London Councils’ Transport and
Environment Committee
Revenue Budget Proposals 2010/11 Item 23
no:
Report by: Frank Smith Job title: Director of Corporate Resources
Date: 10 December 2009
Contact Frank Smith
Officer:
Telephone: 020 7934 9700 Email: frank.smith@londoncouncils.gov.uk
Summary This report details the proposed income and expenditure budgets for the
London Councils Transport and Environment Committee for the 2010/11
financial year, together with the proposed level of borough subscriptions
and charges for services to be levied to meet the proposed level of
expenditure.
This report also updates the Committee on the projected balance on
reserves position after consideration of all current commitments.
This report was considered by the TEC Executive Sub-Committee at their
meeting on 12 November 2009, where it was agreed that these proposals
should be put this Committee for final approval.
Recommendations
The London Councils Transport and Environment Committee is asked to
approve:
The levies and charges for 2010/11 as follows:
The Parking Core Administration Charge of £2,000 per
borough and for TfL (2009/10 - £2,000; paragraph 54);
The Parking Enforcement Service Charge equating to £0.4183
per PCN (2009/10 - £0.391; paragraphs 55-57);
The Concessionary Fares Administration Charge of £14,231
per borough (2009/10 - £14,144; paragraphs 58-59);
The Taxicard Administration Charge of £5.49 per permit
(2009/10 - £5.42; paragraphs 60-62). Boroughs are also
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 1
recommended to increase their Taxicard budgets for 2010/11
by 2.7% to maximise the level of funding from TfL for the year;
The Lorry Ban Administration Charge of £435,723 in total, to
be apportionment by population figures, with TfL paying the
average borough charge of £14,524 (2009/10 - £476,000; TfL
charge £15,867; paragraphs 63-64);
Congestion Charging Appeals – to be recovered on a full cost
recovery basis, as for 2009/10, subject to the agreement of the
GLA under the new contract arrangements (paragraphs 67-
68);
The Parking and Traffic Appeals Charge of £39.42 per appeal
(2009/10 - £40.73 per appeal; paragraphs 67-68);
The TRACE (Electronic) Charge of £13.56 per transaction for
borough/TfL and £15.90 per transaction for non-borough/TfL
users (2009/10 - £13.41/£15.73; paragraphs 69-70);
The TRACE (Fax) Charge of £12.83 per transaction (2009/10 -
£12.69; paragraphs 69-70); and
1 2 3
The DVLC, PEC , PED and PIE Charges of £0.20 per
transaction (2009/10 - £0.20; paragraphs 69-70);
The provisional gross revenue expenditure of £299.465 million for
2010/11, detailed in paragraphs 21-52 of this report and shown in
Appendix A;
On the basis of the agreement of the above charges, the gross
revenue income charges of £293.113 million, net of reserves, for
2010/11 set out in paragraphs 53-73 of this report and shown in
Appendix B and to note the indicative charges to individual
boroughs set out in Appendix C; and
The use of £3.352 million from the specific reserve, which will
offset borough contributions in respect of the 2010/11
concessionary fares scheme with a potential use of a further £3
million reserves arising from the projected underspend in respect
of the budget for other bus operators in 2009/10, making £6.352
million in total.
The Committee is also asked to note the current position on reserves and
future prospects, as set out in paragraphs 74-78 and Table 12 of this
report.
1
The system that allows boroughs to register any unpaid parking tickets with the Traffic Enforcement
Centre and apply for bailiff’s warrants.
2
The system that allows boroughs to log details of persistent evaders of parking fines, wherever they
reside.
3
The system that notifies boroughs of any payments received by TEC in respect of parking fines.
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 2
Introduction – Historical Budgetary Position
1. The Committee operates a significant expenditure budget of over a quarter of a billion
pounds (£292.9 million for 2009/10). However, large amounts of this are, in effect, transfer
payments to contractors and operators. These include:
The Freedom Pass (£257.4 million in 2009/10);
Taxicard (£18.9 million in 2009/10); and
Parking related services, including the Parking and Traffic Appeals Service (PATAS) and
the administration of other direct services, (£15.4 million in 2009/10).
2. Residual operational costs of around £1.2 million for 2009/10 are, therefore, far less than the
overall scale of the budget would at first imply.
3. Borough contributions to the TEC budget is made up of a number of components:
A basic core subscription;
An amount, apportioned by the number of PCNs issued by each borough and TfL which
covers the fixed costs of the parking related services, principally PATAS and some of the
supporting transport policy costs;
Unit charges for each of the transport related ‘traded’ services covering the marginal
costs of these services;
A population based subscription for the London lorry control scheme;
A capitation fee for the management costs of Taxicard and freedom pass; and
A contribution from London Councils’ core subscription for other policy work.
4. The basis core subscription covers essentially the basic costs of operating the committee.
5. The PCN related charge covers the fixed costs of operating PATAS and other transport
related services (such as salary and premises costs), including some policy costs. This fixed
sum is apportioned between boroughs on the basis of the number of PCNs issued, on the
basis that we have to provide services such as PATAS whether or not they are used by
drivers. The cost per PCN has decreased over time, reflecting both efficiencies and
economies of scale. For example, in 1996/97, the cost was £0.68 per PCN while in 2009/10;
the cost was £0.391 per PCN. In 2010/11 it is proposed that the amount is £0.4183 per PCN,
reflecting the fact that although there are reduced overall costs to recoup following the move
to dedicated premises at Angel Square for the appeals hearing centre in February 2009, the
fall in the number of PCNs issued between 2007/08 and 2008/09 has reduced the spreading
base, hence the marginal increase.
6. Unit charges cover the marginal costs of appeals and other parking related services. Most of
these services are contracted out and the transaction charges simply pass these costs on.
Use of these services is generally under borough control.
