N |
Hampshire County Council | ||
Executive Member - Environment |
Item 2 | ||
13 November 2001 |
|||
River Hamble Revised budget 2001/02 and annual review of charges | |||
Report of the County Treasurer | |||
Contact: Bevis Ingram, ext 7508
1 Summary
The following decision is sought:
That the following charges to be introduced from 1 January 2002
Current charge per metre (excl VAT) £ |
Proposed charges per metre (excl VAT) £ |
Imperial equivalent per foot (excl VAT) £ | |
Harbour dues |
7.45 |
7.67 |
2.34 |
2 Reason
The County Council, as Harbour Authority, sets Harbour Dues for the River Hamble annually.
3 Other options considered and rejected
3.1 The proposed increase is in line with inflation faced by the Harbour Authority. This will mean a call on reserves of £11,323. An alternative option, to increase Harbour Dues by 7.9% but not to call on reserves was rejected as it was felt that the increase in Harbour Dues should not exceed 3% this year. The attached report outlines details of the revised budget and calculations.
4 Conflicts of interest
None declared
5 Dispensation granted by the Standards Committee
Not applicable
6 Reason for the matter being dealt with if urgent
Not applicable
Approved by Date
Councillor K B Estlin
bi178
N |
Hampshire County Council | ||
Executive Member - Environment |
Item 2 | ||
13 November 2001 |
|||
River Hamble Revised budget 2001/02 and annual review of charges | |||
Report of the County Treasurer | |||
Contact: Bevis Ingram, ext 7508
7 Introduction
7.1 This report reviews the financial position of the River for the current year. It recommends charges for the calendar year starting 1 January 2002, on the basis that these charges should recover the full cost of operating the river in the financial year 2001/02.
7.2 The current financial arrangements of the River will change from 1 January 2002 with the Harbour Master collecting mooring fees as agent to the Crown.
7.3 This report therefore recommends the charges to be made for Harbour Dues and the charges to be recovered for administering the mooring fees.
7.4 In summary, it is recommended that Harbour Dues are set at £7.67 per metre (£2.34 per foot). This represents an increase of 3% on the current year. The amount to be recovered for administering the mooring fees is £128,040.
7.5 The proposed charges are based on an inflationary only increase, 3% being the level of inflation faced by the Harbour Authority, and will result in a call on reserves of £11,323, based on the latest projection of spending for the current year 2001/02.
7.6 The charges set for the River run for the calendar year 1 January to 31 December. The budget year runs from 1 April to 31 March. The River has always been run on the principle that the charges set should cover all costs of operating the River (including provision for capital works). The income generated from charges has been matched to the financial year in which the
1 January falls. Therefore, the charges set and collected for the year 1 January 2002 to 31 December 2002 should be matched against the budget for the financial year 2001/02. It is worth reiterating this point as the change in arrangements from 1 January make setting this year's charges particularly complex.
8 Analysis of budget and spend
8.1 Appendix A shows the details of the proposed revised budget for 2001/02. The revised budget is the projected spend for the current year based on the best information currently available. The charges made should be sufficient to cover the net expenditure.
8.2 For comparative purposes, Appendix A also shows the revised budget for 2000/01, set one year ago (first column). This should enable a year on year comparison of the projected income and expenditure on the river. Appendix A also shows the original budget for 2001/02 (second column) set in November last year.
8.3 Overall, the gross running costs of the River in the revised budget are £422,150. This is £186,650 (30.6%) lower than 2000/01 and £33,900 higher than the original budget for 2001/02. Paragraph 2.4 below outlines some of the key spending issues, paragraph 2.5 deals with income.
8.4 The five key revenue spending issues are:
· staffing - the revised budget is some £22,500 higher than the original budget. £5,000 of the increase is provision for the part year effect of a new post to monitor the Safety Management System. Other increases are due to sickness cover for a member of staff, pay inflation and higher seasonal staff levels
· CCTV - it has been assumed that no expenditure will be incurred on this in the current year, making a saving of £28,000
· Mid Hamble lease - 2001/02 sees the final payment of this lease cost (£20,627)
· the visitor centre (former Solent School of Yachting) lease amounts to £42,000 in a full year
· additional premises costs of £8,500 relate to the visitor centre.
