Final Local Government Income and Expenditure Figures for 2017-18 Published

Scotland’s Chief Statistician today published Scottish Local Government Financial Statistics: 2017-18. 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

General Fund

 In 2017-18 General Fund gross revenue expenditure was £15,184 million and authorities received income of £4,583 million, resulting in a General Fund net revenue expenditure of £10,601 million, an increase of £90 million or 0.9%. Further costs for the repayment of debt and the financing of capital expenditure amounted to £1,187 million, which gives a funding requirement of £11,788 million.

Total funding in 2017-18 was £11,753 million, an increase of 0.4%. This is made up of General Revenue Grant £6,799 million (58%), Non Domestic Rates £2,666 million (23%), Council Tax £2,278 million (19%), and other funding of £10 million (rounds to 0%). This left a deficit of £35 million to be met from General Fund reserves.

On 1st April 2017 local authorities held General Fund reserves of £1,494 million. The £35 million deficit was met from reserves and authorities transferred £6 million into the General Fund from other reserves, resulting in General Fund reserves falling by £29 million (1.9%) to sit at £1,465 million at the 31st March 2018.

Housing Revenue Account

The Housing Revenue Account (HRA) is a self-financing, stand-alone account mainly funded from rental income. In 2017-18, HRA gross revenue expenditure was £686 million and it received £1,197 million of income, which gives an HRA net revenue surplus of £511 million. Further costs for the repayment of debt and the financing of capital expenditure amounted to £515 million, leaving a deficit of £4 million to be met from reserves.

On 1st April 2017 local authorities held HRA reserves of £169 million. The £4 million deficit was met from reserves and authorities transferred £12 million to the HRA from other reserves. This resulted in HRA reserves increasing by £8 million to sit at £177 million at the 31st March 2018.

Expenditure on Services

The largest service area is education with gross expenditure of £5,224 million (an increase of 3.0% on the previous year) and service income of £380 million (an increase of 58.2%) in 2017-18, which gives a net revenue expenditure on education of £4,844 million, an increase of 0.3% compared with 2016-17. The sharp increase in service income is due to the expansion of the Attainment Scotland Fund (ASF), notably the introduction of Pupil Equity Funding, which is a ring-fenced revenue grant. The ASF underspent in 2017-18 which had a negative impact on net expenditure. As a result the net expenditure growth rate is lower than the gross expenditure growth rate.

Social Work is the next largest service area with gross expenditure of £4,217 million (an increase of 2.7% on the previous year) and service income of £1,081 million (an increase of 11.2%) in 2017-18, which gives a net revenue expenditure on social work of £3,127 million, a decrease of 0.3% compared with 2016-17. This decrease can be largely attributed to changes in the way that social care is funded following implementation of Integration of Health and Social Care. Although total social work expenditure increased by 2.7%, the element of social work expenditure that is paid for through General Revenue Funding has decreased by 0.3%.

Capital

Total capital expenditure was £2,983 million in 2017-18 compared to £2,962 million in 2016-17 – an increase of £21 million (0.7%). Of this, £2,298 million was in the General Fund and £684 million was in the Housing Revenue Account (HRA). The majority (76%) of capital expenditure went on new construction, conversions and enhancements to existing buildings.

Local authorities borrowed £994 million to fund this expenditure, which is 33% of the total funding required. This is an decrease on last year of £184 million (-16%). Local authorities borrowed £740 million for the General Fund, a decrease from last year of £215 million or 16%.   Borrowing for the HRA was £255 million, an increase from last year of £30 million or 33%.

The amount of local authority General Fund debt outstanding at 31 March 2017 was £13,975 million, an increase of 4.5%. The per head figure has increased by 4.1% from £2,474 on the 31st March 2017 to £2,576 on the 31st March 2018.

The £13,975 million debt is split between borrowing of £10,879 million and credit arrangements of £3,096 million. Borrowing per head is £2,005 and credit arrangements per head is £571 giving the total debt per head of £2,576.

The amount of HRA debt outstanding at 31 March 2018 was £3,577 million, made up of borrowing of £3,574 million and credit arrangements of £2 million. This equates to a per dwelling debt of £11,533. The borrowing per dwelling is £11,525 (up 4.2% on 31st March 2017) with a credit arrangement per dwelling of £8.

Capital reserves fell by £73 million (13%), from £565 million on the 1st April 2017 to £638 million on the 31st March 2018.

Council Tax

The average Band D Council Tax in Scotland was £1,173 in 2017-18. Net Council Tax income, after all discounts and reductions, was £2,278 million in 2017-18. The total number of chargeable dwellings (i.e. the tax base) has increased slightly each year, rising from 2.41 million in September 2013 to 2.49 million in September 2018. The total amount of income forgone as part of the Council Tax Reduction scheme across Scotland in 2017-18 was £327 million. This figure is £24 million less than the £351 million funding provided by the UK Government and Scottish Government.

Non-Domestic Rates

Non-domestic rate income collected increased from £2,731 million in 2016 17 to £2,762 million in 2017-18. Non-domestic rates reliefs provided relief of £684 million in 2017-18, up from £591 million in 2016-17. The increase in rates relief was mainly due to the increase in the amount of the Small Business Bonus Scheme (SBBS) relief awarded (following the 2017 revaluation the SBBS 100% threshold was increased) and the introduction of transitional relief for hospitality properties and offices in Aberdeen(shire). As at 1st April 2017, the non-domestic rate tax base comprised of 233,386 non-domestic properties on the Valuation Roll with a total rateable value of £7,358 million. The non-domestic rates ‘Distributable Amount’ was £2,666 million in 2017-18.

Pension Funds

Local Government Pension Fund income in 2017-18 was £3,479 million with expenditure of £1,365 million. Investment income was £2193 million in 2017-18, however it is highly volatile, ranging from a loss of £1,032 million in 2008-09 to gain of £7,748 million in 2016-17. Pension fund expenditure on benefits (including increases under the (Pensions (Increase) Acts)) has increased from £1,249 million in 2016-17 to £1,283 million in 2017-18. Pension fund contributions from employees or employers increased from £1,258 million in 2016-17 to £1,286 million in 2017-18.

Background

• The full Scottish Local Government Financial Statistics 2017-18 publication along with a summary of the key findings is available at: https://www.gov.scot/publications/scottish-local-government-financial-statistics-2017-18/

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