230310ResourcesCtteePaper2_2324BudgetDevelopment

CAIRNGORMS NATION­AL PARK AUTHOR­ITY RESOURCES COM­MIT­TEE: Paper 2, 10^th March 2023

CAIRNGORMS NATION­AL PARK AUTHOR­ITY RESOURCES COMMITTEE

FOR DIS­CUS­SION

Title: ²⁰²³⁄₂₄ BUDGET DEVELOPMENT

Pre­pared by: DAV­ID CAMER­ON, DIR­ECT­OR OF COR­POR­ATE SERVICES.

Pur­pose of Paper

1. This paper sets out the cur­rent pos­i­tion of the Cairngorms NPA ²⁰²³⁄₂₄ fin­an­cial year budget development.

2. The paper provides the Com­mit­tee with the oppor­tun­ity to con­sider the over­all budget pos­i­tion and con­sider the impact of any key assump­tions made in estab­lish­ing budget estim­ates at this point in the ²⁰²³⁄₂₄ budget devel­op­ment process.

Recom­mend­a­tions

The Com­mit­tee is invited to review the pos­i­tion achieved in devel­op­ment of the ²⁰²³⁄₂₄ fin­an­cial year budget and provide any feed­back to officers pri­or to the present­a­tion of the budget pro­pos­als to the full board on 24 March 2023.

Over­view of Draft ²⁰²³⁄₂₄ Budget Position

1. The focus at this stage in the budget devel­op­ment pro­cess is on the util­isa­tion of ​“core” resources made avail­able to the Cairngorms NPA by Scot­tish Gov­ern­ment, through the Nation­al Parks budget and also through oth­er Scot­tish Gov­ern­ment budgets for peat­land res­tor­a­tion and nature recov­ery. Sig­ni­fic­ant oth­er pro­ject fin­ances for deliv­ery of the Her­it­age Hori­zons Pro­gramme, Cairngorms Caper­cail­lie Pro­ject and Com­munity Led Loc­al Devel­op­ment activ­it­ies amongst oth­er extern­ally fun­ded activ­it­ies are excluded from this ana­lys­is as hav­ing no net impact on the Authority’s core budget, oth­er than for staff and fin­an­cial costs fall­ing on core resources as provided for in these estimates.

2. The Park Author­ity has yet to receive a final grant award let­ter for ²⁰²³⁄₂₄ from Scot­tish Gov­ern­ment. We also con­tin­ue to work from grant alloc­a­tion fig­ures for peat­land res­tor­a­tion cir­cu­lated in March 2022. While the grant alloc­a­tions are, we under­stand, rel­at­ively final and secure the income fig­ures remain sub­ject to some uncer­tainty pending final­isa­tion and receipt of grant award letters.

CAIRNGORMS NATION­AL PARK AUTHOR­ITY RESOURCES COM­MIT­TEE: Paper 2, 10^th March 2023

1. Total core income for ²⁰²³⁄₂₄ is increas­ing by £2.117 mil­lion from £11.216m to £13.333m, a 19.13% increase in fund­ing alloc­ated to the Cairngorms NPA by Scot­tish Gov­ern­ment for the com­ing fin­an­cial year. This is a sig­ni­fic­ant increase in fund­ing for the Park Author­ity des­pite wide­spread fin­an­cial restric­tions across oth­er areas of the pub­lic sec­tor. This expec­ted set­tle­ment high­lights the align­ment between the Park Authority’s lead­er­ship of agreed Cairngorms Nation­al Park Part­ner­ship Plan pri­or­it­ies and the Scot­tish Gov­ern­ments ongo­ing priorities.

2. These fund­ing fig­ures incor­por­ate ​‘oth­er gen­er­ated income’ such as plan­ning fees and fees for shared ser­vices pro­vi­sion at a stat­ic pos­i­tion of £0.180m.

