Scottish Local Government Financial Statistics 2014-15

1 Local Government Revenue Expenditure and Funding

1.1 Total Revenue Expenditure and Funding

Note that Revenue Contributions to Capital (RCC) are now counted under statutory adjustments while previous publications will have counted RCC as service expenditure. The re-categorisation of RCC is more in line with how it is treated in authorities accounts and how readers will interpret the statistics.

Total Gross Revenue Expenditure on services by local government in Scotland in 2014-15 was £15.2 billion. Of this, £0.66 billion of expenditure was for the provision of housing through the Housing Revenue Account (HRA).

Table 1.1 summarises revenue income, expenditure, funding and balances for 2014-15. The largest single element of gross expenditure is operating costs (which includes property costs, supplies and services costs, transport and payments to agencies and other bodies) which account for £6.7 billion of expenditure. The second largest element was employee costs which account for £6.2 billion.

Transfer payments are those made to individuals for which no goods or services are received in return by the local authority. The majority of transfer payments are housing benefits which make up £1.8 billion of the total of £2.1 billion. An adjustment for Inter Account and Inter Authority Transfers is made to the gross expenditure to take account of transfers between local authorities and between different services within an authority and ensure that expenditure is not counted twice.

Net Revenue Expenditure on services, which is gross expenditure on services minus income for services, was £10.04 billion. Of this, £10.5 billion is in the General Fund, while Net Revenue Expenditure on Services for the HRA was -£0.46 billion, i.e. service income was greater than service expenditure. Note that the HRA has high levels of Revenue Contributions to Capital, statutory repayment of debt and interest payments, which are not counted as service expenditure.

After taking into account the surplus or deficit from Significant Trading Operations, Finance Costs, Statutory Adjustments and General Funding, authorities had an overall surplus of £69.4 million. This surplus is contributed to the reserves. After transfers to other reserves (e.g. repairs and renewals fund, insurance fund), General Fund reserves increased by £47.6 million to a total of £1.137 billion at the 31^st March 2015 and HRA reserves increased by £13.7 million to £129.8 million.

HRA

The Housing Revenue Account (HRA) records income and expenditure relating to local authority housing stock. Whilst most other local authority services are funded through a combination of non-domestic rates, council tax income and Government grants, the HRA is a ring-fenced account, and expenditure is funded mainly by housing rents with some Government grant.

Trading Services

Trading Service Accounts cover the finances of local authority operated services that are commercial in nature. They are financed by the charges made by a local authority to the recipients of the services they provide.

The main trading services are local authority transport (buses, ferries and other Local Authority transport undertakings), fishery harbours and markets and other trading services (including airports, other harbours and bridges).

Table 1.1 - Revenue Expenditure, Income and Balances, 2014-15

£thousands

	General Fund Services1	Housing Revenue Account	Total
EXPENDITURE ON SERVICES
Employee Costs	6,077,469	135,216	6,212,685
Operating Costs	6,225,530	472,644	6,698,174
Transfer Payments	2,103,011	3,849	2,106,860
Support Services	770,767	74,158	844,925
Adjustment for Inter Account and Inter Authority Transfers	(603,996)	(30,036)	(634,032)
Gross Expenditure on Services	14,572,781	655,831	15,228,612
INCOME SPECIFIC TO SERVICES
Grants from Government Departments other than the Scottish Government	(1,920,813)	(2,386)	(1,923,199)
Scottish Government Ring-Fenced Revenue Grants	(4,296)	0	(4,296)
Scottish Government General Capital Grant used to fund grants to third parties	(55,929)	(813)	(56,742)
Other Grants Reimbursements and Contributions	(828,794)	(5,350)	(834,144)
Customer and Client Receipts	(1,258,896)	(1,112,210)	(2,371,106)
Total Income for Services	(4,068,728)	(1,120,759)	(5,189,487)
Net Revenue Expenditure on Services	10,504,053	(464,928)	10,039,125
(Surplus) / Deficit from Significant Trading Operations	(31,124)	0	(31,124)
FINANCING AND INVESTMENT
Interest payable and similar charges	684,680	137,749	822,429
Interest receivable and similar income	(64,397)	(2,175)	(66,572)
Finance Costs (net of investment income)	620,283	135,574	755,857
STATUTORY ADJUSTMENTS
Revenue Contribution to Capital Expenditure	93,198	191,161	284,359
Statutory repayment of debt	576,145	114,436	690,581
Other Statutory Adjustments	99,489	15,315	114,804
Total Statutory Adjustments	768,832	320,912	1,089,744
Total Amount to be Funded	11,862,044	(8,442)	11,853,602
GENERAL FUNDING
General Revenue Funding	(7,166,590)		(7,166,590)
NDRI Distributable Amount	(2,649,500)		(2,649,500)
Net income from Council Tax after Residual Adjustments	(2,022,214)		(2,022,214)
Other	(76,055)	(8,667)	(84,722)
Total Funding	(11,914,359)	(8,667)	(11,923,026)
(Surplus) or Deficit for the year	(52,315)	(17,109)	(69,424)
Reserves 1 April	(1,089,257)	(116,106)	(1,205,363)
(Surplus) or Deficit for the year	(52,315)	(17,109)	(69,424)
Transfers between General Fund and HRA	(879)	879	0
Transfers between Other Reserves	5,590	2,547	8,137
Change in Reserves	(47,604)	(13,683)	(61,287)
Reserves Balance Carried Forward 31st March	(1,136,861)	(129,789)	(1,266,650)

1. Includes trading services and non-HRA housing. For a breakdown of expenditure in these areas, refer to Table 1.2 and Annexes A & B

1.2 General Fund Revenue Expenditure and Income

Chart 1.1 provides a breakdown of General Fund net revenue expenditure by service. Education and social work account for almost three quarters of General Fund net revenue expenditure. The largest is Education with 44% of the total and net revenue expenditure of £4.61 billion. Of this, £1.78 billion was spent on primary education and £1.85 billion on secondary education with the remainder spent on pre-primary, special and community education. Excluding Police & Fire, Education's share of total net expenditure has stayed the same at around 44% over the six years to 2014-15.