8.5 The issues on income are:
· Sub let income is projected to be £4,000 lower than the original budget
· Other income, including visitor income, is projected to be £23,000 above last year's revised budget. Extra income is due to the occupation of the millennium pontoons by visitors.
9 Capital Programme and Reserves
9.1 The Harbour Authority has funded its capital programme from two reserves - the Harbour Dues Reserve Account and the Moorings Rentals Reserve Account. These reserves are then maintained by contributions from Revenue.
9.2 At its meeting on 1 November 2000 the Management Sub-Committee received a report on the level of reserves and revenue contribution. At that meeting the Sub-Committee resolved that for 2000/01 and 2001/02 the budgeted revenue contribution should no more than match the forecast capital expenditure, with no contribution to Moorings Rentals in 2000/01 (to reduce the increase in mooring fees).
9.3 Further, at its meeting on 9 February 2000, the Management Sub-Committee had agreed that additional contributions of £18,000 per year from visitor income should be made to the Moorings Rentals Reserve in 2001/02, 2002/03 and 2003/04 to pay for the `Millennium' Pontoons installed in summer 2000.
9.4 Appendix B shows the capital programme for 2001/02. This includes £10,000 for the Safety Management System approved by the Management Sub-Committee at its meeting on 25 July 2001.
9.5 Capital works relating to the Harbour Undertaking amount to £44,940. In order to cap the increase in Harbour Dues at 3%, it is proposed that the revenue contribution to the Harbour Dues Reserve Account is £33,617. This will mean £11,323 is taken from the Reserve Account (Appendices A and D).
9.6 Appendix C shows the projected level of reserves.
10 Moorings Rentals Reserve
10.1 The balance on the Moorings Rentals Reserve as at 1 April 2001 was £54,679.
10.2 The Moorings Rentals Reserve has been maintained for capital expenditure on the County Council's "own" moorings, as well as support for the Harbour Dues Reserve and the general benefit of the river, its users, its facilities and environment.
10.3 From 1 January 2002 the County Council's "own" moorings will transfer back to the Crown Estate, and maintenance/capital expenditure on them will cease to be the responsibility of the River Hamble Management Committee. In the light of this, the need for the Moorings Rentals Reserve is dramatically decreased; arguably, it is not needed at all.
10.4 Capital works relating to the Moorings amount to £7,160 in 2001/02. Clearly these costs cannot be charged to the Crown Estate in the form of a fee for administering to moorings after 1 January 2002. It is therefore proposed to fund these works from the Reserve.
10.5 Equally, it would be wrong to offset any income received from visitors for moorings from the fee charged to Crown Estate. So it is proposed that the full amount of income attributable to the Moorings is added to the Reserve (£40,050).
10.6 The cost of the Mid Hamble lease is another cost which cannot be charged to the Crown Estate as an administration fee, so this cost (£20,627 in 2001/02) will have to be met from Moorings Rentals Reserve.
10.7 Finally, the exact level of the Reserve will be clear when the final accounts for 2001/02 are produced. At that stage it is proposed that a decision is taken on what to do with the balance on the Reserve - for example, transfer it to the Crown Estate Partnership reserve, or the Harbour Dues reserve.
11 Crown Estate Partnership Reserve
11.1 This reserve was set up to fund the Harbour Authority's share of the proposed partnership arrangements on visitors, and to support the Harbour Dues reserve and the general benefit of the river, its users, its facilities and environment.
11.2 This reserve is an integral part of the Harbour Authority's accounts (and so the County Council's accounts). Despite its title, the Crown Estate does not have any call on the balance of this reserve.
11.3 All expenditure incurred on the visitor facilities in 2000/02 and 2001/02 has been charged to this reserve, so it currently has a large deficit balance. However, it is proposed that the major capital receipt to be received from the Crown Estate over the next five years will be added to this reserve, bringing into surplus.
11.4 Further, under the business case approved in June 2000, it is expected that this reserve will receive a share in "profits" from the visitor facilities developed in partnership with the Crown Estate.
12 Apportionment of net expenditure
12.1 Taking account of the contribution to capital expenditure and the projected income, the net expenditure to be met from charges is £392,767 (final line, third column, appendix A). This is £4,717 higher than anticipated when the original budget was agreed last year.
