Scottish Local Government Financial Statistics 2014-15

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.


1 Local Government Revenue Expenditure and Funding

1.1 Total Revenue Expenditure and Funding

Note that Revenue Contributions to Capital (RCC) are now counted under statutory adjustments while previous publications will have counted RCC as service expenditure. The re-categorisation of RCC is more in line with how it is treated in authorities accounts and how readers will interpret the statistics.

Total Gross Revenue Expenditure on services by local government in Scotland in 2014-15 was £15.2 billion. Of this, £0.66 billion of expenditure was for the provision of housing through the Housing Revenue Account (HRA).

Table 1.1 summarises revenue income, expenditure, funding and balances for 2014-15. The largest single element of gross expenditure is operating costs (which includes property costs, supplies and services costs, transport and payments to agencies and other bodies) which account for £6.7 billion of expenditure. The second largest element was employee costs which account for £6.2 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 £1.8 billion of the total of £2.1 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.

Net Revenue Expenditure on services, which is gross expenditure on services minus income for services, was £10.04 billion. Of this, £10.5 billion is in the General Fund, while Net Revenue Expenditure on Services for the HRA was -£0.46 billion, i.e. service income was greater than service expenditure. Note that the HRA has high levels of Revenue Contributions to Capital, statutory repayment of debt and interest payments, which are not counted as service expenditure.

After taking into account the surplus or deficit from Significant Trading Operations, Finance Costs, Statutory Adjustments and General Funding, authorities had an overall surplus of £69.4 million. This surplus is contributed to the reserves. After transfers to other reserves (e.g. repairs and renewals fund, insurance fund), General Fund reserves increased by £47.6 million to a total of £1.137 billion at the 31st March 2015 and HRA reserves increased by £13.7 million to £129.8 million.

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, council tax income and Government grants, the HRA is a ring-fenced account, and expenditure is funded mainly by housing rents with some Government grant.

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).

Table 1.1 - Revenue Expenditure, Income and Balances, 2014-15

£thousands

General Fund Services1 Housing Revenue Account Total
EXPENDITURE ON SERVICES
Employee Costs 6,077,469 135,216 6,212,685
Operating Costs 6,225,530 472,644 6,698,174
Transfer Payments 2,103,011 3,849 2,106,860
Support Services 770,767 74,158 844,925
Adjustment for Inter Account and Inter Authority Transfers (603,996) (30,036) (634,032)
Gross Expenditure on Services 14,572,781 655,831 15,228,612
INCOME SPECIFIC TO SERVICES
Grants from Government Departments other than the Scottish Government (1,920,813) (2,386) (1,923,199)
Scottish Government Ring-Fenced Revenue Grants (4,296) 0 (4,296)
Scottish Government General Capital Grant used to fund grants to third parties (55,929) (813) (56,742)
Other Grants Reimbursements and Contributions (828,794) (5,350) (834,144)
Customer and Client Receipts (1,258,896) (1,112,210) (2,371,106)
Total Income for Services (4,068,728) (1,120,759) (5,189,487)
Net Revenue Expenditure on Services 10,504,053 (464,928) 10,039,125
(Surplus) / Deficit from Significant Trading Operations (31,124) 0 (31,124)
FINANCING AND INVESTMENT
Interest payable and similar charges 684,680 137,749 822,429
Interest receivable and similar income (64,397) (2,175) (66,572)
Finance Costs (net of investment income) 620,283 135,574 755,857
STATUTORY ADJUSTMENTS
Revenue Contribution to Capital Expenditure 93,198 191,161 284,359
Statutory repayment of debt 576,145 114,436 690,581
Other Statutory Adjustments 99,489 15,315 114,804
Total Statutory Adjustments 768,832 320,912 1,089,744
Total Amount to be Funded 11,862,044 (8,442) 11,853,602
GENERAL FUNDING
General Revenue Funding (7,166,590) (7,166,590)
NDRI Distributable Amount (2,649,500) (2,649,500)
Net income from Council Tax after Residual Adjustments (2,022,214) (2,022,214)
Other (76,055) (8,667) (84,722)
Total Funding (11,914,359) (8,667) (11,923,026)
(Surplus) or Deficit for the year (52,315) (17,109) (69,424)
Reserves 1 April (1,089,257) (116,106) (1,205,363)
(Surplus) or Deficit for the year (52,315) (17,109) (69,424)
Transfers between General Fund and HRA (879) 879 0
Transfers between Other Reserves 5,590 2,547 8,137
Change in Reserves (47,604) (13,683) (61,287)
Reserves Balance Carried Forward 31st March (1,136,861) (129,789) (1,266,650)

1. Includes trading services and non-HRA housing. For a breakdown of expenditure in these areas, refer to Table 1.2 and Annexes A & B

1.2 General Fund Revenue Expenditure and Income

Chart 1.1 provides a breakdown of General Fund net revenue expenditure by service. Education and social work account for almost three quarters of General Fund net revenue expenditure. The largest is Education with 44% of the total and net revenue expenditure of £4.61 billion. Of this, £1.78 billion was spent on primary education and £1.85 billion on secondary education with the remainder spent on pre-primary, special and community education. Excluding Police & Fire, Education's share of total net expenditure has stayed the same at around 44% over the six years to 2014-15.