Social work is the next largest service with net revenue expenditure of £3.11 billion (30% of total net expenditure). Data on social work expenditure is collected on the basis of client groups. Of the client groups identified in the Local Financial Returns (LFRs), older persons has the highest expenditure of £1.35 billion followed by children and families with £0.86 billion and adults with learning disabilities with £0.51 billion.

A full breakdown of expenditure by sub-service is available in Annex A.

Chart 1.1: General Fund Net Revenue Expenditure on Services: 2014-15

Table 1.2 breaks down revenue expenditure and income by service. The single largest income source shown in Table 1.2 are the grants received by local authorities from the Department of Work and Pensions to fund housing benefits. These grants were worth £1.66 billion in 2014-15 and are shown as part of income in non-HRA housing.

Another significant source of income is customer and client receipts (including all charges to service users) which raised £1.26 billion across in the General Fund. Social work services also receive income from the NHS to provide services, the value of these payments in 2014-15 were £0.418 billion, up from £0.404 billion in 2013-14. A full breakdown of income by service can be found in Annex B.

Table 1.2 - Revenue Expenditure and Income, 2014-15

£thousands

	Gross Expenditure	Income	Net Expenditure	% of General Fund Services
Education	4,817,049	(205,151)	4,611,898	43.9%
Cultural and Related Services	737,186	(93,744)	643,442	6.1%
Social Work	3,944,344	(834,595)	3,109,749	29.6%
Roads and Transport	657,338	(237,743)	419,595	4.0%
Environmental Services	789,949	(124,300)	665,649	6.3%
Planning & Economic Development	461,580	(183,364)	278,216	2.6%
Central Services	657,019	(218,119)	438,900	4.2%
Non-HRA Housing	2,435,724	(2,093,723)	342,001	3.3%
Trading Services	72,592	(77,989)	(5,397)	-0.1%
General Fund Cost of Service1	14,572,781	(4,068,728)	10,504,053	100.0%
Housing Revenue Account	655,831	(1,120,759)	(464,928)
General Fund + HRA Cost of Service1	15,228,612	(5,189,487)	10,039,125

Source: Local Financial Returns - LFR 00

Table 1.3 - Net Revenue Expenditure by Service, 2010-11 to 2014-15

£millions

	2010-11	2011-12	2012-13	2013-14	2014-15
Education	4,648	4,538	4,571	4,578	4,612
Cultural & Related Services	635	613	609	614	643
Social Work	2,857	2,871	2,959	3,031	3,110
Roads & Transport	486	460	457	436	420
Environmental Services	658	646	644	659	666
Planning & Development Services	308	289	279	279	278
Central Services 1, 2	546	428	386	484	439
Non-HRA Housing	391	323	306	321	342
Trading Services	2	(13)	(4)	(2)	(5)
General Fund Net Expenditure (excluding Police & Fire 2)	10,531	10,156	10,208	10,400	10,504
Housing Revenue Account	(365)	(389)	(425)	(439)	(465)
General Fund + HRA Net Revenue Expenditure (excluding Police & Fire 2)	10,166	9,767	9,783	9,961	10,039
Police 1	580	516	517
Fire 1	310	280	291
Central Services (Police & Fire) 1, 2	7	(22)	(50)
General Fund + HRA Net Revenue Expenditure	11,064	10,540	10,540	9,961	10,039

1. Following the Police and Fire Reform (Scotland) Act 2012 figures for 2013-14 may not be comparable with previous years. See section 5.2 for details.

2. Police and fire board net expenditure in central services has been separated from overall General Fund expenditure to allow for time series comparison.

Source: Local Financial Returns - LFR 00

Chart 1.2 shows net revenue expenditure on services per capita by local authority area. This includes expenditure by all local authority bodies in an area (i.e. including expenditure by councils, valuation boards, bridge authorities and regional transport partnerships). The chart shows that on average in Scotland local government spent £1,877 per person in 2014-15, up slightly from £1,870 in 2013-14.

Chart 1.2 - Net Revenue Expenditure on Services per Capita by Local Authority, 2014-15 (£)

Source: Local Financial Returns - LFR 00 and NRS Mid-Year Population Estimates (2014)

1.3 Revenue Expenditure Financing

Revenue expenditure by local authorities is funded by three main sources:

• Grants from Central Government
• Local Taxation (Council Tax and Non Domestic Rates)
• Sales, fees and charges for services (Customer and Client Receipts)

The main source of revenue income for local government is General Revenue Funding, (formerly referred to as the Revenue Support Grant). General Revenue Funding (GRF) is paid by the Scottish Government in support of local authorities' general net revenue expenditure.

Local taxation contributed almost £4.7 billion to the funding of local government in 2014-15 and further information on these taxes is set out in the following sections. General Revenue Funding and local taxation combined together are referred to as "revenue funding". Other income is mostly composed of grants and subsidies received from central government and other parts of the public sector.

Authorities can use Scottish Government Capital Grant to fund grants to third parties for capital projects. These grants can be funded from capital resources, but the asset that they create does not belong to the authority and the expenditure is therefore treated as revenue expenditure in the authorities accounts.

