6 analysis the enforcers the enforcers analysis 7

“
Almost 100 councils lost money on
parking in 2007/08 totalling nearly
£80m John Siraut

Loss-making councils The top ten earners

Across both on and off-street parking, total net revenues after capital costs across On-street parking generates almost £700m across England, but ten councils (all but
all English local authorities is slightly under £370m, but just ten local authorities one of them in London) account for almost half of that (Table 3). Central London,
account for nearly £150m of that. with its huge pressures on parking spaces, can extract high levels of revenue.
In fact, almost 100 local authorities lost money on parking in 2007/08 totalling
nearly £80m between them. Of those, around 60 lost £16m on day-to-day
operations, that is, excluding capital investments (Tables 1 and 2). Council Gross revenue (£’000)
Many authorities see parking more as a service than a business, providing free or Westminster 84,639
low cost on and off-street parking, so they generate insufficient income to cover Camden 44,562
costs. In some authorities park & ride operations provide out of town parking, Kensington & Chelsea 39,464
which once expensive bus contracts are factored in are heavily subsidised to Islington 31,406
encourage use. Lambeth 29,274
Wandsworth 26,395
Hammersmith & Fulham 21,789
Council Operating loss (£’000) Hackney 17,329
South Bedfordshire -277 Brighton & Hove UA 15,711
Illustration: Nicky Phillips

Broxtowe -287 Ealing 13,763

Wellingborough -307 Table 3: Top ten gross revenue earners from on-street parking
Fenland -317
Knowsley -320
South Gloucestershire UA -341 Outside London, the ten highest earning councils raised only £70m between
Surrey -776 them (Table 4), less than Westminster on its own. It is also notable that relatively
Essex -1,015 small authorities such as Brighton & Hove and Milton Keynes raise more money
Norfolk -2,314 than major cities such as Leeds and Manchester.
Lambeth -5,817 Milton Keynes is fairly exceptional, with some 20,000 parking spaces, mostly
Table 1: The ten biggest loss makers on operating costs before capital items are included charged, surrounding each block within the town centre, commercial and station
areas. Brighton & Hove, meanwhile, is similar to many London boroughs in that
demand for car parking spaces way exceeds supply.
Council Net operating loss (£’000)
Surrey -2,012
Coventry -2,072 Council Gross revenue (£’000)
Rutland UA -2,164 Brighton & Hove UA 15,711

The ‘cash cow’ myth

Sefton -2,208 Birmingham 9,637
Norfolk -2,630 Milton Keynes UA 8,650
Peterborough UA -3,127 Manchester 8,204
South Lakeland -5,586 Leeds 7,213
Newcastle upon Tyne -6,032 Kent 5,721
Lambeth -8,797 Liverpool 4,353
Tower Hamlets -24,099 Essex 4,220
Very few councils generate big revenues out LOCAL AUTHORITIES have relatively few sources of revenue that they Table 2: The ten biggest loss makers including capital expenditure Bristol UA 3,801
control. One is parking. For some years there has been a common perception that Newcastle upon Tyne 3,765
of parking while almost 100 are making a parking is an enormous cash cow for local authorities. But my own research of on- Table 4: Top ten (non-London authorities) gross revenue earners from on-street parking
street and off-street revenues shows that this is not the case for most councils. So, car parking revenues are an important source of income for only a handful of
loss, John Siraut reveals At first glance, it does indeed seem that huge sums are pouring into council authorities. For many authorities car parking is a drain on resources. However, it
coffers. Analysis of the 2007/08 financial returns to central government for all of rarely makes sense to subsidise car parking. However, on-street parking is clearly not the money-spinner it may seem as local
England’s local authorities shows that parking generated £1.3bn. However, behind Research shows that parking charges play a limited role in people’s shopping and authorities spend over £450m enforcing regulations and payments. Net revenues in
that headline-grabbing figure, the story is far more complex. Local authorities raise visiting decisions. Rather it is the range and quality of the retail or leisure available 2007/08, excluding capital costs, were £230m across all local authorities, with just
broadly an equal amount from on and off-street parking, but at an individual that is most important. Improving the quality of the retail offer and public realm will six (Brighton & Hove, Hammersmith & Fulham, Wandsworth, Camden,
council level their importance is vastly different. provide far better returns than spending money on subsidising car parking. Kensington & Chelsea and Westminster) accounting for half that amount.
8 analysis the enforcers

