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Cover Story: Issue 218 6 May 2010

Just how profitable are Local Authority parking operations?

Parking income has been hit by the downturn, but some councils are proving adept at
achieving financial efficiency

John Siraut is associate director, economics at consultant Colin Buchanan. All data is
sourced from local authority annual returns to central government
John Siraut

A year ago I predicted in Parking Review that local authority parking revenues would decline
due to the economic downturn. The latest English local authority returns to central
government shows, unusually, a prediction by an economist that turned out to be correct!

In my last feature I challenged the myth that parking is a ‘cash cow’ for parking authorities. My
research found that many councils generate only modest revenues while nearly 100 make a
loss. A year on the financial situation has, if anything worsened for these authorities.

Total net revenues from on and off-street parking came to £326m in 2008/09, down from
£366m in 2007/08. However, my prediction was not quite right as gross revenues held up
reasonably well. What brought the net contribution down was a rise in costs. That said, as
recent issues of Parking Review have shown, parking income at some boroughs has indeed
gone down.

In aggregate, gross on-street parking revenues were £689m in 2008/09, down only slightly
from £696m in 2007/08. However, as Table 1 shows, two-thirds of the revenue is taken by
councils in London while on-street parking outside the capital is not a significant source of
revenue.

The table also shows the amount raised per resident and per car registered in that region.
This highlights the major differences in the importance of parking revenues. My figures show
that the amount raised per car in London is ten times higher, at nearly £180, than the next
region, the South East, which in turn is 70% higher than third placed East of England.
Perhaps surprisingly, the East Midlands raises least per car at under £7. The figures for
London are high, not only because of the relative high price of parking but the widespread use
of parking permits to manage local demand.

Table 1: Gross on-street parking revenue by region

Region £m £ per capita £ per car


London 458.7 60.20 177.23
South East 77.1 9.20 17.26
East of England 28.9 5.05 10.07
Yorkshire & Humberside 21.7 4.16 9.76
North West 30.9 4.49 9.6
South West 25.2 4.85 9.43
West Midlands 23.7 4.37 8.64
North East 8.4 3.28 8.21
East Midlands 14.5 3.27 6.82

On-Street earners

The only authority from outside London to make it into the top ten revenue earners was
Brighton (Table 2). Compared with the previous year, Tower Hamlets has moved into the top
ten, displacing Ealing.
Westminster alone accounts for nearly one-eighth of all local authority on-street parking
revenues. However, there are some interesting variations between London boroughs. For
instance, Lambeth raises nearly £20m while neighbouring Southwark takes in less than £7m.

Table 2: Gross on-street parking revenue by local authority

Local Authority £m
Westminster 81.8
Camden 39.4
Kensington and Chelsea 37.5
Islington 27.8
Wandsworth 25.4
Hammersmith & Fulham 23.5
Lambeth 19.8
Brighton & Hove UA 17.5
Tower Hamlets 16.8
Hackney 14.6

Beyond London
The top ten revenue earners outside London are the same as in 2007/08, with the exception
of Newcastle, which is relegated and East Sussex entering the rating (Table 3).

Again, there are some interesting comparisons, with a city the size of Bristol raising only
£500,000 more than the London Borough of Barking & Dagenham while Brighton earned
twice as much as Birmingham.

Table 3: Gross on-street parking revenue by local authority outside London

Local authority £m
Brighton & Hove UA 17.5
Birmingham 8.8
Manchester 8.3
Milton Keynes UA 7.9
Kent 7.5
Leeds 7.2
Liverpool 5.3
Bristol UA 5.0
East Sussex 4.7
Essex 4.4

The view off-street

When it comes to off-street parking, aggregate gross revenues in 2008/09 were £649m,
marginally up from £644m in 2007/08. As Table 4 shows, off-street parking is much less
important in London than the South West and South East, which raise more revenue per car
than in London.

Interestingly, the East Midlands also raises the least revenue per car from off-street parking
as it does from on-street parking. However, with the exception of London, all regions raise
around double to four times as much money from off-street than on-street parking. With land
values so high in the capital, it makes more sense for London boroughs to use their land for
other uses and make the most of their on-street space.

Councils outside London should perhaps consider selling off-street car parks for other uses
and instead build up their on-street car parking business.
At a local authority level there is less variation between authorities compared to on-street
parking (Table 5). Westminster is still the biggest earner but more parts of the country are
now represented. Since last year York and the London Borough of Richmond have dropped
out of the top ten to be replaced by Cambridge and Woking. Unlike with on-street parking,
councils face competition from private sector car park operators in respect of off-street
parking and revenues depend on the level of competition.

