Archived decisions

Contact: Adrian Thorne, ext 6409 email: [email protected]

1. Summary

1.1 The final accounts of the Harbour Authority for the year ended 31 March 2004 are being presented to the Advisory Committee for information and will then be presented to the River Hamble Harbour Management Committee on 16 June for information. The accounts will then go to the Executive Member for Environment on 13 July for approval.

1.2 The financial management of the Harbour Authority has made progress during the last 12 months and this can be seen in the resulting final accounts:

(i) Expenditure budgets for both accounts are under spent due to improved budgetary control.

(ii) A cost benefit analysis approach is in place for investment decisions.

(iii) Visitor Income has exceeded the Revised Budget.

(iv) The accounting treatment issue for income has been amended.

1.3 This report compares the River Hamble income and expenditure at 31 March 2004 with the revised 2003/04 budget.

1.4 The accounting arrangements for income collection within the Harbour Undertaking and Management of the Moorings account have been reviewed. Harbour Dues and Supervision Charges are invoiced in October/November for the next calendar year. In the past, the income received as a result of these invoices was taken into the financial year in which 1 January fell. This means that 2003/04 included nine months of income that belongs within 2004/05 (as have previous years). For many years this practice was acceptable, providing 12 months income was accounted for in each financial year and a consistent practice was adopted from year to year. However, this treatment is not strictly in accordance with UK accounting standards and greater emphasis is now attached to rigorous application of accounting standards in the public sector. A one-off adjustment has been made within 2003/04 to amend this accounting treatment.

1.5 The impact of this adjustment is that there is a net shortfall of £285,993 for Harbour Dues and Supervision Charges in 2003/04. The impact of additional income in other areas and savings on expenditure results in a shortfall of £271,114 being taken to the Reserve Account. As a result of this adjustment the balance of the Reserve Account will be (£112,126) (in other words the account will be in deficit).

1.6 It will be necessary to bring the Reserve Account back into surplus and ways of achieving this are currently being investigated. Whatever the methodology used it has been agreed that this will not involve any additional income being collected over and above the agreed policy for income (inflation plus 1%).

1.7 In summary, the Harbour Undertaking and Management of Moorings has written a deficit to reserves of £271,114. This is mainly due to the income period adjustment in paragraphs 1.4 to 1.6 above.

1.8 The Visitor Centre Partnership has a small surplus in 2003/04 of £3,500 to write to reserves. This will be used to reduce the deficit which has built up. The future of the Partnership agreement is currently being discussed with the Crown Estate and the outcome of those discussions is likely to impact on the reserve account.

1.9 Harbour Dues income was expected to be in excess of budget, prior to the income adjustment, due to accurate mooring meterage figures being provided by the Harbour Office.

1.10 The 2004/05 budget will be reviewed, taking into account relevant results of the final 2003/04 outturn figures.

2. Corporate Strategy

2.1 This report supports Aims 2 and 5 of the Corporate Strategy (Stewardship of the Environment and Improving Services) by contributing to the statutory duties entailed in the management of the River Hamble.

3. Harbour Undertaking and Management of the Moorings 2003/04

3.1 Appendix 1 shows total expenditure of £425,493 compared with a full year revised budget of £436,500. Expenditure is underspent by £11,007.

3.2 Income of £154,379 compares with the full year revised budget of £436,500. This is due to the adjustment in income to bring it in line with standard accounting procedures. As previously explained (paragraphs 1.4 to 1.6) this is to ensure income and expenditure is matched against the correct accounting period. To amend the treatment means that in 2003/04 nine months of expenditure needs to be funded from Reserves. As a result, income is £282,121 below budget.

3.3 The net overspend is £271,114 and the main factors are detailed below.

3.4 The Employees' outturn is overspent mainly due to taking the cost of £4,000 for advertising for the Marine Director while the budget was £2,000. The Employees' costs include:

(i) part year costs of a Harbour Master and full year costs of an Acting Harbour Master;

(ii) acting up allowances for other staff;

(iii) cost of temporary staff in the summer period;

(iv) staff training (including training on boat handling, health and safety, first aid and web training); and

(v) staff advertising (including the cost of advertising for the Marine Director) and interview expenses.

3.5 The Premises outturn is £3,403 underspent. Details are as follows:

(i) Repairs and maintenance covers closed circuit television (CCTV) modifications relating to health and safety.

