Iwm corporate Plan 2017–20 Introduction

Threats to the financial resilience of IWM will continue to prevail over this Plan period and uncertainty will shape the UK economy in 2017, largely due to the unknown impact of Brexit. The outlook in terms of economic growth for the year ahead is conservative with the average UK GDP growth estimates at 1.3 per cent, (down from 2 per cent in 2016). This might impact IWM as slow economic growth could result in Government pressure to further reduce public spending. Additional pressure may also result from rising inflation. This is likely to affect our commercial performance as customer confidence reduces. Significant cost pressures include increased business rates.

In combination, these financial pressures significantly threaten the achievement of our objectives and the provision of services and activities along current lines. In terms of mitigating controls, we are positioned to manage as a result of the Change Programme which has given us greater financial flexibility through a reduction in fixed costs. In CP17 we have set aside a higher level of contingency as a buffer against these risks and financial uncertainty with £3 million allocated over the Plan period.

The economic context does provide us with opportunities which we have planned to maximise over this period. A devalued pound brings opportunities for audience growth. Visit Britain have forecast buoyant international inbound volume and spend in 2017 on the basis that the prevailing exchange rate could act as an incentive for potential leisure visitors to come to Britain. Visit Britain predict 38.1 million visits, which is an increase of 4 per cent on the 2016 forecast; and £24.1 billion in visitor spending, an increase of 8.1 per cent on 2016. Furthermore this trend could see the return of the staycation effect, where UK families choose to remain at home rather than travel abroad, presenting opportunities for a growth in domestic audiences. In 2018–19 the end of the First World War Centenary and high impact programming around our Remembrance and Renewal season is an opportunity for increased profile and audience engagement.

We have prioritised IT investment where it mitigates cyber security risks as any breach could have serious reputational repercussions for the museum. In CP17 funding continues to support a programme of testing and works to protect the integrity of our network and the assets and information that we hold. On a broader level the current security level for terrorism is severe, meaning that an attack is highly likely. While there is little we can do to remove this threat completely, we have taken every measure we can to ensure that the appropriate levels of vigilance and checks are in place. We are investing in upgrades to our security systems and continue to keep our Business Continuity Plans up to date with a regular regime of testing. Our Audience Development Plan identifies audiences which are more resilient in the unfortunate event of a terrorist incident on British soil and how we might adapt our marketing plans accordingly.

IWM has a large estate which requires significant investment and resource to manage. Whilst we continue to invest in our buildings and infrastructure this is necessarily determined on a risk and priority basis. Projects to be delivered during CP17 include investment in our collections storage at IWM Duxford. This will fulfill one of the fundamental principles of IWM’s Estates Strategy – the relocation of collections material to IWM Duxford – and is an enabler of the Transforming IWM London phase 2 project. Most significantly it will see an estimated 80 per cent of our collections stored in appropriate conditions by the end of this Plan period (currently less than 30 per cent). Such projects may mean short-term disruption for staff and our operations but bring about substantial future gains for IWM, not least by effectively managing the risk around damage to our collection.

Our staff are our most valuable asset and we continue to build our working culture so that we improve our daily working lives. The start of CP17 marks two years since our new staffing structure was implemented in April 2015. Since that time much progress has been made, with centralised teams working more efficiently and effectively across all areas of IWM. A regime of continued change and improvement has now become a norm, and during CP17 we will focus on engendering culture change. This will be informed by our Cultural Change Ambassador Network (CCAN) who have a remit to bring about changes to our working culture. Over this period we will also see new ways of working, with a greater appetite for being experimental and taking risks with our public programming as we take steps to become a learning organisation – learning from mistakes, trying different things and unleashing the creativity of our staff.

8. Impact and outcomes

In terms of strategic objectives, we are seeking to achieve the following:

Prioritising our audiences

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  We will create excellent, inspiring and relevant visitor and learning experiences and people will have a deeper understanding of the causes, course and consequences of war and its impact on all of our lives
  

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  Using global citizenship as a lens for programming, audiences will make personal connections to our content and ideas
  

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  We will build and engage loyal audiences, partners and supporters, using the IWM Institute to channel our research work into a public offer that is dynamic and responsive to audience feedback
  

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  We will cement our profile as an innovative, influential, internationally renowned museum through excellent product and customer service of the highest standard and we will nurture and build key partnerships for mutual benefit
  

