Scottish Local Government Finance Statistics (SLGFS) 2018-19

Annual publication providing a comprehensive overview of financial activity of Scottish local authorities in 2018-19 based on authorities' audited accounts.

This document is part of a collection

4. Reserves and Fixed Assets

4.1 Reserves

Usable reserves reflect a local authorities’ accumulation of surplus income that can be used to finance future revenue or capital expenditure on services. Chart 4.1 shows the total usable reserves at 31 March 2019, by fund. 

Chart 4.1: Usable Reserves at 31 March 2019, £ millions

Chart 4.1: Usable Reserves at 31 March 2019, £ millions

Source: LFR 23


A = Other Statutory Funds, £12m

The General Fund is the principle usable revenue reserve of the local authority. Any deficit in a local authorities’ revenue accounts is met from their General Fund, and any surplus is added to the General Fund reserve. The General Fund therefore reflects a local authority’s accumulation of surplus income that can be used to finance future revenue expenditure on services or to fund future capital expenditure.

The Orkney County Council Act 1974 and the Zetland County Council Act 1974 require Orkney and Shetland to also hold a Harbour Account, a separate account and reserve fund specifically for harbour undertakings. Orkney and Shetland are also able to transfer money between their General Fund and their Harbour Accounts.

Where a local authority has housing, the accumulation of surplus income relating to housing is separately identified as a Housing Revenue Account (HRA) reserve.

In addition to the General Fund a local authority may also hold other statutory usable revenue reserves, such as a Renewal and Repairs Fund or an Insurance Fund, or other specific reserves local to a local authority as permitted by legislation. Amounts will be transferred to and from the General Fund to these reserves. 

Local authorities hold two capital reserves – Capital Fund / Capital Receipts Reserve and a Capital Grants and Receipts Unapplied Account. The Capital Fund and Capital Receipts Reserve were previously identified separately but are treated as a single reserve.

The Capital Fund / Capital Receipts Reserve may be used for the purpose of meeting the cost of capital expenditure and for the repayment of principal on loans, but not any interest on loans.

The Capital Grants Unapplied Account holds capital grant that has been received but not yet used to fund capital expenditure, or capital receipts held pending their release on specific expenditure as permitted by Scottish Ministers.

Local authorities also hold a number of unusable reserves, that is reserves which are not backed by cash resources and cannot be used to fund services. Unusable reserves include a Revaluation Reserve, where increases in the value of fixed assets are recorded. This reserve is not usable as an increase in value of an asset will not be realised until the asset is sold. Other unusable reserves include sums deferred or set aside as statutory adjustments which are used to ensure the Annual Accounts of a local authority reconcile to statutory requirements. As these are unusable reserves, they are not discussed in this publication. However this data is collected as part of the Local Financial Returns and is available in the published LFR 23 workbook.

A change in accounting practice in 2018-19 has resulted in unrealised gains in the value of investments held by local authorities being included in the General Fund / HRA reserve balance, rather than in an unusable reserve as before. This gain is unrealised as the investment is still held and any gain will only be realised if the investment is sold. The unrealised gain is therefore required to be earmarked and is not available to fund future revenue expenditure or to fund capital investment. The value of usable reserves presented in this publication therefore exclude any unrealised gains held as part of the General Fund / HRA balances.

Table 4.1 sets out the movements across all reserves. Figures relating to the General Fund and HRA were also presented in Chapter 2.4

Local authorities had a decrease of £55 million on their revenue reserves, and an increase of £28 million on their capital reserves in 2018-19. This means local authorities’ usable reserves decreased by £27 million overall, from £2,573 million at 1 April 2018 to £2,546 million at 31 March 2019.

