John Shimmin MHKCrypto Valley Summit – September 18th 2014

1

“Economic growth is essential to sustain employment opportunities and living standards”.

Allan Bell MHK, Chief Minister

It is the first of our priorities, in order to generate the revenue needed to support the others.

2014 – the Isle of Man Government’s three key priorities:

Summary of financials 2014/15

Estimated IOM Government income

£532.6 million

Estimated IOM Government expenditure

£543 million

Transfer from reserves

£11 million

Where the money comes from

VAT£234.35M

Spirits, Beer & Wine£19.8M

Other Income£50K

Resident Income Tax

£176M

Tobacco, etc.£17.4M

Hydrocarbons & Oil£31.5M

Other Income Tax£25M

Where the money goes

Other£63.4M

Treasury£106M

Economic Development

£5.5MEducation and

Children£90.2M

Environment , Food &

Agriculture£13.5M

Health & Social Care

£184.4M

Home Affairs£28.4M

Infrastructure£47.1M

How the money is spent

Government spends nearly £11,000 per person per year

Examples of what Government spends its money on for every man, woman

and child in the Isle of Man:

• £3,226 on benefits including State Pension, Income Support and Child Benefit

• £2,120 per head on health services including £266 each on free/subsidised

prescriptions and £168 on treating IOM patients in the UK

• £1,072 on education, including £141 on University Fees

• £740 on former Government employees’ pensions of which £179 comes from current

employee contributions

• £609 on social care: £232 on children’s services; £377 on adult services

• £348 on police, fire and prison services and other parts of DHA

• £181 on supporting agriculture, fisheries and forestry and Wildlife Park

• £106 on public transport and heritage railways

• £66 on waste management

• £45 on sports and arts

• £21 on entertainment

Economic Growth (GDP) 1992/93 – 2013/14

1992

/93

1993

/94

1994

/95

1995

/96

1996

/97

1997

/98

1998

/99

1999

/00

2000

/01

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06

2006

/07

2007

/08

2008

/09

2009

/10

2010

/11

2011

/12*

2012

/13*

2013

/14*

-10

-5

0

5

10

15

EU 15IOM

%

* 2011/12 to 2013/14 figures are estimated for the IOM and EU 15

Isle of man – Economic success story

Background -The Isle of Man economy

• Track record of over 30 years continuous economic growth

• No national debt – Government budgets for surplus and invests its reserves

• Low unemployment – but attracting a growing international workforce

• Growth outlook = 3%-4%

• 19 Economic sectors including Financial Services, Aerospace, e-Business/e-Gaming, Ship/Yacht management, Import/Export, Clean Tech

However we can’t afford to be complacent…..

Vision2020 – a strategy for economic success

• Compared to global trends our economy has done remarkably well

• 30 years’ unbroken growth• Rated 8th by the World Bank (in 2012)*

• We have proven our ability to anticipate change and pursue new opportunities

• Economy 2014 (from a major 2004 public/private sector review)

• Today we are more diversified, in sectors and markets

• Where next?

• Vision2020 develops ideas and plans to be the catalyst for our long term future prosperity

* National income per person

Vision2020 – the research “We wanted to build public and private sector insight

into the economic future for the Isle of Man...”John Shimmin MHK, Minister,

Department of Economic Development

• The aim was to generate as much input and insight from as wide a business audience as possible:

• 225 questionnaires completed • Desk research and analysis undertaken • Sector forecasting with industry bodies • Further wide policy change consultation

across Government • Workshops with over 80 industry leading

participants

Vision2020 – executive summaryThe Isle of Man’s growth prospects are good:

• Growth

• Business confidence is strong in wealth-creating sectors• Market opportunities exist across many sectors• Jobs, turnover and profitability are forecast to grow• But there are better and worse case scenarios• Good prospects in additional emerging sectors

• Government

• Ever deeper public/private sector cooperation needed• Government has a vital role in creating the right, supportive,

environment• Aligned departments, effectiveness, efficiency• Growth will deliver £50m to Government income (equivalent to 10p rise in top rate income tax)• Maintains low taxes while also maintaining public services

• Jobs• Growth in the number, range and quality of jobs• Addressing the challenges of an ageing population

Vision2020 – the economic mix

Although our key sectors will remain so, we will experience a continued change

Vision2020 – how our workforce will need to adapt

CURRENT

FUTURE

Vision2020 – how our workforce will need to adapt

As the Isle of Man economy moves up the value chain, our workforce will need to be:

• More skilled• More specialised • Better paid

Vision2020 – how the island will look

• An international business centre of excellence - we must be able to compete with the best in our chosen sectors

• A transparent international business partner to be proud of- countries, companies and individuals guard their brands

• An incubator for innovation- speed has value and so we can use our small size to good effect

• A skilled technology centre - technology and particularly ICT ability will be critical

• Secure and safe - committed, free and democratic society for both individuals and businesses

• Quality of life- to allow individuals to reach their full potential.

