A Dorset council unlawfully hiked parking charges to raise ‘significant’ amounts of money for other services, inspectors have found.

A report from auditors Grant Thornton revealed North Dorset DC broke the Road Traffic Regulation Act 1984 (RTRA) when it increased parking fees in 2011 to fund other work done by the town hall.

Inspectors were summoned to the local authority after a local resident raised concerns about accounting arrangements.

North Dorset had risen charges at half of its 22 off-street car parks, producing a net income of £11k over 2012/13.

However minutes from a cabinet meeting on 5 September 2011 revealed the reason given for increasing fees was ‘to assist with maintaining the council’s budget for the provision of key services’, which Grant Thornton deemed ‘unlawful’.

Inspectors said the sums raised through the parking charge hike were ‘significant’ in the context of the town hall’s annual savings plan.

John Gregory, Director at Grant Thornton UK LLP, said: ‘In investigating an objection to increased parking charges in the 2012/13 accounts we concluded that the RTRA, which gives councils powers to charge for off-street parking, does not allow them to seek to deliberately make a surplus from these charges to fund other services.

‘In our view the council's decision to increase fees in 2012/13 to support other services was therefore unlawful.

‘We acknowledge that councils need to look at all possible ways of balancing the books in this time of austerity, but any income generation must be undertaken within the confines of the law.’

North Dorset has pledged that all fees and charges will in future meet legal requirements.

Council leader, Cllr Deborah Croney, said: ‘This report concluded that the reasons given by the council for setting these charges did not come within the range of reasons allowed by the rules governing car parking. The report also makes some recommendations for how North Dorset District Council should deal with this issue in future.

‘We accept the auditors findings and recommendations and have already addressed the issue.’

Grant Thornton acknowledged North Dorset had done ‘extremely well’ in identifying savings and efficiencies in the face of ongoing reductions in government grants. While balancing its budget for 2015/16, the council expects it needs to find a further £250,000 of savings in 2016/17.