Source: https://www.gov.scot/publications/scottish-local-government-financial-statistics-2017-18/pages/3/
Timestamp: 2020-02-18 13:04:07
Document Index: 372797097

Matched Legal Cases: ['art 1', 'art 1', 'art 1', 'art 1', 'art 1', 'art 1', 'art 1', 'art 1', 'art 1', 'art 1', 'art 1', 'art 1', 'art 1']

Gross Revenue Expenditure is the total expenditure less inter/intraauthority transfers.
Gross Revenue Expenditure on services increased by 1.8% to £15.9 billion in 2017-18;
Net Revenue Expenditure on services increased by 0.8% to £10.1 billion;
Net Revenue Expenditure on vEducation increased by 0.3% to £4.8 billion;
Net Revenue Expenditure on Social work decreased by 0.3% to £3.1 billion;
General Funding increased by 0.4% to £11.8 billion;
Service income increased by 3.6% to £5.8 billion.
Table 1.1 summarises revenue income, expenditure, funding and reserves for 2017-18.
Total Gross Revenue Expenditure on services by Scottish local authorities in 2017-18 was £15,870 million, 1.8% higher than in 2016-17. Of this, £686 million was for the provision of housing through the Housing Revenue Account (HRA).
Total service income raised by local authorities in 2017-18 was £5,780 million, an increase of 3.6% on the previous year. Of this, £1,197 million was raised through the HRA.
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 2017-18 was £10,090 million, which is an increase of 0.8% on 2016-17.
The second largest service area is social work with gross expenditure of £4,329 million and £1,202 million of service income. Net Revenue Expenditure on social work is £3,127 million, 0.3% lower than in 2016-17.
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 29% of General Fund net revenue expenditure.
Total Other Income and Expenditure for 2017-18 was £1,702 million, an increase of 0.4% on the previous year. Of this, £828 million was spent on interest charges and £656 million was used to repay debt. Authorities used £296 million of revenue resources to fund capital expenditure. Interest received, surplus or deficit from trading operations and other operating expenditure totalled income of £78 million.
Total General Funding available to authorities in 2017-18 was £11,753 million, 0.4% higher than in 2016-17. Of this, £6,799 million was General Revenue Funding, £2,666 million was Non-Domestic Rates Distributable Amount and £2,278 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 deficit of £39 million in 2017-18. This comprises a £35 million deficit in the General Fund and a £4 million deficit in the Housing Revenue Account.
This deficit must be met from local authority reserves. At the 1st of April 2017, Local Authorities held £1,664 million of General Fund and HRA reserves. They transferred £18 million into General Fund and HRA reserves from other accounts within the authority, which meant that reserves decreased by £21 million to give a closing balance at the 31st March 2018 of £1,642 million. Unrounded figures are available in Table 1.1.
Table 1.1 – Revenue Expenditure, Income and Reserves, 2017-18
15,184,242
15,870,477
(4,582,971)
(1,197,371)
(5,780,342)
10,601,271
(511,136)
10,090,135
11,787,855
11,792,083
(6,798,956)
(2,665,800)
(2,278,037)
(11,753,133)
(1,494,107)
(1,465,035)
(1,642,475)
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% (£4,844 million) of General Fund net revenue expenditure. Of this, £1,905 million was spent on primary education and £1,869 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 £3,127 million (29% 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 £1,331 million followed by children and families with £917 million and adults with learning disabilities with £522 million.
Chart 1.1: General Fund Net Revenue Expenditure on Services: 2017-18
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 2013-14, increasing by 6% from £4,579 million in 2013-14 to £4,844 million in 2017-18. Over the period from 2013-14 to 2017-18, net revenue expenditure on Social Work increased by 3% from £3,031 million in 2013-14 to £3,127 million in 2017-18. Planning & Development Services showed the largest percentage fall (-24%) from £279 million in 2013-14 to £213 million in 2017-18.
Table 1.2 – Net Revenue Expenditure by Service, 2013-14 to 2017-18
Non-HRA Housing
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 £7,088 million of expenditure. The second largest element was employee costs which account for £6,866 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 £1,706 million of the total £2,178 million of transfer payments.
The largest element of service income is Customer and Client Receipts, with £2,520 million of income. Of this, £1,187 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 £2,225 million, however £1,746 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, 2017-18
3,644,050
6,719,163
2,606,479
7,088,465
(571,511)
(982,889)
(1,004,733)
5,224,170
4,329,263
Government Grants (excl GRG)
(1,797,038)
(2,221,114)
(2,225,285)
(805,853)
(1,034,855)
(408,602)
(1,332,818)
(1,187,114)
(2,519,932)
(379,903)
(1,202,106)
(1,980,212)
(565,433)
4,844,267
3,127,157
Chart 1.2: Gross Expenditure by Service, 2017-18, £millions
Chart 1.3 shows net revenue expenditure on General Fund 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 £1,964 per person in 2017-18, up slightly from £1,958 in 2016-17. Spend per head ranged from £1,585 per person in Edinburgh to £4,095 per person in Shetland.