Cark park revenues

Off-street parking brings in £640m for English local authorities but revenues are
more widely spread across boroughs. The top ten earning councils generate £85m
from off-street parking and, with the exception of Westminster, are a different set
to the top on-street earners (Table 6).
Collection costs
There are major differences in the cost of revenue collection between boroughs.
For those authorities collecting more than £1m from on-street parking the best ten Council Gross revenue (£’000)
in terms of the amount raised per £1 spent is very different from the top ten Westminster 18,432
money generators (Table 5). Sheffield manages to raise nearly £6 for every £1 Birmingham 9,514
spent and the average across the best ten is £3.55. Richmond upon Thames 8,108
This compares to an average £1.70 raised for every £1 spent for the top ten Guildford 7,860
money earners. If the latter were to manage the same cost to revenue ratios they Bath & North East Somerset UA 7,717
would save £135m in collection/enforcement costs. Newcastle upon Tyne 6,980
Bournemouth UA 6,866
Oxford 6,713
Council Revenue raised per £1 spent Croydon 6,612
Sheffield 5.72 York UA 6,529
Bath & North East Somerset UA 4.99 Table 6: Top ten gross revenue earners from off-street parking
Derby City UA 4.60
Leeds 3.47
Kingston upon Hull UA 3.25 Off-street operating costs are around £360m across England meaning net
Milton Keynes UA 3.24 revenues of around £290m. So, off-street generates more cash than on-street. But
Merton 2.59 off-street parking requires far higher capital investment, roughly £110m compared
Newcastle upon Tyne 2.57 to £40m for on-street parking. Again, there are wide discrepancies in collection
Leicester City UA 2.56 charges. For those authorities taking over £2m in off-street revenues the average
Harrow 2.51 amount collected by the best ten performing authorities per £1 spent was nearly
£3.90 (Table 7), compared to just £1.90 for the top ten money earners.
Average 3.55
Table 5: Revenue raised per £1 spent — on-street parking
Council Revenue raised per £1 spent
Brighton & Hove UA 5.67
Local authorities’ different circumstances mean that collection costs are not fully Liverpool 5.20
comparable. For example, some London councils have large areas of residential Penwith 4.25
parking, which need to be enforced but bring in less revenue. However, it still Ealing 3.64
raises questions about the efficiency of parking policies and procedures in some Scarborough 3.61
boroughs. Worcester 3.49
Previous research has shown a massive variance in the cost of residential East Devon 3.35
permits, with costs varying by location, engine size and number of vehicles. East Staffordshire 3.28
If you consider the costs of implementation, IT systems to control permits, Carrick 3.19
specialised stationery, systems administration and enforcement costs coupled with Woking 3.03
the political ramifications of high residential permit charges, it is easy to see why
residential schemes can be expensive and only a proportion of this is recovered by Average 3.87
permits and penalty charge notices (PCNs). Table 7: Revenue raised per £1 spent — off-street parking

A time for new strategies?

Parking enforcement and charging is a political
minefield for many authorities. However, it is clear
that the large discrepancies between councils in
collection and enforcement costs and the absolute
losses made by some authorities suggests that many
need to urgently revisit their parking policies,
strategies and, most importantly, their pricing regimes.
There are many circumstances where pricing
strategy could be improved throughout an area.
Parking stock may be under-used, with tariffs set too
high, or revenues may be lost where charges could be
made but parking is provided free. Modern equipment
can help to differentiate customers. Westminster
council has introduced Easyjet type pricing, and there
is probably more councils can do in relation to yield
management.
There may also be ways for authorities to reduce
costs. For instance, shared procurement can provide
on-going benefits in terms of reduced operating costs.
Some authorities are looking at shared services, which
might provide greater operational cost savings.
Also, new payment technology, such as mobile
phone systems, could be used to avoid large capital
outlays on upgrading pay & display stock. This would
save on maintenance and cash collection costs and
have significant benefits in terms of reduced vandalism
and theft.
There is obviously an element of cost for the mobile
phone service, but provided this is passed on to the
customer, rather than the council, there will be gains.
It remains to be seen whether these systems can be
applied everywhere, without repelling those
customers not prepared to use a mobile phone as a
means of payment.
With the recession deepening, many councils will
see parking revenue go down in 2008/09. Retail and
commercial trips are likely to be undertaken less
frequently and, in terms of charged parking, for
shorter durations. Both will decrease the revenues
from parking operations.
So, parking authorities will have to embrace new
policies and innovations or risk plummeting returns
and even greater shortfalls.
John Siraut is associate director, economics at
consultant Colin Buchanan. All data is sourced
from local authority annual returns to central
government