Scottish Local Government Financial Statistics 2011-12

1. Introduction to Scottish Local Government Financial Statistics

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. Further information on Scottish Local Government Finance Statistics can be found at http://www.scotland.gov.uk/Topics/Statistics/Browse/Local-Government-Finance .

1.1 Structure and Functions of Local Government

Local Government is responsible for delivering a wide range of services including education, social services, transport, housing, environmental services, cultural services, planning and development and central services. Under the Concordat signed in November 2007, the Scottish Government and Local Government work jointly towards agreed outcomes under a single national purpose.

Local Government in Scotland is comprised of 32 Local Authorities as shown in Map 1.1. In terms of population, the largest of these 32 Authorities is Glasgow City Council and the smallest is Orkney Islands Council. Table 1.1 below shows the population and area for each Local Authority.

In addition to these 32 Local Authorities, there are also Police and Fire Boards, Valuation Joint Boards, Regional Transport Partnerships and the Forth and Tay Bridge Boards. Most of these Boards are the collective responsibility of two or more Councils. See Table 1.2 for listings of Boards and constituent Local Authorities.

Police and Fire Boards are responsible for providing police and fire services to their constituent council members. Board members are nominated by the constituent councils. Net funding is requisitioned from the constituent councils.

Regional Transport Partnerships (RTPs) were established by the Transport (Scotland) Act 2005. Seven statutory regional transport partnerships were created across Scotland to lead on regional transport strategy and delivery.

Valuation Joint Boards provide valuation services, primarily maintaining the Valuation Roll for non-domestic properties, and the Council Tax Valuation List for domestic dwellings. The Valuation Roll and Council Tax Valuation Lists are used as the basis for local taxation billing liability (council tax and non-domestic rates).

Table 1.1 - Local Authority Demographics, 2011-12

	Population 1	Area 2	Population Density 2	Urban Rural Classification		SIMD
				Urban	Rural
		(sq km)	(Persons per sq km)	(% of population)	(% of population)	(% of 15% Most Deprived Datazones)
Scotland	5,254,800	77,925	67	81.9	18.1	100%
Aberdeen City	220,420	186	1,187	98.5	1.5	2.3%
Aberdeenshire	247,600	6,313	39	47.3	52.7	0.5%
Angus	110,630	2,182	51	72.3	27.7	0.3%
Argyll & Bute	89,590	6,909	13	47.7	52.3	1.0%
Clackmannanshire	50,770	159	320	85.7	14.3	1.4%
Dumfries & Galloway	148,060	6,426	23	53.1	46.9	1.3%
Dundee City	145,570	60	2,433	99.5	0.5	5.6%
East Ayrshire	120,200	1,262	95	73	27	3.3%
East Dunbartonshire	104,570	175	599	94.3	5.7	0.3%
East Lothian	98,170	679	145	72.7	27.3	0.3%
East Renfrewshire	89,850	174	517	96.1	3.9	0.7%
Edinburgh, City of	495,360	264	1,878	98.9	1.1	5.5%
Eilean Siar	26,080	3,071	8	21.6	78.4	0.0%
Falkirk	154,380	297	519	91.4	8.6	1.8%
Fife	367,370	1,325	277	80.4	19.6	5.9%
Glasgow City	598,830	175	3,412	99.9	0.1	29.6%
Highland	222,370	25,659	9	49.1	50.9	1.7%
Inverclyde	79,220	160	494	94.3	5.7	4.5%
Midlothian	82,370	354	233	83.2	16.8	0.3%
Moray	87,260	2,238	39	56.7	43.3	0.0%
North Ayrshire	135,130	885	153	89.3	10.7	4.7%
North Lanarkshire	326,680	470	695	93	7	10.2%
Orkney Islands	20,160	990	20	32.5	67.5	0.0%
Perth & Kinross	149,520	5,286	28	52.8	47.2	0.6%
Renfrewshire	170,650	261	654	95.8	4.2	4.9%
Scottish Borders	113,150	4,732	24	51.3	48.7	0.5%
Shetland Islands	22,500	1,466	15	29.2	70.8	0.0%
South Ayrshire	111,560	1,222	91	77.8	22.2	1.7%
South Lanarkshire	312,660	1,772	176	88.7	11.3	5.4%
Stirling	90,770	2,187	41	65.7	34.3	0.7%
West Dunbartonshire	90,360	159	569	98.6	1.4	3.2%
West Lothian	172,990	427	405	89.8	10.2	1.3%

Sources: Population and Area - National Records of Scotland 2011 Mid-Year Population Estimates. Urban Rural Classification - SG Urban Rural Classification 2010-12. SIMD - Scottish Index of Multiple Deprivation 2012.