7. The London Lorry Control scheme is funded through a population based charge. This has
reduced from an average charge in 2000/2001 of £21,818 per borough to a proposed charge
of £14,524 in 2010/11; primarily as a result of decriminalisation of enforcement which has
allowed penalty income to offset the costs of the scheme, although this income has varies
significantly from year to year.
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 3
8. The management costs of Taxicard and Freedom Pass are based on a capitation fee per
member of the scheme. Boroughs have some, albeit limited, control over this.
9. A contribution from London Councils’ core subscription covers other areas of policy work,
especially those which fall outside the statutory definition of the use of parking account
surpluses.
Current Budgetary Position
10. This report seeks approval from the Committee for the proposed income and expenditure
budgets for TEC for 2010/11 and the level of borough subscriptions and charges for 2010/11.
These proposals were considered by the meeting of the TEC Executive Sub-Committee on
12 November 2009, where it was agreed that these proposals should be put this Committee
for final approval. These proposal need to be considered in the context of the decision of the
London Council’s Leaders’ Committee on 11 December 2007 in respect of the level of
boroughs subscriptions for the three period 2008/09 – 20010/11, which, in overall terms, are
to be frozen at the 2007/08 level.
11. The remainder of this report will examine the key features of the proposed budget for
2010/11 and make proposals as to the level of charges for the Committee’s consideration.
Proposed Revenue Expenditure Budget 2010/11 - Overview
12. The gross revenue expenditure budget proposed for TEC in 2010/11 is £299.265 million,
which is shown in detail at Appendix A. This includes:
A 1% increase on salary budgets to cover the anticipated local government pay award,
with the vacancy level remaining at 5%;
A nil increase on all other expenditure budgets, unless price change increases are
contractual commitments, when in such cases a 1.1% increase, in line with the annual
movement in CPI to September 2009, has generally been assumed;
A provisional increase of £10.1 million, or 4.2% for the freedom pass settlement with TfL
to £251 million, in line with the five-year settlement;
An indicative reduction in the level of DfT grant for concessionary fares of £28.763
million, from the previously notified level of £58.45 million to £29.687 million. The
proposal to reduce the level of grant for the third year is currently being consulted upon
by Central Government. The consultation period ends on 30 December 2009, with the
outcome requiring a vote in the House of Commons in early January 2010;
An adjusted sum of £1.2 million for payments to other bus operators for journeys
originating in London, in line with the National Concession Scheme, reduced from £4
million for the current year;
A provisional increase of £500,000 to £12.5 million in respect of the Association of Train
Operating Companies (ATOC) for the Concessionary Fares Scheme;
A 2.7% increase in payments to ComputerCab, the contractor for the Taxicard Scheme,
in line with the anticipated increase in the TfL contribution towards the scheme for
2010/11.
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 4
13. The overall budget for Concessionary Fares reflects the latest position in respect of
negotiations with both TfL and ATOC. The finalised settlement is subject to a separate report
to this Committee and any changes in the figures included in this report will be tabled at the
meeting.
14. Apart from the above and the financial effects of volumes changes relating to the
transactions in respect of TEC traded services, there are the following areas of unavoidable
growth, amounting to £144,000, recommended for inclusion in the budget for 2010/11:
An increase in the rental cost of the hearing centre at Angel Square of £125,000 to cover
the full –year effect of the end of the rent free period; and
An increase in staffing costs of £19,000 relating to the effect of the pay and grading
review, £2,000 of which relates to central recharges.
15. The growth items of £144,000 have been offset by reductions in the budget of £430,000,
which relate to:
Obsolete budgets relating to NZH dilapidation costs (£123,000), interest charges
(£97,000) and the BETTER partnership (£50,000);
One-off system development costs of £100,000, relating to the Low Emissions Zone,
requested by the GLA;
The claw back of the salaries budget of £37,000 to reflect the 1% pay award for 2009/10,
compared against a provision of 2.5%; and
A reduction in the research budget of £23,000, as agreed by this Committee at their
October 2009 meeting.
16. The proposed gross expenditure budget of £299.265 million represents a £6.352 million or
2.2% increase on the comparable figure of £292.913 million for 2009/10. This is shown in
detail at Appendix A and is summarised in Table 1 below:
Table 1 – Movement in Expenditure Budget between 2009/10 and 2010/11
£000 £000
Approved budget 2009/10 292,913
Proposed budget 2010/11 299,465
Indicative increase 6,552
Inflation on direct services 567
Inflation on operating costs 35 602
Developments:
Volume changes on concessionary fares 7,800
Reduction in budget for freedom pass reissue costs (230)
Volume changes for parking/traffic appeals/other parking services (1,189)
Volume changes for congestion charging appeals (145)
GLA system development costs (100)
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 5
End of rent free period at Angel Square site 125
NZH dilapidation costs (123)
Interest charges (97)
BETTER partnership (50)
Research (23)
1.5% salary claw back re:2009 pay award (37)
Pay and grading review 17
Increased central recharges 2 5,750
Indicative increase 6,552
Proposed Revenue Income Budget 2010/11 – Overview
17. After excluding the funding of payments to transport operators and survey and reissue costs
of £284.456 million, which is met by a combination of borough and TfL charges, DfT grant
and a transfer from Committee reserves, a residual expenditure figure of £15.009 million
remains to be recouped through levies and other charges. This is made up of:
Estimated costs of £132,000, relating to Planning and Environmental functions, which
will be funded through the main London Councils Core levy;
A residual sum of £14.877 million, which represents a reduction of £1.48 million, or 9%
on the comparable figure of £16.357 million in 2009/10, with the proportion of this
amount that is actually recharged to the London boroughs being £12.508 million, a
reduction of £905,000 or 6.7% on the figure of £13.413 million for 2009/10;
A sum of £1.189 million relates to charges in respect of Congestion Charge Appeals to
be made on the GLA and £165,000 on TfL for Bus Lane appeals, with a further
£249,000 levied on TfL for other parking and traffic services. A further £94,000 relates to
the TfL funding for the three Mobility Assessment posts and £17,000 relates to TfL’s
Core Parking and Lorry Ban Subscription;
£369,000 relates to anticipated income relating to PCN issued in respect of the Lorry
ban and a further £208,000 relates to use of parking systems by the DVLA and Luton
Borough Council. The residual £78,000 relates to other miscellaneous charges and is
detailed in paragraph 73.