Table 1.4 - Revenue Income by Source, 2010-11 to 2014-15

£millions

	2010-11	2011-12	2012-13	2013-14	2014-15
General Revenue Grant1	8,149	7,790	7,782	7,225	7,167
NDRI Distributable Amount	2,068	2,203	2,297	2,436	2,650
Council Tax2	2,298	2,301	2,319	1,978	2,022
Customer and Client Receipts	2,172	2,287	2,330	2,317	2,371
SG Capital Grant used to fund grants to third parties	68	224	131	125	57
Other Income	3,317	3,382	3,461	2,708	2,846
Total revenue income	18,073	18,188	18,320	16,790	17,113

1. Figures for 2013-14 and later are not comparable with prior years due to changes to the way that Police and Fire are funded following the formation of Police Scotland and the Scottish Fire and Rescue Service. See section 5.2 for more details.

2. Pre-2013-14 Council Tax figures are not comparable with later years as Council Tax Reduction (CTR) was introduced from 1 April 2013 to replace Council Tax Benefit (CTB), which was abolished by the UK Government as part of its welfare reform programme. Due to differences in the administration of the two schemes, Council Tax figures before 2013-14 include CTB, whereas figures from 2013-14 onwards do not include CTR.

Source: Local Financial Returns (LFRs): LFR 00

Chart 1.3 - Revenue Income by Source, 2010-11 to 2014-15 (£ millions)

1. Figures for 2013-14 and later are not comparable with prior years due to changes to the way that Police and Fire are funded following the formation of Police Scotland and the Scottish Fire and Rescue Service. See section 5.2 for more details.

2. Pre-2013-14 Council Tax figures are not comparable with later years as Council Tax Reduction (CTR) was introduced from 1 April 2013 to replace Council Tax Benefit (CTB), which was abolished by the UK Government as part of its welfare reform programme. Due to differences in the administration of the two schemes, Council Tax figures before 2013-14 include CTB, whereas figures from 2013-14 onwards do not include CTR.

Source: Local Financial Returns (LFRs): LFR 00

1.4 Council Tax

In 2014-15, Council Tax bills were issued to around 2.4 million dwellings in Scotland. The amounts collected in 2014-15 raised a total of around £2 billion across all local authorities in Scotland.

Council Tax was introduced in Scotland on the 1^st April 1993 to replace the Community Charge system. It is a tax system based on dwellings and is used as a source of funding in addition to that received from other sources (such as General Revenue Funding, Central Government Grants, ring-fenced revenue grants and other locally raised income).

There are three factors that determine the amount of Council Tax that a dwelling is liable for. These are:

1. The market value of the dwelling as at the 1^st April 1991. Each dwelling is placed into one of eight bands from A to H, with Band A dwellings liable for the lowest rates of Council Tax and Band H attracting the highest.

2. The Band D rate which is set by the local authority, with other bands calculated as a ratio to Band D.

3. A range of exemptions, discounts and reductions that are available in certain circumstances, or in some cases an increase in Council Tax due to the application of a levy.

The valuation range and ratio for each band is given in Table 1.5.

Table 1.5 - Council Tax data by band

	Valuation band ranges as at 1st April 1991	Ratio to Band D	No. of chargeable dwellings as at September 2015	Proportion of chargeable dwellings
Band A	Under £27,000	6/9	506,424	21%
Band B	£27,001 to £35,000	7/9	569,737	23%
Band C	£35,001 to £45,000	8/9	394,252	16%
Band D	£45,001 to £58,000	9/9	324,461	13%
Band E	£58,001 to £80,000	11/9	326,438	13%
Band F	£80,001 to £106,000	13/9	186,282	8%
Band G	£106,001 to £212,000	15/9	120,179	5%
Band H	Over £212,000	18/9	12,745	1%
Total			2,440,518	100%

Collection and Potential Yield of Council Tax

Local authorities are responsible for billing and collecting the correct amounts of Council Tax. Immediately before the start of each financial year, local authorities issue Council Tax bills to dwellings. Each bill is calculated by applying the appropriate band rate for the local authority, then applying any discounts, exemptions, reductions or increases, further details of these are provided in Tables 1.10 and 1.11. Chart 1.4 illustrates the breakdown of the gross Council Tax potential yield into Council Tax billed and the amounts not billed due to Council Tax Reduction (CTR), discounts and exemptions.

Chart 1.4 - Council Tax Potential Yield (£ millions), 2014-15

Local authorities collect Council Tax relating to these bills over the year, and also continue to collect late amounts from previous billing years. The provisional in-year Council Tax collection rate for 2014-15 was 95.4 per cent and the total amount collected for Scotland as a whole (after CTR) was £2.022 billion, including late amounts for previous years. Table 1.6 shows the amount of Council Tax collected by each local authority in 2014-15. More information about bills issued in 2014-15 and the provisional amounts collected are available in the statistics publication 'Council Tax Collection Statistics, 2014-15' which is available at:

www.gov.scot/Topics/Browse/Local-Government-Finance/PubScottishCounTaxStats

Table 1.6 - Council Tax income after CTR by local authority, 2014-15 ^a

Local Authority	Net Council Tax income (£'000s)
Aberdeen City	103,563
Aberdeenshire	119,270
Angus	42,217
Argyll & Bute	43,371
Clackmannanshire	18,341
Dumfries & Galloway	55,644
Dundee City	47,601
East Ayrshire	40,276
East Dunbartonshire	49,912
East Lothian	43,476
East Renfrewshire	41,477
Edinburgh, City of	212,604
Eilean Siar	9,239
Falkirk	53,316
Fife	134,360
Glasgow City	181,428
Highland	101,019
Inverclyde	27,116
Midlothian	34,430
Moray	35,053
North Ayrshire	46,573
North Lanarkshire	100,024
Orkney Islands	7,749
Perth & Kinross	67,578
Renfrewshire	64,494
Scottish Borders	46,149
Shetland Islands	8,351
South Ayrshire	45,226
South Lanarkshire	110,556
Stirling	40,902
West Dunbartonshire	30,783
West Lothian	60,116
Scotland	2,022,214

a Figures include Community Charge and relate to income collected in financial year 2014-15, which can include amounts that were billed in previous years.

