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Publication - Statistics publication

Scottish local government financial statistics 2016-2017

Published: 27 Feb 2018

Annual publication providing a comprehensive overview of Scottish local authority financial activity.

80 page PDF

1.6 MB

80 page PDF

1.6 MB

Contents
Scottish local government financial statistics 2016-2017
1. Local Government Revenue Expenditure and Funding

80 page PDF

1.6 MB

1. Local Government Revenue Expenditure and Funding

The revenue account is used for day-to-day costs, such as paying salaries, bills and rent.

Net Revenue Expenditure is the element funded through General Funding (which is made up of General Revenue Grant, Council Tax and Non-Domestic Rates).

Gross Revenue Expenditure is the total expenditure less inter/intra-authority transfers.

Gross Expenditure by Service and Type of Expenditure, 2016-17, £thousands
Gross Expenditure by Service and Type of Expenditure, 2016-17, £thousands

Revenue Income and Funding (£thousands)
Revenue Income and Funding (£thousands)

  • Gross Revenue Expenditure on services increased by 1.7% to £15.6 billion in 2016-17;
  • Net Revenue Expenditure on services decreased by 0.9% to £10.0 billion;
  • Net Revenue Expenditure on Education increased by 2.0% to £4.8 billion;
  • Net Revenue Expenditure on Social work decreased by 1.1% to £3.1 billion;
  • General Funding decreased by 2.5% to £11.7 billion;
  • Service income increased by 6.6% to £5.6 billion.

1.1 Total Revenue Expenditure and Funding

The two main local authority accounts are the revenue account and the capital account. The revenue account is used for day-to-day costs, such as paying salaries, bills and rent. The capital account is used to fund expenditure that creates an asset, such as building a school, road or care home. Capital income and expenditure are presented in Chapter 2.

Figures are presented in cash terms throughout the publication, i.e. they have not been adjusted for inflation. Where income is presented alongside expenditure, a convention of presenting income in (brackets) and expenditure without brackets is used.

Table 1.1 summarises revenue income, expenditure, funding and reserves for 2016-17.

Total Gross Revenue Expenditure on services by Scottish local authorities in 2016-17 was £15,590 million, 1.7% higher than in 2015-16. Of this, £677 million was for the provision of housing through the Housing Revenue Account ( HRA).

Total service income raised by local authorities in 2016-17 was £5,578 million, an increase of 6.6% on the previous year. Of this, £1,176 million was raised through the Housing Revenue Account. Excluding Social Care, total service income increased by 3.2%. Due to changes to the way that Social Care is funded following implementation of Integration of Health and Social Care, the increase in total service income should be interpreted with care.

Net Revenue Expenditure is the element of expenditure on services to be funded by taxation and non-specific grant income (General Revenue Funding, Council Tax and Non-Domestic Rates), with any remaining expenditure to be met from reserves. Net revenue expenditure is calculated as gross service expenditure minus service income. This is sometimes referred to as the Net Cost of Service. Total Net Revenue Expenditure in 2016-17 was £10,012 million, which is a decrease of 0.9% on 2015-16.

The largest service area is education with gross expenditure of £5,070 million and service income of £240 million in 2016-17, which gives a net revenue expenditure on education of £4,830 million, an increase of 2.0% on 2015-16.

The second largest service area is social work with gross expenditure of £4,217 million and £1,081 million of service income. Net Revenue Expenditure on social work is £3,136 million, 1.1% lower than in 2015-16. This fall can be largely attributed to changes in the way that social care is funded following implementation of Integration of Health and Social Care, which means that an increasing proportion of social care expenditure is funded from Health Boards via Integration Joint Boards. Social care gross expenditure increased by 4.0% (or £173 million) and income (which includes contributions from the Health Boards) increased by 23.6%. This means that, although the total social work expenditure has increased by 4.0%, the element of social work expenditure that is paid for through General Funding (comprising General Revenue Funding, Council Tax and Non-Domestic Rates) has fallen by 1.1%.

Education and Social work account for three quarters of General Fund net revenue expenditure on services, with Education accounting for 46% and Social Work accounting for 30% of General Fund net revenue expenditure.

Total Other Income and Expenditure for 2016-17 was £1,686 million, a decrease of 5.8% on the previous year. Of this, £820 million was on interest charges and £668 million was used to repay debt. Authorities used £290 million of revenue resources to fund capital expenditure. Interest received, surplus or deficit from trading operations and other operating expenditure totalled income of £92 million.

Total General Funding available to authorities in 2016-17 was £11,708 million, 2.5% lower than in 2015-16. Of this, £6,839 million was General Revenue Funding, £2,769 million was Non-Domestic Rates Distributable Amount and £2,091 million was from Council Tax, with £10 million of other funding.

The surplus or deficit on the provision of services is calculated by taking the net cost of service, adding Other Income and Expenditure, then deducting General Funding, which gives a revenue surplus of £9.5 million in 2016-17. This comprises a £9.9 million deficit in the General Fund and a £19.4 million surplus in the Housing Revenue Account.

This surplus contributes to the reserves that local authorities hold. At the 1 st of April 2016, Local Authorities held £1,649 million of General Fund and HRA reserves. They transferred £0.4 million into General Fund and HRA reserves from other accounts within the authority, which meant that reserves increased by £9.9 million to give a closing balance at the 31 st March 2017 of £1,659 million.

(Surplus)/Deficit on Provision of Services
(Surplus)/Deficit on Provision of Services

General Fund and HRA Revenue Reserves
General Fund and HRA Revenue Reserves

Table 1.1 – Revenue Expenditure, Income and Reserves, 2016-17 ( £thousands)

General Fund Housing Revenue Account Total
Income and Expenditure on Services
Gross Expenditure 14,912,703 677,338 15,590,041
Gross Income (4,401,278) (1,176,264) (5,577,542)
Net Cost of Service 10,511,425 (498,926) 10,012,499
Other Income and Expenditure
Interest Payable and Similar Charges 677,084 142,960 820,044
Interest Receivable and Similar Income (73,815) (2,383) (76,198)
Statutory Repayment of Debt 535,881 132,263 668,144
Capital Expenditure Funded from Revenue 81,891 207,714 289,605
(Surplus) or Deficit from Trading Operations (20,533) (1,573) (22,106)
Other Operating Expenditure 6,026 516 6,542
Other Income and Expenditure 1,206,534 479,497 1,686,031
Funding Requirement 11,717,959 (19,429) 11,698,530
General Funding
General Revenue Funding (6,839,251) 0 (6,839,251)
Non-Domestic Rates (2,768,500) 0 (2,768,500)
Council Tax (2,090,754) 0 (2,090,754)
Other (9,540) 0 (9,540)
Total Funding (11,708,045) 0 (11,708,045)
(Surplus) / Deficit to be met from reserves 9,914 (19,429) (9,515)
Reserves
Balance at 1 April 2016 (1,494,546) (154,909) (1,649,455)
(Surplus) or Deficit for the year 9,914 (19,429) (9,515)
Movement in Reserves (5,315) 4,899 (416)
(Increase) or decrease in reserves 4,599 (14,530) (9,931)
Balance 31 March 2017 (1,489,947) (169,439) (1,659,386)

Source: Local Financial Returns – LFR A0

1.2 General Fund Revenue Expenditure and Income

Chart 1.1 provides a breakdown of General Fund net revenue expenditure by service. The HRA has been excluded from this analysis as it is a separate, self-financing account. Education and social work account for three quarters of General Fund net revenue expenditure. The largest is Education with 46% (£4,830 million) of General Fund net revenue expenditure. Of this, £1,880 million was spent on primary education and £1,881 million on secondary education with the remainder spent on pre-primary, special and community education.

