1

1.05

1.1

1.15

1.2

1.25

1.3

1.35

1.4

1.45

1.5

Jan-1

6

Feb-1

6

Mar-

16

Apr-

16

May-1

6

Jun-1

6

Jul-16

Aug-1

6

Sep-1

6

Oct-

16

Nov-1

6

Dec-

16

Jan-1

7

Feb-1

7

Mar-

17

Apr-

17

May-1

7

Jun-1

7

Jul-17

Aug-1

7

Sep-1

7

Oct-

17

Nov-1

7

Dec-

17

£/Eur

£/USD

Employment Growth—Annual Increase in Employment Local Trends

Employment Estimate based on Income Tax records adjusted for ghosts.

Population Estimate

Estimated population movement based on the same quarter in the previous year.

Property Price Inflation

Employment

Population

Housing market

Inflation

Unemployment

Executive Summary Local employment remained up

600 on an annualised basis in Q3.

Q4 down 30 on seasonal

movement.

Population up 300 in 12 months, under 65 up 130 in 12 months.

House prices showing fall compared with the previous quarter

Inflation rose over the quarter to 4.1%

Unemployment down 244 year on

year.

Outlook Inflation around 4% while oil price

high.

Employment still strong but caused by reduced unemployment not immi-

gration.

Real terms fall in median earnings

-800

-600

-400

-200

0

200

400

600

800

Mar-

13

Jun-1

3

Sep-1

3

Dec-

13

Mar-

14

Jun-1

4

Sep-1

4

Dec-

14

Mar-

15

Jun-1

5

Sep-1

5

Dec-

15

Mar-

16

Jun-1

6

Sep-1

6

Dec-

16

Mar-

17

Jun-1

7

Sep-1

7

Dec-

17

-1,200

-1,000

-800

-600

-400

-200

-

200

400

600

Sep-1

2

Dec-1

2

Mar-

13

Jun-1

3

Sep-1

3

Dec-1

3

Mar-

14

Jun-1

4

Sep-1

4

Dec-1

4

Mar-

15

Jun-1

5

Sep-1

5

Dec-1

5

Mar-

16

Jun-1

6

Sep-1

6

Dec-1

6

Mar-

17

Jun-1

7

Sep-1

7

Dec-1

7

Total Population Growth Under 65 Population Growth

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

Dec-

11

Apr-

12

Aug-1

2

Dec-

12

Apr-

13

Aug-1

3

Dec-

13

Apr-

14

Aug-1

4

Dec-

14

Apr-

15

Aug-1

5

Dec-

15

Apr-

16

Aug-1

6

Dec-

16

Apr-

17

Aug-1

7

Dec-

17

THE MANUFACTURING ANDENGINEERING SECTOR

QUARTER 4 2017

OVERVIEW

OUTLOOK

• The Department For Enterprise Business Support Schemes along with one to one relocation supportand relationship management continue to attract and manage a high level of new inward investmentenquiries whilst remaining an important stimulus for continued investment by existing local business.

• Strix celebrated the production of its 2 billionth control. This impressive milestone coincided with thevisit of the BBC ‘One Show’ who filmed a profile of Dr John Taylor’s life at various sites around the Island.The feature will air in the New Year.

• The Isle of Man Aerospace Cluster has negotiated a corporate membership of the Institute ofEngineering and Technology (IET) to support engineering careers and professional development within theCluster but with the potential to cascade this further to all engineering disciplines on the Island in the future.The IET have committed to local resource to support the initiative at no cost to Government.

• The creation of the new ‘Business Agency’ is now underway which is being designed to provideincreased focus and support to export business whilst giving a more structured approach to helping the domestic economy sectors that it partners with.

• The next Isle of Man Aerospace Cluster Forum, in partnership with the North West AerospaceAlliance, will focus on ‘supply chains’ with guest speakers from the University of Central Lancashire Engineering Innovation Centre and presentation from two new inward investment companies attracted here to work as Cluster supply chain partners.

• Continue to support new banking applications as they progress and work with the industry tomonitor closely long term prospects.

• For Insurance, the aim is to progress a number of the recommendations within the strategicreview report.

• To finalise the business case for the insurance sector marketing strategy to ensure that the Islandis the Centre of Excellence for Life Assurance and Investments.

