240126DraftResourcesCtteePaper2_BudgetPosition2024-25

For dis­cus­sion

Title: Update on Budget Pos­i­tion for ²⁰²⁴⁄₂₅ Pre­pared by: Louise Allen, Head of Fin­ance and Cor­por­ate Operations

Pur­pose

1. This paper sets out the cur­rent pos­i­tion of the Park Authority’s ²⁰²⁴⁄₂₅ fin­an­cial year budget development.
2. The paper provides the Com­mit­tee with the oppor­tun­ity to con­sider the over­all budget pos­i­tion togeth­er with the impact of any key assump­tions made in estab­lish­ing budget estim­ates at this point in the ²⁰²⁴⁄₂₅ budget devel­op­ment process.

Recom­mend­a­tions

The Resources Com­mit­tee is invited to review the pos­i­tion achieved in devel­op­ment of the ²⁰²⁴⁄₂₅ fin­an­cial year budget and provide any feed­back to officers pri­or to the present­a­tion of the budget pro­pos­als to the full board on 22 March 2024.

Over­view of draft ²⁰²⁴⁄₂₅ budget position

1. The focus of our work to date has been on core resources provided by Scot­tish Gov­ern­ment through the Nation­al Parks budget and through oth­er Scot­tish Gov­ern­ment budgets for peat­land res­tor­a­tion and nature recov­ery. Sig­ni­fic­ant oth­er pro­ject fin­ances, such as those provided for deliv­ery of the Cairngorms 2030 Pro­gramme, Cairngorms Caper­cail­lie Pro­ject and Com­munity Led Loc­al Devel­op­ment activ­it­ies, are not included in our budget ana­lys­is to date. Some staff and fin­an­cial costs from pro­ject activ­it­ies will be met from core resources, and these are provided for in our estim­ates. Oth­er­wise, extern­ally fun­ded activ­it­ies are assumed to have no net fin­an­cial impact.
2. It is recog­nised, how­ever, that the Cairngorms 2030 pro­ject (C2030) will have a sig­ni­fic­ant effect on our deliv­ery dur­ing ²⁰²⁴⁄₂₅. Both staff and sys­tems will be impacted by the volume of work required to deliv­er the pro­ject, and it is likely that our cur­rent work­ing prac­tices will need to be honed over the course of the year. Invest­ment has been made dur­ing ²⁰²³⁄₂₄ to embed smarter work­ing and achieve effi­cien­cies through bet­ter use of tech­no­logy, largely through more effect­ive use of the Microsoft products included in our soft­ware licences, and this pro­cess will con­tin­ue dur­ing the com­ing year. Work is now under­way to pre­pare a year 1 deliv­ery phase budget for the C2030 Pro­gramme as part of our Pro­gramme start up processes.
3. The Park Author­ity has yet to receive a final grant award let­ter for ²⁰²⁴⁄₂₅ from Scot­tish Gov­ern­ment. Our spon­sor­ship team at Scot­tish Gov­ern­ment has made us aware that the fig­ures provided may be open to amend­ment before March because of fin­an­cial and wider uncer­tain­ties. How­ever, cur­rently they provide the best avail­able basis for budget plan­ning, des­pite uncer­tainty pending the final­isa­tion and receipt of grant award letters.
4. Grant-in-aid for ²⁰²⁴⁄₂₅ is set to increase by £0.977 mil­lion from £8.144m to £9.121m, a 12% increase in fund­ing alloc­ated to the Cairngorms Nation­al Park Author­ity by Scot­tish Gov­ern­ment for the com­ing fin­an­cial year in terms of total cash. This is an excep­tion­al alloc­a­tion, giv­en the breadth and depth of fin­an­cial restric­tions through­out the pub­lic sector.

5. Oth­er sources of income (£0.250m) included in the draft budget pos­i­tion are:

   • Plan­ning fees, and
   • Bank interest (£0.070m)
6. The over­view of the draft budget pos­i­tion for ²⁰²⁴⁄₂₅ is presen­ted in Table 1.

