Publication - Statistics

Scottish Local Government Financial Statistics 2009-10

Published: 24 Feb 2011
Part of:
Statistics
ISBN:
ISBN97817804

Scottish Local Government Financial Statistics 2009-10

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56 page PDF

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Contents
Scottish Local Government Financial Statistics 2009-10
4 LOCAL GOVERNMENT CAPITAL EXPENDITURE

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4 LOCAL GOVERNMENT CAPITAL EXPENDITURE

KEY SUMMARY FACTS

  • Total capital expenditure in 2009-10 was £3,293 million.
  • Capital grants from the Scottish Government to finance capital expenditure in 2009-10 were £891 million.
  • Borrowing to finance capital expenditure (including finance leases) in 2009-10 was £1,916 million.
  • Capital receipts used to finance 2009-10 capital expenditure were £165 million.
  • Capital funded from current revenue in 2009-10 was £166 million.
  • The value of Local Authority fixed assets at 31 March 2010 was £34.5 billion.
  • Total outstanding debt at 31 March 2010 was £10.9 billion.

Capital expenditure undertaken by Local Authorities is mainly for purchasing, constructing or enhancing physical assets, such as buildings ( e.g. police or fire stations and schools), land ( e.g. playing fields), infrastructure ( e.g. roads), and vehicles, plant and machinery. Capital expenditure also includes expenditure that the Scottish Ministers have permitted the local authorities to treat as capital expenditure and is met from capital resources.

Capital expenditure is financed by one or more of the following types of income:

  • Capital receipts from asset sales
  • Capital grants and contributions
  • Contributions from revenue funds
  • Borrowing/ Finance leases

Prior to 1 April 2004, Local Authorities were only permitted to incur liability to fund capital expenditure with the consent of Scottish Ministers. These capital consents were issued by Ministers under section 94 of the Local Government (Scotland) Act 1973. Following the introduction of the Local Government in Scotland Act 2003, Local Authorities are permitted to finance capital expenditure by borrowing without securing Government approval. Local Authorities have a statutory duty to set their own maximum capital expenditure limits. These limits must be set with regard to the CIPFA Prudential Code, which requires that capital expenditure undertaken by Local Authorities must be affordable, prudent and sustainable.

Detailed breakdowns of Capital Expenditure can be found in Annexes I and J.

Table 4.1 - Capital Expenditure, 2009-10 1

£ thousands

General Fund Services

Housing Revenue Account

Total

Acquisition of land, leases, existing buildings or works

455,789

21,414

477,203

New construction, conversions & enhancement to existing buildings

1,920,724

465,182

2,385,906

Vehicles, machinery & equipment

174,688

8,325

183,013

Intangible assets

10,801

396

11,197

Total

2,562,002

495,317

3,057,319

Revenue Expenditure funded from Capital Resources

235,316

-

235,316

Total Capital Expenditure

2,797,318

495,317

3,292,635

1. Includes capital funded from current revenue

Table 4.2 - Capital Expenditure By General Fund Service 1

£ thousands

2005-06

2006-07

2007-08

2008-09

2009-10

Education

330,458

415,392

464,827

479,258

1,248,645

Cultural & Related Services

120,063

136,412

165,992

207,088

216,345

Social Work

46,843

58,962

65,449

63,233

66,379

Police & Fire

66,533

66,820

68,680

101,062

83,779

Roads & Transport

345,831

427,303

484,669

479,769

471,795

Environmental Services

79,823

69,260

101,325

121,267

121,769

Planning & Economic Development

78,398

71,188

121,596

124,060

171,613

Non- HRA housing

89,940

82,259

54,786

180,099

182,808

Trading Services

34,055

48,960

22,179

22,764

21,935

Other Services

206,667

283,610

181,725

274,923

212,250

Total GF Capital Expenditure

1,398,611

1,660,166

1,731,228

2,053,523

2,797,318

Housing Revenue Account

418,078

489,313

453,119

500,558

495,317

Total Capital Expenditure

1,816,689

2,149,479

2,184,347

2,554,081

3,292,635

1. Includes capital funded from current revenue
2. Due to revised accounting arrangements for PPP and PFI, it is not possible to compare capital expenditure for 2009-10 with previous years for services in which there are PPP or PFI schemes. This mainly affects Education.

Table 4.3 - Capital Expenditure By Local Authority type, 2009-10

£ thousands

General Fund

Housing Revenue Account

Total

General Fund

Housing Revenue Account

Total

Scotland

2,797,318

495,317

3,292,635

Aberdeen City

154,675

48,547

203,222

Central Scotland Fire

986

.

986

Aberdeenshire

55,825

19,224

75,049

Dumfries & Galloway Fire

735

.