• the number of jobs grew slightly and there still remains significant demand for staff at four local banks with approximately 50 current vacancies and a further 50 required to replacement anticipated staff turnover

• One new designated financial service business license has been issued to a new significant assetfinance business and there are a number of credible licence applications continuing to progress.

• The Department for Enterprise is holding meetings with the Manx Insurance Association inconsideration of a major new marketing strategy for 2018 and has supported the industry in developing a long term strategic review.

THE FINANCIAL AND PROFESSIONALSERVICES SECTOR

QUARTER 4 2017

OVERVIEW

OUTLOOK

THE E-BUSINESS SECTORQUARTER 4

2017

• EIG Berlin was very successful and generated a high number of leads for the local e-Gaming sector.

• Isle of Man representation at Jobs fairs in Ireland and Lancaster to generate interest in job vacanciesin the Isle of Man and promote the career development opportunities here.

• The quarter saw another consecutive quarter of increased jobs and was the third highest increase inrecent years.

• The Department for Entreprise is working with a number of major companies in the media spacelooking to call the Isle of Man their home.

• Jobs growth expected to continue in next quarter and a major challenge for the sector remains onsecuring appropriate skills.

• New Asian sports book licence expected to go live in this quarter.

OVERVIEW

OUTLOOK

THE SHIPPING SECTOR QUARTER 4

2017

• The register finished strongly with just under 17m Gross Registered Tons at the end of 2017.

• Port State Control performance for 2017 looks good - with indications at the end of December that theIsle of Man will hold onto its United States Coast Guard ‘Qualship 21’ status and its position on the tow key port state control MOUS of Paris and Tokyo.

• Electronic transactions for seafarers documentation – there continues to be an excellent take up by theindustry, reducing paper usage, processing times and courier charges to clients.

• Digital transformation – the Ship Registry has advised the industry and IMO of its intention andcapability to issue electronic certificates to ships – the Isle of Man is one of the first flag states to adopt early digitisation.

OUTLOOK• Green shoots of recovery from depressed markets in many shipping sectors – with ship owners onceagain starting to contract new ships for construction. Indications of good levels of business through the Ship Registry in 2018.

• As digitisation becomes more prevalent in ship certification and seafarers documentation - we may seea reduction in numbers of employees in crew management organisations on the Island.

OVERVIEW

AIRCRAFT REGISTERQUARTER 4

2017

OUTLOOK• The tough trading conditions are likely to continue for the foreseeable future. However, there isincreasing evidence to suggest that Business Aviation traffic movements across Europe and beyond are starting to increase. This trend appears to be sustainable and so represents a positive indicator for the future.

OVERVIEW• The Aircraft Registry maintains its position as the sixth largest business jet register in the world and isstill registering aircraft at a healthy rate.

• The Aircraft Registry has received two awards at the start of 2018: Best Global Aviation Registry for thesecond year running and also a new award of Most Recommended Aviation Registry.

THE CONSTRUCTION INDUSTRYQUARTER 4

2017

• Sector remains a significant employer of labour – employs circa 3,500 individuals.

OVERVIEW

OUTLOOK

• Major development sites in Douglas: -

Finalisation of the contract for sale with the preferred developer for Lord Streetdevelopment site is nearing completion.

The planning application for the Douglas Promenade regeneration scheme will be submitted in early January with works scheduled to start in September 2018 after the Festival of Motorcycling, subject to the necessary approvals.

Work has commenced on the multi-million pound development of a Premier Inn hotel on Market Street in Douglas.•

•

THE UTILITIES AND TRANSPORTINDUSTRY

QUARTER 4 2017

OVERVIEW• The focus for economic growth in the energy sector is on the significant opportunities to developoffshore energy projects in the Isle of Man territorial seas for export to the UK.

• The Isle of Man 2nd hydrocarbon licensing round closed on 10th December 2017 for suitably qualifiedapplicants interested in potential hydrocarbon exploration in the Island’s waters. Submissions are currently being evaluated.

• The offshore wind farm developer, DONG Energy, continues to undertake survey work for a potentialoffshore wind farm development in the Isle of Man territorial seas.

• The first phase of an energy efficiency scheme has been launched which provides advice on reducingenergy consumption and bills.

OUTLOOK• Clarity is required from the UK Government regarding Contract for Difference (CfD) eligibility criteria forIsle of Man offshore renewable energy projects.

• Work continues on the installation of a network of new public Electric Vehicle charging points – therewill be 23 charging points operational by the end of 2018.

