London councils earning more from parking and school meals than from tax

One in three councils is earning more money through parking charges and school meals than council tax, a new study has found.

The Audit Commission, responsible for protecting the public purse, found that councils made £10.2 billion in 2011/12 by charging for rubbish, funerals and other domestic services.

Money brought in by supplementary service charges helped fund 20 per cent of overall service spending by district councils and 9 per cent of the overall spending by single-tier and county councils in 2011/12.

Although nationally, money received through such services amounted to less than half the sum brought in through council tax, the public spending watchdog found that one in three (32 per cent) districts were collecting more money through these additional services than they were through council tax. This was also true for one in five (21 per cent) London boroughs.

The Audit Commission suggested some councils were perhaps using additional paid-for services to boost their income, after the central government grant to local authorities was cut by 26 per cent between 2011 and 2015.

Commission chairman Jeremy Newman said: "There is no 'one-size-fits-all' formula for how councils set their local charging policies. We are providing information and tools for councils, and those who hold them to account, to help understand the important role that charging plays in councils' strategic financial management.

"The fact that some bodies derive more income from charging than council tax is neither good nor bad, but highlights the significant role charging plays in funding public services, and reminds councillors and electors to carefully scrutinise the approaches councils are taking."

Two hundred and one districts in England received £1.4 billion through paid-for services, representing 20 per cent of their total spend in 2011/12.

In London, Westminster, Kensington and Chelsea and Wandsworth had incomes that outstripped spending on equivalent domestic services, all of which contain large concentrations of affluent households.

But the Chartered Institute of Public Finance and Accountancy (CIPFA) suggested the Audit Commission noted that the sums raised through charges had remained stable.

Cipfa chief executive Rob Whiteman said: "The Audit Commission report shows that despite massive budgetary pressures faced by councils, including the council tax freeze, the overall the proportion of income from charging they use to fund public services hasn't increased.

"Cipfa believes that this report lends further weight to our calls for the establishment of an independent grants commission to resolve local government funding, making its distribution fairer and basing it upon genuine need.

"The evidence for the establishment of such an independent commission is mounting, one that can advise government, openly and on the public record, on grant formulae and distribution arrangements."

Plans to abolish the Audit Commission were confirmed in the Queen's Speech in May. Communities Secretary Eric Pickles said the Local Audit and Accountability Bill would save £1.2 billion over 10 years and give local authorities the power to appoint their own auditors.

Minister for Local Government Brandon Lewis said: "Revenue from charges has fallen under this government.

"Unlike the last administration, ministers do not believe that councils should be hammering local residents with stealth taxes. In particular, we believe more should be done to protect residents from excessive parking charges and unfair parking fines."