Publication - Statistics

Scottish Local Government Financial Statistics 2010-11

Published: 22 Feb 2012
ISBN:
9781780456492

A comprehensive overview of Local Authority financial activity

Scottish Local Government Financial Statistics 2010-11
3 - LOCAL GOVERNMENT REVENUE EXPENDITURE

3 - LOCAL GOVERNMENT REVENUE EXPENDITURE

KEY SUMMARY FACTS

  • Total gross revenue expenditure in 2010-11 was £18.5 billion.
  • Total General Fund net revenue expenditure to be funded from General Revenue Funding (GRF), council tax and non-domestic rates was £13.0 billion.
  • Total revenue reserves at 31 March 2011 were £1.6 billion.
  • Housing revenue account gross revenue expenditure was £1.0 billion.

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 1st April 2009. Therefore, from 2009-10 onwards revenue expenditure, statutory repayment of debt and interest and investment income for services in which there are PPP or PFI schemes is not directly 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, 2010-11

£ Thousands
General Fund Services1 Housing Revenue Account Significant Trading Operations Road Bridges Common Good Fund
Employee Costs 7,580,561 151,164 453,258 4,075 218
Operating Costs 6,056,339 449,303 498,898 2,225 10,358
Support Service Costs 694,379 58,296 26,060 117 370
Transfer payments 2,239,666 1,683 . - 800
Revenue Contributions to Capital 36,658 140,454 - 9,856 214
Adjustment for inter account and inter authority transfers -654,297 -22,664 -709,787 - -3,421
Grants to third parties funded by General Capital Grant 63,407 . . . .
Statutory Repayment of Debt 531,490 105,190 22,378 1,440 2,633
Interest payments 615,931 122,444 .. .. ..
Contributions to General Fund/ Other . 1,475 7,816 -554 358
Total Gross Revenue Expenditure 17,164,134 1,007,345 298,623 17,159 11,530

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, 2010-11

£ 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 4,856,964 180,450 4,676,514 39.3% 21,624
Cultural and Related Services 738,957 100,851 638,106 5.4% 12
Social Work 3,609,012 748,260 2,860,752 24.1% 2,354
Police 1,242,866 264,657 978,209 8.2% 397,102
Fire 357,138 43,643 313,495 2.6% -
Roads and Transport 706,996 204,366 502,630 4.2% 300
Environmental Services 792,494 128,939 663,555 5.6% 162
Planning & Economic Development 512,608 199,401 313,207 2.6% 2,242
Non-HRA Housing 2,361,230 1,967,327 393,903 3.3% 2,962
Central Services 774,715 214,395 560,320 4.7% .
Trading Services 61,552 69,825 -8,273 -0.1% 123
Total General Fund services 16,014,532 4,122,114 11,892,418 100.0% 426,881
Interest and investment income 615,931 26,185 589,746 .
Statutory repayment of debt 531,490 . 531,490 .
Contributions to/from HRA 2,181 . 2,181 .
Surplus/deficit from Significant Trading Operations . . -11,105 .
Total 17,164,134 4,148,299 13,004,730 426,881

Table 3.3 - Net Revenue Expenditure by Service, 2006-07 to 2010-11

£ millions
2006-07 2007-08 2008-09 2009-102 2010-11
Education 4,252 4,432 4,676 4,633 4,677
Social Work 2,212 2,368 2,684 2,825 2,861
Police 1,067 1,078 1,100 1,125 978
Fire 280 290 320 332 313
Cultural & Related Services 592 593 628 662 638
Environmental Services 502 510 628 657 664
Roads & Transport1 447 447 453 486 503
Central Services 392 439 469 632 560
Planning & Economic Development 160 163 289 332 313
Non-HRA Housing 77 91 427 420 394
Trading Services -11 -12 -5 -9 -8

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 - Net Revenue Expenditure By Service (%)

Chart 3.1 - Net Revenue Expenditure By Service (%)

1. Due to revised accounting arrangements for PPP and PFI, it is not possible to directly 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 (and later years), 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.