Source: Local Financial Returns, 2014-15

Chargeable Dwellings

Table 1.7 shows the number of dwellings in Scotland for each September from 2010 to 2015. There were a total of 2.557 million dwellings in Scotland in 2015, of which 117,000 dwellings were exempt for Council Tax purposes. This gave 2.441 million chargeable dwellings in 2015: an increase of around 2.7 per cent (around 63,000 dwellings) since 2010.

Table 1.7 - Total number of dwellings in Scotland, 2010 to 2015

	Total Dwellings	Exempt Dwellings	Chargeable Dwellings
2010	2,488,928	111,454	2,377,474
2011	2,500,769	111,740	2,389,029
2012	2,515,042	113,173	2,401,869
2013	2,526,703	116,372	2,410,331
2014	2,540,330	112,525	2,427,805
2015	2,557,365	116,847	2,440,518

Source: CTAXBASE Return

Chart 1.5 shows the distribution of chargeable dwellings across Council Tax bands in each local authority. Across the whole of Scotland, three-fifths of all chargeable dwellings are in Bands A to C. The distribution varies across local authorities due to variations in property market values. Eilean Siar has the largest proportion of dwellings in Bands A to C (78 per cent), whereas East Renfrewshire has the lowest proportion in Bands A to C (27 per cent).

The three local authorities with the highest number of chargeable dwellings were Glasgow, Edinburgh and Fife, with over a quarter of the chargeable dwellings in Scotland between them. Further data on the number of chargeable dwellings by local authority and Council Tax band can be found in the supplementary tables.

Chart 1.5 - Percentage of chargeable dwellings by Council Tax band for each local authority as at September 2015

Council Tax Rates & Average Bills

Each local authority determines their own Band D rate of Council Tax as part of their budget setting process. The rate for other bands is then calculated as a set ratio of the Band D rate, these ratios can be found in Table 1.5. As a result, each local authority has different Council Tax rates. The Band D Council Tax levels for each local authority are shown in Chart 1.6, and range from £1,024 in Eilean Siar to £1,230 in Aberdeen City.

Chart 1.6 - Band D Council Tax rate by local authority, 2014-15 (£)

Since 2007-08, Scottish Government and local government have worked in partnership to freeze Council Tax rates each year. The one exception is Stirling where the council took the decision to reduce the Band D rate from £1,223 in 2007-08 to £1,209 in 2008-09, and subsequently to £1,197 in 2012-13. The Council Tax freeze has caused the Scotland average Band D Council Tax rate to remain steady at £1,149 since 2007-08 - a fall in real terms.

Table 1.8 shows how the average Band D Council Tax bill for Scotland has changed each year from 2010-11. The average Council Tax bill per dwelling in 2014-15 was £989. This differs from the average Band D rate due to the distribution of dwellings across Council Tax bands, as can be seen in Table 1.5 and Chart 1.5, and the application of discounts.

Table 1.8 - Average Council Tax bills, 2010-11 to 2014-15

	Average1 CT bill per dwelling
	Before CTB/CTR	After CTB/CTR
2010-11	£985	£827
2011-12	£984	£826
2012-13	£985	£830
2013-14	£988	£838
2014-15	£989	£846

Source: CTAS, CTAXBASE Returns and Local Financial Returns (LFR 12)

Council Tax Reduction (CTR)

Scotland's CTR scheme was introduced in 2013 following localisation of Council Tax support and the UK Government's abolition of the Council Tax Benefit (CTB). The CTR scheme reduces the Council Tax liability of vulnerable people in Scotland, including people on low incomes, pensioners and lone parents. The impact of CTB/CTR on the average Council Tax bill is also shown in Table 1.8. After taking these reductions in liability into account, the average bill per dwelling for 2014-15 reduced by £143 from £989 to £846.

Scotland's CTR scheme is funded by the UK Government, Scottish Government and local government. In 2014-15, CTR funding from government totaled £343 million (£320 million from UK Government and £23 million from Scottish Government). Local authorities agreed to contribute up to £17 million additional funding from their own budgets to the cost of the scheme, as part of the joint commitment between Scottish Government and local government to mitigate the 10% funding cut by the UK Government.

The amounts distributed to each local authority and the final total costs are shown in Table 1.9. The total cost of the CTR scheme across Scotland in 2014-15 was around £344 million. This figure is under £1 million more than the £343 million funding provided by the UK Government and Scottish Government, and just over £16 million less than the £360 million total budget (including the £17 million from local authorities).

Table 1.9 - CTR funding and final liability for local authorities, 2014-15

Local Authority	UKG and SG funding (£'000s)	Final total reduction in liability (£'000s)
Aberdeen City	£9,485	£9,180
Aberdeenshire	£7,383	£7,207
Angus	£5,222	£5,259
Argyll & Bute	£5,520	£5,560
Clackmannanshire	£3,453	£3,532
Dumfries & Galloway	£8,597	£8,636
Dundee City	£12,267	£12,169
East Ayrshire	£9,589	£9,434
East Dunbartonshire	£4,546	£4,596
East Lothian	£5,245	£5,420
East Renfrewshire	£3,718	£3,782
Edinburgh, City of	£26,649	£26,471
Eilean Siar	£1,545	£1,467
Falkirk	£8,328	£8,191
Fife	£20,486	£20,822
Glasgow City	£68,090	£68,629
Highland	£12,147	£12,033
Inverclyde	£6,743	£6,716
Midlothian	£5,215	£5,127
Moray	£3,790	£3,729
North Ayrshire	£11,291	£11,511
North Lanarkshire	£24,485	£24,441
Orkney Islands	£739	£755
Perth & Kinross	£6,617	£6,535
Renfrewshire	£13,151	£13,187
Scottish Borders	£5,580	£5,517
Shetland Islands	£658	£637
South Ayrshire	£8,416	£8,559
South Lanarkshire	£20,511	£21,052
Stirling	£4,355	£4,383
West Dunbartonshire	£9,320	£9,391
West Lothian	£9,859	£9,823
Scotland	£343,000	£343,751