THE VISITOR ECONOMYQUARTER 4

2017

• Review of tourism legislation public consultation launched with a closing date 26th January 2018.

• Development of 3 new hotels coming to fruition – part of a larger pool of interest in hoteldevelopments.

OVERVIEW

OUTLOOK• How’s Business Survey analysis shows that 58% of businesses that took part have seen an increase inforward bookings for 2018 compared to the same time last year.

• Visit Isle of Man Agency formation is on track following two industry workshops.

• Taste IOM is celebrating its 10 year Anniversary with special events planned in conjunction with the2018 Year of our Island.

• New tourism creative being launched to support promotional activity up to the end of 2020. Springcampaign to launch; Destinations event, London, Feb 1st – 4th, Tourism Industry Day 22nd Feb.

THE AGRICULTURAL ANDFISHERIES SECTORS

QUARTER 4 2017

OVERVIEW

OUTLOOK

• The level of milk supplied to the Creamery up to year on year running 4.4% more than the sametime last year, this reflects the confidence which the stability of the milk price has given the industry.

• The combined effect of decreasing throughput and increasing export is that for the first time fordecades less cattle have gone through Isle of Man Meats than have been exported.

• Total Lamb throughput at Isle of Man Meats for the year was 24,834 this was significantly down onlast year’s figure of 33,029, (75%).

• The proportion of the lamb processed by Isle of Man Meats continued the downward trend ofrecent years, and is now just over 50% of the total output.

• Overall flour sales continue although new markets are picking up and new sales and customers continue albeit in small volumes.

• There continues to be a strong demand from consumers to understand the Provenance of the foodproducts they buy daily.

• The increase in the wholesale price for butter in the UK to a peak of £6,150/t in August 17 wasunsustainable with the high prices reducing demand. The current price is below £4,000 and is predicted to fall further.

• The trend in calf registrations has maintained its recent uplift and to the end of November was within2% of last year’s figures and 13% above those of 2013 which had seen the lowest calf births this millennium.

• There is optimism regarding the ability to increase a number of smaller volume customers and thepotential for at least one larger customer on-island in this financial year.

• There is a concern over potential price rises of food over the next 6 months, with raw material costsbeing passed onto the consumer.

• Businesses beginning to work together more collaboratively with regards to developing value addedproducts.

THE RETAIL SECTORQUARTER 4

2017

• Recently announced increase in freight charges has created significant concernsthroughout the sector.

• Population increase remains a priority.

The completion of the Strand Centre creating approximately 90 retailing jobs.

OVERVIEW

OUTLOOK

• Christmas trading: -

Strong trading, improved on 2016, particularly towards the latter part of December.

Earlier advertising and additional car parking along Douglas promenade greatly helped. Improvements in Christmas decorations in Douglas noted and welcomed, contributing to a good atmosphere.Whilst turnover has held up, margins continue to struggle as costs rise and internet competition continues to have an effect.

• Retail unit vacancy rates in Douglas’ main retail area remained low during the quarter.

• Douglas town centre footfall for December 2017 was at the same levels as during 2016.

• Work headed by the Cabinet Office is ongoing to review the role and functions of theregeneration committees. Population increase remains a priority.

•

a,

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a,

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a,

8

7

6

5,

4:

3

2

1 .

0

-2

Annual Rates of Manx Inflation December 2017 Manx Consumer Prices Index

4.1% December 2017 Manx Retail Prices Index

6.9%

Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17

300000

• • •

• • •

200000

.RPI .CPI

Average Property Prices 12 Month Rolling Average • • • • • • •

• • • • • • •

•

•

•

•

•

•

___ __. • .___--1 • .--- •• • • --------a.-�t--••�-----�•.----e.Average House Price £26°'98 •

100000 Average Flat Price £150,810

Average Property Price £241,906*

Note: The Average Property is a weighted average of both house and flat prices, weighted by the volume of transaction for each type of property.

0 -------- --------


1250

625

• House • Flat • Property Price

Volume of Property Transactions

December 2017

House transactions 990

Flat transactions 192


• House • Flat

The volume of transactions is calculated on the basis of a 12 month period to the end of a quarter. For example Dec-16 refers to all sales for the 12 months up to 31 December 2016. Prices and transactions are provisional for 12 months after the quarter ends, and are revised quarterly to reflect morecomplete data.