(ii) Electricity charges have been less than anticipated.

(iii) Gas charges have been less than anticipated.

(iv) Rates totalling £10,856 were paid to Fareham and Eastleigh Borough Councils. A rebate of £3,384 was received from Fareham (due to a rateable value decrease backdated to 1995).

(v) Leases of £11,468 and rent of £1,917 were paid to the Crown Estate.

(vi) Fixtures, fittings and repairs include chandlery costs, jetty chains and a new carpet (which was required due to building work within the office).

(vii) Cleaning costs incurred relate to window cleaning and cleaning products. The saving against budget is partly due to the cleaner being employed (and costs paid via payroll).

(viii) Burglar/Security payments relate to SECOM Plc.

3.6 Transport outturn shows an underspend of £2,282. This is made up of several items detailed as follows:

(i) Repairs and Maintenance is to cover the ongoing repair and maintenance of the boats. Costs incurred include engine servicing, the hire of a boat and pressure washer as well as £1,505 for a steering ram.

(ii) Boat/Dory replacement is anticipated to be £1,159 underspent. This was caused by the boat purchase costing less than anticipated.

(iii) Repairs to boats, windows and fenders has not been as extensive as initially anticipated.

(iv) Vehicle Running Expenses is predominately fuel costs.

(v) Tool costs are expected to be £1,163 underspent. It was intended to purchase a new pump but a suitable one was not available.

(vi) Car allowances/leases includes £2,450 for a previous member of staff's lease car and £1,824 for mileage claims. The overspend relates to early lease termination costs.

(vii) Staff Travel and Insurance are generally in line with budget.

3.7 Office expenses are £5,286 overspent. The breakdown is as follows:

(i) Equipment includes desk and equipment costs relating to the Marine Director post, the purchase of a digital camera to assist in prosecutions and the purchase of a weather station.

(ii) First Aid Supplies/Health and Safety costs include fire extinguisher servicing, safety signs and electrical testing.

(iii) Catering is £574 overspent as there was no budget in place. Examples of catering costs are refreshments for meetings held and the supply of water coolers. A budget will be included in the revised budget.

(iv) IT costs include HPSN charges and IT 2000 charges (including dial up). This is £3,981 over budget due to HPSN costs which will be amended within 2004/05. The cost will be met by Environment leaving a credit balance on the Hamble account in 2004/05.

(v) Telephones are an internal charge of £1,786 in comparison to a budget of £2,400. In addition, a one-off cost of £1,041 has been incurred for telephones and headsets for the boats.

(vi) Printing and Stationery, Uniforms, Postage and Promotional Events are generally in line with budget.

3.8 Environmental maintenance includes a £600 contribution to the student fund, and conference and consultation costs relating to the Warsash Improvement Plan.

3.9 Public Jetties and navigational safety includes costs for structural testing surveys and power washing.

3.10 Navigational aids is overspent by £1,607 due to necessary unforeseen replacement of lights.

3.11 Central Support Charges is £5,541 underspent. This includes Devolved Finance Unit, Treasurer's, Chief Executive Committee and Chief Executive Legal charges and a proportional adjustment to the Visitor Centre Partnership. The underspend is mainly due to £1,327 of costs being incurred for Chief Executive's Legal when a budget allowed for £7,000.

3.12 Other Services are underspent by £5,401. The breakdown is shown below:

(i) Consultancy costs were incurred as a result of John Pattisson Associates being appointed to undertake work on a preparatory draft for an audit of river moorings.

(ii) Legal costs include £2,152 to BMT Reliability Consultants (who were witnesses in a prosecution) and £812 to a barrister.

(iii) Subscriptions/Memberships includes the British Ports Association subscription, which increased more than £100 on 2002/03.

(iv) The significant variance within other services relates to SMS and the designated person's costs. An element of these costs is ad hoc in nature and reflects the work undertaken during the course of this financial year.

3.13 The Budgetary Pressure budget is made up of £8,000 for the winter refit and £9,500 for the replacement computer system. The spend on the winter refit was £6,582.

3.14 The new IT system design is not sufficiently progressed to incur the expense within 2003/04. The budget has therefore been utilised to pay Marine Enforcement to undertake the Governance review (which cost £13,800). The IT system will therefore be paid for from the Governance budget (£15,000) within 2004/05.

