RNLI vs Daily Mail

[Sybarite]

The important point that Sybarite seems to fail to understand is that there is no connection between the pension fund, its size, assets or liabilities (however calculated) and expenditure on boats. Even the amount going in each year to reduce the deficit is largely out of the control of management and again is unconnected with the purchase of boats - or indeed on any other operational expense.

What he fails to understand is that the financial constraint placed on the management is the income it can generate , largely from its donors and that payments into the pension fund, either the closed DB scheme or for employees in the current scheme are contractural and legal obligations. It is management's responsibility to ensure that benefits to employees through pension schemes and contributions are fair, competitive and consistent with best practice and there is no suggestion that they are not.

There is a lot of confusion about the fact that RNLI is a "charity". It is only designated as such because that is the mechanism for operating in a favourable tax climate, primarily because donations are tax deductable as is certain expenditure. Otherwise as an operational business it is no different from any other in terms of management with an objective of getting the best value out of its expenditure. It does not have a "profit" or return on investment objective so much of the analysis that Sybarite tries to carry out is irrelevant as it ignores the context in which it operates.

The other issue that seems to cause confusion, particularly here, is salaries. If this operation was run in a different legal or corporate framework the salaries paid to management would be little different, being benchmarked against other services such a fire brigade, police, armed services etc. This confusion arises I suggest because people think of charities in a way that is very different from reality and seem to expect people to work for less than the market rate because it is "charitable" work - whatever that means. It is emphatically not. Why should a project manager, or a boat builder, or any other skilled worker be paid less for building lifeboats than going across the road to Sunseeker? You can apply that to any level of management - they are doing comparable jobs to people in other organisations, public or privately owned so should expect comparable pay.

Let's face it you have been sniping at me as long as I have been criticizing the over-heavy RNLI structure – and yet again I will emphasize that I never criticize the brave volunteers.

You seem to time and time again point out that I don’t seem to understand this or that but I do not need you to underwrite my business or financial knowledge.

As far as the pension fund liability is concerned, rather that rework the numbers I pointed out that the magnitude of the movement was worthy of note and posed my points in the way of questions.

Just to clarify the matter, here is what I actually wrote:

#59
It should be noted that the unfunded pension liability FELL by £30m in 2017. An increase of £57.7m one year and a fall of £30m the next would certainly excite my curiosity either as a member or as an auditor. Did the market value of investments increase so much in the year or did so many beneficiaries die off?

#62
However, given the movements from one year to the next he would appear to be having a hard time. (PS This is not to suggest that he got it wrong.)

#72
You who seem to know so much about it please explain to me (with reference to the stock market) why the unfunded deferred pension liability could have moved as follows :

2015 £22.6m
2016 £80.5m
2017 £50.5m ?

I'm open to reasonable explanations.

Basically what I have been saying is that pension liability variations are amongst the biggest figures in the finstats. In my texts I have simply asked that somebody analyse the movements which Angèle kindly did.

However I believe that the average man in the street, when he contributes to the RNLI believes he is contributing towards the cost of boats. The RNLI ‘s appeals for funds are often couched in that direction. But when the charge for pensions is 3 ¼ times the investment in lifeboats (2016)…..

Here is an illustration :

Lifeboats Revenue L/B spend
£m.. £m.. %
2017 17.9 202.4 8.8%
2016 17.7 197.8 8.9%
2015 13.9 191.5 7.3%
2014 18.3 190.1 9.6%
2013 11.6 191.0 6.1%
Total 79.4 972.8 8.2%

This is a trend which has gone on for years.

Compare the average 8.2% of income spend on lifeboats with the movements on the pension liability and you get what I described as an inconvenient situation for the RNLI.

Was this a reason that there were factual mistakes in their rebuttal of the newspaper article?

I think I know what finance people would say but, - hey anybody can make a mistake can’t they.

 

[Sybarite]

The important point that Sybarite seems to fail to understand is that there is no connection between the pension fund, its size, assets or liabilities (however calculated) and expenditure on boats. Even the amount going in each year to reduce the deficit is largely out of the control of management and again is unconnected with the purchase of boats - or indeed on any other operational expense.