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500

400

300

200

100

0

•

Financial Services Act Licences

• • •

----.-.-�-·--��-t------��-��••-December 2017 ----------...-e•

Deposit Taking Licence Holders 16

Investment Business Licence Holders 46

Services to Collective Investment Scheme Licence Holders 48

Corporate Service Licence Holders 140

Trust Service Licence Holders 105

Management or Administration Service Licence Holders 9

Money Transmission Service Licence Holders 5


60

I

50: I

I

I

40:

• I

• • •

30:

.TOTAL

Deposit Base

----------- September 2017 Deposit Base Latest Figures

Sterling £20. 90 billion

• • • •

Non-Sterling £16.45 billion ...

204'

'Total £37.3

� billion

--��-.-.��•1t----.-e��•t-�-ee��...-.-----••�---;�� • •._____. . .__--•-

0 ------- --------Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17

• Sterling • Non Sterling Total

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New Company Formation 500

400

300

Quarter 4 2017

200

2006 Act New Companies 428

100 Conversions to 2006 Act 104

0 L ·---------


30000

• •

20000

10000

• 1931 Act • 2006 Act Conversions to 2006 Act

Total Registered Companies

• • • •

------. • •

Quarter 4 2017

1931 Act Registered Companies 17,090

2006 Act Registered Companies 9,570

Total Registered Companies 26,660

•

0 --------------- --------------

• •


• Total

1/j 0 0 0

FINANCIAL AND COMPANY

INDICATORS QUARTER 3 2017

Quarterly Change In Saving and Lending by Isle of Man Banks to Local Residents and Businesses

200000

100000

-100000

-200000

-300000

-400000

-500000

Quarter 3 2017

Isle of Man Household Lending £1,746m

Isle of Man Business Lending £539m

Isle of Man Household Deposits £3,599m

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17

• Household Lending • Household Savings • Non-Financial Business Lending

(Latest figures)

LABOUR MARKET INDICATORSQUARTER 4 2017

Unemployment

Job Vacancies

December 2017 Registered unemployed persons 335

Unemployment rate 0.8%

Quarter 4 2017

Full Time Job Vacancies Advertised 1,352 Part Time Job Vacancies Advertised 568


Movements Onto and Off Unemployment Register

Employment

Quarter 4 2017

Movements Off the Unemployment Register 373

Movements Onto the Unemployment Register 370

Net Change -3

December 2017

Persons Employed 35,082

Number of Jobs Undertaken 51,493

Self Employment 7,581

Note that the number of jobs is calculated based on Income Tax records. The number of persons employed has been adjusted toremove "ghosts" from the Income Tax system by using census data. The number of jobs may therefore not be directly comparable tothe number employed.

The Persons Employed figure and Self-Employment figure include a number of individuals who are both employed and self-employed.


Work Permits and NI Numbers to Foreign Nationals

Quarter 4 2017

New Permits 509Renewals 303

NI Numbers Issued to Foreign Nationals 95

Please note that the work permit figures are provisional The decrease in Mar 17 and increase in June 17 was due to technical issues around the processing of work permit renewals.


