Contact: Adrian Thorne, ext 6409

1. Summary

1.1 The following decision is sought:

(i) That the River Hamble Budget 2003/04 and the Harbour Dues charge 2004 be approved.

(ii) That a Business Plan for the visitor facility partnership proposals be prepared and presented within six months.'

2. Reason

2.1 Annual approval of budget and Harbour Dues charge.

3. Other Options Considered and Rejected

3.1 Taking no action.

4. Conflicts of Interest Declared by the Decision Maker or a Member or Officer consulted - None.

5. Dispensation granted by the Standards Committee - Not applicable.

6. Reason(s) for the Matter being dealt with if Urgent - Not applicable.

Approved by: Date:

Councillor K B Estlin

7. Introduction

7.1 This report presents the budget for the year 2003/04 and the recommended charges for Harbour Dues for the year January-December 2004. This budget has already been considered by the River Hamble Harbour Management Committee (27 June 2003).

7.2 In order to synchronise billing with the Moorings rentals (billed on behalf of the Crown Estate) the charges for 2004 must be set by October 2003 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. The proposed charge was presented to the June meeting of the Management Committee.

7.3 In order to align the River Hamble budgeting process with Hampshire County Council processes, the 2004/05 budget will be presented to the Executive Member for Environment for approval in January 2004.

7.4 The supervision element of the moorings activity has been apportioned separately this year.

7.5 The budget is broken down 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 evolving partnership with the Crown Estate) - Appendix G.

8. Revenue Budget 2003/04

8.1 Appendix A shows the proposed budget for all activities. For ease of comparison the revised budget for 2002/03 is also shown. The revised budget takes into account known adjustments since the original budget as well as allocating inflation which was shown as one figure in the original budget. Inflation has been allocated at 3% of total expenditure, however salary increases for 2003/04 are now expected to exceed this level. This will impact on other budget headings as savings will need to be achieved elsewhere in order to meet these increases. This will be managed during the year as part of the budget monitoring process.

8.2 An additional appendix - Appendix H has been included as a `glossary' explaining each budget heading.

8.3 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 £308,000. The amount to be recovered from managing the moorings on behalf of the Crown Estate is £109,100, and the net deficit on the Crown Estate Visitor Partnership is £30,500. Details of the budget are outlined below.

8.4 CCTV. The latest estimate of the annual revenue cost of CCTV is £35,000. This is the estimated annual cost whether the equipment is leased or purchased as capital An annual cost of £35,000 means an additional £1.13 per metre on Harbour Dues, £13.28 per annum for a 10 metre boat, including VAT. The CCTV installation is expected to be completed by July 2003.

8.5 Employment costs. The revised budget for employee costs for 2002/03 was £255,650; the proposed budget for 2003/04 is £255,600.

8.6 Premises costs - visitor centre. These are:

	£
Rates	3,700
Water	2,500
Sewerage	2,200
Cleaning	4,000
Fixtures and fittings	1,400
Gas, electric etc	500
	14,300

8.7 Office expenses and advertising have been reduced by £2,100 and £2,000 respectively.

8.8 Other Services. These are:

	£
Consultants fees (Hydro graphic works)	3,000
Legal expenses	4,000
Miscellaneous (eg ABP Research)	1,500
SMS designated person	10,500
	19,000

8.9 The decrease for 2003/04 over 2002/03 is for the one-off cost (£15,000) of the Safety Management System. However, this allocation is now needed for the full year cost of CCTV.

8.10 Appendix C shows the proposed Capital Programme. Two items of Capital - the oil pollution response and the Hydrographic programme - are now regular annual items, and were redesignated as revenue in 2002/03. However, some oil boom equipment is required to be modified at an approximate cost of £6,000 to allow the oil pollution response work to continue effectively. It is proposed that this is met from the capital budget. There are also some refit works required to the harbour patrol boats estimated at £8,500.

8.11 The budget for "other income" is a contribution of £12,000 from the Crown Estate to pay part of the costs of the Assistant Harbour Master - Environment. This saves some 39p per metre on Harbour dues.

9. Harbour Dues

9.1 Appendix E shows the breakdown of the budget for the Harbour Undertaking, together with a comparison with the original budget for 2002/03, and the contribution that each item of income or expenditure makes towards the overall charge for Harbour dues.

9.2 Paragraph 8 above outlines the main reasons for changes in income/expenditure.

9.3 The overall net cost of the Harbour Undertaking for 2003/04 is £308,000. This means that the recommended charge for Harbour dues for 2004 is £9.96 per metre. This represents an inflation increase of 3.4% over the charge for 2003.

10.
Management of the Moorings

10.1 Appendix F shows the breakdown of the budget for the management of the moorings, together with a comparison with the original budget 2002/03.

10.2 This shows that the sum which the Harbour Authority needs to recover from the Crown Estate and from the supervision charge to individual mooring holders is £109,100.

10.3 The fee from the Crown Estate is shown in the budget as £20,000 which is a reduction from last year's £40,000 figure. The charge in 2003 for supervision is £8.51 per metre, representing an inflation only increase, generating £89,800 in income. The final charge is subject to review and negotiation with the Crown Estate.

11. Visitor Facilities Partnership

11.1 Appendix G shows the budget for the visitor partnership facilities. 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. To achieve this a business plan needs to be produced to enable planned investment which should lead to additional visitors income.

12. Reserves

12.1 Appendix D shows the position on the reserves.

13. Charges

13.1 Based on the budget for 2003/04, and the chargeable length used in 2002, (this was 30,931 metres) the proposed charges for 2004 are:

	Current charge per metre (excl VAT)	Proposed charge per metre (excl VAT)
	£	£
Harbour dues	9.63	9.96

The charge for a 10 metre boat, including VAT, will therefore be £117.03 (£113.15 in 2003).

8048/AT

Appendix A

2003/04 Revenue Expenditure Budgets

Appendix B

2003/04 Budget - Apportionment of Expenditure

Appendix C

Capital Programme 2003/04

Oil pollution response and Hydrographic programme now reclassified as Revenue.

Appendix D

Reserves 2003/04

Notes

1. From 1 April 2002 the Harbour Dues Reserve account incorporated 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

Glossary of budget headings