Social work is the next largest service with net revenue expenditure of £3.11 billion (30% of total net expenditure). Data on social work expenditure is collected on the basis of client groups. Of the client groups identified in the Local Financial Returns (LFRs), older persons has the highest expenditure of £1.35 billion followed by children and families with £0.86 billion and adults with learning disabilities with £0.51 billion.

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

Chart 1.1: General Fund Net Revenue Expenditure on Services: 2014-15

Chart 1.1: General Fund Net Revenue Expenditure on Services: 2014-15

Table 1.2 breaks down revenue expenditure and income by service. 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 £1.66 billion in 2014-15 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 £1.26 billion across in the General Fund. Social work services also receive income from the NHS to provide services, the value of these payments in 2014-15 were £0.418 billion, up from £0.404 billion in 2013-14. A full breakdown of income by service can be found in Annex B.

Table 1.2 - Revenue Expenditure and Income, 2014-15

£thousands

Gross Expenditure Income Net Expenditure % of General Fund Services
Education 4,817,049 (205,151) 4,611,898 43.9%
Cultural and Related Services 737,186 (93,744) 643,442 6.1%
Social Work 3,944,344 (834,595) 3,109,749 29.6%
Roads and Transport 657,338 (237,743) 419,595 4.0%
Environmental Services 789,949 (124,300) 665,649 6.3%
Planning & Economic Development 461,580 (183,364) 278,216 2.6%
Central Services 657,019 (218,119) 438,900 4.2%
Non-HRA Housing 2,435,724 (2,093,723) 342,001 3.3%
Trading Services 72,592 (77,989) (5,397) -0.1%
General Fund Cost of Service1 14,572,781 (4,068,728) 10,504,053 100.0%
Housing Revenue Account 655,831 (1,120,759) (464,928)
General Fund + HRA Cost of Service1 15,228,612 (5,189,487) 10,039,125

Source: Local Financial Returns - LFR 00

Table 1.3 - Net Revenue Expenditure by Service, 2010-11 to 2014-15

£millions

2010-11 2011-12 2012-13 2013-14 2014-15
Education 4,648 4,538 4,571 4,578 4,612
Cultural & Related Services 635 613 609 614 643
Social Work 2,857 2,871 2,959 3,031 3,110
Roads & Transport 486 460 457 436 420
Environmental Services 658 646 644 659 666
Planning & Development Services 308 289 279 279 278
Central Services 1, 2 546 428 386 484 439
Non-HRA Housing 391 323 306 321 342
Trading Services 2 (13) (4) (2) (5)
General Fund Net Expenditure (excluding Police & Fire 2) 10,531 10,156 10,208 10,400 10,504
Housing Revenue Account (365) (389) (425) (439) (465)
General Fund + HRA Net Revenue Expenditure (excluding Police & Fire 2) 10,166 9,767 9,783 9,961 10,039
Police 1 580 516 517
Fire 1 310 280 291
Central Services (Police & Fire) 1, 2 7 (22) (50)
General Fund + HRA Net Revenue Expenditure 11,064 10,540 10,540 9,961 10,039

1. Following the Police and Fire Reform (Scotland) Act 2012 figures for 2013-14 may not be comparable with previous years. See section 5.2 for details.

2. Police and fire board net expenditure in central services has been separated from overall General Fund expenditure to allow for time series comparison.

Source: Local Financial Returns - LFR 00

Chart 1.2 shows net revenue expenditure on services per capita by local authority area. This includes expenditure by all local authority bodies in an area (i.e. including expenditure by councils, valuation boards, bridge authorities and regional transport partnerships). The chart shows that on average in Scotland local government spent £1,877 per person in 2014-15, up slightly from £1,870 in 2013-14.

Chart 1.2 - Net Revenue Expenditure on Services per Capita by Local Authority, 2014-15 (£)

Chart 1.2 - New Revenue Expenditure on Services per Capita by Local Authority

Source: Local Financial Returns - LFR 00 and NRS Mid-Year Population Estimates (2014)

1.3 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 (Customer and Client Receipts)

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 almost £4.7 billion to the funding of local government in 2014-15 and further information on these taxes is set out in the following sections. General Revenue Funding and local taxation combined together are referred to as "revenue funding". Other income is mostly composed of grants and subsidies received from central government and other parts of the public sector.

Authorities can use Scottish Government Capital Grant to fund grants to third parties for capital projects. These grants can be funded from capital resources, but the asset that they create does not belong to the authority and the expenditure is therefore treated as revenue expenditure in the authorities accounts.

Table 1.4 - Revenue Income by Source, 2010-11 to 2014-15

£millions

2010-11 2011-12 2012-13 2013-14 2014-15
General Revenue Grant1 8,149 7,790 7,782 7,225 7,167
NDRI Distributable Amount 2,068 2,203 2,297 2,436 2,650
Council Tax2 2,298 2,301 2,319 1,978 2,022
Customer and Client Receipts 2,172 2,287 2,330 2,317 2,371
SG Capital Grant used to fund grants to third parties 68 224 131 125 57
Other Income 3,317 3,382 3,461 2,708 2,846
Total revenue income 18,073 18,188 18,320 16,790 17,113

1. Figures for 2013-14 and later are not comparable with prior years due to changes to the way that Police and Fire are funded following the formation of Police Scotland and the Scottish Fire and Rescue Service. See section 5.2 for more details.

