50
In confidence
key customers in countries which suffer from foreign exchange shortages to buy British books; and to generate surplus revenue. The CP2 target
- £0.15 million surplus revenue by 1992/93 — is expected to be achieved. The revised strategy is to encourage long-term expansion of the scheme: Representatives will be allowed to set manage- ment charges according to the local market and to retain a proportion of any surplus as an incentive. Surplus revenue remitted to the centre is set to increase by £0.06 million per anum by 1993/94, but with prospects for further growth.
PES dividend
16.17 CP2 recorded a decision that PES should pay a £0.15 million ‘dividend' to central funds each year. The business plan for Projects Group includes provision for annual PES dividends calculated as 50% of the previous year's operating surplus, and forecasts that they will reach £0.1 million (a £0.05 million per annum shortfall) by 1993/94.
NARIC
16.18 Targets set in CP2 for 240 subscribing institutions and 68% cost recovery by 1991 proved to be more than the market would bear; the subscription service was discontinued from January 1990. The financial consequence is a recurrent revenue shortfall of £0.08 million, which will be covered from the grant-in-aid. The Council is committed to providing a national information service for academic equivalences through NARIC, and will explore further cost- sharing alternatives.
Cuts
Libraries and book promotion
16.19 In line with the programme of cuts described in CP1, the Council will reduce
operational budgets by a further £0.32 million per annum. The cost of running libraries in Western Europe will be cut by £0.2 million per annum through a reorientation of library services towards information provision and services to target groups. Budgets for book promotion will be reduced by £0.12 million per annum, with up to half the savings coming from reduced expend- iture on the production of British Book News.
Contingency plan to close the gap
16.20 Assuming a government uplift factor of 2.5% (see paragraph 14.10), the Council is estimating that the purchasing power of the grant-in-aid will fall by 5% in 1991/92. This is far more than the 1.5% minimum efficiency gain which all government-funded bodies are expected to achieve each year. The Council plans to deliver recurrent efficiency savings amounting to 2% of the grant and to contribute £0.3 million of further revenue surpluses towards a balanced budget in 1991/92. However, there will still be a £2.6 million gap between planned operational expenditure and income in 1991/92; the gap will rise to £2.8 million per annum by 1993/94 (see table 18).
16.21 The Council is seeking assistance from its sponsors to bridge the remaining gap and thereby maintain or develop the level of its programmes in 1991/92. If, however, the purchasing power of the grant-in-aid is not restored, the Council will be forced to implement its contingency plan which would involve further annual cuts in operations overseas and the headquarters support services on which they depend.
16.22 Cuts in overseas budgets form a major part of the contingency plan. Damage to operational effectiveness would be inevitable and capacity to
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Balancing the budget 1991/92 to 1993/94 All figures in £ million
1991/92
1992/93
1993/94
Reduced income
Reduced purchasing power
of grant-in-aid
-4.90
-7.80
-10.10
Total
-4.90
-7.80
-10.10
Reduced expenditure
Efficiency levy
0.90
1.93
2.84
Additional efficiency gains
1.07
1.55
2.40
Increased revenue-funding
0.33
1.12
1.75
Cuts
0.32
0.32
Contingency plan to close the gap
2.60
2.88
2.79
Total
4.90
7.80
10.10
Table 18