Reasonable - if you have tunnel vision.

There is a lot of confusion about the fact that RNLI is a "charity". It is only designated as such because that is the mechanism for operating in a favourable tax climate, primarily because donations are tax deductable as is certain expenditure.

I think a charity provides a service on a not-for-profit basis.

Otherwise as an operational business it is no different from any other in terms of management with an objective of getting the best value out of its expenditure. It does not have a "profit" or return on investment objective so much of the analysis that Sybarite tries to carry out is irrelevant as it ignores the context in which it operates.

I certainly do not ignore the context. However when 4 or 5 years ago the Shannon was priced at £1.5m and the launching trolley at £800K and these figures are now respectively £2.1M and £1.5m it doesn't take a management consultant to point out that there is a "business" problem - especially during a time when inflation was virtually negliglible.

The other issue that seems to cause confusion, particularly here, is salaries. If this operation was run in a different legal or corporate framework the salaries paid to management would be little different, being benchmarked against other services such a fire brigade, police, armed services etc. This confusion arises I suggest because people think of charities in a way that is very different from reality and seem to expect people to work for less than the market rate because it is "charitable" work - whatever that means. It is emphatically not. Why should a project manager, or a boat builder, or any other skilled worker be paid less for building lifeboats than going across the road to Sunseeker? You can apply that to any level of management - they are doing comparable jobs to people in other organisations, public or privately owned so should expect comparable pay.

Except that I know that alternative models exist - and work.

 

[Angele]

However I believe that the average man in the street, when he contributes to the RNLI believes he is contributing towards the cost of boats. The RNLI ‘s appeals for funds are often couched in that direction. But when the charge for pensions is 3 ¼ times the investment in lifeboats (2016)…..

Here is an illustration :

Lifeboats Revenue L/B spend
£m.. £m.. %
2017 17.9 202.4 8.8%
2016 17.7 197.8 8.9%
2015 13.9 191.5 7.3%
2014 18.3 190.1 9.6%
2013 11.6 191.0 6.1%
Total 79.4 972.8 8.2%

This is a trend which has gone on for years.

Compare the average 8.2% of income spend on lifeboats with the movements on the pension liability and you get what I described as an inconvenient situation for the RNLI.

Sybarite, I'm afraid I think the analysis in your table misrepresents the reality of what proportion of its income the RNLI spends on its charitable purposes. I'm just going to look at the 2016 figures, but the values for the other years produce similar results.

Firstly, the income figure you quote of £197.8m is the total amount coming into the RNLI, and so covers more than just the lifeboat service. The RNLI's purpose is "saving lives at sea" and that covers not just the lifeboat service around the British Isles, but also lifeguards, education and awareness, and their international work - all of those are aimed at stopping people dying near water. So, for consistency, when looking at expenditure as a proportion of revenue you need to include expenditure on those other areas as well.

Secondly, the figure you quote for expenditure on lifeboats is just the capital expenditure on new boats, and doesn't include the operating/maintenance costs of the entire fleet. When I give my money to the RNLI, I know it doesn't only go on building shiny new ones, but it also goes on making sure the old ones continue to run. For that, you need to look at the income and expenditure account and not the fixed asset expenditure.

So, I think a valid comparison of "saving lives at sea" expenditure is to chuck in the full £112.5m spent on lifeboat rescue, the £19.9m on lifeguards, £2.1m spent internationally and the £11.6m on safety, education and awareness. That gives a total of £146.1m.

That equates to around 74% of the RNLI's total income.

You may, of course, disagree with my analysis. But, to include only capital expenditure on new lifeboats and also to ignore the spend on other services like lifeguards, education and international, is (in my opinion) an incomplete representation.

And, by the way, the large movements in the unfunded pension liability (aka deficit) is, in the short term, just a book entry. It does not represent an in-year cost for the RNLI. As I explained earlier, the fund will revalue once every three years and will then agree a 10 year deficit recovery plan. So, depending on when the next valuation is, the charity would have between 10 and 13 years to eliminate a deficit, always assuming that future changes in discounts rates don't do that for them. (The reduction is discount rates in 2016 from 3.8% to 2.6% was exceptional, and there is no reason to assume it could never reverse, which therefore has the potential to eliminate the deficit in a stroke).

