North Yorkshire Council

Fees & Charges Policy

 

1.0       Introduction and Context

1.1       Income generation is an important part of the Council’s overall resources. Fees and charges can help to achieve income to support frontline service delivery and future investment, can influence customer behaviour and can help to ensure the council’s policy objectives are achieved.

1.2       In total in 22/23 the former 8 councils in North Yorkshire expect to generate £113m from discretionary fees and charges - 11% of total income budgeted for the year. An effective Fees and Charges Policy will help to maximise income raised and lower the burden to Council Tax payers of providing various council services, instead ensuring that where appropriate, it is the direct users of these services that are paying towards the costs of these services.

1.3       The principle aims of this Fees and Charges Policy are to support future budget setting and medium-term financial planning processes and to provide a framework for the Council’s approach to charging for services.

1.4       With this in mind, this Policy has been developed, to provide Service Managers with a centralised framework to consider when reviewing their fees and charges, helping to ensure a consistent approach across the Council.

2.0       Scope

2.1       This Policy applies to:

·         Non-Discretionary (Statutory) Services that a Local Authority is mandated, or has a duty to provide, where charging is permissible in the legislation;

·         Discretionary Services that a Local Authority has the power, but is not obliged, to provide and may cost recover for providing such services.

2.2       This Policy does not apply to:

·         Any service where there is no ability to cost recover (charge) for such services;

·         Council Tax and Business Rates – local taxation charges are covered by separate legislation;

·         Fees and Charges that are set in statute and regulations, for example, Planning Application Fees;

·         Services that are free of charge at the point of delivery, under legislation, for example domestic general waste collection;

·         Contributions to the cost of care, as defined by social care legislation;

·         Housing Revenue Account (HRA) housing rents – a separate HRA rents policy covers these particular charges;

·         Services traded through North Yorkshire Education Services (NYES) and

·         Wholly controlled companies – as separate legal entities (within the NYC Group) fees and charges are set separately in accordance with their approved objectives, business plans and governance arrangements.

 

3.0       Roles and Responsibilities

3.1       Within the Council’s Constitution, Directors are responsible for establishing and reviewing fees and charges for their directorate in accordance with this corporate policy framework, the legal framework which enables such charges and the approved budget envelope.

3.2       The Corporate Director of Resources is responsible for reviewing this policy and providing advice and guidance for its implementation.

4.0       Objectives

4.1       With the ever-increasing budget pressures facing the public sector, it is important for the Council to increase resilience and independence wherever possible. One of the main areas this can be explored through is Fees and Charges.

4.2       In line with the Council’s savings requirements and commercial stance, it is vital to regularly review the continuing provision of those discretionary services where the council is unable, or unwilling, to recover the full costs of service. It is also important to ensure that where there is an opportunity to introduce new fees and charges, this opportunity is investigated fully to understand the implications of doing so.

4.3       The Fees and Charges Policy therefore has the following objectives:

4.3.1    Maximising consistency across services:

As part of local government reorganisation, there is a need to move towards a consistent approach to fees and charges to ensure charges reflect service costs and are fair across the whole of North Yorkshire. This Policy acknowledges that there will be different fees and charges in operation across North Yorkshire as services work towards single operating models. This Policy does not specify if, when or how the various fees and charges across all 8 former councils should be harmonised but as services are brought together, it provides a unified set of principles for services to follow.

Any departure from the agreed Policy should be clearly documented and clearly explained. A corporate list of fees and charges is maintained by Finance and will allow Directors and Service Managers to record when a charge was last reviewed and what was considered. To assist with this process, a Fees and Charges calculation tool/guidance has been developed. (Link to Intranet)

4.3.2    Ensuring Fees and Charges are robust and up to date:

All fees and charges are to be reviewed on an annual basis. Whilst it is acknowledged that a full review of each fee and charge implemented by the Council is not practicable each financial year, it is considered that as a minimum the fees and charges already charged by the Council are to be adjusted in line with inflation each year. This will ensure that any inflationary change to the costs of providing a service will be matched by a corresponding change to the charge made for the service. The inflation rate to be applied each year will be notified by the Corporate Director of Resources as part of the budget setting process. All fees and charges must be subject to a detailed review at least every 3 years.

4.3.3    Ensuring that Fees and Charges are clearly understood:

As part of the review of Fees and Charges, the cost of providing each service, and any legislation pertaining to this service, is to be considered. As services start to work together under local government reorganisation and budgets are re-worked, services will be better placed to understand the costs of providing services and will help inform future decisions around fees and charges. The Fees and Charges calculation tool will allow Directors and Service Managers to calculate the cost of providing a service and record any relevant legislation and store this information for future reference.

