Publication - Statistics

Scottish Local Government Financial Statistics 2012-13

Published: 25 Feb 2014
ISBN:
9781784122706

Scottish Local Government Financial 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.

Scottish Local Government Financial Statistics 2012-13
1. Local Government Revenue Expenditure and Income

1. Local Government Revenue Expenditure and Income

1.1 Total Revenue Income and Expenditure

Total gross revenue expenditure by local government in Scotland in 2012-13 was £16.8 billion. The majority of expenditure is in the general fund although over £1 billion of expenditure was in the Housing Revenue Account (HRA) and Significant (Internal) Trading Operations. Further details on these different funds are laid out in sections 2.2 and 2.3.

Table 1.1 details revenue income and expenditure for 2012-13. Throughout the table expenditure is positive and income negative. The biggest single element of gross expenditure were employee costs which account for £7.70 billion of all expenditure. The second largest element was operating costs (which includes property costs, supplies and services costs, transport and payments to agencies and other bodies) which account for £7.12 billion.

Transfer payments are those made to individuals for which no goods or services are received in return by the local authority. The majority of transfer payments are housing benefits which make up £1.66 billion of the total of £2.04 billion. An adjustment for Inter Account and Inter Authority Transfers is made to the gross expenditure to take account of transfers between local authorities and between different services within an authority and ensure that expenditure is not counted twice.

Support services are those paid for services that support the provision of services to the public (including IT, Human Resources, Legal Services, Procurement Services and Corporate Services). In 2012-13 as part of a wider review of the Local Financial Returns (LFRs) the definition of support services was changed to be more prescriptive as to what should and should not be included. This was done to improve comparability of support services costs between local authorities and means that data for support services expenditure in 2012-13 may not be directly comparable with past years.

The surplus or deficit on the provision of service provides an important link between income and expenditure data, and data on reserves, debt and interest costs which were previously collected separately. This allows a greater level of analysis to be undertaken on the relationship between authorities' expenditure, income, funding, debt and reserves. The impact of this can be seen in a number of the tables in Sections 1 and 3 of this publication, in particular in Tables 1.1 and 3.1 which now link together what councils spend, raise and receive with the reserves they hold.

Local authorities are required to ensure that their LFRs are directly comparable to their published audited accounts. This should ensure that the data provided is more comparable across authorities and there is less opportunity for error when classifying expenditure across different services within an authority.

Table 1.1 - Total Revenue Income and Expenditure, 2012-13

    £ thousands
  Total General Fund Services1 Housing Revenue Account Significant Trading Operations Road Bridges Common Good Fund
Employee Costs 7,696,485 7,211,751 136,700 343,725 4,159 150
Operating Costs 7,117,224 6,190,414 454,878 451,056 6,931 13,945
Support Service Costs 900,480 806,506 64,442 28,972 115 445
Transfer payments 2,036,432 2,034,197 1,985 180 0 70
Revenue Contributions to Capital 285,369 94,151 190,810 368 0 40
Adjustment for Inter Account and Inter Authority Transfers -1,225,637 -568,298 -28,890 -621,143 -4,979 -2,327
Gross Expenditure 16,810,353 15,768,721 819,925 203,158 6,226 12,323
Government Grants2 -2,640,323 -2,619,484 -9,530 -5 -11,304 0
Other Grants Reimbursements and Contributions -824,685 -790,289 -10,567 -17,497 -6,300 -32
Customer and Client Receipts -2,581,251 -1,296,127 -1,034,306 -239,625 -80 -11,113
Total Income -6,046,259 -4,705,900 -1,054,403 -257,127 -17,684 -11,145
Net Revenue Expenditure (excl Ring Fenced Grants) 10,764,094 11,062,821 -234,478 -53,969 -11,458 1,178
Interest Paid 805,726 683,665 121,904 47 0 110
Interest Received -32,475 -29,522 -2,391 -18 -66 -478
Investment Income -39,094 -35,007 -1,927 -22 0 -2,138
Pension interest and expected gains / losses on IAS 19 265,113 262,851 2,170 0 92 0
Sub-Total 999,270 881,987 119,756 7 26 -2,506
General Revenue Funding -7,782,446 -7,782,446        
NDRI Distributable Amount -2,296,949 -2,296,949        
Council Tax -2,320,521 -2,318,875 -1,646      
Arrears of Local Tax Collection 1,806 1,806        
Other -144,740 -134,642 -10,098      
Sub-Total -12,542,850 -12,531,106 -11,744 0 0  
Depreciation and Impairment of non-current assets 1,769,939 1,545,687 217,084   7,168  
Amortisation and Impairment of Intangible Assets 8,561 8,471 90   0  
Movement in the fair value of investment properties -4,164 -4,395 208   23  
Surplus or deficit on Trading Operations not included above 0 -43,642 0 43,642 0  
Surplus or deficit on Significant Trading Operations not included above -2,811 -2,811        
Gain or loss on the disposal of Property, Plant and Equipment 54,121 53,930 95   96  
Reversal of Employer's contribution to pension fund/benefits payments made -460,743 -443,868 -16,458   -417  
Post-retirement benefits - IAS 19 803,138 784,578 18,191   369  
Short term accumulating absences -24,266 -24,473 224   -17  
Govt Capital grants and contributions credited to the CI&ES -592,145 -555,933 -34,612   -1,600  
Non- Govt Capital grants and contributions credited to the CI&ES -54,942 -50,356 -4,586   0  
Reversal of Revenue Contribution to Capital -284,961 -94,151 -190,810   0  
Difference in Requisitions 8,516 8,516 0   0  
Surplus or deficit on the provision of services 452,405 595,255 -137,040   -5,810  

1. Includes trading services and non-HRA housing. For a breakdown of expenditure in these areas, refer to Table 2.2 and Annexes A and B.