Unemployment by Sector .vs. Vacancies Left on Fileat the End of the Month

Sectors with Excess Demand for Workers

Sectors with Surplus of Workers

E-Gaming0 Unemployed Persons

38 Vacancies

Entertainment and Catering27 Unemployed Persons

35 Vacancies

Retail Distribution 19 Unemployed Persons

31 Vacancies

Medical and Health Services16 Unemployed Persons

29 Vacancies

Other Business Services 26 Unemployed Persons 4

Vacancies

Construction - Skilled 19 Unemployed Persons

12 Vacancies

Information and CommunicationTechnology

6 Unemployed Persons16 Vacancies

Education3 Unemployed Persons

35 Vacancies

Construction - Unskilled 22 Unemployed Persons

1 Vacancy

Miscellaneous Services 25 Unemployed Persons

4 Vacancies


Manufacturing,General

-1

Mining andQuarrying

-2Utilities

+2Transport and

Communications -10

Banking +5

Insurance+27

Other Finance andBusiness Services -

92

Information andCommunication

Technology +26

Legal andAccountancy

Services0

Corporate ServiceProviders

+29Education

+26

Medical and HealthServices

+22

Other professionalServices

+47E-Gaming

+34

MiscellaneousServices

+10

PublicAdministration

-79

Quarterly Net Change in Employment by Sector

Manufacturing,Engineering

+6

Annual Net Change in Employment by Sector for SeasonalSectors

Manufacturing,Food and Drink

-97Construction

+169WholesaleDistribution

-121

Retail Distribution+368

TouristAccommodation

-29

Catering andEntertainment

+21

Agriculture,Forestry

and Fishing +6

SUMMARY

ISLE OF MAN GOVERNMENT INCOME & EXPENDITURE - YEAR TO DEC-2017

THIS YEAR LAST YEAR

2017-18 2017-18 Variance to Budget 2016-17 Variance to Last

Year

£000 Actual Budget £000 % Actual £000 %

INCOME

Treasury Income:

Customs & Excise -284,702 -269,007 15,695 (6%) -246,520 38,182 (15%)

Income and Other Taxes -154,951 -143,359 11,592 (8%) -146,245 8,706 (6%)

National Insurance Income -144,204 -140,141 4,063 (3%) -167,520 -23,316 14%

Other Treasury Income -7,151 -6,269 882 (14%) -6,195 956 (15%)

Other Government Income -170,609 -167,177 3,432 (2%) -165,195 5,414 (3%)

Total Income -761,616 -725,953 35,664 (5%) -731,675 29,941 (4%)

EXPENDITURE

Treasury 218,416 219,380 964 0% 237,289 18,873 8%

Environment, Food & Agriculture 12,678 13,414 736 5% 13,011 333 3%

Education, Sports & Culture 68,284 71,194 2,909 4% 65,423 -2,861 (4%)

Home Affairs 23,218 22,720 -497 (2%) 22,975 -243 (1%)

Enterprise 23,420 23,503 83 0% 25,122 1,702 7%

Infrastructure 90,235 89,892 -343 (0%) 73,495 -16,740 (23%)

Health & Social Care 198,389 191,965 -6,424 (3%) 190,558 -7,831 (4%)

Cabinet Office 24,420 24,543 123 1% 26,414 1,994 8%

Statutory Boards 6,651 6,737 86 1% 6,283 -367 (6%)

Manx National Heritage 3,340 4,604 1,264 27% 3,316 -24 (1%)

Executive Government 84,352 84,653 301 0% 76,928 -7,424 (10%)

Clerk of Tynwald's Office 3,132 3,548 416 12% 3,037 -95 (3%)

Total Gross Expenditure 756,535 756,153 -382 (0%) 743,851 -12,684 (2%)

NET EXPENDITURE -5,081 30,200 35,281 117% 12,176 17,258 142%

Summary

After nine months, Government’s financial performance is significantly better than budget in terms of income,

whilst expenditure is broadly in line with the budget. Overall there is a net favourable variance to the budget of over £35 million, though more than half of this is due to timing issues.

Compared to last year, some of the variances seem large but again most of these are due to timing only and will normalise by year-end.

Income

1. Total income for the first nine months at almost £762 million is better than budget largely as a result ofCustoms and Income Tax Receipts. Customs Income seems high but the Shared Duties will be adjusted at year

end and are expected to be in line with the FERSA1 and therefore come in on budget. Compared to last year NIincome is down, partly due to timing of the UK agency settlement but also because last year included an

additional retrospective £10m receipt from the UK.

Expenditure

2. Treasury spend is slightly below budget due to benefits, mainly in retirement pension and job seekers/income

support. The large favourable to last year is due to the timing of the UK agency settlement which results in atransfer to the NI Account (and shows as negative expenditure, i.e. it nets with the large adverse variance

shown in NI income).

3. Compared to last year, spend in the Department of Education, Sports & Culture is adverse due to pay awards

and to the transfer of secondary school meals from Health & Social Care, although the latter has income tooffset much of the cost incurred.

4. The Department of Infrastructure is adverse by £16.7 million compared to the prior year due to the posting ofannual loan charges of £17m. In 2016-17 these were posted in the last month of the year.

5. Within the Department of Health & Social Care the adverse variance to budget is mainly within Noble’s. Agency

staff costs are £5.9 million adverse to budget reflecting ongoing difficulties in recruiting permanent staff.However, compared to last year, agency staff costs are £1.8 million lower, which may reflect a positive move

in the recruitment of permanent staff. The adverse variance of £7.8 million compared to last year includes pay,supplies and UK treatment costs, and reflects the additional £11 million investment in health services, as part

of the 2017/18 Budget. The 2017/18 budget figure here does not reflect the £9.5m Supplementary Voteapproved by Tynwald in January 2018.

