Revenue Expenditure and Funding
All Services ( Table 1.1)
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. Expenditure on the repayment of debt and the financing of capital investment was £1.686 billion. This left 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.
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
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.
- 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.
As a result of the Council Tax freeze, Council Tax levels remained fixed from 2007-08 to 2016-17 (except in Stirling where there was a slight drop in the Council Tax level in 2008-09 and 2012-13).
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 rate 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 rate 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.
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 spend £2.962 billion on capital expenditure.
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
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.