Publication - Statistics

Scottish Local Government Financial Statistics 2009-10

Published: 24 Feb 2011
ISBN:
ISBN97817804

Scottish Local Government Financial Statistics 2009-10

Scottish Local Government Financial Statistics 2009-10
3 LOCAL GOVERNMENT REVENUE EXPENDITURE

3 LOCAL GOVERNMENT REVENUE EXPENDITURE

KEY SUMMARY FACTS

  • Total gross revenue expenditure in 2009-10 was £18.5 billion.
  • Total General Fund net revenue expenditure to be funded from GRF, council tax and non-domestic rates was £13.1 billion.
  • Total revenue reserves at 31 March 2010 were £1.4 billion.
  • Housing revenue account gross revenue expenditure was £973 million.

Revenue expenditure covers the costs of maintaining local services and primarily consists of employee costs and operating costs. The benefits of revenue expenditure are received within one financial year. All revenue expenditure, except expenditure on Local Authority housing, is accounted for through the General Fund.

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 (including car allowances) and plant costs, payments to agencies and other bodies, and direct administration costs (including training).

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 funded from current revenue ( CFCR) in discussions of Capital accounts.

Adjustment for inter-account and inter-authority transfers is an adjustment made for the contributions made by one authority to another, i.e. inter-authority transfers, and the recharges, or income from other accounts within an authority, i.e. inter-account transfers. The adjustment is equal to the total of inter-authority transfers and the total of inter-account transfers.

Grants to third parties funded by General Capital Grant ( GCG) come under both revenue and capital 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. The grant may be used to fund 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 strictly as 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.

Revised accounting arrangements for Public Private Partnerships ( PPP) and Public Finance Initiatives ( PFI) were introduced from 1 st April 2009. Therefore, 2009-10 revenue expenditure, statutory repayment of debt and interest and investment income for services in which there are PPP or PFI schemes is not comparable with previous years. See section 1.2 for further details.

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 gross revenue expenditure, less other government grants, sales, fees and charges, 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 balances.

Table 3.1 - Gross Revenue Expenditure, 2009-10

£ Thousands

General Fund Services 1

Housing Revenue Account

Significant Trading Operations

Road Bridges

Common Good Fund

Employee Costs

7,504,392

137,832

502,149

4,189

149

Operating Costs

6,083,923

470,755

515,365

2,979

11,238

Support Service Costs

701,560

67,325

23,378

115

388

Transfer payments

2,337,408

1,395

.

-

1,449

Revenue Contributions to Capital

40,905

106,463

975

8,871

232

Adjustment for inter account and inter authority transfers

-673,792

-14,319

-728,181

-

-979

Grants to third parties funded by General Capital Grant

75,150

.

.

.

.

Statutory Repayment of Debt

473,136

94,410

14,845

740

1,609

Interest payments

599,150

104,786

..

..

..

Contributions to General Fund/ Other

.

4,299

4,509

-

626

Total Gross Revenue Expenditure

17,141,832

972,946

333,040

16,894

14,712

1- Includes trading services and non- HRA housing. For a breakdown of expenditure in these areas, refer to Table 3.7 and Annexes F and G respectively.

3.1 General Fund Revenue Expenditure5

Table 3.2 - General Fund Revenue Expenditure, 2009-10

£ thousands

Gross Expenditure

Income

Net Expenditure financed from grants, NDR , council tax and balances

Net exp as % of total services

Ring-fenced Revenue Grants

Education

4,818,152

185,275

4,632,877

38.3%

37,783

Cultural and Related Services

768,987

106,791

662,196

5.5%

7,883

Social Work

3,559,328

734,196

2,825,132

23.4%

14,669

Police

1,296,823

171,357

1,125,466

9.3%

594,980

Fire

349,708

18,001

331,707

2.7%

-

Roads and Transport

698,778

213,051

485,727

4.0%

1,218

Environmental Services

789,900

132,473

657,427

5.4%

1,787

Planning & Economic Development

514,080

181,929

332,151

2.7%

94,768

Non- HRA Housing

2,323,649

1,903,387

420,262

3.5%

4,608

Central Services

889,716

257,374

632,342

5.2%

.

Trading Services

59,530

68,759

-9,229

-0.1%

122

Total General Fund services

16,068,651

3,972,593

12,096,058

100.0%

757,818

Interest and investment income

599,150

30,358

568,792

.

Statutory repayment of debt

473,136

.

473,136

.

Contributions to/from HRA

895

.

895

.

Surplus/deficit from Significant Trading Operations

.

.

-3,509

.

