Maidstone Borough Council

Charging Policy




1    Introduction and Context

1.1         At Maidstone Borough Council, fees and charges represent an important source of income which is used to support the delivery of the Councilís objectives.† Currently income from fees and charges constitutes just under a third of the councilís funding.


1.2         The Council needs to ensure that its charges are reviewed regularly, and that they contribute towards the achievement of its priorities.† It is also important to ensure that fees and charges do not discriminate against individuals or groups by excluding them from accessing council services.


1.3         Pressure on the Councilís budgets has increased the incentive to make best use of charging opportunities and to recognise the importance of using this as a means of recovering the costs of delivering services.†


1.4         Under the Councilís constitution, responsibility for setting discretionary fees and charges is delegated to service committees and directors.† Each committee will review the fees and charges for the services within its remit at least annually as part of the budget setting process to ensure that they remain relevant and appropriate.


1.5         Where the Council has the discretion to set the charge for a service, it is important that the implications of this decision are fully understood, and that decision makers are equipped with sufficient information to enable rational decisions to be made.



2    Policy Aims and Objectives

2.1         The aim of this policy is to establish a framework within which fees and charges levied by the Council are agreed and reviewed.


2.2         The Council must ensure that charges are set at an appropriate level which maximises cost recovery.† Unless it would conflict with the Councilís strategic priorities, other policies, contracts or the law then the Council should aim to maximise net income from fees and charges.


2.3         The policy aims to ensure that:-


a)            Fees and charges are reviewed regularly, and that this review covers existing charges as well as services for which there is potential to charge in the future.


b)            Budget managers are equipped with guidance on the factors which should be considered when reviewing charges.


c)            Charges are fair, transparent and understandable, and a consistent and sensible approach is taken to setting the criteria for applying concessions or discounted charges.


d)            Decisions regarding fees and charges are based on relevant and accurate information regarding the service and the impact of any proposed changes to the charge is fully understood.



3    Scope

3.1         This policy relates to fees and charges currently being levied by the Council and those which are permissible under the wider general powers to provide and charge for ďDiscretionary ServicesĒ included within the Local Government Act 2003 and Localism Act 2011.† It does not cover services for which the council is prohibited from charging.


3.2         Fees for statutory services delivered by the council, but for which charges are set by central government, rents, leases, council tax, and business rates are outside the scope of this policy.


3.3         In general, charges should ensure that service users make a direct contribution to the cost of providing a service.† However, there may be certain circumstances where this would not be appropriate.† For example:


         Where the council is prohibited from charging for the service (e.g. collection of household waste)

         Where the introduction of a charge would impede delivery of corporate priorities;

         Where administrative costs of charging outweigh the potential income;

         Where the service is seen to be funded from Council Tax (i.e. services which are provided and delivered equally to all residents)

         Where the government sets the fee structure (e.g. pollution permits and private water fees)



4    Principles

4.1         The following overarching principles apply for the consideration and review of all current and future fees and charges levied by the council:


         Fees and charges should maximise cost recovery and where appropriate, income generation, to the extent that the Councilís legal powers permit, providing that this would not present any conflict with the Councilís strategic objectives;

         Fees and charges should support the improvement of services, and the delivery of the Councilís corporate priorities, as set out in the strategic plan;

         Where a subsidy or concession is provided for a service, this must be targeted towards the delivery of strategic priorities, for example, by facilitating access to services;

         The process for setting and updating fees and charges should be administratively simple, transparent and fair, and for budgeting purposes, income projections must be robust and rational.



5    Process and Frequency for Reviewing Charges

5.1         The following arrangements for reviewing charges will be applied throughout the Council, for existing charges as well as those which in principle could be introduced.


5.2         In accordance with the Councilís constitution, ĎDiscretionary fees and charges will be reviewed and fixed each year by the Committee responsible for the function or the Service Director as appropriate having considered a report from the Director or duly authorised Officer in conjunction with the Chief Finance Officer, as part of the estimate cycle


5.3         This annual review will ensure consistency with the Councilís priorities, policy framework, service aims, market sensitivity, customer preferences, income generation needs and that any subsidy made by the Council is justifiable.


