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corporate plans and budgets » Plan & Budget 2003/04 - budget 2003/04

introduction

6.1 Expenditure for 2002/03, before financing costs, is expected to be £2.2m above budget, mainly due to the additional staff and staff-related costs. However, we expect our unit cost to be £544, compared with the budgeted figure of £688.

6.2 The budget for 2003/04 (before financing costs) of £32.5m is £2.8m more than the forecast for 2002/03 - an increase of 9%. The majority of this increase relates to the staff recruited in 2002/03 to service the increasing levels of complaints. We expect the unit cost to be £551 - slightly higher than in 2002/03, in which it was reduced abnormally by the exceptional level of closures. The increase reflects:

  • the full-year effect of staff recruited in 2002/03;
  • additional staff in 2003/04;
  • increased funding for the final salary pension scheme; and
  • the additional 1% national insurance contributions.

6.3 IT costs will increase as a result of the licences and equipment we need to support the additional casework staff, and maintenance charges on our software. The depreciation charge will increase by £0.5m, due to our implementing the new unified case system in 2002/03. This increase is equivalent to £6 on our unit cost.

capital expenditure

6.4 Capital expenditure of £1.4m is planned in 2003/04. This consists of £0.3m to fit-out existing accommodation for the additional staff, £0.4m for IT infrastructure, and £0.7m for IT development.

summary of expenditure

6.5

budget 2002/03 £m
forecast 2002/03 £m
budget 2003/04 £m
staff and staff-related costs
19.7
21.1
22.9
professional fees
0.5
0.6
0.4
IT costs
0.8
0.9
1.3
premises and facilities
3.5
4.0
4.2
other costs
0.3
0.4
0.5
depreciation
2.7
2.7
3.2
operating costs
27.5
29.7
32.5
financing costs
0.7
0.4
0.6
total costs
28.2
30.1
33.1
case closures
40,000
54,500
59,000
unit cost
£688
£544
£551

unit cost per case

6.6 The unit cost per case, analysed over the different parts of our business process, is as follows:

actual 2001/02 £
forecast 2002/03 £
budget 2003/04 £
case-handling
351
284
282
complaints prevention
customer contact division
64
47
45
external liaison/publications
22
18
18
other
administration (incl board costs)
86
70
76
premises and facilities
95
76
75
depreciation
66
49
55
total
684
544
551

headcount

6.7 The full time equivalent headcount is expected to increase to 550 by the end of March 2004 as follows:

budget 2002/03
forecast 2002/03
budget 2003/04
casework divisions
298
353
383
customer contact division
87
85
85
external liaison/publications
16
17
18
business improvement
9
9
9
knowledge management
3
7
8
subtotal
115
118
120
support services
45
45
47
total
458
516
550

conclusion

6.8 Although our costs have increased above the rate of inflation, this is almost wholly due to increased volumes of work. Our unit cost has fallen dramatically, and we have met our three-year target of having a unit cost that is materially lower than that of our predecessor schemes.