FINANCE NEWS: Norwood doubles its subsidy to authorities

Mathew Little

Care charity Norwood has estimated that it subsidised local authorities by £1.9m during 2002/3.

According to its annual report released last week, Norwood posted a deficit of £803,000 for the twelve months to March this year.

The charity blames "a widening gap between the cost of providing services, and the income earned through local authorities purchasing those services".

It was forced to use a proportion of its fundraising income of £5.7m to keep services running. The subsidy is double that for 2001/2.

The overall cost of providing its specialist services, which include help for those with learning disabilities, education and residential care, rose by £2.8m in 2002/3 to £23m. It attributes this increase mainly to the cost of complying with new Care Standards regulations, which have to be fully implemented in 2005.

Norwood's director of corporate service Duncan Milroy said: "2002/3 was a challenging one for Norwood in many ways. The increasing squeeze on local authority funding, changing legislation and growing demands on our community from a range of charities means we will have to examine structures and practices even more rigorously if we are to continue delivering services to their current high standard."

But he added that since March the charity had been more successful in arguing its case with local authorities, and was expecting a reduced deficit for the coming financial year.

John Knight, head of external policy at Leonard Cheshire, which has estimated its own statutory subsidy to be £1.2m, said Norwood's figures showed that the pursuit of full cost recovery should be a priority for government.

"This should be a real challenge to the Active Communities Directorate to put meat on the bones of the cross-cutting review," he said. "Never again can it be said that the voluntary sector is crying wolf over full cost recovery."

Norwood's investments dipped from £7.2m in the previous year to £5.7m in March because of losses on the stock market.

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