At this midpoint in the 2018/19 financial year, we are forecast to exceed our £72.7m budget by £1.3m.
While work continues to decrease this potential overspend, the key driver is an unforeseen increase in outsourced claims volumes relating primarily to SIPP and Pension claims (£3.2m).
These rising costs have been partially offset by effective claims price negotiations and broader efficiency savings, giving rise to the total £1.3m variance to budget.
As we continue to review further opportunities to close this expense gap, we remain cognisant of our potential need to utilise our unlevied reserve, which is in place to cover an unforeseen increase in claims volumes.
In addition, there is a potential risk of a VAT liability being payable on the costs of processing Independent Insurance claims of up to £1.5m pending a decision on their treatment from HMRC.
|Forecast 2018/19 £m||Budget 2018/19 £m|
|Claims handling infrastructure and support||53.8||51.0|
|Outsourced claims handling||17.8||16.2|
|Internal claims handling support||7.9||7.5|
|IT, facilities and central services||23.6||22.8|
|Investment: systems maintenance and improvement||4.5||4.5|
|Depositor protection, investment, recoveries and pension deficit||13.4||14.1|
|Investment: digital and outsourcing||3.5||3.5|
|Pension deficit funding||1.9||2.4|
|Total management expenses||74.0||72.7|