18. In accordance with usual practice, the £3.352 million projected to be held in the specific
reserve, as at 31 March 2010, augmented by the projected £3 million underspend on non-TfL
bus operators in the current year, is recommended for use to offset the cost of concessionary
fares settlement for 2010/11 (refer paragraph 28).
19. The proposed gross income budget of £299.265 million represents a £6.192 million or 2.1%
increase on the comparable figure of £293.073 million for 2009/10. This is shown in detail at
Appendix B and summarised in Table 2 below:
Table 2 – Movement in Income Budget between 2009/10 and 2010/11
£000 £000
Approved budget 2009/10 293,073
Proposed budget 2010/11 299,465
Indicative increase 6,392
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 6
Inflation on direct services income 427
Inflation on operating costs 20 447
Developments:
Volume changes on concessionary fares income 35,656
Reduction in income for freedom pass reissue (230)
Indicative reduction in DfT Grant (27,061)
Reduction in joint committee contribution to TEC functions (46)
Volume changes for parking/traffic appeals/services income (1,443)
Volume changes for congestion charging appeals income (145)
Increase in TfL contribution towards staffing costs 9 6,740
Reduction in use of Committee Reserves (795)
Indicative increase 6,392
20. The following paragraphs detail the main budget headings for 2010/11 and highlight any
significant changes over 2009/10.
Freedom Pass
21. Following on from the current year, which was the second year to include the effects of the
national concessionary fares scheme, the main settlement with TfL for London-resident users
is estimated to be £251 million, in accordance with the five-year agreement with TfL
approved by the Committee in February 2009. This represents an increase of £10.1 million,
or 4.2%, on the figure of £240.9 million for 2009/10.
22. The budget of £3 million for 2009/10 for payments to other bus operators for local journeys
originating in London has been revised to £102 million, which is deemed to be sufficient to
cover the maximum level of claims received from the bus operators. The budget in respect of
the Association of Train Operating Companies (ATOC) has been increased to £12.5 million
to take into account the anticipated settlement for 2010/11.
23. The budget for the survey and reissuing costs, which funds the publicity campaign
associated with the Freedom Pass reissue every two years, is reverted back to the 2008/09
level of £287,000, after an additional one-off cost of £230,000 was approved for 2009/10 to
cover the 2010 pass reissue.
24. The administrative costs of operating the concessionary fares scheme for 2010/11 is
estimated to be £469,629, compared to £467,000 for the current year (refer paragraphs 58-
59),
25. Final negotiations on the actual amounts payable will be complete in time for the meeting of
the Main Committee on 10 December and any variation to these provisional figures will be
tabled at this meeting.
26. The Department for Transport (DfT) is currently consulting on the level of the specific grant
being made available to London for the national concessionary fares scheme, which is paid
direct to London Councils for 2010/11. The consultation period ends on 30 December 2009.
Indicative figure suggest that the previously agreed level of grant of £58.45 million will be
reduced by £28.763 million to £29.687 million. For the purposes of this report, it is assumed
that grant will be paid at this indicative level, whilst the consultation period continues.
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 7
27. Members are also reminded that they approved the provisional transfer of £3.352 million to
the Transport Operators Fares Increase Reserve (TOFIR) when approving the Committee’s
pre-audited final accounts for 2008/09 in July 2009, which has since been confirmed on the
conclusion of the annual audit. In addition, a projected underspend of at least £3 million in
respect of other bus operators costs for 2009/10 is forecast, which can be added this
amount, giving a sum of £6.352 million to reduce the costs to boroughs in 2010/11.
28. The provisional financing of the freedom pass in 2010/11, compared to the current year, can
be summarised in Table 3 below:
Table 3 – Comparative financing of Freedom Pass 2010/11 and 2009/10
Estimated Cost of Freedom Pass 2009/10(£000) 2010/11(£000)
TfL Settlement 240,900 251,000
ATOC Settlement 12,000 12,500
Bus Operators Settlement 4,000 1,200
Survey and Reissue Costs 517 287
Sub-Total 257,417 264,987
Financed by:
Borough contributions 173,622 228,948
Non-residents TfL bus travel rebate 2008/09 19,900 -
DfT grant 56,748 29,687
Transfer from reserves 7,147 6,352
Total Finance 257,417 264,987
29. The total estimated cost payable by boroughs towards the scheme in 2010/11 of £228.948
million compares to £173.622 million payable for 2009/10, an increase of £55.326 million.
These costs will be apportioned to individual borough in accordance with the agreed
recommendations of the arbitrator, which for 2010/11 states that 70% of the costs will be
based on an average two years usage data, with the remaining 30% in accordance with pass
issue numbers.
30. It is recommended that the boroughs continue the arrangement in place for previous financial
years whereby they pay their total indicative contribution of £228.948 million direct to TfL,
with London Councils making up the difference to TfL and paying the agreed settlement
amounts directly to ATOC and the other bus operators. London Councils would also retain a
sum equating to the survey and reissue costs, but the administration costs of the scheme of
£469,629 (refer paragraphs 58-59) will be invoiced separately to the boroughs.
