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Hampshire County Council River Hamble Harbour Board 15 December 2005 River Hamble Budget Report - Revised 2005/06 Budget and Forward 2006/07 Budget Report of the County Treasurer and Director of Environment

Item 13

Contact: Erica Meadus, ext 6864 email: [email protected]

1. Summary

1.1 This report presents the results of the review of the River Hamble Budget which has been carried out by consultation between the Marine Director and the Devolved Finance Unit. It presents the draft revised budget for 2005/06 and the draft forward budget for 2006/07, as well as the proposed charges for 2007.

1.2 The underlying principle for both years is to produce budgets that enable the Harbour Authority to meet operational requirements within the available revenue earning capacity. For 2007 RPI + 1% is applied to fee increases as agreed in previous years.

1.3 The results are being presented to the River Hamble Harbour Board for approval, following consideration by the River Hamble Harbour Management Committee on 6 December.

1.4 All costs attributable to the Harbour Authority carrying out its statutory and ongoing duties on the river have been identified and built into the budget, including legislative and health and safety responsibilities. It is to be expected at this stage of the financial year when setting the revised budget that not all budgets are fully committed. A glossary of terms has been included in Appendix 4 for clarification.

1.5 Negotiations have taken place with the Crown Estate in order to agree settlement for previous years and to re-negotiate the management agreement fee.

1.6 The Harbour Master has undertaken a full review of asset replacement/maintenance requirements for the future. This will provide us with a clear indication of what to plan for in future year's budgets when reserves are in credit, as well as funding expenditure from the available earning capacity.

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 2005/06

3.1 Income relating to the renegotiated management fee with the Crown Estate has been reflected within this report.

3.2 The revised budget for 2005/06 for the Harbour Undertaking and Management of the Moorings, summarised in Appendix 1, shows a revised gross expenditure budget of £504,200. This is an increase on the original budget of £4,300.

3.3 The income budget also increases and is revised from £499,900 to £504,200. The net position on the Harbour Undertaking therefore remains unchanged at break-even.

3.4 The revised Employees' budget breakdown is as follows:

	Original Budget 2005/06 £	Revised Budget 2005/06 £
Salaries (see note i)	274,900	275,800
Training (see note ii)	1,000	2,774
Staff Advertising/ Interview Expenses (see note iii)	1,600	26
Other Employee Expenses	200	0
TOTAL	277,700	278,600

(i) The increase in the salaries budget is due to pay increases for management grade staff. Revised pay rates were unknown at budget setting so an amount for this was allowed within the inflation provision as opposed to within the salaries budget.

(ii) The main increase to the employee budget relates to training. £2,600 has been incurred for essential fire fighting training.

(iii) The staff advertising and interview budget was largely not required this year as there were no staff changes and summer casuals were recruited by word of mouth.

3.5 Premises costs have been increased by £800 to £18,300. The breakdown is shown below:

	Original Budget 2005/06 £	Revised Budget 2005/06 £
Repair and Maintenance (note i.)	1,500	2,200
Electricity	1,000	1,000
Gas	400	400
Rent/Rates (note ii.)	4,000	2,550
Contribution to Visitor Centre Rent (note iii.)	9,000	10,500
Water/Sewerage	400	400
Fixtures, Fittings and Repairs	700	700
Cleaning	200	250
Burglar Alarms/Security	300	300
TOTAL	17,500	18,300

(i) The increase in repairs reflects the cost of repairing the car park pillar.

(ii) The reduction for rent/rates is in line with current spend.

(iii) The contribution to visitor centre rent was increased following the sub-let agreement with Warsash Marine (this is the balance of rent due and the agreed sub-let income and needs to be funded by the Harbour Authority).

3.6 The transport budget has been increased to £28,700 and the breakdown is shown below:

	Original Budget 2005/06 £	Revised Budget 2005/06 £
Repair and maintenance/ refurbishment of boats	14,500	14,500
Vehicle Running Expense (Fuel)	6,000	6,000
Tools (inc chandlery)	1,900	1,900
Car Allowances/ Staff Travel (note i.)	3,100	5,000
Insurance	1,300	1,300
TOTAL	26,800	28,700

(i) The car allowances/staff travel budget has been increased to reflect current levels of staff travel.