3.15 Oil Pollution Response Plan is underspent due to a budget for training of £4,600 being included while actual spend was only £800. The costs also include the £2,500 annual subscription and costs paid relating to the oil boom exercise.

3.16 The only expense (£175) under Port Waste Management is for battery removal.

3.17 Meetings have taken place under the Estuary Management Plan but no actions have been identified and therefore no costs incurred.

3.18 There is an overspend of £2,437 regarding CCTV against a budget of £5,000. This is partly due to expense of £1,940 which was not known at the time of budget preparation and relates to a charge from Tew Brothers for building works to accommodate the CCTV. In addition, CCTV includes £452 legal costs for a proposed licence relating to Southampton Institute.

3.19 There is additional Miscellaneous income of £1,907. This is due to unbudgeted income from visiting pleasure craft.

3.20 The Harbour Dues outturn is now £89,666, which is £218,334 under budget. This reflects the adjustement to move nine months of income (£268,997) into 2004/05 as detailed in paragraphs 1.4 to 1.6 above.

3.21 Income from Supervision charges is now £22,141, which is £67,659 less than budget. This also relates to the adjustment to move nine months of income (£66,424) into 2004/05 as detailed in paragraphs 1.4 to 1.6 above.

3.22 Crown Estate funding (income) is £1,965 more than budget. This includes income from others (such as boatyards and yacht clubs) for notifying mariners of hazards and works underway. It also includes a contribution from the Countryside Service for maintaining a footpath. A detailed breakdown is as follows:-

3.23 There is a need for expenditure of £33,414 to be met directly from reserves (see Appendix 3) as agreed within the budget process. This relates to £6,000 to Hamble-le-Rice Parish Council and £27,414 for maintenance piles.

3.24 The Harbour Undertaking and Management of the Moorings has produced a deficit for the year 2003/04 of £271,114.

4. Visitor Centre Partnership 2003/04

4.1 Appendix 2 shows the 2003/04 outturn and the revised budget figures for the Visitor Centre Partnership.

4.2 The budgeted net deficit is £16,200 for 2003/04 against a net income of £3,500.

4.3 Income is £13,865 more than budgeted.

4.4 Expenditure of £79,965 compares with a full year revised budget of £85,800. Expenditure is underspent by £5,835.

4.5 The Employees outturn includes:

(i) Salaries are an allocation from Harbour Undertaking.

(ii) Staff advertising for the Marine Director was incurred within the Harbour Undertaking.

4.6 The Premises underspend of £1,625 is partly due to cheques sent out for repairs to fixtures and fittings in prior years not being presented at the bank and the amounts being recredited (£931). Another factor is lower than anticipated electricity bills (£239 underspend).

4.7 Transport costs are anticipated to be £35 underspent. Detail is as follows:

(i) Tools and lease car costs are allocated from Harbour Undertaking.

(ii) Car allowances are a proportionate transfer from Harbour Undertaking.

4.8 Office expenses include:

IT Charges are an allocation from Harbour Undertaking.

4.9 Harbour dues and central support charges are an allocation from Harbour Undertaking.

4.10 Income of £83,465 compares with the full year revised budget of £69,600. Gross income is £13,865 over the budget. This is mainly as a result of group bookings being sought out and a proactive approach to the sub-letting of berths.

5. Reserves 2003/04

5.1 The effect of the above on reserves is detailed in Appendix 3.

5.2 The deficit balance at 31 March 2004 for the Harbour Authority is £112,126 and reflects the accounting treatment amendment.

5.3 Interest charged or received on reserve balances has been based on the average seven day rate throughout the year, less 1%.

5.4 The negative balance at 31 March 2004 for the Visitor Centre is £103,536. Discussions are ongoing with the Crown Estate relating to the Visitor Centre accounts and the future of the Partnership.

5.5 The 2nd Capital receipt of £100,000 has been received from the Crown Estate for the sale of the piles, giving a balance on the Capital Receipt Reserve of £203,116.

5.6 The total reserves have decreased from an opening balance of £182,787 to a deficit of £12,546 (a change of £195,333). This is detailed within Appendix 3.

Recommendation

That this report be noted.

8798/AT

APPENDIX 1

Harbour Undertaking and Management of the Moorings

APPENDIX 2

Visitor Centre Partnership

APPENDIX 3

River Hamble Reserves - 2003/04