2. Excluding General Revenue Funding

Source: Local Financial Returns - LFR 00

1.2 Non-General Fund Revenue Income and Expenditure

1.2.1 HRA

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.

1.2.2 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).

1.2.3 Road 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.

1.2.4 Common Good

Common good funds and assets are those held by local authorities which were, in effect, gifted to the local community (usually a previous burgh council). When managing common good funds and assets, local authorities are expected to have regard to the interests of inhabitants of the former burgh area to which the assets relate (except for Aberdeen City, Dundee City, City of Edinburgh and Glasgow City, where the local authority should have regard to the interests of all residents in the council area).

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.

1.3 General Fund Revenue Income and Expenditure

The highest spending service in the general fund is education which had net expenditure of £4.59 billion (this makes up 40% of net expenditure). Of this total £1.76 billion was spent on primary education and £1.87 billion on secondary education with the remainder spent on pre-primary, special and community education. Education's share of total net expenditure has stayed the same at around 40% over the six years to 2012-13.

Social work is the next largest service with net expenditure of £2.96 billion (26% of total net expenditure). Data on social work expenditure is collected on the basis of client groups. Of the client groups identified in the LFRs, older persons has the highest expenditure of £1.29 billion followed by children and families with £0.82 billion and adults with learning difficulties with £0.50 billion.

A full breakdown of expenditure by sub-service is available in Annex A.

The single largest income source shown in Table 1.2 are the grants received by local authorities from the Department of Work and Pensions to fund housing benefits. These grants were worth £1.71 billion in 2012-13 and are shown as part of income in non-HRA housing.

Another significant source of income is customer and client receipts (including all charges to service users) which raised £1.30 billion across all services. Social work services also receive income from the NHS to provide services, the value of these payments in 2012-13 were £0.40 billion, up from £0.38 billion in 2011-12. A full breakdown of income by service can be found in Annex B.

Table 1.2 - General Fund Revenue Income and Expenditure, 2012-13

  £ thousands
  Gross Expenditure Income Net Expenditure Net Expenditure as % of Total Services Ring Fenced Revenue Grants
Education 4,774,454 179,844 4,594,610 39.7% 8,361
Cultural and Related Services 703,107 89,432 613,675 5.3% 0
Social Work 3,785,476 823,859 2,961,617 25.6% 0
Police 1,240,749 219,302 1,021,447 8.8% 507,631
Fire 346,675 50,011 296,664 2.6% 0
Roads and Transport 695,844 208,566 487,278 4.2% 0
Environmental Services 784,331 128,769 655,562 5.7% 0
Planning & Economic Development 483,638 201,088 282,550 2.4% 0
Non-HRA Housing 2,326,819 2,011,115 315,704 2.7% 8,965
Central Services 573,071 210,842 362,229 3.1% 0
Trading Services 54,557 58,115 -3,558 0.0% 0
Net Cost of Service 15,768,721 4,180,943 11,587,778 100.0% 524,957
Interest and Investment Income 683,665 64,529 619,136   0
Statutory Repayment of Debt 595,343 0 595,343   0
Contributions to/from HRA 0 0 0   0
Surplus/deficit from Significant Trading Operations -2,811 0 -2,811   0
Total 17,044,918 4,245,472 12,799,446   524,957

Source: Local Financial Returns - LFR 00

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 5.2 for further details. 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.

Table 1.3 - Net Revenue Expenditure by Service, 2008-09 to 2012-13

  £ millions
  2008-09 2009-101 2010-111 2011-12 2012-13
Education 4,676 4,633 4,677 4,553 4,595
Social Work 2,684 2,825 2,861 2,873 2,962
Police1 1,100 1,125 978 1,018 1,021
Fire 320 332 313 286 297
Cultural & Related Services 628 662 638 618 614
Environmental Services 628 657 664 656 656
Roads & Transport 453 486 503 477 487
Central Services 469 632 560 419 362
Planning & Economic Development 289 332 313 292 283
Non-HRA Housing 427 420 394 331 316
Trading Services -5 -9 -8 -12 -4
Total General Fund Expenditure 11,670 12,096 11,892 11,510 11,588

1. From 2010-11 the funding of Police Pensions changed leading to a reduction in net expenditure. Therefore police expenditure figures from 2010-11 onwards are not directly comparable with figures up to 2009-10.

Source: Local Financial Returns - LFR 00

Chart 1.1 shows net revenue expenditure per capita by local authority area. This includes expenditure by all local authority bodies in an area (i.e. including expenditure by councils, police boards, fire boards, valuation boards and regional transport partnerships). The chart shows that on average in Scotland local government spent £2,409 per person in 2012-13, down slightly from 2,416 in 2011-12.

