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1. Introduction

1.1 This report presents the budget for the year 2002/03 and the recommended charges for Harbour Dues for the year January-December 2003. The report will be submitted to the County Council's Cabinet for approval.

1.2 The charges for Harbour Dues are set by the Cabinet of the County Council, rather than by the Executive Member for Environment. This is to prevent any conflict of interest as the Executive Member for Environment (Councillor Estlin) has a boat on the river and will therefore be directly affected by the charge set.

1.3 In order to synchronise billing with the Moorings rentals (billed on behalf of the Crown Estate), the Cabinet must decide the charges for 2003 by October 2002 at the latest. Under the relevant Harbour Revision Order, the River Hamble Harbour Management Committee should be consulted on the proposed charges, and the Committee's views taken into consideration when a decision is made. Since the Management Committee meets only in June and December, this means the proposed charge must go to the June meeting of the Management Committee.

1.4 In previous years, charges have been based on the "revised budget" presented in the autumn; to comply with the timetable it is proposed that the charges should be based on the base budget contained in this report. In preparing this budget, all lines have been subject to a full review and scrutiny.

1.5 The budget is split into three areas of activity, each shown in a separate appendix:

i) Harbour Undertaking (the Harbour Authority functions, to be funded from Harbour dues). Appendix E.

ii) Management of the Moorings (the costs of managing the moorings on behalf of the Crown Estate). Appendix F.

iii) Visitor facilities partnership (the income and expenditure for the proposed partnership with the Crown Estate). Appendix G.

2. Revenue Budget 2002/03

2.1 Appendix A shows the proposed budget for all activities. For ease of comparison the revised budget for 2001/02 is also shown. This was discussed by the Executive Members Group in October 2001 and subsequently approved by the Cabinet. It also went to the River Hamble Harbour Management Committee for information in December 2001. An additional appendix - appendix I, has been included as a `glossary' explaining each budget heading.

2.2 Appendix B shows the proposed budget split into the three areas of activity. Appendices E, F and G show comparisons with the revised budget for each of these individual areas. The split shows that the amount to be recovered from Harbour Dues is £297,600. The amount to be recovered from managing the moorings on behalf of the Crown Estate is £102,900, and the net deficit on the Crown Estate Visitor Partnership is £9,600. Details of the budget are outlined below.

2.3 CCTV. The latest estimate of the annual revenue cost of CCTV is £31,000. As this will be an annual cost, it would not be appropriate to pay this from reserves - this could not be sustained in the long run. An annual cost of £31,000 means an additional £1 per metre on Harbour Dues, £11.75 per annum for a 10 metre boat, including VAT. The earliest CCTV will be installed will be September, so budget provision of £16,000 represents approximately six months costs.

2.4 Employment costs. The revised budget for employee costs for 2001/02 was £230,250; the proposed budget for 2002/03 is £237,900. £6,500 of the increase is the cost of increments for the permanent staff. The rest is additional seasonal staff. The charge to Harbour Dues has fallen from £143,900 to £129,900, a saving of 45p per metre on Harbour Dues, this is largely due to more accurate allocation of costs to the visitor partnership (in previous years the visitor partnership has not had staffing costs charged to it).

2.5 Premises costs - visitor centre. These are:

2.6 Office expenses (an increase of £7,600). This includes provision for marketing and two editions of River Talk. However, the biggest increase is the cost of using the Hampshire County Council IT2000 network (£7,000) - a corporate requirement.

2.7 Other Services. These are:

The increase for 2002/03 over 2001/02 is the cost of the Safety Management System `Designated Person' £10,000, a statutory requirement plus some associated one off set up costs of £15,000. In future years this allocation will be needed for the full year costs of CCTV. Overall additional expenditure is £25,000 and represents 81p per metre on Harbour dues.

2.8 Appendix C shows the Capital Programme. These figures are notional and the exact programme must be agreed by the Executive Members Group. Two items of Capital - the oil pollution response and the Hydrographic programme - are now regular annual items, and have been re-designated as revenue.

2.9 Inshore Rescue Grants. The budget originally included provision for grants to Solent Sea Rescue (£4,900) and Hamble Rescue (£4,500). However, a grant has not been made to Hamble Rescue since 1998 and so provision has now been deleted, saving £4,500.

2.10 The budget for "other income" includes a contribution of £11,000 from the Crown Estate to pay part of the costs of the Assistant Harbour Master - Environment. This saves some 35p per metre on Harbour dues.