 

[Tranona]

Let's face it you have been sniping at me as long as I have been criticizing the over-heavy RNLI structure – and yet again I will emphasize that I never criticize the brave volunteers.

You seem to time and time again point out that I don’t seem to understand this or that but I do not need you to underwrite my business or financial knowledge.

As far as the pension fund liability is concerned, rather that rework the numbers I pointed out that the magnitude of the movement was worthy of note and posed my points in the way of questions.

Just to clarify the matter, here is what I actually wrote:

#59
It should be noted that the unfunded pension liability FELL by £30m in 2017. An increase of £57.7m one year and a fall of £30m the next would certainly excite my curiosity either as a member or as an auditor. Did the market value of investments increase so much in the year or did so many beneficiaries die off?

#62
However, given the movements from one year to the next he would appear to be having a hard time. (PS This is not to suggest that he got it wrong.)

#72
You who seem to know so much about it please explain to me (with reference to the stock market) why the unfunded deferred pension liability could have moved as follows :

2015 £22.6m
2016 £80.5m
2017 £50.5m ?

I'm open to reasonable explanations.

Basically what I have been saying is that pension liability variations are amongst the biggest figures in the finstats. In my texts I have simply asked that somebody analyse the movements which Angèle kindly did.

However I believe that the average man in the street, when he contributes to the RNLI believes he is contributing towards the cost of boats. The RNLI ‘s appeals for funds are often couched in that direction. But when the charge for pensions is 3 ¼ times the investment in lifeboats (2016)…..

Here is an illustration :

Lifeboats Revenue L/B spend
£m.. £m.. %
2017 17.9 202.4 8.8%
2016 17.7 197.8 8.9%
2015 13.9 191.5 7.3%
2014 18.3 190.1 9.6%
2013 11.6 191.0 6.1%
Total 79.4 972.8 8.2%

This is a trend which has gone on for years.

Compare the average 8.2% of income spend on lifeboats with the movements on the pension liability and you get what I described as an inconvenient situation for the RNLI.

Was this a reason that there were factual mistakes in their rebuttal of the newspaper article?

I think I know what finance people would say but, - hey anybody can make a mistake can’t they.

You still don't get it do you? I am now even more concerned about your claimed ability to understand financial issues, particularly to do with pensions.

So, once again

THERE IS NO CONNECTION BETWEEN THE CHANGES IN THE VALUES OF THE PENSION FUNDS ASSETS AND LIABILITIES AND OPERATIONAL MATTERS SUCH AS EXPENDITURE ON NEW BOATS.

Please read Angele's explanation as to how these differences arise and why they are nothing to do with either the current management or current operations. I have told you this in the past and suggested you find out about UK occupational defined benefit pension schemes in the naive belief that if you are as knowledgeable as you claim you would have no difficulty in grasping the issues and understand why your constant attempts to make something of it in your sniping at the RNLI become so wearing.

The reason I question your "contributions" is because I believe you are fundamentally wrong in the way you approach your "analysis". This is I believe primarily because you fail to understand the nature of the organisation and the context in which it operates.

Nowhere is this more clearly illustrated than in this post of yours. How do you know what donors think they are contributing to? You just "believe" something that suits your argument with absolutely no FACTS to support it. You seem to have zero understanding of how the RNLI raises money, which is far more complex and sophisticated than just "man in the street". It has been raising money for over 150 years at a rate that is sufficient to sustain its operations. Do you seriously think that all those donors that range from individuals putting cash in tins to major corporations funding either individual boats or major developments like the training facilities don't know where their money goes or are somehow dissatisfied with the way it is spent? The accounts are freely available and nothing is hidden.

I am puzzled by your obsession with the %age of income spent on new boats. As the figures you quote show the number is pretty constant over the years which is hardly negative, but suggests that management has it pretty much under control. There is no shortage of boats and the boats they have are the very best you can get for the purpose. So, pray what is your problem?