Map 3.1

Map 3.1

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

£ thousands
Net Revenue Expenditure1 General Revenue Funding2 Ring-fenced Revenue Grants3 Council Taxes NDR Balances
2006-07 10,714,001 5,777,202 888,171 1,811,577 1,883,769 353,282
2007-08 11,119,280 6,169,645 869,939 1,889,913 1,859,727 330,056
2008-09 12,421,451 7,425,886 726,350 1,908,972 1,962,800 397,443
2009-10 13,135,372 7,756,689 761,338 1,909,627 2,165,100 542,618
2010-11 13,004,730 8,149,407 431,419 1,923,186 2,068,200 432,518

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 (%)

Net Revenue Expenditure1 General Revenue Funding2 Ring-fenced Revenue Grants3 Council Taxes NDR Balances
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% 59.8% 5.8% 15.4% 15.8% 3.2%
2010-11 100.0% 62.7% 3.3% 14.8% 15.9% 3.3%

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, 2010-11

£ thousands
Revenue Reserves Total Revenue Reserves
General Fund Housing Revenue Account Renewal and Repairs Insurance Fund Other Statutory Funds
Level of Reserves held 1 April 2010 813,544 69,222 185,452 76,092 267,488 1,411,798
Level of Reserves held 31 March 2011 920,750 75,792 201,380 75,820 290,181 1,563,923

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. For capital expenditure, 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, 2010-11

Passenger Transport1 £ thousands
Buses Ferries Other transport undertakings Road bridges Fisheries, harbours and markets2 Other trading services2 Total External Trading
Expenditure
Employee costs 704 8,452 1,258 4,075 1,944 25,588 42,021
Operating expenses 556 16,326 3,016 1,671 17,765 27,012 66,346
Revenue contributions to capital . . . 9,856 29 - 9,885
Support service costs 46 297 147 117 326 2,013 2,946
Grants to third parties funded by General Capital Grant - - - - - 22 22
Adjustment for inter account and inter authority transfers -1,029 0 -5,191 0 -33 -13,114 -19,367
Total expenditure 277 25,075 -770 15,719 20,031 41,521 101,853
Income
Government grants 133 12 - 1,282 146 - 1,573
Sales, rents, fees and charges 225 5,600 83 89 19,908 46,944 72,849
Other income 200 76 - 15,297 - 2,805 18,378
Grants to third parties funded by General Capital Grant - - - - - 22 22
Total income 558 5,688 83 16,668 20,054 49,771 92,822
Ring Fenced Grants 0 0 0 . . 123 123

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, 2010-111

£ thousands
Expenditure
Employee Costs 151,164
Operating costs 449,303
Transfer Payments 1,683
Support services 58,296
Statutory repayment of debt 105,190
Interest payments 122,444
Total Expenditure2 888,080
Total Gross Revenue Expenditure2 1,007,345
Income
Sales, rents, fees and charges 979,571
Government Grants 9,213
Other Income 2,309
Interest and investment income 1,260
Inter-Account and Inter-Authority Transfers 22,664
TOTAL INCOME 1,015,017
Net expenditure on housing -126,937
Revenue contribution to capital 140,454
Net expenditure after contribution to capital 13,517
Contributions from the General Fund 2,181
Contributions to the General Fund 1,475
Surplus retained on HRA 17,173

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, 2010-11

Chart 3.2 - Housing Revenue Account Expenditure, 2010-11

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, 2010-11

£ thousands
Expenditure
Employee Costs 218
Operating Expenses 10,358
Support Service Costs 370
Other Expenditure 358
Revenue Contributions to Capital 214
Transfer Payments 800
Loan Charges 2,633
Adjustment for inter account and inter authority transfers -3,421
TOTAL EXPENDITURE 11,530
Income
Sales, fees and Charges 7,168
Investment Income 3,157
Other Income 353
TOTAL INCOME 10,678

Contact

Email: Bruce Golding