2. Pre-2013-14 Council Tax figures are not comparable with later years as Council Tax Reduction (CTR) was introduced from 1 April 2013 to replace Council Tax Benefit (CTB), which was abolished by the UK Government as part of its welfare reform programme. Due to differences in the administration of the two schemes, Council Tax figures before 2013-14 include CTB, whereas figures from 2013-14 onwards do not include CTR.

Source: Local Financial Returns (LFRs): LFR 00

Chart 1.3 - Revenue Income by Source, 2010-11 to 2014-15 (£ millions)

Figure 1.3 - Revenue Income by Source, 2010-11 to 2014-15 ( millions)

1. Figures for 2013-14 and later are not comparable with prior years due to changes to the way that Police and Fire are funded following the formation of Police Scotland and the Scottish Fire and Rescue Service. See section 5.2 for more details.

2. Pre-2013-14 Council Tax figures are not comparable with later years as Council Tax Reduction (CTR) was introduced from 1 April 2013 to replace Council Tax Benefit (CTB), which was abolished by the UK Government as part of its welfare reform programme. Due to differences in the administration of the two schemes, Council Tax figures before 2013-14 include CTB, whereas figures from 2013-14 onwards do not include CTR.

Source: Local Financial Returns (LFRs): LFR 00

1.4 Council Tax

In 2014-15, Council Tax bills were issued to around 2.4 million dwellings in Scotland. The amounts collected in 2014-15 raised a total of around £2 billion across all local authorities in Scotland.

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 and is used as a source of funding in addition to that received from other sources (such as General Revenue Funding, Central Government Grants, ring-fenced revenue grants and other locally raised income).

There are three factors that determine the amount of Council Tax that a dwelling is liable for. These are:

1. The market value of the dwelling as at the 1st April 1991. Each dwelling is placed into one of eight bands from A to H, with Band A dwellings liable for the lowest rates of Council Tax and Band H attracting the highest.

2. The Band D rate which is set by the local authority, with other bands calculated as a ratio to Band D.

3. A range of exemptions, discounts and reductions that are available in certain circumstances, or in some cases an increase in Council Tax due to the application of a levy.

The valuation range and ratio for each band is given in Table 1.5.

Table 1.5 - Council Tax data by band

Valuation band ranges
as at 1st April 1991
Ratio to
Band D
No. of chargeable
dwellings as at
September 2015
Proportion of
chargeable
dwellings
Band A Under £27,000 6/9 506,424 21%
Band B £27,001 to £35,000 7/9 569,737 23%
Band C £35,001 to £45,000 8/9 394,252 16%
Band D £45,001 to £58,000 9/9 324,461 13%
Band E £58,001 to £80,000 11/9 326,438 13%
Band F £80,001 to £106,000 13/9 186,282 8%
Band G £106,001 to £212,000 15/9 120,179 5%
Band H Over £212,000 18/9 12,745 1%
Total 2,440,518 100%

Collection and Potential Yield of Council Tax

Local authorities are responsible for billing and collecting the correct amounts of Council Tax. Immediately before the start of each financial year, local authorities issue Council Tax bills to dwellings. Each bill is calculated by applying the appropriate band rate for the local authority, then applying any discounts, exemptions, reductions or increases, further details of these are provided in Tables 1.10 and 1.11. Chart 1.4 illustrates the breakdown of the gross Council Tax potential yield into Council Tax billed and the amounts not billed due to Council Tax Reduction (CTR), discounts and exemptions.

Chart 1.4 - Council Tax Potential Yield (£ millions), 2014-15

Chart 1.4 - Council Tax Potential Yeild ( millions), 2014-15

Local authorities collect Council Tax relating to these bills over the year, and also continue to collect late amounts from previous billing years. The provisional in-year Council Tax collection rate for 2014-15 was 95.4 per cent and the total amount collected for Scotland as a whole (after CTR) was £2.022 billion, including late amounts for previous years. Table 1.6 shows the amount of Council Tax collected by each local authority in 2014-15. More information about bills issued in 2014-15 and the provisional amounts collected are available in the statistics publication 'Council Tax Collection Statistics, 2014-15' which is available at:

www.gov.scot/Topics/Browse/Local-Government-Finance/PubScottishCounTaxStats

Table 1.6 - Council Tax income after CTR by local authority, 2014-15 a

Local Authority Net Council Tax
income (£'000s)
Aberdeen City 103,563
Aberdeenshire 119,270
Angus 42,217
Argyll & Bute 43,371
Clackmannanshire 18,341
Dumfries & Galloway 55,644
Dundee City 47,601
East Ayrshire 40,276
East Dunbartonshire 49,912
East Lothian 43,476
East Renfrewshire 41,477
Edinburgh, City of 212,604
Eilean Siar 9,239
Falkirk 53,316
Fife 134,360
Glasgow City 181,428
Highland 101,019
Inverclyde 27,116
Midlothian 34,430
Moray 35,053
North Ayrshire 46,573
North Lanarkshire 100,024
Orkney Islands 7,749
Perth & Kinross 67,578
Renfrewshire 64,494
Scottish Borders 46,149
Shetland Islands 8,351
South Ayrshire 45,226
South Lanarkshire 110,556
Stirling 40,902
West Dunbartonshire 30,783
West Lothian 60,116
Scotland 2,022,214

a Figures include Community Charge and relate to income collected in financial year 2014-15, which can include amounts that were billed in previous years.

