The Natural History Museum Annual Report 2002|03
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Financial review / Audit and risk management / Funding for research / Income / Expenditure

Financial review

Our principal source of funding continues to be the UK Government, which provides grant-in-aid under a three-year agreement and special payments for essential capital projects. Grant-in-aid accounted for 91% of our available funding for the year – the balance came from admission charges for special exhibitions, sponsorship and donations, and commercial activities.

This was the second year of the current three-year funding agreement, which requires that we meet a series of performance targets in return for assured levels of financial support. We received £28.9 million in baseline grant-in-aid, with a further £6.7 million to compensate for the loss of revenue that followed the introduction of free entry for all adults in December 2001.

During the year we signed a revised Financial Memorandum, which sets out key financial principles, and a new Management Statement, which defines our relationship with the Department for Culture, Media and Sport (DCMS). We value our relationship with our sponsoring body and intend to work closely with DCMS to review and strengthen this further.

We continued to focus on efficiency savings across our organization, and to maximize revenue from non-Government sources. Following the introduction of free entry, we are generating income from our special exhibitions, and retailing revenue has increased, although spending per head declined. Income from retailing also increased, though spending per head declined. Staff, infrastructure and other costs rose.

DCMS is providing additional funding for our capital programme. We received the first £2.5 million of the £6 million grant-in-aid for refurbishing the Palaeontology Building. £2.5 million has been awarded for Darwin Centre Phase Two in the next funding agreement, which commences in the 2003/04 financial year. We incurred further capital costs of £0.9 million for the first stage of the replacement of the Museum’s IT infrastructure.

We are most grateful to the Government for its support during a year of change and renewal for the Museum. However, we have concerns about the levels of funding going forward. Taking the effects of inflation into account, the real level of grant-in-aid is continuing to fall. As we reported to the House of Lords Select Committee for Science and Technology, our grant-in-aid has decreased in real terms by 27% in the decade since the Committee last reported in 1992. We will continue to monitor our funding streams closely. As we have publicly stated, the Museum’s Trustees reserve the right to reintroduce admissions charging should our grant-in-aid from DCMS fall to such an extent that the care of our collections would be put at risk by not doing so.


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