For Decision

Title: Cairngorms Nation­al Park Author­ity ²⁰²³⁄₂₄ Budget and Oper­a­tion Plan

Pre­pared by: Dav­id Camer­on, Head of Cor­por­ate Services

Pur­pose

1. This paper sets out the pro­posed Cairngorms NPA ²⁰²³⁄₂₄ fin­an­cial year budget.

2. The paper provides the board 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.

3. The paper also presents the pro­posed Oper­a­tion­al Plan for ²⁰²³⁄₂₄, the first year of deliv­ery of the new 2023 to 2027 Cor­por­ate Plan.

Recom­mend­a­tions

1. The Board is invited to approve the Cairngorms NPA budget and oper­a­tion­al plan for ²⁰²³⁄₂₄ as set out in this paper.

Over­view of Draft ²⁰²³⁄₂₄ Budget Position

1. The focus of the Cairngorms NPA budget 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, com­munity led loc­al devel­op­ment (CLLD) 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. Grant alloc­a­tions for CLLD areas are also to be final­ised for ²⁰²³⁄₂₄ at the time of devel­op­ing this budget paper for board consideration.

3. While the grant alloc­a­tions are, we under­stand, rel­at­ively final and secure, some income fig­ures form­ing this budget remain sub­ject to some uncer­tainty pending final­isa­tion and receipt of grant award let­ters. This pos­i­tion is rel­at­ively com­mon at this point in set­ting the Park Authority’s budget for the year ahead. Mon­it­or­ing of the income and grant fund­ing pos­i­tion forms part of the ongo­ing budget mon­it­or­ing activ­ity through the year, along­side the mon­it­or­ing and man­age­ment of expenditure.

4. Total core income for ²⁰²³⁄₂₄ is increas­ing by £2.447 mil­lion from £11.216m to £13.663m, a 21.82% 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.

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

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

Table One: Over­view of ²⁰²³⁄₂₄ Budget Devel­op­ment as at 14 March 2023

²⁰²³⁄₂₄ Budget Pro­pos­als Overview

	2023⁄24	2022⁄23
	Budget	Open­ing
	Pro­pos­al	Budget	Vari­ance
	£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
Com­munity Led Loc­al Development	330	0	330
Oth­er Income	182	182	0
Total Income	13,663	11,216	2,447
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
CLLD Fund­ing	300	0	300
Place	515	425	90
Sup­port and Communications	591	604	-13
One-off IT / AV investment	205	0	205
Sub-total	2,486	2,130	356
Total Expendit­ure	13,677	11,229	2,448
Net Income (Net Expendit­ure as ‑ve)	-14	-13	-1

1. As shown in Table One, over­all, the cur­rent budget devel­op­ment against these resources shows a rel­at­ively bal­anced pos­i­tion, with cur­rent expendit­ure estim­ates of £13,677m only £0.014m: a vari­ance of only 0.10%.

2. 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.

3. Sim­il­arly, invest­ment in the ​“People” actions of the Cor­por­ate and Oper­a­tion­al Plans stems from fund­ing through both the core Nation­al Parks grant and ear­marked Com­munity Led Loc­al Devel­op­ment grants on which the Park Author­ity part­ners with the Cairngorms Trust as Account­able Body. Again, for budget con­trol pur­poses, these two strands of activ­ity have been developed sep­ar­ately in the budget fig­ures. Total invest­ment in the People ele­ments of the Park Authority’s plans total £0.607m for ²⁰²³⁄₂₄.

4. The fol­low­ing sec­tions present some spe­cif­ic points of estim­ate and judge­ment in the devel­op­ment of these budget estim­ates for con­sid­er­a­tion by the Board. These aspects of estim­a­tion and assump­tion have pre­vi­ously been con­sidered by the Board’s Resources Com­mit­tee at its meet­ing on 10 March 2023.

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

2. 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.

3. 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 1 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 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 £0.602m com­pared with the ²⁰²²⁄₂₃ budget approved by the board in March 2022. This increase includes activ­ity fun­ded through Nature Chal­lenge Fund and Vis­it­or Infra­struc­ture funds.

2. The full oper­a­tion­al plan, flow­ing from the core object­ives of the Cor­por­ate Plan, is set out at Annex One to this paper.

3. 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.

4. 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 2024. 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.

5. In line with recent years, the oper­a­tion­al plan has been budgeted without ​“over-pro­gram­ming”. The total value of the oper­a­tion­al plan is estab­lished with­in the para­met­ers of total income expec­ted to be avail­able at the com­mence­ment of the fin­an­cial year. No addi­tion­al pro­vi­sion has been made for slip­page over the course of the year through budget­ing for a great­er value of oper­a­tion­al plan invest­ments than are cap­able of being covered by fund­ing levels. This seems the most appro­pri­ate approach to budget set­ting at this stage in the ²⁰²³⁄₂₄ deliv­ery pro­cess, giv­en vari­ous uncer­tain­ties in income levels and expendit­ure pres­sures in the com­ing year.