AND once again why are you trying to make ANY connection between this and anything to do with pensions - particularly the closed DB scheme? THERE IS NO CONNECTION. The figures you quote for pensions are NOT a charge on revenue. I am just astonished somebody who claims to understand finance could possibly think that is the case.

Just for your education there are two charges against revenue for pensions. The first is common to all employers (by law) and is employer's current contribution to employees' pensions and is part of employment costs. The RNLI operates a defined contribution scheme (replacing the DB scheme) into which both employers and employees pay contributions - at a level comparable with other organisations of its size. The second is the additional contributions it is making to reduce the deficit on the old DB scheme. Angele has already explained how this comes about and again is outside the control of current management.

I fully respect your view about the way that the French equivalent is operated but reject your view that it is directly comparable to the RNLI, although recognise that specific aspects may well be comparable. It has been explained to you many, many times how and why these differences arise and why they make your comparisons invalid and you just ignore them. This I and no doubt others, particularly those who understand the way the two organisations operate, find extremely insulting. You seem unwilling to listen, let alone learn from people who know far more about the subjects than you do.

This post of yours to which I am responding is a prime example. You clearly do NOT understand what you are talking about, and it would be much better if you did take the trouble to follow advice and find out about why you are wrong.

 

[CLB]

Except that I know that alternative models exist - and work.

And I am sure that if you were running the RNLI you would implement an alternative model. But what is it that they say about organisations run by accountants?

 

[Tranona]

Reasonable - if you have tunnel vision.




I think a charity provides a service on a not-for-profit basis.




I certainly do not ignore the context. However when 4 or 5 years ago the Shannon was priced at £1.5m and the launching trolley at £800K and these figures are now respectively £2.1M and £1.5m it doesn't take a management consultant to point out that there is a "business" problem - especially during a time when inflation was virtually negliglible.



Except that I know that alternative models exist - and work.

What has "tunnel vision" to do with it? The pension funds are not a pot of gold management can use. Why are you so ignorant? I am just stating the facts.

I have explained why it is a charity. Not all non profit making organisations are charities and charities can run surpluses (as the RNLI does) where income exceeds costs. In a different structure this would be the same as profit. The fundamental difference is that the surplus is not distributable.

Fail to see what rising costs of a particular item has to do with the context. You clearly don't understand the concept of context with your narrow focus on one particular part of the activity. It may well be that there were failures to control costs or underestimate the costs, but there is nothing new about that, particularly with new and untried technology. This occurs in many fields of activity irrespective of the nature of the organisation ownership or structure. I suggest your obsession with this is a perfect example of tunnel vision - that is focusing on one issue means you ignore the big picture.

There are many different models of running a sea rescue service around the world and they are like they are for mostly historical reasons, often reflecting the political culture of the society in which they are based. The one we have in the UK which is generally recognised as one of the best is unique because it is unique. It was started from nothing with no other model to base it on so has developed in its own way to meet the specific needs of this country . THAT is context and it is pointless trying to compare it with another organisation that exists in a different context.

A number of people have explained in detail why the context and solutions are different and you just ignore them. As I said in pointing out your errors in dealing with financial matters that is why you get the reaction you do when you post here. You, like your observations are just not credible.

 

[chanelyacht]

There are a couple of things well worth remembering here.

Lets take SNSM v RNLI boat costs away from the equation for a moment - build costs are a whole different argument.

The problem with the RNLI is its corporate approach - for example, it used to have a team of divisional inspectors, all with years of seatime experience, who would make sure all stations operated to the same standard but reflected local differences - coastal type for example.

Now, that has gone, replaced by degree managers often who have never been to see ("lifesaving managers") operating across both lifeguards (a commercial income stream) and lifeboats. All working to a parrot standard - ignore the local variances, teach the same thing. Follow the book, come what may.

The RNLI was warned a while ago about the level of it's reserves. Now, they could have chosen to assist other UK lifeboat services (the ones they pretend don't exist), so donors' money would be going to...er... lifeboats. A quick constitution change would have allowed that - they could even have supported NCI as well.

