Research and Analytics

General Finance

Trading Standards Statistics


October 2006
Introduction

Trading standards and consumer protection services are intended to secure and maintain a fair and safe trading environment by ensuring that individuals are protected and that businesses compete on equal terms. They form one of a number of key regulatory services within the environmental services responsibilities of local authorities.

Trading standards perform a range of functions, though there is a degree of variation between different authorities. They enforce over 80 Acts of parliament and have powers of prosecution. They also act as a source of information and advice to the general public. The services are located in county councils, unitary authorities, metropolitan districts and London boroughs in England, and in the unitary authorities in Wales and Scotland.

Key responsibilities include the coverage of fair-trading, trade descriptions, weights and measures, consumer credit, food composition and labelling, dangerous and unsafe goods including storage of petroleum, over laden goods vehicles and animal welfare. Certain functions such as waste regulation and public analysis are included in some, but by no means all authorities. There are also certain aspects of the service, which may be under the control of other departments or external agencies, for example animal health. This will distort comparisons between individual authorities. This is particularly the case in terms of actions taken for services in Scotland if making comparisons with England and Wales. A full definition of the service is provided on page 12.

Recent developments include the formation of the Consumer and Trading Standards Agency (CTSA). This will oversee the work of local authority trading standards departments, setting performance standards and facilitating the sharing of good practice. Additionally, the agency will provide central advice and support to consumers and businesses including a new telephone and internet enquiry service called ‘Consumer Direct’. This forms part of a wider government policy to introduce more targeted ‘risk-based’ inspections across the regulatory services, including trading standards, and more strategic integration between the various agents at national and local level.

The DTI led, retail enforcement initiative is another recent development, exploring new ways of carrying out enforcement inspections. The principle behind the scheme is to reduce the burden on trade by limiting the number of inspections carried out by a range of enforcing authorities. So, if a particular retail premise is liable for inspection by trading standards, the fire service and environmental health, one officer would make an assessment on behalf of all three services. Should the visit suggest that there is a matter which requires a professional from another service; the matter is referred to that service for further action.

More in-depth coverage of the Trading Standards service can be found in the Institute’s Technical Information Services information stream, Environmental Services’ found atwww.tisonline.netand the government’s websitewww.tradingstandards.gov.uk. For information about the wider role of local authority regulatory services, visitwww.lacors.gov.uk.

Survey

Returns were received from 96% of local authorities in England and Wales, and for the fourth time data were collected from Scotland, which gave an overall response rate for Great Britain of 95%.

In order to allow more meaningful comparisons to be made, class and regional totals have been 'grossed' to take account of missing data and non-response. This has been effected by referring to information returned by authorities to last year's Trading Standards Survey. Where a return has not been received from an authority the total will be derived by attributing the same level of increase among the class average for responders, to the information observed by the authority in the previous year. Where this figure is also missing, then the totals and distribution are scaled to the per capita class average.

It should be noted that numbers in the commentary have been rounded individually, so column totals and percentage calculations may not sum exactly.

Spending on Trading Standards Service

In 2006-07 local authorities in Great Britain are expecting to spend a total of £223m on the provision of the Trading Standards Service, with income of £21m anticipated from grants, fees and charges for services such as weights and measures testing. Net expenditure on the service shows a 3.6% increase from £196m spent in 2005-06. Over the same period the RPI has increased by 2.6%. Table 1 compares net expenditure over the past five years (including capital charges).

Table 1: Trading Standards Net Expenditure
Increases for 2006-07 are expected to be highest within London Boroughs at 6.3% and Wales at 5.3%, as compared to expected increases of only 2.0% within Scotland.

The majority of total expenditure is spent on core functions i.e. metrology; quality; safety; fair trading; additional and procedural legislation and civil legislation. Core functions seen in terms of staff costs and third party payments for sampling testing and analyses account for 73% of gross expenditure across Great Britain. The remaining costs comprise transport and premises related costs, support services and capital charges. A full subjective financial breakdown is shown in Summary Tables A and B (pages 10 and 11).

