English councils generate ‘record’ £693m surplus, claims RAC Foundation

English councils generated what is being called a “record surplus” of almost £700m from their parking activities, according to research carried out for the RAC Foundation.

In 2014/15 councils in England generated a combined ‘profit’ of £693m from their day-to-day, on and off street parking operations. This is a 4% increase on the 2013/14 amount of £663m. A total of £308m (44%) of the overall surplus total was generated by councils in London.

However, the Local Government Association has robustly rejected the idea that local authorities profit from parking charges, labelling the report “inaccurate and misleading”.

The figures are calculated by taking income from parking charges and penalty notices, then deducting running costs.

The data, analysed for the RAC Foundation by transport consultant David Leibling, comes from the statutory annual returns that councils make to the Department for Communities and Local Government.

His analysis indicates that the rise in profits is accounted for by an increase in parking income rather than a reduction in running costs (which were in line with the previous financial year).

The RAC Foundation says that although not all councils made a large surplus, few lost money on their parking activities. Just 57 (16%) of the 353 local authorities in England reported negative numbers.

The authority with the largest surplus (£46.4m) remained Westminster though this was down 9% on the previous year. The five biggest earners were all London authorities, with only Brighton & Hove and Nottingham breaking into a top ten still dominated by councils in the capital.

Top 20 local authorities by parking surplus 2014-15

1. Westminster - £46.4m
2. Kensington & Chelsea - £33m
3. Camden - £24.5m
4. Hammersmith & Fulham - £23.8m
5. Wandsworth - £20.4m
6. Brighton & Hove - £18.6m
7. Haringey - £16.1m
8. Islington - £13.7m
9. Nottingham - £13.3m
10. Hackney - £10.8m
11. Brent - £10.5m
12. Tower Hamlets - £10m
13. Birmingham - £9.7m
14. Lambeth - £9.7m
15. Milton Keynes - £9m
16. Cornwall - £8.7m
17. Manchester - £7.9m
18. Hounslow - £7.7m
19. Newham - £7.3m
20. Merton - £7.2m

The figure for Haringey seems anomalous: its budgeted figure for 2014/15 was only £8.9m compared with £16.1m actual but the budget figure for 2015/16 is closer to the historic trend.

Nottingham ranks second outside London because it collects several million pounds per year from the Workplace Parking Levy, which is now in its third year. This is dedicated to transport improvements in the Nottingham area, mainly for extension to the tram system.

Local authorities must also provide the government with an estimate of the surplus/deficit they expect to have at the end of the current financial year. This suggests the surplus figure for 2015/16 in England will be £687m.

Steve Gooding, director of the RAC Foundation, said: “The financial sums involved in local authority parking are huge and the overall profits eye-watering. And once again the year-on-year direction of travel is upwards.

“It is unsurprising that London leads the way in making money. Its roads are most congested and the pressure on road space is immense. The legal position is that parking charges are to be used as a tool for managing traffic. But with local government budgets under ever-greater pressure the temptation to see them as a fund raiser must be intense.

“When a parking profit is made the law states that, essentially, the money can only be spent on transport and environment projects. We are simply asking that all councils publish annual reports to tell drivers exactly where this huge excess ends up.

“The precarious financial state of many councils is a genuine concern, not least when it comes to the risk of a cut in road maintenance spending which will hit every one of us. A funding solution requires national and local government to look beyond the High Street parking meter.”

LGA criticises report

Responding to the RAC Foundation report, Local Government Association (LGA) environment spokesman Cllr Peter Box said: “This is a wholly inaccurate and misleading report, which peddles the myth that councils make a profit from parking. The reality is income is spent on running parking services and surpluses are spent on essential transport projects, such as tackling the £12 billion roads repair backlog and creating new parking spaces.

“Councils are on the side of hard-pressed motorists. The average motorist is paying 30 times more to Whitehall in charges and taxation each year than they do to their town hall through parking.

“The RAC Foundation also fails to take into account a likely growing demand for parking from traffic increases on our roads and the important role parking services play in reducing congestion and keeping pedestrians and motorists safe as a result.

“Local authorities have to try and strike a balance when setting parking charges to ensure there are spaces available for everyone at all times of the day and we can keep traffic moving. If charges are too low, high street spaces can be filled by commuters making it impossible for shoppers to park and having a negative knock on impact on local businesses. Residents and businesses expect councils to enforce the law.”

BPA sees report as vote of confidence

The British Parking Association (BPA) welcomed the RAC Foundation report, saying they show that local authority parking services are  delivered efficiently and effectively in the best interests of their communities. "Councils are not it seems using parking as a 'cash-cow’ after all and penalty income from on-street parking has declined by 4%," said Patrick Troy, chief executive of the BPA.

“Since on-street penalty income has been declining over the years it shows the majority of motorists are sensible about where and how they park. Many councils are offering free parking on the run up to Christmas to encourage people to shop in their local high streets.

“There are strict rules laid down by law that stipulate how any parking surplus funds are spent and this typically means re-investment in traffic management that benefits the entire community. Many councils also provide annual reports so that residents can see how the money is spent, and we encourage everyone to do so.”

The Road Traffic Regulation Act 1984 includes provisions to control the use of parking surplus generated and these are set out in Section 55. Troy said: "The BPA has published a Parking Practice Note which explains this in some detail for the benefit of its members. The essence of the legislation says income from all penalty charges (whether issued for on-street or off-street contraventions) plus any income from on-street parking fees and charges is subject to s55 usage; income from off-street parking fees and charges is for general use by the local authority."