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
4 - LOCAL GOVERNMENT CAPITAL EXPENDITURE

4 - LOCAL GOVERNMENT CAPITAL EXPENDITURE

KEY SUMMARY FACTS

  • Total capital expenditure in 2010-11 was £2,35 million.
  • Capital grants from the Scottish Government to finance capital expenditure in 2010-11 were £697 million.
  • Borrowing to finance capital expenditure (including finance leases) in 2010-11 was £1.22 billion.
  • Capital receipts used to finance 2010-11 capital expenditure were £115 million.
  • Capital funded from current revenue in 2010-11 was £209 million.
  • The value of Local Authority fixed assets at 31 March 2011 was £36.3 billion.
  • Total outstanding debt at 31 March 2011 was £11.5 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, 2010-111

£ thousands
General Fund Services Housing Revenue Account Total
Acquisition of land, leases, existing buildings or works 91,428 7,302 98,730
New construction, conversions & enhancement to existing buildings 1,349,467 527,225 1,876,692
Vehicles, machinery & equipment 145,920 10,369 156,289
Intangible assets 4,202 840 5,042
Total 1,591,017 545,736 2,136,753
Revenue Expenditure funded from Capital Resources 211,029 380 211,409
Total Capital Expenditure 1,802,046 546,116 2,348,162

1. Includes capital funded from current revenue

Table 4.2 - Capital Expenditure by General Fund Service, 2006-07 to 2010-11

£ thousands
2006-07 2007-08 2008-09 2009-10 2010-11
Education 415,392 464,827 479,258 1,248,645 508,691
Cultural & Related Services 136,412 166,636 207,088 216,345 196,014
Social Work 58,962 65,449 63,233 66,379 51,256
Police & Fire 66,820 68,680 101,062 83,779 56,224
Roads & Transport 471,778 484,669 479,769 471,795 399,084
Environmental Services 69,260 101,341 121,267 121,769 102,458
Planning & Economic Development 71,000 122,754 124,060 171,613 120,742
Non-HRA housing 82,259 54,806 180,099 182,808 174,404
Trading Services 4,485 22,179 22,764 21,935 12,687
Other Services 283,610 179,887 274,923 212,250 180,486
Total GF Capital Expenditure 1,659,978 1,731,228 2,053,523 2,797,318 1,802,046
Housing Revenue Account 489,313 453,119 500,558 495,317 546,116
Total Capital Expenditure 2,149,291 2,184,347 2,554,081 3,292,635 2,348,162

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, 2010-11

£ thousands
General Fund Housing Revenue Account Total General Fund General Fund
Scotland 1,802,046 546,116 2,348,162
Aberdeen City 89,110 52,991 142,101
Aberdeenshire 41,665 25,882 67,547 Central Scotland Fire 1,005 Ayrshire VJB 7
Angus 23,293 8,344 31,637 Dumfries & Galloway Fire 595 Central VJB -
Argyll & Bute 1 22,697 - 22,697 Fife Fire and Rescue Service 973 Dunbartonshire& Argyll & Bute VJB 47
Clackmannanshire 5,242 3,468 8,710 Grampian Fire 1,681 Grampian VJB -
Dumfries & Galloway1 66,217 - 66,217 Highlands & Islands Fire 2,652 Highland & Western Isles VJB -
Dundee City 57,801 26,962 84,763 Lothian and Borders Fire 2,275 Lanarkshire VJB -
East Ayrshire 28,148 14,379 42,527 Strathclyde Fire 18,698 Lothian VJB 72
East Dunbartonshire 20,141 4,564 24,705 Tayside Fire 3,104 Orkney & Shetland VJB -
East Lothian 27,849 30,075 57,924 TOTAL FIRE 30,983 Renfrewshire VJB 20
East Renfrewshire 14,199 4,677 18,876 Tayside VJB 38
Edinburgh, City of 198,873 37,718 236,591 Central Scotland Police 1,406 TOTAL VALUATION BOARDS 184
Eilean Siar1 35,206 - 35,206 Dumfries & Galloway Police 672
Falkirk 25,897 16,815 42,712 Fife Constabulary 1,386
Fife 95,133 47,314 142,447 Grampian Police 2,851
Glasgow City1 305,837 - 305,837 Lothian & Borders Police 4,984
Highland 72,525 17,678 90,203 Northern Police 1,659
Inverclyde1 17,942 - 17,942 Strathclyde Police 9,541
Midlothian 9,096 26,363 35,459 Tayside Police 2,347
Moray 26,178 10,300 36,478 TOTAL POLICE 24,846
North Ayrshire 18,962 27,095 46,057
North Lanarkshire 117,591 61,100 178,691 Forth Estuary Transport 9,055
Orkney Islands 14,443 6,268 20,711 Tay Road Bridge 1,807
Perth & Kinross 55,915 7,101 63,016 TOTAL BRIDGE AUTHORITIES 10,862
Renfrewshire 26,045 13,141 39,186
Scottish Borders1 29,869 - 29,869 HITRANS -
Shetland Islands 15,864 2,704 18,568 NESTRANS 2,848
South Ayrshire 16,172 12,377 28,549 SESTRAN 377
South Lanarkshire 119,776 40,628 160,404 SWESTRANS 648
Stirling 19,235 12,379 31,614 SPT 26,378
West Dunbartonshire 35,696 15,796 51,492 TACTRAN -
West Lothian 52,303 19,997 72,300 ZetTrans -
TOTAL UNITARY AUTHORITIES 1,704,920 546,116 2,251,036 TOTAL REGIONAL TRANSPORT PARTNERSHIPS 30,251