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  We will be leaders in our field with a reputation for excellence and innovation
  

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  We will secure our long-term financial viability and create a flexible, entrepreneurial and dynamic working culture
  

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  We will incrementally build our income and net profit levels, increasing our financial flexibility so that we can strengthen IWM and continue to invest in our public offer over the long term
  

Delivering effective stewardship of our collection

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  We will develop and care for our collection
  

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  We will ensure our collections and knowledge remain relevant and accessible for audiences now and for generations to come
  

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  Every year we will work towards having fully accessible and accountable records and images of our collection so that we can maximise the value of these assets
  

We have created a Plan that balances income and expenditure over a three-year period. Our trading income increases by 7 per cent over the Plan period, peaking during 2018–19 when we expect our visitor numbers and associated income streams to lift as a result of the Poppies and the close of the First World War centenary period. We forecast that we will generate £75K in trading income over the Plan period. Grant in Aid is shown at a flat level through to 2019–20. Whilst running costs, combined with priority investment, reflect the impact of inflation over the next three years, our salary budget (which remains a substantial proportion of our fixed costs) reduces marginally over the Plan period starting at c. £17.9 million (it is higher in year one reflecting the inclusion of some key fixed term posts that support business development and change) and levelling at £17.6 million by year 3. Contingency funds total £3 million over the three-year period and this provides us with some flexibility should we need to respond to an unexpected event.

This Plan provides investment to meet our strategic objectives through the delivery of our major projects and other specific, high priority activity. This is the activity that will drive IWM forward over the next three years, laying the foundations for our long term success, supporting our ongoing business transformation.

The breakdown of this investment is shown in the table below. A total of £50.9 million is set aside over the next three years. Two-thirds of this funding is channelled towards activity that is audience-focused including our exhibitions and public programming as well as the delivery of the next phase of our masterplan at IWM London. With this, we are seeking to build our impact on our audiences year on year.

Work to build our financial sustainability includes investing in our estates and infrastructure as well as developing new systems that will help us modernise our business. As well as building commercial return, this will help us manage our fixed cost base (systems and infrastructure) more effectively. Just under one fifth of our priority funding is set aside over the Plan period to support this.

IWM has a broad commercial income base including retail, public catering, corporate hospitality and events, admissions (for special exhibitions, programmes and events), publishing and collections sales and licensing. Since launching our Commercial Strategy in 2013, we have been building our net profit levels incrementally. In the current financial year (2016–17) we forecast we will generate a net profit of £5 million through commercial activity and £8.3 million in admissions income. Net profit in year one of the Plan (2017–18), is forecast to be £4.6 million and we estimate that admissions income will be £11.3 million (generated through ticketing to our charging branches).

In performing a sensitivity analysis, we have calculated that any further cuts to Grant in Aid (exceeding 5 per cent) will eliminate the annual contingency funds set aside entirely, leaving us exposed to risk given the necessarily limited investment we are able to make in our estates and infrastructure. It would also eliminate the financial headroom created by the change programme where we have successfully re-engineered our finances by reducing fixed costs and increased self-generated income.

Regarding self-generated income, we have a wide portfolio of income generation activity. Given the increased profile of IWM, this can be considered to be robust. The implementation of a Customer Relationship Management system will bolster this and help reduce costs further. Our catering contracts carry minimum guarantees and insurance protects us against the risk of serious business interruption.

A decline in audience numbers at our charging branches will impact on self-generated income, for example, a 20 per cent reduction means c. £2.3 million less in gross income. This will seriously impact our financial resilience and again, erode the progress we have been able to make through the delivery of the change programme. Our programming, press and marketing activity, as well as the continued quality of our product and high levels of visitor satisfaction, mitigate this risk to some degree.

Should annual utility costs increase by a third, this would eliminate more than half of our annual operational contingency budget of £1 million have set aside across each year of CP17. In light of geopolitical instability, there may continue to be fluctuations in oil prices (although at the time of writing they are at a significant low), so we will continue to monitor utility costs carefully. Over the total Plan period, we have set aside £5.4 million to cover our utility costs across our branches.

Construction inflation remains high and this will impact on our ambitious masterplanning across the IWM estate. At IWM London, we are preparing for the delivery of phase two of our masterplan to create new Second World War and Holocaust galleries and at IWM Duxford, we are preparing a masterplan for delivery over the coming years.