Source: Local Financial Returns, 2014-15

Chargeable Dwellings

Table 1.7 shows the number of dwellings in Scotland for each September from 2010 to 2015. There were a total of 2.557 million dwellings in Scotland in 2015, of which 117,000 dwellings were exempt for Council Tax purposes. This gave 2.441 million chargeable dwellings in 2015: an increase of around 2.7 per cent (around 63,000 dwellings) since 2010.

Table 1.7 - Total number of dwellings in Scotland, 2010 to 2015

Total
Dwellings
Exempt
Dwellings
Chargeable Dwellings
2010 2,488,928 111,454 2,377,474
2011 2,500,769 111,740 2,389,029
2012 2,515,042 113,173 2,401,869
2013 2,526,703 116,372 2,410,331
2014 2,540,330 112,525 2,427,805
2015 2,557,365 116,847 2,440,518

Source: CTAXBASE Return

Chart 1.5 shows the distribution of chargeable dwellings across Council Tax bands in each local authority. Across the whole of Scotland, three-fifths of all chargeable dwellings are in Bands A to C. The distribution varies across local authorities due to variations in property market values. Eilean Siar has the largest proportion of dwellings in Bands A to C (78 per cent), whereas East Renfrewshire has the lowest proportion in Bands A to C (27 per cent).

The three local authorities with the highest number of chargeable dwellings were Glasgow, Edinburgh and Fife, with over a quarter of the chargeable dwellings in Scotland between them. Further data on the number of chargeable dwellings by local authority and Council Tax band can be found in the supplementary tables.

Chart 1.5 - Percentage of chargeable dwellings by Council Tax band for each local authority as at September 2015

Chart 1.5 - Percentage of chargeable dwellings by Council Tax band for each local authority as at September 2015

Council Tax Rates & Average Bills

Each local authority determines their own Band D rate of Council Tax as part of their budget setting process. The rate for other bands is then calculated as a set ratio of the Band D rate, these ratios can be found in Table 1.5. As a result, each local authority has different Council Tax rates. The Band D Council Tax levels for each local authority are shown in Chart 1.6, and range from £1,024 in Eilean Siar to £1,230 in Aberdeen City.

Chart 1.6 - Band D Council Tax rate by local authority, 2014-15 (£)

Chart 1.6 - Band D Council Tax rate by Local Authority, 2014-15 (£)

Since 2007-08, Scottish Government and local government have worked in partnership to freeze Council Tax rates each year. The one exception is Stirling where the council took the decision to reduce the Band D rate from £1,223 in 2007-08 to £1,209 in 2008-09, and subsequently to £1,197 in 2012-13. The Council Tax freeze has caused the Scotland average Band D Council Tax rate to remain steady at £1,149 since 2007-08 - a fall in real terms.

Table 1.8 shows how the average Band D Council Tax bill for Scotland has changed each year from 2010-11. The average Council Tax bill per dwelling in 2014-15 was £989. This differs from the average Band D rate due to the distribution of dwellings across Council Tax bands, as can be seen in Table 1.5 and Chart 1.5, and the application of discounts.

Table 1.8 - Average Council Tax bills, 2010-11 to 2014-15

Average1 CT bill per dwelling
Before
CTB/CTR
After
CTB/CTR
2010-11 £985 £827
2011-12 £984 £826
2012-13 £985 £830
2013-14 £988 £838
2014-15 £989 £846

Source: CTAS, CTAXBASE Returns and Local Financial Returns (LFR 12)

Council Tax Reduction (CTR)

Scotland's CTR scheme was introduced in 2013 following localisation of Council Tax support and the UK Government's abolition of the Council Tax Benefit (CTB). The CTR scheme reduces the Council Tax liability of vulnerable people in Scotland, including people on low incomes, pensioners and lone parents. The impact of CTB/CTR on the average Council Tax bill is also shown in Table 1.8. After taking these reductions in liability into account, the average bill per dwelling for 2014-15 reduced by £143 from £989 to £846.

Scotland's CTR scheme is funded by the UK Government, Scottish Government and local government. In 2014-15, CTR funding from government totaled £343 million (£320 million from UK Government and £23 million from Scottish Government). Local authorities agreed to contribute up to £17 million additional funding from their own budgets to the cost of the scheme, as part of the joint commitment between Scottish Government and local government to mitigate the 10% funding cut by the UK Government.

The amounts distributed to each local authority and the final total costs are shown in Table 1.9. The total cost of the CTR scheme across Scotland in 2014-15 was around £344 million. This figure is under £1 million more than the £343 million funding provided by the UK Government and Scottish Government, and just over £16 million less than the £360 million total budget (including the £17 million from local authorities).