3.7 Office expenses have been decreased by £2,300. The breakdown is shown below:

	Original Budget 2005/06 £	Revised Budget 2005/06 £
Equipment (see note i)	1,800	500
Health and Safety (note i)	1,200	500
Printing and Stationery	3,000	3,000
Catering/General	800	800
Protective Clothing (note i)	3,500	2,500
IT Charges (note ii.)	10,000	10,000
Postage	2,500	2,500
Phones	2,400	2,400
Promotional Events/Publicity/ Publications (note iii.)	300	1,000
TOTAL	25,500	23,200

(i) The Equipment, Health & Safety/First Aid and Protective Clothing budgets have been reduced in line with current spend.

(ii) Current spend and commitments for IT charges are significantly below budget, but the main charge will be made at year end.

(iii) The budget for promotional events/publicity/publications has been increased to cover the cost of the Hamble Directory subscription. This is important for disseminating information to river users.

3.8 Environmental Maintenance, Public Jetties and Navigational Safety/Aids, and Central Support Charges have remained at the same level as the original budget.

3.9 Environmental maintenance costs to date are below budget. Costs are demand led, such as the removal of fallen trees and the budget needs to be kept at its present level to meet potential demand.

3.10 The Public Jetties and Navigational Safety/Aids budget is to cover the expense of removing hazardous objects/materials from the river and repairs and maintenance of jetties and is demand-responsive. To 30 September this financial year £1,444 has been spent/committed. Further spend will be incurred this financial year on maintenance of the sector light and jetty maintenance and the budget is therefore expected to be fully committed.

3.11 The breakdown of Central Support Charges is as follows:

Devolved Finance Unit £15,000

Central Finance £5,000

Chief Executive Committee £4,000

Legal £7,000

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Total £31,000

These costs will need to be divided between the Harbour Undertaking (£27,400) and the Visitor Centre Partnership (£3,600). Transfers for these costs are undertaken at the end of the financial year.

The Devolved Finance Unit provides direct financial support and advice to the Harbour Office.

Central Finance costs relate to payroll, creditors and income collection.

Chief Executive Committee costs relate to committee administration for the Harbour Authority committees.

Legal costs are for legal advice given to the Harbour Authority by County Council lawyers.

3.12 The Other Services budget remains unchanged. The breakdown is shown below:

	Original Budget 2005/06 £	Revised Budget 2005/06 £
Legal Expenses (note i.)	4,000	4,000
Subscriptions/Memberships/Licences/Fees (note ii.)	2,100	2,100
Designated Person (SMS Annual Costs)	4,400	4,400
SMS - Projects (note iii.)	2,600	2,600
TOTAL	13,100	13,100

(i) Legal Expenses relate to external services procured directly by the Harbour Office. Only £1,428 has been incurred to 30 September 2005 however, it is prudent to retain the budget at the original level.

(ii) Examples of expenditure under Subscriptions/Memberships/Licence Fees are conference fees, journals, British Port Association subscriptions and radio licences.

(iii) The SMS Projects budget is to cover non contract work undertaken by Marine Enforcement Limited (MEL). £500 has been incurred to 30 September 2005. MEL are currently engaged in some work, but the full year costs is demand led. Examples of this work are ad hoc advice on safety matters, risk assessment and meeting attendance.

3.13 Budgetary pressures increases by £20,500 to £89,400. This reflects the cost of 3 projects originally anticipated to be met from reserves or future revenue being funded from this year's revenue. Budget details are below:

	Original Budget 2005/06 £	Revised Budget 2005/06 £
Payment to Reserve	38,000	38,000
Boat Replacement Fund (including engines)	14,100	14,100
Fisherman's Jetty (see note i.)	0	14,790
Navigational approach (note ii)	0	7,500
Warsash/Harbour Jetty (note iii.)	0	9,500
Uncommitted Budget Pressures (note iv.)	16,800	5,510
TOTAL	68,900	89,400

(i) The Fisherman's Jetty budget is to cover the Harbour's contribution to the installation of the jetty as documented within the report `Fisherman's Jetty', presented to the Harbour Board Meeting of 15 July 2005 (Item 12).

Some fees relating to the fisherman's jetty have been met already and it is anticipated that all costs will be incurred prior to the end of the financial year.

