Councils need to consider "more strategic approach" to charging

Local authorities may need to become more strategic in the way they set fees and charges so that they encourage or discourage particular behaviour, a leading local government lawyer has argued.

Judith Barnes, partner and head of local government at Eversheds, predicted that income generation would be a key area for councils which have seen a significant drop in revenue from fees and charges following the credit crunch.

Pre-planning advice, car parking and leisure services are among the areas where councils are likely to consider increasing charges.

Barnes said: “Many authorities will be reviewing their strategies on generating income and developing new charges for services. Questions are being asked as to whether the easy 'Barnet' model of basic service provision should be adopted, whereby councils charge for everything else on top of the basic, i.e. paying for a swifter or better service.

“Alternatively authorities could look to economise by cutting service provision that is not essential, although this will obviously come with consequences e.g. leisure and the impact that this approach could have on health. Perhaps authorities should instead be more strategic in the way they set fees and charges to encourage or discourage particular behaviour?”

Barnes warned that the issue of charging more for services raised the dilemma of which services should increase their fees.

She added: “It is also difficult to see how charges can be lawfully set if the councils’ pockets are not deep enough for every desired element of service to be provided – are new eligibility thresholds to be set higher? Are those criteria fair and defensible? Even if new charging policies are adopted there must be some discretion allowed in individual cases.”

The Eversheds partner pointed to a recent MORI survey for BDO – A Perfect Storm Revenue and Charging – which found that 33% of residents supported local authorities selling services locally and 64% supported differential charging.

“The report makes it clear that the public is not averse to paying for services where that protects the front line,” Barnes said. “This means that there are opportunities for councils to review charging strategies and look at new ways of generating income to help balance the books in a way which the public will understand.”