Scottish Local Government Financial Statistics 2009-10
Scottish Local Government Financial Statistics 2009-10
4 LOCAL GOVERNMENT CAPITAL EXPENDITURE
KEY SUMMARY FACTS
- Total capital expenditure in 2009-10 was £3,293 million.
- Capital grants from the Scottish Government to finance capital expenditure in 2009-10 were £891 million.
- Borrowing to finance capital expenditure (including finance leases) in 2009-10 was £1,916 million.
- Capital receipts used to finance 2009-10 capital expenditure were £165 million.
- Capital funded from current revenue in 2009-10 was £166 million.
- The value of Local Authority fixed assets at 31 March 2010 was £34.5 billion.
- Total outstanding debt at 31 March 2010 was £10.9 billion.
Capital expenditure undertaken by Local Authorities is mainly for purchasing, constructing or enhancing physical assets, such as buildings ( e.g. police or fire stations and schools), land ( e.g. playing fields), infrastructure ( e.g. roads), and vehicles, plant and machinery. Capital expenditure also includes expenditure that the Scottish Ministers have permitted the local authorities to treat as capital expenditure and is met from capital resources.
Capital expenditure is financed by one or more of the following types of income:
- Capital receipts from asset sales
- Capital grants and contributions
- Contributions from revenue funds
- Borrowing/ Finance leases
Prior to 1 April 2004, Local Authorities were only permitted to incur liability to fund capital expenditure with the consent of Scottish Ministers. These capital consents were issued by Ministers under section 94 of the Local Government (Scotland) Act 1973. Following the introduction of the Local Government in Scotland Act 2003, Local Authorities are permitted to finance capital expenditure by borrowing without securing Government approval. Local Authorities have a statutory duty to set their own maximum capital expenditure limits. These limits must be set with regard to the CIPFA Prudential Code, which requires that capital expenditure undertaken by Local Authorities must be affordable, prudent and sustainable.
Detailed breakdowns of Capital Expenditure can be found in Annexes I and J.
Table 4.1 - Capital Expenditure, 2009-10 1
£ thousands
General Fund Services |
Housing Revenue Account |
Total |
|
---|---|---|---|
Acquisition of land, leases, existing buildings or works |
455,789 |
21,414 |
477,203 |
New construction, conversions & enhancement to existing buildings |
1,920,724 |
465,182 |
2,385,906 |
Vehicles, machinery & equipment |
174,688 |
8,325 |
183,013 |
Intangible assets |
10,801 |
396 |
11,197 |
Total |
2,562,002 |
495,317 |
3,057,319 |
Revenue Expenditure funded from Capital Resources |
235,316 |
- |
235,316 |
Total Capital Expenditure |
2,797,318 |
495,317 |
3,292,635 |
1. Includes capital funded from current revenue
Table 4.2 - Capital Expenditure By General Fund Service 1
£ thousands
2005-06 |
2006-07 |
2007-08 |
2008-09 |
2009-10 |
|
---|---|---|---|---|---|
Education |
330,458 |
415,392 |
464,827 |
479,258 |
1,248,645 |
Cultural & Related Services |
120,063 |
136,412 |
165,992 |
207,088 |
216,345 |
Social Work |
46,843 |
58,962 |
65,449 |
63,233 |
66,379 |
Police & Fire |
66,533 |
66,820 |
68,680 |
101,062 |
83,779 |
Roads & Transport |
345,831 |
427,303 |
484,669 |
479,769 |
471,795 |
Environmental Services |
79,823 |
69,260 |
101,325 |
121,267 |
121,769 |
Planning & Economic Development |
78,398 |
71,188 |
121,596 |
124,060 |
171,613 |
Non- HRA housing |
89,940 |
82,259 |
54,786 |
180,099 |
182,808 |
Trading Services |
34,055 |
48,960 |
22,179 |
22,764 |
21,935 |
Other Services |
206,667 |
283,610 |
181,725 |
274,923 |
212,250 |
Total GF Capital Expenditure |
1,398,611 |
1,660,166 |
1,731,228 |
2,053,523 |
2,797,318 |
Housing Revenue Account |
418,078 |
489,313 |
453,119 |
500,558 |
495,317 |
Total Capital Expenditure |
1,816,689 |
2,149,479 |
2,184,347 |
2,554,081 |
3,292,635 |
1. Includes capital funded from current revenue
2. Due to revised accounting arrangements for PPP and PFI, it is not possible to compare capital expenditure for 2009-10 with previous years for services in which there are PPP or PFI schemes. This mainly affects Education.