Taxicard
31. As stated in paragraph 12, the budgetary provision for the contract with ComputerCab has
been increased by 2.7%, making the total value of the contract £19.469 million in 2010/11.
This is split between the boroughs contribution of £6.426 million and a contribution from TfL
of £13.043 million. This calculation assumes that boroughs will likewise increase their
2009/10 budgets by 2.7% to form the base for 2010/11 of £6.426 million and it is, therefore,
recommended that boroughs agree to increase their budgets accordingly. At this stage, it is
estimated that both the likely increased costs and projected scheme growth can be contained
within the recommended budget level for 2010/11.
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 8
32. The administration of the Taxicard Scheme is estimated to be £465,155 in 2010/11
compared to £443,000 in 2009/10 (refer paragraphs 60-62) and these costs will be recouped
from boroughs in accordance with the number of Taxicard permits in issue as at 30
September 2009, in accordance with the TEC Agreement.
Trading Account Costs
33. Sungard Public Sector (SPS) Contract – For Parking and Traffic services (P&T), the
budget for 2009/10 of £3.733 million has been reduced by £588,000 to take into account
volume changes to provide a base budget of £3.145 million. Inflation of 0.825% (9 months @
1.1%), amounting to £26,000 has been added to give a total budget of £3.171 million.
34. For Congestion Charging (CC) appeals, the base budget for 2009/10 of £507,000 has been
reduced by £25,000 to take into consideration volume changes to provide a base budget of
£482,000. Inflation of 0.825% (9 months @ 1.1%), amounting to £4,000 has been added to
give a total budget of £486,000.
35. In total, the budget for payments to Sungard Vivista is £3.657 million, compared to £4.24
million for 2009/10.The fixed element of the borough contract of £1.648 million is recouped
from the boroughs, TfL and the GLA as part of the parking enforcement charge, in
accordance with the number of PCNs issued by each borough in 2008/09, as detailed in
Appendix D (refer paragraphs 55-57). The variable elements of the contract, totalling £2.009
million, are recharged to boroughs by way of a unit charge in accordance with actual
borough/TfL/GLA or other usage (refer paragraphs 69-70).
36. Parking and Traffic Adjudicators Fees and Training – The budget for adjudicators’ fees
and training has been increased by 1.5% to cover the 2009 pay award, which keeps the
Adjudicators’ pay at 80% of that for Group 7 full-time judicial appointments outside London,
as agreed by this Committee in November 2001. This increases the hourly fees from £57.93
to £58.804, a £0.87 increase, which includes employers’ National Insurance Contributions.
The estimated volume of PATAS appeals for 2010/11, based on current volumes, is 64,746,
a 17,516 reduction on the budgeted figure of 82,262 for the current year, which was derived
in November 2008. The actual number of appeals heard in 2008/09 was just under 77,074
including Statutory Declarations, Moving Traffic Offences and Lorry Ban Appeals.
37. Based on the average throughput of appeals for the first six months of the financial year of
2.9 appeals being heard per hour (compared to 2.65 appeals per hour when the current
years budget was set last November), the PATAS adjudicators’ fees base budget of £1.866
million has been reduced by £549,000 for 2010/11 to reflect the reduced volumes and the
improved throughput. The base budget for 2009/10 is, therefore, £1.317 million, which rises
to £1.337 million after adding the £20,000 to cover the 1.5% pay award.
38. CC Adjudicators Fees and Training – TfL introduced a major change in the handling of
representations against PCNs and evidence for appeals to the adjudicators during 2006/07,
which led to a significant reduction in the number of appeals lodged (and hence income
accrued), but an increase in the complexity of cases submitted (and hence the Adjudicator’s
cost of dealing with them). The volume of appeals has stabilised but throughput remains
variable, so there is value in continuing the agreement reached in the summer of 2006 with
TfL/GLA officials, who, appreciative of the reasons for these trends, have continued to agree
to reimburse London Councils on a cost-recovery basis for congestion charging transactions
4
Hourly rate paid to Adjudicators is £53.47; employers NIC’s @10% is £5.33, making an hourly cost to the
London Councils of £58.80.
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 9
since 2006/07. The continuation of this agreement into 2010/11, following the successful
award of the contract to continue to provide this service from 2 November 2009, will ensure
that a breakeven position continues in respect of these transactions. The budget for CC
adjudicators’ fees and training has, therefore, been reduced to £389,000 for 2010/11, to
cover the estimated 12,380 CC appeals for 2010/11, which is a reduction of 1,020 on the
estimated number of appeals of 13,400 for the current year, estimated in November 2008.
The actual number of CC Appeals dealt with in 2008/09, including Statutory Declarations,
was 11,248.
39. Payments to Northampton County Court – The approved budget of £5 million has not
been subject to an inflationary increase as the Court Service have confirmed that there are
no intentions to increase the unit charge of £5 per debt registered in respect of unpaid
parking penalties. In addition, volumes appear to be relatively stable and, therefore, the
budget has remained at £5 million to reflect this. Boroughs registering debt determine the
volumes of registrations and the costs are directly recharged to the registering borough (refer
paragraph 71).
Contractual Commitments
40. Staffing Costs -The proposed staffing budget for TEC for 2010/11 is illustrated in Table 4
below:
Table 4– TEC Indicative Staffing Budget 2010/11 £000
2009/10 Base Budget 2,468
Less 1.5% pay award claw back 2009/10 (37)
Salary drift arising from pay and grading review 17
2010/11 Base Budget 2,448
Anticipated pay award 2010/1 @ 1% 24
2010/11 Revised Budget (Outturn) 2,472
Split between:
Services – Directorate/Policy 216
Services – PATAS 503
Services – Traffic and Mobility 1,056
Services – Community Services 5
PAPA - Directorate 38
PAPA - Communications 213
PAPA – World Cities 380
Chief Executive – Committee Servicing 61
2010/11 Revised Budget (Outturn) 2,472
41. The vacancy level for 2010/11 remains at 5% for 2009/10, which applies to all London
Councils staffing budgets. The assumed local government pay award for 2010/11 is 1% and
the above figures include an addition of £17,000 to cover the effect of the Pay and Grading
review that was concluded during January 2009.