Source: Local Financial Returns, 2014-15

Changes to Council Tax Liabilities

Not all dwellings are liable to pay the full rate of Council Tax; discounts, exemptions and increased rates can be charged for certain types of dwellings, and the CTR scheme is available to support households on relatively low incomes in meeting their Council Tax liabilities. Table 1.10 summarises the range of discounts, exemptions and reductions available and the change in liability that applies to each type. Please note that, in some cases, more than one type of discount, exemption or reduction may apply. The examples given in Table 1.10 are typical but not exhaustive. For a full explanation of Council Tax discounts and exemptions, go to:

www.gov.scot/Topics/Government/local-government/17999/counciltax/Secondhomes.

Table 1.10 - Council Tax discounts, exemptions, reductions and increases

Support	Typical dwellings that are exempt	Change in liability
Discounts
Single Person Discount	Occupied by only one CT liable adult	25%
Second Homes	Occupied by those living in tied accommodation (e.g. farm workers, members of the clergy), when they are contributing to the local economy.	10 - 50% 1
Long Term Empty (6 - 12 months)	Empty and unfurnished for > 6 months.	50%
Long Term Empty (> 12 months)	Empty and unfurnished for > 12 months.	10 - 50% or an increase 1
Occupied entirely by disregarded adults	Dwellings occupied entirely by disregarded adults	50%
Exemptions
Occupied	Persons who are exempt from Council Tax	100%
Unoccupied	Empty for < 6 months; cannot be occupied because in need of repair; residents have moved out due to care needs.	100%
Reductions
Disability Reduction	Homes that have been adapted for a disabled person.	One CT band 2
CTR - Passported	In receipt of Pension Credit (Guarantee), JSA (income based), ESA (income related) or Income Support.	100%
CTR - Not passported	Low income household	Up to 100% 3

1 The actual change in liability depends on local authority policy. In 2013-14, local authorities gained the discretionary power to remove the empty properties discount or set a Council Tax increase of 100% on properties which have been empty for more than 12 months.

2 For example, an eligible Band D rate property would be charged Band C rates.

3 The exact change in liability is dependent on a means test.

Table 1.11 shows the number of dwellings eligible for Council Tax discounts and reductions. Of the 2.4 million chargeable dwellings in Scotland, around 1 million were eligible for a discount in 2015. The most common type of discount was the Single Person Discount, with around two-fifths of chargeable dwellings entitled to the discount in 2015. The CTR scheme supports over half a million dwellings, or around one-fifth of chargeable dwellings, in meeting their Council Tax liability.

Around 64,000 dwellings are classified as second homes or long term empty properties. Further statistics on these are available at: www.gov.scot/Topics/Statistics/Browse/Housing-Regeneration/HSfS/LTemptysecondhomes.

Table 1.11 - Number of dwellings¹ in receipt of Council Tax discounts and reductions as at September

Type of Support	2010	2011	2012	2013	2014	2015
All chargeable dwellings	2,377,474	2,389,029	2,401,869	2,410,331	2,427,805	2,440,518
Disability reduction	14,015	13,999	13,994	13,791	13,736	13,505
Single Person Discount	941,915	945,515	948,208	952,251	953,612	955,505
Second Homes 2	38,002	39,250	40,599	35,734	27,879	27,317
Long Term Empty (empty > 6 months)	24,598	25,356	25,454	27,327	31,884	36,419
Occupied entirely by disregarded adults	1,887	1,910	1,809	1,579	2,802	1,378
Dwellings not subject to a discount	1,371,072	1,376,998	1,385,799	1,393,440	1,411,628	1,419,899
CTR/CTB 3	563,720	565,730	560,880	548,070	533,980	512,340

1 Some dwellings may be eligible for more than one type of support, in these cases the dwelling will be counted under each type of support it is eligible for.

2 It is not possible for some councils to separately identify second homes and long term empty dwellings. For these councils, the total number of second homes and long term empty dwellings have been recorded under second homes

3 CTB figures from 2010 to 2012 were published by DWP and are available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/229795/hbctb_release_may13_revised.xls

Source: CTAXBASE Return, CTR Extract and DWP CTB figures

1.5 Non-Domestic Rates

Non-Domestic Rates (NDR) is a property tax paid by the owner/occupier or tenant of a non-domestic property.

In 2014-15, the income raised from NDR was £2.51 billion.

The principles of non-domestic rates were established in the Lands Valuation (Scotland) Act of 1854. This act also provided for the appointment of the Scottish Assessors, who are responsible for determining the classification and valuation of non-domestic and domestic properties, and are independent of both the Scottish Government and local authorities. A non-domestic property is an individual property used for non-domestic purposes. Examples include business premises and third and public sector properties.

The value given to a property for NDR purposes is called its rateable value (RV). The RV of a property is a legally defined valuation provided by the Assessor, broadly based on the rental values the property could achieve. As such it is not necessarily a reflection of the profitability, turnover or output of the business. It is established at revaluation where the Scottish Assessors assess rateable values for all non-domestic properties in Scotland, taking account of the type and nature of the property. All non-domestic properties and their corresponding RVs are listed on the Valuation Roll, which is maintained by the Scottish Assessors.

NDR bills are calculated using the rateable value (RV) of non-domestic properties, multiplied by a poundage set nationally by Scottish Ministers, less any relief or exemption entitlement.

For properties with a rateable value greater than £35,000, the Large Business Supplement (LBS) applies in addition to the poundage (the poundage is effectively increased slightly by adding the LBS).