As slip­page or under­spend in any pro­jects or budget areas arise, man­age­ment action can be taken to real­loc­ate avail­able resources to pri­or­ity areas of invest­ment or to cov­er oth­er emer­ging budget pressures.

1. Sup­port for the oper­a­tion­al plan in ²⁰²³⁄₂₄ is provided through a com­bin­a­tion of resource and cap­it­al grants. Table One high­lights that the Park Authority’s cap­it­al grant alloc­a­tion for the com­ing year has increased by £0.5m to £1.1m. A fur­ther ele­ment of the fin­ance team’s budget mon­it­or­ing respons­ib­il­it­ies in the early stages of the com­ing year will be to mon­it­or the evol­u­tion of oper­a­tion­al plan inten­tions to ensure an appro­pri­ate mix in the value of inten­ded invest­ment between resource and cap­it­al activ­it­ies, which can there­fore be sup­por­ted by the blend of grant fund­ing avail­able. Ini­tial over­view of oper­a­tion­al plan inten­tions sup­ports the budget pos­i­tion now presen­ted. This will con­tin­ue to be mon­itored as the year progresses.

Lever­age

1. The Park Author­ity con­tin­ues to secure sig­ni­fic­ant lever­age in inward invest­ment to the Cairngorms through its deploy­ment of resources in con­tri­bu­tions to part­ner­ship pro­jects and in secur­ing grant fund­ing from non-gov­ern­ment sources. Sig­ni­fic­ant lever­age over ²⁰²³⁄₂₄ will con­tin­ue to come from the Nation­al Her­it­age Lot­tery Fund (NLHF) through the Cairngorms Caper­cail­lie Pro­ject and Her­it­age Hori­zons Cairngorms 2030 Pro­gramme. A sum­mary of the lever­age pos­i­tion estab­lished by the Authority’s suc­cess­ful ongo­ing rela­tion­ship with NLHF is presen­ted in Table Two.

Table Two: Sig­ni­fic­ant Third Party Pro­ject and Pro­gramme Contributions

Pro­ject / Pro­gramme Fund­ing	2023⁄24 budget pro­pos­als	2022⁄23 Open­ing budget pos­i­tion	Vari­ance
	£000	£000	£000
Cairngorms Caper­cail­lie Project	556	915	-359
Her­it­age Horizons	1,365	2,753	-1,388
Oth­er sig­ni­fic­ant income under management	1,921	3,668	-1,747
Scot­tish Gov­ern­ment and oth­er core income	13,663	11,216	2,447
Total income under management	15,584	14,884	700

1. The year ahead rep­res­ents a trans­ition­al year in terms of the Park Authority’s lever­aged income from the sig­ni­fic­ant pro­jects and pro­grammes sup­por­ted by NLHF and oth­er part­ners. The Cairngorms Caper­cail­lie Pro­ject will come to an end in the com­ing year, with lever­aged income con­sequently redu­cing. The Her­it­age Hori­zons Cairngorms 2030 Pro­gramme also trans­itions from the end of the Devel­op­ment Phase, with sub­mis­sion of the bid for com­mence­ment of the Deliv­ery Phase in sum­mer 2023 and approv­al to com­mence the Deliv­ery phase hoped for by Decem­ber 2023. As such there is also some trans­ition­al reduc­tion in anti­cip­ated level of funds under man­age­ment for the Her­it­age Hori­zons Pro­gramme in ²⁰²³⁄₂₄.

2. Des­pite these trans­ition­al reduc­tions in lever­aged funds from major pro­grammes, total fin­ances under man­age­ment in ²⁰²³⁄₂₄, pri­or to con­sid­er­a­tion of smal­ler pro­ject con­tri­bu­tions by part­ners, shows an over­all increase of £0.7m — equi­val­ent to a 4.7% increase in total fin­ances fore­cast to be under man­age­ment in the com­ing year com­pared with the equi­val­ent point of ²⁰²²⁄₂₃.

3. The Deliv­ery Phase of the Her­it­age Hori­zons Pro­gramme is estim­ated at £38m. Very lim­ited fin­an­cial activ­ity is expec­ted between Decem­ber 2023 and March 2024, hence Table Two primar­ily reflects the funds under man­age­ment for clos­ure of the Devel­op­ment phase of the Pro­gramme. A full year of the Deliv­ery phase of this pro­gramme will equate to around £7m in funds under man­age­ment, rep­res­ent­ing a con­sid­er­able future step change in the fin­an­cial and oper­a­tion­al scale of the Park Author­ity to com­mence from ²⁰²⁴⁄₂₅.

Next Steps

1. Fol­low­ing board con­sid­er­a­tion and approv­al of a budget for ²⁰²³⁄₂₄, budget alloc­a­tions will be con­firmed to budget hold­ers to allow plans for deliv­ery over the com­ing fin­an­cial year to commence.

2. We will con­tin­ue to provide budget mon­it­or­ing reports to the board’s Resources Com­mit­tee over the course of the year ahead, identi­fy­ing any sig­ni­fic­ant budget vari­ations and action in man­aging those variations.