4.3.4    Maximising Council income:

When reviewing existing fees and charges, or when considering the implementation of a new charge, the charge should be set at such a level as to maximise the income received by the Council. Please see (Link to intrant) for further guidance on the approach to use when determining a fee and charge.

Service income budgets will rise in line with inflation in each year. As budgeted income targets are set to increase, it is important for fees and charges to be regularly reviewed and updated to help in meeting this increased level of budgeted income.

It is also important to ensure that fees and charges are reflective of the council’s costs of service provision, to ensure that services are not being inadvertently subsidised without a positive decision to this effect.

5.0       Implementation

5.1.      The following costing approach to fees and charges should be adopted:

·         When introducing or reviewing a fee or charge, the Council will follow one of three models set out below.

 

·         As a general rule, Fees and Charges should be aimed towards full-cost recovery, including an appropriate share of corporate and departmental overheads.

 

·         If the Council is unable, or unwilling, to recover the full costs of providing a discretionary service, then as part of the annual review, the continued provision of this service should be considered along with the rationale of the charging policy adopted.

 

·         When finalising the costs of each fee and charge, consideration should be given to any wider implications of setting the charge at the proposed rate, to avoid any unintended consequences.

Costing Model

Objective

Key Considerations

1.    Full Cost Recovery

To cover the full costs of delivering the service ensuring no element of subsidy from local taxpayers.

×          This is the Council’s default charging method;

×          Charges should recover the full costs, including overheads, capital charges and recharges;

2.    Cost Plus

To cover the full costs of delivering the service plus a margin to contribute to re-investment in services.

×          In limited circumstances it may be appropriate to add a margin to full cost recovery, for example to contribute to re-investment in services where the income will not generate a surplus or profit against the service in totality. Guidance from Finance should be obtained before considering such charges

3.    Subsidised

 

To cover all or part of the costs of service delivery with support from local taxpayers.

 

×          The level of subsidy should have regard to the full cost of service delivery and there should be a clear and agreed rationale for subsidy

 

5.2       Fees and Charges should be benchmarked against other local authorities to help identify potential best practice. When appropriate to the Fee and Charge in question, benchmarking against other relevant competitors in the market should also be undertaken.

5.3       Each Directorate is responsible for ensuring that their Fees and Charges are appropriately monitored and up to date. Each Directorate’s list of Fees and Charges is to be overseen by the Directorate’s lead Finance Business Partner.

5.4       Annual reviews should consider the following factors:

·         Inflationary pressures, and when a flat rate uplift might not be the most appropriate option due to specific changes to the cost-of-service delivery;

·         Service-level budget targets, with the context of council-wide targets and advice from lead Finance Business Partners;

·         Cost of administration;

·         Scope for new charging areas, this might be entirely new discretionary service to deliver, or existing services that are currently not charged for;

·         Demand/volume and sensitivity to price changes;

·         Use stakeholder engagement and comparative data, where appropriate, to ensure that charges do not adversely affect the take up of services or restrict access to services (other than where this is a desirable outcome).

5.5       If a decision is taken to not increase some fees and charges the budget shortfall that this creates will need to be bridged through other operational and cost savings. Conversely, if charges are increased above inflation this can contribute to Directorate savings targets.

5.6       Service users should be given a reasonable period of notice before the introduction of new or increased charges and there may be a requirement to consult.

5.7       To ensure cost effectiveness and efficiency when setting and amending charging levels, the following are to be considered:

·         The desirability of increasing the Council’s market share e.g., temporarily reducing a fee or charge in order to stimulate demand for a service, leading to increased income generation;

·         Obstacles to maximising full cost recover when providing the service;

·         Future investment required to improve or maintain the service;

·         If full cost recovery would require a sudden and large uplift and may reduce market share, it may be prudent to phase-in that price rise over a longer period with a temporary agreed discount;

·         The desirability of reducing the uptake of a given service, i.e., raising charges during peak times.

5.8       Once the review of existing fees and charges has been completed, or any proposal for a new fee or charge has been developed, these will need to pass through each Directorate’s agreed approval process before implementation.

5.9       Further guidance is available as part of the Fees and Charges Calculation Tool.

6.0       Regularity of Review

6.1       The Policy is to be reviewed every four years as a minimum and any required amendments will be subject to approval of the Executive.