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Scottish Local Government Financial Statistics 2001-2002

SUMMARY AND KEY FACTS

Total Expenditure and Income

Scottish Local Authority total gross expenditure for 2001-02 was 13.9 billion. This is a 9.1% increase on the figure for 2000-01, and can be split into gross revenue expenditure of 13.0 billion and gross capital expenditure of 0.9 billion (Table 1).

Scottish Local Authority gross income in 2001-02 was 13.6 billion. This is a 4.2% increase on the figure for 2000-01, and can be split into 13.3 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 2001-02 was 9.1 billion, a 6.1% increase over the previous year's figure (Table 2A). Since 1996-97, gross revenue spending by Local Authorities in Scotland has increased by 26%, an average of 4.7% per year. Net current expenditure, which is defined as gross revenue expenditure less income from sales, fees, charges and other local sources, was 7.7 billion, a 7.2% increase from 2000-01.

The main components of net current expenditure in 2001-02 were 3.0 billion of spending on education, 1.4 billion on social work, 1.0 billion on police, fire and emergency planning, and 0.7 billion on loan charges. These figures represent increases of 7.7%, 7.2%, 6.0% and 4.3% respectively on 2000-01.

The long-term trend in net current expenditure by service shows that the greatest relative increases have been in the education and social work service areas, which in 2001-02 jointly accounted for 56% of net current expenditure (Table S1). Approximately half of the 1.2 billion increase in spending since 1996-97 has been allocated to the education service (586 million), with another quarter going to the social work service (283 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
4 Includes non-HRA housing expenditure.

Housing Revenue Expenditure

Total gross expenditure on housing for 2001-02, including both general fund and Housing Revenue Account (HRA) spending, was 2.4 billion, a 4.2% increase over the previous year's figure (Table 2A). 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 88 million (Table 5A), an increase of 11.5% from the 2000-01 figure.

Capital Expenditure and Outstanding Debt

The total gross capital expenditure for 2001-02 was 930 million, an increase of 15.8% from 2000-01. Gross capital income was 255 million, an increase of 5.0% from the 2000-01 figure (Table 2B). This large increase in capital spending was mostly financed by a substantial increase in capital allocations, from 570 million in 2000-01 to 671 million in 2001-02, an increase of 18%.

The increase in gross capital expenditure in 2001-02 is the first significant rise since 1996-97. Gross capital expenditure fell substantially from 1996-97 to 1997-98, then remained relatively constant until 2000-01. Of the main services, all except culture and related services and planning and economic development have received significant increases in capital investment for 2001-02 (Table S2).

Almost one third of gross capital expenditure for 2001-02 was allocated to housing, mostly through the Housing Revenue Account (HRA). Roads and transport accounted for 16% of the gross expenditure, and education represented 15%.

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

Local authority capital debt outstanding was 10.0 billion at 31 March 2002 (Table 10). This is only a 0.8% increase on the figure for 31 March 2001. The total figure can be split into 6.4 billion of 'relevant' debt which has no source of income other than loan charge support from the Scottish Executive, and 3.6 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 2001-02, including Council Tax Benefit payments from the Department for Work and Pensions was 1.649 billion (Table 2A). This is a 6.2% increase on the income received in 2000-01. Average Band D Council Tax in Scotland for 2001-02 was 929, a 4.9% increase from the previous year, and the estimated number of band D equivalent houses (inclusive of all discounts and exemptions) for 2001-02 was 1.87 million, a 0.9% increase from 2000-01.

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 2001-02 and the successful recovery of debt from previous years' bills. The in-year Council Tax collection rate for 2001-02 was 90.6%, an absolute increase of 1.4% from 2000-01.

Figures for Council Tax levels, taxable base and collection rates are available for 2002-03 and are included in Table S3. The Scotland average Band D Council Tax has risen by 37% in cash terms from 1996-97 to 2002-03, an average of 5.4% per year. After adjusting for inflation, this rise is 19% in real terms, or 3.0% per year. The council tax base, expressed in terms of the number of Band D equivalents has been increasing consistently from 1996-97 to 2002-03, at an average rate of approximately 0.8%per year.

In-year collection rate figures, which measure only income received each year against that years' bill have also been steadily increasing since 1998-99, from 87.2% up to 90.6% in 2001-02 and 91.3% in 2002-03.

TABLE S3 Council Tax Summary Statistics, 1996-97 to 2002-03

1 Excludes water and sewerage charges
2 Figures for 2002-03 are not yet available on an accruals basis.
3 Source: Accounts Commission and Council Tax Revenues Received (CTRR) statistical returns to the Scottish Executive.

Continuing collection activity and debt recovery in subsequent years results in additional council tax income. Approximately 379 million of council tax debt has been collected for the years 1996-97 to 2001-02 by 31 March 2003 (Table 12).

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 2001-02 was 1.672 billion, an increase of 6.0% on the previous year. The mid-year estimate of income for 2002-03 is 1.710 billion, which is a 2.3% increase from the 2001-02 figure.

The poundage rate for 2001-02 increased by 2.6% from the 2000-01 figure, to 47.0p. The increase for 2002-03 was 1.7%, resulting in a poundage rate of 47.8p.

In terms of the taxable base, total non-domestic rateable value (RV) for Scotland has increased since the quinquennial revaluation in 2000. In 2001-02, total RV increased to 4.473 billion, up 3.1% from 2000-01. At the beginning of 2002-03, the total RV was 4.518 billion, a further increase of 1.0% from the previous year's figure.

TABLE S4 Non-Domestic Rates Summary Statistics, 1996-97 to 2002-03

1 Excludes water rate.
2 Amount of non dometic rate income collected by councils.
3 Mid-year estimate of income for 2002-03.
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 decrease in total RV evident in 1998-99 and 1999-2000 can be attributed to the fact that the majority of revaluation appeals are settled in the third and fourth years of the cycle. For this reason, although there has been an increase in total RV in 2001-02 and 2002-03, expectations are that this trend will level off or reverse in 2003-04 and 2004-05.

Commercial subjects (Table 14) account for approximately two thirds of the subjects and over half of the total RV. Industrial property represents 7% of subjects, but 15% of the total RV, reflecting the fact that these tend to be larger properties. Formula valued subjects account for only 0.1% of subjects but over 6% of the total RV. This can be explained both by the fact the properties concerned are large scale operations (including many of the formerly nationalised industries) and that in some cases the definition of 'subject' is taken to be all the property holdings of a particular company.

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