Agenda item

Assessment of the Council's Business Income - Where we are now


The Director of Finance & S151 Officer introduced this item to the Panel. He shared with them some presentation slides which will be appended to the minutes when published, a summary is set out below.


He was assisted during the presentation by the Business Analysis Manager (Economy & Growth), Team Manager (Parking Services) and Director for Partnership & Corporate Services.


Council Gross Expenditure Revenue Budget – 2020/21 £352m


£144m = Adults, Childrens and Public Health

£83m = Corporate Budgets inc. Housing Benefit & Tariff payments

£76m = Services to the public inc. Highways / Refuse Collection / Cleansing & Parks / Housing Services

£49m = Council Administered Dedicated Schools Grant


Less income = less money for services


  We’re £5.6m down in lost parking and heritage income compared to April/May last year


  That’s £91,000 a day - 14% of our daily spend on services


Summary of our financial pressures 2020/21


£18.9m - Loss of heritage income

£7.2m - Loss of parking income

£6.13m - Loss of income from commercial estate

£0.71m - Other losses of income



£10m - Increased Expenditure - in supporting our most vulnerable in social care and responding to Covid-19 demands such as sourcing PPE


£42.13m - Projected deficit


How we’re tackling these in-year pressures


£20.7m - In-year savings including reviewing and reducing costs where demand has fallen, deferring projects, holding vacancies and using corporate mitigations

£10m - Government grant

£11.43m - Drawing down reserves

£0.00 - Projected deficit following these measures


Heritage Services – Covid-19 Impact





·  Initial decline in Mandarin speaking visitors around the Lunar New Year period discussed with other leading UK visitor attractions, particularly those who have a high number of Chinese visitors.


·  In late February we saw a wave of cancellations from Italian and French school groups, who typically visit us in the Spring. This came as those governments introduced bans on overseas school groups.


·  By mid-March recommended the closure of the Roman Baths, Fashion Museum and Victoria Art Gallery to the Leader of the Council, through the Chief Executive. This decision was approved and we closed on the 18th of March, ahead of the national lock-down which was introduced the following week.


·  At the point of closure COVID-19 had cost Heritage Services approximately £450k in lost revenue.




Quarter 1 expected performance: 430,000 visitors and £6.7m revenue


The impact of the Roman Baths’ closure has come during a period when it would have been expecting to generate £50,000-£80,000 per day in admission revenue.


ONGOING IMPACT: The reopening capacity restrictions mean that the actual income generated through July and August will be significantly lower than the circa £80,000 per day generated in 2019. 


Reopening Scenario Summary


Planning for reopening started as soon as the doors were closed on the 18th March - Range of scenarios developed looking at different reopening dates, differing demand levels and different combinations of sites opening.


The reopening scenario that was recommended to the Recovery Board, was to reopen the Roman Baths on the 6th July and to reopen the Fashion Museum and Victoria Art Gallery at Easter 2021. The scenario recommended the delivery of corporate hire and wedding business from the Assembly Rooms during 2020/21, as government restrictions allow. This scenario was approved by the Recovery Group.


Visitor numbers at the Roman Baths will be restricted to no higher than 30% of normal, whilst physical distancing is required and on reopening restricted to less than this to allow testing of operational procedures. The projected demand on reopening was 10% of normal visitor numbers and growth to 65% of normal by year-end.


Service Financial Mitigations


Heritage Services has a net expenditure budget of £13.2m, with the largest section of the budget being employee costs.


In 2020/21 Heritage Services had budgeted to generate a surplus of £9.7m to the Council, from this cost base.


The cost base is already lean and savings are more challenging to find. Identified savings of £2.5m which represents 19% of the expenditure budget.


There are a number of savings which fall out as a result of lower business volumes, retail stock purchase, credit card charges and audio guide costs are all directly proportional to the visitor volume.


Staff savings: Visitor Experience staff from the Fashion Museum and Victoria Art Gallery will move to the Roman Baths, which will reduce our need for casual and seasonal staff through the rest of this financial year.


Savings through Furlough: Initially local authorities were not able to furlough staff, this rule was changed following lobbying through the LGA and ALVA.


Heritage Services re-deployed to help the Council meet the challenge of the pandemic, in Waste Services, Bereavement Services, COVID Grant Assessment and in the hub preparing the food packages which were delivered to shielding households.


Parking Services – Covid-19 Impact




·  Lockdown implemented from 23rd March 2020


·  All Parking Charges for On Street, Off Street and PCN’s were suspended from 25th March 2020


·  No parking income received in April apart from the payment of previously issued PCNs


·  Parking Charges re-introduced from 4th May 2020


·  Milsom Street closure has reduced New Bond Street Bus Gate income by 80%, other bus gates down 50%


  • Lockdown has affected the total flow of vehicles on the network (70% reduction at lockdown)



Reopening Scenario Summary


·  The reopening of non-essential shops saw an increase in income in line with projections.