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

Map 4.1

Map 4.1

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 (and subsequent years) 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, 2010-11

£ thousands
General Fund Housing Revenue Account Total
Scottish Government General Capital Grant 352,272 380 352,652
Scottish Government Specific Capital Grants 223,183 5,682 228,865
Grants from Scottish Government Agencies and NDPBs 108,264 7,462 115,726
Other Grants and Contributions 84,520 9,966 94,486
Borrowing from Loans fund 808,181 305,748 1,113,929
Capital receipts used from asset sales/disposals 56,256 58,466 114,722
Capital Fund applied 14,904 12 14,916
Capital funded from current revenue 50,494 158,400 208,894
Assets acquired under credit arrangements (e.g. finance leases, PPP/PFI) 103,972 - 103,972
TOTAL 1,802,046 546,116 2,348,162

Table 4.5 - Total Capital Expenditure and Financing1

£ thousands
2006-07 2007-08 2008-09 2009-10 2010-11
Total Capital Expenditure 2,149,479 2,184,347 2,554,081 3,292,635 2,348,162
Financed by:
Scottish Government grants 553,047 722,171 767,722 891,291 697,243
Borrowing2 766,272 715,234 1,207,055 1,915,990 1,217,901
Other grants and contributions 176,929 132,287 137,811 125,851 94,486
Capital Receipts/Capital Fund applied 454,178 440,987 244,657 193,362 129,638
Capital funded from current revenue 199,053 173,668 196,836 166,141 208,894

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.

Table 4.6 - Capital receipts summary, 2010-11

£ thousands
General Fund Housing Revenue Account TOTAL
Capital Receipts brought forward at 1 April 2010 67,869 7,628 75,497
Capital receipts from the sale/ disposal of tangible fixed assets 76,385 65,515 141,900
Capital receipts from the sale/ disposal of intangible fixed assets 71 - 71
Total capital receipts available for use 144,325 73,143 217,468
Capital receipts used from asset sales/disposals 56,256 58,466 114,722
Capital receipts used to repay debt 1,521 5,453 6,974
Capital receipts transferred to Capital Fund 18,444 - 18,444
Capital receipts held 31 March 2011 68,104 9,224 77,328

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.

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 Borrowing to Finance Capital Expenditure

£ thousands
2006-07 2007-08 2008-09 2009-10 2010-11
Scotland 766,272 710,474 1,206,318 1,091,548 1,113,929
Unitary Authorities 760,598 706,643 1,194,867 1,086,559 1,110,056
Fire 616 - 5,674 - 3,873
Police 994 3,831 5,777 4,989 -
Valuation Boards1 .. .. .. .. 0
Regional Transport Partnerships - - - - -
Bridge Authorities 4,064 - - - -

1. Data from Valuation Boards was collected for the first time in 2010-11

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 borrowing to finance capital expenditure, Local Authorities create assets but also a liability to repay the debt. 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, 2008 - 2011