Table 1.2 - Local Authority Joint Board Membership

Local Authority	Fire Board	Police Board	Regional Transport Partnerships	Valuation Joint Boards
Aberdeen City	Grampian Fire	Grampian Police	NESTRANS	Grampian
Aberdeenshire	Grampian Fire	Grampian Police	NESTRANS	Grampian
Angus	Tayside Fire & Rescue	Tayside Police	TACTRAN	Tayside
Argyll & Bute1	Strathclyde Fire	Strathclyde Police	SPT/HITRANS	Dunbartonshire & Argyll & Bute
Clackmannanshire	Central Scotland Joint Fire	Central Scotland Police	SESTRAN	Central
Dumfries & Galloway	Dumfries & Galloway Fire	Dumfries & Galloway Police	SWESTRANS	Dumfries & Galloway
Dundee City	Tayside Fire & Rescue	Tayside Police	TACTRAN	Tayside
East Ayrshire	Strathclyde Fire	Strathclyde Police	SPT	Ayrshire
East Dunbartonshire	Strathclyde Fire	Strathclyde Police	SPT	Dunbartonshire & Argyll & Bute
East Lothian	Lothian & Borders Fire & Rescue	Lothian & Borders Police	SESTRAN	Lothian
East Renfrewshire	Strathclyde Fire	Strathclyde Police	SPT	Renfrewshire
Edinburgh, City of	Lothian & Borders Fire & Rescue	Lothian & Borders Police	SESTRAN	Lothian
Eilean Siar	Highlands & Islands Fire	Northern Police	HITRANS	Highland and Western Isles
Falkirk	Central Scotland Joint Fire	Central Scotland Police	SESTRAN	Central
Fife	Fife Fire and Rescue Service	Fife Constabulary	SESTRAN	Fife
Glasgow City	Strathclyde Fire	Strathclyde Police	SPT	Glasgow
Highland	Highlands & Islands Fire	Northern Police	HITRANS	Highland and Western Isles
Inverclyde	Strathclyde Fire	Strathclyde Police	SPT	Renfrewshire
Midlothian	Lothian & Borders Fire & Rescue	Lothian & Borders Police	SESTRAN	Lothian
Moray	Grampian Fire	Grampian Police	HITRANS	Grampian
North Ayrshire	Strathclyde Fire	Strathclyde Police	SPT	Ayrshire
North Lanarkshire	Strathclyde Fire	Strathclyde Police	SPT	Lanarkshire
Orkney Islands	Highlands & Islands Fire	Northern Police	HITRANS	Orkney & Shetland
Perth & Kinross	Tayside Fire & Rescue	Tayside Police	TACTRAN	Tayside
Renfrewshire	Strathclyde Fire	Strathclyde Police	SPT	Renfrewshire
Scottish Borders	Lothian & Borders Fire & Rescue	Lothian & Borders Police	SESTRAN	Borders
Shetland Islands	Highlands & Islands Fire	Northern Police	ZetTrans	Orkney & Shetland
South Ayrshire	Strathclyde Fire	Strathclyde Police	SPT	Ayrshire
South Lanarkshire	Strathclyde Fire	Strathclyde Police	SPT	Lanarkshire
Stirling	Central Scotland Joint Fire	Central Scotland Police	TACTRAN	Central
West Dunbartonshire	Strathclyde Fire	Strathclyde Police	SPT	Dunbartonshire & Argyll & Bute
West Lothian	Lothian & Borders Fire & Rescue	Lothian & Borders Police	SESTRAN	Lothian

1. Helensburgh and Lomond are part of SPT while the rest of Argyll and Bute is part of HITRANS.

Map 1.1 - Local Authority Areas

1.2 Local Government Finance

1.2.1 Capital and Revenue Expenditure

Local Government expenditure is split between revenue and capital expenditure.

Both the capital and revenue sections of Local Authority accounts are collected on an accruals basis. This means that transactions are reflected in the accounts of the period in which the relevant event took place (for example, when income was earned or an expense was incurred). Capital accounts figures prior to 2004-05 were recorded on a cash basis, where transactions were recorded in the period in which the payment was made or received.

Revenue expenditure is largely made up of employee and operating costs. Employee costs include salaries, wages, national insurance, superannuation contributions, cash allowances to employees, redundancy and severance payments and other employee costs. Operating costs include property costs, supplies and services, transport and plant costs, payments to agencies and other bodies, and direct administration costs.

Capital expenditure is mainly incurred by Local Authorities for buying, constructing or enhancing physical assets such as buildings (schools, houses etc), land, vehicles, plant and machinery.

For accounting purposes revenue and capital are kept separate, but there is a relationship between the two, where capital expenditure (on a building for example) can have implications for revenue expenditure (where that building needs to be maintained and staffed). The revenue accounts reported include the General Fund, Housing Revenue accounts and External Trading Services accounts. Adjustments are made for transfers between accounts in order to avoid any double counting of expenditure or income.