3. Harbour Dues

3.1 Appendix E shows the breakdown of the budget for the Harbour Undertaking, together with a comparison with the revised budget for 2001/02, and the contribution that each item of income or expenditure makes towards the overall charge for Harbour dues.

3.2 Paragraph 2, above, outlines the main reasons for changes in income/ expenditure. In addition the fundamental review of the budget referred to in paragraph 1.4, above, has resulted in changing the apportionment of some costs between the Harbour Undertaking, the Management of the Moorings and the Crown Estate Visitor Partnership.

3.3 The overall net cost of the Harbour Undertaking for 2002/03 is £297,600. This means that the recommended charge for Harbour dues for 2003 is £9.63 per metre. Regrettably this represents an increase of 25% over the charge for 2002. This is unavoidable if the Harbour is to meet all its obligations with regard to safety and corporate requirements.

3.4 Although the percentage increase is large, it is worth considering the actual charge to River users. The current charge for a 10 metre boat is £90.12 per year, the recommended charge is £113.15, an increase of £23.03 per year or 44p per week.

3.5 The River Hamble Executive Member's Group have given very careful consideration to the proposed budget and concluded that the proposed increase in Harbour dues, although undesirable, was necessary to modernise the management of the river and to comply with new obligations, such as those associated with the Ports Marine Safety Code. The Group also emphasised the need to keep increases in Harbour dues as close to inflation as possible in future, accepting that the Harbour Authority was subject to outside pressure, such as new legislation. The Executive Member's Group also looked forward to the day that income from visitors moorings might begin to contribute more to the Harbour budget.

4. Management of the moorings

4.1 Appendix F shows the breakdown of the budget for the management of the moorings, together with a comparison with the revised budget 2001/02.

4.2 This shows that the sum that the Harbour Authority needs to recover from the Crown Estate and from the supervision charge to individual mooring holders is £102,900.

4.3 The negotiated fee from the Crown Estate is £40,000 per year. The charge in 2002 for supervision is £8.22 per metre, generating £86,777 in income. The budget figure has been left unchanged, but the final charge is subject to review and negotiation with the Crown Estate.

5. Visitor facilities partnership

5.1 Appendix G shows the budget for the visitor partnership facilities. The income figures are estimates based on the new charges, recently introduced

5.2 Appendix H shows comparison of the figures with original business case approved in June 2000. Clearly a different operation is now envisaged and being operated. In particular the midstream moorings are now clearly part of the partnership.

5.3 The deficit can be covered by the capital receipt from the Crown Estate, in the short term. But in the long term there is a need to increase the amount of income generated to bring the operation into a surplus, to repay this deficit and then produce income to support the harbour budget.

6. Reserves

6.1 Appendix D shows the position on the reserves. From 1 April 2002 the Moorings Rentals Reserve will be incorporated in the Harbour Dues Reserve. This will be formalised in the final accounts report for 2001/02, which will also be considered by the June meeting of the Management Committee.

7. Charges

7.1 Based on the budget for 2002/03, and the chargeable length used in 2002, (this was 30,913 metres) the proposed charges for 2003 are:

The charge for 10 metre boat, including VAT, will therefore be £113.15 (£90.12 in 2002).

Recommendation

That the proposed budget and the proposed charges be noted.

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:

Published works.

Documents which disclose exempt or confidential information as defined in the Act.

TITLE FILE

Appendix A

2002/03 Revenue Expenditure Budgets

Appendix B

2002/03 Forward Budget - Apportionment of Expenditure

Appendix C

Capital Programme 2002/03

Oil pollution response and Hydrographic programme now reclassified as Revenue.

Appendix D

Reserves 2002/03

Notes

1. From 1 April 2002 the Harbour Dues Reserve account incorporates the balance on the Moorings Rentals Reserve account.

2. The deficit on the Crown Estate Visitor Partnership can be covered by the Capital receipt for the time being. However, In the long run, the first call on any future surplus on the Partnership operation should be to pay off this deficit.

Appendix E

Harbour Undertaking - year on year comparison

Appendix F

Management of the moorings - year on year comparison

Appendix G

Visitor partnership - year on year comparison

Appendix H

Crown Estate Visitor Partnership : Budget

Comparison with original business case:

Appendix I

Glossary of budget headings