6. Compared to last year, Executive Government is spending at a level that is £7.4 million higher. This relates to

Public Sector Pension payments, where any differential between income and expenditure will be reimbursedfrom the Pensions Reserve at year-end to net to nil.

1 Final Expenditure Revenue Sharing Agreement

CAPITAL REPORT TO COUNCIL OF MINISTERS for the nine months ending 31st December 2017

CAPITAL EXPENDITURE

1 April to 31 December Forecast for Year

Revised* Treasury Forecast

Forecast Forecast Actual YTD Actual 2017-18 Budget Under- as % of

2016-17 2017-18 YTD Budget 2017-18 2017-18 Spend Budget £'m £'m £’m £'m £'m £'m %

Departments 38.8 21.9 54.1 77.5 43.4 34.1 56%

MUA (CLF)

11.91

6.4 8.2 10.9 6.1 8.7 56%

Subtotal (CLF) 28.3 62.3 88.4 49.5 38.9 56%

Boards (non-CLF) 0.4 6.9 8.8 4.9 3.9 56%

Total 50.8 28.7 69.2 97.2 54.4 42.7 56%

* Revised Budget 2017-18 refers to original 2017-18 Budget plus any supplementary votes approved by

Tynwald of which there have been none in the year to date.

Government Departments’ capital spending, excluding borrowing authorities, for the first

nine months of the year to 31 December 2017, was £21.9m against a Year to Date (YTD)

Budget of £54.1m (41%). If the borrowing of the MUA is also included in these figures,

YTD expenditure increases to £28.3m against a YTD budget of £62.3m (45% of the YTD

Budget). This spending represents 45% of the original full year Budget (£88.4m). Spending

over the same period last year was £49m or 53% against the full year Budget of £92.6m.

Spending is therefore 8% lower than full year Budget than over the same period last year.

Combined construction and engineering related expenditure (including the Statutory

Boards) of £24.6m in the year to date is also lower compared to the prior year same period

by £35m. Actual YTD combined construction and engineering related expenditure is 36% of

the full year budgeted combined construction and engineering budget.

Column 3 financial motions made, and approved by Tynwald in the previous quarter of the

financial year, totalling £34m, were for Douglas Promenade, Accommodation for Day Care

Services (Eastcliffe) and Clagh Vane Phases 7 & 8. There were no additional Column 3

financial motions made in this third quarter.

1 2016-17 MUA (CLF) plus Boards (non CLF) Actual YTD combined.

NB: Q2 2016/17 includes the £8.1m approval for the purchase of Salisbury Street Care Home.

2. Capital Spending Summary first Nine Months Ended 31 December 2017

(includes Statutory Boards' spending, excludes Statutory Boards' borrowing)

Government DepartmentsFull Year Budget

(£)

Year To Date

Budget (£)Actual YTD (£)

% of Full

Year

Budget

% of YTD

Budget

DEC 4,636,000 1,102,000 1,137,591 24.54% 103.23%

CO 1,608,000 1,206,000 65,239 4.06% 5.41%

DED 850,000 442,500 66,040 7.77% 14.92%

DEFA 1,079,000 866,000 333,553 30.91% 38.52%

DHA 3,313,000 2,484,750 1,556,621 46.99% 62.65%

DHSC 8,787,000 6,590,250 3,073,688 34.98% 46.64%

DOI 41,214,000 30,910,500 13,184,085 31.99% 42.65%

MNH 610,000 450,445 196,127 32.15% 43.54%

TSY 6,705,000 3,965,000

DOI-HR 6,904,000 5,178,000 2,301,193 33.33% 44.44%

MANX RADIO 1,195,000 896,250 21,624 1.81% 2.41%

STAT-FSA 150,000 -

STAT-GSC 400,000 15,000

Sub Total 77,451,000 54,106,695 21,935,761 28.32% 40.54%

Government Funded Statutory Boards' Spending

MUA 10,911,000 8,183,250 6,384,506 58.51% 78.02%

Sub Total 10,911,000 8,183,250 6,384,506 58.51% 78.02%

Total Govt Funded 88,362,000 62,289,945 28,320,266 32.05% 45.47%

Self-Funded Statutory Boards' Spending

IOMPO 4,430,000 3,630,000 234,831 5.30% 6.47%

MUA-WA 4,363,000 3,272,250 186,286 4.27% 5.69%

Sub Total 8,793,000 6,902,250 421,117 4.79% 6.10%

Grand Total 97,155,000 69,192,195 28,741,384 29.58% 41.54%

Spending analysed by type of scheme for the first nine months ended 31 December 2017; compared to the same period last year, and to budget. This includes some expenditure by the MUA that is funded internally.