Estimated net expenditure (excluding capital charges) per head of population in 2006-07 shows particular variations between classes and regions as Figures 1 and 2 illustrate:

Figure 1: Net Expenditure (excluding capital charges) per 1,000 Population by Class of Authority, 2006-07 Estimates
Figure 2: Net Expenditure (excluding capital charges) per 1,000 Population by English Region, 2006-07 Estimates
As shown in Figure 1, net expenditure in Metropolitan Districts is lower than in the rest of Great Britain. Around the English Regions, the highest expenditure occurs in the West Midlands, closely followed by the East Midlands. The lowest spending region, Yorkshire and the Humber, spends over £1,500 less on the service per 1,000 head of population than the West Midlands.

Average expenditure within Wales is more than £2,500 higher per 1,000 head of population than the English average. Similarly in Scotland, expenditure is more than £1,250 higher. This may reflect the large rural areas and the relatively low population density. As a regulatory service, Trading Standards obviously depends on a certain level of physical visits and staff time.

Staff

The Trading Standards Service is particularly labour intensive, with 69% of gross costs arising from employee expenses. More than 4,400 FTE staff were expected to be employed by services in Great Britain at 1st April 2006, which represents a decrease of 2.0% over 2005 and the first drop in overall staff levels for six years. Table 2 summarises staff changes over the past five years.

Table 2: Total Staff Numbers at 1 April
Table 2 illustrates that there have been particularly high reductions in staff numbers within the South East (excluding London), South West, Yorkshire & the Humber and North East. This is particularly evident in the South East (excluding London), where numbers have dropped by almost 7%.

There has been a general concern in recent years about the numbers of Trading Standards Officers (TSOs) in Britain. As well as being evident in the overall staffing levels, this is further reflected in Figure 3, which show a drop in both the number of qualified and trainee TSOs since 2002, although numbers of trainee TSOs did increase in 2005.

Figure 3: Qualified and Trainee Trading Standards Officers (FTE)
On a more positive note, the numbers of staff studying for the new DCATS qualification has increased from 66.3 FTE at 1 April 2005 to 463.7 FTE at 1 April 2006. It will be interesting to see how the numbers change for future years.

High Risk Businesses

Table 3 illustrates the proportion of trading businesses in high risk categories as a proportion of all businesses over the last five years.

Table 3: Proportion of Trading Businesses in High Risk Categories at 1 April
An encouraging trend is shown, with the proportion of businesses in high risk categories continuing to decrease. Every class of authority where records are available has seen a fall in each of the last four years.

Table 4 puts into context the relationship between the number of Risk Businesses and the resources in place to meet those demands in terms of staff numbers. The ratios are then ranked in Figure 4.

Table 4: Ratio of Staff to Businesses
Figure 4: Distribution of Risk Businesses to Staff Ratio by Class and Region
The highest number of businesses per FTE staff are found in Greater London, with the lowest in Scotland. Figure 4 illustrates a broad north-south divide, with staff in authorities in the south generally having to account for a higher number of high risk premises per head than in the north. Table 5 summarises workload throughout 2005-06, including actions taken. These additional factors should be taken into account when observing relative performance or cost efficiency.

Table 5: Task and Performance Data 2005-06
Non-Core Services

As mentioned earlier, every trading standards authority in Great Britain will have responsibility for carrying out a number of core services, such as fair trading, weights and measures, consumer safety and metrology. There are, however, a number of additional services that may fall within the responsibility of an authority’s trading standards service. The proportion of authorities including these non-core services within their return was collected for the first time this year and is shown in Table 6.

Table 6: Proportion of Trading Standards Services with Responsibility for Non-Core Services
Whilst the majority of trading standards services have responsibility for agriculture and explosives, very few have included money advice activities within their return. As would be expected, the responsibility differs somewhat by class of authority, with 100% of counties including animal health and welfare as compared to 0% within London. In Wales, 83% of trading services account for road traffic, more than double the British average of 40%. A similar situation exists with regards to petroleum in Scotland, with 97% as compared to an average of 46%.

Implications of FRS17

The full implementation of Financial Reporting Standard FRS17 was brought into being for local authorities by the Code of Practice on Local Authority Accounting in the United Kingdom, A Statement of Recommended Practice (SORP) from 1 April 2003.

