NABO response to BW’s licence fees proposals

BW have now received NABO’s input to their consultation about Boat Licence Fees.

We noted before, that the proposal was that the  net-of-VAT licence would not increase, BUT the prompt payment discount would be reduced and an online renewal discount introduced. A fixed charge was proposed to be applied to all bills settled by credit card from 1st April 2010.

Click here to download the consultation document.

NABO submited the response below in February. There was some good debate around the issues, and we thank all those members who responded. We went beyond the questions posed in the consultation and proposed a longer term model for the fees to be indexed linked in the future. We wait with interest on BW’s conclusions.

Boat licence fee consultation 2010

This is the response on behalf of NABO to the consultation dated 17th November 2009. We thank you for the opportunity to comment on the proposals. We do so as follows:

Credit card fees

We agree that it is appropriate to charge an additional fee to pay by credit card. This commonly costs a trader between 1.5% and 3% and not a flat fee as proposed, so we are somewhat surprised by the proposal. We acknowledge that a flat fee is a simple and transparent way to handle the issue and agree with the proposal.

Explorer licence

We suggest that the Waterway Explorer licence is retained as part of the licence mix. We see it as one way to encourage starter boating especially by younger people and other groups of newcomers who don’t want a large outlay.

Prompt payment discount

We are in agreement with a prompt payment discount as a principle that gives a boater the option for a minimum yearly cost. We would emphasise that this also gives BW the considerable administrative advantage of boaters paying on time in one sum and also the advantage of cash flow.

Past consultations have shown boaters to be strongly in favour of preserving the prompt payment discount. Given that the boater has the funding for one lump sum, then the discount should be sufficiently advantageous to provide an incentive. If this is not clear to the individual, and there is no benefit to the advantage over phased payments, boaters will quickly adopt the multi payment approach. This increases administration and denies the cash flow.

We agree that in these days of low interest rates that 10% is too large and it could be argued that is subsidises the better off boater. Therefore we agree with the proposal to reduce prompt payment discount from 10% to 5% in 2010 but believe that it should not be further reduced in following years or the incentive will be lost. If BW decides to further decrease the discount, then this should not mask a further increase in fees. If interest rates go back up, then an increase in the discount percentage should be considered to keep this attractive.

Online renewal

We are in agreement with the principle of on line renewal discount which shares the lower administrative cost with the boater. We are surprised by the proposal to base this on a percentage, when the administrative cost is independent of the sum paid. We suggest that this should be a flat fee of £5.00 per payment. We would rather that this is retained as well as the prompt payment discount and not seen as an alternative.

Late renewal

We agree with the suggestion to retain the £150 one month late renewal fee as an important part of the licence evasion programme.

Other issues

We note that this consultation is running very near to the date when licence fees are to be set. We hope that this can be settled quickly so that the increases are applied uniformly from April 2010. We do not support a change in discount taking effect twice during a calendar year – any changes should only take effect at 01 April for the following year. If the current proposal implies that there may be two discount rates in one year, boaters paying early will pay a little more if the annual renewal falls before or after August 2010. If it is only changed on 01 April then all boaters get the same price for the year which is most equitable.

We note that for the majority of boaters, and we suggest BW’s best paying customers, the most advantageous fee for 2010/11 will actually be an increase of 2%. We therefore find it unfortunate that the headline from BW is “no increase”. This is just not true for the majority and the BW statement is regretted.

Nevertheless, in the current financial climate, we are not against consistent modest licence fee increases but these should be transparent. When announcing proposed price increases in the coming years, they should reflect and not ignore the effect of any policy changes this year.

We now suggest a revised structure for licence fees that allows for a progressive cost increase year on year, and without the major jumps that we have seen in the past years.

We suggest that the core cost quoted for the fee should be on the basis of the cheapest available prompt payment charge, comparable with the 2009/10 fee less the prompt payment discount, with a price index system then applied year on year. Charges should be added to this indexed core cost for the percentage on prompt payment, and flat fees for items like paper payment, credit card payment, overdue renewal and multiple payments.

We suggest that this core cost should be indexed to the Retail Price Index. We suggest that the indexing methodology should be the same as the state pension, as this reflects the income of a high proportion of the boating population. It may be considered that this be expressed as RPI plus x%, where x is a flat percentage which BW commit too for a longer term, say 5 years. We would prefer that this is zero but maybe half or one percent. This greatly aids the transparency of how much licence fees are going up over several years and by how much this is exceeding inflation. We acknowledge that boaters as prime  users of the waterways should be prepared to contribute something extra each year to asssit with the maintenance backlog. We would rather have this as a progressive increase, even in harder times, than see jumps such as 8% in a year.

Although not seen in the proposal, we understand that you are considering stopping the arrangement for boating clubs to act as agents for licensing. We would appeal to you not to do this. We believe that it provides a useful bond between BW and user groups in owning the licence evasion issues. The cash value of this to BW is small, but large to the groups involved. We believe it is good value for the waterways.

We trust this assists in your consideration. We remain available to further discuss any detail you wish.

D Fletcher
Chairman National Association of Boat Owners
February 2010