ALL THINGS LICENSING
Article by Mike Smith, Senior Specialist for Licensing and Community Safety at Guildford Borough Council and Vice-Chair of the Institute of Licensing South East Region.
Please note that this article represents my own views which are not presented as the views of the Institute of Licensing or Guildford Borough Council.
The financial climate facing local authorities
It cannot have escaped the attention of most that Birmingham City Council, reportedly Europe’s largest local authority declared ‘bankruptcy’ last month with the issuing of a section 114 notice.
What is a Section 114 notice?
Under the Local Government Finance Act 1988, if a council’s Chief Financial Officer believes the authority cannot meet its expenditure commitments from its income, they have to issue such a notice. This does not require permission of councillors, it is a function delegated to the appointed officer in charge of the council’s finances.
Legally, local authorities cannot go bankrupt but the issuing of such a notice is often described as being ‘effectively bankrupt’, meaning it cannot make new spending commitments and councillors must meet within 21 days to discuss the next steps to be taken.
The notice means that no new spending is permitted with the exception of funding ‘statutory’ services, however existing commitments and contracts will continue to be honoured. Statutory services are not listed or defined, however are services which the council is legally obliged to undertake. This includes taxi licensing.
Following the service of such a notice most councils pass an amended budget, reducing spending on services in order to begin their financial recovery. However in Birmingham the Government has announced it has appointed Commissioners on an emergency basis to manage the authority, meaning many decisions on spending will be taken outside of Birmingham’s control.
What does a s.114 notice mean for taxi/PH licensing?
In theory, the licensing function should be self-funding on the basis that fees for driver, vehicle and operator licensing should be set locally to recover the cost of the council providing the service. It cannot be used to subsidise other areas and it’s probably also important
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to remember that if staffing and resources dedicated to licensing are reduced, then there should be a subsequent reduction in fees on the above basis.
However, each local authority is separate and carries out its functions in different ways. Whilst many authorities have ‘dedicated’ licensing staff, others have staff who undertake licensing amongst other duties to save costs. Even if there are staff who are ‘dedicated’ to licensing, it is still feasible for the authority to reduce staffing in order to save cost overall. Whilst there may (or may not) be staff dedicated to licensing, there will be other council staff who support the function, including in customer services, finance, legal, HR, democratic services…the list goes on, where savings will also likely be made which will have a subsequent impact on the delivery of the licensing functions.
Whilst taxi/PH licensing is a statutory function, the level of service provided and resource dedicated to the function varies between local authorities, even those which aren’t under financial constraints. Some authorities limit their resources to effectively just the processing of applications with little by way of enforcement actions, whereas others have a more proactive approach to compliance, and it may be that some enforcement work is reduced in order to focus on the statutory delivery of determining applications.
Whilst the issue in Birmingham has made the news headlines, it is one of around 50 authorities which have had to serve a s.114 notice of which I am aware. To demonstrate the scale of the recent problem the number was only a handful of councils at the beginning of the year, and unsurprisingly there have been calls on central Government to consider how services can be funded locally, but in a sustainable way.
Exhibiting for hire
Moving from the very real problem of the financial challenges facing local authorities onto an issue which is at best misunderstood and at worst exacerbated by regular complaints to the authority.
In my role of writing for PHTM I am often approached by councils and occasionally the trade, seeking advice as to practice in their area. One recent enquiry was from an officer who had received a complaint from their local trade about vehicles being ‘exhibited for hire’, and was asked what actions were going to be taking to cease this practice in their district.
The term ‘exhibiting for hire’ does not exist in either the Town Police Clauses Act 1847 (TPCA) or Local Govern-
OCTOBER 2023 PHTM
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