Archived decisions

Sir George Staunton Country Park Joint Management Committee

27 November 2007 Item 9

Revised Budget 2007/08 and Proposed Forward Budget 2008/09

Report of the Treasurer

Contact : Mike Walls 01962 847102

1 Introduction

1.1 This report presents the revised budget for the Park for the current year (2007/08) and a draft forward budget for next year (2008/09).

1.2 Appendix A summarises the original and revised budget for the current financial year (2007/08) and the proposed budget for next year (2008/09).

1.3 Appendix B breaks the revised budget down into its operational elements.

1.4 Appendix C presents the draft forward budget for 2008/09, including proposed contributions from the Partner Authorities.

1.5 In summary, the financial position of the Park is satisfactory and the financial recovery remains on track in line with the Park's long term business plan. Short term losses in income have been compensated for by reductions in expenditure, and the Park is moving into a position where it can build up its reserves to cover unforeseen problems, having moved out of deficit in 2006/07.

2 2007/08 Revenue Budget

2.1 After a strong start to the year, visitor numbers for the first seven months are down by about 10% on the equivalent period for last year (which was an exceptional year for visitor numbers) due mainly to the effect of the Foot and Mouth outbreak in August, and the poor weather. In addition, several projects have had to be commissioned for health & safety reasons, for example extensive path and fencing renovations. This has had a significantly adverse effect on the operational areas of the Park where income projections have been revised down by £49k against the original budget. The financial effect of this fall in visitors has also been felt in the secondary spend areas - the shop and tearoom - where the income budgets have been reduced by £32,000.

2.2 To compensate for these shortfalls, expenditure has been curtailed, and savings have been realised through vacancy management, holding back development of the shop, and postponing some site maintenance work.

2.3 The good news is that although the catering income has fallen the profit has increased through efficiencies reducing costs, for example by better use of casual staff and savings in premises expenditure.

2.4 Further positive signs are that the conference business is growing steadily, and wedding bookings have increased. This has been achieved without employing a dedicated Conference, Functions and Events Manager, resulting in expenditure savings. Income from conferences and events is forecast to be close to the original budget, and by keeping the expenditure down through doing most of the work inhouse the contribution to reserves is £10,000 better than the budget.

2.5 Overall, the forecast income target has been reduced by £91,000 and forecast expenditure has been reduced by £86,000. The budgeted contribution to reserves has, consequently, been revised down by £5,000 to £23,822.

2.6 The effect on reserves will be to increase the opening surplus of £912 to £23,775 after potential interest has been taken into account.

2.7 The variations against the original budget within the budget headings are summarised below.

a) Employees (-£43,800)

The full effect of the pay and benefits settlement on the staff costs are not known, so the estimated figures are still in the budget. There has been no appointment to the Conference, Functions and Events post. Vacancies have been held in the Management team and the Landscaped Gardens and Parkland team, and these will be filled in the next few months. The use of staff in the Tea Rooms has been reviewed and reduced.

b) Premises (-£12,500)

Savings have been achieved by postponing the planned introduction of the EPOS system and some refurbishment of the Gift Shop, and by cutting back on the programme of maintenance work. The cost of utilities has also been lower than originally budgeted.

c) Transport (+£3,100)

The increase in this budget is due mainly to the purchase and hire of agricultural plant and equipment for the Farm and the Landscaped Gardens and Parkland.

d) Supplies & Services (-£33,200)

Unforeseen costs have been incurred in vet fees and animal feed as a result of the Foot and Mouth outbreak, and the costs of ICT have also increased. These have been covered by savings on equipment and promotional costs, and in particular on supplies for catering, the shop and conference and events.

e) Income (-£91,400)

The drop in income results predominately from the fall in visitor numbers. £52,000 has not been realised in entrance charges, and £32,000 in secondary spend at the shop and tea rooms. Income from other sources is forecast to be close to the original budget figure. An encouraging fact is that although income in the commercial operations is forecast to be down by £35,000 in absolute terms, the contribution to reserves has increased by £16,000. The Park team will do all they can to maximize the income streams over the remaining months of the year.

2 2008/09 Revenue Budget

2.1 The current forecast for next year shows that the Park will return a surplus of £14,005. There is, effectively, one Easter school holiday in the 2008/09 financial year, with the fortnight break in April 2008. The Easter Bank Holiday weekend and school holiday in 2009 fall in April. This is expected to have a slightly adverse effect on the income figures, but will still enable the Park to continue to add to the balance in reserves. The figures for 2008/09 are outlined in Appendix C.

2.2 The salaries are forecast to rise by approximately 5.5%, which includes annual increments under the new HCC Remuneration and Benefits scheme, and an anticipated inflationary pay award of 2.5%. There may be an increase in the Employer's contribution to Superannuation, but as no decision has yet been made, this has not been included. Inflation on non-salary budgets has been applied to only a few budget heads at 2.5%. The inflation on the requested contributions from the partners has been restricted to 2.5% which reflects the efficiency savings made within the Park. This is in line with County Council policy at other similar Joint Managed Committees.

2.3 The major variations from the 2007/08 revised budget are as follows:

Employees (+£76,000)

Nearly £36,000 of this increase is due to the pay award and increments. The remaining £40,000 is due to the full year effect of appointing staff to the new Conference, Functions and Events post, the vacant ranger posts, and the Marketing post, and increasing staffing in the Tea Rooms and the Gift Shop. This is funded by the forecast increase in business.

Premises (+£17,100)

This rise is due mainly to the inclusion of the planned introduction of an EPOS system and some refurbishment of the Gift Shop, improvements to conference facilities and to increased utility costs.

Supplies and Services (+£25,800)

All of this increase is due to expenditure on consumable supplies for the commercial operations which will be recovered through higher sales income.

Income (+£102,100)

Most of this increase (£57,000) is due to the forecast rise in visitor numbers and the higher entrance charges. Income from grants and sponsorship is forecast to be stable, but the greatest increase (other than from gate receipts) is predicted to be in the commercial areas of catering, shop and conferences.

2.4 The Partner contributions are allocated against the Management budget. The Entrance income is apportioned across the Management and Operations budget. Sales and grant income are shown against the relevant Operations, Education and Commercial budgets. The Commercial operations are expected to generate their own income and will make a contribution to the overall running costs of the Park, and to the Reserves.

2.5 Members may recall from several years ago the aspiration to reduce the contributions from the partners to below 50% of the Park's gross expenditure. Below is a table showing how the contributions have dropped as a percentage of the gross expenditure from 57% in 1998/99 to 25% in 2006/07, with the intention of reducing it to 23% in 2008/09. It is interesting to note that although gross expenditure has risen by 126% between 1998/99 and 2006/07, the total partner contributions have risen by 0.4% in cash terms (not allowing for inflation). This is an indicator of the success of the Business Plan, and the significance of the income derived from the commercial operations at the Park.

Gross Exp Contrib'ns %

1998/1999 393,771 224,699 57.1

1999/2000 388,115 220,489 56.8

2000/2001 426,114 205,889 48.3

2001/2002 469,601 313,889 66.8

2002/2003 507,249 205,834 40.6

2003/2004 604,114 207,243 34.3

2004/2005 737,610 212,700 28.8

2005/2006 832,880 219,082 26.3

2006/2007 888,968 225,653 25.4

2007/2008 991,400 231,322 23.3 budget figures

2008/2009 1,108,100 237,105 21.4 budget figures

RECOMMENDATIONS

1. That the revised budget for 2007/08 as shown in Appendices A and B be approved.

2. That the partner contributions for 2008/09 as shown in Appendix C be approved.

3. That the budget for 2008/09 as shown in Appendix C be approved.