Table 1

	2024⁄25 Resource Com­mit­tee budget £’000	2023⁄24 Open­ing budget £’000	Move­ment £’000	Increase/​(decrease) %
Income
Nation­al Parks Grant in Aid — Resource	7,311	7,044	267	4%
Nation­al Parks Grant in Aid — Capital	1,810	1,100	710	39%
Peat­land grant — capital	4,517	4,143	374	8%
Peat­land grant — resource — staff	472	429	43	9%
Peat­land grant — resource — non-staff	217	185	32	15%
Nature Cal­lenge grant	300	250	50	17%
Oth­er income	250	182	68	27%
Total income	14,877	13,333	1,544	10%
Expendit­ure
Staff salar­ies	5,697	5,089	608	11%
Estim­ate of poten­tial vacancy savings	(71)	(248)	177
Board fees	180	192	(12)	(7%)
Oth­er staff and board	160	164	(4)	(3%)
Facil­it­ies	364	520	(156)	(43%)
Pro­fes­sion­al services	338	261	77	23%
Pro­gramme contributions
Cairngorms 2030	450	285	165	37%
Peat­land deliv­ery capital	4,517	4,143	374	8%
Peat­land deliv­ery non staff resource	150	185	(35)	(23%)
Vis­it­or Ser­vices infrastructure	350	350	0	0%
Nature chal­lenge	300	250	50	17%
Oper­a­tion­al plan
Nature and climate	414	568	(154)	(37%)
People	270	307	(37)	(14%)
Place	468	515	(47)	(10%)
Sup­port and communications	593	591	2	0%
One-off IT/AV investment		205	(205)
Total expendit­ure	14,180	13,377	803
Net expenditure/​(income)	(697)	44	(741)

1. Scot­tish Gov­ern­ment is con­sid­er­ing the alloc­a­tion of both cap­it­al and resource budgets for peat­land res­tor­a­tion. The fig­ures provided above reflect the ask made by our Peat­land Team. How­ever, teams across the coun­try have sub­mit­ted requests for budget that are sig­ni­fic­antly in excess of avail­able fund­ing (RDEL – 40% great­er; CDEL 29% great­er) and the dis­tri­bu­tion of resources across the vari­ous deliv­ery part­ners is under dis­cus­sion. As such there remains poten­tial for assumed income fig­ures to vary, which will have fol­low-on con­sequences for poten­tial expendit­ure alloc­a­tions across both peat­land cap­it­al and all resource based budgets.
2. Nature Chal­lenge fund­ing has been assumed at the same level as was received this year. The open­ing budget pos­i­tion for ²⁰²³⁄₄ was £0.250m and a fur­ther £0.050 was received later in the year.
3. As is clear from the table, the alloc­a­tion of Grant-in-Aid has increased from £8.144m to £9.121m (£0.977m 12%). How­ever, the increase of close to £1m is weighted towards cap­it­al funds (£0.710m). Indeed, cap­it­al alloc­a­tions have increased from £0.600m in ²⁰²²⁄₂₃ to £1.810m in ²⁰²⁴⁄₂₅. Our abil­ity to take advant­age of this fund­ing is key to budget man­age­ment for ²⁰²⁴⁄₂₅ and is likely to require some changes in our expendit­ure emphasis.
4. To date we have used cap­it­al (CDEL) alloc­a­tions to fund the pur­chase of fixed assets (CDEL-dir­ect), to devel­op path­ways and to sup­port land­scape res­tor­a­tion pro­jects, as an inter­me­di­ary provid­ing grant sup­port to landown­ers and oth­er pub­lic bod­ies (CDEL-indir­ect). Typ­ic­ally, pro­jects fun­ded through CDEL-indir­ect, involve phys­ic­al alter­a­tion of the land­scape, such as build­ing or improv­ing path­ways, the work involved in res­tor­a­tion of peat­land, and the man­age­ment of catch­ments. The sums involved, (exclud­ing peat­land res­tor­a­tion, which has its own ring-fenced fund­ing alloc­a­tion) have been around £0.600m per annum.
5. The budget as presen­ted in Table 1 shows an over­all pos­i­tion of sur­plus (under­spend) of just under £0.700m. The mod­el assumes a 10% reduc­tion in oper­a­tion­al plan expendit­ure from our Grant in Aid – Resource fund­ing; this is the reduc­tion required to bal­ance spend­ing against our resource budget.
6. Inform­a­tion on the pro­posed budget for staff salar­ies is provided in para­graphs 18 to 30 below. Staff­ing costs for ²⁰²⁴⁄₂₅ (exclud­ing any poten­tial vacancy sav­ings) account for 38.3% of the total income shown of £14,877. In the budget for ²⁰²³⁄₂₄ staff­ing costs were 38.2% total budget income.
7. Oper­a­tion­al plan spend­ing from the cap­it­al budget has been retained at levels sim­il­ar to those achieved in pri­or years (£0.660m). In addi­tion, it has been assumed that the con­tri­bu­tion of £0.450m we make to C2030 will be alloc­ated to cap­it­al activ­ity. The remain­ing unap­plied cap­it­al fund­ing (£0.700m) pro­duces the sur­plus shown in Table 1.
8. 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 a sep­ar­ate Nature Chal­lenge line to ensure the appro­pri­ate applic­a­tion of the ear­marked nature recov­ery grant. Total invest­ment for Nature and Cli­mate in Table 1 is £0.714m for ²⁰²⁴⁄₂₅ (Nature chal­lenge £0.300m plus Nature and cli­mate £0.414m) com­pared with £0.818m in the pre­vi­ous year. Fur­ther inform­a­tion on applic­a­tion of the oper­a­tion­al plan budget is provided below (para­graphs 36 to 40).
9. The fol­low­ing sec­tions present some spe­cif­ic points of estim­ate and judge­ment in the devel­op­ment of these budget estim­ates for con­sid­er­a­tion by the Committee.