(ii) Navigational approach costs relate to the purchase of 3 buoy markers, 3 solar powered lights, shackles, mooring chains, sinkers, consent application and contractor assistance in positioning the equipment as proposed in the `Approach to Main Channel Proposed Improvements' report, presented to the Management Committee on 10 October 2005 (Item 8) and the Harbour Board on 21 October (Item 8). The aim of this is to improve visibility and safety on entering the Harbour.

(iii) The Warsash/Harbour Jetty work relates to the proposal to dredge and plan the replacement of the jetty as documented in `Warsash Public Jetty' as presented to the Harbour Board on 8 September 2005 (Item 11).

The first tranche of consultant fees relating to the Warsash/Harbour Jetty will be funded this financial year. Further consultancy costs are to be met from reserves.

A full cost benefit analysis will be produced, although work needs to commence before it can be completed in order to satisfy the Harbour's statutory duties. The cost benefit analysis will highlight any affordability issues.

(iv) Uncommitted budget pressures was included as an allowance for unforeseen pressures. All investment decisions are subject to a cost benefit analysis.

3.14 The Oil Pollution response budget has been increased to £3,100 in line with current spending. The original budget covered the annual subscription only, but there have been additional equipment replacement costs.

3.15 The Port Waste Management Plan costs have been reduced. No costs have yet been incurred for the disposal of non EU food waste disposal so this has been reduced from £1,400 to £400. This budget covers:

(i) sewage pump-out facility;

(ii) parts and emergency call out;

(iii) Non EU food waste disposal;

(iv) emptying of battery cage; and

(v) large river rubbish removal.

3.16 There has been no amendment to the Estuary Management Plan budget. This expected outturn includes:

(i) Student Fund contribution £600

(ii) Meetings £100

(iii) Student Fund Presentation £50

(iv) Education Group meetings £250

There has been little spend to date but it is anticipated that the final position will be in line with budget.

3.17 There is no change to the Hydrographic Programme budget. The expected outturn includes the updating of two sheets of soundings per year by ABP Mer.

3.18 The Dredging Plan budget has been revised in line with the work plan as there will be no work completed this financial year. The small credit relates to income received in the previous financial year.

3.19 CCTV installation is not yet completed to our satisfaction and has not yet been formally accepted as complete by the Harbour Authority. Maintenance costs will commence when the system has been formally accepted. There is little likelihood of acceptance occurring this financial year so the budget has been reduced to nil to reflect this.

3.20 The original budgeted Inflation allocation of £9,000 has been used to operate within our cash limit.

3.21 Income from visitors/miscellaneous has been increased from £6,700 to £13,700 to reflect current income patterns. This comprises:

(i) transfer in of £4,200 visitors harbour dues from the partnership;

(ii) income for footpath maintenance of £500;

(iii) income relating to consents;

(iv) income from boat licences;

(v) income from pleasure craft; and

(vi) miscellaneous income, e.g. towing, salvage.

Income in addition to the budget has been received for boat licences, sailing clubs and pleasure craft.

3.22 Harbour dues income has decreased from £372,200 to £360,800. This is due to a number of factors, principally because the budget was set on full occupancy of mid stream moorings which has not been the case. Reasons for this include:

(i) demand for small boat moorings being less than supply

(ii) delays in completing and letting berths on the new J-pile pontoon,

(iii) extensive works at Universal Marina not yet being carried out.

3.23 Supervision charges are generally in line with the original budget.

3.24 Crown Estate and Other Funding has increased from £23,000 to £30,700. The new management agreement fee comes into effect from 1 January 2006 so this revised budget reflects a quarter of this fee. Income has also increased following the final settlement of previous year's fee income.

4. Harbour Undertaking and Management of the Moorings 2006/07

4.1 The forward budget for 2006/07 highlights gross expenditure of £542,200 with equivalent income and is summarised in Appendix 1.

4.2 Comparisons are measured against the latest budget position, i.e. the revised 2005/06 budget as this reflects the most up-to-date position.

4.3 The principal reason for the increase in expenditure of £38,000 is £20,000 to fund the potential impacts on salaries for 2006/07 resultant of the pay and benefits review. Costs for any potential backdated payments have not been included. An additional £8,000 is also required to cover other staff related costs outside of pay and benefits.

