FINANCE bosses at City of York Council have admitted using the reduction in VAT as a source of extra income.

The authority has withheld the cut from residents in some of its services, making nearly £150,000 extra for its coffers.

A spokesperson said today that in many cases – such as on small parking charges – the decision was pragmatic, as changing signs for the sake of a few pence would be time-consuming and costly.

But it has admitted that in other cases, the decision was based on other targets having been missed.

In an internal email seen by The Press, Richard Hartle, head of finance for leisure, culture and children’s services (LCCS) said: “We are already under-achieving significantly on a number of our income streams against budget target, so the extra income will help to offset this in some small way.”

York Labour councillor James Alexander said it was “disgusting” that the council was “soaking up money” that should go to residents.

The council spokeswoman said that, in total, the reduction in the rate of VAT from 17.5 per cent to 15 per cent had benefited the council by £148,000. Of that, £130,000 was from parking.

The spokeswoman said: “In many cases, reducing charges to take account of the VAT reduction would have been impractical, or inefficient.

“For example in respect of car park charges, charges are rounded up to the nearest 10p and the machines themselves will not accept small coin values.”

She said passing on the reduction on a £1 parking charge, for instance, would give an impractical charge of 98p.

In LCCS, she said, the charges could be passed on more easily as cash was handled over the counter. But she said: “It would once again result in a set of charges that looked odd, and costs would have been incurred in making all of the changes.”

The reduction was passed on in many other departments and areas, including environmental services and housing repairs.

Departments at the council decided individually whether to pass on the cut, and the email seen by The Press shows LCCS considered the financial benefits as well as the practical impact of withholding the reduction.

Council leader Andrew Waller said he would examine the policy at leisure centres, but said: “We are not unique in finding that this tinkering with VAT has created more administrative burdens than it was really worth.”

Conservative leader Ian Gillies said the council seemed to have adopted a “common sense approach” and said the extra income from VAT could help keep parking charges down.

• A spokesman for North Yorkshire County Council said the authority was only not passing on the VAT reduction of 2.5 per cent to customers in cases where it was not practically possible to do so, for example, making a photocopy in a library.

“The fee is 10p, so you can’t reduce that by 2.5 per cent because it wouldn’t make any sense,” he said.

Selby District Council revealed it had not passed on any cuts for car-parking or leisure services prices because the amounts involved were so small.

“For example, one hour in a short stay car park is 40p, so a 2.5 per cent reduction from this is only 0.01p,” a spokesman said.

“We have, however, passed on rate reductions on larger payments, for example garage rents and rents on industrial units,” he said.