Wide variation is seen in net revenue expenditure per head for different local authority areas. This reflects variations in the cost of providing services due to factors such as deprivation, rurality and population age profile, as well as additional costs for island authorities (which clearly have the highest net revenue expenditure per head). Details of how these factors are taken into account in the needs-based methodology central to local government funding distribution can be found on the Scottish Government Grant Aided Expenditure Website.

Chart 1.1 - Net Revenue Expenditure per Capita by Local Authority, 2012-13 (£)

Chart 1.1 - Net Revenue Expenditure per Capita by Local Authority, 2012-13

1.4 Revenue Expenditure Financing

Revenue expenditure by local authorities is funded by three main sources:

  • Grants from Central Government
  • Local Taxation (Council Tax and Non Domestic Rates)
  • Sales, fees and charges for services

The main source of revenue income for local government is General Revenue Funding, (formerly referred to as the Revenue Support Grant). General Revenue Funding (GRF) is paid by the Scottish Government in support of local authorities' general net revenue expenditure.

Local taxation contributed over £4 billion to the funding of local government in 2012-13 and further information on these taxes is set out in the following sections. Other income is mostly composed of grants and subsidies received from central government and other parts of the public sector.

Table 1.4 - Revenue Income by Source, 2008-09 to 2012-13

  £ millions
  2008-09 2009-10 2010-11 2011-12 2012-13
General Revenue Funding1 7,426 7,757 8,149 7,790 7,782
Council Tax 1,909 1,910 1,923 1,926 1,947
Council Tax Benefit Subsidy 351 368 375 376 371
Non Domestic Rates 1,963 2,165 2,068 2,182 2,263
Sales, Rents, Fees & Charges 2,262 2,287 2,179 2,298 2,342
Other Income 3,363 3,390 3,348 3,300 3,244
Total revenue income 17,274 17,877 18,043 17,872 17,949

1. Prior to 2008-09 this was Revenue Support Grant

Sources: General Revenue Funding (Up to 2010-11) - Finance Circulars; Non-Domestic Rates - Non Domestic Rates Returns (NDRI); All Other Data - Local Financial Returns (LFRs)

Chart 1.2 - Revenue Income by Source, 2012-13 (£ millions)

Chart 1.2 - Revenue Income by Source, 2012-13

1.4.1 Council Tax

Council Tax was introduced in Scotland on the 1st April 1993 to replace the Community Charge system. It is a tax system based on dwellings, contributing around £1.9 billion (excluding council tax benefit) of income to local authorities in 2012-13. A dwelling is classified as any kind of flat or house that is used as a place of residence. Each dwelling is placed into one of the 8 council tax bands (A to H) depending on the market value of the dwelling as at the 1st April 1991.

Table 1.5 - Chargeable Dwellings1 by Council Tax Band & Local Authority (as at 2 September 2013)

  Band A Band B Band C Band D Band E Band F Band G Band H Total
Valuation band ranges Under 27,000 27,001 to 35,000 35,001 to 45,000 45,001 to 58,000 58,001 to 80,000 80,001 to 106,000 106,001 to 212,000 Over 212,000  
Ratio to band D 6/9 7/9 8/9 9/9 11/9 13/9 15/9 18/9  
Scotland 508,296 568,264 388,475 316,245 320,379 180,370 115,947 12,355 2,410,331
Aberdeen City 19,652 26,062 17,144 12,619 13,318 7,951 7,060 823 104,629
Aberdeenshire 19,538 15,425 13,643 16,601 20,187 14,911 9,150 544 109,999
Angus 14,325 12,319 6,740 8,017 7,186 2,867 1,550 144 53,148
Argyll & Bute 7,244 9,455 8,721 5,791 7,052 4,001 2,711 219 45,194
Clackmannanshire 6,030 7,006 1,929 2,416 3,107 1,791 811 43 23,133
Dumfries & Galloway 10,659 22,123 11,475 9,602 10,092 4,916 2,335 156 71,358
Dundee City 25,427 15,305 7,927 8,174 6,206 2,279 1,016 35 66,369
East Ayrshire 25,555 9,162 4,914 6,320 5,975 2,892 899 40 55,757
East Dunbartonshire 1,050 3,549 7,995 7,468 10,542 6,723 6,077 586 43,990
East Lothian 1,130 8,880 14,324 5,656 5,708 4,558 3,595 620 44,471
East Renfrewshire 1,204 5,004 3,889 6,250 7,922 5,867 5,931 682 36,749
Edinburgh, City of 19,773 42,887 40,211 34,128 35,957 22,561 19,918 3,645 219,080
Eilean Siar 4,468 3,613 2,717 1,683 1,140 165 34 4 13,824
Falkirk 21,419 18,849 6,345 8,275 8,213 4,957 2,328 60 70,446
Fife 38,811 46,607 21,104 18,922 21,701 12,307 5,960 379 165,791
Glasgow City 56,659 73,576 62,244 37,308 26,195 11,536 5,822 608 273,948
Highland 18,599 22,129 22,198 17,436 17,305 8,423 4,058 309 110,457
Inverclyde 18,146 5,563 3,344 3,209 3,360 1,830 1,380 206 37,038
Midlothian 932 12,035 10,231 4,563 4,172 2,612 1,771 159 36,475
Moray 11,251 10,062 6,121 5,696 5,311 1,928 581 51 41,001
North Ayrshire 21,009 17,842 6,564 6,454 8,634 3,584 1,137 53 65,277
North Lanarkshire 52,176 36,298 18,549 15,294 15,050 7,422 2,629 122 147,540
Orkney Islands 2,226 2,666 2,207 1,640 1,176 263 18 3 10,199
Perth & Kinross 8,464 14,087 11,171 9,981 11,044 6,927 5,541 639 67,854
Renfrewshire 12,227 24,483 13,884 11,003 10,003 5,563 3,217 198 80,578
Scottish Borders 15,683 12,226 6,582 5,580 6,098 4,417 4,057 440 55,083
Shetland Islands 2,866 1,732 2,606 1,725 1,279 245 54 0 10,507
South Ayrshire 6,923 12,222 8,535 8,061 9,368 4,647 2,866 278 52,900
South Lanarkshire 34,875 28,761 24,451 19,061 18,091 10,611 5,591 443 141,884
Stirling 5,324 8,127 3,982 4,183 5,891 4,907 4,783 648 37,845
West Dunbartonshire 7,640 16,261 7,251 5,613 4,210 1,569 650 55 43,249
West Lothian 17,011 23,948 9,477 7,516 8,886 5,140 2,417 163 74,558
% of all dwellings 21% 24% 16% 13% 13% 7% 5% 1% 100%

