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Chapter 11 Finance

1. Introduction

1.1 This chapter provides information on finance, such as expenditure on transport within Scottish Ministers' responsibility and on transport controlled by Local Authorities. It shows capital and current expenditure on motorways and trunk roads, Local Authority revenue and capital income and expenditure on roads and transport, government grants for the construction and improvement of harbour facilities, petrol and diesel prices and duties, and average weekly household expenditure on transport.

1.2 It should be noted that almost all the figures in this chapter are expressed in what are referred to as "current", "out-turn" or "cash" prices: no table gives "constant price" figures.

2. Main Points

2.1 The provisional estimated total of capital and current expenditure on motorways and trunk roads in 2005-06 was estimated at £312 million, a decrease of 4% over 2004-05 (which had the peak expenditure in recent years at £325 million - but the total is forecast to rise to £341 million in 2006-07). Total expenditure on transport within Scottish Ministers' responsibility in 2004-05 was estimated at £1,066 million, £106 million (11%) more than in the previous year. ( Table 11.1)

2.2 In 2004-05, expenditure on transport controlled by local authorities was £499 million (excluding loan charges). In cash terms, this was 2.5% more than in 2003-04. Road maintenance (£244 million in 2004-05) accounted for around half the expenditure in every year (apart from 1996-97). The other main categories of expenditure in 2004-05 were:

In 2004-05, the net income from parking charges was £24 million, almost twice the figure for 1996-97. ( Table 11.1)

2.3 Expenditure on the management and maintenance of the trunk road network totalled £161.9m in 2004-05. Excluding an inflation adjustment of £11.8m, the expenditure is split £89.9m on structural repairs and £60.2m on routine, cyclic, winter maintenance and network management. (These figures do not include spending on construction). ( Table 11.2)

2.4 The Local Authorities with the highest net revenue expenditure on roads and transport (excluding loan charges) in 2004-05 were: Glasgow City (£44.0 million), South Lanarkshire (£35.4 million), Fife (£31.2 million) North Lanarkshire, (£29.1 million) and Highland (£27.6 million). ( Table 11.3) The table also shows local authorities' figures for each of a number of types of expenditure:

2.5 Gross capital account expenditure by councils and boards on local authority roads and transport totalled £271.1 million in 2004-05, an increase of 22% from the previous year. Of this total £177.3 million was spent on roads, £93.4 million on other transport a0nd £0.4 million on toll bridges. The main components of the roads expenditure were £34.0 million on roads projects costing under £2 million each, £21.8 million on improvements and reconstruction of major roads costing £2+ million each, £45.7 million on structural maintenance of roads, and £36.1 million on road safety for local roads. ( Table 11.4)

2.6 The local authorities with the highest gross capital account expenditure on roads and transport in 2004-05 were:

Highland spent the most both on 'major' road projects costing £2+ million each (£6.1 million) and smaller road projects (£5.9 million). North Lanarkshire spent the most on roads special objectives (£15.8 million). For other types of transport, the highest spender was City of Edinburgh (£20.7 million). ( Table 11.5)

2.7 In 2004-05, local government roads and transport trading services revenue income totalled £42.2 million: £14.2 million from road bridges (Forth and Tay only), £14.0 million from ferries, £0.3 million from buses and £13.7 million from other local authority transport undertakings (such as airports, harbours and piers). The main sources of income were £25.9 million from sales, rents, fees and charges and a £14.1 million contribution towards deficiencies from general funds. ( Table 11.6)

2.8 Local government roads and transport trading services capital account expenditure totalled £16.8 million in 2004-05. ( Table 11.7)

2.9 In 2004-05, government grants for the construction and improvement of harbour facilities totalled £6.9 million. The main recipients were Caledonian MacBrayne (£3.2 million), Scrabster harbour authority (£1.8 million), Highland Council (£1.2 million) and Orkney Islands Council (£748,000). ( Table 11.8)

2.10 The average prices of unleaded petrol and diesel in Great Britain as a whole rose between June 2004 and June 2005, by 3.2 and 6.1 pence per litre respectively. Tax (duty plus VAT) represented about 70% of the price of unleaded petrol and 68% of the price of diesel in Great Britain in June 2005, compared with 72% for both fuels in June 1995, and with 73% for unleaded petrol and 72% for diesel in June 2004. ( Table 11.9)

