# = pounds sterling
HM Treasury News Release
207/98 9 December 1998
-----------------------------------------------------------------
TREASURY AGREES TO ALLOW FINES, LEVIES AND FEES
TO BE USED TO FINANCE SPECIFIC PROJECTS
The first schemes in which receipts from fines, levies and fees
can be used to fund specific projects were announced today by
Chief Secretary, Stephen Byers. The detailed criteria against
which applications to retain receipts from specific activities
will be assessed were also set out. This new flexibility will
allow government departments and agencies to retain money raised
from fines and levies in cases where this would encourage the
development of new initiatives, more efficient use of public
money and better services.
Explaining this new policy Mr Byers,said:
"The Treasury is determined to provide a flexible and
effective framework within which controls on public money
will work. Where appropriate, and providing they meet
strict criteria, I believe it is now right to consider how
bodies can in future meet the costs of their activities from
the money they raise from fines, levies and fees.
"The criteria will ensure that the money raised is in each
case appropriate for such treatment, in particular, that the
money is spent where it is most needed and will not distort
the operational priorities of the organisations concerned."
Separate criteria are applied to fines/penalties and
licences/levies, reflecting the different considerations that
apply. For example, money raised from fines and penalties will
only be allowed to meet costs where: this is likely to improve
performance against policy objectives; enforcement costs can be
readily identified and apportioned; and where arrangements are
in place to prevent any possible abuse of the system through the
use of fine and penalty collection as a method of revenue
raising.
The criteria applying to licences and levies require, for
example: that the service provided is closely linked to the payer
of the fee; that the activity must further the government's
economic goals; and that efficiency regimes are in place to keep
costs down.
A full list of the criteria used is set out below.
Activities where using receipts to meet costs has been approved
include:
DVLA receipts from wheel clamping activities; fees
charged for removing wheel clamps from illegally parked
cars and proceeds from the sale of unclaimed cars
removed from the roadside will meet the costs of wheel
clamping teams and the pounds where cars are held.
Office of Rail Regulation licence fees; the costs of
the rail regulator will be met from licence fees
charged to rail operators.
Environment Agency charges on waste packaging
producers; waste packaging producers must register with
the Environment Agency, which then monitors their
activities. The costs to the Environment Agency can
be met through registration fees.
For the remaining applications, discussions are continuing with
departments on whether and how each case could meet the criteria.
These include:
a request that the agencies involved should be allowed
to retain the money raised from speed camera fines to
meet the associated costs;
Environment Agency fines for breaches of environmental
regulations.
The Treasury would be happy to consider further detailed
proposals from departments, set against the criteria, to use
receipts to meet costs.
NOTES TO EDITORS
1. The Economic and Fiscal Strategy Report 1998 (June 1998, CM
3978) announced that departments were to be able to keep more of
their receipts in order to improve efficiency and effectiveness.
2. Any questions relating to the specific activities for which
receipts might offset costs should be addressed to the
departments concerned.
3. The full list of criteria used for assessing proposals by
departments to allow netting off of receipts from costs, within
Departmental Expenditure Limits, is:
(I) CRITERIA TO BE APPLIED TO FINES AND PENALTIES
Will performance against policy objectives, e.g. crime
fighting and prevention, be likely to be improved?
Are arrangements in place which will ensure that the
activity will not lead to the abuse of fine and penalty
collection as a method of revenue raising, and that
operational priorities will remain undistorted?
Will revenues always be sufficient to meet future costs,
with any excess revenues over costs being surrendered?
Can costs of enforcement be readily identified and
apportioned without undue bureaucracy, and with
interdepartmental and inter-agency agreement, where
necessary?
Can savings be achieved through the change and are adequate
efficiency regimes in place to control costs, including
regular efficiency reviews?
(II) CRITERIA TO BE APPLIED TO LICENCES AND LEVIES
The service delivered should be closely linked to the payer
of the licence or levy, either because they are the
beneficiaries of the service, or because they are the cause
of the expenditure being incurred;
The licence or levy is appropriate, i.e. applied in the
economically most advantageous way in the circumstances;
Introducing the levy or licence should not materially
restrict the Government's fiscal policy;
The activity financed by the levy or licence must further
our economic goals;
Netting off receipts would improve the efficiency with which
resources are allocated eg because of a difficulty in
otherwise matching resources to unpredictable changes in
externally driven demand;
Where appropriate, charges should be set using the
principles of the Fees and Charges Guide, and surpluses
would have to be surrendered;
There should be adequate efficiency regimes in place to keep
costs down, including stretching targets and regular
efficiency reviews;
Day-to-day decisions on the level of charges and an
efficient level of costs should be taken separately from
the body raising the levy, to prevent abuse of its monopoly
power. Normally this would be by the departmental minister.
There will be periodic reviews, involving the Treasury, of
the operation of the licences and levies, including whether
they should exist at all, what scale of activity is
appropriate, and the level of charges set.