3. The over­view of the draft budget pos­i­tion for ²⁰²³⁄₂₄ is presen­ted in Table One.

CAIRNGORMS NATION­AL PARK AUTHOR­ITY RESOURCES COM­MIT­TEE: Paper 2, 10^th March 2023

Table One: Over­view of ²⁰²³⁄₂₃ Budget Devel­op­ment as at 23 Feb­ru­ary 2023

²⁰²³⁄₂₄ Budget Overview

	10 Mar 23
	Resource	2022⁄23
	Cttee	Open­ing
	Budget	Budget	Vari­ance
23/02/2023	£000	£000	£000
Income
Nation­al Parks Grant in Aid — Core	7,044	6,467	577
Nation­al Parks Grant in Aid — Vis­it­or Manage	0	500	-500
Nation­al Parks Grant in Aid — capital	1,100	600	500
Peat­land Grant — capital	4,143	2,962	1,181
Peat­land Grant — resource	614	505	109
Nature Chal­lenge Grant	250	0	250
Oth­er Income	182	182	0
Total Income	13,333	11,216	2,117
Expendit­ure
Staff Salar­ies	4,841	4,439	402
Board Fees	192	185	7
Oth­er staff and board	164	177	-13
Facil­it­ies	520	407	113
Pro­fes­sion­al services	261	225	36
Pro­gramme Contributions
Her­it­age Horizons	285	150	135
Peat­land deliv­ery — capital	4,143	2,962	1,181
Peat­land deliv­ery non staff	185	200	-15
Vis­it­or Services
Infra­struc­ture	350	324	26
Nature chal­lenge	250	30	220
Oper­a­tion­al Plan
Nature and Climate	568	795	-227
People	307	306	1
Place	515	425	90
Sup­port and
Com­mu­nic­a­tions	796	604	192
Total Expendit­ure	13,377	11,229	2,148
Net Income
(Net Expendit­ure as negative)	-44	-13	-31

1. As shown in Table One, over­all, the cur­rent budget devel­op­ment against these resources shows a rel­at­ively bal­anced pos­i­tion, with cur­rent expendit­ure estim­ates of £13,377m only £0.044m: a vari­ance of only 0.33%.

CAIRNGORMS NATION­AL PARK AUTHOR­ITY RESOURCES COM­MIT­TEE: Paper 2, 10^th March 2023

1. It should be noted that for budget con­trol pur­poses, the oper­a­tion­al plan invest­ment in Nature and Cli­mate actions has been split across the oper­a­tion­al plan budget line and sep­ar­ate Nature Chal­lenge line to ensure the appro­pri­ate util­isa­tion of ear­marked nature recov­ery grant. Total invest­ment for Nature and Cli­mate in Table One is £0.818m for ²⁰²³⁄₂₄ com­pared with £0.825m in the pre­vi­ous year.

2. The fol­low­ing sec­tions present some spe­cif­ic points of estim­ate and judge­ment in the devel­op­ment of these budget estim­ates for con­sid­er­a­tion by the Committee.

Staff­ing Investment

Staff­ing Levels

1. The num­bers of staff in the Cairngorms NPA estab­lish­ment are expec­ted to be broadly stat­ic for ²⁰²³⁄₂₄. Should the bid for the Her­it­age Hori­zons Cairngorms 2030 Deliv­ery Phase be approved by Decem­ber 2023, we will expect to com­mence ini­tial recruit­ment early in the 2024 cal­en­dar year. The recruit­ment will not impact staff­ing num­bers in the fin­an­cial year ahead. Any ini­tial staff­ing impacts likely to arise in ²⁰²³⁄₂₄ will be from renew­al of exist­ing con­tracts or intern­al recruit­ment, both of which have no impact on exist­ing staff­ing levels.

2. The increase in staff payroll levels for ²⁰²³⁄₂₄ rep­res­ent to some extent the full year con­sequences of recruit­ment under­taken over the course of ²⁰²²⁄₂₃ in staff­ing our increased scale of deliv­ery: Her­it­age Hori­zons Cairngorms 2030 (C2030) and Peat­land Res­tor­a­tion Pro­grammes each increased in scale over the course of the year.

3. All increase in the scale of the peat­land res­tor­a­tion staff team is off­set by the increase in the resource fund­ing to the Park Author­ity from Scot­tish Government’s peat­land res­tor­a­tion grant alloc­a­tion. The increase in scale of the team is also needed to meet the deliv­ery demands of a fur­ther increase of £1.181m in peat­land res­tor­a­tion cap­it­al invest­ment for the Cairngorms Nation­al Park.

4. Her­it­age Hori­zons staff invest­ment will impact the Park Authority’s budget for ²⁰²³⁄₂₄ giv­en the gap between the end of the devel­op­ment and deliv­ery phases. This gap was always recog­nised as a fin­an­cial man­age­ment con­sequence of this stage of the pro­gramme for the Park Author­ity as lead applic­ant and employ­er of many of the staff involved in the pro­gramme. Staff con­tracts have been exten­ded until Decem­ber to retain know­ledge and exper­i­ence and devel­op deliv­ery phase pro­grammes many of which will be pressed for time on receipt of the approv­al to pro­ceed. The Park Author­ity requires to fin­ance staff con­tracts over this gap in pro­gramme fund­ing. There­fore, the level of payroll cost fall­ing against the Park Authority’s core resources will increase tem­por­ar­ily for the ²⁰²³⁄₂₄ fin­an­cial year.