Source: Council Tax Base 2013 (CTAXBASE)

Table 1.5 details the band boundaries, the ratio to band D council tax (the multiplier) and the number of chargeable dwellings in each band by local authority. As at 2nd September 2013, there were 2.4 million chargeable dwellings in Scotland. Around three quarters (1.8 million) of all chargeable dwellings were in council tax bands A to D, and only 0.5% (12,355 dwellings) in band H. The total number of chargeable dwellings and the distribution of those dwellings across council tax bands varies across local authority areas. For example, 78% (10,798) of all chargeable dwellings in Eilean Siar are in bands A to C, compared with 64% (23,198) in Midlothian, and 27% (10,097) in East Renfrewshire. This is a consequence of variation by local authority in the market value of dwellings.

Council tax is used as a source of funding to make up the difference between the amount of money a local authority wishes to spend, and the amount of funding it receives from other sources (such as General Revenue Funding and ring-fenced revenue grants). Each local authority determines its own level of council tax as part of their budget setting process, establishing the band D council tax level. As a result, council tax levels differs across local authority areas ranging from £1,024 in Eilean Siar to £1,230 in Aberdeen City (as shown in Chart 1.3). The council tax charged for all other bands is a proportion of the band D level set (see ratios to band D in table 1.5).

The Scotland band D council tax level over the past 5 years can be seen in table 1.6. Council tax levels remain constant (at 2007-08 levels), as a consequence of the council tax freeze agreed between the Scottish Government and local government. As a result, the average council tax per dwelling has also remained flat since 2007-08, with any small changes reflecting movement in the council tax base (such as changes in the total number of dwellings, the distribution of those dwellings across council tax bands, and the number of discounts and exemptions). In real terms, the level of band D council tax has fallen in each year since 2007-08. Prior to 2007-08, both cash and real terms increases were seen as the band D council tax level increased year on year.

Table 1.6 - Scotland Council Tax Levels

  2009-10 2010-11 2011-12 2012-13 2013-14
Scotland Average Band D Council Tax (£)1 1,149 1,149 1,149 1,149 1,149
Band D % increase (cash terms) 0.0% 0.0% 0.0% 0.0% 0.0%
Band D % increase (real terms)2 -2.7% -2.6% -2.3% -1.8% -2.0%
Average Council Tax Bill per Dwelling (£)3 987 985 984 985 988

1. Since 2008-09, Council Tax rates have been frozen at 2007-08 levels.

2. Real terms figures are calculated using GDP deflators (HM Treasury Dec 2013)

3. This average is taken over all chargeable dwellings and is affected by a number of factors such as the distribution of dwellings across council tax bands, discounts and exemptions, new construction and removal of demolished housing from the roll.

Source: Council Tax Assumptions (CTAS), Council Tax Base (CTAXBASE)

Chart 1.3 - Band D Council Tax Bill Amount by Local Authority, 2012-13 (£)

Chart 1.3 - Band D Council Tax Bill Amount by Local Authority, 2012-13

Source: Council Tax Assumptions (CTAS) returns

The Band D council tax levels by local authority are shown in Chart 1.3. As a result of the Council Tax Freeze, band D council tax levels have not changed since 2007-08. The one exception is in Stirling where the council took the decision to reduce the band D council tax from £1,223 in 2007-08 to £1,209 in 2008-09, and subsequently to £1,197 in 2012-13.

Not all dwellings are liable to pay full council tax. A dwelling may be eligible for a discount or exemption dependent on either the status of the dwelling or the personal circumstances of the persons resident in the dwelling. If a dwelling is exempt there is no council tax payable in respect of that dwelling. If a dwelling is eligible for a discount then these may range from 10% to 50% depending on the nature of the discount.

In addition part, or all, of the council tax bill may be paid through council tax benefit (CTB) for those who qualify.

An exempt dwelling can be occupied or unoccupied. Examples of unoccupied exempt dwellings include dwellings that are unoccupied and unfurnished for up to 6 months, dwellings that cannot be occupied because they are in need of structural repair, or are being improved or reconstructed, or an unoccupied dwelling where the liable person was formerly resident and has moved to receive personal care elsewhere. Occupied dwellings eligible for exemption include dwellings that are the sole residence of only persons under the age of 18, dwellings occupied only by students, and dwellings used as trial flats by registered housing associations.

