Charging and Trading Powers Lawrence Graham, 15 th Nov 2006 Damien Welfare 2-3 Gray’s Inn Square

Charging Section 93, Local Government Act 2003 Local authority may charge: - for discretionary services (not duties) - if no other charging power - and provided no express prohibition on charging for that service (SofS may remove legislative obstacles)

Charging (cont) Recipient has to agree to receive Revenue must not exceed cost (taking one year with another) - LAs to devise their own robust methodologies - CIPFA basis of assessing costs

Charging (cont) Differential charges permitted as between users (or some may receive free) SofS may disapply the power Available to all authorities Guidance, Nov 03

Charging and well-being Bar on raising money under the well-being power (s 2, LGA 2000) expressly lifted where done by means of charging. Charging permitted for discretionary services (not goods) provided under the well-being power

Charging: pre-existing regime Section 150, Local Govt & Housing Act 1989: SofS may create charging schemes for particular services. Was used for eg: - public path orders - charges for highways and raid traffic activities - registration of HMOs - land searches - overseas assistance

Pre-existing regime (cont) Section 150 cannot be used for “excepted functions” -Education in schools -Libraries (separate regime, s 154) -Fire fighting -Temporary traffic signs NB: excepted functions under s 150, LGHA not expressly prohibited under s 93, LGA 2003

Examples of other charging regimes (s 93 does not apply) Education: - musical tuition - school meals - board and lodging otherwise than at school Planning: - costs incurred in making public path orders on request

Examples (cont) Highways - charges to undertakers for diversion works (NRSWA 1991) - application for licence to deposit skip on highway Traffic: - request to place sign indicating route to specified land or premises

Examples (cont) Health and social services: - issue of disabled parking badges - funding of more expensive residential accommodation Libraries and museums - lending or receiving material if no duty Recreation - Sports centres

Local Authorities (Goods and Services) Act 1970 Power (arguably) to make agreements to charge (as well as trade with) public bodies for services Possible implications in relation to s 93 for charging in public sector where agreements

Checklist - charging Power not duty No existing provision to charg No existing provision not to charge Can be well-being activity Level of charge not to exceed cost Recipient agrees to receive SofS has not disapplied

Trading Sections 95 & 96, LGA 2003 Applied by order to Excellent, Good and Fair authorities (categorised under s 99, LGA 2003) SI 2004/1705 (as amended)

S 95 power Authorities authorised to do for a commercial purpose anything which they are authorised to do for the purpose of carrying on any of their “ordinary” (ie all other) functions Guidance, July 2004

Trading power - limitations Does not apply as regards a person where duty to do anything in relation to that person (though could still provide free) And does not apply where an existing power to act for a commercial purpose in relation to the person concerned – s 95(2)(b) Exercisable only through a company (“within meaning of Part 5, LGHA”) SofS may impose conditions (but may also remove legislative obstacles)

Issues - trading Boundaries Company (limited by guarantee; unlimited; society registered under IPSA 1965) Members’ interests FOI Unfair competition Procurement

Trading and well-being Local authorities (who may exercise the power) may trade in a well-being activity, provided the activity is a proper use of the well-being power Similarly activities under section 111, LGA 1972

Trading: pre-existing regime S1, LAs (Goods and Services) Act LAs may enter agreements with other public bodies for the supply of goods or materials, the provision of administrative or technical services, the use of plant or the carrying out of works or maintenance but not construction

Goods and Service Act (cont) Significant in relation to trading with public sector under agreements Public bodies include eg management agents and works contractors (trunk roads)

LG (Misc Provisions) Act 1976 S 19: - recreational facilities S 38: Agreements for use of spare capacity on computers, but not provide solely for purpose

Checklist - trading Order applies to authority Activity is an ordinary function Power not duty Can be well-being No existing power to trade Business case Company structure Any relevant conditions set by SofS

Conclusions LAs raised £10.2 billion from sales, fees and charges in 2003/4 = c 9% of income (Lyons) Possible proposals in Lyons report for user charges for certain services Expansion of charging? Trading power not yet being extensively used – LGA survey