²⁰²³⁄₂₄ Pay Considerations

1. The budget for ²⁰²³⁄₂₄ is in devel­op­ment in the absence of pub­lished Pub­lic Sec­tor Pay Policy for the com­ing year. As the Com­mit­tee has pre­vi­ously been informed, the Pay Policy which is typ­ic­ally issued along­side the Scot­tish Gov­ern­ment budget pro­pos­als in Decem­ber has been delayed for pub­lic­a­tion in the con­text of responses

CAIRNGORMS NATION­AL PARK AUTHOR­ITY RESOURCES COM­MIT­TEE: Paper 2, 10^th March 2023

to the cost of liv­ing pres­sures and con­sequent sig­ni­fic­ant delays in pay set­tle­ment with­in many pub­lic bodies.

1. A key point of estim­ate and judge­ment at this phase of budget devel­op­ment there­fore con­cerns the pro­vi­sions made for the ²⁰²³⁄₂₄ pay award. At this stage, a pro­vi­sion of 5.5% of payroll has been allowed to cov­er all ele­ments of the Park Authority’s response to the pub­lic sec­tor pay policies once this is final­ised and pub­lished. Cur­rent infla­tion rates remain well above this level, while interest rates have also con­tin­ued to rise. There is some fin­an­cial com­ment­ary at present sug­gest­ing that infla­tion may have peaked with some eco­nom­ic fore­casts sug­gest­ing a decrease to around 2% by autumn of 2023. Nev­er­the­less, man­age­ment is con­scious that it is the infla­tion indic­at­or in March / April that is typ­ic­ally the key bench­mark in deal­ing with staff pay con­sid­er­a­tions for the com­ing fin­an­cial year.

2. The cur­rent pro­vi­sion provides a sum of £0.244m as the value of pay award impacts in the budget.

Payroll Recov­er­ies

1. Estim­ates have been estab­lished of the levels of staff payroll recov­er­ies from extern­al fund­ing sources. Cur­rent estim­ates are for recov­er­ies of £0.472m. I am aware that this aspect of estim­a­tion and judge­ment at this stage in devel­op­ment of the cur­rent year budget was under-estim­ated and this remains a focal point in devel­op­ment of final estim­ates to be presen­ted to the board on 24 March.

2. I am equally aware of the trans­ition­al nature of the year ahead as covered pre­vi­ously, with a gap in C2030 pro­gramme fund­ing and also the Cairngorms Caper­cail­lie pro­gramme com­ing to an end.

3. Over­all, I sug­gest a prudent approach to estim­ates of payroll recov­er­ies con­tin­ues to be taken at this stage in estab­lish­ing a fin­an­cial pos­i­tion for the forth­com­ing year.

Vacancy Sav­ings

1. In arriv­ing at budget estim­ates for staff­ing, we make an estim­ate of payroll sav­ings which may achieved over the course of the year from turnover and man­age­ment of vacant posts. The payroll budget is not there­fore set to cov­er full estab­lish­ment. Rather, it is adjus­ted to allow for a level of expec­ted vacan­cies through turnover and recruit­ment timetables.

2. The estim­ates presen­ted at this stage to Com­mit­tee provide for an estim­ated 5% sav­ing in payroll for staff costs which are not recov­er­able from oth­er sources of income. This provides for £0.248m of reduc­tion in the value of payroll which would oth­er­wise be budgeted for.

3. The vacancy sav­ing estim­ate is I per­cent­age point high­er than that used for ²⁰²²⁄₂₃, which was based on a 4% vacancy sav­ing. As Com­mit­tee mem­bers will be aware from ²⁰²²⁄₂₃ fin­an­cial mon­it­or­ing reports, the pay­bill budget has been con­sist­ently under­spent over the course of the year. It there­fore seems appro­pri­ate to adjust the

CAIRNGORMS NATION­AL PARK AUTHOR­ITY RESOURCES COM­MIT­TEE: Paper 2, 10^th March 2023

estim­ated impacts of turnover and vacancy man­age­ment upward slightly to budget on a 5% assumption.

Infla­tion­ary Impacts And Run­ning Costs

1. The Head of Fin­ance and Cor­por­ate Oper­a­tions has reviewed all areas of run­ning costs: oth­er staff and board, facil­it­ies, and pro­fes­sion­al ser­vices from a zero base. This exer­cise has refreshed and rebased our fin­an­cial estim­ates for these areas of the budget in light of changes in oper­a­tion­al modes, for example switch of IT ser­vices from one-off cap­it­al pur­chases to on-going annu­al licence fees, and to reflect cur­rent levels of costs arising from recent infla­tion pres­sures. The adjus­ted budget estim­ates for these areas of the Park Authority’s cost base are set out in Table One.