Where only one council tax liable adult resides in a dwelling they are entitled to claim a 25% discount on their council tax bill. Where a dwelling is classed as a second home or long term empty, that dwelling is entitled to claim a discount of between 10% and 50% depending on the Local Authority. Unoccupied dwellings may also be eligible for a 50% discount for the 6 months after the initial 6 month exemption.

A breakdown of council tax dwellings by classification as chargeable, discounted, or exempt from 2009 to 2013 is given below in Table 1.7. The total number of dwellings has increased by around 49,000 (2%) from 2.477 million dwellings in 2009 to 2.527 million in 2013. Similarly, the number of chargeable dwellings has increased by around 45,000 (2%) from 2.365 million chargeable dwellings in 2009, to 2.410 million in 2013. The proportion of dwellings exempt, chargeable or discounted has remained steady over time with around 4.5% of all dwellings exempt from paying council tax, and 42% of all chargeable dwellings discounted. In 2013, there were 116,372 exempt dwellings and 1,016,891 discounted dwellings.

Table 1.7 - Council Tax Chargeable Dwellings, Discounts and Exemptions1

  2009 2010 2011 2012 2013
Total dwellings 2,477,397 2,488,928 2,500,769 2,515,042 2,526,703
Dwellings exempt 112,168 111,454 111,740 113,173 116,372
Chargeable dwellings 2,365,229 2,377,474 2,389,029 2,401,869 2,410,331
Chargeable dwellings subject to:          
25% discount 936,957 941,915 945,515 948,208 952,251
Second Homes2 37,060 38,002 39,250 40,599 35,734
Long Term Empty2 22,169 24,598 25,356 25,454 27,327
Occupied entirely by disregarded adults 2,668 1,887 1,910 1,809 1,579
Dwellings not subject to discount 1,366,375 1,371,072 1,376,998 1,385,799 1,393,440

1. As at the first Monday in September of each year

2. It is not possible for some councils to separately identify second homes and long term empty dwellings. For these councils, the total number of second homes and long term empty dwellings have been recorded under second homes.

Source: Council Tax Base (CTAXBASE) Returns

Local Authorities are responsible for the billing and collection of council tax. Each individual bill is calculated by applying the multiplier for each band to the band D council tax level, and the applying any discounts, exemptions or reductions as detailed above. At the start of each financial year local authorities issue council tax bills to households liable for each bill. They collect council tax income relating to these bills over the year, and also continue to collect late amounts from previous billing years[1]. The amount of council tax income collected in 2012-13 are reported in table 1.8 below.

Table 1.8 - Council Tax Income by Local Authority, 2012-13

      £ thousands
  Council Tax Income (excl CTB)1 Council Tax Benefit Subsidy (CTB) Council Tax Income (incl CTB)1
Scotland 1,947,014 370,805 2,317,819
Aberdeen City 99,200 10,492 109,692
Aberdeenshire 110,077 8,171 118,248
Angus 40,204 5,746 45,950
Argyll & Bute 41,248 5,927 47,175
Clackmannanshire 17,415 3,722 21,137
Dumfries & Galloway 53,869 9,368 63,237
Dundee City 45,894 13,242 59,136
East Ayrshire 39,070 10,289 49,359
East Dunbartonshire 48,023 4,831 52,854
East Lothian 40,758 5,694 46,452
East Renfrewshire 40,353 4,164 44,517
Edinburgh, City of 203,437 28,657 232,094
Eilean Siar 8,786 1,692 10,478
Falkirk 51,427 8,982 60,409
Fife 129,630 22,340 151,970
Glasgow City 179,079 72,927 252,006
Highland 97,453 13,288 110,741
Inverclyde 25,936 7,217 33,153
Midlothian 32,468 5,627 38,095
Moray 34,158 4,121 38,279
North Ayrshire 46,011 12,179 58,190
North Lanarkshire 98,016 26,295 124,311
Orkney Islands 7,204 880 8,084
Perth & Kinross 64,729 7,101 71,830
Renfrewshire 62,758 14,047 76,805
Scottish Borders 44,872 5,945 50,817
Shetland Islands 8,111 754 8,865
South Ayrshire 44,854 9,089 53,943
South Lanarkshire 106,461 22,818 129,279
Stirling 39,520 4,834 44,354
West Dunbartonshire 27,912 9,924 37,836
West Lothian 58,081 10,442 68,523

1. Includes Community Charge

Source: Local Financial Returns - LFR 12

1.4.2 Non-Domestic Rates

Non-domestic Rates (NDR) are a property tax paid by the owner/occupier or tenant of a non-domestic property. NDR bills are calculated using the rateable value of non-domestic properties, multiplied by a poundage set nationally by Scottish Ministers, less any relief or exemption entitlement. In 2012-13, the income raised from NDR was £2.35 billion.

The principles of non-domestic rates were established in the Lands Valuation (Scotland) Act of 1854. This act also provided for the appointment of the Scottish Assessors, who are responsible for determining the classification and valuation of non-domestic and domestic properties, and are independent of both the Scottish Government and local authorities. A non-domestic property is an individual property used for non-domestic purposes including businesses, public buildings and advertising hoardings. The value given to a property is called its rateable value (RV).