Table 1.12 shows the composition of properties (and associated RV) on the Valuation Roll by property type. As at 1^st April 2015, there were 223,046 properties with a total RV of £6.7 billion. Shops were the most prevalent type of property on the valuation roll, making up nearly a quarter (24%) of the number of properties and RV on the roll. Industrial subjects and offices are the next two largest categories in terms of numbers and RV. Together, these three categories account for 63% of properties on the valuation roll, and 58% of the RV.

Table 1.12 - Non-Domestic Rates Properties by Classification (as at 1 April 2015)

	Number of properties	Rateable value	% of Properties on Valuation Roll	% of RV on Valuation Roll
CATEGORY	1st April 2015	1st April 2015	1st April 2015	1st April 2015
Advertising	1,988	7,929,319	1%	0%
Care Facilities	3,014	106,302,379	1%	2%
Communications	370	22,934,215	0%	0%
Cultural	1,391	46,584,635	1%	1%
Education and Training	3,724	505,366,410	2%	8%
Garages and Petrol Stations	4,311	64,856,415	2%	1%
Health and Medical	3,178	203,129,890	1%	3%
Hotels	5,115	189,643,144	2%	3%
Industrial Subjects	47,265	1,144,301,891	21%	17%
Leisure, Entertainment, Caravans etc.	21,484	239,558,468	10%	4%
Offices	39,771	1,135,022,108	18%	17%
Other	13,259	95,223,242	6%	1%
Petrochemical	141	106,158,030	0%	2%
Public Houses	3,775	109,534,735	2%	2%
Public Service Subjects	9,882	321,507,583	4%	5%
Quarries, Mines, etc.	689	22,086,110	0%	0%
Religious	6,235	55,208,967	3%	1%
Shops	53,282	1,617,747,045	24%	24%
Sporting Subjects	3,377	17,919,045	2%	0%
Statutory Undertaking	795	707,691,454	0%	11%
TOTAL ALL NON-DOMESTIC PROPERTIES	223,046	6,718,705,085	100%	100%

Source: Scottish Assessors Valuation Roll, 1st April 2015

Table 1.13 provides a breakdown of properties on the Valuation Roll by local authority and RV band.

In terms of the Small Business Bonus Scheme and the application of the Large Business Supplement, £18,000 and £35,000 represent the rateable value thresholds for small and large businesses respectively.

Around 78% of all properties (174,201 properties) have a Rateable Value less than or equal to £18,000.

Table 1.13 - Non-Domestic Rates Subjects by Local Authority (as at 1 April 2015)¹

Local Authority	Rateable Value Band			Total Non-Domestic Properties
	<= £18,000	£18,001 to £35,000	> £35,000
Scotland	174,201	19,638	29,207	223,046
Aberdeen City	5,006	1,119	2,284	8,409
Aberdeenshire	9,914	799	1,080	11,793
Angus	4,031	349	401	4,781
Argyll & Bute	7,664	344	347	8,355
Clackmannanshire	1,297	121	147	1,565
Dumfries & Galloway	8,220	473	559	9,252
Dundee City	4,145	585	961	5,691
East Ayrshire	3,212	309	415	3,936
East Dunbartonshire	1,762	288	305	2,355
East Lothian	2,774	262	328	3,364
East Renfrewshire	1,306	211	224	1,741
Edinburgh, City of	13,681	2,371	3939	19,991
Eilean Siar	2,070	110	115	2,295
Falkirk	3,652	472	681	4,805
Fife	10,432	1,193	1620	13,245
Glasgow City	17,643	2,901	4,774	25,318
Highland	15,258	975	1,407	17,640
Inverclyde	1,796	206	307	2,309
Midlothian	2,232	244	373	2,849
Moray	3,984	250	366	4,600
North Ayrshire	4,128	386	503	5,017
North Lanarkshire	7,021	1,049	1554	9,624
Orkney Islands	1,875	132	96	2,103
Perth & Kinross	7,119	587	724	8,430
Renfrewshire	4,727	584	960	6,271
Scottish Borders	6,261	411	417	7,089
Shetland Islands	1,736	111	147	1,994
South Ayrshire	3,801	420	556	4,777
South Lanarkshire	7,202	1,084	1489	9,775
Stirling	4,000	420	578	4,998
West Dunbartonshire	2,165	274	415	2,854
West Lothian	4,087	598	1135	5,820

1. Includes a small percentage of properties with zero rateable value.

Source: Scottish Assessors Valuation Roll, 1st April 2015

Table 1.14 shows a time series of annual NDR Income, total Rateable Value, and Poundage Rate. Revaluations typically take place on a 5-year cycle and are intended to be 'revenue neutral'. As a consequence of the 2010 revaluation, the poundage was reduced from 48.1p in 2009-10 to 40.7p in 2010-11 and the total RV of non-domestic properties (the tax base) increased from £5.3 billion in 2009-10 to £6.6 billion in 2010-11. The next revaluation will take place in 2017.

Table 1.14 - Non-Domestic Rates Income, Total Rateable Values and Poundage Rate

	2009-10	2010-111	2011-12	2012-13	2013-14	2014-15
Non Domestic Rates Income (£m) 2	2,010	2,138	2,251	2,347	2,367	2,511
Total Rateable Value (£m)	5,299	6,612	6,678	6,718	6,716	6,681
Poundage Rate (pence)	48.1	40.7	42.6	45.0	46.2	47.1
Large Business Supplement (pence)3	0.4	0.7	0.7	0.8	0.9	1.1

1. Revaluation occurred in 2010
2. All income figures, including 2014-15, are the final audited income collected by councils.
3. The Large Business Supplement is applied in addition to the poundage for properties with a rateable value over £35,000

Source: NDR Income - Non-domestic Rate Income Returns, Rateable Value - Scottish Assessors Valuation Roll as at 1st April

Table 1.14 also shows that the total RV has increased slightly since the 2010 revaluation from £6.61 billion to £6.68 billion in 2014-15. This is due to the net impact of several factors including increases in the tax base from new properties or extension of existing properties, and decreases as demolished properties are deleted from the valuation roll or as the RV is reduced as a result of appeals^[1]. As Non-Domestic Rates bills in Scotland are directly related to the rateable values of individual non-domestic properties, changes in the total RV impact on the amount of NDR available for collection, along with other factors such as the poundage rate and backdated revaluation appeals losses which also affect the final income.