Table 4: Gross off-street parking revenue by region

Region £m £ per capita £ per car


South West 105.1 20.18 39.27
South East 144.7 17.26 32.38
London 77.4 10.16 29.92
East 74.5 13.00 25.90
West Midlands 66.0 12.19 24.11
North East 22.8 8.86 22.17
Yorkshire & Humber 48.9 9.37 22.01
North West 66.7 9.71 20.76
East Midlands 42.7 9.62 20.08
Table 5: Gross off-street parking revenue by local authority

Local Authority £m
Westminster 16.4
Birmingham 10.2
Guildford 8.6
Bath & North East Somerset UA 8.2
Newcastle Upon Tyne 7.9
Oxford 7.8
Croydon 7.3
Cambridge 7.0
Woking 6.6
Bournemouth UA 6.6

The overall picture

Taking all parking revenues together, Table 6 shows how the £1.3bn local authority parking
market is distributed by region. London clearly is in a league of its own followed by the
congested South-east.

It is perhaps surprising that the South West comes next in terms of revenue raised per car
while more urban areas such as the West Midlands and the North West come some way
behind.

Are councils in the East Midlands missing an opportunity given that they raise £20 a car less
than those in the southern regions?
In net terms, the top ten councils earned £118m from parking in 2008/09, accounting for a
third of total net revenues. Again, London councils dominate, taking seven of the top ten
spots, with five earning more than £10m (Table 7).

Table 6: All parking revenues by region

Region £ per capita £ per car


London 70.37 207.15
South East 26.46 49.64
South West 25.02 48.70
East 18.05 35.97
West Midlands 16.57 32.75
Yorkshire & Humber 13.53 31.78
North East 12.14 30.38
North West 14.19 30.36
East Midlands 12.89 26.90

Table 7: Net parking revenues by local authority, highest earners

Local Authority £m
Westminster 26.4
Kensington & Chelsea 22.9
Camden 14.5
Wandsworth 12.7
Hammersmith & Fulham 11.8
Leeds 6.3
Croydon 6.1
Birmingham 5.8
Guildford 5.6
Richmond Upon Thames 5.5

Loss-making councils

For some local authorities parking income helps to offset council tax bills, but for many it is a
major drain on resources. Ten councils lost £30m between them in 2008/09. In fact, over 100
councils lost money on parking totalling £58m (Table 8). To be fair to some of these councils,
losses were incurred due to capital expenditures while day-to-day operations were profitable.
For others the council may not be seeking to make a profit, but its raises the fundamental
question that is ducked by many authorities; what are their objectives of being in the parking
business?

Table 8: Net parking revenues by local authority, largest losses

Local authority £m
Thurrock UA -6.3
East Hertfordshire -5.4
Tunbridge Wells -5.1
Aylesbury Vale -4.0
Walsall -2.3
Surrey -1.7
Dacorum -1.6
Rotherham -1.3
Bradford -1.3
Stratford-on-Avon -1.2
True costs

It is difficult to assess how cost effective a parking operation really is. Off-street car parks vary
from large multi-stories to small surface sites.

Meanwhile, on-street some councils have to enforce large controlled parking zones, which are
mainly for residential use while others have principally paid- for spaces to worry about.
However, it is noticeable the difference in revenue to cost ratios between similar councils.

That is, for every £1 spent on on-street parking how much revenue do they receive? Table
9 shows revenue to cost ratios for selected London boroughs.

For instance, Kensington & Chelsea raises £2.45 for very £1 spent while Westminster brings
in just £1.80. And while Bromley achieves £1.59, neighbouring Croydon takes 20% less at
£1.22. So, behind the headlines of this £1.3bn parking business, there are many issues for
councils to address to ensure not only efficient management but also financial efficiency.

Table 9: Revenue to cost ratios for on-street parking for selected London boroughs

Local Authority £m
Kensington & Chelsea 2.45
Hammersmith & Fulham 2.07
Wandsworth 2.03
Westminster 1.80
Lewisham 1.64
City of London 1.60
Brent 1.59
Camden 1.57
Bromley 1.56
Barking & Dagenham 1.51
Tower Hamlets 1.40
Newham 1.28
Hackney 1.27
Lambeth 1.23
Croydon 1.22
Islington 1.17
Greenwich 1.16
Southwark 1.04

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