Findings from the Audit Commissions national study

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Findings from the Audit Commissions national
study

• David Pottruff
• Research Manager
• 17 April 2008

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Charging is fundamental to the achievement of
local priorities
Positively charged Maximising the benefits of
local public service charges

• The decisions made by councils and central
  government about charging for local public
  services affect everyone . . . in setting charges
  councils determine not only the service users
  from whom they will generate income, but how they
  will spend money to subsidise services.
  Positively charged

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It makes an important contribution to council
finances . . .
Positively charged Maximising the benefits of
local public service charges

• 10.8 billion nationally in 2006/07
• 8 per cent of total income
• Half as much as council tax
• Over one quarter of councils generate more
  through charges than council tax

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. . . and supports delivery of a wide range of
services
Positively charged Maximising the benefits of
local public service charges

• nursery and early years services
• school meals
• social care
• transport services
• environmental health
• sports and leisure

• arts and heritage
• car parking
• planning
• building control
• licensing
• burials and cremations

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The contribution of charging varies between
different types of council . . .
Positively charged Maximising the benefits of
local public service charges
Charging income by council type 2006/07
Source CLG - Revenue Outturn Service Expenditure
Summary Data 2006/07
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. . . and between councils of the same type
Positively charged Maximising the benefits of
local public service charges
Charging income as a percentage of total service
expenditure 2006/07 Metropolitan districts
Source CLG - Revenue Outturn Service Expenditure
Summary Data 2006/07
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Even very similar councils have quite different
approaches
Positively charged Maximising the benefits of
local public service charges
Charging income for a group of district council
nearest neighbours 2006/07
Source CLG - Revenue Outturn Service Expenditure
Summary Data 2006/07
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People can pay very different amounts for
essentially the same services
Positively charged Maximising the benefits of
local public service charges
Household expenditure on charges and council tax
Source Audit Commission
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Councils can also use charges to achieve service
and strategic objectives
Positively charged Maximising the benefits of
local public service charges

• Setting prices lower than market rates
• Encourage use
• Setting prices higher than market rates
• Discourage use of scarce resources
• Discourage behaviours with undesirable
  consequences
• Increasing, constant or decreasing unit price
• Influence the level of consumption
• Differential price based on time of consumption
• Ration use at certain times of day, month or year
• Differential prices for different groups
• Target services to priority users

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Councils can also use charges to achieve service
and strategic objectives
Positively charged Maximising the benefits of
local public service charges

• Waste collections
• Hazardous waste, construction and DIY waste,
  2-day service
• Sports services
• Two tiered concessions status and ability to pay
• Discounted facilities hire for accredited clubs
• Road user charging
• Parking
• Christmas shopping
• Permit parking based on CO2 emissions

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But too few councils are making the best use of
charging opportunities
Positively charged Maximising the benefits of
local public service charges

• Only one in five council finance directors
  believe that their councils make optimal use of
  charging powers
• The general power to charge for discretionary
  services has remained largely unused
• Charging is commonly used as a tool to minimise
  council tax increases

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The legislative framework constrains the use of
charging
Positively charged Maximising the benefits of
local public service charges

• Prohibitions on charging in some services
• Where these are deemed to provide a public good
• Restricted to cost recovery in most cases
• Allows authorities to recoup their efficient
  costs
• An inducement to provide or improve services that
  otherwise might not
• Required to charge at nationally prescribed level
  for some services
• Providing a level playing field for service users
• Can impact inequitably on taxpayers

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The legislative framework constrains the use of
charging
Positively charged Maximising the benefits of
local public service charges

• The rationale for restrictions not always clear
• Inhibits flexibility to respond to local
  circumstances
• Concerns about postcode lotteries, but the public
  have mixed views
• Poses challenge to governments own devolution
  agenda

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Local factors also act as barriers to better use
of charges
Positively charged Maximising the benefits of
local public service charges

• The contribution of charges to council objectives
  is unclear
• 4 in 10 councils have no charging policy
• Budget information presented net of income
• Council tax receives considerably more scrutiny
• The public, and some managers, have little
  understanding of costs and subsidies
• Benchmarking often limited to charges, not costs,
  markets or impact
• As a result, resources not targeted to priority
  services and users

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Local factors also act as barriers to better use
of charges
Positively charged Maximising the benefits of
local public service charges

• Councils are cautious of public opinion
• The public are concerned about stealth taxes
  and paying twice
• More tolerant of charges where they have a choice
  or understand the purpose of charges
• Some prefer the direct link between charge and
  service
• Willing to pay more where they see service
  improvement
• For most charged for services people believe they
  get value for money
• Failure to engage openly with public opinion can
  lead to poor charging decisions

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Local factors also act as barriers to better use
of charges
Positively charged Maximising the benefits of
local public service charges

• Charging can be politically contentious
• Politicians views regarded as a barrier in 70 per
  cent of councils
• Rightly concerned about affordability and
  protection of vulnerable groups
• Micro-management of charges can be a distraction
  from policy setting
• Some have increased levels of delegation

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Local factors also act as barriers to better use
of charges
Positively charged Maximising the benefits of
local public service charges

• The legacy of historic approaches
• Reluctance to review charging where previous
  decisions have been unpopular
• Annual inflationary increases can fail to account
  for changing costs, usage and priorities
• Striking the right balance
• Legitimate political choices to be made about
  resourcing priorities
• Need to balance ability and willingness of users
  and taxpayers to pay for services
• Tensions can arise between finance and service
  objectives
• Where finance is the main focus other strategic
  opportunities may be missed

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Councils can do more to understand the effect of
charges
Positively charged Maximising the benefits of
local public service charges

• Charges work within a systems of choices made by
  councils and individuals
• Understanding the system for different services
  and user groups is essential to effective use of
  charges

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Councils can do more to understand the effect of
charges
Positively charged Maximising the benefits of
local public service charges

• What objectives do you want to achieve?

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Councils can do more to understand the effect of
charges
Positively charged Maximising the benefits of
local public service charges

• Do you understand how (potential) users will
  respond to price?
• What other factors influence service use by
  different groups?

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Councils can do more to understand the effect of
charges
Positively charged Maximising the benefits of
local public service charges

• What impact do charges at different levels have?
• Service usage
• Household expenditure
• Income/subsidy
• Are impacts equitable?
• Is the council achieving its objectives?

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Further information
Positively charged Maximising the benefits of
local public service charges

• Our study report, charging directory, household
  charges calculator and charging income comparison
  tool can be accessed via
• www.audit-commission.gov.uk/charging
• You can contact the study team via
• charging_at_audit-commission.gov.uk
• d-pottruff_at_audit-commission.gov.uk