Social work is the next largest service with net revenue expenditure of £3,136 million (30% of General Fund net expenditure). Data on social work expenditure is collected on the basis of client groups. Of the client groups identified in the Local Financial Returns ( LFRs), older persons has the highest expenditure with £1,356 million followed by children and families with £897 million and adults with learning disabilities with £518 million.

A full breakdown of expenditure by sub-service is available in the accompanying excel tables.

Chart 1.1: General Fund Net Revenue Expenditure on Services: 2016-17
Chart 1.1: General Fund Net Revenue Expenditure on Services: 2016-17

Table 1.2 provides a time series of net revenue expenditure by service. Education is the only service area that has shown increases in expenditure each year since 2012-13, increasing by 6% from £4,571 million in 2012-13 to £4,830 million in 2016-17. Over the period from 2012-13 to 2016-17, net revenue expenditure on Social Work increased by 6% from £2,959 million in 2012-13 to £3,136 million in 2016-17. Planning & Development Services showed the largest percentage fall (16%) from £279 million in 2012-13 to £235 million in 2016-17.

Table 1.2 – Net Revenue Expenditure by Service, 2012-13 to 2016-17 ( £millions)

2012-13 a 2013-14 2014-15 2015-16 2016-17
Education 4,571 4,579 4,612 4,736 4,830
Cultural & Related Services 609 614 643 598 576
Social Work 2,959 3,031 3,110 3,169 3,136
Roads & Transport 457 436 420 418 399
Environmental Services 644 659 666 684 680
Planning & Development Services 279 279 278 243 235
Central Services 386 484 439 465 390
Non- HRA Housing 306 321 342 294 292
Trading Services (4) (2) (5) (17) (27)
General Fund Net Expenditure 10,208 10,400 10,504 10,590 10,511
Housing Revenue Account (425) (439) (465) (490) (499)
General Fund + HRA Net Revenue Expenditure 9,783 9,961 10,039 10,101 10,012

a) Following the Police and Fire Reform (Scotland) Act 2012, the new bodies that replaced Police and Fire boards were classified as Central Government. To allow comparability over time, Police and Fire has been excluded from the 2012-13 figures. See section 5.2 for details.
Source: Local Financial Returns – LFR 00

Type of Expenditure

The element with the highest gross revenue expenditure is operating costs (which includes property costs, supplies and services costs, transport and payments to agencies and other bodies) which account for £6,828 million of expenditure. The second largest element was employee costs which account for £6,713 million.

Transfer payments are those made to individuals for which no goods or services are received in return by the local authority. The majority of transfer payments are under Non- HRA Housing, which will include the payment of Housing Benefits, and make up around £1,912 million of the total £2,218 million of transfer payments.

An adjustment for Inter-Account and Inter-Authority Transfers is made to the gross expenditure to eliminate transfers between different services within an authority and between local authorities. This prevents double counting expenditure when aggregating the individual returns.

Support services include Finance, Legal, Human Resources, IT, Internal Audit, Procurement and Asset Management.

Local authorities can receive service income from a variety of sources.

The largest element of service income is Customer and Client Receipts, with £2,539 million of income. Of this, £1,166 million is from the Housing Revenue Account, the vast majority of which will be rent income.

The second largest element of service income is Government Grants (excl General Revenue Funding) with £2,072 million, however £1,806 million of this is under Non- HRA Housing, which will include the grant from the DWP to be used by authorities to pay out Housing Benefits.

Table 1.3 Net Revenue Expenditure by Service and Type of Income / Expenditure, 2016-17 (£thousands)

Education Culture and Related Services Social Work Roads and Transport Environmental Services Housing (non- HRA) Central and Other Total General Fund Housing Revenue Account Total General Fund plus HRA
Expenditure
Employee Costs 3,506,753 198,915 1,361,466 190,732 298,475 102,716 909,683 6,568,740 144,232 6,712,972
Operating Costs 1,367,468 442,009 2,501,471 532,345 477,799 353,545 677,459 6,352,096 476,247 6,828,343
Transfer Payments 32,799 19,302 214,646 (6,073) 6,496 1,911,555 34,648 2,213,373 4,939 2,218,312
Support Services 196,575 36,892 172,867 38,267 56,030 23,925 225,164 749,720 74,359 824,079
Adjustment for Inter Account and Inter Authority Transfers (33,472) (26,018) (33,491) (160,076) (35,596) (14,188) (668,385) (971,226) (22,439) (993,665)
Gross Expenditure 5,070,123 671,100 4,216,959 595,195 803,204 2,377,553 1,178,569 14,912,703 677,338 15,590,041
Income
Government Grants (excl GRF) (75,783) (3,694) (104,856) (6,078) (2,279) (1,806,358) (70,229) (2,069,277) (2,748) (2,072,025)
Other Grants, Reimbursements and Contributions (33,223) (13,490) (713,373) (22,632) (6,557) (113,076) (56,271) (958,622) (7,540) (966,162)
Customer and Client Receipts (131,164) (77,793) (262,974) (167,044) (114,424) (166,188) (453,765) (1,373,352) (1,165,976) (2,539,328)
Other Income 0 (27) 0 0 0 0 0 (27) 0 (27)
Total Income (240,170) (95,004) (1,081,203) (195,754) (123,260) (2,085,622) (580,265) (4,401,278) (1,176,264) (5,577,542)
Net Revenue Expenditure 4,829,953 576,096 3,135,756 399,441 679,944 291,931 598,304 10,511,425 (498,926) 10,012,499

Source: Local Financial Returns – LFR 00

Chart 1.2: Gross Expenditure by Service, 2016-17, £millions
Chart 1.2: Gross Expenditure by Service, 2016-17, £millions
Source: Local Financial Returns – LFR 00

Chart 1.3 shows net revenue expenditure on services per head of population by council. Valuation Joint Boards, Tay Road Bridge and Regional Transport Partnerships have been excluded from the figure here. The chart shows that on average in Scotland council's spent £1,866 per person in 2016-17, down slightly from £1,881 in 2015-16. Spend per head ranged from £1,476 per person in Edinburgh to £3,874 per person in Shetland.

Chart 1.3 – Net Revenue Expenditure per Head Population by Council, 2016-17 (£)
Chart 1.3 – Net Revenue Expenditure per Head Population by Council, 2016-17 (£)
Source: Local Financial Returns – LFR 00 and NRS Mid-Year Population Estimates (2016)

1.3 Revenue Income and Funding

Revenue expenditure by local authorities is funded by three main sources:

  • Grants from Central Government;
  • Local Taxation (Council Tax and Non Domestic Rates);
  • Sales, fees and charges for services (Customer and Client Receipts).