CLIENTS FIRST

Financial services will

remain our

number one economic

sector in a safe,

transparent and reputable

centre

Vision2020 comprises the following strategies (1):

TECH ISLE

Rapidly expand our

e-business capabilities

and reputation worldwide

MANUFACTURING

CENTRE OF

EXCELLENCE

Provide the skills,

infrastructure and costs

needed to support this

growing hi-tech sector

OFFSHORE

ENERGY HUB

Maximise the potential

benefits from

offshore wind, tidal, gas and

other energy sources in our

waters

DESTINATION ISLAND

Made much more attractive

for the visitors, residents

and investors who

represent our target

audience.

DISTINCTIVE LOCAL

FOOD AND DRINK

Support flourishing

businesses to reliably supply

locally produced staple and

artisanal

products, profitably

exporting and

contributing to a local food

culture

ISLE OF ENTERPRISE

An attractive business

climate for entrepreneurs to

invest, work and create jobs

INTERNATIONAL

PARTNER

Deepen international

political, regulatory and

business links with key

target countries

Vision2020 comprises the following strategies (2):

Vision2020 – Financial Services Clients FirstProtecting and enhancing our biggest economic sector

• Volatility

• Continued uncertainty to 2020• Desire for manufacturing led recovery, but global

pressure to replenish fiscal reserves limiting lending• Reduction of traditional offshore market• Need for international security and professional

services will remain strong

• Customers

• Confidence and expectations are changed forever• Additional regimes to protect the vulnerable will

constrain the wealthy with sophisticated needs

• Opportunities

• Evolve to meet tomorrow’s needs• Customer focused outcomes• Loss of confidence is also an opportunity for us to

provide a safe, transparent, secure and reputable haven for wealth - and clients themselves

• Offering the Freedom to Flourish• Build on our existing reputation

Vision2020 – Tech IsleCapitalising on our number one source of growth

• A leading centre for innovative SMEs to relocate and grow

• Excellent infrastructure (telecoms, electricity and data hosting)• Supportive financial and professional services• Tax advantages

• Opportunities

• Businesses employing 10-50 staff• Broad related ICT skills• Skilled, flexible professionals• Starting small, growing fast• Niche businesses providing online services

• Adapting to the future

• Education and training• Increased online Government transactions• Citizens and business• Data use will grow by a factor of 100• A leading European data hub• A third self-healing ring - better bandwidth and prices• E-gaming will continue to be catalyst

Vision2020 – Manufacturing centre of excellenceHigh-tech is high priority in the 2020 world

• Clusters

• Following the aerospace model:

• Shared knowledge• Shared resource• Shared synergy

• Diversity

• Bespoke bathrooms/kitchens• Thermostatic kettle controls• Super-luxury - watch making• Diving equipment• Body composition monitors

• Adapting to the future

• Education and training• Centre of Excellence• Capital investment• Flexible financial partnerships with Government• Competitive infrastructure costs• Tactical inward investment• Develop technology parks

} Higher value

Vision2020 – Offshore energy hubHarnessing the future waves of power

• The natural advantage we have:

• Wind• Tidal• Near shore wave energy• Shallow water depth• Central location in Irish Sea• Cost effective• Renewables• Hydrocarbon energy sources• IoM owns the seabed up to 12 miles offshore• A valuable development asset

• Opportunities

• A viable hub for offshore energy• Diverse job opportunities• Synergies with existing Isle of Man sectors

Vision2020 – Destination IsleAttracting the people who matter

• The lifestyle advantage

• Using the Island’s natural beauty to attract:

• Visitors• Residents• Entrepreneurs• High net worth individuals

• Opportunities

• Our lifestyle advantages, unique culture and heritage are an essential pillar of the proposition

• Unrivaled reputation for outdoor adventure, heritage and culture

• Year round programme of events, headlined by the world renowned TT races

• Quality is key with service delivery and offerings in:• Retail• Hospitality• Leisure services• Transport links

Vision2020 – Distinctive local food and drinkAdding value to the Island’s produce

• The potential for success

• Celebrated local food culture valued by residents, visitors, retailers and the hospitality sector

• Private and public sector partnerships will be essential• Collaborative approach between producers needed; to

• Capitalise on scale • Enjoy export opportunities• Ensure reliable supply chains

• Paths to growth

• Evidence based exploitation• Opportunities and trends• Move away from commodity based products• Focus on quality/less-price sensitive products• Well-trained, informed industry• Careful management of countryside

Vision2020 – Enterprise IslandProviding the platform for success

• Location, location, location

• The environment itself is then our competitive advantage• Ensuring the Isle of Man is the entrepreneurs’ location of

choice• Government is at the heart of creating the optimum

environment:• Radical education shift to ICT capability• Business incubator facilities will be needed to realise ideas• Incentives and financial support to fuel start-ups and

growth• Speed of primary legislation will allow opportunities to be

capitalised on

Working together to deliver Vision2020

• A Government with:

• The right scope and structure• A business-friendly culture

•Priorities for Government include:

• A long-term tax strategy • Education/skills development • Partnership working• Entrepreneurship• Marketing and business development• Communication• Customer focussed approach• Infrastructure development• Vision • Integrated public/private action plans to achieve those

targets • Clear governance to ensure appropriate coordination and

political oversight of both policy and delivery

Thank you