735

Angus

33,368

9,621

42,989

Fife Fire and Rescue Service

3,662

.

3,662

Argyll & Bute 1

29,022

-

29,022

Grampian Fire

2,385

.

2,385

Clackmannanshire

33,468

4,824

38,292

Highlands & Islands Fire

2,771

.

2,771

Dumfries & Galloway 1

109,684

-

109,684

Lothian and Borders Fire

2,192

.

2,192

Dundee City

78,753

20,805

99,558

Strathclyde Fire

9,909

.

9,909

East Ayrshire

24,463

12,556

37,019

Tayside Fire

2,119

.

2,119

East Dunbartonshire

172,092

4,432

176,524

TOTAL FIRE

24,759

.

24,759

East Lothian

31,895

21,618

53,513

East Renfrewshire

12,820

3,903

16,723

Central Scotland Police

2,492

.

2,492

Edinburgh, City of

460,824

33,864

494,688

Dumfries & Galloway Police

828

.

828

Eilean Siar 1

17,978

-

17,978

Fife Constabulary

2,150

.

2,150

Falkirk

72,358

14,099

86,457

Grampian Police

2,526

.

2,526

Fife

74,799

52,238

127,037

Lothian & Borders Police

10,829

.

10,829

Glasgow City 1

296,357

-

296,357

Northern Police

3,796

.

3,796

Highland

70,606

10,738

81,344

Strathclyde Police

12,896

.

12,896

Inverclyde 1

38,520

-

38,520

Tayside Police

2,103

.

2,103

Midlothian

19,993

22,670

42,663

TOTAL POLICE

37,620

.

37,620

Moray

31,937

4,258

36,195

North Ayrshire

22,131

20,286

42,417

Forth Estuary Transport

8,835

.

8,835

North Lanarkshire

100,900

53,844

154,744

Tay Road Bridge

1,921

.

1,921

Orkney Islands

9,067

1,401

10,468

TOTAL BRIDGE AUTHORITIES

10,756

.

10,756

Perth & Kinross

118,962

18,594

137,556

Renfrewshire

39,862

12,623

52,485

HITRANS

-

.

-

Scottish Borders 1

73,931

-

73,931

NESTRANS

3,278

.

3,278

Shetland Islands

31,915

2,168

34,083

SESTRAN

-

.

-

South Ayrshire

19,310

7,904

27,214

SWESTRANS

465

.

465

South Lanarkshire

185,935

39,612

225,547

SPT

26,656

.

26,656

Stirling

26,256

8,997

35,253

TACTRAN

-

.

-

West Dunbartonshire

108,364

16,099

124,463

ZetTrans

-

.

-

West Lothian

137,714

30,392

168,106

TOTAL REGIONAL TRANSPORT PARTNERSHIPS

30,399

.

30,399

TOTAL UNITARY AUTHORITIES

2,693,784

495,317

3,189,101

1. These councils have transferred their housing stock to Registered Social Landlords

4.1 Financing Capital Expenditure

Capital expenditure can be financed by central Government grants, capital receipts (proceeds from the sale of fixed assets), other grants and contributions, revenue resources and prudential borrowing (consisting of self-financed borrowing and borrowing supported through loan charge support from the Scottish Government).

The capital data for 2009-10 include the changes arising from the introduction of International Financial Reporting Standards ( IFRS). Under the new accounting arrangements the criteria for asset recognition moved from risk and reward to the control of service provision and control of the residual value of the asset. Based on the new tests most local authorities identified that they do have control of service provision and the residual interest in the PFI assets, such as schools. These assets are now recognised as assets of the local authority (on-balance sheet) which they were not under the previous arrangements and now form part of the capital regime. Any expenditure on their construction or enhancement will be capital expenditure. The associated financing of the arrangement is a type of debt which is known as a finance lease or credit arrangement

Table 4.4 - Financing of capital expenditure, 2009-10

£ thousands

General Fund

Housing Revenue Account

Total

Scottish Government General Capital Grant

462,640

-

462,640

Scottish Government Specific Capital Grants

265,605

2,765

268,370

Grants from Scottish Government Agencies and NDPBs

157,955

2,326

160,281

Other Grants and Contributions

121,558

4,293

125,851

Borrowing from Loans fund

779,807

311,741

1,091,548

Capital receipts used from asset sales/disposals

110,418

54,328

164,746

Capital Fund applied

28,017

599

28,616

Capital funded from current revenue

46,876

119,265

166,141

Assets acquired under credit arrangements ( e.g. finance leases, PPP/ PFI)

