The Ombudsman's final decision
Summary: Mr X complained the Council’s street trading fees are excessive and disproportionate. He considers it unfair that street traders consents are significantly more expensive than consents for ice cream traders. There is no evidence of fault in the way the Council operated its street trading scheme or set the fees.
The complaint
The complainant, whom I shall refer to as Mr X complained the Council’s street trading fees are excessive and disproportionate. He considers it unfair that street traders consents are significantly more expensive than consents for ice cream traders.
The Ombudsman’s role and powers
We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended) If we are satisfied with an organisation’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)
How I considered this complaint
As part of the investigation, I have: considered the complaint and the documents provided by Mr X; made enquiries of the Council and considered the comments and documents the Council provided; discussed the issues with Mr X; Mr X and the Council had an opportunity to comment on my draft decision. I considered any comments received before making a final decision.
What I found
Law and Guidance Street trading is governed by the Local Government (Miscellaneous Provisions) Act 1982. Paragraph 9 (1) of Schedule 4 provides a district council may charge such fees as they consider reasonable for the grant or renewal of a street trading licence or consent. The fees charged should reflect the cost of administering the street trading licence or consent scheme, including processing and compliance with the consents.
The Council’s scheme The Council implemented a revised charging scheme in April 2022. Under the previous scheme the Council would issue consents for 3, 6, 9 or 12 month periods, for 1 April to 30 June, 1 July to 30 September, 1 October to 31 December and 1 January to 31 March. There was an initial consultation fee of £160, unless the location had previously been consented, and street traders were charged a daily fee of £15 per day.
Ice cream traders did not pay a daily fee, but rather an annual charge of £793.
The revised scheme also requires an initial consultation fee of £220, unless the location had previously been consented. Street traders no longer pay a daily fee, and can choose monthly, quarterly or annual consents. The prices for these are: One month - £320 Quarterly - £800 Annually - £2,710 If street traders choose to pay for an annual consent in four instalments the price increases to £2,910. Ice cream traders pay a revised annual fee of £925.
What happened here Mr X has been a street trader for many years and is unhappy with the way the Council calculates the licence fees.
In April 2021 Mr X made a formal complaint to the Council as he felt the street trading licence fee was far in excess of the administrative costs to the Council. He also considered the street trading fees were disproportionate compared to the fees charged to ice cream traders. He noted ice cream traders would trade seven days a week for at least six months a year but their licence fees were approximately a fifth of that for street traders.
Mr X asked the Council to confirm the costs of administering the licensing scheme and the revenue it received. He also noted many other councils charged hundreds rather than thousands of pounds for street trading licences.
The Council responded and confirmed it had to consider the approximate costs of administering and maintaining the licensing regime. It stated it was an accepted principle that those who benefit from the scheme, that is the licence holders, should cover the cost of administering and maintaining it. The broad objective was to ‘break even’ over time.
The Council referred to guidance produced by the Local Government Association, ‘Open for Business’, on locally set licence fees. It explained a large part of the fee is derived from staffing costs required to administer, manage and enforce the scheme. The Council had carried out a ‘time and motion/ exercise for the processes and functions required to operate the scheme.
It then went on to explain why the costs of street trading and ice cream licences were calculated differently. It issued mobile ice cream trading consents annually from April to March the following year. Applicants had to apply and pay for these permits annually. The Council noted that whilst the consents permitted trading for up to 12 months, ice cream traders tend to only operate during the warmer months. They could also only advertise by chiming between midday and 7pm. This reduced the actual trading period during which compliance and enforcement was required. In addition the plating of licenced ice cream vans had assisted in general compliance and identifying transgressors for appropriate enforcement.
This differs to street trading consents which can be issued for 3, 6, 9 or 12 month periods at set points throughout the year. While this allowed traders greater flexibility it increased the administrative burden on the Council. The Council noted that complaints and the requirement for enforcement had increased in the last two financial years and had more than doubled in 2020-2021, particularly against traders who attempt to operate without consents.
The Council asserted enforcement was necessary to ensure effective operation of the scheme and to create a level playing field for consented traders. It also noted that passing on the reasonable non-recoverable enforcement costs was consistent with a decision of the Supreme Court.
The Council was satisfied the fees charge were reasonable and proportionate to the costs of the processes associated with the street trading scheme and did not exceed the costs to administer, maintain and enforce the street trading scheme.
Mr X was not satisfied by the Council’s response. He did not dispute the principle of recovering the costs of administering the scheme, but maintained the fees were not fairly proportioned. Mr X stated ice cream vendors could sound their chimes for the same number of hours as street traders would trade each day. They could also trade 7 days a week within the same annual fee whereas street traders would have to pay more to trade 7 days a week.
In relation to the administration costs, Mr X confirmed that although he currently paid for his consent quarterly, he would pay annually if the lower administration costs meant he was paying the same as ice cream vendors. Mr X considered the way the Council calculated charges for street traders was unnecessarily time consuming for both traders and the Council and added unnecessary administrative costs.
The Council advised Mr X it had undertaken a benchmarking exercise to compare the Council’s fees with those of other local authorities. It stated this had shown the Council’s fee structure and fees were broadly similar to other authorities, although it was clear different authorities applied different regimes.
In addition the Council confirmed it had taken on board Mr X’s comments and had reviewed the current fee structure. It was now looking to implement a simpler fee structure which would no longer require traders to calculate the fee based on predicted trading days. By allowing traders to apply for 1 year, 3 months or 1 month consents the Council anticipated the administrative burden of processing the consents and therefore the cost would be reduced. The Council was also reviewing the annual fee for ice cream trader consents.