Table 4.3 - Capital Expenditure By Local Authority type, 2009-10
£ thousands
General Fund |
Housing Revenue Account |
Total |
General Fund |
Housing Revenue Account |
Total |
||
---|---|---|---|---|---|---|---|
Scotland |
2,797,318 |
495,317 |
3,292,635 |
||||
Aberdeen City |
154,675 |
48,547 |
203,222 |
Central Scotland Fire |
986 |
. |
986 |
Aberdeenshire |
55,825 |
19,224 |
75,049 |
Dumfries & Galloway Fire |
735 |
. |
735 |
Angus |
33,368 |
9,621 |
42,989 |
Fife Fire and Rescue Service |
3,662 |
. |
3,662 |
Argyll & Bute 1 |
29,022 |
- |
29,022 |
Grampian Fire |
2,385 |
. |
2,385 |
Clackmannanshire |
33,468 |
4,824 |
38,292 |
Highlands & Islands Fire |
2,771 |
. |
2,771 |
Dumfries & Galloway 1 |
109,684 |
- |
109,684 |
Lothian and Borders Fire |
2,192 |
. |
2,192 |
Dundee City |
78,753 |
20,805 |
99,558 |
Strathclyde Fire |
9,909 |
. |
9,909 |
East Ayrshire |
24,463 |
12,556 |
37,019 |
Tayside Fire |
2,119 |
. |
2,119 |
East Dunbartonshire |
172,092 |
4,432 |
176,524 |
TOTAL FIRE |
24,759 |
. |
24,759 |
East Lothian |
31,895 |
21,618 |
53,513 |
||||
East Renfrewshire |
12,820 |
3,903 |
16,723 |
Central Scotland Police |
2,492 |
. |
2,492 |
Edinburgh, City of |
460,824 |
33,864 |
494,688 |
Dumfries & Galloway Police |
828 |
. |
828 |
Eilean Siar 1 |
17,978 |
- |
17,978 |
Fife Constabulary |
2,150 |
. |
2,150 |
Falkirk |
72,358 |
14,099 |
86,457 |
Grampian Police |
2,526 |
. |
2,526 |
Fife |
74,799 |
52,238 |
127,037 |
Lothian & Borders Police |
10,829 |
. |
10,829 |
Glasgow City 1 |
296,357 |
- |
296,357 |
Northern Police |
3,796 |
. |
3,796 |
Highland |
70,606 |
10,738 |
81,344 |
Strathclyde Police |
12,896 |
. |
12,896 |
Inverclyde 1 |
38,520 |
- |
38,520 |
Tayside Police |
2,103 |
. |
2,103 |
Midlothian |
19,993 |
22,670 |
42,663 |
TOTAL POLICE |
37,620 |
. |
37,620 |
Moray |
31,937 |
4,258 |
36,195 |
||||
North Ayrshire |
22,131 |
20,286 |
42,417 |
Forth Estuary Transport |
8,835 |
. |
8,835 |
North Lanarkshire |
100,900 |
53,844 |
154,744 |
Tay Road Bridge |
1,921 |
. |
1,921 |
Orkney Islands |
9,067 |
1,401 |
10,468 |
TOTAL BRIDGE AUTHORITIES |
10,756 |
. |
10,756 |
Perth & Kinross |
118,962 |
18,594 |
137,556 |
||||
Renfrewshire |
39,862 |
12,623 |
52,485 |
HITRANS |
- |
. |
- |
Scottish Borders 1 |
73,931 |
- |
73,931 |
NESTRANS |
3,278 |
. |
3,278 |
Shetland Islands |
31,915 |
2,168 |
34,083 |
SESTRAN |
- |
. |
- |
South Ayrshire |
19,310 |
7,904 |
27,214 |
SWESTRANS |
465 |
. |
465 |
South Lanarkshire |
185,935 |
39,612 |
225,547 |
SPT |
26,656 |
. |
26,656 |
Stirling |
26,256 |
8,997 |
35,253 |
TACTRAN |
- |
. |
- |
West Dunbartonshire |
108,364 |
16,099 |
124,463 |
ZetTrans |
- |
. |
- |
West Lothian |
137,714 |
30,392 |
168,106 |
TOTAL REGIONAL TRANSPORT PARTNERSHIPS |
30,399 |
. |
30,399 |
TOTAL UNITARY AUTHORITIES |
2,693,784 |
495,317 |
3,189,101 |
1. These councils have transferred their housing stock to Registered Social Landlords
4.1 Financing Capital Expenditure
Capital expenditure can be financed by central Government grants, capital receipts (proceeds from the sale of fixed assets), other grants and contributions, revenue resources and prudential borrowing (consisting of self-financed borrowing and borrowing supported through loan charge support from the Scottish Government).