Instead, they moved into politics, lobbying, public inland safety, all of which had the aim of...er.. raising profile and money. You now can hardly sit on a beach in the south west without some RNLI chugger - sorry, lifesaving engagement advisor - approaching you with stories of imminent death and a set of direct debit forms. That's when the paid lifeguards aren't shouting at you to move, of course.

I was recently at a national SAR conference with mountain rescue, HMCG, independents, etc - and hordes of RNLI management. Guess which group all headed back to the Hilton in the evenings?

Then you have the penny pinching in west Wales by contrast.

Sybarite and I may disagree on the floaty things side of it, but he's bang on the money organisationally.

 

[maxi77]

There are a couple of things well worth remembering here.

Lets take SNSM v RNLI boat costs away from the equation for a moment - build costs are a whole different argument.

The problem with the RNLI is its corporate approach - for example, it used to have a team of divisional inspectors, all with years of seatime experience, who would make sure all stations operated to the same standard but reflected local differences - coastal type for example.

Now, that has gone, replaced by degree managers often who have never been to see ("lifesaving managers") operating across both lifeguards (a commercial income stream) and lifeboats. All working to a parrot standard - ignore the local variances, teach the same thing. Follow the book, come what may.

The RNLI was warned a while ago about the level of it's reserves. Now, they could have chosen to assist other UK lifeboat services (the ones they pretend don't exist), so donors' money would be going to...er... lifeboats. A quick constitution change would have allowed that - they could even have supported NCI as well.

Instead, they moved into politics, lobbying, public inland safety, all of which had the aim of...er.. raising profile and money. You now can hardly sit on a beach in the south west without some RNLI chugger - sorry, lifesaving engagement advisor - approaching you with stories of imminent death and a set of direct debit forms. That's when the paid lifeguards aren't shouting at you to move, of course.

I was recently at a national SAR conference with mountain rescue, HMCG, independents, etc - and hordes of RNLI management. Guess which group all headed back to the Hilton in the evenings?

Then you have the penny pinching in west Wales by contrast.

Sybarite and I may disagree on the floaty things side of it, but he's bang on the money organisationally.

Whilst I have the utmost sympathy with the thoughts expressed I would suggest that this may not just be corporate empire building, but even though the RNLI very wisely avoids government cash to avoid interference that interference these days is creeping in via the charity commissioners who are enforcing their corporate view on things.

 

[JumbleDuck]

Whilst I have the utmost sympathy with the thoughts expressed I would suggest that this may not just be corporate empire building, but even though the RNLI very wisely avoids government cash to avoid interference that interference these days is creeping in via the charity commissioners who are enforcing their corporate view on things.

The RNLI accepts a whole stack of (local) government cash to provide lifeguard services. I am very glad to hear that the Charity Commission is being proactive an making sure that the concessions given to charities are being earned. There is far too much dodgy behaviour in the charity sector.

 

[Tranona]

The RNLI accepts a whole stack of (local) government cash to provide lifeguard services. I am very glad to hear that the Charity Commission is being proactive an making sure that the concessions given to charities are being earned. There is far too much dodgy behaviour in the charity sector.

The lifeguard service is ring fenced from the lifeboat activities and (presumably) any surplus from this and other commercial activities is passed to the charity. This work is, I believe won through open tenders.

This is rather different from other forms of government funding where charities are funded by government to pursue specific projects.

Would be very surprised if this is not very closely monitored by the charity commissioners.

 

[JumbleDuck]

The lifeguard service is ring fenced from the lifeboat activities and (presumably) any surplus from this and other commercial activities is passed to the charity. This work is, I believe won through open tenders.

This is rather different from other forms of government funding where charities are funded by government to pursue specific projects.

There are an awful lots of charities which survive largely, mostly or wholly on government contracts won through open tender. It's very common in the social care world, and the charitable status of these organisations can be decidedly iffy.

Would be very surprised if this is not very closely monitored by the charity commissioners.

