CAIRNGORMS NATION­AL PARK AUTHOR­ITY Resources Com­mit­tee Paper 2 11/02/22

CAIRNGORMS NATION­AL PARK AUTHORITY

RESOURCES COM­MIT­TEE

FOR DIS­CUS­SION

Title: ²⁰²²⁄₂₃ BUDGET DEVELOPMENT

Pre­pared by: DAV­ID CAMER­ON, Dir­ect­or of Cor­por­ate Services

Pur­pose

This paper presents an over­view of the Cairngorms NPA’s budget pos­i­tion for the ²⁰²²⁄₂₃ fin­an­cial year.

The paper seeks the Committee’s views on the budget pos­i­tion and any stra­tegic risks or implic­a­tions to be con­sidered in the final­isa­tion of the budget pri­or to present­a­tion of fin­an­cial pro­pos­als for ²⁰²²⁄₂₃ to the board at its meet­ing in March.

Recom­mend­a­tions

The Resources Com­mit­tee is asked to: a) Con­sider the budget pos­i­tion for ²²⁄₂₃ ; b) Identi­fy any stra­tegic risks or implic­a­tions posed for the Board’s deliv­ery of its stra­tegic object­ives which may require addi­tion­al man­age­ment action; c) Identi­fy any spe­cif­ic budget issues to be con­sidered in devel­op­ment of final ²⁰²²⁄₂₃ budget pro­pos­als to be presen­ted to the board in March 2022.

Over­view

1. The Board agreed a trans­ition­al budget and stra­tegic plan­ning pro­cess for ²⁰²²⁄₂₃ while the next Nation­al Park Part­ner­ship Plan (NPPP) is final­ised. The pack­ages of work pro­posed for ²⁰²²⁄₂₃ and their link­ages to stra­tegic out­comes are still in devel­op­ment by the Seni­or Man­age­ment Team and will be presen­ted to the Board in March. The intent for the Resources Com­mit­tee at this point in the devel­op­ment of the ²⁰²²⁄₂₃ budget is to con­sider the over­view of the Authority’s fin­an­cial pos­i­tion for the com­ing year and to test any key budget­ing assump­tions or estimates.

2. Scot­tish Gov­ern­ment pub­lished its budget for ²⁰²²⁄₂₃ in Decem­ber 2021. The Author­ity has con­firmed resource and cap­it­al grant in aid alloc­a­tions with­in the Nation­al Parks line of that budget.

3. There remains uncer­tainty at this point about the final resource alloc­a­tion for peat­land res­tor­a­tion in ²⁰²²⁄₂₃. The Scot­tish Gov­ern­ment team respons­ible for this budget

CAIRNGORMS NATION­AL PARK AUTHOR­ITY Resources Com­mit­tee Paper 2 11/02/22

1. line are review­ing the pos­i­tion in the con­text of a nation­al budget alloc­a­tion which is insuf­fi­cient to cov­er all peat­land action areas reques­ted alloc­a­tions. The cap­it­al alloc­a­tions for the com­ing year to cov­er peat­land res­tor­a­tion works are under­stood to be fixed and in line with expect­a­tions. How­ever, there is some risk around the poten­tial to deploy the cap­it­al resources avail­able in deliv­ery of res­tor­a­tion works if the resource fund­ing is insuf­fi­cient to sup­port the staff time and wider sup­port required to enable the cap­it­al fun­ded works.

2. The estim­ated fin­an­cial impact of staff pay pro­pos­als for ²⁰²²⁄₂₃ are included in the fig­ures presen­ted in this paper. The staff pay pro­pos­als are them­selves covered by a sep­ar­ate paper covered else­where on the agenda for this com­mit­tee meeting.

3. There are no unanti­cip­ated impacts from pro­gramme and pro­ject deliv­ery on the Authority’s for­ward budget pos­i­tion. All pro­gramme and pro­ject expendit­ure has been recovered from planned fund­ing sources, includ­ing Cairngorms NPA budgeted fin­an­cial con­tri­bu­tions where applic­able, in devel­op­ing the ²⁰²²⁄₂₃ for­ward fin­an­cial plan.

