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Business Plan and Budget 2016/17 for consultation

15 December 2015, Peter Barker, Director of Corporate Services and Operations
budget

During the next year we will continue to enhance the recent progress we have made in our regulatory approach, with a balanced emphasis on prevention of future harm to consumers alongside seeking to hold to account those responsible for consumer harm and bringing the market into disrepute. Our business plan sets out the range and depth of the regulatory activity we will undertake to achieve this.

The full cost operating budget for 2016/17 has been based on a thorough review all of our cost areas, and accurately reflects the regulatory approach and level of activity set out in the business plan. The budget for which we will be seeking Ofcom approval is £4,269k, which represents a 5% saving in real terms over the current year.

In terms of the levy required on industry outpayments to fund this budget, the two other major components are the size of the PRS market and the level of collected fines and admin charges during the current year. In each case both are forecast to be lower, which means that despite the reduction in our budget, the levy will rise to 0.74% (from 0.6% in the current year). Our calculations have assumed a 4% decline in market size in 2016/17, but we recognise this consultation exercise may well lead to a different consensus – in which case an increase in estimated market size will reduce the levy (and vice-versa).

Given the uncertainty with the current levy model, we are particularly interested in identifying alternatives that may work better for the PRS industry. In the short-term, and within the constraints of our current Code of Practice, we are proposing a variation to the current model – and will be interested to see if this is viewed as desirable and viable. In the longer-term, however, we aim to work with industry to undertake a comprehensive review of the current funding model.

The consultation remains open until 29 January 2016, but please let us know if you have any questions or comments before then if that will help you put together your response. We look forward to hearing what you have to say.

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