The main source of revenue income for local government is General Revenue Funding, (formerly referred to as the Revenue Support Grant). General Revenue Funding ( GRF) is paid by the Scottish Government to support the delivery of local services.

Local taxation contributed almost £4.9 billion to the funding of local government in 2016-17 and further information on these taxes is set out in the following sections. General Revenue Funding and local taxation combined together are sometimes referred to as "Taxation and non-specific grant income". Other income is mostly composed of grants and subsidies received from central government and other parts of the public sector.

Table 1.4 – Revenue Income by Source, 2012-13 to 2016-17 ( £millions)

2012-13 2013-14 a 2014-15 2015-16 2016-17
General Funding: 12,543 11,724 11,923 12,003 11,708
General Revenue Funding 7,782 7,225 7,167 7,147 6,839
Non-Domestic Rates Distributable Amount 2,297 2,436 2,656 2,791 2,769
Council Tax 2 2,319 1,978 2,022 2,055 2,091
Other Funding 145 85 78 10 10
Service Income: 5,777 5,066 5,185 5,230 5,578
Government Grants (excl GRF) 2,640 1,974 1,984 2,040 2,073
Other Grants, Reimbursements and Contributions 807 774 833 768 966
Customer and Client Receipts 2,330 2,317 2,368 2,423 2,539
Total Revenue Income 18,320 16,790 17,108 17,233 17,287

a) Figures for 2013-14 and later are not comparable with prior years due to changes to the way that Police and Fire are funded following the formation of Police Scotland and the Scottish Fire and Rescue Service. See section 5.2 for more details.
2. Pre-2013-14 Council Tax figures are not comparable with later years as Council Tax Reduction ( CTR) was introduced from 1 April 2013 to replace Council Tax Benefit ( CTB), which was abolished by the UK Government as part of its welfare reform programme. Due to differences in the administration of the two schemes, Council Tax figures before 2013-14 include CTB, whereas figures from 2013-14 onwards do not include CTR.
Source: Local Financial Returns – LFR 00

Chart 1.4 – Revenue Income and Funding, 2016-17
Chart 1.4 – Revenue Income and Funding, 2016-17
Source: Local Financial Returns ( LFRs): LFR A0 and 00

1.4 Council Tax

In 2016-17, Council Tax bills were issued to 2.47 million dwellings in Scotland. Over £2 billion of Council Tax revenue was raised across all local authorities in Scotland in 2016-17.

Council Tax was introduced in Scotland on the 1 st April 1993 to replace the Community Charge. It is a tax system based on dwellings and is used as a source of funding in addition to that received from other sources (General Revenue Grant, Non-Domestic Rates, ring-fenced revenue grants and other locally raised income from rent, fees and charges).

There are three factors that determine the amount of Council Tax that a dwelling is liable for. These are:

1. The market value of the dwelling as at the 1 st April 1991. Each dwelling is placed into one of eight bands from A to H, with Band A dwellings liable for the lowest rates of Council Tax and Band H attracting the highest.

2. The Band D rate which is set by the local authority, with other bands calculated as a ratio to Band D. The ratios determining the charges for properties in bands E-H changed for the 2017-18 Council Tax year, which is the year after the data included in this report.

3. A range of exemptions, discounts and reductions that are available in certain circumstances, or in some cases an increase in Council Tax due to the application of a levy.

The valuation range and ratio for each band is given in Table 1.5.

Table 1.5 – Council Tax valuation range and ratios by band

Valuation band ranges as at 1 st April 1991 Ratio to Band D (to 2016-17) No. of chargeable dwellings as at September 2017 Proportion of chargeable dwellings
Band A Under £27,000 6/9 505,129 20%
Band B £27,001 to £35,000 7/9 572,271 23%
Band C £35,001 to £45,000 8/9 399,508 16%
Band D £45,001 to £58,000 9/9 332,640 13%
Band E £58,001 to £80,000 11/9 333,611 13%
Band F £80,001 to £106,000 13/9 192,916 8%
Band G £106,001 to £212,000 15/9 124,270 5%
Band H Over £212,000 18/9 13,150 1%
Total 2,473,497 100%

Source: CTAXBASE 2017 Return

Collection and Potential Yield of Council Tax

Local authorities are responsible for billing and collecting Council Tax. Before the start of each financial year, local authorities issue Council Tax bills to householders in each dwelling. Each bill is calculated by applying the appropriate band rate for the local authority, then applying any discounts, exemptions, reductions or increases: further details are provided in Tables 1.10 and 1.11. Chart 1.5 illustrates the breakdown of the gross Council Tax potential yield into Council Tax billed and the amounts not billed due to Council Tax Reduction ( CTR), discounts and exemptions.

Chart 1.5 – Council Tax Potential Yield (£ millions), 2016-17
Chart 1.5 – Council Tax Potential Yield (£ millions), 2016-17
Source: CTAXBASE 2016 Return and CTRR 2016-17 Q4 Returns

Local authorities collect Council Tax relating to these bills over the year, and also continue to collect late amounts from previous billing years. The provisional in-year Council Tax collection rate for 2016-17 was 95.8 per cent and the total amount collected for Scotland as a whole (after CTR) was £2.091 billion, including late amounts for previous years. Table 1.6 shows the amount of Council Tax collected by each local authority in 2016-17. More information about bills issued in 2016-17 and the provisional amounts collected are available in the statistics publication 'Council Tax Collection Statistics, 2016-17' which is available at:
http://www.gov.scot/publications/council-tax-collection-statistics-2016-17/

Table 1.6 – Council Tax income after CTR by local authority, 2016-17 a

Local Authority Net Council Tax income (£'000s)
Aberdeen City 104,192
Aberdeenshire 119,646
Angus 43,110
Argyll & Bute 44,051
Clackmannanshire 18,895
Dumfries & Galloway 56,841
Dundee City 49,212
East Ayrshire 42,460
East Dunbartonshire 51,302
East Lothian 43,937
East Renfrewshire 42,325
Edinburgh, City of 221,390
Eilean Siar 9,324
Falkirk 55,336
Fife 139,838
Glasgow City 189,732
Highland 105,560
Inverclyde 28,387
Midlothian 36,415
Moray 36,342
North Ayrshire 47,908
North Lanarkshire 104,405
Orkney Islands 7,998
Perth & Kinross 69,420
Renfrewshire 67,836
Scottish Borders 47,842
Shetland Islands 8,542
South Ayrshire 47,117
South Lanarkshire 115,570
Stirling 42,043
West Dunbartonshire 31,592
West Lothian 62,186
Scotland 2,090,754

a Figures relate to income collected in financial year 2016-17, which can include amounts that were billed in previous years.
Source: Local Financial Returns, 2016-17

Chargeable Dwellings

Table 1.7 shows the number of dwellings in Scotland for each September from 2012 to 2017. There were a total of 2.595 million dwellings in Scotland in 2017, of which 121,300 dwellings were exempt for Council Tax purposes. This gave 2.473 million chargeable dwellings in 2017: an increase of around 3.0 per cent (71,600 dwellings) since 2012.

