THE GENERAL LIGHTHOUSE FUND 2002 – 2003 Report and Accounts for the year ended 31 March 2003 (in continuation of the House of Commons Paper No 1015 of 2002/2003) Presented by the Secretary of State for Transport pursuant to Section 211(5) of the Merchant Shipping Act 1995 Ordered by the House of Commons to be printed 21 July 2004 HC 921 London: The Stationery Office £12.50 Contents Foreword to the Accounts 1 Performance Indicators for the General Lighthouse Authorities 9 Constitutions of the General Lighthouse Authorities and their Board members 12 Statement of the responsibilities of the General Lighthouse Authorities’ Boards, the Secretary of State for Transport and The Accounting Officer 15 Statement on Internal Control 16 Certificate of the Comptroller and Auditor General to the Houses of Parliament 18 Income and Expenditure Account 20 Balance Sheet 21 Cash Flow Statement 22 Notes to the Accounts 24 Five year summary 39 Appendix 1 40 Appendix 2 43 Foreword to the Accounts for the year ended 31 March 2003 The report and accounts of the General Lighthouse Merchant Shipping (Salvage and Wrecks) Act 1995 Fund (the Fund) are prepared pursuant to Section in respect of the Republic of Ireland. 211(5) of the Merchant Shipping Act 1995. Trinity House is currently responsible under Section 193(5) of the Merchant Shipping Act 1995 for Europa Point Lighthouse in Gibraltar. In addition, as a Accounting for the Fund purely administrative arrangement, the Corporation The Companies Act 1985 does not apply to all discharges the responsibilities of the Department for public bodies but the principles that underlie the Act’s Transport at Sombrero (Anguilla) and Cape Pembroke accounting and disclosure requirements are of (Falkland Islands). The Authority meets residual general application: their purpose is to give a true pension liabilities in respect of former employees of and fair view of the state of affairs of the body the Imperial Lighthouse Service in the West Indies concerned. The Government therefore has decided and Sri Lanka. that the accounts of public bodies should be The Merchant Shipping and Maritime Security Act prepared in a way that conforms as closely as 1997 gives the GLAs the powers to establish possible with the Act’s requirements and also contracts to exploit spare capacity. complies with Accounting Standards where applicable. The Fund’s Accounts consolidate the The General Lighthouse Authorities (Beacon: Maritime Authorities’ accounts and comply as appropriate with Differential Correction System) Order 1997 came this policy. The Notes to the Accounts contain further into force on 12 January 1998 and states that the information. Section 211(5) of the Merchant definition of “Beacon” in the Merchant Shipping Act Shipping Act 1995 requires the Secretary of State to includes equipment for a Differential Global lay the Fund’s Accounts before Parliament. Positioning System. Fund Activities Code of Practice for Board Members Section 195 of the Merchant Shipping Act 1995 The GLAs have adopted codes of best practice for and Section 634 of the Merchant Shipping Act Commissioners and Board Members, which is based 1894, in respect of the Republic of Ireland, state on the Model Code of Best Practice for Public Bodies that: issued by the HM Treasury. The Code is underpinned by the Seven Principles of Public Life set out in the Responsibility for the provision and management of Committee of Standards in Public Life (the Nolan lighthouses, buoys and beacons on the coasts and Committee). sea areas around the British Isles is vested in the three General Lighthouse Authorities (GLAs): • Corporation of Trinity House (TH); Source of Finance • Commissioners of Northern Lighthouses (known The GLAs are financed by advances made by the as the Northern Lighthouse Board) (NLB); Department for Transport from the Fund, whose principal income is from light dues levied on shipping • Commissioners of Irish Lights (CIL). using ports in the United Kingdom and the Republic The Authorities also have wreck removal powers of Ireland. The Fund receives additional income from under Section 253 of the 1995 Act and the the Republic of Ireland Exchequer following an agreement entered in 1985 and from sundry receipts 1 The General Lighthouse Fund 2002–2003 generated by the GLAs, from buoy and property instability of the investment market. The total cash rental, workshop service and the sale of assets. There value of the Fund at 1 April 2002 was £68.8m. The is also income from investments. All three GLAs value at 31 March 2003 had fallen to £63.6m, a contained their running cost expenditure within levels reduction of £5.2m or 7.6%. The closing value was approved by Ministers. The level of light dues in the measured close to the lowest value of the