Developing a true cost recovery business model Christie

Developing a true cost recovery business model Christie Junor-Sheppard Head of Registration Services Westminster City Council westminster. gov. uk

Westminster City Council Background 2014 to 2016 underachieving income by about £ 300 k pa Savings plan – Service income target increased year on year - £ 150 k for 2016 -17 and an additional £ 100 k for 2017 -18 Far from cost neutral: net cost to the council 2016 -17 was £ 410 k

Westminster City Council Did the usual…. • Increased the fees • Introduced new services • Introduced agile working to reduce travel and need for office space • Looked at efficiencies • reorganised appointment diary to increase no. appointments in a day • reorganised ceremony diary to reduce travel time • online bookings • Drove down costs • old registers stored out of London • reduced taxi use • used sessional staff more • Drove up demand • Microsite “a day to remember”

Westminster City Council Relaunch of Old Marylebone Town Hall

Westminster City Council Cost recovery model "The model takes a full cost approach, capturing all cost associated with the delivery of the Registrar’s service. This includes, for example, staff time and supplies as well as less tangible charges like management oversight and property costs, such as wear and tear. Once a cost base is established the model seeks to allocate and apportion these costs by looking at what ultimately drives expenditure. Is it the amount of time staff spend on a task, or is it a flat charge for the use of a venue. More simply put, by looking at all the ways costs are incurred and overlaying the types and quantities of services delivered by the registrar’s service, the model can suggest a price which fully recovers costs. Once the base position is established the model enables freedom to look at differential pricing, e. g. charging people different prices based on popularity of times and venues or offering discounts to residents. This flexible pricing structure can be pursued with the confidence that the overall position is still cost recovery and not beyond the powers of the local authority, but enables the registrar’s service to take a more commercial view and shape the market". Tim – WCC Finance

Westminster City Council Put more simply…. . STEP 1: All costs / no. staff hours = hourly rate inc. evenings / weekends STEP 2: Hourly rate x no. hours to undertake appointment / ceremony inc. of ALL associated tasks = cost of delivering that appointment / ceremony STEP 3: Forecast volume of ceremonies and appointments x cost of delivery = forecast net position of service STEP 4: By altering the fee set for each discretionary service, can ensure recover full cost of service inc. statutory

Westminster City Council Number crunching

Westminster City Council Some interesting findings…. . • • Statutory RO ceremonies cost £ 115 each for £ 50 fee – a net loss of £ 65 each A church wedding on a Saturday cost £ 342 for £ 90 fee – a net loss of £ 252 each BUT • A weekday private Citizenship ceremony cost £ 66 for a £ 110 fee – a net gain of £ 44

Westminster City Council The OMTH premium Additional costs associated with operating the building • Ushering service • Utilities • FM • NNDR • Depreciation of the asset • Redecoration • Renewal of furnishings • Refurbishment costs So separated them, apportioned them against forecast volume of ceremonies and calculated a “OMTH premium” to be added to standard cost of providing a ceremony

Westminster City Council • • • Can instantly calculate effect of promotions and discounts Can test the veracity of introducing a new service Can determine what the fee should be for new services By working out which services generate more income, can decide which services should be prioritised By getting the formula agreed instead of the fees, don’t need member approval for fee setting By running hypotheticals can see the impact of changes eg. Introduction of NDRS / Loss of NCS

Westminster City Council Difficulties • Forecasting volumes can be difficult especially if don’t have historic data • Costs can be difficult to work out, and unforeseen costs can and do occur • Constant monitoring is required • Be more successful than anticipated – and you move into profit!

Westminster City Council Result 2018 -19 forecasting £ 50 k net cost to the council, with over £ 2 m income forecast