04 Apr 2024
Desperate moves by St Albans council to use parking fees to prop up its budget black hole have exposed questions about the extent to which certain revenues can be used to fill the deficit.
Speaking to the St Albans Times recently, council leader Cllr Chris White said SADC only had three sources of income: fees and charges, its grant from the Government, and council tax. Of these, he said, fees and charges are not entirely but largely parking.
As part of stringent measures to balance the budget for 2024/25, the Lib Dem administration voted through a variety of policies, including Sunday parking charges rising from £1.50 to £2.50, means-testing for senior citizen parking permits, a 28 per cent increase in visitor parking permits, and a 33 per cent increase to evening parking.
Free on street car parking across the district is also at risk, as spaces could be replaced with Pay and Display bays, providing an additional source of parking revenue.
As set out in the budget papers presented to Full Council on February 28, the anticipated income from changes to limited waiting bays in Harpenden, St Albans, London Colney and Redbourn is an additional income of £185,600 in 2024/25.
But to what extent can this extra revenue be used to help SADC’s overall cashflow crisis?
In 2016, Soho sex shop proprietors won a long-running legal battle against Westminster City Council, proving it was profiteering from the sale of trader licences and could only justify a reasonable percentage of its fees.
The case of Hemming (t/a Simply Pleasure Ltd) and others found that the only charges which WCC could legitimately levy had to relate to the administrative costs of processing the relevant applications and monitoring compliance.
It was no longer acceptable to set a fee based on the perceived footfall in a location.
The city council was forced to repay the excessive fees it had charged, together with interest, in a landmark ruling which rang alarm bells in local authorities across the country.
It prompted councils to take drastic action to avoid being found in a similar situation.
In St Albans, for example, the income from the thriving Charter Market was much higher than its outgoings, so this had to be offset against overhead costs like the SADC chief executive, finance, the Civic Centre etc, and by investing in improved facilities like new stalls.
This meant that in 2013/14, the market made a profit of over £50,000, but for 2014/15, it made a loss of almost £113,000, at least on paper.
The Hemming judgement means it is illegal for a council to use revenue from any licensed activity such as markets, pubs, parking and taxis on anything other than that particular service.
A council spokesperson confirmed the situation for SADC: “Where not set by government, licensing fees and charges are set purely on a cost recovery basis. Separately, the council
has a number of commercial properties and activities where the revenue supports essential council services.”
With parking, for example, revenue from fees and fines must only be used to run the parking department, and cannot be cross-allocated to other departments, but should be ring-fenced under the terms of the Road Traffic Regulation Act (1984).
In 2013, when Barnet council tried to increase the charges for residents’ parking permits and visitor vouchers in Controlled Parking Zones (CPZs), a local resident applied for a judicial review.
A court determined that the council’s purposes in increasing charges was to generate additional income for road maintenance and improvement, concessionary fares and other road transport costs and reduce the need to raise income from other sources, such as fines, charges and council tax and that this was unlawful.
There was no evidence that the increase was required to cover increased running costs of the parking scheme.
However, the situation seems to be different for SADC, as the council spokesperson explained: “All revenue from on street parking and penalty charges arising from parking offences must be spent on transport, including highway maintenance and environmental improvements.
“Parts of the council’s car park services are run on a commercial basis separate from the provisions of the Road Traffic Management Act 1984. A surplus from some car park operations, should they arise, could be used to support other council services provided to residents in the district. For example, they could be used to supplement deficits from on street parking services.
“Like all local authorities, the council is not a profit-making organisation – it is required to set a balanced budget each year and has a range of income steams which form part of its overall budget. Other income streams include, for example, Council Tax, commercial rents and income, fees and charges, and grants from government.
“So there is some complexity to revenue raised through parking.”
However, despite the recent increases to fees and the proposed end to free parking bays, based on the current financial modelling the council does not expect the on street parking service to be in a surplus position for 2024/25. Is this because it is being cross allocated to central or other costs?
Does the Hemming judgement also explain why the council wants to scrap the street trader licences given to the six mobile outlets which operate in the city centre?
When the judgement was enforced, most councils were forced to refund overcharged licence and consent fees, but although SADC agreed to reduce fees for street traders, it has never agreed to any refunds.
Asked whether any St Albans city centre street traders were reimbursed for excessive fees charged before the Hemming ruling, the council spokesperson said: “Fees were adjusted after the Hemming ruling. Reimbursements were not required.”
Flash forwards to the present, and SADC wants to revoke all the street trader licences and move operations under the wing of the markets department, allowing the council to increase fees without worrying about Hemming, add additional stalls and effectively run the market up to seven days a week.
The council spokesperson confirmed: “Street traders currently operate under street trading consents. These are issued under the Local Government Miscellaneous Provisions Act 1982 and only allow us to recover our costs.”
The existing mobile outlets could see their annual fees skyrocket from a few hundred pounds to well over £5,000 depending how many days a week they trade.
The current forecast is that markets will achieve an income of £448,000, 18.5 per cent above the previous year, and the forecast is for a surplus of £50,000 in the financial year 2023/24, but how that revenue will be reinvested has yet to be revealed.
The spokesperson explained: “We are working to streamline all markets-related activity under one team for efficiency reasons. ”We are also wanting to be fair to all our traders and allow more traders to trade on non-Charter Market days if they wish to do so.
“We have assumed that there will be a different mix of traders on each day. Seasonal traders have been taken into account in the planning.
“We are seeing interest from market traders and anticipate that some or most of the current street traders will continue to trade.”
Following publicity from the St Albans Times, SADC agreed to a public consultation on the proposals, rather than imposing them at the start of April, and a final decision will be made in the summer.
To compound the situation, many of the overhead costs assigned to licensed services have been reduced as SADC rents out more of the Civic Centre and reduces staffing and other costs, pushing more and more departments closer into the black.
The spokesperson said the overheads associated with the Civic Centre are proportional to the amount of space occupied.
“The council is still the biggest occupier of the building but, through effective asset management, our footprint in the building has reduced since the Covid pandemic, which has enabled other partners to move in and share the space with us. This has created a source of income and reduced some of our operating costs.
“It should be noted that some operating costs (e.g., maintenance and utilities) have increased over the same period. The allocation of the central accommodation recharge to service areas is a commonly used internal accounting mechanism; the costs are still the council’s.”
Questions must surely be asked about what extent SADC is being entirely transparent about what these increases in fees and charges are being used for? Is it part of a larger ‘modal shift’ agenda designed to make it more difficult and costly to park, as part of a bid to tackle the climate emergency by reducing the usage of cars? Or does it just want to balance the books for parking and the Charter Market?
Like local authorities across the country, SADC is in an unenviable position when it comes to its finances, and there are limited options available to improve the situation. However, arguably there needs to be more honesty about the political agenda behind these recent decisions, especially if the revenue raised is not being used for the purpose it was intended.