Chart 1.3 – General Fund Net Revenue Expenditure per Head Population by Council, 2017-18 (£)
Source: Local Financial Returns – LFR 00 and NRS Mid-Year Population Estimates
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 £4.9 billion to the funding of local government in 2017-18 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, 2013-14 to 2017-18
Chart 1.4 – Revenue Income and Funding, 2017-18
Source: Local Financial Returns (LFRs): LFR A0 and 00
In 2017-18, Council Tax bills were issued to 2.49 million dwellings in Scotland. Over £2.278 billion of Council Tax revenue was raised across all local authorities in Scotland in 2017-18.
Council Tax was introduced in Scotland on the 1st 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).
1. The market value of the dwelling as at the 1st 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.
Valuation band ranges
as at 1st April 1991
(to 2017-18)
2,487,101
Source: CTAXBASE 2018 Return
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), 2017-18
Source: CTAXBASE 2017 Return and CTRR 2017-18 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 2017-18 was 96.0 per cent and the total amount collected for Scotland as a whole (after CTR) was £2.278 billion, including late amounts for previous years. Table 1.6 shows the amount of Council Tax collected by each local authority in 2017-18. More information about bills issued in 2017-18 and the provisional amounts collected are available in the statistics publication ‘Council Tax Collection Statistics, 2017-18’ which is available at:
https://www.gov.scot/publications/council-tax-collection-statistics-2017-18-9781788519847/
Table 1.6 – Council Tax income after CTR by local authority, 2017-18a
Net Council Tax
2,278,037
a Figures relate to income collected in financial year 2017-18, which can include amounts that were billed in previous years.
Source: Local Financial Returns, 2017-18
Table 1.7 shows the number of dwellings in Scotland for each September from 2013 to 2018. There were a total of 2.615 million dwellings in Scotland in 2018, of which 127,900 dwellings were exempt for Council Tax purposes. This gave 2.487 million chargeable dwellings in 2018: an increase of around 3.0 per cent (77,800 dwellings) since 2013.
Table 1.7 – Total number of dwellings in Scotland, 2013 to 2018
2,410,331
2,427,805
2,557,365
2,594,821
2,614,957
Source: CTAXBASE Returns
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, are subject to revised ratios, and therefore higher charges, from 2017-18.
Chart 1.6 - Percentage of chargeable dwellings by Council Tax band for each local authority as at September 2018
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 used from 2017-18 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 £1,055 in Comhairle nan Eilean Siar to £1,249 in Glasgow City.
Chart 1.7 – Band D Council Tax rate by local authority, 2017-18 (£)
Source: CTAS 2017 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 caused the Scotland average Band D Council Tax rate to remain steady at £1,149 from 2007-08 to 2016-17 – a fall in real terms.
In 2017-18, the Council Tax freeze ended and the Local Government Finance settlement included an agreement between the Scottish Government and local government for locally determined Council Tax increases to be capped at 3 per cent.
In 2017-18, eight local authorities did not increase their Band D council tax rate, one increased it by 2 per cent, two by 2.5 percent and the remaining 21 local authorities increased their Band D rate by 3 per cent.
Table 1.8 shows how the average Band D Council Tax bill for Scotland has changed each year from 2012-13. The average Council Tax bill per dwelling in 2017-18 was £1,069. 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, 2012-13 to 2017-18
Average1 CT bill per dwelling
CTB/CTR
Source: CTAS, CTAXBASE Returns and Local Financial Returns (LFR12)
Scotland’s CTR scheme was introduced in 2013 following the UK Government’s abolition of Council Tax Benefit (CTB) and localisation of Council Tax support. 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 2017-18 reduced by £133 from £1,069 to £936.
Scotland’s CTR scheme is funded by the Scottish Government. In 2017-18, CTR funding totalled £351 million. This included additional funding for the 25 per cent increase in the child premium within the CTR scheme introduced in April 2017, and the extension of the CTR scheme to provide relief for low to middle income households from the impact of the council tax reforms on properties in Bands E - H.
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 2017-18 was around £327 million. This figure is £23.7 million less than the £351 million funding provided by the UK Government and Scottish Government.
Table 1.9 – CTR funding and final liability for local authorities, 2017-18
Funding (£'000s)
Final total reduction
in liability (£'000s)
Source: Local Financial Returns (LFR23), CTR Extract
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: https://www.gov.scot/policies/local-government/council-tax/
Chargeable dwellings in which there is only one resident or only one resident is not disregarded
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 removed1
Empty properties not meeting the criteria of a second home.
(> 12 months)
Up to 50% discount or an increase of up to 100% 1
Chargeable dwellings occupied entirely by residents who are disregarded for a discount.