824,442

-

824,442

TOTAL

2,797,318

495,317

3,292,635

Table 4.5 - Total Capital Expenditure and Financing 1

£ thousands

2005-06

2006-07

2007-08

2008-09

2009-10

Total Capital Expenditure

1,816,689

2,149,479

2,184,347

2,554,081

3,292,635

Financed by:

Scottish Government grants

446,533

553,047

722,171

767,722

891,291

Borrowing 2

663,119

766,272

715,234

1,207,055

1,915,990

Other grants and contributions

147,337

176,929

132,287

137,811

125,851

Capital Receipts/Capital Fund applied

313,241

454,178

440,987

244,657

193,362

Capital funded from current revenue

246,459

199,053

173,668

196,836

166,141

1. Includes Housing Revenue Account expenditure and financing.
2. Includes finance leases.

Chart 4.1 - Capital Expenditure Financing

Chart 4.1 - Capital Expenditure Financing

4.2 Capital Receipts

Capital receipts can be used to finance capital expenditure and repay debt (principal but not interest). These receipts are generated through the sale or disposal of assets, such as a council house or other local authority land/building. The amount of capital receipts used to finance capital expenditure can be less than the amount of capital receipts raised in a given year.

Table 4.6 - Capital receipts summary, 2009-10

£ thousands

General Fund

HRA

TOTAL

Capital Receipts brought forward at 1 April 2009

74,748

3,725

78,473

Capital receipts from the sale/ disposal of tangible fixed assets

164,306

63,609

227,915

Capital receipts from the sale/ disposal of intangible fixed assets

-

1,482

1,482

Total capital receipts available for use

239,054

68,816

307,870

Capital receipts used from asset sales/disposals

110,418

54,328

164,746

Capital receipts used to repay debt

1,557

11,028

12,585

Capital receipts transferred to Capital Fund

74,061

.

74,061

Capital receipts held 31 March 2010

53,018

3,460

56,478

4.3 Borrowing

Local Authorities have the statutory power to borrow under Schedule 3 of the Local Government (Scotland) Act 1975. Local Authorities may borrow for the purposes of:

  • Acquiring land
  • Construction of buildings
  • Undertaking permanent work or provision of plant and machinery
  • Lending to relevant authorities or Community Councils
  • Any other purpose for which the authority is authorised under any enactment to borrow

Borrowing is a major component of the funding of capital expenditure, whose proportion in terms of capital expenditure financing increased greatly from 2007-08 to 2008-09, as shown in Chart 4.1. This increase is likely reflective of advice given to authorities to take advantage of recent market conditions by borrowing where possible, instead of, for example, using receipts from sales of assets, which has shown a corresponding decrease in proportion of capital expenditure financing.

The Scottish Government provides loan charge support as part of local authority revenue funding, which covers the debt charges on a notional amount of capital expenditure each year. This is known as supported borrowing. Borrowing over and above the level of supported borrowing is classified as self-financed borrowing, and is financed by the local authority itself.

Local authorities are required by legislation to operate a loans fund. All amounts of money borrowed by local authorities must be paid into this loans fund, which then makes advances to service accounts to fund capital expenditure. The Scottish Government monitors the value of debt recorded in the loans fund (rather than the level of external debt) because it is this amount of debt that is charged to services over a period of time. It is not expected, however, that the levels of loan pool debt and external debt will be significantly different in value.

Table 4.7 - Loans Fund Advances to Finance Capital Expenditure

£ thousands

2005-06

2006-07

2007-08

2008-09

2009-10

Scotland

663,119

766,272

710,474

1,206,318

1,091,548

Unitary Authorities

662,785

760,598

706,643

1,194,867

1,086,559

Fire

-

616

-

5,674

-

Police

334

994

3,831

5,777

4,989

Regional Transport Partnerships

-

-

-

-

-

Bridge Authorities

-

4,064

-

-

-

Local Authorities often need to provide long term financing for capital projects. Borrowing allows authorities a flexible, yet largely predictable method of finance. The Scottish Government provides Local Authorities with support for the costs of an agreed level of new borrowing each year.

The ongoing cost of servicing the majority of this debt is supported through loan charges support within Total Revenue Funding ( TRF). New debt incurred over and above the levels of supported borrowing is self-financed by local authorities and the small element of non-revenue generating debt on general fund services that is not relevant for loan charges support within TRF is generally on programmes supported through ring-fenced grants up to and including 2008-09.

The costs of servicing debt on Local Authority trading services (e.g piers and harbours) are mainly met through the charges made for these services, while the costs of servicing Housing Revenue Account ( HRA) debt are met principally through income from rents and from Housing Support Grant.