Table 1.7 – Total number of dwellings in Scotland, 2012 to 2017

Total Dwellings Exempt Dwellings Chargeable Dwellings
2012 2,515,042 113,173 2,401,869
2013 2,526,703 116,372 2,410,331
2014 2,540,330 112,525 2,427,805
2015 2,557,365 116,847 2,440,518
2016 2,575,495 120,089 2,455,406
2017 2,594,821 121,324 2,473,497

Source: CTAXBASE Return

Chart 1.6 shows the distribution of chargeable dwellings across Council Tax bands in each local authority. Across the whole of Scotland, just under three-quarters of all chargeable dwellings are in Bands A to D. The distribution varies across local authorities due to variations in property market values. Comhairle nan Eilean Siar has the largest proportion of dwellings in Bands A to D (90 per cent), whereas East Renfrewshire has the lowest proportion in Bands A to D (44 per cent). Dwellings in Band E to H, just over a quarter of the total, will be subject to revised ratios, and therefore higher charges, from 2017-18.

The three local authorities with the highest number of chargeable dwellings were Glasgow, Edinburgh and Fife, with over a quarter of the chargeable dwellings in Scotland between them. Further data on the number of chargeable dwellings by local authority and Council Tax band can be found in the supplementary tables at the link below.
http://www.gov.scot/Topics/Statistics/Browse/Local-Government-Finance/DatasetsCouncilTax

Chart 1.6 - Percentage of chargeable dwellings by Council Tax band for each local authority as at September 2017
Chart 1.6 - Percentage of chargeable dwellings by Council Tax band for each local authority as at September 2017

Source: CTAXBASE 2017 Return

Council Tax Rates & Average Bills

Each local authority determines their own Band D rate of Council Tax as part of their budget setting process. The rate for other bands is then calculated as a set ratio of the Band D rate: the ratios up to and including 2016-17 can be found in Table 1.5. As a result, each local authority has different Council Tax rates. The Band D Council Tax levels for each local authority are shown in Chart 1.7, and range from £1,024 in Comhairle nan Eilean Siar to £1,230 in Aberdeen City.

Chart 1.7 – Band D Council Tax rate by local authority, 2016-17 (£)
Chart 1.7 – Band D Council Tax rate by local authority, 2016-17 (£)

Source: CTAS 2016 Return

From 2007-08 to 2016-17, the Scottish Government and local government worked in partnership to freeze Council Tax rates each year. The one exception is Stirling, where the council reduced the Band D rate from £1,223 in 2007-08 to £1,209 in 2008-09, and subsequently to £1,197 in 2012-13. The Council Tax freeze has caused the Scotland average Band D Council Tax rate to remain steady at £1,149 since 2007-08 – a fall in real terms.

Table 1.8 shows how the average Band D Council Tax bill for Scotland has changed each year from 2011-12. The average Council Tax bill per dwelling in 2016-17 was £997. This differs from the average Band D rate due to the distribution of dwellings across Council Tax bands, as can be seen in Table 1.5 and Chart 1.5, and the application of discounts.

Table 1.8 – Average Council Tax bills, 2011-12 to 2016-17

Average CT bill per dwelling
Before CTB/ CTR After CTB/ CTR
2011-12 £984 £826
2012-13 £985 £830
2013-14 £988 £838
2014-15 £989 £846
2015-16 £991 £856
2016-17 £997 £867

Source: CTAS, CTAXBASE Returns and Local Financial Returns ( LFR12)

Council Tax Reduction ( CTR)

Scotland's CTR scheme was introduced in 2013 following localisation of Council Tax support and the UK Government's abolition of Council Tax Benefit ( CTB). The CTR scheme reduces the Council Tax liability of vulnerable people in Scotland, including people on low incomes, pensioners and lone parents. The impact of CTB/ CTR on the average Council Tax bill is also shown in Table 1.8. After taking these reductions in liability into account, the average bill per dwelling for 2016-17 reduced by £130 from £997 to £867.

Scotland's CTR scheme is funded by the UK Government, Scottish Government and local government. In 2016-17, CTR funding from government totalled £343 million (£320 million from UK Government and £23 million from Scottish Government). Local authorities agreed to contribute up to £17 million of additional funding from their own budgets to the cost of the scheme, as part of the joint commitment between Scottish Government and local government to mitigate the 10% funding cut by the UK Government.

The amounts distributed to each local authority and the final total costs are shown in Table 1.9. The total cost of the CTR scheme across Scotland in 2016-17 was around £320 million. This figure is £23 million less than the £343 million funding provided by the UK Government and Scottish Government.

Table 1.9 – CTR funding and final liability for local authorities, 2016-17

Local Authority UKG and SG funding (£'000s) Final total reduction in liability (£'000s)
Aberdeen City 9,231 9,340
Aberdeenshire 7,318 7,234
Angus 5,285 5,067
Argyll & Bute 5,475 5,070
Clackmannanshire 3,461 3,316
Dumfries & Galloway 8,577 8,101
Dundee City 12,436 11,675
East Ayrshire 9,428 8,618
East Dunbartonshire 4,522 4,174
East Lothian 5,276 4,810
East Renfrewshire 3,726 3,463
Edinburgh, City of 26,252 23,775
Eilean Siar 1,458 1,344
Falkirk 8,329 7,609
Fife 20,597 19,499
Glasgow City 68,990 64,020
Highland 12,139 11,374
Inverclyde 6,657 6,226
Midlothian 5,126 4,731
Moray 3,748 3,604
North Ayrshire 11,630 10,939
North Lanarkshire 24,094 21,962
Orkney Islands 747 730
Perth & Kinross 6,544 6,155
Renfrewshire 13,131 12,133
Scottish Borders 5,508 4,970
Shetland Islands 637 623
South Ayrshire 8,445 7,838
South Lanarkshire 20,696 19,273
Stirling 4,347 3,994
West Dunbartonshire 9,263 8,658
West Lothian 9,927 9,265
Scotland 343,000 319,590

Source: Local Financial Returns ( LFR23), CTR Extract

Changes to Council Tax Liabilities

Not all dwellings are liable to pay the full rate of Council Tax; discounts, exemptions and increased rates can be charged for certain types of dwellings, and the CTR scheme is available to support vulnerable people in meeting their Council Tax liabilities. Table 1.10 summarises the range of discounts, exemptions and reductions available and the change in liability that applies to each type. Please note that, in some cases, more than one type of discount, exemption or reduction may apply. The examples given in Table 1.10 are typical but not exhaustive. For a full explanation of Council Tax discounts and exemptions, go to: www.gov.scot/Topics/Government/local-government/17999/counciltax/Secondhomes.

