Publication - Statistics publication

Scottish Local Government Financial Statistics 2010-11

Published: 22 Feb 2012
Part of:
Statistics
ISBN:
9781780456492

A comprehensive overview of Local Authority financial activity

60 page PDF

2.7 MB

60 page PDF

2.7 MB

Contents
Scottish Local Government Financial Statistics 2010-11
1 - INTRODUCTION TO SCOTTISH LOCAL GOVERNMENT FINANCE STATISTICS

60 page PDF

2.7 MB

1 - INTRODUCTION TO SCOTTISH LOCAL GOVERNMENT FINANCE STATISTICS

Scottish Local Government Finance Statistics is an annual publication that provides a comprehensive overview of Scottish Local Authority financial activity. The publication covers Local Authority income, revenue and capital expenditure, outstanding debt, local taxation and Local Authority pensions. Further information on Scottish Local Government Finance Statistics can be found at http://www.scotland.gov.uk/Topics/Statistics/Browse/Local-Government-Finance.

1.1 Structure and Functions of Local Government

Local Government is responsible for delivering a wide range of services, including education, social services, transport, housing, environmental services, cultural services, planning and development and central services. Under the Concordat signed in November 2007, the Scottish Government and Local Government work jointly towards agreed outcomes under a single national purpose.

Local Government in Scotland is comprised of 32 Local Authorities as shown in Map 1.1. In terms of population, the largest of these 32 Authorities is Glasgow City Council and the smallest is Orkney Islands Council. Table 1.1 below shows the population and area for each Local Authority.

In addition to these 32 Local Authorities, there are also Police and Fire Boards, Valuation Joint Boards, Regional Transport Partnerships and the Forth and Tay Bridge Boards. Most of these Boards are the collective responsibility of two or more Councils. See Annex A for listings of Boards and constituent Local Authorities.

Police and Fire Boards are responsible for providing police and fire services to their constituent council members. Board members are nominated by the constituent councils. Net funding is requisitioned from the constituent councils.

Regional Transport Partnerships (RTPs) were established by the Transport (Scotland) Act 2005. Seven statutory regional transport partnerships were created across Scotland to lead on regional transport strategy and delivery.

Valuation Joint Boards provide valuation services, primarily maintaining the Valuation Roll for non-domestic properties, and the Council Tax Valuation List for domestic dwellings. The Valuation Roll and Council Tax Valuation Lists are used as the basis for local taxation billing liability (council tax and non-domestic rates).

Table 1.1 Local Authority Population and Area, 2010-11

Population1 Area2
(sq km)
Scotland 5,222,100 77,925
Aberdeen City 217,120 186
Aberdeenshire 245,780 6,313
Angus 110,570 2,182
Argyll & Bute 89,200 6,909
Clackmannanshire 50,630 159
Dumfries & Galloway 148,190 6,426
Dundee City 144,290 60
East Ayrshire 120,240 1,262
East Dunbartonshire 104,580 175
East Lothian 97,500 679
East Renfrewshire 89,540 174
Edinburgh, City of 486,120 264
Eilean Siar 26,190 3,071
Falkirk 153,280 297
Fife 365,020 1,325
Glasgow City 592,820 175
Highland 221,630 25,659
Inverclyde 79,770 160
Midlothian 81,140 354
Moray 87,720 2,238
North Ayrshire 135,180 885
North Lanarkshire 326,360 470
Orkney Islands 20,110 990
Perth & Kinross 147,780 5,286
Renfrewshire 170,250 261
Scottish Borders 112,870 4,732
Shetland Islands 22,400 1,466
South Ayrshire 111,440 1,222
South Lanarkshire 311,880 1,772
Stirling 89,850 2,187
West Dunbartonshire 90,570 159
West Lothian 172,080 427

1. Source: NRS 2010 mid-year population estimates, Table 2
2. Source: NRS 2010 mid-year population estimates, Table 9
http://www.gro-scotland.gov.uk/statistics/theme/population/estimates/mid-year/2010/tables.html

Map 1.1

Map 1.1

1.2 Local Government Finance

Capital and Revenue

Local Government expenditure is split between revenue and capital expenditure.