·  Quarter 1 income £543,331, against a Quarter 1 budget of £2,822,440


·  20/21 Income forecast £4,550,127 against a budget of £11,947,837 represents a loss of 62% of parking income in 20/21


·  Seen steady increase in Pay & Display income - continued to regularly monitor usage and income on a daily basis. Now only offset rom 2019 average 7 day income by £7k (67% of total)


  • Traffic flow now back to 80% of pre Covid-19, yet car parks don’t mirror this change with 66% of use, but YPS at 70% showing less long duration stays


  • Day spread shows clear reduction in night-time economy, with no evening second peak.


·  PCN issue – 75% down


Service Financial Mitigations


Net expenditure budget £4.4m


Staffing represents almost 50% of the spend – Staff have continued to work throughout lockdown to support the emergency services and help vulnerable residents.


Recovery Plan Savings identified 20/21 totalling £122,000 made up of:

£47k Vacancy Management / £50k Blue Badge / £25k Maintenance Reduction


Plus further one off savings of £186,000 in 20/21

Potential further savings of £289,000 for 21/22 onwards


Savings represent 14% of the expenditure budget.


Overall Quarter 1 Forecast

Income Shortfall £7.4m

Expenditure Mitigations £0.3m

Total Shortfall £7.1m


Financial Planning Implications


2020/21 Budget Mitigations include


·  Up to £20m of in year recovery plans approved in July.


·  Access to the government income reimbursement scheme will refund 75p in every pound of lost income.


Future years budget impact


·  Income budgets are being re-set based on revised business plan projections.


·  Income diversification and wider recovery measures are being incorporated into the future years medium term financial strategy to reduce reliance on visitor income.


Councillor Matt McCabe asked what the normal staff to visitor ratio was, what is it now and what is sustainable.


The Business Analysis Manager (Economy & Growth) replied that he would have to come back to the Panel with exact figures, but normally a figure of around £50,000 is generated per staff member and that is not possible under the current level of restrictions. He added that the plans in place are for operation at 30% capacity and that the staffing levels required to keep visitors safe mean than staff numbers have not fallen significantly.


He stated that the same number of staff were required for a lower number of visitors to deliver a Covid secure workplace and that the roles and responsibilities of some staff have changed.


Councillor Alastair Singleton asked for further explanation in relation to Bus Gate Income and the fact that it was down by 80%.


The Team Manager (Parking Services) replied that due to lower levels of traffic less unauthorised motorists had driven through the Bus Gate to incur a PCN charge. He added that a budgetary target is set regarding these charges for comparative and financial management purposes only, but stated that no income target is set.


Councillor Mark Elliott asked if the figure relating to the budget for Children & Adult Services could be clarified as it is often referenced as 83% of the total budget.


The Director of Finance & S151 Officer replied that figure relates to 80p in the £1 of our net budget which is £118m.


Councillor Elliott asked if further changes were proposed to the Recovery Plan who would make that decision to implement.


The Director of Finance & S151 Officer replied that the Cabinet would have to sign off any new proposals.


Councillor Karen Warrington asked for confirmation that the Council’s current financial position was due to its reliance on income from Heritage, Parking and Commercial Estates.


The Director of Finance & S151 Officer replied that the Council does have a high level of exposure due to its historic income levels.


Councillor Warrington asked if any lessons could be learned from similarly affected Local Authorities.


He replied that he had spoken regularly with neighbouring Section 151 Officers to compare strategies and consistency to approaches on how to structure future plans. He added that he was aware that some Councils had taken a much harder line, in year, in terms of staffing cuts.


Councillor Yukteshwar Kumar asked if any other measures had been considered to allow the Fashion Museum and the Victoria Art Gallery to open earlier than is planned.


The Business Analysis Manager (Economy & Growth) replied that a range of options were considered, but the measures now in place reflect Government guidance. He added the redeployment of staff from those sites to the Roman Baths has generated £230,000 of savings.


Councillor Kumar asked if any consideration had been given on how to attract back visitors from China and other countries to our tourist sites, such as the Roman Baths.


The Business Analysis Manager (Economy & Growth) replied that international visitors to Bath from China were second only to those who travel from the USA, followed by mainland Europe. He said that they were assessing still how this part of the recovery would play out. He added there was a significant domestic visitor market that could be increased to replace international visitors.


He stated that he expected the Roman Baths to be close to its current capacity over the coming few weeks / months and that 87% of possible tickets were sold last week without the need for a discount.


The Chairman commented that changes to how attractions can operate coupled with the fact that millennials have a particular view on what they want to visit were going to have a significant effect on the long-term market. He asked what thoughts had been given to this scenario by the Council and whether there was any evidence to help within the public domain.


