Final Local Government Income and Expenditure Figures for 2016-17

Scotland’s Chief Statistician today published Scottish Local Government Financial Statistics: 2016-17. This is an annual compendium publication that provides a comprehensive overview of financial activity of Scottish local authorities based on their final, audited accounts.  The publication covers: local authority revenue expenditure and income, capital expenditure and income; reserves; debt; local taxation; and local authority pensions. The figures released today were produced by independent statistical staff free from any political interference, in accordance with professional standards set out in the Code of Practice for Official Statistics.

Revenue Expenditure and Funding

All Services

In 2016-17 gross revenue expenditure on services was £15.590 billion and income was £5.578 billion, resulting in a net cost of services of £10.012 billion. £4.830 billion of the net costs of services was on Education and £3.136 billion was on Social Work. These two services accounted for around three-quarters of the net cost of services. In addition, expenditure on the repayment of debt and the financing of capital investment was £1.686 billion, which results in a funding requirement of £11.699 billion.

Where a local authority provides housing, a separate account, (the Housing Revenue Account (HRA)) is kept to record the costs of housing.   This is a self-financing stand alone account mainly funded from rental income. The statistics therefore report the General Fund and the HRA separately.

General Fund Revenue Expenditure and Funding

In 2016-17 gross expenditure on revenue services was £14.913 billion and income was £4.401 billion, a net cost of services of £10.511 billion. Further costs for the repayment of debt and the financing of capital expenditure amounted to £1.207 billion. This left a funding requirement of £11.718 billion.

This funding requirement is met from grant from the Scottish Government, Non Domestic Rate income, Council Tax and Reserves.

Total Funding in 2016-17 was £11.708 billion. This is made up of Scottish Government General Revenue Grant with £6.839 billion (58%), Non Domestic Rates with £2.769 billion (24%), Council tax with £2.091 billion (18%), and other funding of £0.009 billion (rounds to 0%).

This left a deficit of £9.914 million to be funded from reserves.

The value of General Fund reserves at 1 April 2016 was £1.495 billion. After taking into account the deficit for the year plus a transfer from other reserves of £5.315 million the value of General Fund reserves at 31 March 2017 was £1.490 billion, a decrease of £4.599 million.

Housing Revenue Account Revenue Expenditure and Funding

In 2016-17 gross expenditure for the HRA was £0.677 billion and income was £1.176 billion, a suplus of £0.499 billion. Expenditure on the repayment of debt and the financing of capital investment was £0.479 billion. This left a surplus of £19.429 million to be added to HRA reserves.

The value of HRA reserves at 1 April 2016 was £154.909 million. After taking into account the surplus for the year, plus a transfer to other reserves of £4.899 million the closing HRA reserves was £169.439 million, an increase of £14.530 million.

Council Tax

• The average Band D Council Tax in Scotland was £1,149 in 2016-17.
• Council Tax income was £2.091 billion in 2016-17 (after Council Tax Reduction).

The total number of chargeable dwellings (i.e. the tax base) has increased slightly each year, rising from 2.40 million in September 2012 to 2.47 million in September 2017.

Non-domestic Rates

Non-domestic rates bills are calculated using the rateable value (RV) of a non-domestic property, multiplied by the poundage rate (48.4p in 2016-17) plus any relevant supplements (such as Large Business Supplement), less any rates reliefs.

• Non-domestic rates income collected increased from £2.579 billion in 2015-16 to £2.731 billion in 2016-17. This is due to the net effect of several factors such as the inflationary increase in the poundage rate, the increase to the large business supplement, the curtailment of empty property relief and other changes to the tax base (e.g. new or demolished properties).
• Non-domestic rates reliefs provided relief of £0.59 billion in 2016-17, down from £0.63 billion in 2015-16. A curtailment in empty property relief was the main factor which contributed to the reduced total.
• As at 1st April 2017, the non-domestic rates tax base comprised of 233,386 non-domestic properties on the Valuation Roll with a total rateable value of £7.358 billion.
• The non-domestic rates ‘Distributable Amount’ was £2.77 billion in 2016-17.

Capital Investment

To be able to deliver services a local authority has to invest in its assets, such as roads, schools and flood defences. In 2016-17 local authorities spent £2.962 billion on capital expenditure.

General Fund Capital Investment

In 2016-17 capital expenditure by the General Fund totalled £2.285 billion, an increase of 21% or £0.393 billion.