I'm sure it will be, My own employer, bing a registered charity, has a completely separate branch for all commercial activities and I gather that the Charity Commission breathes fairly heavily over our collective shoulder regarding this.

 

[Tranona]

Agree and why I made the comment earlier about how individuals view charities as if they were all the same.

Suspect there is still the image among many here that the cork clad seasalts fighting through the surf in their pulling boat is the RNLI. Not helped by the organisation having clung onto this image for a long time as it attracts certain kinds of donors.

However, things have moved on and to an extent live saving (or rather loss of life) at sea has been sort of solved. The recent research and analysis of stats shows that deaths related to water are not from boats (of all sorts) foundering at sea but at the interface between land and water. Hence the change in emphasis towards inland and shorebased services. Expect if you or I were responsible for RNLI policy and saw this opportunity to apply the organisation's skills in this sector we would do the same. This should have no effect on the existing services which are well funded and run effectively.

 

[Angele]

Tranona and JumbleDuck

Actually, I'm not sure that the RNLI receives much money any more (from local authorities) to pay for lifeguarding services. It certainly was the case when they entered the lifeguarding "market" - doing the job that had traditionally been done by the council, but for less money that it had previously cost the LA and with lifeguards that were given a good and consistent level of training. However, I'm not sure where on the income side of the "P&L" is the revenue source that pays for the £20m p.a. it costs the RNLI to provide lifeguarding services. To the extent the RNLI does receive payment, it certainly cannot cover its costs.

I very much think this was the case (10+ years ago) where the RNLI initially offered to take over the running of lifeguards from councils in return for being paid to do so. The councils subsequently decided they could not afford to keep paying the RNLI. So, the charity is forced into a tough choice of whether to continue providing lifeguards to save lives when no funding is available. And it appears the answer to that is "yes, they do". (Of course, as alluded to earlier by channelyacht, providing lifeguards gives the RNLI the opportunity to rattle a tin or two on beaches, so it ain't all bad).

 

[dom]

To the extent the RNLI does receive payment, it certainly cannot cover its costs.

I very much think this was the case (10+ years ago) where the RNLI initially offered to take over the running of lifeguards from councils in return for being paid to do so. The councils subsequently decided they could not afford to keep paying the RNLI. So, the charity is forced into a tough choice of whether to continue providing lifeguards to save lives when no funding is available. And it appears the answer to that is "yes, they do". (Of course, as alluded to earlier by channelyacht, providing lifeguards gives the RNLI the opportunity to rattle a tin or two on beaches, so it ain't all bad).

I never knew that, but cash strapped councils cutting services would not surprise me. Interesting.

 

[JumbleDuck]

THowever, I'm not sure where on the income side of the "P&L" is the revenue source that pays for the £20m p.a. it costs the RNLI to provide lifeguarding services. To the extent the RNLI does receive payment, it certainly cannot cover its costs.

That's a very interesting point. I'll guess that where lifeguard services are charged for, they appear under "Trading income - net" in the accounts, but they certainly are spending a heck of a lot on the shouty people (jaded view, having seen them in action in Cornwall).

 

[Sybarite]

You still don't get it do you? I am now even more concerned about your claimed ability to understand financial issues, particularly to do with pensions.

So, once again

THERE IS NO CONNECTION BETWEEN THE CHANGES IN THE VALUES OF THE PENSION FUNDS ASSETS AND LIABILITIES AND OPERATIONAL MATTERS SUCH AS EXPENDITURE ON NEW BOATS.

I NEVER said that there was a connection. What I referred to is a question of perception. Ie Somebody thinks he is contributing towards the costs of a lifeboat whereas in fact a much larger sum may in fact be going into the pension scheme.

And is there something you don’t understand in what I wrote :

“...would certainly excite my curiosity..”
“...This is not to suggest that he got it wrong”
“ ...I'm open to reasonable explanations.”
“...I'm not saying it's wrong but perhaps you might expand on the logic.”

