Fife Partnership Board
24 March 2009
Agenda Item 06
RESPONDING TO THE ECONOMIC RECESSION:
A FIFE ACTION PLAN
1.1 This paper sets out local actions being undertaken and proposed to
respond to the economic recession and seeks input from the Fife
Partnership for a coordinated Partnership response.
1.2 Section 2 reviews the background to the economic difficulties and section
3 looks at the problems already being encountered in Fife.
1.3 Section 4 proposes a series of actions and section 5 makes
2.1 The UK has now suffered two consecutive quarterly reductions in GDP,
the commonly held definition of recession. This is part of a worldwide
downturn in economic activity, which has gathered pace in the latter part
of 2008 and early 2009.
2.2 The causes of the recession are varied and complex. However, the key
factors appear to be:
2.2.1 A global imbalance between developed and emerging economies,
in which savings from the latter financed budget deficits in the
former and led to over valuation of assets and securities in key
markets – particularly housing in the USA and other countries
including the UK.
2.2.2. The ‘credit crunch’ – a severe shortage of money or credit which is
affecting banks, businesses and families as a result of problems in
the sub-prime mortgage market in the USA, reducing confidence
and trust within the banking sector leading to restricted lending and
availability of credit.
2.2.3 Rising oil prices and commodity/food prices – which kept inflation
and its projections above the Bank of England target rate resulting
in minimal slacking of monetary policy until late 2007 and much
more rapid cuts in the Bank of England lending rate over the last
2.3 The results have been felt outside of the financial markets with falling
house prices, rising bankruptcy and business failure, rising
unemployment, falling retail sales and falling consumer and business
2.4 In response, a series of high profile action plans and statements have
been issued from international and national governments including the
G7, G20, European Union, UK and Scottish Governments. In general
these packages have sought to:
Recapitalise the banks and other financial institutions
Increase the flow of money in economies through slackening monetary
Maintain demand in economies through increasing public sector
expenditure and reduction in taxes
Provide public policy support to businesses, homeowners and
employees made redundant
Reform the financial system
Promote sustainable economic growth
2.5 Latest projections from the Bank of England suggest that the recession
will last until early 2010 although the effects will be longer, particularly as
the last recession in the UK in the early 1990s saw six consecutive
quarters of negative growth.
3 IMPACT IN FIFE
3.1 The latest Experian forecasts for Fife estimate that during 2000-2007
annual average growth rate in Fife Output (as measured by Gross Value
Added (GVA)) was 2.1%. By contrast, Fife’s GVA is expected to contract
by 1.2% during 2009. The impact of the economic downturn has already
been felt locally.
3.2 Statistics from the latest Labour Market Update show that unemployment
began to increase from July 2008. There has been a decrease in the
number of job/training placements available especially in the construction
industry. The latest data for January 2009 shows an increase from the
same month in 2008, from 2.8% to 4.1%. Fife’s rate of unemployment
has historically been higher than Scotland as a whole.
3.3 The Halifax House Price Index has seen a 6.0% decline in Scotland with a
similar fall forecast for 2009. The Council of Mortgage Lenders recently
said that updating their house price predictions was ‘futile’ as the housing
market slump is unlikely to end before 2010.
3.4 Company bankruptcies in Scotland increased by 30% in the second
quarter of 2008/09 financial year (equating to a 43% increase year-on-
year), whilst individual insolvencies have risen by 70% compared to the
same period last year.
3.5 Partners have also been impacted by the economic downturn. The
Council, for example, has seen a reduction in the number of planning
applications, building warrants and property enquiry certificates with a
consequent loss of fee income; reduction in income from council tax, non
domestic rates and capital receipts; and increased rent arrears. Partners
in the voluntary sector have seen an increasing demand for money advice
and rights and advice services.
3.7 Finally, there are opportunities arising from the changed economic
Public sector employment is being seen as safer than private sector.
Green Travel – The downturn could assist in increasing car sharing
and use of public transport.
Procurement and contracts – The market may become more
competitive and provide better prices.
4 FUTURE DEVELOPMENTS
4.1 The pace at which the recession is deepening makes it extremely difficult
to predict future developments. It will be important, therefore, to monitor
events closely and adapt our responses as appropriate.
4.2 It is clear, however, that the scale of the downturn requires a strategic
rather than a piecemeal response. A risk assessment has therefore been
carried out and is summarised using a Balanced Scorecard approach
allowing the Partnership to address risks for customers, employees,
resources and the delivery of Community Plan Outcomes. The timing of
these risks is difficult to predict. The results are summarised in this
Increased demand for consumer rights and advice, promoting benefit
take-up and campaigns
Increased contact with customers in financial difficulty
Possible increase in complaints
Protection for vulnerable clients against (e.g.) increases in money
lending, family break-up, stress
Reduced individual and family income
Areas of multiple deprivation may suffer relatively worse impacts than
more affluent areas
Reduction in confidence and lack of finance could lead to isolation for
Possible reduction in trust of public services and civic leadership
Employees may not have appropriate skills to deal with distressed
Training budgets may come under pressure
Employees themselves may need financial advice and assistance
Individuals may become more sensitive to charges for services
A new focus on efficiencies could diminish our capacity to respond to
rising service demands
Balances and contingencies more difficult to maintain with reduced
Suppliers’ and contractors’ financial problems lead to reduced service
Issues for treasury management, investments, and Pension Fund
Management arising from problems in financial markets.
4.6 Community Plan Outcomes
Increase in Business failure and decrease in start-ups
Difficulty in placing More Choices More Chances (MCMC) group and
trainees in appropriate employment and/or training
Businesses may withdraw from workforce training during recession to
Reduction in inward investment
Failure of retail businesses impacting on Town Centres
Reduction in investment in business infrastructure by private
Increase in anti-social behaviour, acquisitive crime and fear of crime
Increase in accidents and antisocial behaviour at mothballed
Reduction in new private sector house building and downsizing of
Increase in housing repossessions and increased demand for rented
Maintaining improvements in educational attainment and achievement
Reduced financial capacity for individuals and families to access early
years development opportunities, cultural, educational and social
opportunities, healthy diet and fitness
Increased mental health problems
5 ACTION PLAN
5.1 Appendix 1 contains actions presented to the Council’s Policy, Finance and
Asset Management Committee, to assist mitigate the effects of the
recession. These have been grouped under three headings:
Information and Advice
Investment and Expenditure
Intervention and Policy
and categorised as actions to assist businesses and organisations,
individuals and employees.
5.2 As stated above, there is a need to continue monitoring the effects of the
recession on businesses, individuals, organisations and employees. This is
being undertaken by Development Services and the Corporate Research
Team within Performance and Organisational Support.
5.3 The Fife Economic Partnership has also discussed the need for local action
to tackle the recession.
The Fife Partnership Board is asked to:
1 Note the effects of the recession on Partners, Fife residents and businesses.
2 Note the actions already being taken to mitigate the effects of the recession
3 Comment on the actions contained in Appendix 1 and suggest additional
Partnership responses to the recession
Senior Manager (Policy & Communications)
Performance and Organisational Support
Tel: 08451 555555 Ext.
12 March 2009