Winchester Hat Fair bosses have frozen a back office post and cut the hours of its artistic director to stave off a cash crisis – weeks before they need to plan next year’s event.

It has also emerged the city council refused to advance a £40,000 lifeline to the street festival which is waiting for £138,000 promised by the EU, some of which is long overdue.

Council chiefs asked the Hat Fair to “do some further sums,” and come back, according to Chris Turner, one of five directors who sits on the board.

As a result, the cash-strapped charity decided not to fill a vacant administrator post and to temporarily reduce the hours of artistic director Kate Hazel, the only other paid member of staff, who was already part-time.

Prof Turner, who has been on the board for about 18 months, said this would ease the problem until December when some Arts Council funding is expected.

The Hat Fair, which started in 1974, is thought to be grappling with its biggest crisis in years. Yet only last March the street festival’s Arts Council grant rocketed from £80,000 a year to £140,000 for three years – putting its finances on a firmer footing.

Pror Turner, who is also chief executive of Winchester Business Improvement District (BID), stressed the popular event was facing a short-term problem. He said: “We are in the middle of an interesting and tricky time. We are waiting for EU money.

“We know absolutely when the £138,000 arrives all our cash flow problems will be resolved. But at the moment it is hard as we are having to book acts and plan next year’s festival.”

He said next month (November) Hat Fair organizers were due to meet city council officials on the safety advisory group to plan the large-scale public event.

Named after the tradition of throwing money into hats, the Hat Fair has grown out of all recognition from humble beginnings as a buskers’ fair.

Now in it is an internationally-renowned event with dozens of artists from across the world performing in the city’s ancient streets over four days in July and attracting thousands of people.
It also receives more public money than ever before.

In total, the Hat Fair received £250,000 in grants in 2011. In addition to EU funding, the Arts Council has pledged £140,000, the city council £24,500 and the county council £5,000 in 2012.
However the charity has been rapped over the knuckles by a watchdog body for failing to submit its annual accounts on time in previous years.

A spokesman for the Charity Commission said: “We note that the charity was late in filing its accounts for the years ending 2010, and has not yet filed annual documents for the year ending 2008.

“This is not acceptable. Trustees have a duty to file annual documents with the Commission and charities with incomes of over £25,000 are required to file accounts. Public trust and confidence in charities requires transparency and we would urge the trustees to take seriously their duties in this regard.”

The Hat Fair published accounts for the year ending March 2011 – the latest available –show the charity managed to reduce its deficit to £886 compared to £40,497 the previous year
This summer the Hat Fair was dealt a heavy blow after being forced to cancel two of its biggest acts due to bad weather.

Councillor Robert Humby, deputy leader of Winchester City Council, said officers wanted more up-to-date financial information from the Hat Fair, including its draft accounts for 2011-12.

Cllr Humby said: "We want to be able to help the Hat Fair as it is a very important part of Winchester but in order to make a decision we need to clearly understand what its financial position is.

"We want details about when the EU funding will be paid and how secure it is - whether it has been signed-off by the EU."