42. The £26,520 budgetary provision for member’s allowances has also been increased by 1% to
£26,785 for 2010/11.
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 10
43. Accommodation Costs - New Zealand House –The lease at NZH expired in February 2009
and the provision of £123,000 to cover the potential costs of any dilapidation costs was not
required during 2009/10 as the issue was fully settled during the 2008/09 financial year. This
budget has, therefore, been removed from the budget and there will be no further costs
associated with NZH.
44. Accommodation Costs – Angel Square – The budget for 2010/11 includes the full cost of
the leasehold agreement for these premises of £447,000, now that the eight-month rent free
period of £125,000, offered by the landlord at the start of the lease, has ceased. Other
premises costs at Angel Square are estimated to be £43,000 per annum, the same level as
for the current year. In addition, a provision for the annual depreciation charge of £142,000
relating to the fit out costs at Angel Square is again included in the budget, which will apply
annually over the six year lease period.
45. Accommodation Costs - Southwark Street – This is included as part of central recharges
cost and covers the 28 staff based at Southwark Street who are directly chargeable to the
TEC funding stream. Use of this accommodation will attract a per capita desk space charge
of £7,502, equating to £210,000. In addition, ancillary premises costs such as cleaning,
security and maintenance contracts, again apportioned on a per capita basis, come to
£38,000. Finally, car parking spaces are provided locally to the five Lorry Ban enforcement
officers, due to the nature of their duties and shift patterns, at a cost of £21,000 in 2010/11.
46. System Developments – The existing budget of £291,000 for one-off system developments
has been retained in the budget for 2010/11, to cover any exceptional changes that may be
required to the various parking and traffic systems, such as mandatory changes for any new
statutory requirements. Development works to the value of £100,000, which was to be
recharged to the GLA in respect of LEZ appeals, with an appropriate income budget, has
been removed from the budget for 2010/11.
Discretionary Expenditure
47. Research Budget – The approved budget of £123,000 for 2009/10 has been reduced by
£23,000 to £100,000 for 2010/11, as agreed by the meeting of this Committee on 15 October
2009, to strip out any potential over provision.
48. BETTER Partnership – As agreed by the TEC Sub-Committee meeting on 10 September
2009, the budget provision of £50,000 is deemed to be obsolete and has been removed from
the budget for 2010/11.
49. Interest Charges – In the past, the time lag in the payment of invoices relating to the
Committee’s traded services transactions, most of which are sent out in arrears, can result in
the Committee being overdrawn at the bank. Under such circumstances, this would result in
a charge being incurred from the City of London, London Councils bankers, for this facility.
However, since the receipt of the DfT grant in respect of the national concessionary fares
scheme, the Committee has been in credit at the bank and has earned interest on these
balances. The budget of £97,000 to cover potential charges has, therefore, been removed
from the budget for 2010/11, although this position will need to be reviewed once the DfT
grant ceases with effect from the 2011/12 financial year.
50. General/Office Costs - The budgetary provision of £819,000 for 2010/11 is broken down in
Table 5 below:
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 11
Table 5 – TEC General/Office costs budget 2010/11 £000
2009/10 Base Budget 956
Volume changes on appeals numbers – postage/stationery (40)
GLA LEZ system development costs (100)
2010/11 Base Budget 816
Inflation on contractual commitments only 3
2010/11 Revised Budget (Outturn) 819
Split between:
System Developments (paragraph 46) 291
General/Office Costs – postage, telephones, copiers, etc. 261
Appeals administration – postage/stationery 159
Staff Training/Recruitment Advertising 28
Staff Travel 25
External audit fees 29
City of London finance, payroll and legal SLA 26
2009/10 Revised Budget (Outturn) 819
51. No inflation has been allowed for 2010/11 on general running costs, except where there are
contractual commitments. This applies to London Councils as a whole. For TEC, this only
applies to the external audit fees and the SLA with the City of London, where 1.1% has been
allowed.
Central Recharges
52. The budgetary provision of £554,000 for 2010/11 is broken down in Table 6 below and reflect
a marginal increase, mainly driven by salary costs:
Table 6– TEC Central Recharges Budget 2010/11 £000
2009/10 Base Budget 545
Effect of pay and grading review 2
Inflation 7
2010/11 Revised Budget (Outturn) 554
Split between:
Southwark Street premises costs (paragraph 46) 248
Corporate Resources staffing costs/ HR SLA 185
Corporate Governance staffing costs 121
2010/11 Revised Budget (Outturn) 554
Revenue Income Budget
53. As detailed in paragraph 17 of this report, the Committee will need to raise £299.265 million
from the various sources of finance, including reserves, in order to balance the revenue
budget for 2010/11. The following paragraphs detail the various sources of income and an
estimation of the amounts that can prudently be raised and the proposed charges for
2010/11 are individually detailed.
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 12
Subscriptions and Charges to London Boroughs
54. Parking Core Administration Charge – The core subscription covers a proportion of the
cost of the central management and policy work of the Committee and its related staff,
accommodation, contract monitoring and other general expenses. It is charged to boroughs
and TfL at a uniform rate, which for 2009/10 was £2,000 per borough. In line with the three-
year freeze in the overall level of borough subscriptions, it is recommended that this
subscription remains at £2,000 per borough for 2010/11.
