117.1 Categories
- Fees and charges fall into three categories:
- Statutory
- Cost related
- Discretionary Services
117.2 Statutory Charges
- Statutory charges are outside of the Council’s control. However, it should be noted that in terms of the Resource Allocation Model, income will be assumed to increase in line with other fees and charges (usually inflation).
- Additional income from higher fee increases, or additional income volume, can be used to support increased expenditure/lower income in other areas.
- Conversely, lower income generation from fee increases below inflation or reduced volume will need to be funded from expenditure reductions or additional income elsewhere in the service.
117.3 Cost related Charges
- For some services charges are not prescribed, but the Business Unit Head is able to set the charge by reference to the cost of service provision.
- Constraints exist whereby the charge should be set to cover the cost of the service, e.g. Building Control fees, Public Entertainment licenses. With the new freedoms and flexibilities being allowed by Central Government this is increasingly the case.
- To achieve this the Heads of Service need to have appropriate systems in place to support the fee setting process.
- Service Accountants are able to advise how overheads can be allocated to support charging mechanisms.
- It is also recommended that large fluctuations in charges are avoided.
117.4 Charges for Discretionary Services
- Discretionary services are defined as a service which the authority is authorised but not required to provide.
- Charges for discretionary services can be set to cover costs, including overheads, but not to make profit.
- If a service is provided with the intention of raising revenue, a local authority trading company must be set up. Advice and assistance must be sought from the Section 151 Officer before any action is taken to set up a trading company.
117.5 All Fees and Charges
- Charges levied should have due regard to existing policies and delegations.
- Proposed fees and charges should be varied within +/-5% of the existing fee or charge.
- Heads of Service should review proposed fee levels in consultation with the Portfolio Holder.
- Charges that are either considered to be politically sensitive or potentially contentious should be reported to Cabinet.
- Heads of Service are required to produce a balanced budget. The Resource Allocation Model, which sets the cash limit within which services must be provided, assumes that fees and charges will increase by a set percentage (usually inflation) and therefore generate an additional level of income. Fees and charges will need to be increased to generate this amount of income in total.
- Heads of Service are able to cross subsidise charges for services by increasing some charges above inflation and other charges at a lower level. Alternatively, where the estimated additional income generated falls short of the assumed increase allowed in the Resource Allocation Model, Heads of Service must identify alternative ways of balancing the budget, for example, by reducing expenditure, seeking alternative ways of providing service provision, cross subsidisation from other services under the control of the Head of Service, or the identification of other income sources such as grants or new sources of income generation.
- All fees should be considered as part of the Service Planning process reported to Scrutiny and Review panels.
- Where decisions on increases in fees and charges are taken outside the budget process for administrative reasons (e.g. where there is a statutory regulation or a duty of consultation, for example, car parking where notices have to be served) due regard must be given to the financial strategy. Should a decision be taken not to increase charges/or propose increases below that assumed in the financial strategy, reports to Cabinet must clearly state the financial implications, budget shortfall, and that these will need to be funded within the service when the budgets are prepared.
- Fee setting should have due regard to current VAT regulations. VAT advice is available from Corporate Accountancy.
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