This capital expenditure was funded from Scottish Government grants (33%), other grants and contributions (7%), borrowing money (42%), credit arrangements (finance leases / private finance initiatives) (9%) capital reserves (5%), and revenue reserves (4%).

Total General Fund borrowing at 1 April 2016 was £10.068 billion which equates to borrowing per head of population of £1,874. New borrowing for capital expenditure increased this by £954 million, with repayments of borrowing reducing the borrowing by £438 million. The value of borrowing at 31 March 2017 was £10.580 billion, an increase of £513 million. This equates to a borrowing per head of £1,958, an increase of £84 (4.5%) per head over the financial year.

In addition to borrowing local authorities also finance capital investment by entering into credit arrangements. Many new schools have been built under these arrangements, known as private financing initiatives. The asset is operated by the developer with the local authority being charged for the services provided each year plus the debt costs from building the asset. In 2016-17 Local authorities funded £207 million of assets from credit arrangements. The value of debt liabilities for credit arrangements as at 1 April 2016 was £2.676 billion, a debt per head of £498. After adding new liabilities and deducting repayments the closing balance for credit arrangements at 31 March 2017 was £2.792 billion, a debt per head of £517. The debt per head has risen by £19 (3.8%) during the financial year.

Total debt from borrowing and credit arrangements as at 31 March 2017 was £13.373 billion or £2,474 per head (1 April 2016 this was £12.744 billion or £2,383 per head).

Housing Revenue Account Capital Investment

In 2016-17 capital expenditure by the HRA totalled £676.804 million.

This capital expenditure was funded from borrowing money (33%) revenue reserves (31%), capital reserves (19%) Scottish Government grants (15%), other grants and contributions (2%).

Total HRA borrowing at 1 April 2016 was £3.360 billion which equates to borrowing per dwelling of £10,600. New borrowing for capital expenditure increased this by £225 million, with repayments of borrowing reducing the borrowing by £138 million. The value of borrowing at 31 March 2017 was £3.450 billion, an increase of £90 million. This equates to a borrowing per house of £10,900, an increase of £301 (2.8%) per house.

The HRA reduced its debt from credit arrangements in 2016-17 from £2.679 million to £2.543 million. The debt per house remained at £8.

Local Government Pensions

Total Local Government Pension Scheme Fund income in 2016-17 was £9.0 billion. This is up by £7.1 billion compared with 2016-17 due to an increase in investment income, which is influenced by the type of investment, which can fluctuate year on year reflecting market forces. Contributions from employees and employers totalled £1.26 billion, an increase of £0.02 billion or 1.8% on 2015-16.

Local Government Pension Fund Expenditure in 2016-17 was £1.32 billion, an increase of £0.08 billion or 6.5%. The majority (95%) of this expenditure is on pension benefits, of which £0.30 billion was on lump sum payments and £0.95 billion was on pensions.

Background

The full Scottish Local Government Financial Statistics 2015-16 publication is available at: http://www.gov.scot/Topics/Statistics/Browse/Local-Government-Finance/PubScottishLGFStats

Definitions:

• GROSS REVENUE EXPENDITURE is the total expenditure on Local Authority services within a financial year less inter-authority and inter-account transfers.
• NET REVENUE EXPENDITURE is the element of expenditure on services to be funded by taxation and non-specific grant income (i.e. General Revenue Grant, Council Tax and Non-Domestic Rates), with any remaining expenditure to be met from reserves.
• CAPITAL EXPENDITURE is mainly incurred by Local Authorities for buying, constructing or enhancing physical assets such as buildings (schools, houses etc.), land, vehicles, plant and machinery.
• CAPITAL INCOME comprises of Government grants, receipts from the sale or disposal of assets and other grants and contributions.

Further information on Scottish Local Government Finance Statistics can be found at: http://www.gov.scot/Topics/Statistics/Browse/Local-Government-Finance

Each year, the Scottish Government issues financial returns relating to local government finance for completion by Local Authorities, Valuation Joint boards, Regional Transport Partnerships (RTPs) and Bridge Authorities. Summary information is published in the annual publication: “Scottish Local Government Finance Statistics”.  The information is used to answer requests (both internal and external to SG), for policy analysis and for Parliamentary Questions.

Official statistics are produced in accordance with professional standards – more information on the standards of official statistics in Scotland can be accessed at: http://www.gov.scot/Topics/Statistics/About