Table 1.10 – Council Tax discounts, exemptions, reductions and increases

Type of Support Typical dwellings that are eligible Variation in liability
Discounts
Single Person Discount Chargeable dwellings in which there is only one resident or only one resident is not disregarded. 25% discount
Second Homes Chargeable dwellings which are no one's sole or main residence, but are furnished and lived in for at least 25 days during any 12 month period. 10 - 50% discount or discount removed 1
Long Term Empty (6 - 12 months) Empty properties not meeting the criteria of a second home. 10 – 50% discount
Long Term Empty (> 12 months) Empty properties not meeting the criteria of a second home. Up to 50% discount or an increase of up to 100% 1
Occupied entirely by disregarded adults Chargeable dwellings occupied entirely by residents who are disregarded for discount. 50% discount
Exemptions
Occupied Dwellings occupied solely by any combination of students, those with a severe mental impairment, school leavers or persons under the age of 18. 100% reduction
Unoccupied Dwellings which are; empty and unfurnished for less than 6 months or empty and under repair for less than 12 months. Dwellings which are empty because their former residents have moved out for the purpose of receiving personal care by reason of old age, disablement or illness. 100% reduction
Reductions
Disability reduction Homes that have been adapted for a disabled person. One CT Band or 5/9 of the Band A charge reduction 2
Council Tax Reduction (Passported) In receipt of Pension Credit (Guarantee), JSA (income based), ESA (income related) or Income Support. 100% reduction
Council Tax Reduction (Not passported) Low income household. Up to 100% reduction 3

1 The actual change in liability depends on local authority policy. In 2013-14, local authorities gained the discretionary power to remove the empty properties discount or set a council tax increase of 100 per cent on properties which have been empty for more than 12 months.
2 For example, a Band D rate property that was eligible for the disability reduction would be charged the Band C rate.
3 The exact change in liability is dependent on a means-test.

Table 1.11 shows the number of dwellings eligible for Council Tax discounts and reductions. Of the 2.47 million chargeable dwellings in Scotland, around 1 million were eligible for a discount in 2017. The most common type of discount was the Single Person Discount, with around two-fifths of chargeable dwellings entitled to the discount in 2017. The CTR scheme supports almost half a million dwellings, or around one-fifth of chargeable dwellings, in meeting their Council Tax liability.

Around 59,200 dwellings are classified as second homes or long term empty properties: further statistics on these are available at:
http://www.gov.scot/publications/housing-statistics-scotland-quarterly-update-published-12-december-2017/

Table 1.11 – Number of dwellings 1 in receipt of Council Tax discounts and reductions as at September

Type of Support 2012 2013 2014 2015 2016 2017
All chargeable dwellings 2,401,869 2,410,331 2,427,805 2,440,518 2,455,406 2,473,497
Disability reduction 13,994 13,791 13,736 13,505 13,463 13,705
Single Person Discount 948,208 952,251 953,612 955,505 963,297 972,537
Second Homes 2 40,599 35,734 27,879 27,317 26,140 22,101
Long Term Empty (empty > 6 months) 25,454 27,327 31,884 36,419 36,236 37,135
Occupied entirely by disregarded adults 1,809 1,579 2,802 1,378 1,411 1,352
Dwellings not subject to a discount 1,385,799 1,393,440 1,411,628 1,419,899 1,428,322 1,440,372
CTR/ CTB 3 560,880 548,070 533,980 512,340 495,660 489,560

1 Some dwellings may be eligible for more than one type of support, in these cases the dwelling will be counted under each type of support it is eligible for.
2 It is not possible for some councils to separately identify second homes and long term empty dwellings. For these councils, the total number of second homes and long term empty dwellings have been recorded under second homes
3 CTB figures to 2012 were published by DWP and are available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/229795/hbctb_release_may13_revised.xls

Source: CTAXBASE Return, CTR Extract and DWP CTB figures

1.5 Non-Domestic Rates

Non-Domestic Rates ( NDR) is a property tax paid by the owner/occupier or tenant of a non-domestic property.

In 2016-17, the income raised from NDR was £2.73 billion.

The principles of non-domestic rates were established in the Lands Valuation (Scotland) Act 1854. This act also provided for the appointment of the Scottish Assessors, who are responsible for determining the classification and valuation of non-domestic and domestic properties, and are independent of both the Scottish Government and local authorities. A non-domestic property is an individual property used for non-domestic purposes. Examples include business premises and third and public sector properties.

The value given to a property for NDR purposes is called its rateable value ( RV).

The RV of a property is a legally defined valuation provided by the Assessor, broadly based on the rental values the property could achieve. As such it is not necessarily a reflection of the profitability, turnover or output of the business. It is established at revaluation where the Scottish Assessors assess rateable values for all non-domestic properties in Scotland, taking account of the type and nature of the property. All non-domestic properties and their corresponding RVs are listed on the Valuation Roll, which is maintained by the Scottish Assessors. Rateable values are periodically updated at non-domestic rate revaluations. Scottish Assessors undertook a non-domestic rates revaluation in 2017, assigning updated rateable values to all non-domestic properties in Scotland. [1]

NDR bills are calculated using the rateable value ( RV) of non-domestic properties, multiplied by a poundage set nationally by Scottish Ministers, less any relief or exemption entitlement.

( NDR bill ) = ( RV ) x ( Poundage ) - ( Reliefs )

In 2016-17, for properties with a rateable value greater than £35,000, the Large Business Supplement ( LBS) applies in addition to the poundage (the poundage is effectively increased slightly by adding the LBS). [2]

Table 1.12 shows the composition of properties (and associated RV) on the Valuation Roll by property type. As at 1 st April 2017, there were 233,386 properties with a total RV of £7.4 billion. Shops were the most prevalent type of property on the valuation roll, making up nearly a quarter (23%) of the number of properties and RV on the roll. Industrial subjects and offices are the next two largest categories in terms of numbers and RV. Together, these three categories account for 63% of properties on the valuation roll, and 54% of the RV.

Table 1.12 – Non-Domestic Rates Properties by Classification (as at 1 April 2017)

  Number of properties Rateable value (£) % of Properties on Valuation Roll % of RV on Valuation Roll
Category 1st April 2017 1st April 2017 1st April 2017 1st April 2017
Advertising 1,924 10,538,430 1% 0%
Care Facilities 2,975 118,542,034 1% 2%
Communications 349 24,645,995 0% 0%
Cultural 1,419 53,810,920 1% 1%
Education and Training 3,705 559,765,675 2% 8%
Garages and Petrol Stations 4,245 74,937,080 2% 1%
Health and Medical 3,233 228,000,365 1% 3%
Hotels 5,469 275,073,193 2% 4%
Industrial Subjects 49,050 1,256,125,440 21% 17%
Leisure, Entertainment, Caravans etc. 22,299 281,406,378 10% 4%
Offices 44,061 1,082,525,979 19% 15%
Other 16,156 141,617,533 7% 2%
Petrochemical 142 122,224,305 0% 2%
Public Houses 3,732 132,642,075 2% 2%
Public Service Subjects 10,082 356,549,995 4% 5%
Quarries, Mines, etc. 660 17,990,509 0% 0%
Religious 6,101 56,293,665 3% 1%
Shops 53,709 1,611,664,302 23% 22%
Sporting Subjects 3,010 18,120,492 1% 0%
Statutory Undertaking 1,065 935,200,808 0% 13%
Total All Non-Domestic Properties 233,386 7,357,675,173 100% 100%

Source: Scottish Assessors Valuation Roll, 1st April 2017

Table 1.13 provides a breakdown of properties on the Valuation Roll by local authority and RV band.