Table 1.9 - CTR funding and final liability for local authorities, 2014-15

Local Authority UKG and SG
funding (£'000s)
Final total reduction
in liability (£'000s)
Aberdeen City £9,485 £9,180
Aberdeenshire £7,383 £7,207
Angus £5,222 £5,259
Argyll & Bute £5,520 £5,560
Clackmannanshire £3,453 £3,532
Dumfries & Galloway £8,597 £8,636
Dundee City £12,267 £12,169
East Ayrshire £9,589 £9,434
East Dunbartonshire £4,546 £4,596
East Lothian £5,245 £5,420
East Renfrewshire £3,718 £3,782
Edinburgh, City of £26,649 £26,471
Eilean Siar £1,545 £1,467
Falkirk £8,328 £8,191
Fife £20,486 £20,822
Glasgow City £68,090 £68,629
Highland £12,147 £12,033
Inverclyde £6,743 £6,716
Midlothian £5,215 £5,127
Moray £3,790 £3,729
North Ayrshire £11,291 £11,511
North Lanarkshire £24,485 £24,441
Orkney Islands £739 £755
Perth & Kinross £6,617 £6,535
Renfrewshire £13,151 £13,187
Scottish Borders £5,580 £5,517
Shetland Islands £658 £637
South Ayrshire £8,416 £8,559
South Lanarkshire £20,511 £21,052
Stirling £4,355 £4,383
West Dunbartonshire £9,320 £9,391
West Lothian £9,859 £9,823
Scotland £343,000 £343,751

Source: Local Financial Returns, 2014-15

Changes to Council Tax Liabilities

Not all dwellings are liable to pay the full rate of Council Tax; discounts, exemptions and increased rates can be charged for certain types of dwellings, and the CTR scheme is available to support households on relatively low incomes in meeting their Council Tax liabilities. Table 1.10 summarises the range of discounts, exemptions and reductions available and the change in liability that applies to each type. Please note that, in some cases, more than one type of discount, exemption or reduction may apply. The examples given in Table 1.10 are typical but not exhaustive. For a full explanation of Council Tax discounts and exemptions, go to:

www.gov.scot/Topics/Government/local-government/17999/counciltax/Secondhomes.

Table 1.10 - Council Tax discounts, exemptions, reductions and increases

Support Typical dwellings that are exempt Change in liability
Discounts
Single Person
Discount
Occupied by only one CT liable adult 25%
Second Homes Occupied by those living in tied accommodation
(e.g. farm workers, members of the clergy), when they
are contributing to the local economy.
10 - 50% 1
Long Term Empty
(6 - 12 months)
Empty and unfurnished for > 6 months. 50%
Long Term Empty
(> 12 months)
Empty and unfurnished for > 12 months. 10 - 50% or an increase 1
Occupied entirely by
disregarded adults
Dwellings occupied entirely by disregarded adults 50%
Exemptions
Occupied Persons who are exempt from Council Tax 100%
Unoccupied Empty for < 6 months; cannot be occupied because
in need of repair; residents have moved out due to care needs.
100%
Reductions
Disability Reduction Homes that have been adapted for a disabled person. One CT band 2
CTR - Passported In receipt of Pension Credit (Guarantee), JSA (income
based), ESA (income related) or Income Support.
100%
CTR - Not passported Low income household Up to 100% 3

1 The actual change in liability depends on local authority policy. In 2013-14, local authorities gained the discretionary power to remove the empty properties discount or set a Council Tax increase of 100% on properties which have been empty for more than 12 months.

2 For example, an eligible Band D rate property would be charged Band C rates.

3 The exact change in liability is dependent on a means test.

Table 1.11 shows the number of dwellings eligible for Council Tax discounts and reductions. Of the 2.4 million chargeable dwellings in Scotland, around 1 million were eligible for a discount in 2015. The most common type of discount was the Single Person Discount, with around two-fifths of chargeable dwellings entitled to the discount in 2015. The CTR scheme supports over half a million dwellings, or around one-fifth of chargeable dwellings, in meeting their Council Tax liability.

Around 64,000 dwellings are classified as second homes or long term empty properties. Further statistics on these are available at: www.gov.scot/Topics/Statistics/Browse/Housing-Regeneration/HSfS/LTemptysecondhomes.

Table 1.11 - Number of dwellings1 in receipt of Council Tax discounts and reductions as at September

Type of Support 2010 2011 2012 2013 2014 2015
All chargeable
dwellings
2,377,474 2,389,029 2,401,869 2,410,331 2,427,805 2,440,518
Disability reduction 14,015 13,999 13,994 13,791 13,736 13,505
Single Person
Discount
941,915 945,515 948,208 952,251 953,612 955,505
Second Homes 2 38,002 39,250 40,599 35,734 27,879 27,317
Long Term Empty
(empty > 6 months)
24,598 25,356 25,454 27,327 31,884 36,419
Occupied entirely by
disregarded adults
1,887 1,910 1,809 1,579 2,802 1,378
Dwellings not subject
to a discount
1,371,072 1,376,998 1,385,799 1,393,440 1,411,628 1,419,899
CTR/CTB 3 563,720 565,730 560,880 548,070 533,980 512,340

1 Some dwellings may be eligible for more than one type of support, in these cases the dwelling will be counted under each type of support it is eligible for.

