Revenue expenditure covers the costs of providing local services and primarily consists of employee costs and operating costs. The benefits from revenue expenditure are received within one financial year. All revenue expenditure, except expenditure on local authority housing, is accounted for through the General Fund.
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 and council tax income plus Government grants, the HRA is a ring-fenced account, and expenditure is funded by housing rents and Government subsidies.
All authorities are required to maintain a General Fund. This is the main revenue account, it receives the majority of the authorities revenue income (including General Funding) and is used to pay out the majority of the authorities revenue expenditure.
Employee costs include salaries and wages, national insurance and superannuation contributions, cash allowances paid to employees, redundancy and severance payments and other employee costs.
Operating costs include property costs, supplies and services costs, transport and plant costs, payments to agencies and other bodies, and direct administration costs.
Support Service costs are those paid for services that support the provision of services to the public, e.g. IT, Human Resources, Legal Services, Procurement Services and Corporate Services.
Transfer payments are those made to individuals for which no goods or services are received in return by the local authority.
Revenue Contributions to Capital ( RCC) are the revenue contributions towards capital expenditure on capital assets which were met directly from the service revenue within the current year. RCC can also be referred to as capital financed from current revenue ( CFCR) in discussions of Capital accounts. In the revenue account, RCC is excluded from the service expenditure figures and instead counted as 'other income and expenditure'.
Adjustment for intra/inter-authority transfers is an adjustment made to prevent double counting due to money moving between accounts within the authority or due to money moving between authorities. The adjustment is equal to the total of recharge income from other services, contributions from other local authorities, contributions from Integration Joint Boards and requisition income. This adjustment results in the expenditure being reported against the authority or service area that commissions the service.
Grants to third parties funded by General Capital Grant ( GCG) is treated as revenue expenditure. The General Capital Grant was introduced for the first time in 2008-09. It is a Scottish Government grant paid to the 32 local authorities. In addition to funding the capital expenditure of the local authority, with certain limitations, the grant may also be used to fund third party capital expenditure (either through direct spend or the provision of grant). Where the GCG is used to finance the capital expenditure of the council, this expenditure is considered is capital expenditure. Where the GCG is used to fund third party capital projects the GCG is treated as revenue income and the corresponding third party grant or direct payment is treated as revenue expenditure.
Gross revenue expenditure is the total expenditure on local authority services within a financial year less intra/inter-authority transfers.
Net revenue expenditure is gross revenue expenditure, less other government grants, customer and client receipts, grants to third parties funded by General Capital Grant, and other grants, reimbursements and contributions. It is therefore the net revenue expenditure that is to be financed from General Revenue Funding, non-domestic rates, council tax and reserves.
Common Good Fund income and expenditure is recorded in a separate set of accounts. Some property held within a local authority's Common Good Fund can be sold, while some must be maintained in trust for the community. The fund is used for projects that are for the common good of all residents.
General Funding is sometimes referred to as "Taxation and non-specific grant income" and comprises General Revenue Grant, Non-Domestic Rates and Council Tax.