4.4 The forward Employees' budget is £308,700. The breakdown of employee costs is as follows:

	Revised Budget 2005/06 £	Forward Budget 2006/07 £
Salaries (see note i.)	275,800	283,900
Pay & Benefits allowance (note ii)	0	20,000
Training	2,774	3,000
Staff Advertising/Interview Expenses	26	1,600
Other Employee Expenses	0	200
TOTAL	278,600	308,700

(i) Salaries include pay awards for all staff.

(ii) The potential impact of the Pay & Benefit project is estimated at £20,000. Future years will continue to incur these costs.

4.5 The Premises costs comparison is as follows:

	Revised Budget 2005/06 £	Forward Budget 2006/07 £
Repair and Maintenance (note i.)	2,200	1,500
Electricity	1,000	1,000
Gas	400	400
Rent/Rates	2,550	3,000
Contribution to Visitor Centre Rent	10,500	10,500
Water/Sewerage	400	400
Fixtures, Fittings and Repairs	700	700
Cleaning	250	300
Burglar Alarms/Security	300	300
TOTAL	18,300	18,100

(i) The reduction in repairs and maintenance reflects the one off nature of the repairs to the car park pillar in 2005/06.

4.6 The transport budget has been increased by £3,000 as follows:

	Revised Budget 2005/06 £	Forward Budget 2006/07 £
Repair and maintenance/ refurbishment of boats (inc engines) (note i.)	14,500	16,500
Vehicle Running Expense (Fuel) (note ii.)	6,000	7,000
Tools (inc chandlery)	1,900	1,900
Car Allowances/Staff Travel	5,000	5,000
Insurance	1,300	1,300
TOTAL	28,700	31,700

(i) Repairs and maintenance/refurbishment of boats has been increased in order to undertake some work to extend their life expectancy.

(ii) Fuel costs have been increased in line with fuel price trends.

4.7 The forward budget for Office expenses has increased by £3,500 to adjust for the current year underspending. Details are as follows:

	Revised Budget 2005/06 £	Forward Budget 2006/07 £
Equipment (see note i.)	500	1,800
Health and Safety (note i.)	500	1,200
Printing and Stationery	3,000	3,000
Catering/General	800	800
Protective Clothing (note i.)	2,500	3,500
IT Charges	10,000	10,000
Postage (note ii.)	2,500	2,800
Phones	2,400	2,400
Promotional Events/ Publicity/ Publications (note iii.)	1,000	1,200
TOTAL	23,200	26,700

(i) Equipment costs, Health and Safety and Protective clothing anticipated underspends in 2005/06 are not expected to be repeated in 2006/07.

(ii) Postage has increased by £300 to cover additional mail shots.

(iii) Promotional Events/Publicity/Publications reflects the cost of supporting the Hamble Directory which are £1,000.

4.8 Environmental Maintenance remains consistent with the revised budget.

4.9 Public Jetties and Navigational Safety/Navigational Aids has been reduced by £3,000 to £9,000 reflecting the lower maintenance expected as a result of jetty replacement works.

4.10 Central support charges remain as per the Revised Budget detailed in 3.11 above. No inflation has been applied to this cost.

4.11 Other Services has increased from £13,100 to £14,700 as follows:

	Revised Budget 2005/06 £	Forward Budget 2006/07 £
Legal Expenses	4,000	4,000
Subscriptions/Memberships/Licences/Fees	2,100	2,100
Designated Person (SMS Annual Costs) (see note i)	4,400	6,000
SMS - Projects	2,600	2,600
TOTAL	13,100	14,700

(i) The increase in SMS annual costs reflects the revised contract.

4.12 Budgetary pressures forward budget stands at £80,200 detailed below:

	Revised Budget 2005/06 £	Forward Budget 2006/07 £
Navigational approach purchase costs	7,500	0
Harbour Dues set up costs (stickers and signage) (see note i.)	0	6,000
Fisherman's jetty	14,790
Warsash/Harbour Jetty	9,500	0
Out of date flares (note ii.)	0	3,100
Rates liability (note iii.)	0	5,000
Boat Replacement Fund (note iv.)	14,100	14,100
Uncommitted Budget Pressures (note v.)	5,510	14,000
Payment to Reserves (note vi.)	38,000	38,000
TOTAL	89,400	80,200

(i) Harbour dues set up costs result from the proposed changes to regime and charges for harbour dues to leisure users of the river as set out in the paper `River Hamble Harbour Dues'. This paper was presented to the Harbour Management Committee on 10 October (Item 10) and the Harbour Board on 21 October (Item 10).