I was deliberately not getting down into the nitty-gritty of whether or not an organization needs to provide for pension costs or how those costs should be calculated. That was not the point in question. I might remind you that I brought this matter up because the RNLI claimed that revenues sometimes fell and they gave the example of a £43m fall in 2016 to reinforce the notion that they needed the continuing support of the public. However their figure was incorrect because revenues actually rose by £16.1 in 2016. What fell was NET income and that was because liabilities rose notably the pension liability by £57.7m.

I therefore consider that their statement was either incompetent or dishonest but, as always I would like to hear directly from the RNLI and, if I am wrong I will retract and apologise. But, I don’t think I am.

The reason I question your "contributions" is because I believe you are fundamentally wrong in the way you approach your "analysis". This is I believe primarily because you fail to understand the nature of the organisation and the context in which it operates.

The concept of running a rescue service is not rocket science. I have dealt with and consulted for very much more complex organizations. I have also audited several major charities as well as having been a treasurer of two. I also used to lecture on the Business Approach to Auditing ie you have to fully understand how an organization functions before you may competently audit it.

Nowhere is this more clearly illustrated than in this post of yours. How do you know what donors think they are contributing to? You just "believe" something that suits your argument with absolutely no FACTS to support it. .

Right back at you. How do you know they don’t believe that? Common sense and observation (as well as pm’s) lead me to think so.

The accounts are freely available and nothing is hidden

My experience over the years on this subject is that very few people on here (sophisticated sample population closely associated with the activity) know anything about the RNLI’s financial position, its investments or the cost of boats or the charity’s reserves. How many people do you think on here have studied the RNLI’s accounts?

The figures you quote for pensions are NOT a charge on revenue. I am just astonished somebody who claims to understand finance could possibly think that is the case.

I never said they were – but the movements on them are. Or are a credit to revenue.

The second is the additional contributions it is making to reduce the deficit on the old DB scheme. Angele has already explained how this comes about and again is outside the control of current management.

Was my explanation to Uricanejack not clear enough?

“Without going into detail it would appear that the underfunded element is being amortized over a number of years by an annual charge of around £9m. This means as time goes on the gap should narrow.”

I reject your view that it is directly comparable to the RNLI,

Shouts, fleet, lives saved are in the same ballpark. Only difference is that the SNSM operates at 1/10th of the RNLI's operating budget.

This I and no doubt others, particularly those who understand the way the two organisations operate, find extremely insulting. You seem unwilling to listen, let alone learn from people who know far more about the subjects than you do.

If you believe that I am willing to debate in any area you like.

This post of yours to which I am responding is a prime example. You clearly do NOT understand what you are talking about, and it would be much better if you did take the trouble to follow advice and find out about why you are wrong.

Back to the point “you’re wrong because I say so...?? Perhaps if you took the trouble to read what I actually say rather than jumping in to criticize what I don’t say.

 

[Sybarite]

What has "tunnel vision" to do with it? The pension funds are not a pot of gold management can use. Why are you so ignorant? I am just stating the facts.

Where did I say or infer that management could use the pension funds? You are really scraping the barrel now.

I have explained why it is a charity. Not all non profit making organisations are charities and charities can run surpluses (as the RNLI does) where income exceeds costs. In a different structure this would be the same as profit. The fundamental difference is that the surplus is not distributable.

There are many more fundamental differences between commercial and charitable accounting but it would take too long to go into them now. I have however outlined some in previous years and I am sure you will rush to do a search for them...

Fail to see what rising costs of a particular item has to do with the context. You clearly don't understand the concept of context with your narrow focus on one particular part of the activity. It may well be that there were failures to control costs or underestimate the costs, but there is nothing new about that, particularly with new and untried technology. This occurs in many fields of activity irrespective of the nature of the organisation ownership or structure. I suggest your obsession with this is a perfect example of tunnel vision - that is focusing on one issue means you ignore the big picture.

