Finance: Norwood reveals profits but warns of continuing cost threats

Jewish care charity Norwood has turned round a deficit to record a £1.4m surplus for 2003/4.

The charity's investments helped to bring the charity into the black, rising in value by £800,000 over the year.

Norwood, which provides residential care to disabled children, has also reduced its 'subsidy' to local authorities - the shortfall between statutory revenues and the cost of providing contracted services - by just under £1m, to £1.25m.

Chief executive Norma Brier said: "The improved financial position has been achieved through a rigorous reappraisal of the true cost of providing Norwood's services and how it charges for them, successful fund-raising, and reductions in central support expenditure. The past year has been a period of consolidation, which has seen it maintain its financial position."

The surplus comes after Norwood recorded a deficit of £1.7m in 2002/3.

Its total income for the last financial year was £27.7m. Statutory funding stood at £19m, a rise of £2.4m on the previous year. The overall fundraising income was £6.4m. Revenue income, which covers day-to-day running costs at Norwood, stood at £6.2m.

However, the charity is still warning of pressure from the cost of complying with the National Minimum Care Standards, and a reluctance by local authorities to pay for the full cost of the services it provides.

"Success in renegotiating particular cases of underfunding masks an underlying trend, whereby the yearly inflation-related increases offered by local authorities do not meet the cost inflation of service provision," said Norwood director of corporate services Duncan Milroy.

"This trend will result in an increase in the subsidy this year. Unless there is a radical change in local authorities' attitudes, it will further increase in 2005/6."

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