News story

Grant Shapps to abolish century-old payment rules for parish councils

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Parish councils to be freed from rules which force them to use out-dated payment methods such as cheques.

Local Government Minister, Grant Shapps, has today (9 October 2010) unveiled plans to free England’s 9,000 parish councils from archaic rules which prevent them from using modern banking methods and making fast and easy payments to the small businesses they employ.

Parish councils spend over £340 million each year. But under laws introduced in 1894, even the smallest payments must be signed off by at 2 members of the council - creating a time-consuming process and leading them to use cheques instead of quick electronic transfers. In contrast, the Payments Council reports that cheque usage fell by £21.5 billion in the last year alone.

So the minister has confirmed that from 2011, parish councils will be given the freedom to use modern banking methods - in time for the abolition of cheques in 8 years’ time. These changes are set to benefit the many private companies that parish councils employ, as they should now be paid faster.

The National Association of Local Councils and the Society of Local Council Clerks will now work together to put important safeguards in place so all payments made by parish councils are legitimate and there is no misuse of the system.

Local Government Minister Grant Shapps said:

“Parish councils have been around for over 100 years, but it doesn’t mean they should be bound by outdated rules which make it harder for them to serve their local community.

“It’s time to bring parish councils into the 21st Century so they can get on and do their jobs in a faster and simpler way.

“This is about removing the barriers so that local people can deliver the services that their communities care about, but it could also help hard pressed contractors who rely on quick payments to survive.”

The move has also been supported by the National Association of Local Councils, whose Chairman Councillor Michael Chater said:

“I am delighted that the government is making it easier for local councils to get on and do their job through modernising the rules on the way they can make payments.

“This much needed reform is very welcome and underlines the important role local councils play in their communities supporting local people and local businesses.

“This initiative will give a much welcome boost to local councils to help them operate more efficiently and effectively and enable them to continue to play their role at the heart of localism and Big Society.”