55. Parking Enforcement Service Charge - the majority of this charge is made up of the fixed
cost element of the parking managed service contract and the provision of accommodation
and administrative support to the PATAS adjudicators at the Angel Square hearing centre. It
is allocated to users in accordance with the number of PCNs issued. For 2010/11,
expenditure of £2.912 needs to be recouped, compared to £3.024 million for 2009/10, which
is detailed in Table 7 below:
Table 7 – Breakdown of the Parking £000
Enforcement Service Charge 2010/11
SPS Fixed Contract Costs 1,570
Angel Square Premises Costs 511
Direct Staffing Costs 502
General Office Expenditure 117
Central Recharges 212
Total 2,912
56. A total of 5.549 million PCN’s were issued by boroughs and TfL in 2008/09 in respect of
parking, bus lane, moving traffic and lorry ban enforcement and a further 1.414 million by the
GLA/TfL in respect of congestion charging and LEZ offences, making 6.963 million in total.
The full breakdown is detailed in Appendix D. This equates to £0.4183 per PCN, an increase
of £0.0273 or 6.98% on the Parking Enforcement Service Charge of £0.391 per PCN for
2009/10.
57. The reason for this increase is due to the fact that although the level of expenditure to be
recouped has reduced by £112,000, or 3.7%, from £3.024 million to £2.912 million, due to
reduced costs arising from the new hearing centre, the fall in the number of PCNs issued
from 7.734 million in 2007/08 to 6.963 million in 2008/09 (a reduction of 771,000, or just
under 10%) has reduced the spreading base, thereby increasing the unit cost.
58. Administration Charge – Concessionary Fares – This levy covers the cost of
administering the concessionary fares scheme on behalf of boroughs after payments to
transport operators and survey and reissuing costs and other income sources have been
considered. The costs are apportioned as a uniform charge per borough. For 20010/11, the
full cost of administering the scheme is estimated to amount to £469,629 compared to
£467,000 for the current year, as detailed in Table 8 below:
Table 8 – Breakdown of the £000
Concessionary Fares Administration
Charge 2010/11
SPS Fixed Contract Costs 13
Southwark Street Premises Costs 48
Direct Staffing Costs 255
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 13
General Office Expenditure 108
Central Recharges 46
Total 470
59. This uniform charge equates to £14,231 per borough, an increase of £79, or 0.56% on the
£14,152 per borough charge for 2009/10.It is proposed, therefore, to increase the
Concessionary Fares Administration Charge to £14,231 per borough for 2010/11.
60. Administration Charge – Taxicard – This is calculated in the same manner as the
administration charge for concessionary fares, although it is apportioned to boroughs in
accordance with the number of Taxicard permits in issue as at 30 September. For 2009/10,
the budgeted per permit charge was £5.42, with TfL funding the first £3.09, with the
boroughs paying £2.33. The full cost of administering the scheme in 2010/11 is estimated to
be £465,155 (net of the £94,000 TfL contribution to additional staffing costs), compared to
£443,000 for 2009/10; and is detailed in Table 9 below:
Table 9 – Breakdown of the Taxicard £000
Administration Charge 2010/11
SPS Fixed Contract Costs 13
Southwark Street Premises Costs 63
Direct Staffing Costs 239
General Office Expenditure 105
Central Recharges 45
Total 465
61. Total borough membership as at 30 September 2009 was 84,737, inclusive of the
memberships of Barnet and Redbridge, whose administration fee is funded by TfL, an
increase of 2,994 on the membership figure of 81,743 for 2008. Based on these numbers,
the unit permit charge is £5.49, a £0.07 or 1.3% increase. The element to be paid by
boroughs, therefore, increases by £0.03 from £2.33 to £2.36, with TfL element increasing by
£0.04 from £3.09 to £3.13.
62. Each borough allocates a total annual amount that it is prepared to fund the scheme. This
includes the total permit charge (in the form of a management fee) and the cost of trips taken
by its members. The trips budget is determined by simply deducting the total management
fee from the total budget allocated. As TfL are committed to paying any increased borough
costs (i.e. above the budgeted borough figures), in accordance with the practice adopted for
the last eight years, the boroughs (with the exception of Barnet and Redbridge) will be billed
for the full management fee of £5.49, with TfL picking up a greater proportion of trips
undertaken by Taxicard holders. It is proposed, therefore, to increase the Taxicard
Administration Charge to £5.49 per member for 2010/11, an increase of £0.07, or 1.3%.
63. Administration Charge – Lorry Ban Scheme - This is calculated in the same manner as
the concessionary fares and Taxicard administration charge, although it is apportioned to
boroughs in accordance with the ONS mid-year population figures for, in the case of
2010/11, June 2008. For 2009/10, the total sum to be apportioned in this manner amounted
to £476,000 after consideration of the £369,000 estimated income from PCNs after
decriminalisation of the Scheme became operational from 1 April 2004.
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 14
64. The latest forecast for 2009/10 suggests that PCN income is likely to reach the budgeted
target, although there is some work still to be done in respect of prior year debts that might
have some effect on the final current years figure. It is prudent, therefore, to assume that this
PCN income budget should remain at the same level for 2010/11. The total cost of
administering the scheme is £804,723 in 2010/11, compared to £845,000 in 2009/10 a
reduction of £40,277, or 4.77%. Borough contributions will, therefore, reduce to £435,723 for
2010/11. TfL will pay the average borough charge of £14,524 for 2010/11. Individual borough
apportionments are detailed in Appendix C.2.
65. Lorry Ban PCN Income – As mentioned in paragraph 64 above, the current years budget
remains at £369,000 for 2010/11.