In terms of the Small Business Bonus Scheme ( SBBS) and the application of the Large Business Supplement ( LBS), £18,000 and £51,000 currently (2017/18) represent the rateable value thresholds for small and large businesses respectively. [3]

Around 78% of all properties (180,886 properties) have a rateable value less than or equal to £18,000, and around 9% of properties have a rateable value of more than £51,000.

Table 1.13 – Non-Domestic Rates Subjects by Local Authority (as at 1 April 2017) 1

Local Authority Rateable Value Band Total Non-Domestic Properties
<= £18,000 £18,001 to £51,000 > £51,000
Scotland 180,886 30,498 22,002 233,386
Aberdeen City 5,435 1,962 2,146 9,543
Aberdeenshire 9,488 1,430 966 11,884
Angus 4,135 475 274 4,884
Argyll & Bute 7,686 564 266 8,516
Clackmannanshire 1,234 206 113 1,553
Dumfries & Galloway 8,310 698 388 9,396
Dundee City 4,280 881 692 5,853
East Ayrshire 3,229 447 277 3,953
East Dunbartonshire 1,813 377 198 2,388
East Lothian 2,836 394 253 3,483
East Renfrewshire 1,314 301 136 1,751
Edinburgh, City of 15,876 3,863 3,116 22,855
Eilean Siar 2,221 159 90 2,470
Falkirk 3,765 737 496 4,998
Fife 10,811 1,801 1,032 13,644
Glasgow City 19,143 4,507 3,596 27,246
Highland 15,242 1,528 1,091 17,861
Inverclyde 1,880 275 190 2,345
Midlothian 2,323 394 306 3,023
Moray 3,853 435 321 4,609
North Ayrshire 4,124 586 353 5,063
North Lanarkshire 7,426 1,542 1,045 10,013
Orkney Islands 1,919 185 71 2,175
Perth & Kinross 7,275 807 539 8,621
Renfrewshire 4,889 900 714 6,503
Scottish Borders 6,244 630 317 7,191
Shetland Islands 1,768 178 110 2,056
South Ayrshire 3,844 611 386 4,841
South Lanarkshire 7,358 1,557 1,046 9,961
Stirling 4,195 687 420 5,302
West Dunbartonshire 2,290 369 267 2,926
West Lothian 4,680 1,012 787 6,479

1. Includes a small percentage of properties with zero rateable value.

Source: Scottish Assessors Valuation Roll, 1st April 2017 Table 1.14 shows a time series of annual NDR Income, total rateable value, and poundage rate. Revaluations typically take place on a 5-year cycle and are intended to be 'revenue neutral'. As a consequence of the 2010 revaluation, the poundage was reduced from 48.1p in 2009-10 to 40.7p in 2010-11 and the total RV of non-domestic properties (the tax base) increased from £5.3 billion in 2009-10 to £6.6 billion in 2010-11. The next revaluation took effect on 1 April 2017. Total rateable value at 1 st April 2017 was £7.4 billion and the poundage for 2017-18 is currently 46.6p, reduced from 48.4p in 2016-17.

Table 1.14 – Non-Domestic Rates Income, Total Rateable Values and Poundage Rate

  2009-10 2010-11 1 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
Non Domestic Rates Income (£m) 2 2,010 2,138 2,251 2,347 2,367 2,511 2,579 2,731
Total Rateable Value (£m) 3 5,299 6,612 6,678 6,718 6,716 6,681 6,719 6,796
Poundage Rate (pence) 48.1 40.7 42.6 45.0 46.2 47.1 48.0 48.4
Large Business Supplement (pence) 4 0.4 0.7 0.7 0.8 0.9 1.1 1.3 2.6

1. Revaluation occurred in 2010
2. All income figures, including 2016-17, are the final audited income collected by councils, and paid to SG. These figures are net of reliefs, apart from those for which the cost is met by local authorities.
3. As at start of financial year
4. The Large Business Supplement was applied in addition to the poundage for properties with a rateable value over £35,000. (The RV threshold was increased to £51,000 from April 2017 though the supplement remained at 2.6p).
Source: NDR Income – Non-domestic Rate Income Returns, Rateable Value – Scottish Assessors Valuation Roll as at 1st April

Table 1.14 also shows that the total RV has increased slightly since the 2010 revaluation from £6.6 billion to £6.8 billion in 2016-17. This is due to the net impact of several factors including increases in the tax base from new properties or extension of existing properties and decreases as demolished properties are deleted from the valuation roll or as the RV is reduced as a result of appeals. [4] As non-domestic rates bills in Scotland are directly related to the rateable values of individual non-domestic properties, changes in the total RV impact on the amount of NDR available for collection, along with other factors such as the poundage rate and backdated revaluation appeals losses which also affect the final income.

Inflation is a key driver of growth in NDR income as the poundage rate, set nationally by Scottish Ministers [5] , has typically been tied to the Retail Price Index [6] (other than in the first year of a revaluation). NDR bills are calculated by multiplying the RV of a property by the poundage rate, and then applying discounts and exemptions. Large business properties (those with a RV greater than £35,000 in 2016-17 and £51,000 from 2017-18) also pay a supplement to the poundage rate, known as the Large Business Supplement ( LBS). The LBS was 2.6p in 2016-17 [7] . For the period 2012-13 to 2014-15, large retailers with RV of £300,000 or more that sold both alcohol and tobacco also paid the Public Health Supplement ( PHS) - an additional 13p on the poundage rate in 2014-15. These supplements increase the amount paid in NDR bills. Conversely, exempt properties (which do not pay rates), and relief schemes such as the Small Business Bonus Scheme can significantly reduce the amount paid in NDR bills, and therefore the NDR income.

Table 1.15 summarises the total number of properties and rateable value as at 1 st April 2017 and the NDR income collected in 2016-17 by local authority (net of reliefs). This is net of reliefs, apart from those for which the cost is met by local authorities. Consequently, it is slightly greater than the net amount actually paid.

Table 1.15 – Non-Domestic Rates Properties, Rateable Values and Income By Local Authority 1

Authority Non-Domestic Properties 2 Apr-17 Non-Domestic Rateable Values Apr-17 (£000s) Non-Domestic Rate Income 2016-17 3 (£000s)
Scotland 233,386 7,357,675 2,731,481
Aberdeen City 9,543 593,767 207,535
Aberdeenshire 11,884 286,633 95,174
Angus 4,884 80,431 26,440
Argyll & Bute 8,516 109,931 30,957
Clackmannanshire 1,553 42,498 15,519
Dumfries & Galloway 9,396 123,270 45,050
Dundee City 5,853 186,886 69,702
East Ayrshire 3,953 80,366 29,414
East Dunbartonshire 2,388 68,991 24,610
East Lothian 3,483 74,989 25,402
East Renfrewshire 1,751 43,253 14,768
Edinburgh, City of 22,855 945,618 368,712
Eilean Siar 2,470 26,491 8,028
Falkirk 4,998 184,691 72,291
Fife 13,644 427,587 179,772
Glasgow City 27,246 1,016,782 374,123
Highland 17,861 359,803 126,516
Inverclyde 2,345 57,341 21,820
Midlothian 3,023 84,100 28,933
Moray 4,609 108,444 38,585
North Ayrshire 5,063 115,161 41,665
North Lanarkshire 10,013 291,967 118,782
Orkney Islands 2,175 28,851 9,725
Perth & Kinross 8,621 159,642 54,511
Renfrewshire 6,503 316,839 99,740
Scottish Borders 7,191 106,773 33,034
Shetland Islands 2,056 60,817 23,259
South Ayrshire 4,841 115,179 42,446
South Lanarkshire 9,961 744,327 288,977
Stirling 5,302 122,596 44,936
West Dunbartonshire 2,926 185,733 79,461
West Lothian 6,479 207,919 91,593