As a property tax, the RV of a property (a legally defined valuation, broadly based on rental values) is a reflection of its value rather than profitability, turnover or output of the business. It is established at revaluation where the Scottish Assessors assess rateable values for all non-domestic properties, taking account of the type and nature of the property. All non-domestic properties and their corresponding RVs are listed on the Valuation Roll, maintained by the Scottish Assessors. Table 1.9 shows the composition of properties (and associated RV) on the Valuation Roll by property type. As at 1st April 2013, there were 219,441 properties with a total RV of £6.7 billion.

Table 1.9 - Non-Domestic Rates Properties by Classification (as at 1 April 2013)

  Number of properties Rateable value (£000s)
CATEGORY 1st April 2013 1st April 2013
Advertising 2,100 8,226
Care Facilities 3,058 104,011
Communications 339 15,149
Cultural 1,392 47,385
Education and Training 3,832 514,237
Garages and Petrol Stations 4,415 65,910
Health and Medical 3,168 210,377
Hotels 4,874 185,060
Industrial Subjects 46,167 1,127,543
Leisure, Entertainment, Caravans etc. 20,516 236,107
Offices 38,467 1,124,700
Other 13,159 89,732
Petrochemical 143 111,949
Public Houses 3,856 110,019
Public Service Subjects 9,988 321,401
Quarries, Mines, etc. 696 26,657
Religious 6,283 54,361
Shops 53,028 1,603,829
Sporting Subjects 3,364 17,970
Statutory Undertaking 596 741,676
TOTAL ALL NON-DOMESTIC PROPERTIES 219,441 6,716,299

Source: Scottish Assessors Valuation Roll, 1st April 2013

Table 1.10 provides a breakdown of properties on the Valuation Roll by local authority and RV band. Around 78% of all properties (170,575 properties) have a Rateable Value less than or equal to £18,000.

Table 1.10 - Non-Domestic Rates Subjects by Local Authority (as at 1 April 2013)1

Local Authority Rateable Value Band Total Non-Domestic Properties
<= £18,000 £18,001 to £34,999 >= £35,000
Scotland 170,575 19,809 29,057 219,441
Aberdeen City 4,927 1,149 2,283 8,359
Aberdeenshire 9,734 779 1,028 11,541
Angus 4,020 356 401 4,777
Argyll & Bute 7,429 347 346 8,122
Clackmannanshire 1,310 132 147 1,589
Dumfries & Galloway 8,118 491 550 9,159
Dundee City 4,185 595 952 5,732
East Ayrshire 3,165 307 419 3,891
East Dunbartonshire 1,712 304 309 2,325
East Lothian 2,719 262 325 3,306
East Renfrewshire 1,248 217 224 1,689
Edinburgh, City of 13,144 2,393 3,934 19,471
Eilean Siar 2,008 101 112 2,221
Falkirk 3,555 466 683 4,704
Fife 10,188 1,209 1,602 12,999
Glasgow City 17,241 2,926 4,806 24,973
Highland 15,031 976 1,378 17,385
Inverclyde 1,737 207 310 2,254
Midlothian 2,181 265 361 2,807
Moray 3,928 247 359 4,534
North Ayrshire 4,074 382 500 4,956
North Lanarkshire 6,887 1,033 1,552 9,472
Orkney Islands 1,850 124 96 2,070
Perth & Kinross 6,937 588 723 8,248
Renfrewshire 4,696 609 956 6,261
Scottish Borders 6,191 411 414 7,016
Shetland Islands 1,713 105 148 1,966
South Ayrshire 3,758 420 556 4,734
South Lanarkshire 6,971 1,125 1,470 9,566
Stirling 3,927 434 566 4,927
West Dunbartonshire 2,075 266 414 2,755
West Lothian 3,916 583 1,133 5,632

1. Includes properties with zero rateable value.

Source: Scottish Assessors Valuation Roll, 1st April 2013

Table 1.11 shows the annual NDR Income, total Rateable Value, and Poundage Rate, as well as their changes over time. As a consequence of the 2010 revaluation, the poundage was reduced from 48.1p in 2009-10 to 40.7p in 2010-11 and the total RV of non-domestic properties (the tax base) increased from £5.3 billion in 2009-10 to £6.6 billion in 2010-11. The next revaluation will take place in 2017.

Table 1.11 - Non-Domestic Rates Income, Total Rateable Values and Poundage Rate

  2009-10 2010-11 2011-12 2012-13 2013-14
Non Domestic Rates Income (£m)1 2,010 2,138 2,251 2,347 2,446
Total Rateable Value (£m) 5,299 6,612 6,678 6,718 6,716
Poundage Rate (pence) 48.1 40.7 42.6 45.0 46.2

1. Councils' notified (pre-audit) estimate of income for 2012-13 and mid-year estimate of income for 2013-14

Sources: NDR Income - Non-domestic Rate Income Returns, Rateable Value - Scottish Assessors Valuation Roll as at 1st April

Table 1.11 also shows that the total RV has increased slightly since the 2010 revaluation from £6.61 billion to £6.72 billion in 2013-14. This is due to the net impact of several factors including increases in the tax base from new properties or extension of existing properties, and decreases as demolished properties are deleted from the valuation roll or as the RV is reduced as a result of appeals[2]. As Non-Domestic Rates bills in Scotland are directly related to the rateable values of individual non-domestic properties, changes in the total RV impact on the amount of NDR available for collection.