Inflation is a key driver of growth in NDR income as the poundage rate, set nationally by Scottish Ministers^[2], is typically tied to the Retail Price Index (other than in the first year of a revaluation). NDR bills are calculated by multiplying the RV of a property by the poundage rate, and then applying discounts and exemptions. Large business properties (those with a RV greater than £35,000) also pay a supplement to the poundage rate, known as the Large Business Supplement (LBS), which is used to fund a portion of the Small Business Bonus Scheme (SBBS). The LBS was 1.1p in 2014-15. For the period 2012-13 to 2014-15, large retailers with RV of £300,000 or more that sell both alcohol and tobacco also paid the Public Health Supplement (PHS) - an additional 13p on the poundage rate in 2014-15. These supplements increase the amount paid in NDR bills. Conversely, exempt properties (which do not pay rates), and relief schemes such as the Small Business Bonus Scheme can significantly reduce the amount paid in NDR bills, and therefore the NDR income.

Table 1.15 summarises the total number of properties and rateable value as at 1^st April 2015 and the NDR income collected in 2014-15 by local authority (net of reliefs).

Table 1.15 - Non-Domestic Rates Properties, Rateable Values and Income By Local Authority¹

Authority	Non-Domestic Properties2 Apr-15	Non-Domestic Rateable Values Apr-15	Non-Domestic Rate Income 2014-153
		(£000s)	(£000s)
Scotland	223,046	6,718,705	2,511,290
Aberdeen City	8,409	457,525	193,214
Aberdeenshire	11,793	227,053	85,722
Angus	4,781	77,059	26,551
Argyll & Bute	8,355	89,129	30,036
Clackmannanshire	1,565	38,067	16,645
Dumfries & Galloway	9,252	118,560	42,395
Dundee City	5,691	187,855	67,150
East Ayrshire	3,936	81,401	29,153
East Dunbartonshire	2,355	67,601	23,398
East Lothian	3,364	68,944	23,237
East Renfrewshire	1,741	40,751	14,374
Edinburgh, City of	19,991	910,691	344,628
Eilean Siar	2,295	22,742	7,002
Falkirk	4,805	172,282	67,286
Fife	13,245	435,570	152,736
Glasgow City	25,318	980,357	350,888
Highland	17,640	311,517	110,516
Inverclyde	2,309	60,239	20,309
Midlothian	2,849	78,492	27,871
Moray	4,600	89,014	33,268
North Ayrshire	5,017	108,703	38,495
North Lanarkshire	9,624	297,665	109,884
Orkney Islands	2,103	26,082	8,620
Perth & Kinross	8,430	149,282	51,732
Renfrewshire	6,271	234,681	81,981
Scottish Borders	7,089	90,694	29,091
Shetland Islands	1,994	44,178	16,578
South Ayrshire	4,777	108,239	39,792
South Lanarkshire	9,775	640,455	266,873
Stirling	4,998	114,107	41,920
West Dunbartonshire	2,854	171,876	75,608
West Lothian	5,820	217,895	84,334

1. Rates bills for specific utilities are collected by specified councils on behalf of all 32 councils, and appear on the valuation roll for those councils: South Lanarkshire (Electricity), West Dunbartonshire (Gas), Fife (Water), Falkirk (Docks and Harbours), Highland (Railways), Renfrewshire (Telecommunications). This increases the take for those authorities.

2. Includes properties with a zero rateable value

3. Audited income collected by councils.

Source: Number of Properties and Rateable Value - Scottish Assessors Valuation Roll 1st April 2015

NDR Income - Non-domestic Rate Income Returns provided by Councils

Table 1.15 shows geographical variations in the number of properties, rateable value and NDR income. It should be noted however that some councils have responsibility for collection of NDR for specific utilities as detailed in the footnote to the table. For these councils, the entries on the valuation roll and NDR income include Scotland-wide data for the specified utilities sectors. To avoid the need for revisions, only final (audited) NDR income figures are included in this publication. The deadline for NDR income returns was accelerated for 2014-15 and subsequent years to allow audited NDR income data to be included.

Table 1.16 - Amount of Non-Domestic Rates Relief Provided by Relief Type^1,2

£thousands

	2008-09	2009-10	2010-11	2011-12	2012-13	2013-14	2014-152
Empty Property Relief	127,385	153,361	145,936	157,862	169,134	146,496	140,962
Charities	113,417	122,132	136,731	151,276	164,979	173,623	181,242
Sports Clubs	9,651	11,604	11,476	12,059	12,431	12,911	13,487
Disabled persons relief	42,914	45,484	51,901	54,372	57,580	58,299	59,648
SBBS	72,553	108,420	123,259	134,719	150,196	161,002	170,635
Religious Properties	18,986	20,218	24,016	22,960	24,573	25,205	26,113
Rural Rate Relief	3,887	3,918	4,129	4,218	4,305	4,323	4,244
Renewable Energy Relief Scheme3			3,560	4,126	4,811	7,333	9,280
New Start4						130	484
Fresh Start5						189	536
Other6	27	19	4	43	10	63	221
Gross Amount	388,821	465,157	501,013	541,635	588,018	589,574	606,852

1. Estimates include mandatory and discretionary elements of relief where applicable, but exclude backdated payments of relief
2. Reliefs for all years, including 2014-15, are final audited figures.
3. The Renewable Energy Relief Scheme was introduced at 1 April 2010.
4. The new start relief scheme was introduced at 1 April 2013 and will run for 3 years.
5. The fresh start relief scheme was introduced at 1 April 2013.
6. Other includes Hardship and Enterprise Areas.