(ii) £3,100 has been included to meet the costs of establishing a collection point for out of date flares as recommended in the Harbour Master's Report dated 17 March 2005.

(iii) The rates are currently being assessed by the Valuation Office at our request. A decision is not anticipated for some time so this is a prudent estimate to cover any costs should it transpire that we do in fact have a responsibility for rates. Our view is that the cost should fall to The Crown Estate.

(iv) The boat replacement funding continues at the same level as 2005/06. This is to ensure that there are sufficient funds built up to replace boats and engines when required.

(v) An allowance of £14,000 has been included under Uncommitted Budget Pressures forward budget for the ongoing strategic development of the river. All investment decisions will be subject to the agreed cost benefit analysis approach.

(vi) The reserve account on the Harbour Undertaking reflected a deficit and in 2004 the options for resolving this were considered. The suggested approach was for the balance to be met from budget allocations over a 3 year period. The £38,000 above is the second year's payment to reserve. Any under spend at the end of the financial year will be used to reduce the deficit which stood at £97,894 at 31 March 2005.

4.13 Oil Pollution Response has increased slightly to £3,200 reflecting the current spend pattern.

4.14 The Port Waste Management Plan costs increase back to £3,000 to allow for future non-EU port food waste costs at £1,400. This budget also includes refuse costs of £600 and £1,000 general port waste management.

4.15 The Estuary Management Plan remains in line with the revised budget at £1,000. This covers meeting costs, student fund presentations, education group meetings and an allocation to the student fund.

4.16 The Hydrographic Programme remains at £5,000.

4.17 There is an uncertainty about the requirement for further dredging plan costs. Any work plans that require funding during 2006/07 will need to be proposed with a cost benefit analysis in order to be met from the Budgetary Pressures uncommitted budget.

4.18 An estimated £5,000 for CCTV maintenance has been included based on Cirus estimates.

4.19 £6,000 for non-staff inflation has been included.

4.20 The income budget for 2006/07 stands at £542,200.

4.21 Visitor/Miscellaneous income of £10,000 comprises:

(i) transfer in of £4,200 visitors harbour dues from the partnership;

(ii) income re: footpath maintenance of £500;

(iii) boat licences of £2,000;

(iv) income relating to consents of £800; and

(v) miscellaneous (e.g. salvage and towing) of £2,500.

4.22 Harbour Dues increases from £360,800 to £410,900. This reflects:

(i) Inflation plus 1% fee increase (i.e. 3.7%) as agreed in December 2004;

(ii) An additional £10,000 income as a result of the proposed changes to regime and charges for harbour dues to leisure users of the river as set out in the paper `River Hamble Harbour Dues' detailed above under budgetary pressures. This is a prudent estimate which may need to be reviewed at revised budget time next year;

(iii) A transfer of a quarter of the supervision income to harbour dues in line with the proposal to combine harbour and supervision charges with effect from 1 January 2007.

4.23 Supervision charges falls to reflect the last quarter's income in 2006/07 merging with harbour dues. Supervision fees have also been inflated by RPI +1% (i.e. 3.7%).

4.24 Crown Estate Funding has been renegotiated and an income figure is included at £44,000 which incorporates sub-let income fees. The agreement includes a standard fee of £42,000 plus incentive payments to the Harbour Authority if sub-let income increases.

5. Visitor Centre Partnership 2005/06

5.1 Partnership arrangements with the Crown Estate have been agreed. In summary:

(i) Visitors income is split 50/50 between Crown Estate and the Harbour Authority;

(ii) Sub-let mooring income is collected by the Harbour Authority and paid onto the Crown Estate. The Harbour Authority retains £2,000 per annum by way of a collection fee during 2005/06. The sub-let mooring income has been further reviewed as part of the management agreement negotiations and with effect from 1 January 2006 is now combined with the annual management fee;

(iii) a Management fee of £10,000 is paid to the Harbour Authority by the Crown Estate.

