The Government's Guidance on Charging says
Limitation to cost recovery
15. By providing a power to charge for discretionary services the Government’s aim is to
encourage authorities to provide those sorts of services they would otherwise decide not to
provide (or improve) at all because they cannot justify or afford to provide them for free or
to improve them. The aim is not to provide a new source of income for authorities, but to
allow them to cover their costs.
16. The 2003 Act therefore provides that for each discretionary service for which a charge is
made using the new power, authorities should be under a duty to secure that, taking one
year with another, the income from charges for that service does not exceed the costs of
provision.
17. The requirement to take one year with another recognises the practical difficulties local
authorities will face in estimating the charges. It establishes the idea of balancing the
books over a period of time (which may be a number of years – see paragraphs 21-23)
without having to have detailed prescription either on the face of the Act or in secondary
legislation. Any over or under recovery that resulted in a surplus or deficit of income in
relation to costs in one period should be addressed by an authority when setting its charges
for future periods so that over time income equated to costs (see also paragraph 26).
Calculating the Costs of Provision and the Charge
18. Each Authority making use of the new power to charge will need to establish a robust
methodology for assessing the costs to the authority of providing each discretionary
service. Authorities are free to decide what methodology they wish to adopt. They may
however find it helpful to draw on existing and familiar principles as set out in the CIPFA
Best Value Accounting Code of Practice (the Code). One option would be to use the
Code’s definition of Total Cost. As an alternative, authorities may wish to consider adding
to Total Cost an appropriate contribution for Corporate and Democratic Core (CDC) and
Non-Distributed Costs (NDC), as those terms are defined in the Code, as a part of the
costs of provision.
The guidance (and the text of the Act itself) is quite clear; Authorities may make no more from the charges of providing a service than it actually costs them.
BANES make £150,000 per year from planning pre-application advice, charging £70 per hour.
Here is their response. They appear to be claiming that "benchmarking" is a robust methodology for setting charges (in other words, ask a few other councils what they are charging and copy them).
Request
“With reference to this mandatory guidance, please provide me with the information
that shows how the Council has complied with the Act in respect of the provision of
Planning pre-application advice, showing the methodology used, and the actual
calculated costs of delivering the service for each year since the implementation of
the Act”.
Response
We believe that we comply with the act.
The Local Government Act says:
“Calculating the cost of provision and the charge: 18. Each authority making use of the new power to charge will need to establish a
robust methodology for assessing the costs to the authority of providing each
discretionary service. Authorities are free to decide what methodology they wish to
adopt”.
Charging rates were determined through benchmarking. We hold information on pre
application charges i.e. invoices sent, payment received , however no information is
held which confirms whether the Council has made a surplus or a loss on these
charges since they were implemented.
Aren't they a bit hypocritical?
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