The Levy Board has today published its latest Business Plan, setting out the Board’s principal objectives and details of its expenditure allocations for calendar year 2015.
The Business Plan also contains the Board’s latest income and expenditure projections for the current Levy year (2015/16) to 31st March 2016. The latter takes into account a £4m reduction in expenditure in calendar year 2016 compared to 2015, which the Board has recently agreed in principle.
The Board decided last year to maintain calendar year 2015 expenditure at broadly similar levels to 2014, in the knowledge that this would very likely incur a deficit for both the 2014/15 and 2015/16 Levy years. The deficit for 2014/15, which will be published definitively in the Board’s Annual Report in the summer, is expected to be £4.1m, and the estimated deficit for 2015/16 is £6.5m. These deficits will be met from the Board’s reserves.
With regard to calendar year 2017, the Board is mindful that there are uncertainties around income including with regard to some current arrangements in place. If income was to fall further in that year, then, coupled with an anticipated ongoing decline in gross win on British racing in Licensed Betting Offices, a substantial reduction in expenditure in 2017 would be required.
The Board has agreed that Racing should now discuss with interested parties, including the Levy Board Executive, how a £4m expenditure reduction in 2016 would be effected.
Levy Board Chairman Paul Lee commented: “We announced in December 2014 that budget deficits would be incurred in both the 2014/15 and 2015/16 Levy years which was very likely to necessitate a reduction in expenditure in calendar year 2016.
“For the purposes of adopting current estimates, the Board is assuming that the decline in leviable gross profit in 2015/16 will revert to the norm of around 4%, following a significantly higher fall in 2014/15. The assumption of 4% is consistent with analysis of the trend of the last ten years.
“The Board has agreed that there must be underlying stability in our finances even in difficult times, albeit recognising that expenditure reductions will have an effect on the recipients of funding. The Board has worked hard in recent years to restore reserves which at one point in 2011 were almost as low as £15m.
“The Board has in principle agreed a £4m reduction in spending in 2016 and, unless there is good reason to expect higher income in 2016/17 than currently assumed, a more severe reduction in expenditure will be required in calendar year 2017. The planned £4m reduction in 2016 is a smaller cut than might have been made, given those assumptions.
“However, the Board will keep both 2016 and 2017 expenditure plans under review in the coming months so that they can be adjusted in the event that there are indications of improvement in the anticipated financial position.”
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