5.2 Arrangements are now in place for the sub-letting of the Visitor Centre building.

5.3 Appendix 2 shows the revised budget for the Visitor Centre Partnership. The budgeted net deficit has moved from £16,250 to £0 for 2005/06.

5.4 Total expenditure of £80,400 is broadly in line with the original budget of £80,500. Income increases from £64,250 to £80,400. The main causes of this is the building sub-let and the Crown Estate negotiations.

5.5 The breakdown of employee costs is as follows:

	Original Budget 2005/06 £	Revised Budget 2005/06 £
Salaries (note i.)	22,900	24,400
Training	300	300
Staff Advertising/Interview Expenses	400	400
Other Employee Expenses	100	100
TOTAL	23,700	25,200

(i) The salary costs are based on an allocation from the Harbour Office.

5.6 Premises costs reflect changes based on current expenditure levels.

	Original Budget 2005/06 £	Revised Budget 2005/06 £
Electricity (see note i)	100	300
Gas	200	200
Rent/Rates (note ii.)	4,000	2,700
Water/Sewerage	200	200
Fixtures, Fittings and Repairs	500	500
Cleaning	500	500
Facilities Maintenance	800	800
Burglar Alarms/Security	100	100
TOTAL	6,400	5,300

(i) Electricity costs have increased as usage of the building increased. An agreement has been reached that the Harbour Authority will incur 5% of the electricity costs and 30% of the gas costs. The remainder will be invoiced to Warsash Marine.

(ii) Rates are not now accounted for by the Harbour Authority.

5.7 The transport budget remains unchanged.

	Original Budget 2005/06 £	Revised Budget 2005/06 £
Tools	300	300
Staff Travel/ Car Allowances	300	300
TOTAL	600	600

5.8 The Office expenses budget remains unchanged. Details are shown below:

	Original Budget 2005/06 £	Revised Budget 2005/06 £
IT Charges (see note i)	1,000	1,000
Credit Card Facilities (note i)	500	500
TOTAL	1,500	1,500

(i) IT charges are incurred at year end and credit cards charges are monthly.

5.9 Harbour dues payable to the Harbour Undertaking and Central Support Charges (see 3.11 above) remain as per the original budget.

5.10 The Former Solent School of Yachting budget has increased to £34,500. This relates to the full year charge for the building less the contribution from Harbour. It also includes provision for £3,000 possible payment to Vail Williams as agent fees in sub-letting the building.

5.11 Crown Estate Rents remains at £5,500. This includes:

(i) lease of the Warsash Jetty of £3,000;

(ii) lease of the Hamble Landing Stage of £1,000;

(iii) £100 lease of the Upper Hamble river bed; and

(iv) 10% of visitor income on the Hamble Landing Stage and Warsash Jetty (£1,400).

5.12 The original inflation budget of £2,000 has been used to operate within the cash limit.

5.13 The Net Visitor income is expected to increase to £39,000 from the original budget of £32,250. This is our agreed 50% of the gross income and is anticipated to increase in line with current income levels.

5.14 The current fee for collecting sub-let income is £2,000. With effect from 1 January 2006 it will be replaced with the renegotiated Crown Estate management agreement. Therefore, three quarters of the £2,000 fee is included within the revised budget for 2005/06.

5.15 A Management fee of £25,000 payable to the Harbour Authority by the Crown Estate was included within the original budget. This was reduced to £10,000 as part of the previous year Crown Estate settlement.

5.16 The miscellaneous income has increased from nil to £29,900 which is mainly the income for sub-letting the building to Warsash Marine.

6. Visitor Centre Partnership 2006/07

6.1 The forward budget for the Visitor Centre Partnership highlights gross expenditure of £79,900 and income of £79,900 and therefore no loss or gain is anticipated.

6.2 The breakdown of employee costs is as follows:

	Revised Budget 2005/06 £	Forward Budget 2006/07 £
Salaries (note i.)	24,400	25,300
Training	300	300
Staff Advertising/Interview Expenses	400	400
Other Employee Expenses	100	100
TOTAL	25,200	26,100

(i) The salary costs here are based on an allocation from the Harbour Office.