Both the capital and revenue sections of Local Authority accounts are collected on an accruals basis. This means that transactions are reflected in the accounts of the period in which the relevant event took place (for example, when income was earned or an expense was incurred). Capital accounts figures prior to 2004-05 were recorded on a cash basis, where transactions were recorded in the period in which the payment was made or received.

Revenue expenditure is largely made up of employee and operating costs. Employee costs include salaries, wages, national insurance, superannuation contributions, cash allowances to employees, redundancy and severance payments and other employee costs. Operating costs include property costs, supplies and services, transport and plant costs, payments to agencies and other bodies, and direct administration costs.

Capital expenditure is mainly incurred by Local Authorities for buying, constructing or enhancing physical assets such as buildings (schools, houses etc), land, vehicles, plant and machinery.

For accounting purposes revenue and capital are kept separate, but there is a relationship between the two, where capital expenditure (on a building for example) can have implications for revenue expenditure (where that building needs to be maintained and staffed). The revenue accounts reported include the General Fund, Housing Revenue accounts and External Trading Services accounts. Adjustments are made for transfers between accounts in order to avoid any double counting of expenditure or income.

Revenue expenditure is largely financed through Scottish Government grants, Non-Domestic Rates income and Council Tax income. Capital is mainly financed through Scottish Government grants, borrowing, capital receipts and revenue contributions.

Revenue and capital accounts should not be combined to produce total expenditure and income figures. There are elements of expenditure, i.e. Revenue Contributions to Capital, which is also known as Capital Financed from Current Revenue, and Grants to third parties funded by the General Capital Grant, which are reported both as Revenue and as Capital expenditure. As such, analysis and discussion of revenue and capital accounts are done separately to avoid double-counting.

Local Authority Funds and Reserves

Local Authorities are required under section 93(1) of the Local Government (Scotland) Act 1973 to have a General Fund. All sums received by or on behalf of the authority are required to be paid into that fund, and all sums payable by the authority shall be paid out of the General Fund, except where statute provides otherwise. The General Fund is therefore the main account for local authorities and the one where most transactions occur. General Fund revenue expenditure and income is reported in Chapter 3 of this publication. References to General Fund Income and Expenditure in this publication encompass the income and expenditure of the 32 Local Authorities, the Police and Fire Boards, the Valuation Joint Boards, and the Regional Transport Partnerships, but do not include income and expenditure of the Forth or Tay Bridge Boards.

The Housing (Scotland) Act 1987 requires a local authority to keep a Housing Revenue Account (HRA) for income and expenditure in relation to a local authority's own direct provision of housing. This separates the costs of social housing from other services provided by the local authority. Details of the Housing Revenue Account are reported in Chapter 3 (Section 3.5) of this publication.

Local authorities also own and manage Common Good assets. Statute requires these assets to be accounted for separately. Common good values are reported in Chapter 3 (Section 3.6) of this publication.

Local Authorities are empowered by the Local Government (Scotland) Act 1975 to establish a Renewal and Repair fund. This fund may be used for repairing, maintaining, replacing and renewing the authority's buildings, plant and equipment. The Renewal and Repair fund may also be used to finance capital expenditure. In accordance with the Code of Practice on Local Authority Accounting in the UK (the Code), expenditure may not be charged directly to reserves. As such, all transactions are restricted to contributions to and from the General Fund.

The Local Government (Scotland) Act 1975 (as amended by schedule 13 of the Local Government etc. (Scotland) Act 1994) also enables a local authority to establish an Insurance Fund. Again, expenditure should not be charged directly to any reserve. As such, all transactions for this reserve are restricted to contributions to and from the General Fund.