Staff­ing

Staff­ing levels

1. The Park Authority’s estab­lish­ment will increase sig­ni­fic­antly in ²⁰²⁴⁄₂₅. There will be a need to provide resource to the Cairngorms 2030 pro­ject (14 FTE) as high­lighted in the paper presen­ted to the board in June 2023 pri­or to sub­mis­sion of the C2030 bid. How­ever, most of the cost of new posts estab­lished will be recov­er­able through the pro­ject. In addi­tion, cost recov­ery will be avail­able through C2030 for exist­ing posts paid for from core funds dur­ing the gap between the end of the devel­op­ment phase of the pro­ject, and the start of the deliv­ery phase. The full year cost (includ­ing pro­spect­ive pay award) of new C2030 posts is estim­ated at £0.568m, with exist­ing C2030 fun­ded posts cre­ated in the devel­op­ment phase and con­tinu­ing into the deliv­ery phase adding a fur­ther £0.520m (£1.088m in total). These costs are recov­er­able from the C2030 pro­gramme budget and are repor­ted to Com­mit­tee for trans­par­ency – they do not impact on the resource cov­er needed to be provided from our grant-in-aid allocations.
2. There are three vacan­cies (3FTE) that we have mod­elled at present for recruit­ment in ²⁰²⁴⁄₂₅ and provided for with­in the staff­ing budget. The full year cost of the pro­vi­sion for recruit­ment into these vacan­cies, which sup­port deliv­ery of plan­ning and cor­por­ate sup­port ser­vices, is estim­ated at £0.159m. The busi­ness case for recruit­ment into these vacan­cies will be tested pri­or to any recruit­ment as part of our stand­ard pro­cesses and any decision not to take for­ward the recruit­ment pro­cess will allow for real­loc­a­tion of budgets else­where. Com­mence­ment of the roles part way through the year will also reduce the budget­ary require­ments for ²⁰²⁴⁄₂₅. The pos­i­tion as regards this pro­vi­sion is likely to be clear­er at the time of present­ing final budget estim­ates to the board in March.
3. Payroll sav­ings may be avail­able if staff cur­rently in post are appoin­ted to C2030 roles, and their ori­gin­al post is not back­filled. Fur­ther con­sid­er­a­tion will be giv­en to this option and could lead to sav­ings of between £50k and £185k.

²⁰²⁴⁄₂₅ pay considerations

1. Scot­tish Gov­ern­ment has developed a 2‑year approach to its own main award. There is pres­sure on the Author­ity to fol­low suit with awards over two years that, taken togeth­er, provide sim­il­ar com­pens­a­tion levels to the Scot­tish Government’s main award.
2. A key point of estim­ate and judge­ment at this phase of budget devel­op­ment there­fore con­cerns the pro­vi­sions made for the ²⁰²⁴⁄₂₅ pay award. It is anti­cip­ated that the award will vary amongst the salary band­ings and will be a com­bin­a­tion of fixed sums and per­cent­age increases.
3. The budget includes a pay award impact of £0.333m (exclud­ing costs rechargeable through C2030) which, com­bined with the award made in ²⁰²³⁄₂₄, is designed to achieve an increase aver­aging around 10% for staff over the 2 years from April 2023 to March 2025. We are still mod­el­ling the poten­tial pay award for ²⁰²⁴⁄₂₅ and wait­ing for any fol­low up pay policy advice from Scot­tish Gov­ern­ment. A more detailed update on the poten­tial pay award for ²⁰²⁴⁄₂₅ will be presen­ted to the Com­mit­tee in the com­ing months pri­or to com­men­cing con­sulta­tion on this mat­ter with the staff group, and their staff and uni­on rep­res­ent­at­ives, through our Staff Con­sultat­ive For­um process.
4. The Park Authority’s con­trac­ted work­ing hours will reduce from the cur­rent year level of 36 hours per week to 35 hours per week as the second phase of the agreed reduc­tion in con­trac­ted hours from 37.5 hours per week in place in ²⁰²²⁄₂₃. This reduc­tion in con­trac­ted hours is in line with the wider object­ives of the Scot­tish Government’s pub­lic sec­tor pay policies. The Man­age­ment Team and Resources Com­mit­tee agreed that the second phase in imple­ment­a­tion of this staged reduc­tion in con­trac­ted hours would be imple­men­ted sub­ject to review of the impacts of the phase 1 reduc­tion over the first half of ²⁰²³⁄₂₄. There have been no adverse impacts of the phase 1 reduc­tion iden­ti­fied by Man­age­ment Team, while the ini­tial res­ults of our inde­pend­ent staff sur­vey show a marked improve­ment in staff feed­back across a range of factors includ­ing well­being. We will be present­ing more inform­a­tion on the staff sur­vey res­ults to a future Com­mit­tee meeting.