Total

17,141,832

4,002,951

13,135,372

757,818

Table 3.3 - Net Revenue Expenditure by Service, 2005-06 to 2009-10

£ millions

2005-06

2006-07

2007-08

2008-09

2009-10 2

Education

4,112

4,252

4,432

4,676

4,633

Social Work

2,054

2,212

2,368

2,684

2,825

Police

1,018

1,067

1,078

1,100

1,125

Fire

278

280

290

320

332

Cultural & Related Services

575

592

593

628

662

Environmental Services

476

502

510

628

657

Roads & Transport 1

555

447

447

453

486

Central Services

551

392

439

469

632

Planning & Economic Development

159

160

163

289

332

Non- HRA Housing

64

77

91

427

420

Trading Services

-9

-11

-12

-5

-9

1. Includes Local Authority Transport Undertakings
2. Due to revised accounting arrangements for PPP and PFI, it is not possible to compare net revenue expenditure for 2009-10 with previous years for services in which there are PPP or PFI schemes. The services affected are: Education, Social Work, Culture & Related Services, Environmental Services and Roads & Transport.

Chart 3.1 General Fund Net Revenue Expenditure by Service (%)1,2

Chart 3.1 General Fund Net Revenue Expenditure by Service (%)

1. Due to revised accounting arrangements for PPP and PFI, it is not possible to compare net revenue expenditure for 2009-10 with previous years for services in which there are PPP or PFI schemes. The services affected are: Education, Social Work, Culture & Related Services, Environmental Services and Roads & Transport.
2. Roads & Transport includes Local Authority Transport Undertakings.

As identified in Section 1.2, changes in accounting arrangements in 2009-10 for PPP and PFI mean that items relating to financing of PPP and PFI previously included within service expenditure are now recorded in statutory repayment of debt and interest payments. This affects the level of service expenditure when comparing 2008-09 to 2009-10, especially in education where most councils have a PPP or PFI scheme in operation. As mentioned earlier in section 2.1, in the 2008-09 local government finance revenue settlement, many formerly ring-fenced revenue grants were rolled up into General Revenue Funding ( GRF). This change in funding can be seen as a larger than usual increase in expenditure from 2007-08 to 2008-09 both in Table 3.3 and in Chart 3.1 above. The Supporting People Grant, the Community Regeneration Fund and the Strategic Waste Fund were three of the largest grants affected by these changes in funding.

3.2 Revenue Expenditure Financing

Net revenue expenditure is funded through grants, non-domestic rates, council tax and balances as shown below in Tables 3.4 and 3.5.

Table 3.4 - Financing of Net Revenue Expenditure, 2005-06 to 2009-10

£ thousands

Net Revenue Expenditure 1

General Revenue Funding 2

Ring-fenced Revenue Grants 3

Council Taxes

NDR

Balances

2005-06

10,612,201

5,567,902

756,874

1,720,305

1,897,073

670,047

2006-07

10,714,001

5,777,204

888,171

1,811,577

1,883,769

353,280

2007-08

11,119,280

6,169,645

869,938

1,889,913

1,859,727

330,057

2008-09

12,421,451

7,425,884

723,776

1,908,972

1,962,800

400,019

2009-10

13,135,372

7,756,689

757,818

1,909,627

2,165,100

546,138

1. Includes trading services and non- HRA housing. For a breakdown of expenditure in these areas, refer to Table 3.7 and Annexes F and G respectively.
2. Prior to 2008-09, GRF or General Revenue Funding was referred to as Revenue Support Grant.
3. Prior to 2008-09, Ring-fenced Revenue Grants were referred to as Specific Grants.

Table 3.5 - Financing of Net Revenue Expenditure (%), 2005-06 to 2009-10

Net Revenue Expenditure 1

General Revenue Funding 2

Ring-fenced Revenue Grants 3

Council Taxes

NDR

Balances

2005-06

100.0%

52.5%

7.1%

16.2%

17.9%

6.3%

2006-07

100.0%

53.9%

8.3%

16.9%

17.6%

3.3%

2007-08

100.0%

55.5%

7.8%

17.0%

16.7%

3.0%

2008-09

100.0%

59.8%

5.8%

15.4%

15.8%

3.2%

2009-10

100.0%

59.1%

5.8%

14.5%

16.5%

4.2%

1. Includes trading services and non- HRA housing. For a breakdown of expenditure in these areas, refer to Table 3.7 and Annexes F and G respectively.
2. Prior to 2008-09, GRF or General Revenue Funding was referred to as Revenue Support Grant.
3. Prior to 2008-09, Ring-fenced Revenue Grants were referred to as Specific Grants.