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

3 CTB figures from 2010 to 2012 were published by DWP and are available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/229795/hbctb_release_may13_revised.xls

Source: CTAXBASE Return, CTR Extract and DWP CTB figures

1.5 Non-Domestic Rates

Non-Domestic Rates (NDR) is a property tax paid by the owner/occupier or tenant of a non-domestic property.

In 2014-15, the income raised from NDR was £2.51 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. Examples include business premises and third and public sector properties.

The value given to a property for NDR purposes is called its rateable value (RV). The RV of a property is a legally defined valuation provided by the Assessor, broadly based on the rental values the property could achieve. As such it is not necessarily a reflection of the profitability, turnover or output of the business. It is established at revaluation where the Scottish Assessors assess rateable values for all non-domestic properties in Scotland, taking account of the type and nature of the property. All non-domestic properties and their corresponding RVs are listed on the Valuation Roll, which is maintained by the Scottish Assessors.

NDR bills are calculated using the rateable value (RV) of non-domestic properties, multiplied by a poundage set nationally by Scottish Ministers, less any relief or exemption entitlement.

Formula: (NDR bill) property = (RV) property x(poundage) national-(Reliefs)property

For properties with a rateable value greater than £35,000, the Large Business Supplement (LBS) applies in addition to the poundage (the poundage is effectively increased slightly by adding the LBS).

Table 1.12 shows the composition of properties (and associated RV) on the Valuation Roll by property type. As at 1st April 2015, there were 223,046 properties with a total RV of £6.7 billion. Shops were the most prevalent type of property on the valuation roll, making up nearly a quarter (24%) of the number of properties and RV on the roll. Industrial subjects and offices are the next two largest categories in terms of numbers and RV. Together, these three categories account for 63% of properties on the valuation roll, and 58% of the RV.

Table 1.12 - Non-Domestic Rates Properties by Classification (as at 1 April 2015)

Number of properties Rateable value % of Properties on Valuation Roll % of RV on Valuation Roll
CATEGORY 1st April 2015 1st April 2015 1st April 2015 1st April 2015
Advertising 1,988 7,929,319 1% 0%
Care Facilities 3,014 106,302,379 1% 2%
Communications 370 22,934,215 0% 0%
Cultural 1,391 46,584,635 1% 1%
Education and Training 3,724 505,366,410 2% 8%
Garages and Petrol Stations 4,311 64,856,415 2% 1%
Health and Medical 3,178 203,129,890 1% 3%
Hotels 5,115 189,643,144 2% 3%
Industrial Subjects 47,265 1,144,301,891 21% 17%
Leisure, Entertainment, Caravans etc. 21,484 239,558,468 10% 4%
Offices 39,771 1,135,022,108 18% 17%
Other 13,259 95,223,242 6% 1%
Petrochemical 141 106,158,030 0% 2%
Public Houses 3,775 109,534,735 2% 2%
Public Service Subjects 9,882 321,507,583 4% 5%
Quarries, Mines, etc. 689 22,086,110 0% 0%
Religious 6,235 55,208,967 3% 1%
Shops 53,282 1,617,747,045 24% 24%
Sporting Subjects 3,377 17,919,045 2% 0%
Statutory Undertaking 795 707,691,454 0% 11%
TOTAL ALL NON-DOMESTIC PROPERTIES 223,046 6,718,705,085 100% 100%

Source: Scottish Assessors Valuation Roll, 1st April 2015

Table 1.13 provides a breakdown of properties on the Valuation Roll by local authority and RV band.

In terms of the Small Business Bonus Scheme and the application of the Large Business Supplement, £18,000 and £35,000 represent the rateable value thresholds for small and large businesses respectively.

Around 78% of all properties (174,201 properties) have a Rateable Value less than or equal to £18,000.

Table 1.13 - Non-Domestic Rates Subjects by Local Authority (as at 1 April 2015)1

Local Authority Rateable Value Band Total Non-Domestic Properties
<= £18,000 £18,001 to £35,000 > £35,000
Scotland 174,201 19,638 29,207 223,046
Aberdeen City 5,006 1,119 2,284 8,409
Aberdeenshire 9,914 799 1,080 11,793
Angus 4,031 349 401 4,781
Argyll & Bute 7,664 344 347 8,355
Clackmannanshire 1,297 121 147 1,565
Dumfries & Galloway 8,220 473 559 9,252
Dundee City 4,145 585 961 5,691
East Ayrshire 3,212 309 415 3,936
East Dunbartonshire 1,762 288 305 2,355
East Lothian 2,774 262 328 3,364
East Renfrewshire 1,306 211 224 1,741
Edinburgh, City of 13,681 2,371 3939 19,991
Eilean Siar 2,070 110 115 2,295
Falkirk 3,652 472 681 4,805
Fife 10,432 1,193 1620 13,245
Glasgow City 17,643 2,901 4,774 25,318
Highland 15,258 975 1,407 17,640
Inverclyde 1,796 206 307 2,309
Midlothian 2,232 244 373 2,849
Moray 3,984 250 366 4,600
North Ayrshire 4,128 386 503 5,017
North Lanarkshire 7,021 1,049 1554 9,624
Orkney Islands 1,875 132 96 2,103
Perth & Kinross 7,119 587 724 8,430
Renfrewshire 4,727 584 960 6,271
Scottish Borders 6,261 411 417 7,089
Shetland Islands 1,736 111 147 1,994
South Ayrshire 3,801 420 556 4,777
South Lanarkshire 7,202 1,084 1489 9,775
Stirling 4,000 420 578 4,998
West Dunbartonshire 2,165 274 415 2,854
West Lothian 4,087 598 1135 5,820

