FEATURE COMPREHENSIVE SPENDING REVIEW
Restructuring could trigger site sales bonanza
THE COMPREHENSIVE SPENDING REVIEW (CSR) COULD TRIGGER THE COMPLETE RESTRUCTURING OF THE OFF-STREET CAR PARKING SECTOR, WITH COUNCILS SELLING OFF THEIR CAR PARKS, ARGUES JOHN SIRAUT
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overnment finances are complicated. In simple terms the government will spend £700bn this year, raise some £550bn in taxes and charges, and borrow the remaining £150bn. If it were to continue to spend and borrow at this level, it would not be long
before the biggest item of expenditure would be interest payments. Hence the present large spending cuts, which all the political parties accepted were needed, but refused to talk about before the general election. Te cuts will affect everyone, from rich to poor, through welfare
reductions and tax and VAT increases. Any growth in private sector employment is liable to be offset by reductions in the public sector, and in those sections of the private sector dependent upon it. So the amount of disposable money floating around the economy is likely to decline, or at best remain static over the next few years. Parts of the parking sector have already been badly affected by
the economic downturn. For example, airport-related parking has suffered from a steep drop in the number of people taking package holidays, down by around 20 per cent at some airports. However, airports with more business travel, which are less dependent on either charter flights or services to Irish destinations where travel has collapsed, have borne up much better. More generally, people with less money to spend are not going
out as much, so city centre parking – at least for local authority run car parks – has seen fairly static revenues, despite increases in charges.
Fundamental restructuring So how is the future likely to pan out for the £5bn a year car parking industry? I believe it could lead to nothing less than a fundamental restructuring of the whole sector. Local authorities are facing substantial cuts in government
grants and this leaves them in a dilemma. On the one hand they need to raise money to offset these cuts, which could come from increased parking charges. On the other hand, though, in poorly performing town centres, they will be under pressure from retailers and others to cut or even scrap parking charges.
18 DECEMBER 2010 If charges go up, this offers the private sector a choice – either
to raise prices in line, or to undercut councils and increase market share. If councils reduce charges, then private sector operators will be forced to differentiate their product more, to justify the continuing premium they charge. Councils will also be seeking cuts in the cost of their parking provision, especially when
I expect to see many councils taking a much more radical approach and asking themselves why they are in the car parking business in the first place
retendering enforcement contracts. Tis could lead to multi- council contracts, pressure to consolidate back office operations, the increased use of cameras for enforcement, and changes in the hours of enforcement. However, these measures will do little more than save a few
thousand pounds here and raise a few thousand pounds there. What I expect to see is many councils taking a much more radical approach and asking themselves why they are in the car parking business in the first place, given that many make no money out of it and they have no money to invest in maintaining their parking assets. Some councils will, therefore, sell their off-street car parks, or at the very least seek long-term partnerships with the private sector
www.britishparking.co.uk
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