Break­down of total payroll budget 2024⁄25 includ­ing posts recovered from third party income	£m
Full year cost of exist­ing staff pre 2024⁄25 award	5.770
Increase in employ­er pen­sion rate	0.077
Award 2024⁄25	0.333
Cost of exist­ing staff	6.180
Vacan­cies for recruit­ment Cairngorms Nation­al Park Authority	0.159
New posts C2030	0.568
Total budget estim­ate 2024⁄25	6.907

Payroll recov­er­ies

1. Estim­ates have been made of the levels of staff payroll recov­er­ies from extern­al fund­ing sources. Cur­rent estim­ates are for recov­er­ies through C2030 of £1.088m in ²⁰²⁴⁄₂₅. This aspect of estim­a­tion and judge­ment will be reviewed in devel­op­ment of final estim­ates to be presen­ted to the board on 22 March.
2. A pro­por­tion of the salary costs of staff engaged on Com­munity Led Loc­al Devel­op­ment (CLLD) will also be recov­er­able, assum­ing that CLLD fund­ing will be awar­ded in broadly the same amount for the com­ing year and with the same allow­ances for admin­is­tra­tion and anim­a­tion costs: salary costs of £0.096m are budgeted, of which around £0.067m are expec­ted to be recovered, leav­ing a cost of around £0.029 to be met by the Authority.

Break­down of recov­er­able payroll costs 2024⁄25	£m
Exist­ing posts C2030	0.520
New posts C2030	0.568
Total C2030	1.088
CLLD posts	0.067
Total recov­er­able	1.154

Vacancy sav­ings and recruit­ment delays

1. In arriv­ing at budget estim­ates for staff­ing, we make an estim­ate of payroll sav­ings that may be achieved over the course of the year from staff 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 1% sav­ing in payroll for staff costs which are not recov­er­able from oth­er sources of income. This provides for £0.071m of reduc­tion in the value of payroll which would oth­er­wise be budgeted for. This estim­ate of pos­sible sav­ings is sig­ni­fic­antly lower than was applied in ²⁰²³⁄₂₄ (5% of payroll budget, £248k). Vacancy sav­ings have not been real­ised as anti­cip­ated when the ²⁰²³⁄₂₄ budget was set and have been removed from the out­turn fore­cast for ²⁰²³⁄₂₄. Sig­ni­fic­ant staff turnover is not anti­cip­ated for ²⁰²⁴⁄₂₅, giv­en the oppor­tun­it­ies provided by C2030 and ongo­ing Park Part­ner­ship Plan activ­it­ies. This reduc­tion in anti­cip­ated vacancy sav­ings has there­fore con­trib­uted sig­ni­fic­antly to the increase in staff budget for ²⁰²⁴⁄₂₅ as com­pared to the pri­or year.
3. Recruit­ment delays are pos­sible, giv­en the amount of recruit­ment to be com­pleted, and with pri­or­ity being giv­en to C2030 roles. It has been assumed that the four Cairngorms Nation­al Park Author­ity vacant posts will not be filled until the sum­mer of 2024, sav­ing a quarter of the year’s salary costs (£0.056).
4. Using this mod­el­ling, the net cost for staff salar­ies in ²⁰²⁴⁄₂₅ is there­fore £5,626m:

	£m
Total budget estim­ate 2024⁄25	6.907
Total recov­er­able payroll costs	(1.154)
	5.753
Allow­ance for pos­sible recruit­ment delays	(0.056)
	5.697
Allow­ance for vacancy savings	(0.071)
Net cost for staff salar­ies in 2024⁄25	5.626