Source: Non-domestic Rate Income Returns from Councils

There are a number of types of NDR relief that reduce the NDR bill for qualifying properties. Table 1.16 shows the main types of relief available^[3] and the amount of relief provided each year from 2008-09 to 2014-15.

The gross amount of relief provided has increased substantially from £389 million in 2008-09 to £607 million in 2014-15. Key reasons for this are increases in the poundage rate (due to annual inflation) and an increase in relief provided through the Small Business Bonus Scheme, with expansion of the scheme thresholds and greater awareness of the scheme likely to be contributory reasons. Other reasons for change are likely to include growth in the tax base over this period (i.e. an increase in the overall rateable value) and changes to amounts awarded for other reliefs (for example the introduction of the new relief schemes). Changes were made to Empty Property Relief (EPR) in 2013, reducing the amount of EPR for non-industrial properties from 100% for 3 months and then 50% thereafter to 100% for 3 months then 10% thereafter, resulting in decreases to the cost of Empty Property Relief in 2013-14 and 2014-15.

The total NDR income collected by local authorities is pooled at the Scotland level^[4]. Each council reports the NDR collected to the Scottish Government to be included in the central pool. The amount to be re-distributed to each authority from the pool is known as the Distributable Amount (DA) and is set by the Scottish Government before the start of the financial year in question.

From 1^st April 2011, the distribution methodology provides that Councils retain what it is estimated they can collect in business rates (rather than the previous policy where it was redistributed on the basis of population shares). As the combined total of NDR income and General Revenue Funding (GRF) provided to councils is guaranteed by the Scottish Government, any reduction in the amount of NDR collected is compensated for by a corresponding increase in GRF and vice versa. Any surpluses or deficits are paid out or recovered from Councils in the calculation of future years distributable business rates totals. The DA is based upon a forecast of the NDR income and prior year adjustments, and is therefore not guaranteed to match the total contributions to the pool for that year.

The calculation of the distributable amount for 2014-15 is given in Annex F and the 2014-15 distributable amount per Local Authority is shown in Table 1.17.

Table 1.17 - Non-Domestic Rates Distributable Amount by Local Authority, 2014-15

	Non-Domestic Rate Distributable Amount (£000s)
Scotland	2,649,500
Aberdeen City	192,684
Aberdeenshire	85,901
Angus	28,033
Argyll & Bute	31,002
Clackmannanshire	12,918
Dumfries & Galloway	48,474
Dundee City	58,704
East Ayrshire	31,060
East Dunbartonshire	24,901
East Lothian	25,172
East Renfrewshire	15,151
Edinburgh, City of	364,108
Eilean Siar	7,046
Falkirk	74,307
Fife	158,661
Glasgow City	363,061
Highland	124,210
Inverclyde	22,707
Midlothian	29,013
Moray	33,370
North Ayrshire	40,197
North Lanarkshire	118,797
Orkney Islands	9,604
Perth & Kinross	55,415
Renfrewshire	106,316
Scottish Borders	31,013
Shetland Islands	17,602
South Ayrshire	43,134
South Lanarkshire	297,292
Stirling	32,586
West Dunbartonshire	78,548
West Lothian	88,513

Source: Amendment Order Scotland (2014)

1.6 Customer and Client Receipts

Local authorities receive income from sales, rents, fees and charges as a result of providing services. These services are wide ranging in nature, as is the amount of income associated with each service, as detailed in Table 1.18 below.

The total customer and client receipts received by local authorities has increased by 2.3%, from £2.32 billion in 2013-14 to £2.37 billion in 2014-15. In the General Fund this has increased by 1.2%, from £1.24 billion in 2013-14 to £1.26 billion in 2014-15. Almost half (47%) of customer and client receipts are to the HRA where it has increased by 3.6% from £1.07 billion to £1.11 billion in 2014-15.

Table 1.18 - Customer and Client Receipts - 2010-11 to 2014-15

£thousands

	2010-11	2011-12	2012-13	2013-14b	2014-15
Education	95,006	115,017	113,355	120,563	119,061
Cultural & Related Services	81,521	77,490	70,731	71,185	72,567
Social Work	251,167	268,104	276,455	276,012	275,301
Roads & Transport	146,157	171,756	154,197	175,384	182,833
Environmental Services	120,400	117,767	117,969	117,457	112,180
Planning & Development Services	97,897	118,519	116,749	121,079	120,162
Central Services	113,862	143,521	110,889	131,710	143,806
Non-HRA Housing	164,339	179,116	165,412	160,800	155,077
Trading Services	66,852	63,526	58,045	69,843	77,909
Total General Fund (GF) Customer and Client Receipts excluding Police & Fire	1,137,201	1,254,816	1,183,802	1,244,033	1,258,896
Housing Revenue Account (HRA) 1	979,571	965,920	1,034,306	1,073,362	1,112,210
Total GF + HRA Customer and Client Receipts, excluding Police & Fire	2,116,772	2,220,736	2,218,108	2,317,395	2,371,106
Police, Fire & Emergency Planning	55,098	66,575	111,992
Total GF + HRA Customer and Client Receipts	2,171,870	2,287,311	2,330,100	2,317,395	2,371,106

1. The Housing Revenue Account (HRA) records income and expenditure relating to Local Authority housing stock.

b. The Police and Fire Reform (Scotland) Act 2012 created Police Scotland and Fire Scotland, which replaced the former Police and Fire Boards. These new bodies are classified as Central Government, rather than Local Government.

Source: Local Financial Returns (LFRs)