Oper­a­tion­al Plan invest­ment, as is com­mon in the Authority’s expendit­ure pro­file, is heav­ily weighted toward com­ple­tion of planned invest­ment in the final quarter of the fin­an­cial year. At present, we con­tin­ue to work on the assump­tion that we will deliv­er the ²⁰²¹⁄₂₂ com­mit­ments in full in that fin­an­cial year and there will be no impacts on ²⁰²²⁄₂₃ fin­an­cial year from ²⁰²¹⁄₂₂ deliv­ery plans.

Ana­lys­is of Budget Position

Income

1. A sum­mary of the Authority’s cur­rent income expect­a­tions for ²⁰²²⁄₂₃ is set out in Table One.

Table One: Scot­tish Gov­ern­ment Fund­ing Allocations

	2020⁄21 £000	2021⁄22 £000	2022⁄23 £000	22⁄23 Change from pri­or year £000
Resource main allocation	4,779	5,830	6,467	+637
Resource COV­ID Response		500		-500
Cap­it­al	240	600	600	0
Total grant in aid allocations	5,019	6,930	7,067	+137
Spe­cif­ic Programmes
Peat­land Res­tor­a­tion Resource funding	246	440	440	tbc
			To be confirmed

CAIRNGORMS NATION­AL PARK AUTHOR­ITY Resources Com­mit­tee Paper 2 11/02/22

Peat­land Res­tor­a­tion Cap­it­al Funding	-	1,850	2,780	+930
SG Biod­iversity Funding	-	196	To be confirmed	To be confirmed
Oth­er gen­er­ated income	125	174	182	-24
Total Income from Scot­tish Gov­ern­ment and gen­er­ated from operations	5,390	9,590	10,469	+879
			tbc	tbc
Fund­ing under man­age­ment with­in sig­ni­fic­ant ongo­ing projects
Cairngorms Caper­cail­lie Project		610	915	+315
Her­it­age Hori­zons (estim­ated split)	100		2,753	+2,653
Funds under man­age­ment before spe­cif­ic pro­ject contributions	10,300		13,665	+3,365
			tbc	tbc

1. At this stage in the budget devel­op­ment pro­cess, con­firm­a­tion of final alloc­a­tions for the resource sup­port to the Cairngorms Peat­land Res­tor­a­tion Pro­gramme is still to be received as is inform­a­tion on any replace­ment for the biod­iversity chal­lenge fund­ing received in ²⁰²¹⁄₂₂. The peat­land resource fund­ing pos­i­tion in par­tic­u­lar cre­ates sig­ni­fic­ant budget uncer­tainty for the Author­ity at this stage in the pro­cess. A spend­ing review is cur­rently being under­taken by the team respons­ible for man­age­ment of this budget with­in Scot­tish Gov­ern­ment and we expect the out­come of this pro­cess to be known in advance of the budget sub­mis­sion to the board in March.

Expendit­ure

1. High level expendit­ure estim­ates fall­ing against these resources are set out in Table Two.

CAIRNGORMS NATION­AL PARK AUTHOR­ITY Resources Com­mit­tee Paper 2 11/02/22

Table Two: Ini­tial Expendit­ure Pro­jec­tions ²⁰²²⁄₂₃

Budget	2021⁄22 £000	2022⁄23 £000	22⁄23 Change from pri­or year £000
Staff­ing	4,102	4,434	+332
Board fees	180	183	+3
Oth­er staff and board costs	177	177	0
Facil­it­ies	377	377	0
IT and Pro­fes­sion­al Services	156	226	+70
Sub-total core expenditure	4,992	5,397	+405
Pro­gramme Investment
Her­it­age Horizons	150	150	0
Peat­land cap­it­al investment	1,972	2,780	+808
Peat­land ser­vice support	0	219	+219
Stra­tegic Vis­it­or Infra­struc­ture Improve­ment Programme	324	324	0
Nature Chal­lenge and Green Recov­ery Grants	446	0	-446
COV­ID Organ­isa­tion­al and com­munity response	220	84	-136
Sub-total Pro­gramme Investment	3,112	3,557	+435
Oper­a­tion­al Plan
Con­ser­va­tion and Land Management	406		See para 10
Nature and Cli­mate Investment		365	See para 10
Vis­it­or Services	512		See para 10
Place		205	See para 10
Stra­tegic Plan­ning and Rur­al Development	310		See para 10
People		425	See para 10
Cor­por­ate	160		See para 10
Com­mu­nic­a­tions	101		See para 10
Sup­port and Facil­it­at­ing Deliv­ery across all NPPP and cor­por­ate areas		520	See para 10
Sub-total Oper­a­tion­al Plan	1,489	1,515
Total invest­ment fun­ded from Scot­tish Gov­ern­ment grant and gen­er­ated income	9,593	10,469
Invest­ment fun­ded by oth­er sums under management	710	3,668
Total invest­ment under management	10,303	14,137