6.3 Premises costs reflect minor changes.

	Revised Budget 2005/06 £	Forward Budget 2006/07 £
Electricity	300	300
Gas	200	200
Rates (note i.)	2,700	3,000
Water/Sewerage	200	200
Fixtures, Fittings and Repairs	500	500
Cleaning	500	500
Facilities Maintenance (note ii.)	800	800
Burglar Alarms/Security	100	100
TOTAL	5,300	5,600

(i) Rates has increased in line with reviews.

(ii) Facilities Maintenance reflects the annual cost for power washing the visitor's pontoon and jetties.

6.4 The transport budget remains unchanged.

6.5 Office expenses remain unchanged. Details are below:

	Revised Budget 2005/06 £	Forward Budget 2006/07 £
IT Charges (note i.)	1,000	1,000
Credit card Facilities (note i.)	500	500
TOTAL	1,500	1,500

(i) IT charges are incurred at year end and credit cards charges are monthly.

6.6 Harbour Dues and Central Support Charges remain as per the revised budget.

6.7 The Former Solent School of Yachting fee has been adjusted from a revised budget of £34,500 to £31,500 to reflect the one off nature of the Vail Williams fee.

6.8 Crown Estate Rents remain as per the revised budget.

6.9 The budget to cover non-staff related inflation stands at £1,300.

6.10 Visitor income is broadly in line with the revised budget.

6.11 Sub let income is now part of the wider management agreement and therefore reduces to nil.

6.12 Management Fee income of £10,000 has been included as per the revised budget.

6.13 Miscellaneous income increases to £31,500 for the full year rental income from Warsash Marine including rental of trailer space.

7. Reserves 2005/06

7.1 The reserve position can be seen in Appendix 3.

7.2 The deficit on the Harbour Undertaking reserve is being met from revenue over 3 years from a budgeted amount and any under spends at the end of the year.

7.3 The projected deficit balance at 31 March 2006 for the Harbour Authority is £49,783 while the projected deficit on the Visitor Centre Partnership is £144,241.

7.4 There is a surplus balances on the Boat Replacement Fund of £26,479.

7.5 Interest charged or received on reserve balances has been estimated at the monthly average 7 day rate less 0.5%. This ranges from 3.95% to 4.23% through the year.

7.6 The fourth Crown Estate receipt (£100,000), will have been received from Crown Estate for the sale of piles. The surplus balance stands at £423,960.

7.7 The total projected balance on reserves at 31 March 2006 is a surplus of £256,415.

8. Reserves 2006/07

8.1 The revenue transfer to the Harbour Undertaking reserve account during 2006/07 clears the deficit balance by 31 March 2007.

8.2 A transfer from the Crown Estate Receipts reserve has been made as detailed in the Final Accounts 2004/05 Report in order to clear the deficit balance on the Visitor Centre Partnership.

8.3 The transfer in 8.2 above and the receipt of the fifth and final Crown Estate Receipt leaves a Crown Estate Receipt Reserve balance of £384,126 at 31 March 2007.

8.4 A further contribution from revenue into the boat replacement fund provides a surplus balance of £41,654.

8.5 The total projected balance on reserves at 31 March 2007 is a surplus of £426,404.

9. Charges

9.1 Based on the budget for 2006/07, the proposed charges for 2007 are as follows:

	Current charge per metre (excl. VAT)	Proposed charge per metre (excl. VAT)
Harbour Dues	£10.78	11.18
Supervision	£9.20	9.54

9.2 The Harbour Dues for a 10 metre boat inclusive of VAT will therefore be £131.36 (£126.67 in 2006).

9.3 This represents an increase of 3.7% (RPI +1%).

10. Impact Assessments

10.1 This report provides a position statement on the River Hamble budget, therefore an impact assessment in terms of the Race Relations (Amendment) Act has not been undertaken. Elements within this budget are not expected to compromise the County Council's policies for equality and diversity.

10.2 Setting and revising the revenue budget is key to ensuring that the department's services are delivered in a cost-effective manner within overall corporate budget guidelines.

Recommendation

That this report 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:
1.	Published works.
2.	Documents which disclose exempt or confidential information as defined in the Act.