The capital data for 2009-10 include the changes arising from the introduction of International Financial Reporting Standards ( IFRS). Under the new accounting arrangements the criteria for asset recognition moved from risk and reward to the control of service provision and control of the residual value of the asset. Based on the new tests most local authorities identified that they do have control of service provision and the residual interest in the PFI assets, such as schools. These assets are now recognised as assets of the local authority (on-balance sheet) which they were not under the previous arrangements and now form part of the capital regime. Any expenditure on their construction or enhancement will be capital expenditure. The associated financing of the arrangement is a type of debt which is known as a finance lease or credit arrangement
Table 4.4 - Financing of capital expenditure, 2009-10
£ thousands
General Fund |
Housing Revenue Account |
Total |
|
---|---|---|---|
Scottish Government General Capital Grant |
462,640 |
- |
462,640 |
Scottish Government Specific Capital Grants |
265,605 |
2,765 |
268,370 |
Grants from Scottish Government Agencies and NDPBs |
157,955 |
2,326 |
160,281 |
Other Grants and Contributions |
121,558 |
4,293 |
125,851 |
Borrowing from Loans fund |
779,807 |
311,741 |
1,091,548 |
Capital receipts used from asset sales/disposals |
110,418 |
54,328 |
164,746 |
Capital Fund applied |
28,017 |
599 |
28,616 |
Capital funded from current revenue |
46,876 |
119,265 |
166,141 |
Assets acquired under credit arrangements ( e.g. finance leases, PPP/ PFI) |
824,442 |
- |
824,442 |
TOTAL |
2,797,318 |
495,317 |
3,292,635 |
Table 4.5 - Total Capital Expenditure and Financing 1
£ thousands
2005-06 |
2006-07 |
2007-08 |
2008-09 |
2009-10 |
|
---|---|---|---|---|---|
Total Capital Expenditure |
1,816,689 |
2,149,479 |
2,184,347 |
2,554,081 |
3,292,635 |
Financed by: |
|||||
Scottish Government grants |
446,533 |
553,047 |
722,171 |
767,722 |
891,291 |
Borrowing 2 |
663,119 |
766,272 |
715,234 |
1,207,055 |
1,915,990 |
Other grants and contributions |
147,337 |
176,929 |
132,287 |
137,811 |
125,851 |
Capital Receipts/Capital Fund applied |
313,241 |
454,178 |
440,987 |
244,657 |
193,362 |
Capital funded from current revenue |
246,459 |
199,053 |
173,668 |
196,836 |
166,141 |
1. Includes Housing Revenue Account expenditure and financing.
2. Includes finance leases.
Chart 4.1 - Capital Expenditure Financing
4.2 Capital Receipts
Capital receipts can be used to finance capital expenditure and repay debt (principal but not interest). These receipts are generated through the sale or disposal of assets, such as a council house or other local authority land/building. The amount of capital receipts used to finance capital expenditure can be less than the amount of capital receipts raised in a given year.
Table 4.6 - Capital receipts summary, 2009-10
£ thousands
General Fund |
HRA |
TOTAL |
|
---|---|---|---|
Capital Receipts brought forward at 1 April 2009 |
74,748 |
3,725 |
78,473 |
Capital receipts from the sale/ disposal of tangible fixed assets |
164,306 |
63,609 |
227,915 |
Capital receipts from the sale/ disposal of intangible fixed assets |
- |
1,482 |
1,482 |
Total capital receipts available for use |
239,054 |
68,816 |
307,870 |
Capital receipts used from asset sales/disposals |
110,418 |
54,328 |
164,746 |
Capital receipts used to repay debt |
1,557 |
11,028 |
12,585 |
Capital receipts transferred to Capital Fund |
74,061 |
. |
74,061 |
Capital receipts held 31 March 2010 |
53,018 |
3,460 |
56,478 |
4.3 Borrowing
Local Authorities have the statutory power to borrow under Schedule 3 of the Local Government (Scotland) Act 1975. Local Authorities may borrow for the purposes of:
- Acquiring land
- Construction of buildings
- Undertaking permanent work or provision of plant and machinery
- Lending to relevant authorities or Community Councils
- Any other purpose for which the authority is authorised under any enactment to borrow
Borrowing is a major component of the funding of capital expenditure, whose proportion in terms of capital expenditure financing increased greatly from 2007-08 to 2008-09, as shown in Chart 4.1. This increase is likely reflective of advice given to authorities to take advantage of recent market conditions by borrowing where possible, instead of, for example, using receipts from sales of assets, which has shown a corresponding decrease in proportion of capital expenditure financing.