1. The expendit­ure and invest­ment pro­pos­als in devel­op­ment for the trans­ition­al plan ²⁰²²⁄₂₃ fol­low the new Nation­al Park Part­ner­ship Plan (NPPP) struc­ture and there­fore move away from the cat­egor­isa­tion used in pre­vi­ous years which fol­lows the

CAIRNGORMS NATION­AL PARK AUTHOR­ITY Resources Com­mit­tee Paper 2 11/02/22

cur­rent Cor­por­ate Plan 2018 to 2022 struc­ture. Year on year vari­ations are not presen­ted in Table Two. While there may be per­ceived to be some com­mon­alty between old and new cat­egor­isa­tions, in real­ity there is more blur­ring between the impacts of invest­ment between nature, cli­mate, people, place, cor­por­ate and com­mu­nic­a­tions invest­ment plans. Year on year com­par­is­ons would not there­fore be appro­pri­ate nor robust.

1. The Her­it­age Hori­zons: Cairngorms 2030 Pro­gramme will also make con­sid­er­able con­tri­bu­tions across all areas of the new NPPP over the course of its Devel­op­ment Phase in ²⁰²²⁄₂₃. The Oper­a­tion­al Plan and Pro­gramme Invest­ment con­tri­bu­tions set out in Table Two are in addi­tion and com­pli­ment­ary to the Her­it­age Hori­zons work programme.

Key Assump­tions

1. At this stage of budget devel­op­ment, the Exec­ut­ive Man­age­ment Team is con­sid­er­ing two key ele­ments of the budget estab­lish­ment pro­cess which are con­sidered here. The Committee’s view of these assump­tions in light of the stra­tegic con­sid­er­a­tions set out at the start of this paper is invited to inform fur­ther devel­op­ment of the budget estim­ates pri­or to the Board meeting.

Vacancy Sav­ings

1. Our budget devel­op­ment pro­cess for ²¹⁄₂₂ recog­nised the increase in staff levels to deliv­er new pro­grammes of activ­ity. We anti­cip­ated that some delays in recruit­ment and increased levels of turnover would impact on budgets. As such, we increased the vacancy sav­ings assump­tion to £171,600, or 3.9% of the revised staff budget of £4,455,600. Staff­ing for ²⁰²¹⁄₂₂ rep­res­en­ted 47.5% of avail­able resources for the year, the sig­ni­fic­ant reduc­tion as a per­cent­age of income reflect­ing the increase in peat­land pro­gramme and cap­it­al alloc­a­tions to the Author­ity for ²⁰²¹⁄₂₂.

2. As the ²⁰²¹⁄₂₂ budget mon­it­or­ing has shown, our staff budgets includ­ing these vacancy assump­tions have been under­spent in the year. For ²⁰²²⁄₂₃, we have again set budget assump­tions on an expect­a­tion of real­ising sav­ings from vacancy man­age­ment and some delays in recruit­ment between expec­ted and actu­al start dates. Budgets are there­fore being developed once again with a vacancy sav­ing assump­tion of around 4% of full estab­lish­ment costs.

