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

The following Local Government practice 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

Local authority powers to charge and trade

Coronavirus (COVID-19): This Practice Note contains guidance on matters that have temporarily been altered to assist in the management of the coronavirus (COVID-19) pandemic. For further information, see Practice Notes: Local authority meetings during the coronavirus (COVID-19) pandemic [Archived] and Coronavirus (COVID-19)—governance tracker.

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

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