Following the publication of budget estimates of local authority revenue expenditure and financing for 2013 - 2014, the Department for Communities and Local Government (DCLG) has highlighted English local authority forecasts of £635m surplus from parking charges and fines in 2013 and 2014.  In a statement, the Secretary of State for Communities and Local Government, Eric Pickles MP, has indicated a potential review of parking policies. The RAC Foundation has also published a report on parking charges.

The DCLG statement follows the successful judicial review challenge to Barnet Council's decision to increase parking charges in its Controlled Parking Zones.  The judgment has implications for the wider local authority sector.

Summary of the case

In R (Attfield) v London Borough of Barnet [2013] EWHC 2089 (Admin), the claimants applied for a judicial review of the Council's decision to increase the charges for residents' parking permits and visitor vouchers in Controlled Parking Zones (CPZs).  In 2011 the Council had raised the cost of a resident’s permit for a first car from £40 to £100 and cost of visitor vouchers from £1 to £4 each.  Income received from parking charges was paid into the Special Parking Account (SPA).  Like many councils, the Council's SPA generated a surplus for a number of years and, at year end, the surplus was appropriated into the Council's General Fund.  The Council's expenditure from the General Fund includes expenditure on items such as highways investment, roads and footways, concessionary fares and transport for SEN pupils. 

It was not in dispute that the increase in charges was introduced to meet expenditure other than parking such as road maintenance, concessionary fares and other road transport costs.  The key issue in contention was whether the Council had acted lawfully in seeking to generate a surplus, over and above the monies needed to operate the parking scheme, to fund other transport expenditure, such as road repair and concessionary fares.

By virtue of section 45 of the Road Traffic Regulation Act 1984 (RTRA 1984), local authorities have the power to designate parking places on the highway, charge for use of them and issue parking permits for a charge.  Under section 46 such charges are to be prescribed in the designation order or separate order made by the authority. 

Section 55 RTRA 1984 provides for the creation of a ring fenced account (the SPA) into which the monies raised under sections 45 and 46 must be placed and for dealing with any surplus funds which includes expenditure for other transport purposes.  

Section 122 imposes a general duty on local authorities exercising functions under RTRA 1984 to "secure the expeditious, convenient and safe movement of vehicular and other traffic (including pedestrians) and the provision of suitable and adequate parking on and off the highway…".

The Council contended that aside from general principles of administrative law there were no restrictions on its charging power under section 45 RTRA 1984 and it was entitled to generate a surplus to contribute towards the cost of other transport expenditure provided these came within the scope of the objects in section 122 RTRA 1984.

The judgment

The court held that the Council's purpose in increasing the charges for resident parking permits and visitor vouchers was to generate additional income to meet projected expenditure for road maintenance and improvement, concessionary fares and other road-transport costs and reduce the need to raise income from other sources, such as fines, charges and council tax and that this was unlawful.  There was no evidence that the increase was required to cover increased running costs of the parking scheme.

As a matter of general principle, a public body must exercise a statutory power for the purpose for which the power was conferred by Parliament and not for any unauthorised purpose.  The RTRA 1984 is not a revenue-raising or taxing statute and did not authorise the Council to use its powers to charge local residents increased parking charges with the purpose of raising surplus revenue for other transport purposes funded by the General Fund.  

Although the funds in the SPA may be used in accordance with section 55, there can be no wider use of the funds under section 122; that section merely imposes a duty on authorities to exercise their functions under the RTRA 1984 in accordance with the objects set out in the statute.

The Council's purpose in increasing the charges for resident parking permits and visitor vouchers was to create a surplus and was not therefore authorised under the 1984 Act and therefore its decision to do so was unlawful.

In reaching its decision the Court applied the decisions in R v Manchester City Council ex p. King (1991) 89 LGR 696, the recent Court of Appeal decision on licensing of sex establishments in R (Hemming (t/a Simply Pleasure Ltd)) v Westminster City Council [2013] EWCA Civ 591 and the High Court decision on the designation of CPZs in  R v Camden LBC ex p. Cran [1995] EWHC 13 (Admin).

This is yet another example of the strict interpretation by the courts of the powers under which councils generate revenue.

Implications for local authorities

Although the court refused permission to appeal, the Council is reportedly considering an application to the Court of Appeal to appeal the ruling. 

The decision as it stands however clearly has implications for the sector which has a reported general account surplus £565m.  Authorities will need to carefully consider the their parking charges regimes to ensure that they relate to the amount the authority considers appropriate for the purposes of parking regulation and not for other transport initiatives.  The decision also means that any existing surplus may be at risk.

While it may come as cold comfort to authorities in these times of budget constraints, the court did recognise that authorities have “a discretion to set charges to reflect its parking policies... [and are] not restricted to levying a charge only to cover the base cost of running the scheme”.  When setting charges it is acceptable to recognise and plan for dealing with any surplus; budgeting for a modest surplus does not render the scheme unlawful or evidence any unlawful revenue raising motive.  Indeed the court recognised that “it may be prudent to budget for a surplus to allow for unforeseen expenses, shortfalls in other years and payment of capital charges/debts”.

If you are concerned about the lawfulness of your parking charge regime or whether any current surplus may be at risk in light of this decision, we would be happy to provide you with specific advice. 

Given the wide reaching implications of the decision for the sector, in the event that several authorities wish to take advice on this issue, it may be possible for authorities to form a collective with appropriate costs sharing arrangements.  We would be happy to facilitate any such arrangements.