Boat registration charges proposals from 1 January 2022

For each of our waterways, we currently receive less income from boat registration charges than we spend on the services those charges should pay for. These charges contribute to our overall aim of keeping our waterways open and safe for use by both recreational boaters and those who rely on them for their business.

At the moment, across all our waterways, boat registration charges contribute approximately 52% of the total amount we spend on delivering our navigation service. This level of overall contribution has risen due to increases in charges in recent years.

Our waterways also receive income from other sources, including government grant-in-aid (GiA), funding from commercial activities, and contributions from other beneficiaries. However, for a number of years our funding has not met our investment needs. This has affected our standards of service and the condition of our navigation infrastructure and facilities.

To address this, we have developed a longer-term plan to make our navigation business more financially sustainable. The Navigation business plan describes our ambition and provides the framework for national and area delivery.

The strategic objectives are to deliver:

• a financially sustainable navigation business where those who benefit contribute towards the benefits they gain
• a navigation business that are resilient to climate change, reduce CO2 and maximise benefits to society
• effective and efficient ways of working between staff, customers and partners

The plan sets out the national strategic and the local actions we will take to deliver these ambitions. It also explains how, by working with partners, we will seek to maximise income and outcomes for our waterway environment. It will help us to be as financially resilient as possible now, and into the future.

Securing the right level of funding through our charges is a priority within the plan.  Our key action is to transform boat registration and our management processes to deliver a more transparent service for our boating customers and maximise the recovery of costs.

Our review of charges applies to boat registration charges which contribute to the service those customers benefit from. Through the Navigation business plan, we aim to achieve further improvements in service levels by delivering efficiencies and securing funding from other beneficiaries.  

Table 1 shows how our waterway areas are funded. This is based on projected revenue income for 2020, excluding the impacts of the coronavirus (COVID-19) pandemic. 

Table 1: Current funding for our waterways (2020)

This gives a projected total budget for navigation in 2020 of £14.7 million (m)

Current income from boat registration charges is £7.86m.

We have used our 2019 customer base to project income from boat charges. This includes income from Gold licences, British Rowing (BR) and British Canoeing (BC). 

For 2020, before the impacts of COVID-19, we anticipated an income of £7.86m.

By 2024 we project an annual income of £8.65m when we apply the proposed charges we set out in this consultation. This income will match the forecast expenditure to deliver our navigation service and allow us to move to a more financially sustainable position.

Over the 3 years this means an additional £2.1m will be available to fund our increased costs and contribute to the delivery of the navigation service. This is summarised in table 2.

Table 2: Summary of navigation charges income 2022 to 2024

We have reviewed the operational activities that make up the navigation service. We have divided them into 2 categories. Those activities that should be funded from boat charges because those customers benefit directly from them, and those which should be funded by other sources. These are shown in table 3.

Table 3: Breakdown of the navigation service into activities that should be funded by boat charges and those which should be funded from other sources

The percentages show where we have allocated proportions of the activities between the 2 options.

Boat registration charges income is currently 52% of our overall navigation budget, which is forecast to be approximately £14.9m in 2021. A review of activities concluded that boat charges should be contributing 58%. These proposals mean that the boat charges contribution will increase to approximately 55% by 2024 charge year.

We have considered the wider affordability of increases and the COVID-19 pandemic when assessing the need to increase charges to fund our work over the next 3 years. Our assessment of these impacts is set out in 'Overview of the impact of these proposals on boatng customers'.

We paused the review of our charges last year because of the COVID-19 pandemic and held our charges at current levels. Our costs, however, are increasing and will continue to do so over the next 3 years.

These proposals are based on our best understanding of the relationship between the cost of the service and the benefits boaters receive. The increases are the minimum necessary to sustain a safe and efficient navigation service whilst we deliver the actions within the Navigation Business Plan.

We will take the opportunity to review our financial position as the business plan actions are implemented over the next 3 years.

The charging framework

The main proposals are for:

• a standard approach for annual and short period registrations based on size of boat (area) for all powered and unpowered enclosed boats
• fixed charges for all unpowered open boats and workboats which have less variation in size
• an additional ‘top up’ charge for business boats (based on the type of boat)
• common fixed charges across the waterways where it makes sense to do so
• waterway specific charges to reflect the costs of the local service
• a consistent approach for concessions and exemptions 
• a revised pro-rata approach for refunds and part year charges

These are explained in more detail in section entitled Proposals for a consistent framework for charging across our waterways.

We have not increased charges for 2021 to 2022. We are proposing to set charges for 3 years from January 2022 for the River Thames and April 2022 for Anglian Waterways and the Upper Medway.

We propose to move to the new charges framework as described in Proposals for a consistent framework for charging in year 1. To enable us to better recover our costs we are also proposing an overall increase in charges of 6% in year 1 (2022), with a further 4% in year 2 (2023) and then 0% in year 3 (2024). This equates to a 10.2% increase over the 3 years.

This additional income will contribute towards delivering a sustainable service to boaters based on the benefits they receive. It will cover projected additional costs for staff and external contracts to deliver this service. The increase also covers a contribution to capital financing costs.

We expect our staff costs to increase over this period. The costs are based on a public sector pay freeze in 2021, and pay rises from 2022 onwards. For our external contracts, we expect costs to rise in line with the Consumer Price Index (CPI) over the 3 years (based on CPI of around 1.7% per year).

Government require us to recover a contribution to the financing of capital expenditure through our regulatory regimes. Our navigation charges have not previously included this contribution. For the first time our proposals for charges include an annual contribution to financing navigation assets.

These proposals will affect customers’ charges. The impacts will come firstly from the changes to the revised framework. Then charge levels will increase to recover appropriate costs. But some customers will see overall reductions.

A major part of the proposed framework is the new approach to charging for powered boats. We will no longer have:

• charge banding by length of boats
• caps on charges for boats over a certain size
• significant discounts for engine sizes or types of boat

The proposal means that all powered boat users will pay for the whole size of their boat. Customers who will no longer receive discounts will see the largest increases to their charges.

For our largest customer group (annual private powered boat owners), table 4 shows how the revised framework and charge increase will affect them, through to the end of 2024. It shows the number of boats in each category.

Table 4: Impacts for annual private powered boats of the new charges framework and   proposed increases to 2024

Table 4 shows that we anticipate over 7,000 of these boats will see either a reduction, or an increase of less than £50 over the 3 year charging period.

A further 3,900 boats will see increases of less than £150.

This means that 90% of this category of boats will have an increase of less than £150. 

The remaining 10% is largely made up of boats that currently benefit from charge caps, and discounts for types of boat or engine size, and will no longer do so.

Business boats previously had higher charges, largely depending on their size, with some business customers paying more than £1,000 per boat extra (compared to an equivalent private boat).

Our proposed framework recognises that the extra charges needed to cover business activities do not relate to size, but more to the type of business boat. 

So we propose that businesses will pay the same boat charge as private customers, but with an additional fixed business charge.  The result is that the majority of businesses will see a reduction in their charges.

We have continued to apply fixed charges wherever possible. Annual registrations for unpowered open boats will generally see increases of around £4.52 over the 3 year charging period.