About charging

Councils in many service areas charge fees, for example for swimming or parking services. There are a host of legal powers available to councils to charge for services. There are also a number of specific legal restrictions that prevent charging for certain services and it is important to remember that the charging power under the Local Government Act 2003 (England and Wales) only applies to ‘discretionary services’ not statutory services. Charging powers were reaffirmed for English authorities under the Localism Act 2011 but again there are some restrictions around how and on what services councils can use charging powers.

Discretionary services are those services that an authority has the power but not a duty to provide. An authority may charge where the person who receives the service has agreed to its provision. A council could not for example charge for its education services that it is required to provide but it could charge for say a window cleaning services that it offers as an extra service.

If charging is done for a commercial purpose or a profit ( using powers under the 2003 Local Government Act or the Localism Act 2011 ) it must be through a trading company.

The essential difference between charging and trading under the 2003 Act is that charging for discretionary services is limited to cost recovery whereas trading (through a company) permits the making of a profit. There are 4 main differences in the powers:

• charging relates only to discretionary services, whereas the power to trade is for all services
• all best value authorities can use the power to charge
• charging is limited to the recovery of the cost of providing the service whereas trading can be at a profit
• the power to trade is only exercisable through a company

There have also been recent changes introduced through the Localism Act