In addition to the funds listed above, some local authorities may have specific statutory authority to hold other reserves. Examples include the Orkney County Council Act 1974 and the Zetland County Council Act 1974, which require the respective councils to keep separate accounts for their harbour undertakings and provide the power for the councils to hold a reserve fund for the same undertakings. As with other reserves' transactions, all transactions for these reserves are restricted to contributions to and from the General Fund.

The Local Government (Scotland) Act 1975 Act also permits a local authority to establish a Capital Fund. This fund 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). Capital receipts may be paid directly into the Capital Fund in accordance with the provisions of the 1975 Act.

Details of the balances held by local authorities on their General Fund and other reserves are detailed in Chapter 3 (Section 3.3).

In addition to their own funds certain local authorities have the responsibility for managing pension funds. The Local Government Pension Schemes do not form part of the local authority accounts or reserves. Pension fund data is reported in Chapter 5 of this publication.

Changes to accounting arrangements for Public Private Partnerships and Public Finance Initiatives

Revised accounting arrangements for Public Private Partnerships (PPP) and Public Finance Initiatives (PFI) were introduced from 1st April 2009. Local Financial Returns 2009-10 and Final Capital Return 2009-10 were revised to collect data based on the new arrangements and this has continued for 2010-11.

The revisions require local authorities to separate the PPP/PFI unitary charge into elements recognising the liability to meet the construction cost of the asset (statutory repayment of debt), interest costs arising from financing arrangements and the service charge for services (revenue expenditure) provided under the arrangement. Previously the total unitary charge was included within the relevant service revenue expenditure. Therefore, for 2009-10 (and later years) 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. Total revenue expenditure is not affected by the changes. To allow comparisons to be made between the old and new accounting arrangements, revenue expenditure tables prepared on the old basis [LGF Stats 2009-10 (PPP/PFI Adjusted)] were published alongside Scottish Local Government Financial Statistics 2009-10 (which included tables on the new basis).

Capital expenditure is also affected by the revised accounting arrangements. Before 1 April 2009 assets provided by a PFI/PPP or similar arrangement were not recorded as assets of the authority and therefore expenditure on the construction or enhancement of those assets were not recorded as capital expenditure. 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.

This change should therefore be taken into account when comparing 2009-10 capital expenditure for services in which councils have PPP or PFI with those of previous years. Comparison between data on the old and new bases is provided in Capital Expenditure Report 2010-11.

The services in which councils have reported having PPP or PFI are Education, Social Work, Culture & Related Services, Environmental Services and Roads & Transport. The biggest effect can be seen in Education as most councils have a PPP or PFI scheme for this service.

For more detailed information on the accounting changes see Finance Circular 4/2010.

Data Sources and Notes

The tables and figures in this publication have been compiled using various financial returns made by Local Authorities and Joint Boards throughout the financial year. The continued co-operation of these bodies in completing these returns is gratefully acknowledged.

All financial data is shown at outturn level to reflect the amounts after the year's accounts have been closed, but before audit. Where possible actual figures have been used. Where this has not been possible, near-actual figures have been taken. For this reason the figures published in this publication may not always agree with those published in Local Authority Audited Accounts.

Please note that due to rounding, some totals may not agree with the sum of their constituent parts. Calculations have been made where possible using un-rounded figures and may therefore not agree exactly with the rounded figures given in accompanying tables.

The following symbols are used throughout the publication:

.. not available

. not applicable

- nil or less than half the final digit shown

Enquiries

Enquiries relating to any of the text, tables or figures contained in the publication may be directed to:

Scottish Government
Local Governance and Reform Analytical Unit
Local Government Finance
Area 3H-North, Victoria Quay
Edinburgh
EH6 6QQ

Tel: (0131) 244 7033
E-mail: lgfstats@scotland.gsi.gov.uk

All tables in this publication and further background data are available as Excel spreadsheets from the Scottish Government Local Government Finance Statistics website at: http://www.scotland.gov.uk/stats/lgfstats


Contact

Email: Bruce Golding