5.4         Heads of Service and budget managers will be asked to complete a schedule setting out all proposed fees and charges for the services in their area (including those which are not set by the council).† This will usually take place in autumn for the following financial year and review the current year. By this means, any growth or savings resulting from fees and charges can be built into the budget strategy.† The schedule will indicate:


         The service or supply to which the charge relates;

         Who determines the charges;

         The basis for the charge (e.g. units or hourly rates);

         The existing charge;

         The total income budget for the current year;

         The proposed charge;

         Percentage increase/decrease;

         Effective date for increase/decrease; and

         Estimated income for the next financial year after introducing the change.


†††††††† An example schedule is provided at Appendix B.


5.5         Following this, the proposals will be collated by the Finance section into a report for each committee to consider the appropriateness of proposed fees and charges for the services within their remit.† The report will clearly identify the charges for which the committee can apply discretion, and distinguish these from the charges which are set externally and included for information only.† Policy and Resources Committee will then receive a final report which brings together the proposals from each of the three service committees, in order to assess the overall impact of the proposed changes, and consider the potential impact on customers and service users.†


5.6         The timing of the annual review will ensure that changes can be incorporated into the councilís budget for the forthcoming financial year, although changes to fees and charges may be made outside of this process if required through a report to the relevant director or service committee.


5.7         It is possible that the review may lead to a conclusion that charges should remain at the existing level.† If this is the case, then the outcomes of the review, including the justification for not increasing the charge need to be documented and reported to the relevant service committee.


5.8         For the avoidance of doubt, periodic reviews of the rents and leases are not covered by the above.† Individual reviews will be implemented by the relevant officer as long as market levels at least are achieved.†



6    Guidance

6.1         A checklist of issues for budget managers and Heads of Service to consider when determining the level at which to set fees and charges is provided at Appendix A to this policy.†


6.2         Below is a list of guiding principles intended to assist decision makers in determining the appropriate level at which to set fees and charges:


a)            Any subsidy from the Council tax payer to service users should be transparent and justifiable.


b)            Fees and charges may be used to manage demand for a service, and price elasticity of demand should be considered when determining the level at which charges should be set.


c)            Fees and charges should not be used to provide subsidies to commercial operators.


d)            Concessions for services should follow a logical pattern and a fair and consistent approach should be taken to ensuring the ensure recovery of all fees and charges.


e)            Fees and charges should reflect key commitments and corporate priorities.


f)            Prices could be based on added and perceived value, which takes account of wider economic and social considerations, as well as cost.


g)            There should be some rational scale in the charge for different levels of the same service and there should be consistency between charges for similar services.


h)            Policies for fees and charges should fit with the Councilís Medium Term Financial Strategy and, where appropriate, should be used to generate income to help develop capacity, to deliver efficiency and sustain continuous improvement.


i)             In certain areas, charging may be used to generate surpluses which can be used to finance other services.


6.3         Wherever possible, charges should be recovered in advance or at the point of service delivery.† If this is not possible, then invoices should be issued promptly and appropriate recovery procedures will be followed as required.† Use of direct debit should be encouraged for periodic payments where this would improve cost effectiveness and enable efficient and timely collection of income.



7    Cost Recovery Limitation

7.1         Generally speaking, charges should be set at a level which enables all the costs of delivering a service to be recovered, although there are some exceptions to this identified earlier in this document.† This includes direct costs such as the purchase of goods for resale, as well as indirect costs such as management and accommodation costs.†


7.2         For certain services, legislation prohibits the Council from generating surpluses through charging.† The general principle is that, taking one financial year with another, the income from charges must not exceed the costs of provision.† Examples where this applies include building control and local land charges.

