A budget is a financial representation of planned activity for a given period. The basic principle is to compare the cost of the planned activity to the expected income the activity will generate and establish whether there will be a surplus (income exceeds cost) or deficit (cost exceeds income) at the end of the period. A surplus will mean that related reserves have increased, and a deficit leads to reduction in related reserves.

The University is a not-for-profit organisation. However, we need to ensure that activity is financially sustainable such that total income and total expenditure are broadly in line with each other.