Table 4.1: Movements in Usable Reserves in 2018-19, £ millions

Revenue Reserves Level of Reserves held at 1 April  2018 a Movements in year Overall Increase (-) or Decrease (+) in year Level of Reserves held at 31 March 2019
Surplus (-) or Deficit (+) on Provision of Services Movement between Revenue Reserves
General Fund -1,161 62 -44 18 -1,143
Housing Revenue Account -177 19 -19 0 -177
Harbour Account -300 -29 15 -14 -314
Renewal and Repairs -172 0 34 34 -138
Insurance Fund -88 0 -3 -3 -90
Other Statutory Funds -31 0 19 19 -12
Total Revenue Reserves -1,929 53 2 55 -1,874
Capital Reserves
Capital Fund /  Capital Receipts -497 12 -6 6 -491
Capital Grants and Receipts Unapplied -147 -38 4 -33 -180
Total Capital Reserves -644 -26 -2 -28 -671
Total Usable Reserves -2,573 27 0 27 -2,546

Source: LFR 23


a This excludes amounts relating to unrealised gains that have been included in revenue reserves under IFRS 9.

Table 4.2 sets out the level of reserves held by all local authorities in Scotland at 31 March from 2014-15 to 2018-19. Usable reserves have increased by 5.3 per cent over this period, from £2,417 million 2014-15 to £2,546 million in 2018-19. This has largely been driven by an increase of 24.7 per cent in capital reserves. Revenue reserves have shown little change, decreasing by only 0.2 per cent between from £1,879 million 2014-15 to £1,874 million 2018-19. 

Table 4.2: Level of Usable Reserves held at 31 March from 2014-15 to 2018-19, £ millions

Revenue Reserves 2014-15 2015-16 2016-17 2017-18a 2018-19b % change between 2014-15 & 2018-19
General Fund -1,137 -1,193 -1,178 -1,153 -1,143 0.5%
HRA -130 -142 -169 -177 -177 36.3%
Harbour Account 1 n/a n/a -312 -312 -314 n/a
Renewal and Repairs -176 -201 -171 -172 -138 -21.6%
Insurance Fund -86 -85 -84 -88 -90 4.6%
Other Statutory Funds 1 -349 -282 -20 -32 -12 n/a
Total Revenue Reserves -1,879 -1,903 -1,934 -1,935 -1,874 -0.2%
Capital Reserves
Capital Fund /  Capital Receipts -466 -578 -522 -491 -491 5.3%
Capital Grants and Receipts Unapplied -72 -50 -45 -147 -180 150.1%
Total Capital Reserves -538 -628 -567 -638 -671 24.7%
Total Usable Reserves -2,417 -2,531 -2,501 -2,573 -2,546 5.3%

Source: LFR 23


a As these figures are the closing reserve figures taken from the 2017-18 LFR, they may not match exactly to the opening reserve figures provided in Table 4.1 which have come from the 2018-19 LFR. Discrepancies between LFRs could be for a number of reasons, including where local authorities have restated their accounts or have made an error in their prior LFR.

b This excludes amounts relating to unrealised gains that have been included in revenue reserves under IFRS 9.

1 Figures specifically relating to the Harbour Account were not collected in returns prior to 2016-17, they were instead included in the Other Statutory Fund figures.

4.2 Fixed Assets

Capital expenditure creates local authority assets. Operational assets are assets a local authority can use when providing services, such as a school, council houses, vehicles etc. Non-operational assets are assets that a local authority cannot currently utilise, for example an asset that is still under construction or an asset that is being held for disposal. Intangible assets are non-physical assets, such as computer software.

The value of local authority fixed assets from 2014-15 to 2018-19 is shown in Table 4.3. The total value of fixed assets in 2018-19 was £46,182 million, an increase of 6.3 per cent from £43,456 million in 2017-18. 

Table 4.3: Value of Fixed Assets at 31 March from 2014-15 to 2018-19, £ millions 1

  2014-15 2015-16 2016-17 2017-18 2018-19 % change between 2017-18 & 2018-19
Operational Assets 37,953 39,116 40,258 41,620 44,242 6.3%
Non-Operational Assets 1,389 1,523 1,810 1,780 1,875 5.4%
Intangible Assets 52 48 51 56 65 17.1%
Total Assets 39,394 40,687 42,120 43,456 46,182 6.3%

Source: CR Final


1 A detailed breakdown of fixed asset values between 2014-15 and 2018-19 is provided in Table 4.3a in the associated Excel file.

Almost all of local authorities’ fixed assets, 95.8 per cent, are operational assets and the value of these has increased every year since 2014-15. There has been a total increase in value of operational assets of 16.6 per cent over this five year period from £37,953 million in 2014-15 to £44,242 million in 2018-19.



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