12.2 In order to arrive at a recommended charge it is necessary to apportion this net expenditure between the Harbour Undertaking (for Harbour Dues) and the Moorings Rental account.
12.3 The apportionment is based principally on an allocation of staff time spent on the various tasks involved in managing the river. Overheads are apportioned similarly whilst other costs are charged specifically. The apportionment is set out in Appendix D and the net expenditure to be met from charges is as follows:
£ |
To be met from: | |||
Harbour undertaking |
237,400 |
Harbour Dues | ||
13 Chargeable Length
13.1 The chargeable length used is as follows:
Revised 2001/02 feet | ||
Harbour Dues |
101,453 |
14 Proposed Charge
14.1 Appendix E shows the calculation of the proposed charge. The net expenditure to be raised from the charge is divided by the chargeable length to give an annual charge per foot/metre. The proposed charge is shown in the table below, together with the charge for 2000/01 and the percentage increase.
2000/01 |
2001/02 Proposed |
% | |||
£ |
£ |
||||
Harbour Dues |
Foot |
2.27 |
2.34 |
3.0 | |
Metre |
7.45 |
7.67 |
3.0 |
14.2 The effect of this charge, including VAT, on a 32 feet boat would be an increase of £2.63 for the whole year, as follows:
Current annual charge (inc VAT) |
Proposed annual charge (inc VAT) | ||
£ |
£ | ||
Harbour dues |
85.35 |
87.98 |
14.3 Appendix F shows the cost of administering the Moorings is £128,040 (excluding capital and repairs), and it is proposed that this should be the starting point for negotiating an annual fee with the Crown Estate, and other charges made in connection with administering the Moorings.
Recommendation
It is recommended that the following charge be introduced from 1 January 2002:
Current charge per metre (excl VAT) |
Proposed charge per metre (excl VAT) |
Imperial equivalent per foot (excl VAT) | ||
£ |
£ |
£ | ||
Harbour Dues |
7.45 |
7.67 |
2.34 |
Section 100 D - Local Government Act 1972 - background papers
The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.
NB the list excludes:
1. Published works.
2. Documents which disclose exempt or confidential information as defined in the Act.
TITLE FILE
bi177
Appendix A
2001/02 Revenue Expenditure Budgets
Revised Budget 2000/01 (at outturn prices) |
Original Budget 2001/02 (at Nov 2000 prices) |
Revised Budget 2001/02 (at Outturn prices) | ||
£ |
£ |
£ | ||
Employees |
223,400 |
207,750 |
230,250 | |
Premises |
8,400 |
8,200 |
15,900 | |
Transport |
14,800 |
14,800 |
15,100 | |
Supplies and Services: |
||||
Environmental maintenance |
3,000 |
3,000 |
3,200 | |
Mooring maintenance |
3,600 |
2,700 |
4,500 | |
Navigational aids |
3,000 |
3,000 |
3,000 | |
CCTV |
0 |
28,000 |
0 | |
Inshore rescue grants |
9,200 |
9,200 |
9,400 | |
Central support charges |
28,000 |
28,000 |
28,700 | |
Rates on land used as moorings |
9,000 |
8,700 |
9,000 | |
Office expenses |
24,900 |
24,900 |
26,500 | |
Other services |
6,700 |
6,700 |
9,000 | |
Upper Hamble lease and public jetties |
4,800 |
4,800 |
4,973 | |
Visitor Centre lease |
0 |
0 |
42,000 | |
Lower Hamble lease |
240,000 |
0 |
0 | |
Mid Hamble lease |
30,000 |
30,000 |
20,627 | |
Provision for Inflation |
8,500 |
|||
Gross Running Costs |
608,800 |
388,250 |
422,150 | |
Contribution to Harbour Dues Reserve |
32,800 |
32,800 |
33,617 | |