2. The work has high­lighted a small reduc­tion in budget require­ment for oth­er staff and board expendit­ure, recog­nising in part the fin­an­cial effi­cien­cies of new work­ing arrange­ments adopted.

3. Facil­it­ies costs have increased sig­ni­fic­antly, with an increase in budget pro­vi­sion of £0.113m for ²⁰²³⁄₂₄. Energy costs for build­ing and trans­port have impacted this sig­ni­fic­antly. While the Grant­own office runs on bio­mass fuel, energy prices for this fuel source have almost doubled over the course of the cur­rent year. Oth­er infla­tion pres­sures have also driv­en the increase in this area of the budget.

4. Pro­fes­sion­al and IT ser­vices have increased by £0.036m (16%). This increase includes the impact of the mod­al shift to annu­al licence costs for IT infra­struc­ture. Pro­fes­sion­al ser­vices such as audit are also expec­ted to increase con­sid­er­ably in line with infla­tion pres­sures. There are also some step change increases from increased invest­ment in areas such as cyber secur­ity measures.

5. At present, there are no pro­vi­sions for fur­ther infla­tion­ary increases in these estim­ates, with budget man­age­ment action required to con­tain the impact of any fur­ther infla­tion­ary increases in ²⁰²³⁄₂₄ with­in man­age­ment of the over­all budget position.

Effi­ciency Savings

1. I expect that the require­ment to achieve a 3% effi­ciency sav­ing will be included in grant award let­ters. Sub­ject to the terms of this require­ment being cla­ri­fied, the cur­rent under­stand­ing is that the effi­ciency sav­ings require­ments will be met through actions described above on vacancy man­age­ment and wider budget man­age­ment in con­tain­ing ongo­ing infla­tion­ary increases.

Oper­a­tion­al Plan Investment

1. Over­all invest­ment in oper­a­tion­al plan activ­it­ies has increased by £0.276m com­pared with the ²⁰²²⁄₂₃ budget approved by the board in March 2022.

2. This paper does not go into the detail of the oper­a­tion­al plan deliv­ery pro­pos­als as this will be con­sidered in more detail by the full board on 24 March 2023.

CAIRNGORMS NATION­AL PARK AUTHOR­ITY RESOURCES COM­MIT­TEE: Paper 2, 10^th March 2023

1. It is worth high­light­ing at this devel­op­ment­al phase of the budget that there is a one- off increase to the oper­a­tion­al plan alloc­a­tions for sup­port and com­mu­nic­a­tions in ²⁰²³⁄₂₄ to deliv­er redevel­op­ment and mod­ern­isa­tion of the web­site plat­form, and also to com­plete invest­ment in audio visu­al equip­ment and sys­tems to sup­port revised gov­ernance pro­cesses and work­ing arrangements.

2. Table One high­lights an expec­ted increase in the Park Authority’s fin­an­cial con­tri­bu­tion to the C2030 Pro­gramme for the com­ing year to £0.285m from pre­vi­ous annu­al con­tri­bu­tions of £0.150m in the devel­op­ment phase of the Pro­gramme. We expect part­ner con­tri­bu­tions to the Pro­gramme to typ­ic­ally com­mence in the ²⁰²⁴⁄₂₅ fin­an­cial year, assum­ing that the deliv­ery phase start will be con­firmed around Decem­ber 2023. There­fore, we expect the Park Author­ity will need to provide for start up fin­ance to cov­er ini­tial Pro­gramme costs between Decem­ber 2023 and March

3. The full year annu­al con­tri­bu­tion to the C2030 pro­gramme from ²⁰²⁴⁄₂₅ fin­an­cial year is expec­ted to be £0.450m, which will secure annu­al Pro­gramme fund­ing of close to £6m.

Next Steps

1. The Committee’s views on the budget pos­i­tion, and par­tic­u­larly the key assump­tions and estim­ates made as set out in the above sec­tions, are invited at this time. Fol­low­ing the Com­mit­tee meet­ing, the budget devel­op­ment pro­cess will con­tin­ue and views of Com­mit­tee reflec­ted on pri­or to final­isa­tion of the budget paper to be presen­ted to the board at its meet­ing on 24 March.

Dav­id Camer­on davidcameron@​cairngorms.​co.​uk 28 Feb­ru­ary 2023