The Business Analysis Manager (Economy & Growth) replied that they were starting to consider the long-term trends but that this was still difficult to forecast. He added that the current plan was to be operating at 65% capacity by the end of the financial year. He acknowledged that visitor trends and wants are changing and that whilst in recovery there was an opportunity to maximise revenue from individual pricing and to support secondary spend.


He said that there was also the possibility of exploring online retail offers and to use the Baths for smaller scale wedding ceremonies.


The Chairman commented that he had concerns in terms of Climate Emergency with encouraging larger number of visitors to travel long distances to visit the city. He asked whether a Virtual Reality Experience had been considered.


The Business Analysis Manager (Economy & Growth) replied that they were exploring options for their future digital content.


The Chairman said that he commended the staff for diversifying their roles and asked would they return to their substantive posts in the future.


The Business Analysis Manager (Economy & Growth) replied that once social distancing measures had passed he expected staff to return to their normal duties.


Councillor Winston Duguid asked how the revenue figures were tracking through July against projection to achieve 10% of normal revenue.


The Business Analysis Manager (Economy & Growth) replied that at the end of week three they 1% ahead of the remodelled revenue figures.


Councillor Duguid asked for an indication of how much the Council could expect to receive via the government income reimbursement scheme that will refund 75p in every £1 of lost income.


The Director of Finance & S151 Officer replied that they had not yet received the full details of the scheme to assess what was ruled in / ruled out of it. He said though that any contractual / commercial income would not be within the scheme, any income through fees and charges such as licensing, weddings, heritage and parking would be in the scheme. He added that Council’s potential claim could be in the region of £15m and whilst very welcome it still leaves the Council with need to have in place significant recovery plans.


Councillor Shaun Hughes asked how this would affect the Red / Amber / Green status of the Council’s finances as detailed in a previous report.


The Director of Finance & S151 Officer replied that it places the Council in the Amber status.


Councillor Robin Moss asked whether there had been an increase in local visitors with access to a Discovery Card to the Roman Baths, which enables entrance for free, since they had reopened and how was this being managed in relation to paying customers.


The Director of Finance & S151 Officer replied that he believed the current strategy was to encourage those that do have a Discovery Card to visit with relatives / friends from out of the area so that they pay to enter. He said that he would follow this up with the Business Analysis Manager (Economy & Growth).


The Panel were informed subsequently that these are not just Discovery Card holders but, temporarily, anyone who can prove they live in B&NES. By doing this it increases our accessibility to local residents at this time and also means we do not have to allocate staff time to the issue and renewal of Discovery Cards.


Up to and including 4th August we had welcomed 1,307 local residents, 5% of total visitors since reopening. The number has fallen from the first week of reopening (w/c 6 July) where the figure was 12% indicating increasing confidence from visitors to travel and visit, which is encouraging from a business recovery perspective.


It was expected that local audiences would be first to return to attractions and so we created a promotion for Discovery Card holders where they received 25% off the admission of guests from outside the district and encouraged them to use the Baths as a place to reconnect with friends and family that they hadn’t seen during lockdown. 304 residents brought 412 guests generating £5.7k of admissions revenue.


Councillor Matt McCabe asked whether any consideration had been given to asking for an administrative fee, say £5, for a Discovery Card.


The Chairman asked for an answer to be sought to this question. He also wished to thank everyone for taking part in the debate.


The Panel were informed subsequently that there is a fee of £2 charged for anyone who loses a Discovery Card and requires a replacement. Introducing a membership fee has been considered in the past and discounted as a potential barrier to a scheme which is designed to be a benefit to all residents of Bath and North East Somerset, irrespective of their ability to pay.


There is a risk that creating even a small charge will cause considerable loss of goodwill amongst residents, for whom the scheme is evidence that the Council recognises that it provides its museums for them and not just for tourists. Rather than restrict access to the scheme to those who can pay, we wish to explore ways of increasing Discovery Card ownership amongst hard-to-reach audiences in Bath and North East Somerset as part of the Council’s wider community engagement strategy.


The Discovery Card scheme is also an important means of supporting local independent (charity-run) museums, many of whom offer incentives to Discovery Card holding B&NES residents. This community of museums has suffered real hardship due to Covid-19 and this is a way the Council can help them to recover. Before making any changes to the scheme, an early task will be to consult with museums and attractions on whether it helps drive footfall and how we can improve it further for them.


There are currently around 40,000 valid Discovery Cards held by B&NES residents. Naturally in the current financial climate it is right that we look at all aspects of our operation to see whether the approaches of previous years’ remain appropriate and we will do that as we move forward with our business plan. 



The Panel RESOLVED to note the report and presentation provided.

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