Contribution to Moorings Rentals Reserve (to match capital expenditure) |
0 |
29,000 |
0 | |
Total Expenditure |
641,600 |
450,050 |
455,767 | |
Income |
||||
Sub lets |
6,000 |
6,000 |
2,000 | |
Other (including visitor income) |
38,000 |
56,000 |
61,000 | |
Debt adjustment |
(9,000) |
|||
Net expenditure to be met from charges |
606,600 |
388,050 |
392,767 | |
Appendix B
Capital Programme 2001/02
Scheme |
Total Cost |
Harbour Undertaking |
Mooring Rentals | |
£ |
£ |
£ | ||
2001/02 |
Oil pollution response |
3,500 |
3,500 |
- |
2 x Outboards |
5,800 |
4,640 |
1,160 | |
Hydrographic Programme |
10,000 |
10,000 |
- | |
Harbour Infrastructure and Environment Works |
15,000 |
15,000 |
- | |
Moorings Maintenance |
4,200 |
- |
4,200 | |
Minor Works |
3,600 |
1,800 |
1,800 | |
SMS System |
10,000 |
10,000 |
- | |
52,100 |
44,940 |
7,160 | ||
Appendix C
Reserves 2001/02
Harbour Dues Reserve Account |
Moorings Rentals Reserve Account |
Crown Estate Partnership Account Reserve | |
£ |
£ |
£ | |
Balance at 1 April 2001 |
60,113 |
54,679 |
-37,114 |
Estimated interest accruing in 2001/02 |
2,650 |
2,400 |
- |
62,763 |
57,079 |
-37,114 | |
Add : Contribution from revenue account |
33,617 |
0 |
-46,750 |
Add : Income from Visitors |
0 |
40,050 |
0 |
96,380 |
97,129 |
-83,864 | |
Less: Estimated capital expenditure in 2001/02 |
44,940 |
7,160 |
|
Less : Mid Hamble lease |
20,627 |
||
Estimated balance at 31 March 2002 |
51,440 |
69,342 |
-83,864 |
Appendix D
2001/02 Revised Budget - Apportionment of Expenditure
Revised Budget 2001/02 |
Harbour Undertaking (Harbour Dues) |
Moorings Rentals Account |
Crown Estate Partnership | |||
£ |
£ |
£ |
£ | |||
Employees |
230,250 |
143,865 |
86,385 |
- | ||
Premises |
15,900 |
4,440 |
2,960 |
8,500 | ||
Transport |
15,100 |
11,280 |
3,520 |
300 | ||
Supplies and Services: |
||||||
Environmental maintenance |
3,200 |
3,000 |
0 |
200 | ||
Mooring maintenance |
4,500 |
0 |
4,500 |
0 | ||
Navigational aids |
3,000 |
3,000 |
0 |
0 | ||
Inshore rescue grants |
9,400 |
9,400 |
0 |
0 | ||
Central support charges |
28,700 |
21,525 |
7,175 |
0 | ||
Rates on land used as moorings |
9,000 |
0 |
9,000 |
0 | ||
Office expenses |
26,500 |
16,100 |
10,400 |
0 | ||
Other services |
9,000 |
4,900 |
4,100 |
0 | ||
Upper Hamble lease and public jetties |
4,973 |
4,973 |
0 |
0 | ||
Visitor Centre lease |
42,000 |
0 |
0 |
42,000 | ||
Lower Hamble lease |
0 |
0 |
0 |
0 | ||
Mid Hamble lease |
20,627 |
0 |
20,627 |
0 | ||
Gross Running Costs |
422,150 |
222,483 |
148,667 |
51,000 | ||
Contribution to Harbour Dues Reserve |
33,617 |
33,617 |
- |
|||
455,767 |
256,100 |
148,667 |
51,000 | |||
Less: Sub let income |
2,000 |
200 |
1,800 |
0 | ||
Less: Other income |
61,000 |
18,500 |
38,250 |
4,250 | ||
Net expenditure to be met from charges |
392,767 |
237,400 |
108,617 |
46,750 | ||
Appendix E
Calculation of charge based on Revised Budget 2001/02
Net expenditure to be raised from charges
£
Harbour Undertaking 237,400 To be raised from Harbour Dues
32 foot boat including VAT £ | ||||||
Harbour Dues |
237,400 |
= |
£2.34 |
per foot |
87.98 | |
101,453 |
foot |
= |
£7.67 |
per metre |
288.57 | |
Appendix F
Moorings
Calculation of Administration Fee to be recovered from Crown Estate
£ | ||
Gross revenue cost of Moorings Rentals |
148,667 | |
Less Mid Hamble Lease |
20,627 | |
Cost of administration of moorings |
£128,040 | |