Revenue and capital accounts should not be combined to produce total expenditure and income figures. There are elements of expenditure, i.e. Revenue Contributions to Capital, which is also known as Capital Financed from Current Revenue, and Grants to third parties funded by the General Capital Grant, which are reported both as Revenue and as Capital expenditure. As such, analysis and discussion of revenue and capital accounts are done separately to avoid double-counting.

1.2.2 Local Government Expenditure - Funding

Revenue expenditure is largely financed through Scottish Government grants, Non-Domestic Rates income and Council Tax income. Capital is mainly financed through Scottish Government grants, borrowing, capital receipts and revenue contributions.

This publication does not cover how funding is distributed amongst local authorities but details of the needs-based methodology central to funding allocation can be found on the Scottish Government Grant Aided Expenditure Website.

1.2.3 Local Authority Funds and Reserves

Local Authorities are required under section 93(1) of the Local Government (Scotland) Act 1973 to have a General Fund. All sums received by or on behalf of the authority are required to be paid into that fund, and all sums payable by the authority shall be paid out of the General Fund, except where statute provides otherwise. The General Fund is therefore the main account for local authorities and the one where most transactions occur. References to General Fund Income and Expenditure in this publication encompass the income and expenditure of the 32 Local Authorities, the Police and Fire Boards, the Valuation Joint Boards, and the Regional Transport Partnerships, but do not include income and expenditure of the Forth or Tay Bridge Boards.

The Housing (Scotland) Act 1987 requires a local authority to keep a Housing Revenue Account (HRA) for income and expenditure in relation to a local authority's own direct provision of housing. This separates the costs of social housing from other services provided by the local authority.

Local authorities also own and manage Common Good assets. Statute requires these assets to be accounted for separately.

Local Authorities are empowered by the Local Government (Scotland) Act 1975 to establish a Renewal and Repair fund. This fund may be used for repairing, maintaining, replacing and renewing the authority's buildings, plant and equipment. The Renewal and Repair fund may also be used to finance capital expenditure. In accordance with the Code of Practice on Local Authority Accounting in the UK (the Code), expenditure may not be charged directly to reserves. As such, all transactions are restricted to contributions to and from the General Fund.

The Local Government (Scotland) Act 1975 (as amended by schedule 13 of the Local Government etc. (Scotland) Act 1994) also enables a local authority to establish an Insurance Fund. Again, expenditure should not be charged directly to any reserve. As such, all transactions for this reserve are restricted to contributions to and from the General Fund.

In addition to the funds listed above, some local authorities may have specific statutory authority to hold other reserves. Examples include the Orkney County Council Act 1974 and the Zetland County Council Act 1974, which require the respective councils to keep separate accounts for their harbour undertakings and provide the power for the councils to hold a reserve fund for the same undertakings. As with other reserves' transactions, all transactions for these reserves are restricted to contributions to and from the General Fund.

The Local Government (Scotland) Act 1975 Act also permits a local authority to establish a Capital Fund. This fund may be used for the purpose of meeting the cost of capital expenditure and for the repayment of principal on loans (but not any interest on loans). Capital receipts may be paid directly into the Capital Fund in accordance with the provisions of the 1975 Act.

In addition to their own funds certain local authorities have the responsibility for managing pension funds. The Local Government Pension Schemes do not form part of the local authority accounts or reserves.

1.2.4 Changes to Accounting Arrangements for Public Private Partnerships and Public Finance Initiatives

Revised accounting arrangements for Public Private Partnerships (PPP) and Public Finance Initiatives (PFI) were introduced from 1^st April 2009. Local Financial Returns 2009-10 and Final Capital Return 2009-10 were revised to collect data based on the new arrangements and this has continued for subsequent.

The revisions require local authorities to separate the PPP/PFI unitary charge into elements recognising the liability to meet the construction cost of the asset (statutory repayment of debt), interest costs arising from financing arrangements and the service charge for services (revenue expenditure) provided under the arrangement. Previously the total unitary charge was included within the relevant service revenue expenditure. Therefore, for 2009-10 (and later years) revenue expenditure, statutory repayment of debt and interest and investment income for services in which there are PPP or PFI schemes is not comparable with previous years. Total revenue expenditure is not affected by the changes. To allow comparisons to be made between the old and new accounting arrangements, revenue expenditure tables prepared on the old basis [LGF Stats 2009-10 (PPP/PFI Adjusted)] were published alongside Scottish Local Government Financial Statistics 2009-10 (which included tables on the new basis).