66. Parking Appeals – The costs for the payments to adjudicators is detailed in paragraphs 36-
38, with the estimated overall costs for each appeal for 2010/11 laid out in Table 10 below:
Table 10 – Proposed Cost P&T CC
of Appeals 2010/11
Estimated Appeal Nos. 64,746 12,380
Average Case per hour 2.90 1.92
Adjudicator Hours 22,326 6,448
Training Hours 800 350
Total Hours 23,126 6,798
Expenditure £ £
Adjudicators Fees 1,336,277 389,421
Vivista Variable Costs 1,082,345 190,804
Postage/Admin 133,376 25,503
Total 2,551,998 605,728
Income
Hearing Fees 2,551,998 605,728
Indicative Unit Cost of
Appeal 39.42 48.93
67. As detailed in paragraph 38, London Councils have recently been successful in retendering
for the contract to provide the congestion charging appeals service and there is value,
therefore, in continuing the agreement reached in the summer of 2006 for TfL/GLA to
reimburse London Councils on a cost-recovery basis for these transactions, rather than on a
unit cost basis. Continuation of this agreement into 2010/11 will ensure that a breakeven
position continues in respect of these transactions, so the estimated cost of £605,728 for
hearing an estimated 12,380 CC appeals will be fully recovered. The underlying indicative
unit cost of an appeal has, in fact, reduced from £55.44 to £48.93, reflecting an improvement
in throughput rate of actual appeals from 1.57 per hour to 1.92 per hour, although this factor
has no effect if the reimbursement from the GLA is on a cost recovery basis.
68. For P&T appeals, based on the throughput for 2.9 cases heard per hour for the first 6
months of 2009/10, the indicative unit cost for 2010/11 is £39.42, a reduction of £1.31, or
3.2% on the charge of £40.73 for 2009/10. The reduction in costs is largely attributed to an
increase in the budgeted throughput rate of 2.9 per hour for 2010/11, compared to 2.65 for
2009/10. The Committee is, therefore, asked to approve the unit cost for 2010/11 for a P&T
appeal of £39.42.
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 15
69. Parking Managed Services – Variable Charges – These variable charges form part of the
parking managed service contract, the volumes of which the Committee has no control. The
individual boroughs are responsible for using such facilities and the volumes should not,
therefore, be viewed as service growth. The volumes are based on those currently being
processed by the contractor and are recharged to the boroughs, TfL, the GLA and other
users as part of the unit cost charge. Current trends during the first half of 2009/10 suggest
that there continues to be a significant reduction in the use of these services, which is
attributable to the reduction in economic activity as a result of the current downturn.
70. The base charges have been increased for inflation of 1.1% and applied against the
estimated volumes for 2010/11. The proposed charges and volumes Table 11, compared
against the position for the current year.
Table 11 - Parking 2010/11 20109/11 2009/10 2009/10
Services Usage and Estimated Proposed Estimated Proposed
Charges 2009/10 and Volumes Unit Volumes Unit
2010/11 (Nos) Charge (Nos) Charge
(£) (£)
TRACE (Boroughs) 63,066 13.56 104,607 13.41
TRACE (Other Users) 12,778 15.90 13,436 15.73
TRACE (Fax
Transaction) 13,436 12.83 24,790 12.69
DVLC 452,441 0.20 491,253 0.20
PEC 1,214,384 0.20 1,399,096 0.20
PED/PIE 52 0.20 5,003 0.20
71. Court Fees – Northampton County Court – As detailed in paragraph 39, the expenditure in
respect of the registration of debt is directly recouped from boroughs. The Court Service is
not intending to increase the £5 unit fee for 2010/11 and it is, therefore, proposed to maintain
this budget at £5 million for 2010/11 to match estimated expenditure.
72. Income from TfL - As TfL are a member of TEC, the proposed Parking Core Subscription
for 2010/11 of £2,000 and the average borough Lorry Ban Subscription of £14,524 for
2010/11 will be payable by TfL. In addition, income of £222,000 is expected to accrue from
Parking Enforcement Service Charge, as detailed in paragraphs 56-57 above, based on the
530,629 PCN’s issued in 2008/09 (down from 752,440 in 2007/08). A sum of £165,000 is
expected to accrue from Bus lane appeals and a further £27,000 from TfL use of other
parking systems (down from £281,000 for the current year). A further £94,000 relates to the
TfL funding for the three administration support posts dealing with Taxicard.
Other Income
73. Miscellaneous Income – It is estimated that income of £78,000 will continue to be raised
from three main sources in 2010/11. Firstly, £34,000 is expected to accrue for the
administration of the Health Emergency badge (HEB) in the form of registration fees and
charges for badges to Doctors Surgeries, in accordance with the revised charges set by the
Full Committee in October 2009. Secondly, £31,000 is expected to accrue from London
Transport for secretarial services provided by the Committee during the concessionary fares
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 16
negotiations. Finally, the residual amount of £13,000 is expected to accrue from the sales of
leaflets and maps and other miscellaneous sales.
Committee Reserves
74. The audited balance of the Committee’s reserves as at 31 March 2009 has been confirmed
by PwC at £11.497 million, of which £10.499 million relates to the balance of the specific
reserve. Table 12 below updates the Committee of developments since the summer and
details the revised estimated level of reserves as at 31 March 2010, if all current known
liabilities and potential future commitments are considered:
Table 12 – Analysis of Committee General Specific Total
Reserves Reserve Reserve
Audited reserves at 31 March 2009 998 10,499 11,497
Reserves used in setting 2009/10 Budget (10) (7,147) (7,157)
Research Budget c/f into 2009/10 (79) - (79)
Consumer Direct C/F into 2009/10 (234) - (234)
Sub-Total 675 3,352
Reserves provisionally committed in 2010/11 - (3,352) (3,352)
Indicative reserves 31 March 2010 675 - 675
Salary costs claw back 37 - 37
Projected Budget surplus/(deficit) 2009/10 2 3,000 3,002
Estimated Residual Balances 714 3,000 3,714
75. Since 2003/04, the Committee has agreed to only use the Specific Reserve to reduce the
cost of the Concessionary Fares Settlement and it is recommended that this practice, where
resources are available, continue into the future, with £3.352 million be recommended for
use for this purpose for 2010/11. In addition, the projected underspend in respect of other
bus operators of £3 million can also be used to offset the total scheme costs in 2010/11,
making £6.352 million in total, which the Committee is being asked to approve.
