Treasurer's Report to Convention 2024
PCC Lion Philip Goodier
Council Treasurer PCC Philip Goodier
I would like to thank the Council of Governors for again giving me the opportunity to serve the Multiple District.
This Report does not deal with any charity monies, which are covered within the relevant charity Report.
1. Current Situation
My primary objective since the start of the coronavirus pandemic, in March 2020, has been to ensure the financial stability, and safety, of the Multiple District.
There are old adages that 'cash is king' and 'turnover is vanity and profit sanity' and these have been my watchwords: as we have seen too frequently, businesses, many of them long-established and well respected, have ceased trading because, ultimately, they ran out of cash.
I have resolved to ensure that MD105 remains 'cash rich' and able to withstand financial shocks.
As Council Treasurer a great deal of time has been spent looking at the finances of the Multiple District, the budget and the forecast expenditure for the current fiscal year, 2023-24, in order to make recommendations to Council.
The Council of Governors is not planning any major capital spending; the MD Headquarters was modernised and extended to make it DDA compliant a few years ago. There should be no requirement to undertake major works in the medium term - we will of course have ongoing repairs and renewals, simply to safeguard the fabric of the building.
2. Liquidity:
The MD is a cash rich organization well capable of meeting all day-to-day obligations from cash flow: as at the 31st of March the Association has the following liquid funds:
GBP Bank Accounts, details of the account holding institutions are:
CAF Bank Ltd, RBS Farnborough, Lloyds Leeds - total instant access funds £201,503
Financial movements are managed to minimize the risk of balances with any one institution exceeding £85,000, the maximum covered under the Financial Services Compensation Scheme.
In addition, investments with a market value of £199,184 are held: these are instant access, not term investments.
This gives total liquidity of £400,687
3. General Account
The budget for 2022-23 included a return to members of surpluses generated during the covid period and as planned, a deficit arose over 2022-23; at £29,087 after tax, the deficit was lower than budget. Actual expenditure for year to 30th June 2022, is contained in the Budget Proposals for 2024/25.
4. MD Convention
At one time we held the MD Convention in a seaside resort, on the basis that we would receive what is termed 'subvention' from the local authority, who usually owned and managed the venue.
Subvention is the principal that our collective spend in a locality is worth the offset provided to attract our business. Increasingly, local authorities are handing over the management of venues to third party companies and subvention is a thing of the past.
The MD Convention Officer increasingly looks to large hotels as venues. Many venues suffered significant losses during the covid period and are now seeking to recover those losses. As was reported to Council in January, we have reached the position were holding a MD Convention in or to the south of Birmingham is becoming prohibitively expensive for us to consider.
Unfortunately, predicting demand and attendance a few years in advance of the event has become very difficult and losses have been incurred on social events in recent years such that there is now no social reserve fund.
5. MD Finance Committee
The Finance Committee met on Saturday 6th January 2024 to review the financial position of the Multiple District, to discuss the Budget submissions and to make recommendations to Council for the 2024-2025 financial year on a range of issues. It should be noted that some expenditure has the weight of either the Constitution or Convention Resolution behind it and is mandatory, not discretionary.
The Finance Committee noted, with concern, that membership levels across the Multiple District continue to fall, albeit that the rate of loss has dropped since the exceptionally high levels seen during the pandemic lockdowns.
I would like to thank all members of the Committee and the MD Specialist Officers for their invaluable contribution, as and when requested, and especially, their attendance and guidance in the very complex budgeting process.
6. Budget 2024-25
As Council Treasurer, I am aware that there is a demand from members that Council drive down costs, however, inflation hit four-decade highs in several economies during 2022 resulting in a cost-of-living crisis that still threatens to tip the world into recession. Although inflation slowly reduced during 2023 it still remains above the Bank of England 2% target.
Consumers are reducing their spending to cope with soaring bills, especially in energy. Russia's invasion of Ukraine and the sanctions in response to Vladimir Putin's brutal war caused energy prices to spike, although prices have since fallen sharply from peaks seen in 2022 & 2023.
I prepare a quarterly financial forecast for Council, which is presented at each Council meeting, so that Council are aware of expenditure levels as they change during the year and are informed as to the financial impact their decisions have.
Our Headquarters staff have been very active in seeking competitive quotes for a wide range of products and services; I commend the work put in by Brigitte Green who has been proactive in seeking to reduce expenditure across the board.
Certain costs are being borne by Headquarters because of work being transferred 'in' from MD Officers due to the volume and time being taken.
For many years we enjoyed, as a Not for Profit Organisation, what is termed 'Discretionary Rate Relief'. As a consequence of the financial pressures facing them, Birmingham City Council withdrew that relief with effect from the 1st April 2011. This added more than £6,000 of cost to the organisation, this again is legislative, but provides no additional benefit.
Although an appeal was lodged against the withdrawal, it was refused on the basis that we are an organisation 'well able to absorb such a cost increase'. Given that Birmingham City Council is effectively bankrupt, the chances of obtaining 'Discretionary Rate Relief' are remote, at best.
The increase in VAT to 20% in January 2011 costs the MD around £7,500 in a full year. It is considered there is no advantage to register for VAT.
To reduce costs associated with mailings a resolution was approved at Convention 2011 and Headquarters now distribute information by electronic means where possible.
The Finance Committee discussed the overall budget proposals and made recommendations to Council; the outcomes are incorporated in the "Cost Analysis For Dues Resolution" that accompanies the Resolutions.
- Historically, Headquarters have absorbed costs rather than apportioning costs to relevant budget heads. Where possible, Headquarters costs are allocated to the Portfolios they undertake work.
- Headquarters salaries are in line with market rates for the Birmingham area.
- The Budget is based on a projected membership of 9,200 as there continues to be downward pressure on membership.
- The full schedule of budgets is set out in the attachment to the Dues Resolution.
- Finally, I would point out that, for every 250 extra members that we get, we collect £10,500.00 more, however, the general trend is a falling membership. If we can reverse the trend and increase our membership, then the cost burden on each member will reduce.
7. CIO
I am advised by Lion Paula Mellows, CIO Lead, that, as at 31.10.2023, 482 Clubs have registered an interest to become a CIO; there are approximately 560 Clubs in the MD.
376 are now registered of which 7 need a 105-order completing and a Step 8 (transfer of Assets).
And a further 115 need to complete the Step 8 (transfer of Assets).
8. Questions
If anyone has any query or seeks any clarification of anything contained within this report please do not hesitate to contact me, before the MD Convention, so that a detailed and complete response can be given.
Lion Philip Goodier FCPFA
Council Treasurer