1. Includes a small percentage of properties with zero rateable value.

Source: Scottish Assessors Valuation Roll, 1st April 2015

Table 1.14 shows a time series of annual NDR Income, total Rateable Value, and Poundage Rate. Revaluations typically take place on a 5-year cycle and are intended to be 'revenue neutral'. 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 1.14 - Non-Domestic Rates Income, Total Rateable Values and Poundage Rate

2009-10 2010-111 2011-12 2012-13 2013-14 2014-15
Non Domestic Rates Income (£m) 2 2,010 2,138 2,251 2,347 2,367 2,511
Total Rateable Value (£m) 5,299 6,612 6,678 6,718 6,716 6,681
Poundage Rate (pence) 48.1 40.7 42.6 45.0 46.2 47.1
Large Business Supplement (pence)3 0.4 0.7 0.7 0.8 0.9 1.1

1. Revaluation occurred in 2010
2. All income figures, including 2014-15, are the final audited income collected by councils.
3. The Large Business Supplement is applied in addition to the poundage for properties with a rateable value over £35,000

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

Table 1.14 also shows that the total RV has increased slightly since the 2010 revaluation from £6.61 billion to £6.68 billion in 2014-15. 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[1]. 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, along with other factors such as the poundage rate and backdated revaluation appeals losses which also affect the final income.

Inflation is a key driver of growth in NDR income as the poundage rate, set nationally by Scottish Ministers[2], 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 (those with a RV greater than £35,000) 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 1.1p in 2014-15. For the period 2012-13 to 2014-15, large retailers with RV of £300,000 or more that sell both alcohol and tobacco also paid the Public Health Supplement (PHS) - an additional 13p on the poundage rate in 2014-15. These supplements increase the amount paid in NDR bills. Conversely, exempt properties (which do not pay rates), and relief schemes such as the Small Business Bonus Scheme can significantly reduce the amount paid in NDR bills, and therefore the NDR income.

Table 1.15 summarises the total number of properties and rateable value as at 1st April 2015 and the NDR income collected in 2014-15 by local authority (net of reliefs).

Table 1.15 - Non-Domestic Rates Properties, Rateable Values and Income By Local Authority1

Authority Non-Domestic
Properties2
Apr-15
Non-Domestic
Rateable Values
Apr-15
Non-Domestic
Rate Income
2014-153
(£000s) (£000s)
Scotland 223,046 6,718,705 2,511,290
Aberdeen City 8,409 457,525 193,214
Aberdeenshire 11,793 227,053 85,722
Angus 4,781 77,059 26,551
Argyll & Bute 8,355 89,129 30,036
Clackmannanshire 1,565 38,067 16,645
Dumfries & Galloway 9,252 118,560 42,395
Dundee City 5,691 187,855 67,150
East Ayrshire 3,936 81,401 29,153
East Dunbartonshire 2,355 67,601 23,398
East Lothian 3,364 68,944 23,237
East Renfrewshire 1,741 40,751 14,374
Edinburgh, City of 19,991 910,691 344,628
Eilean Siar 2,295 22,742 7,002
Falkirk 4,805 172,282 67,286
Fife 13,245 435,570 152,736
Glasgow City 25,318 980,357 350,888
Highland 17,640 311,517 110,516
Inverclyde 2,309 60,239 20,309
Midlothian 2,849 78,492 27,871
Moray 4,600 89,014 33,268
North Ayrshire 5,017 108,703 38,495
North Lanarkshire 9,624 297,665 109,884
Orkney Islands 2,103 26,082 8,620
Perth & Kinross 8,430 149,282 51,732
Renfrewshire 6,271 234,681 81,981
Scottish Borders 7,089 90,694 29,091
Shetland Islands 1,994 44,178 16,578
South Ayrshire 4,777 108,239 39,792
South Lanarkshire 9,775 640,455 266,873
Stirling 4,998 114,107 41,920
West Dunbartonshire 2,854 171,876 75,608
West Lothian 5,820 217,895 84,334

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. Audited income collected by councils.

Source: Number of Properties and Rateable Value - Scottish Assessors Valuation Roll 1st April 2015

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

Table 1.15 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. To avoid the need for revisions, only final (audited) NDR income figures are included in this publication. The deadline for NDR income returns was accelerated for 2014-15 and subsequent years to allow audited NDR income data to be included.