76. After considering the projected surplus of £2,000 for the current year, the Committee is left
with general reserves of £714,000. This equates to 15.4% of total operating expenditure of
£4.627 million, which exceeds the benchmark range for uncommitted reserves agreed by the
Full TEC Committee in December 2005.
77. This leaves the Committee with a reasonable working balance to allow it some buffer against
any unforeseen events that may arise during the course of the next financial year. However,
officers must ensure that the budgets for the remainder of the current financial year and for
2010/11 continue to be effectively controlled to prevent this level of potential reserves from
being used in an unplanned way, that is, to cover instances of overspending over the next 16
months. As a yardstick, the officers should continue to ensure that general reserves do not
fall below the £170,000 buffer created by the Committee in October 2006 and that the
Committee is given very early warning if this scenario is likely to happen.
78. In addition, it is recognised that following both a General Election and the Borough Elections
during 2010, further consideration will need to be given to the focus of the organisation in
future years and how this will impact upon these assumptions about future budget strategy.
In readiness for the post-election period and any immediate measures that might be
introduced that affects the level of resources amongst member boroughs, work has started
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 17
amongst senior officers on a range of scenarios likely to arise that can be applied with the
aim of securing future savings for member authorities.
Summary
79. This report details the proposed income and expenditure budgets for the London Councils
Transport and Environment Committee for the 2010/11 financial year, together with the
proposed level of borough subscriptions and charges for services to be levied to meet the
proposed level of expenditure.
80. This report also updates the Committee on the projected balance on reserves position after
consideration of all current commitments.
81. This report was considered by the TEC Executive Sub-Committee at their meeting on 12
November 2009, where it was agreed that these proposals should be put this Committee for
final approval.
Recommendations
82. The London Councils Transport and Environment Committee is asked to approve:
The levies and charges for 2010/11 as follows:
The Parking Core Administration Charge of £2,000 per borough and for TfL (2009/10
- £2,000; paragraph 54);
The Parking Enforcement Service Charge equating to £0.4183 per PCN (2009/10 -
£0.391; paragraphs 55-57);
The Concessionary Fares Administration Charge of £14,231 per borough (2009/10 -
£14,144; paragraphs 58-59*);
The Taxicard Administration Charge of £5.49 per permit (2009/10 - £5.42; paragraphs
60-62). Boroughs are also recommended to increase their Taxicard budgets for
2010/11 by 2.7% to maximise the level of funding from TfL for the year;
The Lorry Ban Administration Charge of £435,723 in total, to be apportionment by
population figures, with TfL paying the average borough charge of £14,524 (2009/10 -
£476,000; TfL charge £15,867; paragraphs 63-64);
Congestion Charging Appeals – to be recovered on a full cost recovery basis, as for
2009/10, subject to the agreement of the GLA under the new contract arrangements
(paragraphs 67-68);
The Parking and Traffic Appeals Charge of £39.42 per appeal (2009/10 - £40.73 per
appeal; paragraphs 67-68);
The TRACE (Electronic) Charge of £13.56 per transaction for borough/TfL and
£15.90 per transaction for non-borough/TfL users (2009/10 - £13.41/£15.73;
paragraphs 69-70);
The TRACE (Fax) Charge of £12.83 per transaction (2009/10 - £12.69; paragraphs
69-70); and
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 18
The DVLC, PEC5, PED6 and PIE7 Charges of £0.20 per transaction (2009/10 - £0.20;
paragraphs 69-70);
The provisional gross revenue expenditure of £299.465 million for 2010/11, detailed in
paragraphs 21-52 of this report and shown in Appendix A;
On the basis of the agreement of the above charges, the gross revenue income charges
of £293.113 million, net of reserves, for 2010/11 set out in paragraphs 53-73 of this
report and shown in Appendix B and to note the indicative charges to individual boroughs
set out in Appendix C; and
The use of £3.352 million from the specific reserve, which will offset borough
contributions in respect of the 2010/11 concessionary fares scheme with a potential use
of a further £3 million reserves arising from the projected underspend in respect of the
budget for other bus operators in 2009/10, making £6.352 million in total.
83. The Committee is also asked to note the current position on reserves and future prospects,
as set out in paragraphs 74-78 and Table 12 of this report.
Financial Implications for London Councils
None, other than those detailed in the report
Legal Implications for London Councils
None
Equalities Implications for London Councils
None
Appendices
Appendix A – Proposed revenue expenditure budget 2010/11;
Appendix B – Proposed revenue income budget 2010/11;
Appendix C.1 – Indicative charges to boroughs 2009/10;
Appendix C.2 – Indicative charges to boroughs 2010/11; and
Appendix D – Parking Enforcement statistics 2008/09
5
The system that allows boroughs to register any unpaid parking tickets with the Traffic Enforcement
Centre and apply for bailiff’s warrants.
6
The system that allows boroughs to log details of persistent evaders of parking fines, wherever they
reside.
7
The system that notifies boroughs of any payments received by TEC in respect of parking fines.
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 19
Background Papers
TEC Budget Working Papers 2009/10 and 2010/11;
TEC Final Accounts Working Papers 2008/09;
TEC Revenue Budget Forecast Working Papers 2009/10; and
London Councils Consolidated Budget Working Papers 2009/10 and 2010/11.
Revenue Budget Proposals 2010/11 London Councils’ TEC – 10 December 2009
Agenda Item 23, Page 20