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What Are Penalty Charge Notices?

22 February 2021

Penalty charge notices (PCNs) are typically issued by local authorities to collect unpaid car parking fines. That means that if you don’t pay a parking charge, that then goes through an enforcement process.

This is where the council would conduct research to find out who owns the vehicle, they would then write to you and would offer you the chance to settle the debt and if that isn't achieved than a PCN is issued and that moves to enforcement. 

The enforcement of a PCN then follows the familiar steps of a standard process involving the compliance stage, then taking control of goods via a controlled goods agreement and potentially a second visit and sale of goods as necessary in order to recover the unpaid debt. 

One of the key differences when you enforce a Penalty Charge Notice is you know that a saleable asset exists because you can’t incur a penalty charge notice without a vehicle so you know that this vehicle can be seized for satisfaction of the debt. 

In addition to parking and waiting related offences, PCNs can also be raised for bus lane conventions, red route contraventions, congestion charge offenses or stopping in a yellow box junction.

All of those infractions would generate a penalty charge notice that would go through the same process.

When you receive a Penalty Charge Notice, it will include a description of the offence, vehicle details, the time and date of issue, how to pay and also contact information for the issuing local authority. 

Why are PCNs important for local authorities?

Penalty Charge Notices are really important for local authorities particularly the current climate because they are a key source of revenue for the council.

Whilst it may be frustrating to receive one, penalty charges are a reliable source of income used to fund vital public services including road maintenance, social care, civic amenities, recycling, street cleaning and many other important local services. 

Another reason why Penalty Charge Notices are important is that compared to other sources of revenue such as Council Tax, PCNs have a much higher issuance against transient populations.

This means that revenue can be collected from people coming into the area to use local shopping facilities and public services, who might not be local residents and therefore not contributing to the funding of such services in other ways.

This is an elegant solution from the perspective of the local authority. However, it also presents its own challenges as out-of-area warrants can more of a challenge to enforce as the enforcement agent will may have to travel far outside of the area to visit an address. 

How have collections of PCNs been impacted by the Coronavirus Pandemic?  

Unfortunately, the Coronavirus pandemic has presented significant problems for local authorities across the country.

Councils are coming under pressure to continue providing public services at the same time as collections are falling from council tax, business rates and also PCNs, which have fallen sharply during lockdown periods as people have stayed at home. 

Each time that non-essential shops are closed, this is not only damaging the local economy, but it also means that local authorities are receiving far less income from penalty charges as people are typically not travelling for reasons of shopping or local tourism. 

Consequently, local authorities will also not be receiving the revenue that traditionally flows from the enforcement of penalty charge notices which places pressure on funding for local services at a time when councils are trying to resist spending cuts.

This creates a difficult situation where you are relying ever more on council tax payments because councils are not receiving the revenue they would usually be counting on from local retailers and people shopping in town centres.

This situation will begin to change as lockdown restrictions are gradually eased but at the same time the immediate outlook is uncertain for various reasons.

On the demand side, local retailers and hospitality businesses may struggle to trade profitably as town centre offices remain vacant and the switch to online retail changes consumer behaviour reducing footfall in town centres.

Similarly, the FCA has recently reported that as many as 1 in 4 households are at risk of financial vulnerability prompting concern for council tax collections especially as rates rise in April coinciding with the tapering of coronavirus support schemes.

To restore confidence, there may well will be an effort from local authorities to kick start local communities, encouraging people back into town centres and local shopping facilities as restrictions gradually ease.

One way to do this could be to offer free parking in town centres for a limited time period which would help to get people back into the habit of shopping in person again. Similarly, local tourism campaigns could help attract visitors from surrounding areas.

As confidence returns, the enforcement of PCNs can play an important role helping councils to balance their books by offset the dependence on council tax and business rates, which place a burden on local residents and local businesses respectively.

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