Charging brings in more income than council tax for one in five councils
The Audit Commission has published ‘Income from charging: Using data from the VFM Profiles, September 2013′, a briefing drawn from its Value for Money (VFM) Profiles. The briefing presents the Commission’s analysis of the £10.2 billion that English councils raised through charging for services in 2011/12.
Charging in 2011/12 funded 9 per cent of single-tier and county councils’[i] overall service expenditure, and 20 per cent of district councils. Although nationally the total income from charging was less than half the amount raised through council tax in 2011/12, at the local level it exceeded council tax in one in three (32 per cent) district councils and one in five (21 per cent) London boroughs.
Jeremy Newman, Audit Commission chairman said “There is no ‘one-size-fits-all’ formula for how councils set their local charging policies. We are providing information and tools for councils, and those who hold them to account, to help understand the important role that charging plays in councils’ strategic financial management. The fact that some bodies derive more income from charging than council tax is neither good nor bad, but highlights the significant role charging plays in funding public services, and reminds councillors and electors to carefully scrutinise the approaches councils are taking.”
The Commission’s analysis found great variation between councils in terms of the amount of income they generate from charges, the ratio of charging income to service spending, and the changes to these over recent years. The contribution of charging to spending in 2011/12 varied most for district councils, with 2 to 87 per cent being generated through charges[ii].
Mr Newman comments: “Within the limitations set by Government, councils can charge for a wide range of the services they provide to recover the cost of providing those services. A multitude of factors, from a council’s location to its population’s needs or demographics, will influence councils’ opportunities and decisions about charging for services. With reductions in their funding and rising demand for many services, councils are facing difficult choices about which services they can afford to provide. The use of charging to support a service, or influence demand merits closer examination. At the same time, councils need to ensure that their approaches to charging are delivering the benefits expected and remain lawful.
The Commission also found that from 2004/05 to 2011/12 councils’ total income from charging reduced by 2 per cent in real terms (when adjusted for inflation), and by 11 per cent in real terms since 2009/10. Despite these reductions, for councils as a whole the contribution of charging income to service spending remained relatively stable over this period – at about 10 per cent.
The ‘Income from charging: Using data from the VFM Profiles, September 2013′, briefing presents a high-level analysis of councils’ income from charging and the contribution it makes to service spending. It focuses on the national picture in 2011/12 (the latest year for which data is available) and trends for different types of council across broad service areas. The data used can be found in the Financial Resilience section of the Audit Commission’s VFM Profiles.
[i]This group includes county councils, London borough councils, metropolitan district councils and unitary authorities.
[ii] Although ranging from 2 to 87 per cent, half of district councils had between 14 and 25 per cent of their service spending funded through charging for services.
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Notes to Editors
The VFM Profiles
The VFM Profiles are widely used, with 9,000 visitors in the last financial year. Now with improved accessibility, they bring together data about the cost, performance and activity of local councils and fire authorities. The Profiles show how organisations are spending resources, what services they perform and how these costs and performance levels compare between organisations, and over time. Auditors use them to draw their VFM conclusions in annual audits, but anyone can use them: from Councillors and local government employees to members of the public. The VFM Profiles are an online tool that can help the public look at their council and how it compares with others, at a time when the transparency of public services is increasingly important.
The data in the VFM Profiles can be used to examine, for individual councils:
• how much charging income is generated in total and in broad service areas;
• how charging income contributes to total spending and spending in broad service areas;
• how charging income and cost recovery compares to other councils of the same type; to councils that serve areas that are similar in terms of population and economic factors; or to councils within geographic areas; and
• changes over time.
Councils charge for a wide range of services, including: 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; and burials and cremations.
Previous VFM briefings
Council tax collection – Using data from the Value for Money Profiles (June 2013)
Social Care for older people: Using Data from the Value for Money Profiles (July 2013)
The Audit Commission
The Audit Commission’s role is to protect the public purse. We do this by appointing auditors to a range of local public bodies in England. We set the standards we expect auditors to meet and oversee their work. Our aim is to secure high-quality audits at the best price possible. We use information from auditors and published data to provide authoritative, evidence-based analysis. This helps local public services to learn from one another and manage the financial challenges they face. We also compare data across the public sector to identify where services could be open to abuse and help organisations fight fraud.
For further information please contact:
Nick Rigg
Communications
Direct line: 0303 444 8284
Mobile: 07970 906 112
Press office: 0303 444 8282
Email: n-rigg@audit-commission.gsi.gov.uk