The objective of FRS17 is a fair recognition of assets, liabilities and obligations of current and future retirement benefits. Under the previous arrangements the amount of retirement benefit expenditure recognised was the employer's contribution to the pension fund or, in the case of an unfunded scheme, payments to pensioners for whom the employer had direct responsibility. This meant that the revenue account did not reflect the true economic cost of pension benefits earned by employees in the year. The previous treatment only took into account the cash payments that had been made to the pension fund and to retired employees. The cash costs on their own are not a realistic measure of the cost of providing retirement benefits.

FRS17 is a complex accounting standard but its main principle is relatively simple, that an organisation should account for retirement benefits in the year it takes on responsibility for them, even if the actual payment will be many years into the future. As the pension rights earned by employees are recorded at their present value in the year earned, the increase of a scheme's liabilities during the year, due to pension rights earned in past years being one year nearer to payment, is included as interest costs. In the case of funded pension schemes the expected return on the pension assets is offset against the interest cost.

63 authorities are shown as reporting figures on a FRS17 basis for the 2006-07 Estimates, and these authorities have been highlighted with a '§' in the main tables, and are listed below:

Camden, Wandsworth, Hounslow, Merton, Richmond-upon-Thames, Sutton, Bury, Rochdale, Salford, St Helens, Sefton, Barnsley, South Tyneside, Sunderland, Birmingham, Dudley, Solihull, Walsall, Bath & North East Somerset, Blackburn with Darwen, Bracknell Forest, East Riding of Yorkshire, Isle of Wight, Medway, Middlesbrough, North Somerset, Nottingham, Peterborough, Plymouth, Reading, Torbay, West Berkshire, Windsor & Maidenhead, York, Cheshire, Cumbria, Devon, Durham, Essex, Hampshire, Hertfordshire, Lancashire, Lincolnshire, Norfolk, Northamptonshire, Nottinghamshire, West Sussex, Cardiff, Merthyr Tydfil, Newport, Pembrokeshire, Powys, Wrexham, Aberdeen, Aberdeenshire, East Ayrshire, Edinburgh, Glasgow, North Ayrshire, South Ayrshire, Stirling, West Dunbartonshire, West Lothian.

84 authorities are shown as reporting figures on a FRS17 basis for the 2005-06 Actuals, and these authorities have been highlighted with a '#' In the main tables, and are listed below:

Camden, Hammersmith & Fulham, Kensington & Chelsea, Wandsworth, Enfield, Hounslow, Merton, Richmond-Upon-Thames, Bury, Rochdale, Salford, Wigan, Knowsley, St Helens, Sefton, Barnsley, Gateshead, South Tyneside, Sunderland, Birmingham, Coventry, Dudley, Solihull, Walsall, Bath & North East Somerset, Blackburn with Darwen, Blackpool, Bracknell Forest, Bristol, East Riding of Yorkshire, Isle of Wight, Medway, Middlesbrough, North East Lincolnshire, North Somerset, Nottingham, Peterborough, Plymouth, Poole, Telford & Wrekin, Torbay, West Berkshire, Windsor & Maidenhead, York, Cambridgeshire, Cheshire, Cumbria, Derbyshire, Devon, Dorset, Durham, East Sussex, Essex, Hampshire, Hertfordshire, Lancashire, Leicestershire, Lincolnshire, Norfolk, Northamptonshire, Northumberland, Nottinghamshire, Suffolk, West Sussex, Worcestershire, Cardiff, Merthyr Tydfil, Newport, Pembrokeshire, Powys, Torfaen, Wrexham, Aberdeen, Dumfries & Galloway, Dundee, East Ayrshire, East Dunbartonshire, Edinburgh, Glasgow, North Ayrshire, South Lanarkshire, Stirling, West Dunbartonshire, West Lothian.

Table 7 illustrates the impact on trading standards net expenditure of authorities accounting on a FRS17 or pre-FRS17 basis.

Table 7: Impact of FRS17 on Trading Standards Net Expenditure
On average, the difference between figures reported on a FRS17 basis and on a pre FRS17 basis at 2.3% is small. However, care should be taken if comparing data that have been reported on a different method.


October 2006

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