FTSE 100 United Kingdom is determined by the Secretary of index for the year. The effect of the reduction in the State for Transport under Section 205 of the value of the investments was reduced by light dues Merchant Shipping Act 1995. The Minister for income that was slightly above predicted levels. In Communication Marine and Natural Resources sets addition the cash draw downs required by the GLAs light dues in the Republic of Ireland. Light dues rates were less than forecast. and regulations remained unchanged during the year. Activities Results The Marine Navigation Plan to 2015 The current plan projected a mix of aids based on In 2002/2003 the income of the Fund was £77.2m the technology mix of the late 1990s. In the (2001/2002 £81.1m) including light dues of intervening period, the GLAs’ marine Differential £71.9m (2001/2002 £75.2m). Total operating Global Positioning System (DGPS) has been expenditure of the Fund was £65.7m (2001/2002 commissioned. The Decca Navigator closed in £62.9m) before interest charges. 2000. Debate continues on the future of the Loran C The surplus in 2002/2003 was £5.5m system post-2004. Automatic Identification Systems (2001/2002 £14.7m). will become a mandatory fitment to all vessels over 300 gross tons registered in SOLAS states. Work has In April 2000 the investment fund was split between begun to develop a new marine navigation plan that two investment houses, Morgan Stanley Quilter and takes these changes into account, providing a vision HSBC Asset Management. In addition to the of the requirement to 2020. investment portfolio, Morgan Stanley Quilter also manages the Fund’s Cash Reserve. All light dues Operational Performance income is paid into the Cash Reserve. The imprest The performance indicator used to measure transfers to the GLAs are paid out of the cash operational performance is “Aids to Navigation reserve. Availability”. This indicator is a measure of the quality of the primary service – the effectiveness of Aids to Investments analysis by Investment House Navigation and their availability as a contribution to safe navigation at sea. Availability is measured by Market Value Cost 31 March 2003 31 March 2003 dividing total time (i.e. the sum of the total number of £M £M hours in a year multiplied by the number of Aids to HSBC Investments 25.3 34.3 Navigation in each category) into the total number of Cash for investment 0.7 0.7 hours that the Aids were available to the mariner. This MSQ Investments 20.2 24.8 calculation is then expressed as a percentage. Cash for investment 0.1 0.1 Total 46.3 59.9 Methods of measurement and recommended Cash Reserve* 17.3 17.3 standards are set for each category of Aid by the Total Reserve 63.6 77.2 International Association of Aids to Navigation and *Includes Euro cash reserve of £1.3m, excludes £3.1m cash Lighthouse Authorities (IALA) and included in its held by the GLAs publication IALA Aids to Navigation Guide During the year light dues collected in Euros by RoI were held (Navguide – Edition 4: December 2001). in a Euro account and used to partially meet the running costs for CIL Pages 9, 10 and 11 set out the results for 2002/2003. All Standards have been achieved There were considerable fluctuations in the value of with the exception of Northern Lighthouse Board’s the Fund during 2002/03. This reflected the Category 1 Racons where performance is 0.1% 2 Foreword to the Accounts below the IALA minimum. The causes have been of ship time dedicated to routine maintenance to aids ascertained and specific objectives have been set to to navigation. It concluded that two of the vessels, recover the situation. The trend is improving. the NLB Pharos and the THV Mermaid, should be replaced with two new Multi-Function Tenders (MFTs) Historic Estate as soon as possible. The THV launches, Vectis and Work continues to develop the historic estate to Ready, should be replaced with a larger Rapid provide an income to the General Lighthouse Fund Intervention Vessel (RIV). The primary function of the and to preserve its integrity for the future. Much of the RIV would be to offer a rapid wreck-marking facility lighthouse estate is under-utilised for aids to in the event of an accident in the Dover Straits. The navigation purposes. While much of the estate has RIV would also carry out survey and buoy work in the been sold, partial disposal of operational sites has Southeast corner of the UK. The review proposed the not proved to be attractive for many reasons. The withdrawal of the THV Patricia when the new vessels lighthouse tower and service buildings are an have entered service. This would reduce the GLAs’ integrated unit and partial disposal would require fleet to three multi-function tenders, one smaller buoy major re-provision of key services.