Infla­tion­ary impacts and run­ning costs

1. The budget for run­ning costs has been built on the out­turn fore­cast for ²⁰²³⁄₂₄. Infla­tion­ary increases of 3% have been applied, reflect­ing the Bank of England’s estim­ates that infla­tion will fall from its cur­rent level of 4.6% to a tar­get level of 2%. The budget approach rep­res­ents an expect­a­tion of the aver­age rate over the course of the fin­an­cial year.
2. Over the course of ²⁰²³⁄₂₄ we have exper­i­enced notice­able pres­sure on the budgets for power and mileage. The budget for ²⁰²⁴⁄₂₅ reflects these increases as well as an infla­tion­ary uplift.
3. Soft­ware licences are now an essen­tial part of the organisation’s infra­struc­ture, with our core pro­grammes avail­able only as Soft­ware As A Ser­vice (SAAS). The increase in staff­ing levels and the need for applic­a­tions with great­er func­tion­al­ity (e.g. Microsoft Pro­ject for pro­ject man­age­ment) is res­ult­ing in high­er costs year on year. An addi­tion­al £0.050m (31%) has been provided to cov­er the cost of addi­tion­al Microsoft licences and of new fin­an­cial software.
4. Leg­al fees have been increased by £0.015m to provide scope for addi­tion­al pro­cure­ment guid­ance required as a res­ult of the anti­cip­ated increase in pro­cure­ment and contracting.

Effi­ciency savings

1. It is likely 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 by con­tain­ing ongo­ing infla­tion­ary increases and man­aging staff vacan­cies where this is possible.

Oper­a­tion­al plan investment

1. Oper­a­tion­al plan pri­or­it­ies were dis­cussed at the Seni­or Man­age­ment Team’s policy day, held in early Decem­ber 2023. Des­pite a 4% increase in Grant in Aid – Resource fund­ing, the increase in payroll costs means that there is less resource fund­ing (RDEL) avail­able for oper­a­tion­al plan activ­it­ies in ²⁰²⁴⁄₂₅.
2. Sav­ings of 10% across all oper­a­tion­al plan areas, togeth­er with the remov­al of one-off items of expendit­ure incurred in ²⁰²³⁄₂₄ that will not recur, would release in the order of £0.649m. Assum­ing sim­il­ar levels of cap­it­al­isa­tion as in pre­vi­ous years (around £0.660m) this would bal­ance the resource budget – this is the scen­ario reflec­ted in Table 1.
3. How­ever, this approach would leave unused CDEL budget of £0.700m. In essence, oper­a­tion­al plan expendit­ure can be main­tained at its ²⁰²³⁄₂₄ levels, provid­ing £0.649m of that expendit­ure can be fun­ded from cap­it­al alloc­a­tions: fixed assets and CDEL-indirect.
4. 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 22 March 2024.
5. Table 1 high­lights an expec­ted increase in the Park Authority’s fin­an­cial con­tri­bu­tion to the C2030 Pro­gramme for the com­ing year to £0.450m from the ²⁰²³⁄₂₄ con­tri­bu­tion of £0.285m. We expect part­ner con­tri­bu­tions to the Pro­gramme to com­mence in the ²⁰²⁴⁄₂₅ fin­an­cial year. There­fore, we expect the Park Author­ity will need to provide for start-up fin­ance to cov­er ini­tial Pro­gramme costs in the final quarter of 2024. The full pro­gramme con­tri­bu­tion to the C2030 pro­gramme has been set at £2.250m over the 5 years of the pro­ject (£0.450m per annum) and this secures total pro­gramme fund­ing of £36m.

Next steps

1. Pri­or­it­ies for activ­ity to meet the aims of the oper­a­tion­al plan are under dis­cus­sion, with par­tic­u­lar con­sid­er­a­tion of the need to take advant­age of the changed dis­tri­bu­tion of our fund­ing alloc­a­tion between RDEL and CDEL. Cur­rent thoughts around poten­tial applic­a­tion of this addi­tion­al CDEL fund­ing include:

   • Pro­vi­sion for cli­mate change grant fund­ing (£0.300m — £0.400m),
   • Mak­ing avail­able addi­tion­al cap­it­al fin­ance to the C2030 pro­ject, which will reduce future year con­tri­bu­tions and lim­it future year budget pres­sures (£0.100 — £0.150).

Any remain­ing sur­plus may be needed to com­pensate for fund­ing uncer­tain­ties asso­ci­ated with the peat­land res­tor­a­tion and CLLD fund­ing position.

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 the views of Com­mit­tee reflec­ted on pri­or to final­isa­tion of the budget paper to be presen­ted to the board at its meet­ing on 22 March.

Louise Allen louiseallen@​cairngorms.​co.​uk