Treasury guidance indicates that charges should normally be set to recover full costs. In the case of statutory services there is an important constitutional principle that public bodies should not levy supplementary taxation, which would be the effect of setting fees deliberately to recover a surplus, unless exceptionally the statute provides for this.
The British Library Act 1972 (“the Act”) charges the British Library Board with managing the British Library as a national library for the United Kingdom and its collection as a national centre for reference, study and bibliographical and other information services. The Act enables the Board to impose charges “for any services provided by the Board or for the loan or use of any item from their collection”, but does not provide for recovery of a surplus. Legal advice is that this means the Board may charge to recover no more than the full costs of those services that it provides under the Act.
However there may be cases where Ministers agree that, as a matter of policy, a statutory service should recover less than its full costs; or services which are not part of, or which in terms of their performance specification go beyond, the statutory duties of the Board and can be charged at market rates.
All British Library services and activities are costed consistently, regardless of the individual pricing policy. Cost is defined as the full costs of resources used in providing the service or undertaking the activity, both direct costs and overheads, and including any costs of using the capital assets in providing the service.
The Board has determined that certain of its activities, undertaken under statute, exhibit the characteristics of “public goods” in economic terms and hence cannot be attributed to any specific individual, company or group, and are regarded as being provided to the nation as a whole. The full costs of these activities are not apportioned as overhead to the service categories identified below.
Each of the Library’s services is allocated to one of the categories by pricing/cost recovery objective listed below:
Ai - Uncharged services, wholly or partially supported by Grant-in-aid
Aii - Charged services, with partial support from Grant-in-aid
B - Services charged at full cost, i.e. including overheads
Non-Statutory (or Ancillary) Services
C - Services charged at market rates, above full costs, to maximise their contribution to general overheads
A comprehensive list of Library services, indicating the pricing category to which each belongs, is attached as a schedule to this document.
Statutory services are those core services which, in its opinion, the Board cannot fetter or devolve its statutory duty to provide, under the British Library Act 1972, to manage the British Library as a national library for the United Kingdom and its collection as a national centre for reference, study and bibliographical and other information services.
Category Ai: Uncharged services, wholly or partially supported by Grant-in-aid
These statutory services are provided to identifiable individuals, companies or groups, but the Board believes, and Ministers agree, that they should as a matter of policy be provided free of charge. In economic terms, these exhibit the characteristics of “merit or social goods”, access to which would be inhibited contrary to the wider public interest by the imposition of a charge.
Category Aii: Charged services, with partial support from Grant-in-aid
These statutory services are provided on a charged basis to identifiable individuals, companies or groups but they concurrently support the national good. The Board has concluded that for these services the full cost recovery target is demonstrably unattainable if public service objectives are to be achieved, and that the discontinuation of the service on financial grounds alone would not be in the public interest. As a matter of policy, the Board believes, and Ministers agree, that these services may recover less than their full costs.
The Board recognises that the level of Grant-in-aid allocated to the British Library, and thus the extent to which statutory services and activities are in practice supported from Grant-in-aid, will be determined by the political and economic circumstances of the time. The Board therefore seeks to maximise its resources from alternative sources of funding such as sponsorship and donations, and hence to supplement or offset support from the public purse.
Category B: Services charged at full cost, i.e. including overheads
These statutory services are provided on a charged basis to identifiable individuals, companies or groups with the target of achieving full cost recovery.
Non-Statutory (Ancillary) Services
Non-statutory (or ancillary) services are those that the Board elects to carry out as incidental or conducive to its core functions; these include the provision of premium or value-added services (i.e. services carried out at an enhanced level of performance compared with standard levels of statutory provision), and the provision of strictly incidental services (e.g. room hire, catering etc).
Category C: Services charged at market rates, above full costs, to maximise their contribution to general overheads
Prices for non-statutory services are set at market rates, taking into account price elasticity of demand, other suppliers’ prices etc, with the objective of maximising contribution to the Library’s general overheads.
Whilst these categories indicate the level of cost recovery which each service will normally be expected to achieve, in practice the Board recognises that a service may, as a result of its position in the product life cycle, on the basis of its business plan, or as a result of other temporary circumstances, fail to achieve its cost recovery objective. In this regard the pricing category provides a benchmark against which the actual performance of a service will be reviewed, monitored and controlled on a regular basis over the longer term. Continuing variance from financial objectives will require management action and ultimately it may, under those circumstances, be necessary to discontinue services in that position.
The British Library Board