1. Rates bills for specific utilities are collected by specified councils on behalf of all 32 councils, and appear on the valuation roll for those councils: South Lanarkshire (Electricity), West Dunbartonshire (Gas), Fife (Water), Falkirk (Docks and Harbours), Highland (Railways), Renfrewshire (Telecommunications). This increases the take for those authorities.
2. Includes properties with a zero rateable value
3. Audited income collected by councils. This is net of reliefs apart from those for which the cost is met by local authorities.
Source: Number of Properties and Rateable Value - Scottish Assessors Valuation Roll 1st April 2017 NDR Income - Non-domestic Rate Income Returns provided by Councils

Table 1.15 shows geographical variations in the number of properties, rateable value and NDR income. It should be noted however that some councils have responsibility for collection of NDR for specific utilities as detailed in the footnote to the table. For these councils, the entries on the valuation roll and NDR income include Scotland-wide data for the specified utilities sectors. To avoid the need for revisions, only final (audited) NDR income figures are included in this publication. The deadline for NDR income returns was accelerated for 2014-15 and subsequent years to allow audited NDR income data to be included.

There are a number of types of NDR relief that reduce the NDR bill for qualifying properties. Table 1.16 shows the main types of relief available [8] and the amount of relief provided each year from 2010-11 to 2016-17. It should be noted that the reliefs here are both mandatory reliefs, and the element of discretionary relief funded by Scottish Government. The elements of discretionary reliefs funded by local authorities are not included.

Table 1.16 – Amount of Non-Domestic Rates Relief Provided by Relief Type 1,2 ( £thousands)

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
Empty Property Relief 145,936 157,862 169,134 146,496 140,962 141,604 93,682
Charities 136,731 151,276 164,979 173,623 181,242 189,312 201,215
Sports Clubs 11,476 12,059 12,431 12,911 13,487 13,852 13,851
Disabled persons relief 51,901 54,372 57,580 58,299 59,648 60,599 61,498
SBBS 123,259 134,719 150,196 161,002 170,635 179,544 187,029
Religious Properties 24,016 22,960 24,573 25,205 26,113 26,625 27,014
Rural Rate Relief 4,129 4,218 4,305 4,323 4,244 4,235 4,114
Renewable Energy Relief Scheme 3 3,560 4,126 4,811 7,333 9,280 9,545 647
New Start 4       130 484 188 398
Fresh Start 4       189 536 573 607
Other 5 4 43 10 63 221 422 730
Gross Amount 501,013 541,635 588,018 589,574 606,852 626,497 590,784

1. Estimates include mandatory and discretionary elements of relief where applicable, but exclude backdated payments of relief and excludes councils own contributions to reliefs
2. Reliefs for all years, including 2016-17, are final audited figures.
3. The Renewable Energy Relief Scheme was introduced at 1 April 2010.
4. The new start an fresh start relief schemes were introduced at 1 April 2013.
5. Other includes Hardship and Enterprise Areas.
Source: Non-domestic Rate Income Returns from Councils

The gross amount of relief provided has increased substantially from £501 million in 2010-11 to £626 million in 2015-16. It then fell slightly to £591m in 2016-17 due to a change in empty property relief entitlement. Key reasons for change in total relief costs include changes to the poundage, changes to the tax base (recent growth in overall rateable value), changes in relief entitlement, increased awareness of a relief scheme, or introduction of new reliefs. For example the Small Business Bonus Scheme ( SBBS) has been expanded in recent years and a greater awareness of the scheme will have contributed to the rise in cost of SBBS. Changes were made to Empty Property Relief ( EPR) in 2013, reducing the amount of EPR for non-industrial properties from 100% for 3 months and then 50% thereafter, to 100% for 3 months then 10% thereafter, resulting in decreases to the cost of Empty Property Relief in the three years to 2014-15. EPR changed again in 2016-17 reducing the initial (3 months) relief for non-industrial properties from 100% to 50%, with a resultant decrease of EPR relief of almost £50m between 2015-16 and 2016-17. Table 1.16a shows the amount of relief paid in each local authority area in 2016-17.

Table 1.16a – Amount of Non-Domestic Rates Relief Provided by Relief Type, by Local Authority, 2016-17 1,2 (£thousands)

Authority Empty Property Relief Charities Sports Clubs Disabled persons relief SBBS Religious Exemption Rural Rate Relief Renewable Energy Relief Scheme 3 Other 4 All reliefs
Aberdeen City 6,968 11,006 242 2,866 5,093 1,064 0 0 31 27,269
Aberdeenshire 1,391 2,499 966 2,515 8,741 944 1,198 17 32 18,302
Angus 1,115 2,226 1,026 1,431 4,157 561 70 7 1 10,592
Argyll & Bute 591 2,118 240 628 5,696 454 243 90 9 10,068
Clackmannanshire 333 869 94 454 1,515 120 5 0 0 3,390
Dumfries & Galloway 1,061 2,047 351 1,045 6,861 486 196 0 7 12,054
Dundee City 3,121 9,833 157 2,366 5,380 735 0 0 20 21,612
East Ayrshire 1,077 2,514 136 1,218 3,663 458 6 0 14 9,085
East Dunbartonshire 211 2,673 418 888 2,759 571 0 0 0 7,519
East Lothian 653 2,761 972 1,004 3,232 426 33 58 7 9,146
East Renfrewshire 387 1,503 248 848 1,845 477 0 64 0 5,372
Edinburgh, City of 15,860 36,004 1,497 6,998 17,637 3,731 0 0 256 81,981
Eilean Siar 103 973 64 389 1,438 288 100 129 0 3,485
Falkirk 2,684 3,185 174 1,532 4,530 445 3 0 21 12,575
Fife 5,158 10,188 593 4,305 11,988 1,545 37 0 266 34,079
Glasgow City 27,342 48,306 618 8,475 22,724 3,455 0 0 194 111,114
Highland 1,956 9,443 338 3,782 12,326 1,327 1,169 100 39 30,481
Inverclyde 884 2,144 293 731 2,310 333 0 0 60 6,754
Midlothian 520 3,270 284 514 2,372 326 10 0 0 7,296
Moray 383 1,585 213 938 3,081 445 145 0 4 6,793
North Ayrshire 3,023 2,801 288 1,759 4,355 480 54 0 91 12,850
North Lanarkshire 3,808 8,745 337 2,573 8,996 2,426 0 0 161 27,047
Orkney Islands 75 875 62 224 1,336 162 275 82 26 3,116
Perth & Kinross 825 5,681 306 2,527 7,314 811 100 15 242 17,821
Renfrewshire 3,083 5,649 280 2,420 5,647 764 0 0 33 17,876
Scottish Borders 1,012 2,641 585 1,177 5,694 526 116 0 70 11,821
Shetland Islands 174 1,225 767 356 924 112 171 0 0 3,729
South Ayrshire 1,884 2,176 276 1,640 4,532 564 48 0 92 11,212
South Lanarkshire 2,735 6,775 472 3,080 8,908 1,667 35 61 22 23,755
Stirling 1,354 3,403 1,008 796 4,115 333 93 18 25 11,145
West Dunbartonshire 813 2,199 73 597 2,648 366 1 0 1 6,698
West Lothian 3,101 3,898 473 1,423 5,213 612 6 7 12 14,745
Scotland 93,682 201,215 13,851 61,498 187,029 27,014 4,114 647 1,734 590,784