Table 1.16 - Amount of Non-Domestic Rates Relief Provided by Relief Type1,2

£thousands

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-152
Empty Property Relief 127,385 153,361 145,936 157,862 169,134 146,496 140,962
Charities 113,417 122,132 136,731 151,276 164,979 173,623 181,242
Sports Clubs 9,651 11,604 11,476 12,059 12,431 12,911 13,487
Disabled persons relief 42,914 45,484 51,901 54,372 57,580 58,299 59,648
SBBS 72,553 108,420 123,259 134,719 150,196 161,002 170,635
Religious Properties 18,986 20,218 24,016 22,960 24,573 25,205 26,113
Rural Rate Relief 3,887 3,918 4,129 4,218 4,305 4,323 4,244
Renewable Energy Relief Scheme3 3,560 4,126 4,811 7,333 9,280
New Start4 130 484
Fresh Start5 189 536
Other6 27 19 4 43 10 63 221
Gross Amount 388,821 465,157 501,013 541,635 588,018 589,574 606,852

1. Estimates include mandatory and discretionary elements of relief where applicable, but exclude backdated payments of relief
2. Reliefs for all years, including 2014-15, are final audited figures.
3. The Renewable Energy Relief Scheme was introduced at 1 April 2010.
4. The new start relief scheme was introduced at 1 April 2013 and will run for 3 years.
5. The fresh start relief scheme was introduced at 1 April 2013.
6. Other includes Hardship and Enterprise Areas.

Source: Non-domestic Rate Income Returns from Councils

There are a number of types of NDR relief that reduce the NDR bill for qualifying properties. Table 1.16 shows the main types of relief available[3] and the amount of relief provided each year from 2008-09 to 2014-15.

The gross amount of relief provided has increased substantially from £389 million in 2008-09 to £607 million in 2014-15. Key reasons for this are increases in the poundage rate (due to 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. Other reasons for change 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 the introduction of the new relief schemes). Changes were made to Empty Property Relief (EPR) in 2013, reducing the amount of EPR for non-industrial properties from 100% for 3 months and then 50% thereafter to 100% for 3 months then 10% thereafter, resulting in decreases to the cost of Empty Property Relief in 2013-14 and 2014-15.

The total NDR income collected by local authorities is pooled at the Scotland level[4]. Each council reports the NDR collected to the Scottish Government to be included in the central pool. The amount to be re-distributed to each authority 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 2014-15 is given in Annex F and the 2014-15 distributable amount per Local Authority is shown in Table 1.17.

Table 1.17 - Non-Domestic Rates Distributable Amount by Local Authority, 2014-15

Non-Domestic Rate Distributable Amount (£000s)
Scotland 2,649,500
Aberdeen City 192,684
Aberdeenshire 85,901
Angus 28,033
Argyll & Bute 31,002
Clackmannanshire 12,918
Dumfries & Galloway 48,474
Dundee City 58,704
East Ayrshire 31,060
East Dunbartonshire 24,901
East Lothian 25,172
East Renfrewshire 15,151
Edinburgh, City of 364,108
Eilean Siar 7,046
Falkirk 74,307
Fife 158,661
Glasgow City 363,061
Highland 124,210
Inverclyde 22,707
Midlothian 29,013
Moray 33,370
North Ayrshire 40,197
North Lanarkshire 118,797
Orkney Islands 9,604
Perth & Kinross 55,415
Renfrewshire 106,316
Scottish Borders 31,013
Shetland Islands 17,602
South Ayrshire 43,134
South Lanarkshire 297,292
Stirling 32,586
West Dunbartonshire 78,548
West Lothian 88,513

Source: Amendment Order Scotland (2014)

1.6 Customer and Client Receipts

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 1.18 below.

The total customer and client receipts received by local authorities has increased by 2.3%, from £2.32 billion in 2013-14 to £2.37 billion in 2014-15. In the General Fund this has increased by 1.2%, from £1.24 billion in 2013-14 to £1.26 billion in 2014-15. Almost half (47%) of customer and client receipts are to the HRA where it has increased by 3.6% from £1.07 billion to £1.11 billion in 2014-15.

Table 1.18 - Customer and Client Receipts - 2010-11 to 2014-15

£thousands

2010-11 2011-12 2012-13 2013-14b 2014-15
Education 95,006 115,017 113,355 120,563 119,061
Cultural & Related Services 81,521 77,490 70,731 71,185 72,567
Social Work 251,167 268,104 276,455 276,012 275,301
Roads & Transport 146,157 171,756 154,197 175,384 182,833
Environmental Services 120,400 117,767 117,969 117,457 112,180
Planning & Development Services 97,897 118,519 116,749 121,079 120,162
Central Services 113,862 143,521 110,889 131,710 143,806
Non-HRA Housing 164,339 179,116 165,412 160,800 155,077
Trading Services 66,852 63,526 58,045 69,843 77,909
Total General Fund (GF) Customer and Client Receipts excluding Police & Fire 1,137,201 1,254,816 1,183,802 1,244,033 1,258,896
Housing Revenue Account (HRA) 1 979,571 965,920 1,034,306 1,073,362 1,112,210
Total GF + HRA Customer and Client Receipts, excluding Police & Fire 2,116,772 2,220,736 2,218,108 2,317,395 2,371,106
Police, Fire & Emergency Planning 55,098 66,575 111,992
Total GF + HRA Customer and Client Receipts 2,171,870 2,287,311 2,330,100 2,317,395 2,371,106

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

b. The Police and Fire Reform (Scotland) Act 2012 created Police Scotland and Fire Scotland, which replaced the former Police and Fire Boards. These new bodies are classified as Central Government, rather than Local Government.

Source: Local Financial Returns (LFRs)

Contact

Email: Euan Smith

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