Hampshire County Council

Executive Member - Sir George Staunton Country Park Joint Management Committee

Item 7

2 December 2004

Budget Monitoring 2004/05 and Draft Forward Budget 2005/06

Report of the County Treasurer

Contact: Bevis Ingram 01962 847508

1 Introduction

1.1 This report presents an update on the financial position of the Park, monitoring against the current year's budget (2004/05) and a draft forward budget for next year (2005/06).

1.2 Appendix A compares the budget and forecast outturn for the current financial year (2004/05).

1.3 Appendix B presents the draft forward budget for 2005/06, including proposed contributions from the Partner Authorities. Appendix C presents the forward budget for 2005/06 in a new format.

1 2004/05 Revenue Budget

1.1 The delay in handing over the buildings and facilities to the Park following the completion of the HLF funded work has had a significant detrimental impact on the revenue budget. Income-generating opportunities for the spring and summer season have been lost, while some costs have been accruing. Cost saving measures have been and are being taken to minimise the effect on reserves, but despite this the current forecast is for the year end position to be down by a net £26,500 against the original budget resulting in a forecast operational deficit of £20,300 for the year.

1.2 The effect on reserves will be to increase the deficit from the brought forward figure of £16,502 to £37,175 by the year end, after potential interest payments have been taken into account.

1.3 Members will recall that the deficit for 2003/04 (brought forward) was expected to be a one off, and that small surplus was planned for 2004/05 to be followed by further surpluses in future years to pay off the deficit and to start to build up reserves. The forecast deficit for 2004/05 now means that this process must be put back to start in 2005/06.

1.4 The variations within the budget headings are summarised below.

1.4.1 Employees (+£7,200)

1.4.2 Premises (-£36,200)

1.4.3 Transport (+£1,300)

1.4.4 Supplies & Services (+£45,700)

1.4.5 Income (-£8,500)

2 2005/06 Revenue Budget

2.1 The forecast for future years is improving now that all the buildings and facilities in the pay area have been handed back to the Park. The Park Manager has drawn up a detailed budget for each distinct operation of the Park which shows that the Park will return a surplus of £11,000 next year, and the plan is to increase this in subsequent years. The figures for 2005/06 are summarised in Appendix B.

2.2 The salaries are forecast to rise by 4.2% due to the nationally agreed pay award and the anticipated increase in Employer's contribution to Superannuation. Inflation on non-salary budgets has been applied to only a few budget heads at 2.5%. The inflation on the requested contributions from the partners has been restricted to 3.0% which reflects the efficiency savings made within the Park. This is in line with County Council recommendations to other similar Joint Management Committees.

2.3 For 2005/06 the Park operations have been broken down into three distinct categories - Management, Operations & Education, and Commercial. The latter two categories have been further divided, and budgets have been allocated accordingly as shown in Appendix C. This is to show more clearly the contribution made by specific area and activities in the Park, and will help to clarify the financial impact of management decisions.

2.4 Appendix C is an early attempt and will no doubt be refined over time. The Partner contributions are allocated against the Management budget. The Entrance income is apportioned across the Operations budget, together with appropriate and relevant sales income. The Commercial operations are expected to generate their own income and will make a contribution to the overall running costs of the Park, and to the Reserves.

2.5 The major differences in figures from the 2004/05 revised budget are as follows:

2.5.1 Employees (+£116,800)

2.5.2 Premises (+£14,300)

2.5.3 Supplies and Services (+£81,100)

2.5.4 Income (+£238,000)

3 Conclusion

3.1 The finances of the Park remain difficult, and the Park continues to rely heavily on Hampshire County Council for both funding and for carrying the current deficit. However, the Park has been through a period of great change and development and is now well placed to make excellent progress. There is no reason to believe that the Park's finances should not make similar progress and that the deficit will be paid off within the next three financial years.

Recommendation

1 That the revised budget for 2004/05 as shown in Appendix A be approved.

2 That the partner contributions for 2005/06 as shown in Appendix B be approved.

3 That the budget for 2005/06 as shown in Appendices B and C be approved.