Over-pro­gram­ming

1. Over the last two to three years, the Author­ity has gradu­ally elim­in­ated the prac­tice of ​“over-pro­gram­ming” as an ele­ment of its budget set­ting. Over-pro­gram­ming allowed for some expect­a­tion of slip­page in expendit­ure plans over the course of the year by budget­ing for a great­er level of expendit­ure than could be sup­por­ted be the funds avail­able in the year. Man­age­ment of slip­page through over-pro­gram­ming helped

CAIRNGORMS NATION­AL PARK AUTHOR­ITY Resources Com­mit­tee Paper 2 11/02/22

ensure that the Author­ity could max­im­ise use of resources and come as close to a tar­get break-even out­turn pos­i­tion at the end of the year as pos­sible. A key advant­age of the over-pro­gram­ming approach is that the Author­ity also min­im­ised risk of funds being clawed back if not fully com­mit­ted dur­ing the year. The dis­ad­vant­age of the approach is the heightened risk of over-spend­ing if the levels of com­mit­ment are not adequately managed.

1. The rationale for the remov­al of an over-pro­gram­ming allow­ance linked to the increas­ing cer­tainty of pro­ject man­agers on their spend­ing plans as our part­ner­ships and oper­a­tion­al agree­ments matured, and con­sequently reduced expect­a­tion of sig­ni­fic­ant slip­page in plans.

2. It may be appro­pri­ate to budget on the basis of some increase in over-pro­gram­ming to ensure the Author­ity is able to max­im­ise deploy­ment of resources avail­able in the year ahead, giv­en this is a trans­ition­al year with the poten­tial for part­ner­ship pro­grammes of work to take some time to mature to a point of com­mit­ting funds.

Wider Fin­an­cial Analysis

Staff­ing

1. Level of invest­ment in our staff team increases by £332,000 in cur­rent pro­jec­tions for the ²⁰²²⁄₂₃ year com­pared with the ²⁰²¹⁄₂₂ base pro­vi­sion, and increase of 8.1%. This increase cov­ers the full year con­sequences of recruit­ment under­taken in ²⁰²¹⁄₂₂; increase of 1.5% in employ­ers’ nation­al insur­ance con­tri­bu­tions imple­men­ted as part of the UK Government’s budget; pro­vi­sion for the pay award for staff in ²⁰²²⁄₂₃ with­in the pub­lic sec­tor pay policy for the year; and the mod­elled con­sequences of a small level of recruit­ment expec­ted in ²⁰²²⁄₂₃ (around 5 posts).

2. While increas­ing on the ²⁰²¹⁄₂₂ level, the level of invest­ment in the staff team for ²⁰²²⁄₂₃ rep­res­ents a small decrease in the deploy­ment of Scot­tish Gov­ern­ment grant and gen­er­ated income, with 42.4% of this income inves­ted in the staff team as opposed to 42.8% in the pre­vi­ous year.

3. Giv­en the scale of total fin­an­cial resources now under man­age­ment by the Author­ity, a bet­ter meas­ure of the scale of the level of staff invest­ment is giv­en in com­par­ing staff levels with this total fin­an­cial invest­ment under man­age­ment. Out staff invest­ment for ²⁰²²⁄₂₃ rep­res­ents 32.4% of total resources cur­rently fore­cast for ²⁰²²⁄₂₃ com­pared with 39.8% in the pri­or year.

Oper­a­tion­al Plan Delivery

1. Oper­a­tion­al Plan invest­ment over the trans­ition­al plan­ning peri­od and first (part) year of the NPPP has increased slightly from the pri­or year pos­i­tion to £1.515 million.

CAIRNGORMS NATION­AL PARK AUTHOR­ITY Resources Com­mit­tee Paper 2 11/02/22

1. This invest­ment is aug­men­ted by a range of pro­gramme invest­ments which are dis­closed sep­ar­ately in this paper for added trans­par­ency on the fin­an­cial plans, cov­er­ing the peat­land pro­gramme; stra­tegic vis­it­or infra­struc­ture improve­ment plan (cap­it­al invest­ment plans); the Authority’s cash con­tri­bu­tion to the Her­it­age Hori­zons pro­gramme; and we expect final year of invest­ment in the organ­isa­tions intern­al and extern­al work on move­ment out of COVID19 busi­ness con­tinu­ity and lock­down operations.

Cash Man­age­ment

1. There are no cur­rent cash man­age­ment issues to highlight.

Dav­id Camer­on Janu­ary 2022 davidcameron@​cairngorms.​co.​uk