08 February 2008
Charges are a powerful means of boosting local coffers and even changing people's negative behaviour. But councils – not Whitehall – are best placed to judge how this should be done
'Car park charges have gone up again.' It's a comment repeated many times across the country, and when the car park in question happens to be owned by your local council, you might wonder about the thinking that went into the decision.
A recent report from the Audit Commission, Positively charged, looks at charging for services by councils and rightly identifies it as big business. In 2006/07, councils in England raised £10.8bn from charges for services, excluding rent. At around 8% of councils' total income, this is a revenue stream that clearly needs to be managed effectively.
As the commission points out, effective management implies a great deal more than making a profit. By setting charges below competitive rates, councils can encourage the use of services, while high charges can discourage them. And, through concessions, councils can target services towards specific user groups. It is easy to see how these mechanisms can be applied to car parking charges, and many councils have done that imaginatively.
For example, East Hampshire District Council has supported businesses by removing car parking charges in two towns in the run-up to Christmas, encouraging local shopping. Richmond upon Thames is using charging to influence environmental objectives, by introducing higher fees for parking permits for 'gas guzzlers' and reduced rates for more environmentally friendly cars.
In my borough of Westminster, we set charges for internet access in our libraries at higher rates for non-members, so that only members of our library service benefit from subsidised rates and other users pay at rates comparable with commercial internet cafés.
As these examples show, charging for local services often brings into play a range of complex political decisions. Local public opinion can sometimes be sharply divided about the merits of a new charge.
Councillors will naturally think about how the public will react, as well as whether the charge will achieve its intended economic, social or environmental objectives. That's part of what local democracy is all about. And only local councils, with their combination of deep knowledge of individual localities and democratic accountability, can properly take all relevant factors into account.
Kettering Borough Council, for example, uses 11 guiding principles to inform how charges for local public services are set. Each of these raises, in its own right, a string of issues.
For example, 'subsidy from taxpayer to service user should be a conscious choice' will require the council to have a very full understanding of the economics of the charge, including the relationship between price, demand and the cost to the council of providing it. And that, unlike some of the other charging principles, does not touch on issues of political choice.
So, what could be done better? As the Audit Commission rightly points out, councils could take a more thoughtful approach to their charging strategies. The public clearly expects them to make complex decisions: a survey accompanying the commission's report shows that around 60% of people believe it is acceptable for councils to charge different amounts, based on ability to pay, to ensure equal access to local public services. Almost two-thirds agree that it is acceptable for councils to use charging to influence people's behaviour.
But, as so often, the dead hand of Whitehall gets in the way of the proper exercise of local democracy. Although councils have the freedom to set charges for many services, there is a long list of services that must be provided free of charge, or at centrally determined rates. Some of these may be unexceptionable. But, in a society where binge drinking can lead to serious social problems, what is the point of arbitrary caps on licensing charges, which have left council taxpayers £100m out of pocket?
Why, when a shortage of professional planning capacity is widely recognised as a barrier to the delivery of the development we need, does the government stop councils meeting the full costs of handling planning applications through fees, when both councils and developers would favour that?
Why are charges for local land searches subject to complex restrictions that make fair competition between councils and commercial providers of these services almost impossible to achieve?
There is surely a clear message to ministers in the Audit Commission's findings, and it is one that repeats a key point in Sir Michael Lyons' comprehensive report on local government finance last year. Decide what local government is for, and devolve the full powers needed for councils to do the job. Interference from the centre and over-regulation are hindering better outcomes for local people.
Sir Simon Milton is chair of the Local Government Association
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