Archived decisions
Sir George Staunton Country Park Joint Management Committee
18 November 2008 Item 9
Revised Budget 2008/09 and Proposed Forward Budget 2009/10
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 (2008/09) and a draft forward budget for next year (2009/10).
1.2 Appendix A summarises the original and revised budget for the current financial year (2008/09) and the proposed budget for next year (2009/10).
1.3 Appendix B breaks the revised budget down into its operational elements.
1.4 Appendix C presents the draft forward budget for 2009/10, including proposed contributions from the Partner Authorities.
1.5 In summary, the Park has suffered from the poor weather in spring and August, and is beginning to feel the effect of the current economic climate as the income from visitors has fallen short of the budgeted forecast. Despite curbing expenditure the Park is forecasting a deficit this year and a small surplus next year.
2 2008/09 Revenue Budget
2.1 The budget was set to include growth in visitor numbers and income for the 2008/09 financial year. Although visitor numbers in the first six months of the year have been marginally up on last year, they have been lower than the budgeted profile. Consequently, visitor income (which includes secondary spend in the Gift Shop and Tea Rooms) has been down by about 20% on the equivalent period last year. The figures for October were back on profile, which would be encouraging for the remainder of the financial year were it not for the effect of the "credit crunch" on future visitor numbers.
2.2 To compensate for these shortfalls, expenditure has been curtailed, and savings have been realised through vacancy management, cutting back on administration expenses, and postponing some site maintenance work.
2.3 The fall in income from visitors has been compounded by the continuing slow growth of the conference business, though this has been almost fully offset by the consequential reduction in expenditure. There are positive signs that the take up for the wedding package is increasing with over 100 enquiries received and four weddings already booked for next year.
2.4 Overall, the forecast income target has been reduced by £55,700 and forecast expenditure has been reduced by £22,900.
2.5 As a result of all this, the budgeted contribution to reserves of £14,005 is now forecast to be a draw on reserves of £18,795 - a reversal of £32,800. The effect on reserves will be to increase the opening deficit of £6,142 to £25,213 after potential interest payments have been taken into account.
2.6 The variations against the original budget within the budget headings are summarised below.
a) Employees (+£13,800)
The full effect of the pay and benefits settlement on the staff costs have now been incorporated into the budget. The total cost of this is partially masked by holding 2.5 posts vacant. The Conference, Functions and Events post was filled in April but has recently become vacant again. This post, together with a couple of others will be not be filled until early in the new year. Other than these posts, the Park is now fully staffed. Given the current budget position, the employment of temporary and casual staff has been severely reduced.
b) Premises (-£25,100)
Savings have been achieved by postponing again the planned introduction of the EPOS system in the Gift Shop, and by cutting back on the programme of maintenance work.
c) Transport (+£3,500)
The increase in this budget is due to small increases across several budget headings including fuel, and the purchase and hire of agricultural plant and equipment for the Farm and the Landscaped Gardens and Parkland.
d) Supplies & Services (-£15,100)
The downturn in visitor numbers has seen a consequential fall in the expenditure on supplies for the Gift Shop and Tea Rooms. There have also been cutbacks in general equipment, office expenses, uniforms, advertising and promotions. These have more than offset the increase in the costs of animal welfare and ICT. The budget also includes over £50,000 for the improvements to the Play Trail funded through the Big Lottery Fund in partnership with Havant Borough Council.
e) Income (-£55,700)
The drop in income results predominately from visitor numbers falling below forecast. £56,100 will not be realised in entrance charges, and £46,000 in secondary spend at the shop and tea rooms. Income from most other sources are all forecast to be slightly down on the original budget figure. The exception is grants where income of over £30,000 from the Single Farm Payment and the contribution of over £50,000 for the Play Trail mask the real scale of the fall in income for the Park. The Park team will do all they can to maximize the income streams over the remaining months of the year.
2 2009/10 Revenue Budget
2.1 All the national economic indicators predict a downturn in disposable income in the next year or so. Taking this into account, the plan is for the Park to return a small surplus of £1,533 in 2009/10, and to pay off the reserve deficit in the following year. The figures for 2009/10 are outlined in Appendix C.
2.2 The staff costs are forecast to rise by approximately 4.5%, which includes annual increments under the HCC Remuneration and Benefits scheme, and an anticipated inflationary pay award of 2.5%. There will also be an increase of 0.5% in the Employer's contribution to Superannuation. Although inflation on non-salary budgets has been forecast at an average of 2.5%, these budgets have been based on the 2008/09 Revised Budget levels with the intention of inflationary increases being absorbed. The inflation on the requested contributions from the partners has been restricted to 2.5% which reflects the efficiency savings being 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 2008/09 revised budget are as follows:
Employees (+£11,700)
The pressures on the staffing budget are outlined in Paragraph 3.2 above. The increase in staff costs has been restricted to only £11,700 due to vacancy management and reducing the use of casual and temporary staff.
Premises and Transport (no increase)
Despite a predicted rise in utility costs of 70% to 80% it is proposed to absorb these increases by postponing site and premises improvements, by foregoing the purchase of the EPOS system, by reducing the number of vehicles, and by not replacing certain items of plant and equipment (subject to health and safety considerations).
Supplies and Services (-£71,800)
This reduction is due to the removal of the one-off expenditure in 2008/09 on the equipment for the Play Trail, and to cuts in the budgets for development work in the Park.
Income (-£45,700)
The budget for Entrance Charges has been increased slightly following the proposals in the 20009/10 pricing structure report. Income from visitors' secondary spend in the Gift Shop and Tea Rooms has been held at the reduced 2008/09 level. The one-off grant in 2008/09 from Havant Borough Council for the Play Trail has been removed, and the Single Farm Payment has been amended to include only the 2009/10 figure.
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.
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 24% in 2007/08. It is interesting to note that although gross expenditure has risen by 139% between 1998/99 and 2007/08, the total partner contributions have risen by only 2.7% 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 942,615 230,793 24.5
2008/2009 1,085,200 237,105 21.8 budget figures
2009/2010 1,025,100 243,033 23.7 budget figures
RECOMMENDATIONS
1. That the revised budget for 2008/09 as shown in Appendices A and B be approved.
2. That the partner contributions for 2009/10 as shown in Appendix C be approved.
3. That the budget for 2009/10 as shown in Appendix C be approved.