2.11 The UK Retail Prices Index ( RPI) rose by 29% from a value of 149.1 (based on 13 January 1987=100) for 1995 to a value of 192.0 for 2005. Most of the Transport components of the RPI increased more rapidly than this, and therefore rose in real terms. In "cash" terms, the costs of petrol and oil and the cost of maintenance of motor vehicles both increased by 63% and there was a 45% rise in the cost of vehicle tax and insurance. However, the cost of purchasing a motor vehicle fell by 18% in "cash" terms over the last ten years. As a result, the motoring expenditure index rose by 21%, which is less than the 29% increase in the RPI, so the overall cost of motoring decreased slightly in real terms between 1995 and 2005. Over the same period, the overall index of fares and other travel costs rose by 42% in "cash" terms. Rail fares rose by 36% and bus and coach fares by 50%, so both increased in real terms. ( Table 11.10)

2.12 The total average weekly household expenditure in Scotland on transport and vehicles in 2004-05 was £60.60, an increase of 2% over the previous year and 33% on 10 years ago. As a percentage of total household expenditure this was 15.7%, fractionally more than the previous year and only slightly less than 10 years ago where it was 15.8%. ( Table 11.11)

3. Notes and Definitions

3.1 Following local government reorganisation on 1 April 1996, the management and maintenance of motorways and other trunk roads was sub-divided into 8 operating units. These applied for the years from 1996-97 to 2000-01 inclusive. New arrangements were introduced with effect from 2001-02. From 2001-02 there are now 4 Operating Companies. Details of the areas covered by each of these companies can be found in the Annex.

3.2 Local authority trading services: Those services of a commercial nature which are, or could be, substantially financed by charges made to recipients of the services.

3.3 In a few cases, negative figures are shown in the net expenditure tables. This is due to income/receipts exceeding the expenditure in a particular category.

3.4 Retail Prices Index: Rail fares are 5 parts per 1,000 (or 0.5%) of the Retail Prices Index. Bus and coach fares are also 5 parts per 1,000 (or 0.5%). 'Motoring costs' accounts for 14.6% of the Retail Prices Index. This breaks down into:

6.2% Purchase of vehicles
2.2% Maintenance of motor vehicles
3.8% Petrol and Oil
2.4% Tax and Insurance.

Car parking charges are included under 'Maintenance of motor vehicles'.

3.5 Resource Accounting and Budgeting (also known as Accruals): Under resource accounting income is shown when it is earned, and costs are shown when they are incurred, the timing of the cash movement is irrelevant. The costs of a capital asset are spread ('depreciated') evenly over its useful life. A capital charge is also made against the value of the asset.

3.6 Cash Accounting: Income is shown when money is received, and costs are shown when payment is made. All receipts and payments made in a financial year are included in the cash accounts for that period. The whole cost of a capital asset is recorded when it is bought.

4. Sources

4.1 The statistics in this chapter come from the following sources:

• Table 11.1 (upper half - "Scottish Ministers")* - the publication "Building a Better Scotland: Spending Proposals 2003-2006: What the money buys" which details current public expenditure and plans to 2005-06 with subsequent years from "Scotland's Budget Documents 2006-07: Budget (Scotland) (No.3) Bill Supporting Document" (* except 'Local Transport - Capital' which is obtained from returns made by Councils and boards to The Scottish Executive)
• Tables 11.1 (lower), 11.3 to 11.7 - from returns by Councils and boards to The Scottish Executive
• Tables 11.2 - Transport Scotland Trunk Roads Network Management
• Table 11.8 - The Scottish Executive Transport Group Ferries Operations, Piers and Harbours
• Tables 11.9 - The Department of Trade and Industry
• Tables 11.10 and 11.11 - The Office for National Statistics

5. Further Information

5.1 For further information on Table 11.1 (upper) - Motorways and Trunk roads and central government subsidies to transport industries, contact Alistair Lindsay of The Scottish Executive Finance Transport Division (tel: 0131 244 7485).

5.1 For further information on Tables 11.1 (lower) (Local Transport - Capital), 11.1(b) and 11.3 to 11.7 contact Mrs Margaret Sellar of The Scottish Executive Local Government Finance Statistics branch (tel: 0131 244 7035) or e-mail lgfstats@scotland.gsi.gov.uk.

5.2 For further information on Table 11.2 contact Mr Duncan Kerr of Transport Scotland Trunk Roads Network Management (tel: 0141 272 7371)

5.3 For further information on Table 11.8 contact Mr David Todd of The Scottish Executive Enterprise, Transport and Lifelong Learning Department, Transport Group Ferries Operations, Piers and Harbours (tel: 0131 244 1679).

5.4 For further information on Table 11.9 contact Ms Deirdre Taylor, Department of Trade and Industry (tel: 020 7215 2722).

5.5 For further information on Table 11.10 contact the Office of National Statistics - Consumer Prices and General Inflation Division (tel: 020 7533 5845).

5.6 For further information on Table 11.11 contact the Office of National Statistics - Expenditure and Food Survey (tel 020 7533 5756).

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