Dwellings occupied solely by any combination of students, those with a severe mental impairment, school leavers or persons under the age of 18.
Dwellings which are; empty and unfurnished for less then 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 purposes of receiving personal care by reason of old age, disablement or illness.
Homes that have been adapted for a disabled person.
One CT Band or 5/9 of the Band D charge reduction2
In receipt of Pension Credit (Guarantee), JSA (income based), ESA(income related) or Income Support.
(Not passported)
Up to 100% reduction3
Table 1.11 shows the number of dwellings eligible for Council Tax discounts and reductions. Of the 2.49 million chargeable dwellings in Scotland, around 1 million were eligible for a discount in 2018. The most common type of discount was the Single Person Discount, with around two-fifths of chargeable dwellings entitled to the discount in 2018. The CTR scheme supports almost half a million dwellings, or around one-fifth of chargeable dwellings, in meeting their Council Tax liability.
Around 64,000 dwellings are classified as second homes or long term empty properties: further statistics on these are available at: https://www.gov.scot/publications/housing-statistics-quarterly-update-december-2018/.
Table 1.11 – Number of dwellings1 in receipt of Council Tax discounts and reductions as at September
(empty > 6 months)
Occupied entirely by
Dwellings not
1,411,628
1,440,372
Reduction/Benefit3
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 Council Tax Benefit figures from 2010 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 Returns, CTR Extract and DWP CTB figures
Non-Domestic Rates (NDR) is a property tax paid by the owner/occupier or tenant of a non-domestic property.
In 2017-18, the income raised from NDR was £2.76 billion.
The value given to a property for NDR purposes is called its rateable value (RV). RV is based on a legally defined valuation and broadly corresponds to the notional rental value the property could achieve in the open market if it were vacant and to let, taking account of the type and nature of the property. As such it is not necessarily a reflection of the profitability, turnover or output of the ratepayer. RVs are generally initially established when a non-domestic property comes into existence. Non-domestic properties and their corresponding RVs are listed on the Valuation Roll, which is maintained by the Scottish Assessors. RVs are periodically updated at non-domestic rate revaluations. Scottish Assessors undertook the last revaluation in 2017, assigning updated rateable values to all non-domestic properties in Scotland.[1] Revaluations typically have taken place on a 5-year cycle[2] NDR bills are calculated using the RV of the property, multiplied by a poundage set nationally by Scottish Ministers, less any relief or exemption entitlement.
In 2017-18, for properties with an RV greater than £51,000, the Large Business Supplement (LBS) applied in addition to the poundage (the poundage is effectively increased by adding the LBS).
In England revenue-neutral revaluations are a statutory requirement, with the poundage generally decreasing in line with average RV increases (or vice versa). This is not the case in Scotland, with the 2017 revaluation and poundage actually leading to a decrease in anticipated revenue over the following cycle.
Table 1.12 shows the composition of properties (and associated RV) on the Valuation Roll by property type. As at 1st April 2017[3], 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.
10,538,430
118,542,034
24,645,995
53,810,920
559,765,675
74,937,080
228,000,365
275,073,193
1,256,125,440
281,406,378
1,082,525,979
141,617,533
122,224,305
132,642,075
356,549,995
17,990,509
56,293,665
1,611,664,302
18,120,492
935,200,808
7,357,675,173
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.
Table 1.13 – Non-Domestic Rates Subjects by Local Authority (as at 1 April 2017)1
1. Includes properties with a zero rateable value.
Table 1.14 shows a time series of annual NDR Income, total rateable value and poundage rate. As a consequence of the 2017 revaluation, the poundage was reduced from 48.4p in 2016-17 to 46.6p in 2017-18 and the total RV of non-domestic properties (the tax base) increased from £6.8 billion in 2016-17 to £7.4 billion in 2017-18.
Non Domestic Rates Income (£m)2
Total Rateable Value (£m)3
1. Revaluations occurred in 2010 and 2017.
2. All income figures, including 2017-18, are the final audited income collected by councils, and paid to SG. These figures are net of reliefs awarded by the SG, but gross of any local reliefs, or top-ups to discretionary reliefs that the councils award themselves.
4. The Large Business Supplement is applied in addition to the poundage for properties with a rateable value over £51,000
Table 1.14 also shows that between the 2010 and 2017 revaluations the total RV had increased slightly from £6.6 billion in 2010-11 to £6.8 billion in 2016-17. This was 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 totalRV 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 previously 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 £51,000 in 2017-18) also pay a supplement to the poundage rate, known as the Large Business Supplement (LBS). The LBS was 2.6p in 2017-18[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 1st April 2017 and the NDR income collected in 2017-18 by local authority. This is net of reliefs, apart from those for which the cost is met by local authorities. Consequently, amounts reported are slightly greater than those actually paid.
