Contact: Bevis Ingram, ext 01962 847508

1 Introduction

1.1 This report quantifies the impact of the closure of the Park due to Foot and Mouth on the Park's revenue finances for 2001/02, and recommends a way forward to ensure the continuation of the Park.

1.2 The Forward budget, five year Business Plan and Final Accounts 2000/01 are considered elsewhere on the agenda. This report, however, is crucial to the Park's future.

1.3 As already notified, the closure of the Park due to Foot and Mouth will mean that the Park will fall short of its income targets for 2001/02 by a significant amount. The shortfall will exceed the reserves of the Park many times over.

2 Context to the Park's finances

2.1 Before going into the detail of the figures for the current year, it will be useful to remind ourselves of the history of the Park's finances, the income targets set and achieved, and the other sources of funding.

2.2 The current Joint Management arrangements for the Park were set up in 1987 and revised in 1992. The Park covers 405 hectares; practically all the land of the Park is owned by Portsmouth City Council, Portsmouth Water Company, and Forest Enterprise in very approximately equal shares. The Park is entirely within the boundaries of Hampshire County Council, and crosses the boundaries of Havant Borough Council and East Hampshire District Council.

2.3 Under the partnership arrangements of the Constitution of the JMC as originally agreed, the four Local Authority Partners subsidise the Park on a revenue formula of 61% from Hampshire County Council and 13% each from Portsmouth City Council, East Hampshire District Council and Havant Borough Council.

2.4 The Local Authority Partner contributions (the subsidy) have been frozen since 1997/98 (which itself represented only a 1.5% increase on 1996/97), at £137,067 from Hampshire County Council, and £29,211 from each other partner authority.

2.5 In 1999/00 East Hampshire District Council cut its revenue contribution to £5,000, and it has remained at this level since. Portsmouth City Council has given notice of intent to cut its contribution to zero with effect from 2002/03.

2.6 In 1999/00 Hampshire County Council made an additional Partner contribution of £20,000 and in 2000/01 Havant Borough Council made an additional partner contribution of £5,000. Since 1999/00 Rowlands Castle Parish Council has contributed £400 per year to the Park (although this does not count as a formal `partner' contribution). Additionally £2,209 was received in the current year from East Hampshire Area Committee.

2.7 This means the revenue contributions (including that from Rowlands Castle) to the Park since 1997/98 have been as follows:

£

1997/98 229,700

1998/99 229,700

1999/00 220,889

2000/01 205,889

2001/02 203,098 current projected (including additional
grant £2,209, from East Hants Area
Committee)

2.8 This clearly shows that the subsidy to the Park has been cut significantly in both cash terms and real terms.

2.9 Over the same period the revenue income generated by the Park's operations has been as follows:

£

1997/98 172,359

1998/99 178,634

1999/00 189,051

2000/01 212,937 (nb Park closed from Feb 2001)

(2001/02 213,900 Forward budget pre Foot and Mouth)

2.10 Overall, the annual surplus/deficit (including the subsidy) has been:

£

1997/98 14,683 surplus

1998/99 9,562 surplus

1999/00 21,425 surplus

2000/01 7,288 deficit (nb Park closed from Feb 2001)

(2001/02 8,911 deficit, forward budget pre Foot and
Mouth)

This reflects good budget management on behalf of the Park, with expenditure being controlled to ensure funds available have not been exceeded.

2.11 The reserves of the Park have been built up over the years by capital contributions from Partner authorities, appeals for funding of specific projects, and transfers from revenue. The reserves have funded various capital projects, the latest and most significant being the successful bid for Heritage Lottery Fund funding for the £2 million park restoration project.

2.12 As at the beginning of 2001/02, the reserves of the Park were as follows:

£

Reserves earmarked as Lottery partnership funding 170,170

General reserve 22,281

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3 Financial impact of Foot and Mouth

3.1 This section of the report details the consequences of Foot and Mouth on the Park's income, and the action taken by the Park's Management to mitigate the effects. The closure of the Park was based on clear advice from the relevant regulatory authorities and was notified to the JMC at its last meeting in March 2001.

3.2 Assuming the Park reopens at the end of October and remains open for the rest of the financial year, the total lost income is estimated to be £178,300. The lost income is broken down as follows:

£

Entrance fees 144,700

Other fees 7,000

Sales 15,500

Other income 11,000

---------

178,300

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3.3 Action has been taken to offset the effects of this, and the following additional income has been/is expected to be generated:

£

Entrance fees (reduced charge entry) 15,000

Other fees (new activities/events) 6,500 (note, this has been offset by
£4,000 extra cost see para 4.3)

Sales -

Other income 1,200

---------

22,700

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3.4 Particularly noteworthy under `other income' is a donation of £1,200 raised by local school children in Leigh Park, which helps demonstrate the importance of the Park to the local community.

3.5 The total net income lost is therefore £155,600

4 Expenditure

4.1 This section of the report details additional revenue expenditure incurred or projected for the year, together with action taken by the Park's management to make savings.

4.2 Projected additional costs for the year are £33,900 on employees. Additional costs not yet quantified are:

£

Cost of pipework in glasshouses (figure awaited)

Compensation payment to catering concessionaire est 5,000

4.3 The additional employees costs are:

£

Restructure approved March JMC 11,500

Cleaners (see below) 5,000

Extra overtime 5,400

Single status (one off) 6,000

Activity leaders (covered by additional income) 4,000

Adjustments due to pay awards/gradings 2,000

--------

33,900

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4.4 The cleaners (cost £5,000) have been taken on to replace the contract cleaners which was budgeted at a cost of £5,000, (from premises budget). The quotation for the year from the contractor was for £9,000, so this actually represents additional spending of £4,000 avoided.

4.5 Expenditure savings made total £10,800, broken down as follows:

£

Premises 5,200 ( cleaning budget
now in staffing)

Transport 500

Supplies and services 5,100

--------

10,800

--------

4.6 The net additional expenditure is therefore £23,100.

4.7 Total net additional expenditure (£23,100) plus net income lost (£155,600), giving a net additional cost of £178,700. The budgeted deficit was £8,911; against this an additional grant of £2,209 has been received from East Hampshire Area Committee. Therefore the total projected deficit is £185,400.

5 Funding the deficit

5.1 Clearly the projected deficit will exceed the general reserve of £22,281 many times over. It is therefore proposed that the JMC formally requests a one off contribution from each partner authority to cover the deficit in accordance with the formula. The amount requested from each authority will be as follows:

£

Hampshire County Council 113,094

Havant Borough Council 24,102

East Hampshire District Council 24,102

Portsmouth City Council 24,102

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185,400

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5.2 The Management Agreement makes it clear that it is the responsibility of the Partner Authorities to fund the deficit. If the deficit is not cleared the future of the JMC and the Park must be called into question.

Recommendation

The partner authorities be requested to fund the deficit in 2001/02 on a one off basis, in the way detailed in paragraph 5.1.

Section 100 D - Local Government Act 1972 - background papers

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes:

1. Published works.

2. Documents which disclose exempt or confidential information as defined in the Act.

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