7.3         Any over or under recovery that resulted in a surplus or deficit of income in relation to costs in one period should be addressed when setting its charges for future periods so that, over time, income equates to costs.†

7.4         Councils are free to decide what methodology to adopt to assess costs.† Maidstone Borough Council follows the Service Reporting Code of Practice definition of total cost, including an allocation of all related support costs, plus an appropriate share of corporate and democratic core and non-distributed costs.† Further guidance and support on calculating the full cost of service provision can be obtained from the Finance section.


8    Concessions & Subsidies

8.1         The normal level of fees and charges may be amended to allow for concessions targeted at certain user groups to encourage or facilitate access to the service.


8.2         Where concessions are proposed or already in place they must be justified in terms of overall business reasons, or implementation of key strategic considerations e.g. community safety, healthy living.


8.3         †Examples of concessions and the reasons why they are awarded are:-


-      Reductions for older people or children to encourage different age groups to participate in the sport which is linked to the promotion† of public health;


-      Free spaces for disabled drivers in Council car parks to support social inclusion:


-      Concessions for new casual traders at the market to stimulate new usage;


8.4         In some cases, it may also be justifiable to subsidise a service for all users, where it would support delivery of strategic priorities.


8.5         In some circumstances, it may also be suitable to implement a system of means testing for managing access to concessions and subsidies, in order to ensure that subsidy can be targeted appropriately.†


8.6         A fair and consistent approach should be taken to the application of concessionary schemes, and decisions should recognise the Councilís broader agenda on promoting equality, as set out in the Equality Policy.† When considering new charges, or significant changes to an existing charge, the budget manager should complete an Equalities Impact Assessment (EQIA).


8.7         All decisions regarding concessions and subsidies should include consideration of the impact the Councilís ability to generate income and the Medium Term Financial Strategy.



9    Introducing a new charge

9.1         Proposals to introduce new charges should be considered as part of the service planning process and income projections should be factored into the Councilís medium term financial plan.


9.2         Reasonable notice should be given to customers and service users prior to the introduction of a new charge, along with advice on concessions and discounts available.


9.3         Proposals should be based on robust evidence, and will incorporate the anticipated financial impact of introducing the charge, as well as the potential impact on demand for the service.


9.4         Performance should be monitored closely following implementation to enable amendments to the charge to be made if required, and the charge will subsequently be picked up as part of the annual review process.





10.1      Income levels will be monitored throughout the year and reported to committees through the quarterly reporting process.† Significant variances may be addressed through an amended to charges, which will require approval from the appropriate Director or Service Committee.


10.2      The impact of changes in demand for services will be monitored through quarterly performance monitoring reports, where this is identified as a key performance indicator.






















The below checklist may be used as a guide for managers when reviewing existing charges or implementing a new fee structure:




Have you considered the following?



1. How does the charge link to the Councilís corporate priorities?




2. Does the charge enable the council to recover all costs of providing the service?




3. If the answer to question 2 is ĎNoí, have you considered increasing the charge to enable full cost recovery?




4. Has the impact of inflation on the cost of service delivery been reflected in the proposed charge?




5.† Do the administrative costs of charging or increasing the charge outweigh the potential income to be generated?




6. Is the charge being used to deter or incentivise certain behaviours?




7. Has there been any investment in the service to effect an increase in charges?



8. If there is a market for the service or supply, has the impact of market conditions and competition be considered in setting the charge?




9. How sensitive is the price to demand for the service?† Is there a risk that an increase in charge could deter potential customers?




10.† If applicable, have consultation results been taken into account?




11.† Could the charges or income budget be increased to support the delivery of a savings target?




12. What would the impact of the change be on customers, and how does this affect the delivery of corporate priorities?




13.† Have any alternative charging structures been considered?




14. How will the service be promoted?† How successful have previous promotions been in generating demand?




15. New charges only - are there any legal factors which impact on the scope for charging (e.g. an obligation to limit charges to cost recovery only)?




16.† New charges only - has an Equalities Impact Assessment been completed?




17.† If applicable, have concessionary charges been considered on a fair and consistent basis?













Chargeable Service/Supply:





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