4.4 Fixed Assets and Outstanding Debt

As a result of capital expenditure, Local Authorities generate assets and liabilities. The value of Local Authority fixed assets is shown in Table 4.8 below, and the levels of outstanding debt are shown in Table 4.9.

Table 4.8 - Value Of Fixed Assets, 2009-10

£ thousands

Value of fixed assets as at 31 March 2010

Operational Assets

Council dwellings

9,140,999

Other land and buildings

18,182,691

Vehicles, plant and machinery

769,104

Infrastructure assets

3,941,374

Community assets

172,117

Total operational assets

32,206,285

Non-operational assets

Assets under construction

983,249

Surplus assets held for disposal

583,577

Investment properties

702,732

Total non-operational assets

2,269,558

Intangible Assets

42,756

TOTAL ASSETS

34,518,599

Table 4.9 - Outstanding Debt On Local Authority Services, 2009-10

General Fund Services 1

Housing Revenue Account

Total All Debt (£000s)

Total Debt (£000s)

Per Head (£)

Total Debt (£000s)

Per HRA dwelling (£)

Scotland

8,701,375

1,675

2,209,731

6,838

10,911,106

Aberdeen City

397,896

1,861

163,658

7,175

561,554

Aberdeenshire

284,943

1,170

126,065

9,741

411,008

Angus

124,573

1,130

27,114

3,462

151,687

Argyll & Bute 2

191,110

2,123

-

-

191,110

Clackmannanshire

95,744

1,894

33,788

6,748

129,532

Dumfries & Galloway 2

232,057

1,563

-

-

232,057

Dundee City

213,396

1,488

141,567

9,589

354,963

East Ayrshire

164,875

1,372

68,030

5,241

232,905

East Dunbartonshire

110,395

1,055

16,320

4,523

126,715

East Lothian

178,687

1,845

56,276

6,996

234,963

East Renfrewshire

93,528

1,048

23,134

7,531

116,662

Edinburgh, City of

850,108

1,780

313,160

14,711

1,163,268

Eilean Siar 2

146,296

5,588

-

-

146,296

Falkirk

185,273

1,215

37,584

2,296

222,857

Fife

475,108

1,307

128,623

4,184

603,731

Glasgow City 2

1,467,764

2,494

-

-

1,467,764

Highland

468,309

2,124

139,221

10,233

607,530

Inverclyde 2

183,641

2,290

-

-

183,641

Midlothian

104,649

1,295

85,498

13,047

190,147

Moray

119,536

1,364

37,341

6,428

156,877

North Ayrshire

163,472

1,206

71,423

5,328

234,895

North Lanarkshire

389,437

1,193

120,266

3,227

509,703

Orkney Islands

35,228

1,765

-

-

35,228

Perth & Kinross

173,082

1,186

48,543

6,560

221,625

Renfrewshire

169,352

997

126,378

9,639

295,730

Scottish Borders 2

195,180

1,732

-

-

195,180

Shetland Islands

12,401

558

42,739

23,626

55,140

South Ayrshire

130,073

1,167

56,154

6,792

186,227

South Lanarkshire

555,544

1,787

149,651

5,793

705,195

Stirling

130,761

1,474

19,081

3,409

149,842

West Dunbartonshire

118,638

1,305

95,406

8,385

214,044

West Lothian

324,446

1,897

82,711

6,429

407,157

Central Scotland Fire

6,571

23

.

.

6,571

Dumfries & Galloway Fire

-

-

.

.

-

Fife Fire and Rescue Service

-

-

.

.

-

Grampian Fire

10,444

19

.

.

10,444

Highlands & Islands Fire

12,211

42

.

.

12,211

Lothian and Borders Fire

9,638

10

.

.

9,638

Strathclyde Fire

28,586

13

.

.

28,586

Tayside Fire

6,820

17

.

.

6,820

Central Scotland Police

9,781

34

.

.

9,781

Dumfries & Galloway Police

-

-

.

.

-

Fife Constabulary

-

-

.

.

-

Grampian Police

6,436

12

.

.

6,436

Lothian & Borders Police

28,322

30

.

.

28,322

Northern Police

18,632

65

.

.

18,632

Strathclyde Police

36,876

17

.

.

36,876

Tayside Police

11,298

28

.

.

11,298

Forth Estuary Transport

-

..

.

.

-

Tay Road Bridge

-

..

.

.

-

HITRANS

-

-

.

.

-

NESTRANS

-

-

.

.

-

SESTRAN

-

-

.

.

-

SWESTRANS

-

-

.

.

-

SPT

30,258

14

.

.

30,258

TACTRAN

-

-

.

.

-

ZetTrans

-

-

.

.

-

1. Includes Trading Services
2. These councils have transferred their housing stock to Registered Social Landlords