2014 Income and Expenditure Forecast

Transcription

1 23 June 2014 Performance and Resources Board 12 To consider 2014 Income and Expenditure Forecast Issue 1 To consider actual income and expenditure to date, and forecast figures to the end of Recommendations 2 The Performance and Resources Board is asked to: a Consider the Q1 forecast of income and expenditure for b Note the work being carried out by Directors to review income and expenditure options over the medium term.

2 2014 Income and Expenditure Forecast Issue Revenue expenditure and income 3 The income and revenue expenditure figures to the end of May 2014, and the full year forecast, are: Financial Summary as at May 2014 Budget Actual Full year Full year to date to date budget forecast % % Income Annual retention fees 34,932 35, % 85,200 85,181 (19) (0)% Registration fees (8) (1)% 4,000 4, % PLAB fees (37) (7)% 1,200 1,140 (60) (5)% Certification fees 1,193 1, % 3,000 3, % Investment income (3) (0)% 1,400 1, % Other income % % Total Income 37,867 38, % 95,000 95, % Expenditure by cost type Direct staffing costs 18,919 19,194 (275) (1)% 47,902 50,445 (2,543) (5)% Indirect staffing costs 1,304 1,308 (4) (1)% 3,262 3,405 (143) (4)% Office costs 2,574 2, % 6,620 6, % Accommodation costs 2,659 2, % 6,470 6,479 (9) (0)% Legal costs 2,442 2, % 5,806 5,905 (99) (2)% Professional fees 1,665 1, % 4,604 4,786 (182) (4)% Council & members costs % % Panel & assessment costs 6,152 6,396 (244) (4)% 14,973 15,388 (415) (3)% Depreciation 2,659 2,672 (13) (1)% 6,696 6, % New Initiatives Fund % % Total Expenditure 38,584 37, % 96, ,122 (3,151) (3)% Surplus/(deficit) (717) 323 1,040 (1,971) (4,600) (2,629) 4 The actual surplus at the end of May 2014 is 323,000 compared to a budgeted deficit for the period of 717,000. Income is marginally ahead of budget and expenditure is 2% under budget. 5 While the overall position is currently favourable, we are forecasting additional costs over the remainder of the year, principally due to the increase in fitness to practice complaints. 2

3 6 The 2014 budget was based on a planned deficit of 2 million. The table above shows a forecast deficit of 4.6 million. The main variances are: a Staffing costs: as part of the 2014 budget-setting process we adjusted staffing budgets to reflect normal staff turnover, which typically runs at around 9%. Actual turnover to date has been lower, averaging around 7%, and so expenditure is higher than budgeted. The forecast also includes 30 additional investigation staff and ten additional legal staff due to an increase in fitness to practice complaints, five additional staff for revalidation, changes to our internal audit arrangements, plus additional IS and HR staff to support the increase in recruitment and workload across the organisation. b Office costs: postage and stationery costs are forecast to be under budget due to increased use of e-communications, and some marketing and project work may be deferred. c Accommodation costs: forecast to be marginally over budget. We received a one-off business rates rebate on Hardman Street, but this is offset by forecasted additional costs of 90,000 as a result of our decision to extend the lease on Centurion House to the end of the year, to help accommodate the increase in headcount. We are currently exploring the opportunity to take 14,086 square feet of additional space on the fourth floor of Hardman Street, which has recently become available. This would allow us to terminate the Centurion House lease at the end of the year and locate all of our Manchester-based staff in one building. We will report detailed costings to the Performance and Resources Board later in the year. d Legal costs: forecast to be over budget due to the increase in fitness to practise complaints. e Professional fees: fitness to practise consultancy work is forecast to be over budget. f Panel and assessment costs: forecast to be over budget due to more Interim Orders Panel days and adjudication hearing days than anticipated, and an increase in performance assessments. g Depreciation: forecast to be under budget due to timing differences between budgeted and forecast completion dates for capital projects. Capital expenditure 7 In addition to our revenue expenditure on day to day operational business, the GMC incurs capital expenditure on major projects and assets that will generate benefits over a number of years. The standard accounting treatment is to spread capital costs over the lifetime of the asset, rather than accounting for 3

4 the whole cost in the year of acquisition. This is achieved through an annual depreciation charge to the revenue account. 8 Capital projects, by their nature, involve relatively long timescales. When budget proposals are being formulated in October and November, we cannot always forecast with certainty the stage of completion of each project and so some projects will span our normal financial year-end. At the end of 2013 a number of capital projects were still in progress, and so we have carried forward the unspent budget provision to 2014, to allow the projects to be completed. 9 Capital expenditure to the end of May 2014, and the full year forecast, is: Capital Programme as at May 2014 Budget to date Actual to date Full year budget Full year forecast % % 2013 Facilities projects % % 2013 IS Projects % (9) (3)% 2014 Facilities Projects % 1,324 1, % 2014 IS Projects 2,665 2, % 5,501 5,675 (174) (3)% 2014 Homeworking Facilities Costs % % IS Costs % % Total 4,096 3, % 8,390 8, % 10 Capital expenditure is currently 943, 000 under budget. Projects brought forward from 2013 include additional Oracle licences, management and new network connections. Next steps 11 The Q1 forecast shows that budget managers expect to incur over 3 million of additional, unbudgeted costs in Our experience in previous years suggests that cost forecasts at the Q1 stage tend to be overstated, however, given the additional staffing already recruited to help deal with the increase in fitness to practise complaints, an overspend between 2 million and 3 million seems likely. 12 We passed the point where our fee income exceeds costs at the end of 2013, and so without action we are likely to make significant inroads into our reserves over the next few years. This is not sustainable over the longer term and so Directors are reviewing options to reduce our costs and/or increase our income. Council will consider proposals over the coming months as part of the forecasting and budgeting processes for 2015 and beyond. 4

5 Supporting information How this issue relates to the corporate strategy and business plan 13 The annual budget supports all of the strategic aims set out in the corporate strategy and business plan. Specifically, the control of income and expenditure supports our commitment to make best use of our resources. If you have any questions about this paper please contact: Steve Downs, Assistant Director - Finance and Procurement, sdowns@gmc-uk.org,