TITLE	LOCATION
None.

700(B)/EM

Employees (see notes 5.5 and 6.2)				23,700	14,288	25,200	26,100
Premises (5.6 and 6.3)				6,400	2,595	5,300	5,600
Transport (5.7 and 6.4)				600	89	600	600
Supplies and Services:
	Office Expenses (5.8 and 6.5)			1,500	172	1,500	1,500
	Harbour Dues (5.9 and 6.6)			4,200	0	4,200	4,200
	Central Support Charges (5.9 and 6.6)			3,600	0	3,600	3,600
	Former SSY (5.10 and 6.7)			33,000	34,500	34,500	31,500
	Crown Estates Rents (5.11 and 6.8)			5,500	3,136	5,500	5,500
	Inflation (5.12 and 6.9)			2,000	0	0	1,300
TOTAL EXPENDITURE				80,500	54,780	80,400	79,900
INCOME
Net Visitor Income (5.13 and 6.10)				-32,250	-28,286	-39,000	-38,400
Sub let income (5.14 and 6.11)				-7,000	-2,000	-1,500	0
Management Fee (5.15 and 6.12)				-25,000	0	-10,000	-10,000
Miscellaneous Income (5.16 and 6.13)				0	-29,861	-29,900	-31,500
Gross Income				-64,250	-60,147	-80,400	-79,900
NET (INCOME)/EXPENSE				16,250	-5,367	0	0

									APPENDIX 3
River Hamble Reserves - Forecast 2005/06
					Harbour	Visitor	Crown	Boat	TOTAL
					Undertaking	Centre	Estate	Replacement
					Reserve	Partnership	Receipt	Fund
						Reserve
					£	£	£	£	£
Balance as at 1 April 2005					-97,894	-138,658	311,420	11,900	86,768
Estimated Interest accruing in 2005/06					10,111	-5,583	12,540	479	17,547
	Sub total				-87,783	-144,241	323,960	12,379	104,315
Transfer from Harbour Revenue					38,000	0	0	14,100	52,100
Crown Estate receipt					0	0	100,000	0	100,000
Less net deficit for year					0	0	0	0	0
Plus net surplus for year					0	0	0	0	0
Estimated balance at 31 March 2006					-49,783	-144,241	423,960	26,479	256,415
River Hamble Reserves - Forecast 2006/07
					Harbour	Visitor	Crown	Boat	TOTAL
					Undertaking	Centre	Estate	Replacement
					Reserve	Partnership	Receipt	Fund
						Reserve
					£	£	£	£	£
Balance as at 1 April 2006					-49,783	-144,241	423,960	26,479	256,415
Estimated Interest accruing in 2006/07					12,407	-5,857	17,214	1,075	24,839
	Sub total				-37,376	-150,098	441,174	27,554	281,254
Transfer from Harbour Revenue					38,000	0	0	14,100	52,100
Harbour Jetty works					0	0	-6,950	0	-6,950
Transfer to clear Partnership deficit					0	150,098	-150,098	0	0
Crown Estate receipt					0	0	100,000	0	100,000
Less net deficit for year					0	0	0	0	0
Plus net surplus for year					0	0	0	0	0
Estimated balance at 31 March 2007					624	0	384,126	41,654	426,404

APPENDIX 4

Glossary of Terms

Employees	Includes all salary related costs as well as advertising, recruitment and training.
Premises	Cost of Harbour Office and associated buildings, including repairs and maintenance, utilities, fixtures and fittings and rent and rates.
Transport	Includes all boat purchase, refurbishment and maintenance costs as well as insurance and staff travel
Environmental Maintenance	Signage, cutting back foliage/trees, minor repairs to Upper Hamble, leaflets and educational material.
Navigational Aids	Signs and marks placed on the river.
Central Support Charges	Finance, legal, personnel and secretarial services.
Office Expenses	Office equipment, health and safety, printing and stationery, protective clothing, IT charges, postage, telephones and publications.
Other Services	Legal expenses, subscriptions/membership, Safety Management System (SMS) and designated person.
Provision for Inflation	Provision for inflation during 2006/07 budget given that charges apply to 2007.
Cost Benefit Analysis	Investment appraisal technique used to analyse and measure the costs and associated benefits of a project.