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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 2006-07 was estimated at £453 million, an increase of 19% over 2005-06. Total expenditure on transport within Scottish Ministers' responsibility in 2005-06 was estimated at £1,642 million, £576 million (54%) more than in the previous year. ( Table 11.1)
2.2 In 2005-06, expenditure on transport controlled by local authorities was £535 million (excluding loan charges). In cash terms, this was 7.2% more than in 2004-05. Road maintenance (£256 million in 2005-06) has accounted for around half the expenditure in recent years. The other main categories of expenditure in 2005-06 were:
- concessionary fares - £95 million, a 6% increase over the previous year (the large percentage rises in 2002-03 and 2003-04 were due to the introduction of a national minimum standard of free off-peak local bus travel for elderly and disabled people in Scotland with effect from 30 September 2002, and the extension of the arrangements to men aged 60-64 with effect from 1 April 2003);
- contributions to passenger transport - £85 million;
- road lighting - £59 million;
- network and traffic management - £47 million.
In 2005-06, the net income from parking charges was £25 million, almost twice the figure for 1997-98. ( Table 11.1)
2.3 Expenditure on the management and maintenance of the trunk road network totalled £142.4m in 2005-06. Excluding an inflation adjustment of £16.0m, the expenditure is split £75.3m on structural repairs and £51.0m 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 2005-06 were: Glasgow City (£52.5 million), South Lanarkshire (£37.2 million), Fife (£35.1 million) North Lanarkshire, (£30.1 million) and Highland (£29.5 million). ( Table 11.3) The table also shows local authorities' figures for each of a number of types of expenditure:
- Road maintenance/Winter maintenance. Glasgow City had the highest expenditure on road maintenance (£18.3 million), followed by South Lanarkshire (£15.9 million). Highland and Aberdeenshire spent the most on winter maintenance (£6.7 million and £5.7 million respectively).
- Concessionary Fares. Glasgow had the highest expenditure on concessionary fares (£12.1 million), followed by Edinburgh (£8.9 million).
- Contributions to Public Transport. in terms of the total net revenue expenditure on 'local authority' and 'non LA' public transport, Shetland Islands (£11.8 million) made the largest contributions to passenger transport. Orkney spent £6.3 million and Fife spent £5.1 million.
- Road Lighting. Glasgow spent most on road lighting (£9.9 million), followed by South Lanarkshire and North Lanarkshire, at £4+ million each.
- Parking. Edinburgh raised the largest amount from parking (£11.5 million, net) and Glasgow raised £8.8 million.
2.5 Gross capital account expenditure by councils and boards on local authority roads and transport totalled £333.6 million in 2005-06, an increase of 23% from the previous year. Of this total £230.5 million was spent on roads, £91 million on other transport and £12.1 million on toll bridges. The main components of the roads expenditure were £33.5 million on roads projects costing under £2 million each, £35.4 million on improvements and reconstruction of major roads costing £2+ million each, £74.6 million on structural maintenance of roads, and £42 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 2005-06 were:
- City of Edinburgh (£56.8 million),
- West Lothian (£25.1 million),
- Highland (£23.7 million), and
- North Lanarkshire (£20.6 million).
Highland spent the most both on 'major' road projects costing £2+ million each (£9.9 million) and smaller road projects (£7.1 million). City of Edinburgh spent the most on roads special objectives (£36.2 million). For other types of transport, the highest spender was also City of Edinburgh (£20.6 million). ( Table 11.5)
2.7 In 2005-06, local government roads and transport trading services revenue income totalled £44.8 million: £16.5 million from road bridges (Forth and Tay only), £14.6 million from ferries, £0.4 million from buses and £13.4 million from other local authority transport undertakings (such as airports, harbours and piers). The main sources of income were £27.6 million from sales, rents, fees and charges and a £14.8 million contribution towards deficiencies from general funds. ( Table 11.6)
2.8 Local government roads and transport trading services capital account expenditure totalled £28.8 million in 2005-06. ( Table 11.7)
2.9 In 2005-06, government grants for the construction and improvement of harbour facilities totalled £5.1 million. The main recipients were Caledonian MacBrayne (£1.3 million), Highland Council (£1.8 million), Lerwick Port authority (£1.0 million), Scrabster Harbour Trust (£483,000) and Orkney Islands Council (£352,000). ( Table 11.8)
2.10 The average prices of unleaded petrol and diesel in Great Britain as a whole rose between June 2005 and June 2006, by 10.4 and 8.7 pence per litre respectively. Tax (duty plus VAT) represented about 64% of the price of unleaded petrol and 63% of the price of diesel in Great Britain in June 2006, compared with 78% unleaded petrol and 77% for diesel for unleaded petrol in June 1996, and with 70% for and 68% respectively for both fuels in June 2005. ( Table 11.9)
2.11 The UK Retail Prices Index ( RPI) rose by 30% from a value of 152.7 (based on 13 January 1987=100) for 1996 to a value of 198.1 for 2006. 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 the maintenance of motor vehicles increased by 66%, petrol and oil by 63% and there was a 52% rise in the cost of vehicle tax and insurance. However, the cost of purchasing a motor vehicle fell by 23% in "cash" terms over the last ten years. As a result, the motoring expenditure index rose by 19%, which is less than the 30% increase in the RPI, so the overall cost of motoring decreased in real terms between 1996 and 2006. Over the same period, the overall index of fares and other travel costs rose by 40% in "cash" terms. Rail fares rose by 36% and bus and coach fares by 47%, so both increased in real terms. ( Table 11.10)
2.12 Average weekly household expenditure in Scotland on transport and vehicles between 2003-04 and 2005-06 was £54.40, representing 13.8% of total household expenditure. On average, £23.75 was spent on the purchase of vehicles, £23.00 on the operation of personal transport (including £15.00 on petrol, diesel and other motor oils) and £7.70 on transport services (such as bus and train fares). ( Table 11.11b)
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 which resulted in 4 Operating Companies maintaining the trunk road network. The introduction of 3rd Generation Contracts for Trunk Road Maintenance in April 2006 and 2007 means there are now 3 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:
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 Grant Carr of Transport Scotland (tel: 0141 272 7120).
5.1 For further information on Tables 11.1 (lower) (Local Transport - Capital), 11.1(b) and 11.3 to 11.7 contact Mr John Valentine of The Scottish Government Statistical Support for Local Government branch (tel: 0131 244 7033) or e-mail lgfstats@scotland.gsi.gov.uk.
5.2 For further information on Table 11.2 contact Mr James Watson of Halcrow (tel: 0141 272 3300)
5.3 For further information on Table 11.8 contact Mr Bob Davie of The Scottish Government Enterprise, Transport and Lifelong Learning Department, Transport Group Ferries Operations, Piers and Harbours (tel: 0131 244 7243).
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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