Mr X welcomed the change to the fee structure but maintained street traders had been overcharged for many years and had subsidised ice cream vendors. He asked for a breakdown of the costs of running the scheme and a meeting with a senior officer for street traders to discuss their concerns. Mr X also asked the Council to consider allowing monthly payments, similar to the system used for council tax payments, which would benefit all traders.
The Council did not consider a meeting was necessary and confirmed it was not able to offer the option of paying for annual consents by monthly direct debits.
Mr X remains unhappy with the disparity between the cost of street trader consents and ice cream traders and has asked the Ombudsman to investigate his concerns.
In response to my enquiries the Council has drawn attention to the Local Government (Miscellaneous Provisions) Act 1982 which allows a council to charge such fees as it considers reasonable. The Act also allows councils to determine different fees for diverse types of licence or consent, taking account of: the duration of the licence or consent; the street in which it authorises trading and/or; the description of the articles being sold.
It has reiterated that local fees are set on a cost recovery basis with the fee set to cover the Council’s costs in relation to the administration of the licensing regime. This includes office administration, setting/renewing fees, processing of manual applications and associated documentation checks, maintenance of records, engaging with stakeholders/responsible authorities, statutory checks such as a basic DBS, development of process and draft licences determination and production of policy, web materials and providing advice and guidance.
The Council disputes Mr X’s assertion that street traders fees are used to subsidise the cost of the ice cream traders’ scheme. It states that in determining different charging regimes for street traders and ice cream traders the Council accepted the nature of ice cream traders is seasonal and that in real terms they do not operate all year round. Unlike street traders, ice cream traders do not have a regular pitch and there are timing limitations regarding advertising by means of chiming.
The Council considered this reduced the actual trading period during which compliance and enforcement is required. Identifying transgressors was also easier with plated licensed ice cream vans.
According to the Council’s records, it received a total of six complaints about street trading in 2019, 24 in 2020 and 30 in 2021. These complaints led to formal enforcement action in four cases in 2019, six in 2020 and a further six in 2021.
In comparison the Council received 17 complaints about ice cream traders in 2019, 17 in 2020 and 36 in 2021. Of these, three resulted in enforcement action in 2019 and one each in 2020 and 2021.
The Council states the new scheme means that traders no longer have to calculate the fee based on their predicted trading days but can choose the option that suits their business needs. It anticipates the flexibility of the new scheme will encourage new business to trade in Peterborough.
It does not have systems in place to allow for monthly direct debits to pay for an annual consent and states the cost of doing so is proportionally higher due to the additional administrative costs involved. The Council states there are significant differences between the administration and collection of council tax and street trading. Council tax collection is on a much larger scale than street trading, and there are statutory provisions in place for enforcement, if necessary, which increases the recovery rate.
In addition, the cost of council tax recovery is split across the city’s 80,000 council taxpayers and so provides a much more proportionate cost than would apply if such the cost was split across the small number of street traders.
In response to the draft decision Mr X reiterated his view that ice cream traders operate for similar hours to street vendor. And that all traders should be treated the same with the costs of administering the licences spread across the board. He feels the Council should acknowledge the effect of seasonal condition on all traders, not just ice cream vans. Mr X asserts it is more expensive to administer ice cream van licences as they require DBS checks, vehicle plating and are mobile making enforcement more difficult. Street traders are static which makes identification and enforcement easier.
Mr X is also concerned about the difference in the cost of paying for a licence annually and monthly. Purchasing 12 sperate monthly licences costs £3,840, while an annual licence costs £2,710. He disputes it costs an additional £94 each month to administer monthly licences and maintains traders should be able to pay for annual licences by monthly instalments without incurring significant additional fees.
The Council states that under the new fee structure street traders holding an annual consent receive a real terms reduction in the fee of 49.6%. It states the difference in cost between a one month consent and an annual consent is not an ‘administration charge’. Rather, the fees for monthly and quarterly consents are proportionately higher to ensure the street trading regime as a whole recovers its cost, taking into account the significant reduction annual consent holders receive.
Analysis Councils are entitled to set their own policies. It is not our role to decide the Council’s policy and what fees it should be charging. Our role is to examine how the Council made its decisions and whether there was any fault in that process.
Mr X is unhappy that under the previous scheme street traders were charged a daily rate, rather than annual or periodic fees. But councils are not required to operate a particular scheme or follow a set format. The law allows councils to choose whether to, and if so how to, charge for street trading licensing. There is no evidence the fees charged exceeded the cost of administering, maintaining, and enforcing the street trading scheme.
The Council has recently reviewed its fee scheme and introduced a simpler fee structure which reduces the administration process and therefore the cost. This is to be welcomed. The Council cannot accept monthly payments for annual licences as Mr X would like, but it has explained the reasons for and cost implications of this.
Mr X is also unhappy the Council has set different fees and conditions for ice cream trading licences. This is a decision the Council is entitled to make, and it has clearly set out its reasons for doing so.
I recognise that there is a significant difference between the annual fee for street traders and ice cream traders, but this is not in itself indicative of fault by the Council. Rather, it is reflective of the costs of administering the schemes.
Mr X has received a response to his freedom of information request regarding the cost of running the schemes which identified a deficit to the Council rather than a surplus. He asserts an increase in the ice cream trader licence would allow for a reduction in the street trader licence and achieve greater parity amongst the traders as a whole. However, the court has confirmed that charges within a licensing regime for different categories of licences should not subsidise each other.
Based on the documentation available, there is no evidence of fault in the way the Council operated its street trading scheme or set the fees.
Final decision
There is no evidence of fault in the way the Council operated its street trading scheme or set the fees.
Investigator's decision on behalf of the Ombudsman