The Scottish Government provides loan charge support as part of local authority revenue funding, which covers the debt charges on a notional amount of capital expenditure each year. This is known as supported borrowing. Borrowing over and above the level of supported borrowing is classified as self-financed borrowing, and is financed by the local authority itself.
Local authorities are required by legislation to operate a loans fund. All amounts of money borrowed by local authorities must be paid into this loans fund, which then makes advances to service accounts to fund capital expenditure. The Scottish Government monitors the value of debt recorded in the loans fund (rather than the level of external debt) because it is this amount of debt that is charged to services over a period of time. It is not expected, however, that the levels of loan pool debt and external debt will be significantly different in value.
Table 4.7 - Loans Fund Advances to Finance Capital Expenditure
£ thousands
2005-06 |
2006-07 |
2007-08 |
2008-09 |
2009-10 |
|
---|---|---|---|---|---|
Scotland |
663,119 |
766,272 |
710,474 |
1,206,318 |
1,091,548 |
Unitary Authorities |
662,785 |
760,598 |
706,643 |
1,194,867 |
1,086,559 |
Fire |
- |
616 |
- |
5,674 |
- |
Police |
334 |
994 |
3,831 |
5,777 |
4,989 |
Regional Transport Partnerships |
- |
- |
- |
- |
- |
Bridge Authorities |
- |
4,064 |
- |
- |
- |
Local Authorities often need to provide long term financing for capital projects. Borrowing allows authorities a flexible, yet largely predictable method of finance. The Scottish Government provides Local Authorities with support for the costs of an agreed level of new borrowing each year.
The ongoing cost of servicing the majority of this debt is supported through loan charges support within Total Revenue Funding ( TRF). New debt incurred over and above the levels of supported borrowing is self-financed by local authorities and the small element of non-revenue generating debt on general fund services that is not relevant for loan charges support within TRF is generally on programmes supported through ring-fenced grants up to and including 2008-09.
The costs of servicing debt on Local Authority trading services (e.g piers and harbours) are mainly met through the charges made for these services, while the costs of servicing Housing Revenue Account ( HRA) debt are met principally through income from rents and from Housing Support Grant.
4.4 Fixed Assets and Outstanding Debt
As a result of capital expenditure, Local Authorities generate assets and liabilities. The value of Local Authority fixed assets is shown in Table 4.8 below, and the levels of outstanding debt are shown in Table 4.9.
Table 4.8 - Value Of Fixed Assets, 2009-10
£ thousands
Value of fixed assets as at 31 March 2010 |
|
---|---|
Operational Assets |
|
Council dwellings |
9,140,999 |
Other land and buildings |
18,182,691 |
Vehicles, plant and machinery |
769,104 |
Infrastructure assets |
3,941,374 |
Community assets |
172,117 |
Total operational assets |
32,206,285 |
Non-operational assets |
|
Assets under construction |
983,249 |
Surplus assets held for disposal |
583,577 |
Investment properties |
702,732 |
Total non-operational assets |
2,269,558 |
Intangible Assets |
42,756 |
TOTAL ASSETS |
34,518,599 |
Table 4.9 - Outstanding Debt On Local Authority Services, 2009-10
General Fund Services 1 |