Loan Scheme includes HPAS (DOI) and Development of Industry (DED), Farming Improvement Scheme (DEFA)

Financial Governance Division Treasury 22 January 2017

Scheme Type Actual YTD (£) Prior YTD (£)

Actual YTD

as % of

Prior YTD

YTD Budget

(£)

Actual YTD

as % of

YTD

Budget

Full Year

Budget 2017-

18 (£)

Actual YTD

as % of

Original

Budget

2017-18

Construction-Govt 13,646,128 14,922,906 91.44% 26,512,695 51.47% 37,238,000 36.65%

Construction-Stat Board 38,822,134

Engineering 4,373,783 6,030,365 72.53% 11,383,250 38.42% 15,171,000 28.83%

Engineering-Stat Board 6,570,792 11,455,500 57.36% 15,274,000 43.02%

Land/Property Acquisition 13,338,440 148,500 198,000

Loan Scheme -318,641 -260,848 122.16% 6,679,000 -4.77% 9,082,000 -3.51%

Other-Government 177,135 73,568 240.78% 1,837,250 9.64% 4,428,000 4.00%

Other-Stat Board 159,090 2,250,000 3,000,000

Plant/Equip 4,057,356 4,717,703 86.00% 7,546,000 53.77% 11,334,000 35.80%

Plant/Equip-Stat Board 234,831 1,380,000 17.02% 1,430,000 16.42%

Total Govt and Statutory

Boards 28,741,384 77,803,358 36.94% 69,192,195 41.54% 97,155,000 29.58%

Scheme Type Actual YTD (£) Prior YTD (£)

Actual YTD

as % of

Prior YTD

YTD Budget

(£)

Actual YTD

as % of

YTD

Budget

Full Year

Budget 2017-

18 (£)

Actual YTD

as % of

Original

Budget

2017-18

Construction Breakdown

Construction-Govt 13,646,128 14,922,906 91.44% 26,512,695 51.47% 37,238,000 36.65%

Construction-Stat Board 38,822,134

Construction Total 13,646,128 53,745,040 25.39% 26,512,695 51.47% 37,238,000 36.65%

Engineering Breakdown

Engineering 4,373,783 6,030,365 72.53% 11,383,250 38.42% 15,171,000 28.83%

Engineering-Stat Board 6,570,792 - 11,455,500 57.36% 15,274,000 43.02%

Engineering Total 10,944,575 6,030,365 181.49% 22,838,750 47.92% 30,445,000 35.95%

Construction and Engineering

Total 24,590,703 59,775,405 41.14% 49,351,445 49.83% 67,683,000 36.33%

Extracted from above: showing subtotals for Construction, and Engineering scheme types only:

VALUE OF EXTERNALLY MANAGED INVESTMENTS

Schedule showing the value of the externally managed investments held in the following

funds:

Book cost Market value

£ millions £ millions

770.8 872.1323.9 366.438.5 39.434.0 34.4

167.1 183.4

As at 30th December 2017

National Insurance Investment Account

Reserve Fund

Hospital Estates Development Fund

Manx Currency Account

Public Service Employees Pension Reserve

Manx Utilities Bond Repayment Fund 53.8 60.5

1,388.0 1,556.2

Each of the funds has its own investment strategy according to its investment needs.

Treasury's investment strategy for those reserve funds which have a significant exposure to

equities is to maximise the total return on the funds over the long term. The short term

fluctuations of market values are therefore considered of less importance than the long term

return on investments held.

BANK DEPOSITS AND CALL ACCOUNTS HELD AT LOCAL BANKS BY TREASURY

Fixed term deposits and call accounts directly held by Treasury as at 30th September 2017 totalled:

Cash at Bank 30-Dec-17

Sterling £234.0m

Isle of Man Government

Government Office

Bucks Road, Douglas

Isle of Man, IM1 3PN

Email: [email protected]

www.gov.im/

Documents

Quarterly Economic to the Q4 2017 · Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17