Inflation is a key driver of growth in NDR income as the poundage rate, set nationally by Scottish Ministers[3], is typically tied to the Retail Price Index (other than in the first year of a revaluation). NDR bills are calculated by multiplying the RV of a property by the poundage rate, and then applying discounts and exemptions. Large business properties also pay a supplement to the poundage rate, known as the Large Business Supplement (LBS), which is used to fund a portion of the Small Business Bonus Scheme (SBBS). The LBS was 0.8p in 2012-13 for properties with a Rateable Value greater than £35,000. For the period 2012-13 to 2014-15, large retailers that sell both alcohol and tobacco will also pay the Public Health Supplement (PHS) - an additional 9.3p on the poundage rate in 2012-13. These supplements increase the amount paid in NDR bills. Conversely, exempt properties (which do not pay rates), and relief schemes can significantly reduce the amount paid in NDR bills, and therefore the NDR income.

Table 1.12 summarises the total number of properties and rateable value as at 1st April 2013, and the NDR income collected in 2012-13 and estimated income for 2013-14 by local authority (net of reliefs). Income for 2013-14 is estimated at £2.45 billion compared to £2.35 billion in 2012-13. The higher poundage rate (due to the normal annual inflation) will have contributed to this estimated increase in income. The net change in the tax base will also be a factor, including the impact of revaluation appeals (which can in some cases result in significant annual fluctuations at a local authority level).

Table 1.12 - Non-Domestic Rates Properties, Rateable Values and Income By Local Authority1

Authority Non-Domestic Properties2 Apr-13 Non-Domestic Rateable Values Apr-13 Non-Domestic Rate income
2012-133 2013-144
    (£000s) (£000s) (£000s)
Scotland 219,441 6,716,299 2,346,727 2,445,642
Aberdeen City 8,359 445,785 170,592 184,282
Aberdeenshire 11,541 211,875 75,630 80,772
Angus 4,777 77,580 25,324 27,006
Argyll & Bute 8,122 85,674 27,419 24,417
Clackmannanshire 1,589 38,757 14,038 13,904
Dumfries & Galloway 9,159 119,551 42,021 44,577
Dundee City 5,732 189,571 59,634 53,001
East Ayrshire 3,891 82,899 28,644 28,811
East Dunbartonshire 2,325 68,536 22,561 22,092
East Lothian 3,306 69,219 23,259 22,873
East Renfrewshire 1,689 39,084 13,224 14,518
Edinburgh, City of 19,471 912,555 319,909 342,803
Eilean Siar 2,221 21,835 6,547 6,946
Falkirk 4,704 176,769 65,786 54,672
Fife 12,999 435,069 156,484 146,152
Glasgow City 24,973 984,337 316,100 335,413
Highland 17,385 308,110 107,753 111,739
Inverclyde 2,254 59,626 19,140 20,735
Midlothian 2,807 77,420 25,780 27,909
Moray 4,534 85,781 31,760 32,265
North Ayrshire 4,956 108,553 36,571 37,653
North Lanarkshire 9,472 296,677 93,673 107,373
Orkney Islands 2,070 25,151 8,189 8,323
Perth & Kinross 8,248 150,182 50,276 52,041
Renfrewshire 6,261 238,785 87,133 90,261
Scottish Borders 7,016 90,997 27,596 29,562
Shetland Islands 1,966 44,790 15,790 14,807
South Ayrshire 4,734 109,316 37,588 37,435
South Lanarkshire 9,566 657,758 253,711 277,132
Stirling 4,927 115,205 38,960 39,818
West Dunbartonshire 2,755 172,140 70,056 73,719
West Lothian 5,632 216,714 75,581 82,632

1. Rates bills for specific utilities are collected by specified councils on behalf of all 32 councils, and appear on the valuation roll for those councils: South Lanarkshire (Electricity), West Dunbartonshire (Gas), Fife (Water), Falkirk (Docks and Harbours), Highland (Railways), Renfrewshire (Telecommunications). This increases the take for those authorities.

2. Includes properties with a zero rateable value

3. Notified (pre-audit) estimate of Income

4. Mid-year estimate of Income

Source: Number of Properties and Rateable Value - Scottish Assessors Valuation Roll 1st April 2013; NDR Income - Non-domestic Rate Income Returns provided by Councils

NDR Income - Non-domestic Rate Income Returns provided by Councils

Table 1.12 shows geographical variations in the number of properties, rateable value and NDR income. It should be noted however that some councils have responsibility for collection of NDR for specific utilities as detailed in the footnote to the table. For these councils, the entries on the valuation roll and NDR income include Scotland-wide data for the specified utilities sectors. The 2013-14 income data in table 1.12 are mid-year estimates which provide an indication of income but may change significantly, particularly at local authority level, when final data are available.