£ thousands
Value of fixed assets
as at 31 March 2008
Value of fixed assets
as at 31 March 2009
Value of fixed assets
as at 31 March 2010
Value of fixed assets
as at 31 March 2011
Operational Assets
Council dwellings 7,953,481 8,739,347 9,140,999 9,780,140
Other land and buildings 12,522,596 13,383,489 18,182,691 19,132,148
Vehicles, plant and machinery 646,958 719,015 769,104 928,814
Infrastructure assets 3,287,842 3,640,832 3,941,374 4,335,085
Community assets 150,566 170,045 172,117 177,755
Total operational assets 24,561,443 26,652,728 32,206,285 34,353,942
Non-operational assets
Assets under construction 897,459 1,019,265 983,249 1,275,873
Surplus assets held for disposal 546,398 540,592 583,577 492,701
Investment properties 1,238,439 1,130,689 702,732 209,196
Total non-operational assets 2,682,296 2,690,546 2,269,558 1,977,770
Intangible Assets 46,977 43,305 42,756 18,052
TOTAL ASSETS 27,290,716 29,386,579 34,518,599 36,349,764

Table 4.9 - Outstanding Debt for each Local Authority, 2010-11

General Fund Services1 Housing Revenue Account Total All Debt (£000s)
Total Debt (£000s) Per Head (£) Total Debt (£000s) Per HRA dwelling (£)
Scotland 9,107,360 1,744 2,383,441 7,451 11,490,801
Aberdeen City 431,783 1,989 185,923 8,189 617,706
Aberdeenshire 301,581 1,227 124,685 9,702 426,266
Angus 131,031 1,185 27,478 3,529 158,509
Argyll & Bute2 183,818 2,061 - - 183,818
Clackmannanshire 93,028 1,837 32,225 - 125,253
Dumfries & Galloway2 240,170 1,621 - - 240,170
Dundee City 229,685 1,592 157,725 11,349 387,410
East Ayrshire 172,105 1,431 71,717 5,548 243,822
East Dunbartonshire 130,916 1,252 16,247 4,548 147,163
East Lothian 193,100 1,981 81,384 9,941 274,484
East Renfrewshire 94,652 1,057 25,020 8,179 119,672
Edinburgh, City of 851,321 1,751 327,962 15,761 1,179,283
Eilean Siar2 145,171 5,543 - - 145,171
Falkirk 188,439 1,229 41,063 2,537 229,502
Fife 520,870 1,427 144,984 4,764 665,854
Glasgow City2 1,518,745 2,562 - - 1,518,745
Highland 490,959 2,215 139,883 10,324 630,842
Inverclyde2 186,077 2,333 - - 186,077
Midlothian 101,224 1,248 106,512 16,279 207,736
Moray 120,753 1,377 43,125 7,407 163,878
North Ayrshire 163,174 1,207 84,884 6,419 248,058
North Lanarkshire 453,813 1,391 148,338 3,996 602,151
Orkney Islands 32,046 1,594 2,875 3,644 34,921
Perth & Kinross 178,570 1,208 46,202 6,301 224,772
Renfrewshire 212,136 1,246 98,459 7,652 310,595
Scottish Borders2 198,721 1,761 - - 198,721
Shetland Islands 13,895 620 41,468 23,154 55,363
South Ayrshire 132,987 1,193 56,283 6,834 189,270
South Lanarkshire 614,257 1,970 167,015 6,534 781,272
Stirling 134,128 1,493 21,178 3,906 155,306
West Dunbartonshire 120,726 1,333 101,686 8,980 222,412
West Lothian 351,014 2,040 89,120 6,896 440,134
Central Scotland Fire 6,200 21 . . 6,200
Dumfries & Galloway Fire - - . . -
Fife Fire and Rescue Service - - . . -
Grampian Fire 9,957 18 . . 9,957
Highlands & Islands Fire 11,149 38 . . 11,149
Lothian and Borders Fire 8,489 9 . . 8,489
Strathclyde Fire 29,409 13 . . 29,409
Tayside Fire 6,361 16 . . 6,361
Central Scotland Police 9,245 31 . . 9,245
Dumfries & Galloway Police - - . . -
Fife Constabulary - - . . -
Grampian Police 5,810 11 . . 5,810
Lothian & Borders Police 26,894 28 . . 26,894
Northern Police 17,918 62 . . 17,918
Strathclyde Police 35,541 16 . . 35,541
Tayside Police 9,492 24 . . 9,492
Forth Estuary Transport - .. . . -
Tay Road Bridge - .. . . -
HITRANS - - . . -
NESTRANS - - . . -
SESTRAN - - . . -
SWESTRANS - - . . -
SPT - - . . -
TACTRAN - - . . -
ZetTrans - - . . -

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


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Email: Bruce Golding