Housing Revenue Account |
Total All Debt (£000s) |
|||
---|---|---|---|---|---|
Total Debt (£000s) |
Per Head (£) |
Total Debt (£000s) |
Per HRA dwelling (£) |
||
Scotland |
8,701,375 |
1,675 |
2,209,731 |
6,838 |
10,911,106 |
Aberdeen City |
397,896 |
1,861 |
163,658 |
7,175 |
561,554 |
Aberdeenshire |
284,943 |
1,170 |
126,065 |
9,741 |
411,008 |
Angus |
124,573 |
1,130 |
27,114 |
3,462 |
151,687 |
Argyll & Bute 2 |
191,110 |
2,123 |
- |
- |
191,110 |
Clackmannanshire |
95,744 |
1,894 |
33,788 |
6,748 |
129,532 |
Dumfries & Galloway 2 |
232,057 |
1,563 |
- |
- |
232,057 |
Dundee City |
213,396 |
1,488 |
141,567 |
9,589 |
354,963 |
East Ayrshire |
164,875 |
1,372 |
68,030 |
5,241 |
232,905 |
East Dunbartonshire |
110,395 |
1,055 |
16,320 |
4,523 |
126,715 |
East Lothian |
178,687 |
1,845 |
56,276 |
6,996 |
234,963 |
East Renfrewshire |
93,528 |
1,048 |
23,134 |
7,531 |
116,662 |
Edinburgh, City of |
850,108 |
1,780 |
313,160 |
14,711 |
1,163,268 |
Eilean Siar 2 |
146,296 |
5,588 |
- |
- |
146,296 |
Falkirk |
185,273 |
1,215 |
37,584 |
2,296 |
222,857 |
Fife |
475,108 |
1,307 |
128,623 |
4,184 |
603,731 |
Glasgow City 2 |
1,467,764 |
2,494 |
- |
- |
1,467,764 |
Highland |
468,309 |
2,124 |
139,221 |
10,233 |
607,530 |
Inverclyde 2 |
183,641 |
2,290 |
- |
- |
183,641 |
Midlothian |
104,649 |
1,295 |
85,498 |
13,047 |
190,147 |
Moray |
119,536 |
1,364 |
37,341 |
6,428 |
156,877 |
North Ayrshire |
163,472 |
1,206 |
71,423 |
5,328 |
234,895 |
North Lanarkshire |
389,437 |
1,193 |
120,266 |
3,227 |
509,703 |
Orkney Islands |
35,228 |
1,765 |
- |
- |
35,228 |
Perth & Kinross |
173,082 |
1,186 |
48,543 |
6,560 |
221,625 |
Renfrewshire |
169,352 |
997 |
126,378 |
9,639 |
295,730 |
Scottish Borders 2 |
195,180 |
1,732 |
- |
- |
195,180 |
Shetland Islands |
12,401 |
558 |
42,739 |
23,626 |
55,140 |
South Ayrshire |
130,073 |
1,167 |
56,154 |
6,792 |
186,227 |
South Lanarkshire |
555,544 |
1,787 |
149,651 |
5,793 |
705,195 |
Stirling |
130,761 |
1,474 |
19,081 |
3,409 |
149,842 |
West Dunbartonshire |
118,638 |
1,305 |
95,406 |
8,385 |
214,044 |
West Lothian |
324,446 |
1,897 |
82,711 |
6,429 |
407,157 |
Central Scotland Fire |
6,571 |
23 |
. |
. |
6,571 |
Dumfries & Galloway Fire |
- |
- |
. |
. |
- |
Fife Fire and Rescue Service |
- |
- |
. |
. |
- |
Grampian Fire |
10,444 |
19 |
. |
. |
10,444 |
Highlands & Islands Fire |
12,211 |
42 |
. |
. |
12,211 |
Lothian and Borders Fire |
9,638 |
10 |
. |
. |
9,638 |
Strathclyde Fire |
28,586 |
13 |
. |
. |
28,586 |
Tayside Fire |
6,820 |
17 |
. |
. |
6,820 |
Central Scotland Police |
9,781 |
34 |
. |
. |
9,781 |
Dumfries & Galloway Police |
- |
- |
. |
. |
- |
Fife Constabulary |
- |
- |
. |
. |
- |
Grampian Police |
6,436 |
12 |
. |
. |
6,436 |
Lothian & Borders Police |
28,322 |
30 |
. |
. |
28,322 |
Northern Police |
18,632 |
65 |
. |
. |
18,632 |
Strathclyde Police |
36,876 |
17 |
. |
. |
36,876 |
Tayside Police |
11,298 |
28 |
. |
. |
11,298 |
Forth Estuary Transport |
- |
.. |
. |
. |
- |
Tay Road Bridge |
- |
.. |
. |
. |
- |
HITRANS |
- |
- |
. |
. |
- |
NESTRANS |
- |
- |
. |
. |
- |
SESTRAN |
- |
- |
. |
. |
- |
SWESTRANS |
- |
- |
. |
. |
- |
SPT |
30,258 |
14 |
. |
. |
30,258 |
TACTRAN |
- |
- |
. |
. |
- |
ZetTrans |
- |
- |
. |
. |
- |
1. Includes Trading Services
2. These councils have transferred their housing stock to Registered Social Landlords
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