Local authority powers to charge and trade
Produced in partnership with Philip McCourt
Local authority powers to charge and trade

The following Local Government guidance note Produced in partnership with Philip McCourt provides comprehensive and up to date legal information covering:

  • Local authority powers to charge and trade
  • Specific powers
  • General powers
  • Charging
  • Discretionary services
  • Cost recovery
  • Procedures
  • Trading

The power for a local authority to charge and trade has existed for some time, but its legal basis has never been entirely clear. The Local Government Act 2003 (LGA 2003) introduced new provisions in relation to trading and charging, but to understand the application and scope of the new powers it is important to first understand the statutory powers that preceded it.

The LGA 2003 powers draw a broad distinction between charging (ie cost recovery only) and trading (which allows the authority to make a profit). Crucially, the new powers do not apply where a specific power already exists. Therefore, when considering charging or trading, the first thing an authority should do is establish whether the project fits within one of the specific powers.

Assuming it does not, the authority should consider whether the project is charging or trading. The key differences between the two are:

  1. charging only relates to services, whereas the power to trade is for all services, works and supplies functions

  2. all authorities can use the power to charge whereas the power to trade is available only to councils rated 4 stars, 3 stars, 2 stars or 1 star under Comprehensive Performance Assessment (CPA)

  3. charging is limited to the recovery of the cost of providing the service whereas trading can be at a profit

  4. the power to trade is