Table 1.13 - Amount of Non-Domestic Rates Relief Provided by Relief Type1

          £thousands
  2008-09 2009-10 2010-11 2011-12 2012-132
Unoccupied Property/Partly Unoccupied Property 127,385 153,361 145,936 157,862 169,134
Charities 113,417 122,132 136,731 151,276 164,980
Sports Clubs 9,651 11,604 11,476 12,059 12,431
Disabled persons relief 42,914 45,484 51,901 54,372 57,580
SBBS3 72,553 108,420 123,259 134,719 150,196
Religious Properties 18,986 20,218 24,016 22,960 24,573
Rural Rate Relief 3,887 3,918 4,129 4,218 4,313
Renewable Energy Relief Scheme4     3,560 4,126 4,811
Other 27 19 4 43 8
Gross Amount 388,821 465,157 501,013 541,635 588,026

1. Estimates include mandatory and discretionary elements of relief where applicable, but exclude backdated payments of relief

2. Notified (pre-audit) estimate of relief expenditure for 2012-13

3. From 1 April 2008, the Small Business Rates Relief Scheme was replaced with the Small Business Bonus Scheme.

4. The Renewable Energy Relief Scheme was introduced at 1 April 2010

Source: Non-domestic Rate Income Returns

There are a number of types of NDR relief that reduce the NDR bill for qualifying properties. Table 1.13 shows the main types of relief available[4] and the amount of relief provided each year from 2008-09 to 2012-13.

The gross amount of relief provided increased substantially from £389 million in 2008-09 to £588 million in 2012-13. Key reasons for this are increases in the poundage rate (due to normal annual inflation) and an increase in relief provided through the Small Business Bonus Scheme, with expansion of the scheme thresholds and greater awareness of the scheme likely to be contributory reasons. Further secondary factors are likely to include growth in the tax base over this period (i.e. an increase in the overall Rateable Value) and changes to amounts awarded for other reliefs (for example an increase in Charity Relief and the introduction of the Renewable Energy Relief Scheme).

The total NDR income collected by Local Authorities is pooled at the Scotland level[5]. Each council reports the NDR collected to the Scottish Government to be included in the central pool. The amount to be re-distributed from the pool is known as the Distributable Amount (DA) and is set by the Scottish Government before the start of the financial year in question.

From 1st April 2011, the distribution methodology provides that Councils retain what it is estimated they can collect in business rates (rather than the previous policy where it was redistributed on the basis of population shares). As the combined total of NDR income and General Revenue Funding (GRF) provided to councils is guaranteed by the Scottish Government, any reduction in the amount of NDR collected is compensated for by a corresponding increase in GRF and vice versa. Any surpluses or deficits are paid out or recovered from Councils in the calculation of future years distributable business rates totals. The DA is based upon a forecast of the NDR income and prior year adjustments, and is therefore not guaranteed to match the total contributions to the pool for that year.

The calculation of the distributable amount for 2012-13 is given in Annex F and the 2012-13 distributable amount per Local Authority is shown in Table 1.14.

Table 1.14 - Non-Domestic Rates Distributable Amount by Local Authority, 2012-13

  Non-Domestic Rate Income (£000s)
Scotland 2,263,000
Aberdeen City 164,576
Aberdeenshire 73,370
Angus 23,944
Argyll & Bute 26,479
Clackmannanshire 11,033
Dumfries & Galloway 41,403
Dundee City 50,140
East Ayrshire 26,529
East Dunbartonshire 21,268
East Lothian 21,500
East Renfrewshire 12,941
Edinburgh, City of 310,993
Eilean Siar 6,018
Falkirk 63,467
Fife 135,516
Glasgow City 310,099
Highland 106,091
Inverclyde 19,395
Midlothian 24,781
Moray 28,502
North Ayrshire 34,333
North Lanarkshire 101,467
Orkney Islands 8,203
Perth & Kinross 47,331
Renfrewshire 90,807
Scottish Borders 26,489
Shetland Islands 15,035
South Ayrshire 36,842
South Lanarkshire 253,924
Stirling 27,833
West Dunbartonshire 67,090
West Lothian 75,601

Source: Finance Circular 3/2012

1.4.3 Sales, Rents, Fees and Charges

Local Authorities receive income from sales, rents, fees and charges as a result of providing services. These services are wide ranging in nature, as is the amount of income associated with each service, as detailed in Table 1.15 below.

Table 1.15 - Sales, Rents, Fees and Charges

          £ thousand
  2008-09 2009-10 2010-11 2011-12 2012-13
Education 85,691 87,115 95,006 115,017 113,355
Cultural & Related Services 78,621 85,516 81,521 77,479 71,357
Social Work 259,061 246,014 251,167 268,101 276,450
Police, Fire & Emergency Planning 88,557 93,043 55,098 66,575 111,992
Roads & Transport 146,605 165,941 146,068 171,674 154,117
Environmental Services 117,873 123,164 120,400 117,767 117,969
Planning & Economic Development 112,644 120,146 97,897 118,518 116,541
Non-HRA Housing 232,028 189,150 164,339 179,116 165,412
Central Services 141,455 144,819 113,862 143,521 110,889
Trading Services 70,810 66,992 66,852 63,526 58,045
Total GF Sales, Rents, Fees and Charges 1,333,345 1,321,900 1,192,210 1,321,294 1,296,127
HRA1 920,146 955,710 979,571 965,920 1,034,306
Common Good Fund 8,324 9,073 7,168 10,809 11,113
Road Bridges 162 133 89 82 80
Total Sales, Rents, Fees and Charges 2,261,977 2,286,816 2,179,038 2,298,105 2,341,626

1. The Housing Revenue Account (HRA) records income and expenditure relating to Local Authority housing stock

Source: Local Financial Returns (LFRs)


Contact

Email: Euan Smith