Some councils have responsibility for collection of NDR for specific utilities. For these councils, the entries on the valuation roll and NDR income include Scotland-wide data for the specified utilities sectors.
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 2017-18. Local reliefs and the elements of discretionary reliefs funded by local authorities are not included.
The gross amount of relief provided has increased substantially from £501 million in 2010-11 to £684 million in 2017-18. Key reasons for change in total relief costs include changes to the poundage, changes to the tax base (recent growth in overall RV and increase in overall RV at revaluation), 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. Following the 2017 revaluation a transitional relief scheme was introduced for pubs, hotels and restaurants with rateable value below £1.5 million, and for offices in Aberdeen and Aberdeenshire. Table 1.16a shows the amount of relief paid in each local authority area in 2017-18.
Table 1.15 – Non-Domestic Rates Properties, Rateable Values and Income By Local Authority1
7,357,675
2. Includes properties with a zero rateable value.
3. Audited income collected by councils. This is net of reliefs paid by Scottish Government, but gross of all local reliefs, and top-ups to discretionary amounts paid by councils themselves.
Sources: Number of Properties and Rateable Value - Scottish Assessors Valuation Roll (April 2017). NDR Income - Non-domestic Rate Income Returns provided by Councils.
Table 1.16 – Amount of Non-Domestic Rates Relief Provided by Relief Type1,2
Renewable Energy Relief Scheme3
Transitional Relief5
2. Reliefs for all years, including 2017-18, are final audited figures.
3. The Renewable Energy Relief Scheme was introduced on 1 April 2010.
4. The New Start and Fresh Start relief schemes were introduced on 1 April 2013.
5. Transitional relief was introduced for certain classes of properties following the 2017 revaluation.
6. Other includes Hardship and Enterprise Areas.
Table 1.16a – Amount of Non-Domestic Rates Relief Provided by Relief Type, by Local Authority, 2017-181,2 £thousands
3. Other includes Hardship, Enterprise Areas, New Start, Fresh Start and Rural Rate Relief.
Each council reports to the Scottish Government the amount of NDR collected which is to be included in the annual NDR Account which is published as part of the overall Scottish Government’s annual accounts. The amount to be distributed to each authority as part of the annual local government finance settlement is known as the Distributable Amount (DA) and is set by the Scottish Government before the start of the financial year in question.
From 1st April 2011, the local government funding distribution methodology sees Councils retain all of the NDR income collected in their area (the previous policy saw NDR redistributed on the basis of population shares). As the combined total of NDR income and General Revenue Grant (GRG) provided to councils is guaranteed by the Scottish Government, any increase in the amount of NDR collected is compensated for by a corresponding decrease in GRG 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 NDR income received 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 2017-18 is given in Annex F and the 2017-18 distributable amount per local authority is shown in Table 1.17.
There are two current policy initiatives that directly linked to the NDR collected.
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 buoyancy target (the target percentage increase in their tax base) to benefit from receiving additional grant equal to 50% of any additional NDR income. In effect this means that only 50% of the additional NDR attributable to the increased buoyancy is deducted from the GRG. This increased funding is carried forward between revaluation years, with each year’s increased funding being carried forward to the next year and added to any new retention awarded, assuming the previous year’s income is maintained. In 2017-18 the amount the additional funding received under this scheme (according to the authorities’ returns) was £1.03 million (cumulative £8.9 million in 2016-17).
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 2017-18 the amount of NDR retained by local authorities for TIF projects was (according to the authorities’ returns) £1.5 million (£1.2 million in 2016-17).
Table 1.17 – Non-Domestic Rates Distributable Amount1 by Local Authority, 2017-18
Non-Domestic Rate Distributable Amount (£000s)1
Source: Local Government Finance Circular 01/2017.
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 contributable amount of income that year (as given in tables 1.14 and 1.15)
2. The Distributable Amount for 2018-19 was published in December 2017 in the Local Government Finance Circular 05/2017, and will be set out in next year’s publication. 2019-20 Distributable Amount was published in December 2018 and can be found in the Local Government Finance Circular 08/2018.
The total customer and client receipts received by local authorities has decreased by 0.7%, from £2,537 million in 2016-17 to £2,520 million in 2017-18. In the General Fund this has decreased by 2.8%, from £1,371 million in 2016-17 to £1,333 million in 2017-18. Almost half (47%) of customer and client receipts are attributable to the HRA which has seen receipts increase by 1.8% from £1,166 million to £1,187 million in 2017-18.
Table 1.18 – Customer and Client Receipts – 2013-14 to 2017-18
Total General Fund (GF) Customer and Client Receipts
1,371,366
Housing Revenue Account (HRA)1
2,367,830
2,422,666
1. The Housing Revenue Account (HRA) records income and expenditure relating to the provision of Local Authority housing.
Source: Local Financial Returns (LFRs)