Capital expenditure is also affected by the revised accounting arrangements. Before 1^st April 2009 assets provided by a PFI/PPP or similar arrangement were not recorded as assets of the authority and therefore expenditure on the construction or enhancement of those assets were not recorded as capital expenditure. 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.

This change should therefore be taken into account when comparing 2009-10 capital expenditure for services in which councils have PPP or PFI with those of previous years. Comparison between data on the old and new bases is provided in Capital Expenditure Report 2010-11.

The services in which councils have reported having PPP or PFI are Education, Social Work, Culture & Related Services, Environmental Services and Roads & Transport. The biggest effect can be seen in Education as most councils have a PPP or PFI scheme for this service.

For more detailed information on the accounting changes see Finance Circular 4/2010.

1.2.5 Data Collection and Quality

The tables and figures in this publication have been compiled using various financial returns made by Local Authorities and Joint Boards throughout the financial year. These financial returns are approved by local authority directors of finance. The continued co-operation of these bodies in completing these returns is gratefully acknowledged.

To aid comparability, data collection aims to follow accountancy standards where they apply - for example revenue expenditure data are collected in line with the Chartered Institute of Public Finance and Accountancy (CIPFA) Service Code of Practice (SeRCOP).

As part of the quality assurance procedure, the Scottish Government carries out validation checks on the incoming data to identify possible errors. Potential problems are identified in a number of ways, including comparing the data received to: other known sources; data from previous years; and data from other local authorities. Where appropriate, views are also sought from policy colleagues - for example where a change in the financial data may be attributable to a policy change. To ensure the data are of a high quality, the Scottish Government then works with the relevant local authorities to resolve any data issues identified.

LFR Review - the participation of local authority representatives, the Convention of Scottish Local Authorities (COSLA), CIPFA and Scottish Government policy colleagues in the Local Financial Return (LFR) Review is also gratefully acknowledged. This was a major review of the LFR forms which collect data on local authority revenue expenditure (for example on services such as: Education; Social Work; Cultural and Related Services). The aim of the review was to update and improve the information collected through the LFRs to ensure the provisions of timely and high quality data whilst minimising unnecessary complications or burden (taking into account any developments in policy and accountancy practice and the needs of data users). As a result of the review, the following key improvements have been implemented:

• The collection structure was compared to local authority accounting standards and, where appropriate, changes were made to better reflect local authority accounts to reduce the burden on local authority data providers and improve comparability between local authorities.
• The timing of the collection was changed to enable audited data to be collected.
• A summary sheet was added to pull together data from the collections for different services and to tie the LFR data to local authority accounts.
• The collection was streamlined to ensure only essential data were collected, hence some previously collected data were removed from the forms (with the aim of reducing the burden on data providers).

1.2.6 Notes

As discussed above, for 2011-12, revenue expenditure data has been collected after local authority accounts were audited.

All other financial data is shown at outturn level to reflect the amounts after the year's accounts have been closed, but before audit. Where possible actual figures have been used. Where this has not been possible, near-actual figures have been taken. For this reason the figures published in this publication may not always agree with those published in Local Authority Audited Accounts.

Please note that due to rounding, some totals may not agree with the sum of their constituent parts. Calculations have been made where possible using un-rounded figures and may therefore not agree exactly with the rounded figures given in accompanying tables.

The following symbols are used throughout the publication:

.. not available
nc not collected
. not applicable
- nil or less than half the final digit shown

1.2.7 Enquiries

Enquiries relating to any of the text, tables or figures contained in the publication may be directed to:

Scottish Government
Local Government Finance Statistics
Local Governance and Reform Analytical Division
Area 3H-North, Victoria Quay
Edinburgh
EH6 6QQ

Tel: (0131) 244 7033
E-mail: lgfstats@scotland.gsi.gov.uk

Many of the data collections feeding into this report collect data at a more detailed level than the information published here. Much of the additional data can be made available if requested (contact details as above). Empty data collection forms, which illustrate what is collected can be viewed on the Scottish Government website Local Government Finance - Data Supplier Area pages.

All tables in this publication, and further background data, are available as Excel spreadsheets from the Scottish Government Local Government Finance Statistics website at:

http://www.scotland.gov.uk/stats/lgfstats

1.2.8 Local Government Financial Statistics from other parts of the UK

Statistics on local government finance in England and Wales can be found here:

Local Government Finance Statistics - England

[https://www.gov.uk/government/organisations/department-for-communities-and-local-government/series/local-government-finance-statistics-england]

Local Government Finance 2013 (Wales)

[http://wales.gov.uk/topics/statistics/headlines/localgov2013/?lang=en]

Although many of the statistics in the publications for Scotland, England and Wales adopt common accounting standards, there will be some variations in definitions for statistics for different countries.

If further advice is required on the definitions used in Scottish Local Government Financial Statistics, please use the contact details in the Enquiries section (above).