1. Estimates include mandatory and discretionary elements of relief where applicable, but exclude backdated payments of relief. Figures exclude local reliefs, or top-ups to discretionary reliefs which the local authorities award themselves.
2. Figures are final audited figures.
3. The Renewable Energy Relief Scheme was introduced at 1 April 2010.
4. Other includes Hardship and Enterprise Areas, new start and fresh start.
Source: Non-domestic Rate Income Returns from Councils

Most of the NDR income collected by local authorities is pooled at the Scotland level and then redistributed back to local authorities. There are two exceptions to this.

A Business Rates Incentivisation Scheme ( BRIS) was introduced from April 2012 to incentivise councils to maximise existing business rates income and attract new economic growth by allowing all authorities that exceed their annual business rates target to retain 50% of any additional income. Between revaluation years, each year's retention is carried forward to the next year and added to any new retention awarded. In 2016-17 the amount retained under this scheme (according to the authorities' returns) was £8.9 million (£2.6 million in 2015-16).

The Scottish Government is also piloting Tax Incremental Financing ( TIF) which allows local authorities to fund public sector infrastructure, which unlocks private sector investment, contributing to sustainable and inclusive economic growth. This growth is funded from future incremental business rates that are generated as a result of attracting more businesses into the area because of upfront public sector enabling investment.

Six pilot TIF schemes were developed through secondary legislation under existing provisions of the Local Government Finance Act (1992). The pilot approach has allowed this model to be tested in Scotland, with four pilot projects currently in place, of which three have received full approval (Argyll & Bute, Falkirk and Glasgow) and one (Fife) has received approval in principle. In 2016-17 the amount of NDR retained by local authorities for TIF projects was (according to the authorities' returns) £1.2 million (£0.9 million in 2015-16).

Each council reports to the Scottish Government the amount of NDR collected which is to be included in the central pool. The amount to be re-distributed to each authority from the pool is known as the Distributable Amount ( DA) and is set by the Scottish Government before the start of the financial year in question.

From 1 st April 2011, the distribution methodology sees Councils retain the amount estimated they will collect in business rates (the previous policy saw NDR redistributed on the basis of population shares). As the combined total of NDR income and General Revenue Funding ( GRF) provided to councils is guaranteed by the Scottish Government, any reduction in the amount of NDR collected is compensated for by a corresponding increase in GRF and vice versa. Any changes from the assumed collection amount in any year is paid out or recovered from Councils in the calculation of future years distributable business rates totals. The Distributable Amount is based upon an estimate of the NDR income made prior to the year start, and includes prior year adjustments. It will not therefore match exactly the income received by the Scottish Government in any year (as given in tables 1.14 and 1.15), nor the total eventual contributions to the pool for any year.

The calculation of the distributable amount for 2016-17 is given in Annex F and the 2016-17 distributable amount per local authority is shown in Table 1.17.

Table 1.17 – Non-Domestic Rates Distributable Amount 1 by Local Authority, 2016-17

  Non-Domestic Rate Distributable Amount (£000s) 1
Scotland 2,768,500
Aberdeen City 215,585
Aberdeenshire 98,450
Angus 29,410
Argyll & Bute 30,445
Clackmannanshire 16,269
Dumfries & Galloway 47,992
Dundee City 71,010
East Ayrshire 30,239
East Dunbartonshire 25,550
East Lothian 24,370
East Renfrewshire 15,622
Edinburgh, City of 374,650
Eilean Siar 8,019
Falkirk 68,028
Fife 183,330
Glasgow City 373,351
Highland 127,682
Inverclyde 23,331
Midlothian 32,026
Moray 35,581
North Ayrshire 41,458
North Lanarkshire 120,543
Orkney Islands 9,868
Perth & Kinross 57,555
Renfrewshire 96,105
Scottish Borders 33,593
Shetland Islands 17,821
South Ayrshire 40,754
South Lanarkshire 303,113
Stirling 46,216
West Dunbartonshire 82,792
West Lothian 87,725

Source: Amendment Order Scotland (2016)
1. The Distributable Amount is the amount distributed to local authorities as part of the annual local government finance settlement; it is based upon an estimate of the NDR income, including prior year adjustments. It is not guaranteed to match the income eventually received by the SG that year (as given in tables 1.14 and 1.15).

1.6 Customer and Client Receipts

Local authorities receive income from sales, rents, fees and charges as a result of providing a range of services. The amount of income associated with each service is detailed in Table 1.18 below.

The total customer and client receipts received by local authorities has increased by 4.8%, from £2,423 million in 2015-16 to £2,539 million in 2016-17. In the General Fund this has increased by 7.1%, from £1,282 million in 2015-16 to £1,373 million in 2016-17. Almost half (46%) of customer and client receipts are attributable to the HRA which has seen receipts increase by 2.2% from £1,141 million to £1,166 million in 2016-17.

Table 1.18 – Customer and Client Receipts – 2012-13 to 2016-17 ( £thousands)

2012-13 2013-14 b 2014-15 2015-16 2016-17
Education 113,355 120,563 124,200 122,477 131,164
Cultural & Related Services 70,728 71,185 72,567 68,799 77,793
Social Work 276,450 276,012 275,301 264,079 262,974
Roads & Transport 154,197 175,384 182,690 182,978 167,044
Environmental Services 117,969 117,457 112,180 123,825 114,424
Planning & Development Services 116,541 121,077 120,161 134,682 119,161
Central Services 110,889 131,709 143,806 162,394 242,788
Non- HRA Housing 165,412 160,800 155,076 159,635 166,188
Trading Services 58,045 69,843 69,639 63,077 91,816
Total General Fund ( GF) Customer and Client Receipts 1,183,586 1,244,030 1,255,620 1,281,946 1,373,352
Housing Revenue Account ( HRA) 1 1,034,306 1,073,362 1,112,210 1,140,720 1,165,976
Total GF + HRA Customer and Client Receipts 2,217,892 2,317,392 2,367,830 2,422,666 2,539,328

1. The Housing Revenue Account ( HRA) records income and expenditure relating to the provision of Local Authority housing.
b. The Police and Fire Reform (Scotland) Act 2012 created Police Scotland and Fire Scotland, which replaced the former Police and Fire Boards. These new bodies are classified as Central Government, rather than Local Government and have been excluded from the 2012-13 figures to allow comparability over time.
Source: Local Financial Returns ( LFRs)


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