That’s what I mean about tunnel vision. If you don’t see anything wrong with those increases then you know nothing about project management nor cost control. The basic problem is that they need to spend money and so spent £23m creating a boat building facility to build a few boats per year; took 13 years to design and produce the Shannon – including a 3 year period - 3 YEARS -..!!! – to redesign the hull.
You say that it happens everywhere. Well the SNSM went from conception to delivery of the 61’ AWB in under 4 years and at a cost of approximately half of what a 44’ Shannon costs. It has a more efficient hull than the Shannon (IMHO - but I am willing to back up that statement on technical grounds if you wish). The SNSM took the logical approach by using existing architects and yards to produce their new boats. It might be interesting if you could tell me how many Shannons the Berthon yard have sold to 3rd parties as they announced they were going to do? OTOH the pantocarene hull has been adopted all over the world as its wave piercing bow section provides a faster and more comfortable passage though waves and it is much more economical. A Thames based pilot boat operation has said that they save £50K per boat per year just in fuel costs with the pantocarene hulls.

With the RNLI bringing boat construction in-house they have multiplied their fixed cost base and if there is a future turn-down in legacy/donation income (Brexit...???) they might soon find themselves struggling. A commercial operation would never assume an operation so far removed from their base competencies.

A number of people have explained in detail why the context and solutions are different and you just ignore them.

I never ignore them; I debate them.

As I said in pointing out your errors in dealing with financial matters that is why you get the reaction you do when you post here. You, like your observations are just not credible.

Point out an error that I have made in dealing with financial matters. The reaction that you seem to think that I get is closely related to your knee jerk.

 

[Mark-1]

Shouty Lifeguards are a tricky one. On the one hand if the RNLI are subsidising life-guarding for Local Authorities then great - it's broadly in keeping with what the RNLI were set up to do, saves the tax payer cash and seems a better way to burn the RNLI's excess cash than commissioning insanely over-engineered bespoke solutions to launch inflatable boats. (Much as I love them - not many places in the UK you can see serious money-no-object engineering these days.)

On the other hand (IMHO) the RNLI beach Nazis bring the RNLI into disrepute with the beach-going public and the idea that those people are getting management positions in the 'good' RNLI seems mad to me. Plus, I suspect many doners are not aware that a chunk of their cash funds beach patrols that would otherwise be provided by local authorities.

Tricky.

I like CY's idea for burning the RNLI's excess cash - just give large grants to Independent lifeboats. Job done.

 

[JumbleDuck]

(Much as I love them - not many places in the UK you can see serious money-no-object engineering these days.)

My materials tutor at university used to say "There are only two areas of engineering in which material costs are irrelevant: space and sports." I think he'd have to add "RNLI lifeboats" to the list now.

On the other hand (IMHO) the RNLI beach Nazis bring the RNLI into disrepute with the beach-going public and the idea that those people are getting management positions in the 'good' RNLI seems mad to me.

I am disappointed to find that my experience of shouty RNLI lifeguards (all testosterone and quad bikes on Porthgwidden Beach) was not unique. One could be a bad hiring decision or a good hiring decision having a bad day, but it's beginning to sound like policy.

 

[Angele]

That's a very interesting point. I'll guess that where lifeguard services are charged for, they appear under "Trading income - net" in the accounts, but they certainly are spending a heck of a lot on the shouty people (jaded view, having seen them in action in Cornwall).

I think trading activities is the profit generated by the RNLI shops around the country and online - all those bears in foulies and Giles cartoon Christmas cards.

2017
Income from trading activities = £10.7m
Expenditure on trading activities = £5.1m
Profit = £5.5m (some rounding error).

Which leads me to think that any receipts for providing lifeguard services is either in "charitable activities" (£3.7m) or "other income" (£1.1m). Neither comes close to the £20m cost of providing the service.

I too have a thing about shouty lifeguards. I can think of one particular beach near where I grew up that never had lifeguards when I was young. Frankly, it didn't really need them. No nasty undercurrents ready to sweep the unwary out to sea. I used to spend much of the summer holidays on that beach, swimming wherever I wanted. Never once felt in the least bit of danger. Now it is guarded and they get very grumpy if you won't swim in the tiny bit of the beach they have flagged off for that purpose, which therefore inevitably gets crowded. I'd still rather swim outside of the flags to get some clear water to myself.