Hampshire County Council
Executive Member - Sir George Staunton Country Park Joint Management Committee
2 December 2004
Budget Monitoring 2004/05 and Draft Forward Budget 2005/06
Report of the County Treasurer
Contact: Bevis Ingram 01962 847508
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.
1.1 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)
This small variation masks a great deal of management activity. Expenditure on staff training has been curtailed, and turnover savings have been made mainly in the office and farm staff. However, the decision to bring cleaning of premises and catering operations in house rather than through contractors, together with the cost of covering for absence have contributed to the spend being greater than the original budget.
1.4.2 Premises (-£36,200)
Savings are forecast through stringent management of utilities (-£11,000) and general maintenance (-£3,000), freezing expenditure on fixture and fittings
(-£5,000), and through employing staff rather than contractors to clean the premises (-£17,000).
1.4.3 Transport (+£1,300)
The increase is due to higher expenditure on hire of vehicles and plant.
1.4.4 Supplies & Services (+£45,700)
Although there have been small savings in office expenditure and advertising, there have been increases in expenditure, mainly on site maintenance, materials, tools and equipment (+£6,000), and hired services (+£4,000). The largest additional expenditure has been incurred on the purchase of catering supplies following the decision to take the catering operation in house (+£32,000); this has been offset by increased catering income. The Management Team is taking every opportunity to minimise expenditure.
1.4.5 Income (-£8,500)
Income overall is forecast to fall short of the original budget by £8,500. This single figure masks the disparity between the different budget headings. The overriding reason for this is the unavailability to the public of the new facilities, a factor upon which the original budget was based.
Although visitor numbers are forecast to reach last year's level this has been due to the success of the initiative whereby visitor incentives (such as free entry, or free repeat visits) were offered during the restoration period in order to maintain interest in the site. Income from paying visitors will be down by £28,000.
Income from Other Charges includes events and room hire. The forecast outturn for both of these are lower by £49,300 because the facilities were not ready for use until September.
Forecast Sales income has been reduced by £10,900 because of fewer pet sales as the breeding programmes could not be reintroduced to the Farm until later in the year when the buildings were handed back.
Income from other sources has increased by £79,700 and has almost compensated for the shortfall in the other categories. The two major contributors to this are additional one-off grants (£30,000) and extra catering income (£50,000) both of which will have incurred some additional expenditure in staff time, materials and equipment and provisions.
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)
The budget will increase due to the new and enhanced operations
(eg conferencing and catering) and to filling posts that have previously been held vacant (eg marketing, Senior Farm Ranger). Inflation accounts for £20,000 of this increase.
2.5.2 Premises (+£14,300)
The rise is due to the full year effect of managing the new facilities.
2.5.3 Supplies and Services (+£81,100)
The main increases arise through the costs of catering, events and conferences. These will be covered by directly earned income.
2.5.4 Income (+£238,000)
The predicted increase in income is a direct result of the new Conferencing (£60,000) and Catering (£70,000) income streams becoming fully operational. A nominal (below inflation) increase in ticket prices and a continuation of the current trend in visitor numbers will generate an extra £62,000 in gate receipts and £38,000 secondary spend in the retail operations. Should the anticipated volume of events, conferences and catering fall below the budgeted level, there will be a compensatory reduction in related expenditure.
(Appendix C shows this more clearly).
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.
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.