3.3 Revenue Reserves

Reserves are generated by accumulating surplus income, which is generally then used to finance future spending on services.

Table 3.6 - Beginning and End of Year Revenue Reserves Levels by Account, 2009-10

£ thousands

Revenue Reserves

General Fund

Housing Revenue Account

Renewal and Repairs

Insurance Fund

Other Statutory Funds

Total Revenue Reserves

Level of Reserves held 1 April 2009

718,211

99,373

189,362

76,688

261,496

1,345,130

Level of Reserves held 31 March 2010

775,622

95,715

185,026

75,914

274,513

1,406,790

3.4 Trading Services

Trading Service accounts cover the finances of Local Authority operated services that are commercial in nature. They are financed by the charges made by a Local Authority to the recipients of the services they provide.

The main trading services are Local Authority Transport (buses, ferries and other Local Authority transport undertakings), Fishery harbours and markets and other trading services (including airports, other harbours and bridges).

From 2008-09, the funding arrangements for the Forth and Tay Bridge authorities changed. Under the Abolition of Bridge Tolls (Scotland) Act 2008, the bridge authorities stopped receiving income from tolls and, instead, started receiving a revenue grant from Transport Scotland. On the capital expenditure side of things, bridge authorities also started receiving a capital grant from Transport Scotland, so are no longer reliant on borrowing through their constituent authorities from the Loans Fund. Despite this change in funding, Local Authorities continue to provide services for the bridge authorities by way of contract.

Table 3.7 - Trading Service Revenue Expenditure and Income by Service, 2009-10

Passenger Transport 1

£ thousands

Buses

Ferries

Other transport undertakings

Road bridges

Fisheries, harbours and markets 2

Other trading services 2

Total External Trading

Expenditure

Employee costs

621

8,168

1,183

4,189

1,888

20,037

36,086

Operating expenses

556

16,684

2,877

2,979

16,482

21,313

60,891

Revenue contributions to capital

.

.

.

8,871

-

1,356

10,227

Support service costs

11

254

219

115

342

1,460

2,401

Adjustment for inter account and inter authority transfers

-940

-88

-5,292

-

-245

-3,103

-9,668

Total expenditure

248

25,018

-1,013

16,154

18,467

41,063

99,937

Income

Government grants

80

31

-

1,226

2

-

1,339

Sales, rents, fees and charges

202

5,469

64

133

18,277

48,715

72,860

Other income

-

366

-

13,142

84

1,681

15,273

Total income

282

5,866

64

14,501

18,363

50,396

89,472

Ring Fenced Grants

-

-

-

.

.

122

122

1. Included under Roads & Transport in service level breakdowns
2. Included under Trading Services in service level breakdowns

3.5 Housing Revenue Account

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.

Table 3.8 - Housing Revenue Account Expenditure and Income, 2009-10 1

£ thousands

Expenditure

Employee Costs

137,832

Operating costs

470,755

Transfer Payments

1,395

Support services

67,325

Statutory repayment of debt

94,410

Interest payments

104,786

Total Expenditure 2

876,503

Total Gross Revenue Expenditure 2

972,946

Income

Sales, rents, fees and charges

955,710

Government Grants

5,583

Other Income

5,942

Interest and investment income

1,878

Inter-Account and Inter-Authority Transfers

14,319

TOTAL INCOME

983,432

Net expenditure on housing

-106,929

Revenue contribution to capital

106,463

Net expenditure after contribution to capital

-466

Contributions from the General Fund

895

Contributions to the General Fund

4,299

Surplus retained on HRA

4,728

1. Includes leasing charges
2. The total expenditure breakdown represents the way HRA is recorded in local authority accounts.
The total gross revenue expenditure figure is included to ensure consistency with the HRA expenditure breakdown in table 3.1 which provides a comparison with other accounts.

Chart 3.2 - Housing Revenue Account Expenditure and Income, 2009-10

Chart 3.2 - Housing Revenue Account Expenditure and Income, 2009-10

3.6 Common Good Fund

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.

Table 3.9 - Common Good Fund Expenditure and Income, 2009-10

£ thousands

Expenditure

Employee Costs

149

Operating Expenses

11,238

Support Service Costs

388

Other Expenditure

626

Revenue Contributions to Capital

232

Transfer Payments

1,449

Loan Charges

1,609

Adjustment for inter account and inter authority transfers

-979

TOTAL EXPENDITURE

14,712

Income

Sales, fees and Charges

9,073

Investment Income

3,296

Other Income

396

TOTAL INCOME

12,765