Scottish Government

Scottish Local Government Financial Statistics 2003-04

SUMMARY AND KEY FACTS

Total Expenditure and Income

Scottish Local Authority total gross expenditure for 2003-04 was 16.0 billion. This is a 3.2% increase on the figure for 2002-03, and can be split into gross revenue expenditure of 14.9 billion and gross capital expenditure of 1.0 billion ( Table 1).

Scottish Local Authority gross income in 2003-04 was 15.8 billion. This is a 7.5% increase on the figure for 2002-03, and can be split into 15.5 billion of gross revenue income and 0.3 billion of gross capital income ( Table 1).

General Fund Service Expenditure

General fund gross service expenditure for 2003-04 was 10.9 billion, an 8.8% increase over the previous year's figure (Table 2A). Since 1996-97, gross revenue spending by Local Authorities in Scotland has increased by 50%, an average of 6.0% per year. Net current expenditure, which is defined as gross revenue expenditure less income from sales, fees, charges and other local sources, was 9.2 billion, an 8.3 % increase from 2002-03 ( Table 3).

The main components of net current expenditure in 2003-04 were 3.7 billion of spending on education, 1.8 billion on social work, 1.1 billion on police, fire and emergency planning, and 0.8 billion on loan charges. These figures represent increases of 9.5%, 9.6%, 9.5% and 4.6% respectively on 2002-03.

The long-term trend in net current expenditure by service shows that the greatest increases have been in the education and social work service areas, which in 2003-04 jointly accounted for 59% of net current expenditure (Table S1). Almost half of the 2.7 billion increase in spending since 1996-97 has been allocated to the education service (1,244 million), with another quarter going to the social work service (697 million).

1 Excluding general fund contributions to housing, trading services and interest on revenue balances.
2 Including general fund contributions to transport (LA and non LA).
3 Differs significantly from later years due to a change in recording practise of a grant in aid of expenditure on rail passenger services

Housing Revenue Expenditure

Total gross expenditure on housing for 2003-04, including both general fund and Housing Revenue Account (HRA) spending, was 2.6 billion. HRA Scotland level figures are not comparable with previous years due to the impact of large-scale voluntary stock transfers in Glasgow City, Scottish Borders and Dumfries and Galloway. After accounting for income received from sales, rents, fees and charges, benefits paid by Central Government and other income, net current expenditure to be financed from non-domestic rates, council taxes and balances was 211 million ( Table 5A).

Capital Expenditure and Outstanding Debt

The total gross capital expenditure for 2003-04 was 1,033 million, an increase of 6.3% from 2002-03. Gross capital income was 331 million, an increase of 16.8% from the 2002-03 figure ( Table 2B). Capital allocations increased from 693 million in 2002-03 to 717 million in 2003-04, an increase of 3.4%.

Gross capital expenditure has continued to increase steadily in 2003-04. Gross capital expenditure fell substantially from 1996-97 to 1997-98, and then remained relatively constant until the large increases in the past three years. Almost 25% of gross capital expenditure for 2003-04 was allocated to housing, mostly through the Housing Revenue Account (HRA). Roads and transport accounted for 19% of the gross expenditure, and education represented 17%.

1 Excluding capital expenditure which is financed from revenue
2 Including administrative buildings and equipment, housing loans and grants, other services and trading services.

Local authority capital debt outstanding was 9.0 billion at 31 March 2004 (Table 10). This is a 1.4% decrease on the figure for 31 March 2003 of 9.1 billion.. The total figure can be split into 6.7 billion of 'relevant' debt which has no source of income other than loan charge support from the Scottish Executive, and 2.3 billion of 'non-relevant' debt which has a source of income, such as housing rents, harbour fees, etc.

Council Tax

Total Council Tax income for 2003-04, including Council Tax Benefit payments from the Department for Work and Pensions was 1.840 billion (Table S3). This is a 5.0% increase on the income received in 2002-03. Average Band D Council Tax in Scotland for 2003-04 was 1,009, a 3.9% increase from the previous year, and the estimated number of band D equivalent houses (inclusive of all discounts and exemptions) for 2003-04 was 1.9 million, a 0.9% increase from 2002-03. The number of chargeable dwellings (all dwellings excluding exemptions) has increased by 0.8% from September 2003 to September 2004 ( Table 12).

The increase in income is greater than the combined effect of increases in both the tax level and the tax base, and can be attributed to both an improved in-year collection rate for Council Tax in 2003-04 and the successful recovery of debt from previous years' bills. The in-year Council Tax collection rate for 2003-04 was 91.7%, an absolute increase of 0.3% from 2002-03.

Figures for Council Tax levels and the taxable base for 2004-05 are included in Table S3. The Scotland average Band D Council Tax has risen by 48.8% in cash terms from 1996-97 to 2003-04, an average of 5.1% per year. After adjusting for inflation, this rise is 22.3% in real terms, or 2.5% per year. The council tax base, expressed in terms of the number of Band D equivalents has been increasing consistently from 1996-97 to 2004-05, at an average rate of approximately 0.9% per year.

TABLE S3 Council Tax Summary Statistics, 1996-97 to 2004-05

1 Excludes water and sewerage charges.
2 Figures for 2004-05 are not yet available.
3 Source: Accounts Commission and Council Tax Revenues Received (CTRR) statistical returns to the Scottish Executive.

Non-Domestic Rates

Non-domestic rate (NDR) income is collected by Local Authorities and pooled at the Scotland level for redistribution on the basis of population. NDR income, net of all reliefs and rebates, for 2003-04 was 1.706 billion, an increase of 0.1% on the previous year. The mid-year estimate of income for 2004-05 is 1.803 billion, which is a 5.7% increase from the 2003-04 figure.

The 2003-04 poundage remained at 47.8p. The poundage rate for 2004-05 increased by 2.1% from the 2003-04 figure, to 48.8p.

In terms of the taxable base, the net growth in total non-domestic rateable value (RV) for Scotland has slowed in recent years. In 2003-04, total RV decreased by 1.4% to 4.457 billion. At the beginning of 2004-05, the total RV was 4.444 billion, a decrease of 0.3% from the previous year's figure.

TABLE S4 Non-Domestic Rates Summary Statistics, 1996-97 to 2004-05

1 Excludes water rate.
2 Amount of non domestic rate income collected by councils.
3 Mid-year estimate of income for 2004-05
4 Total rateable value at the beginning of the financial year.

Changes in the total RV are the net result of two components. Firstly, growth in the total RV comes about from new construction or expansion of existing properties. Conversely, successful appeals result in a reduction in rateable values and downward pressure on the total. This second component is much more variable than the first, as the settlement of appeals is linked to the five-yearly revaluation cycle. The small decreases in total RV evident in the figures for 2003-04 and 2004-05 can be attributed to the fact that the majority of revaluation appeals are settled in the third and fourth years of the cycle.

In 2004 a uniform coding system was deployed across Scotland by all fourteen regional Assessors to classify the number and rateable value of subjects into 20 separate categories ( Table 14). Almost one quarter (24%) of subjects are shops or other retail premises, a further fifth (21%) are industrial properties and around one seventh (14%) are offices. Together these three categories alone account for 59% of subjects and 61% of the total RV.