The GDC is funded predominately from fees paid by dentists and dental care professionals (DCPs) who are required under the Dentists Act 1984 to be registered with the Council in order to practise dentistry in the United Kingdom. Fees are also paid to us by dentists to maintain their entry on the specialist lists.
Of our income in 2020, 69.5% was dedicated to delivery of regulatory activity (2019:75.8%), 24.7% was utilised for essential enabling functions (2019: 24.4%) and 5.8% utilised for other non-cash expenditure (2019: -0.2%).
Total operating income decreased by £8.9m in the year to £38.7m (2019: £47.6m).
The key drivers for this reduction are:
- an £8.7m decrease in registration income following the reduction to the level of annual retention fee charged to Dentists for their 2020 renewal and DCPs for their 2020/21 renewal
- a £1.2m decrease in Overseas Registration Examination fees due to exam deferment as a direct impact of the pandemic
- an additional £0.8m of income generated from first registration fees following their introduction in January 2020.
Total expenditure decreased by £3.6m to £33.0m in 2020 (2019: £36.6m); the significant (defined as variances over £0.5m) changes to our expenditure by regulatory function in 2020 were:
- a reduction of £4.0m in total Fitness to Practise and Hearings as a result of:
- reduced activity resulting directly from the impact of COVID-19 pandemic on the regulatory function. We expect delayed costs will now materialise in the second half of 2021 and early 2022 as operations normalise. We have been prudent in ensuring we have built this financial risk into our planning assumptions underpinning the Corporate Costed Plan 2021-2023
- the full year financial impact as a result of the efficiencies delivered by Fitness to Practise End to End Review
- a decrease of £0.7m in expenditure relating to the running of the Overseas Registration Exam due to necessary exam deferment as a direct consequence of the COVID-19 pandemic
- an increase of £0.7m in Accommodation and Office Service costs following the completion of the Estates Strategy programme and all ongoing running costs (previously charged against the programme in 2019) being transferred to business-as-usual operating costs
- a reduction of £1.2m in the Estates Strategy related expenditure, which was a time bound programme of work and completed in January 2020. This programme transferred ongoing operational cost for our new Birmingham office to Accommodation and Office Services from January 2020. This programme of work remains on track to deliver projected savings of circa £50m over 15 years
- a reduction of £1.7m of benefit received in 2019 to the annual IAS19 valuation of the pension scheme on the 31 December 2019. The prior year benefit specifically related to a one-time scheme curtailment as a result from those roles made redundant as part of delivery of our Estates Strategy.
- Throughout 2020, we benefited from previous decisions we had taken with a view of generating future efficiency savings. In 2020, we achieved £8.9m of ongoing savings from projects started in previous years, which saw our investment in Shifting the Balance and the Estates Strategy provide a positive return for the first-time since initial investment. These savings represent 27% of our 2020 cost base. Cumulative savings over the five-year period to December 2020 total £21.4m.
The GDC restricts the reporting of savings to a maximum of 5 years. Throughout the process of efficiency savings, careful consideration has been given to ensure that the implementation of any saving initiatives does not put public protection at risk. The GDC uses these savings to ensure organisational viability by building our reserves to a sustainable position, and by funding programmes that invest in measures to deliver public protection more efficiently by reducing the costs of and burden of regulatory enforcement.
The capital employed is £40.4m at 31 December 2020 (2019: £38.4m) comprising total assets of £84.2m (2019: £82.9m) and current and non-current liabilities of £43.9m (2019: £44.4m).
Total reserves held at 31 December 2020 total £40.4m (2019: £38.4m) of which general reserves are £35.9m (2019: £30.7m). The £35.9m general reserves is made up of two elements: reserves committed to fixed assets (£16.3m) and free reserves (£19.6m). The free reserves expressed as number of months of annual operating expenditure: 5.9
In setting a target level, Council considered that free reserves at a minimum of three months of operating spend and maximum of six months is appropriate, with a target to be four and a half months of operating expenditure as adjusted for our current assessment of financial risk by the end of our current three-year plan of strategic activity.
Our current approach to budgeting minimises the level of contingency budget we hold for financial uncertainty within the annual approved budget. Instead, we set any potential financial risk and uncertainty in timing of expenditure against free reserves.
This means that there is a greater probability of the need to call against free reserves than there would have been historically. Our assessment against the CCP 2021-2023 plan demonstrates current expenditure plans would sustain free reserves at 4.9
months of operating expenditure (£16.2m) when adjusted for our current assessment of financial risk (£9.4m).
This policy will continue to be reviewed to ensure it remains appropriate in light of our increased focus on medium term financial planning challenges and estimates following the financial challenges presented to the organisation and profession as a direct consequence of the COVID-19 pandemic.