The main business at our October Council meeting was to make decisions about the work of the GDC for 2021 and beyond and to approve the budget, plans and ARF levels for next year.
Despite the pressures on our budget, Council decided to maintain the ARF at its current level for the coming year. When the ARF levels were approved in October 2019, they were set to cover the entirety of the period from 2020-2022, with one of the aims being to provide certainty to registrants about the level of payment required. It has taken a very great deal of concentrated effort over the summer in the face of the income and expenditure uncertainty we have faced - and continue to face - to allow us to meet that aim
The impact of the restrictions imposed as a result of COVID-19 on dental services and dental professionals was very much front of mind as we discussed our plans and activities for 2021. It was clear from the discussion that Council colleagues were very aware that because of the pandemic, and other external issues, this year’s planning and budgeting process had been undertaken in the context of very high levels of uncertainty in relation to both income and expenditure. However, Council was absolutely united in recognising that we must continue to meet our statutory obligations as a regulator. Whilst we have been able to review and reschedule some of our work, that means we cannot stop what we do, and we need to ensure that we continue to have the financial resilience necessary to support the work.
On the expenditure side, as I explained in last week's update, a lot of work had been done in advance to make sure our plans reflect the current situation and are focused on the highest priority activities. Council approved the Costed Corporate Plan (CCP) for 2021-2023, details of which can be found on our Council meetings pages.
However, with the continuing uncertainty and the impact that may have on our income levels, we decided that our plan for 2021 needed to be able to cope with a 10% drop in our income from the level we are currently forecasting. We are planning to spend 6.5% less in 2021 than in 2020 which will help us deal with this risk, as it is more important than ever that we manage our financial reserves effectively.
Council therefore agreed that our reserves policy would remain unchanged. We noted that our free reserves, net of identified and costed risks, are forecast to equate to 3.9 months of operating expenditure by the end of 2023, which remains at the lower end of the range Council has set, and that it would be prudent to increase them towards the target level of 4.5 months.
Finally, I would like to take the opportunity to thank all the staff who have worked tirelessly to develop and present a very comprehensive plan and robust budget for the next three years. The high level of detail provided to me and my fellow Council members, under very difficult and challenging circumstances, has given us the confidence that these plans have been thoroughly considered and costed, and that they will ensure that the GDC is able to effectively meet its statutory obligations throughout these difficult times.