CHAPTER 11 FINANCE
1. Introduction
1.1 This chapter provides information on finance, such as expenditure on transport within Scottish Ministers' responsibility and on transport controlled by Local Authorities. It shows capital and current expenditure on motorways and trunk roads, Local Authority revenue and capital income and expenditure on roads and transport, government grants for the construction and improvement of harbour facilities, petrol and diesel prices and duties, and average weekly household expenditure on transport.
1.2 Almost all the figures in this chapter are expressed in what are referred to as current, out-turn or cash prices: no table gives constant price (i.e. deflated) figures.
2. Main Points
Motorways & Trunk Roads
2.1 The total of capital and current expenditure on motorways and trunk roads in 2006-07 was estimated at £406 million, an increase of 30% over 2005-06. Total expenditure on transport within Scottish Ministers' responsibility in 2006-07 was estimated at £1,844 million, £271 million (17%) more than in the previous year. ( Table 11.1)
2.2 Expenditure on the management and maintenance of the trunk road network totalled £174.3m in 2006-07. Excluding an inflation adjustment of £11.9m, the expenditure is split £89.2m on structural repairs and £73.3m on routine, cyclic, winter maintenance and network management. (These figures do not include spending on construction). ( Table 11.2)
Local Authorities
2.3 In 2006-07, expenditure on transport controlled by local authorities was £432 million (excluding loan charges). In cash terms, this was 19% less than in 2005-06. Road maintenance (£252 million in 2006-07) accounted for around half the expenditure in recent years. The other main categories of expenditure in 2006-07 were:
- contributions to passenger transport - £72 million;
- road lighting - £61 million;
- network and traffic management - £39 million
In 2006-07, the net income from parking charges was £24 million, almost twice the figure for 1997-98. ( Table 11.1)
2.4 The Local Authorities with the highest net revenue expenditure on roads and transport (excluding loan charges) in 2006-07 were: Glasgow City (£38.4 million), South Lanarkshire (£32.2 million), Fife (£29.8 million) Highland (£23.8 million) and North Lanarkshire, (£23.5 million). ( Table 11.3) The table also shows local authorities' figures for other types of expenditure in 2006/07:
- Road maintenance/Winter maintenance Glasgow City had the highest expenditure on road maintenance (£18.4 million), followed by South Lanarkshire (£16.7 million). Aberdeenshire and Highland spent the most on winter maintenance (£4.3 million and £3.0 million respectively)
- Contributions to Public Transport in terms of the total net revenue expenditure on 'local authority' and 'non LA' public transport, Shetland Islands (£12.2 million) made the largest contributions to passenger transport. Fife spent £7.2 million and Orkney spent £6.4 million
- Road Lighting Glasgow spent most on road lighting (£9.2 million), followed by South Lanarkshire and North Lanarkshire, at £4+ million each
- Parking Edinburgh raised the largest amount from parking (£11.1 million, net) and Glasgow raised £9.1 million.
Gross Capital Expenditure
2.5 Gross capital account expenditure by councils and boards on local authority roads and transport totalled £448.3 million in 2006-07, an increase of 34% from the previous year. Of this total £276.3 million was spent on roads, £149 million on other transport and £22.9 million on toll bridges. The main components of the roads expenditure were £38.0 million on roads projects costing under £2 million each, £32.3 million on improvements and reconstruction of major roads costing £2+ million each, £88.5 million on structural maintenance of roads, and £45 million on road safety for local roads. ( Table 11.4)
2.6 The local authorities with the highest gross capital account expenditure on roads and transport in 2006-07 were:
- City of Edinburgh (£89.5 million),
- Clackmannanshire (£48.6 million),
- Fife (£20.7 million), and
- North Lanarkshire (£20.5 million)
City of Edinburgh spent the most both on 'major' road projects costing £2+ million each (£24.5 million) and roads special objectives (£23.0 million). Argyll and Bute spent the most on road projects under £2 million (£6.3 million). For other types of transport, the highest spender was Clackmannanshire (£44.3 million). ( Table 11.5)
2.7 The National Concessionary Travel ( NCT) bus scheme was introduced in April 2008 and administered at by Transport Scotland for Scotland as a whole. Previously local authorities administered their own schemes, therefore local expenditure on concessionary travel (and therefore overall totals of spend) shown in Table 11.3 will be greatly reduced from previous years, now only covering rail, subway, ferry and some taxi schemes. Further statistics on concessionary travel can be found in table 12.31.
Revenue
2.8 In 2006-07, local government roads and transport trading services revenue income totalled £45.7 million: £17 million from road bridges (Forth and Tay only), £18.6 million from ferries, £0.4 million from buses and £9.7 million from other local authority transport undertakings (such as airports, harbours and piers). The main sources of income were £26.9 million from sales, rents, fees and charges and a £15.5 million contribution towards deficiencies from general funds. ( Table 11.6)
2.9 Local government roads and transport trading services capital account expenditure totalled £34.8 million in 2006-07. ( Table 11.7)
2.10 In 2007-08, government grants for the construction and improvement of harbour facilities totalled £16.4 million. The main recipients were Argyle and Bute council (£9.4 million), Caledonian MacBrayne (£4.6 million), North Link ferries (£1.6 million) and Highland Council (£360,000). ( Table 11.8)
Travel Costs
2.11 Between June 2006 and June 2007 the average price of unleaded petrol rose by 1.1 pence, while diesel fell by 0.7 pence per litre in Great Britain. Tax (duty plus VAT) represented about 65% of the price of both unleaded petrol and diesel in Great Britain in June 2007, compared with 76% for both fuels in June 1997, and with 64% for unleaded petrol and 63% for diesel in June 2006. ( Table 11.9)
2.11 The UK Retail Prices Index ( RPI) rose by 31% from a value of 157.5 (based on 13 January 1987=100) for 1997 to a value of 206.6 for 2007. Most of the Transport components of the RPI increased more rapidly than this, and therefore rose in real terms. In cash terms, the costs of the maintenance of motor vehicles increased by 65%, petrol and oil by 53% and there was a 52% rise in the cost of vehicle tax and insurance. However, the cost of purchasing a motor vehicle fell by 27% in cash terms over the last ten years. As a result, motoring expenditure index rose by 14%, less than the 31% increase in the RPI and therefore a real term fall between 1997 and 2007. Over the same period, fares and other travel costs rose by 44% in cash terms - rail fares by 40% and bus and coach fares by 50%, both real term increases. ( Table 11.10)
2.12 Average weekly household expenditure in Scotland on transport and vehicles in 2006 was £60.20, representing 16.0% of total household expenditure. On average, £26.30 was spent on the purchase of vehicles, £26.80 on the operation of personal transport (including £18.30 on petrol, diesel and other motor oils) and £7.10 on transport services (such as bus and train fares). ( Table 11.11b)
3. Notes and Definitions
3.1 Following local government reorganisation on 1 April 1996, the management and maintenance of motorways and other trunk roads was sub-divided into 8 operating units. These applied for the years from 1996-97 to 2000-01 inclusive. New arrangements were introduced with effect from 2001-02 which resulted in 4 Operating Companies maintaining the trunk road network. The introduction of 3 rd Generation Contracts for Trunk Road Maintenance in April 2006 and 2007 means there are now 3 Operating Companies. Details of the areas covered by each of these companies can be found in the Annex.
3.2 Local authority trading services: Those services of a commercial nature which are, or could be, substantially financed by charges made to recipients of the services.
3.3 In a few cases, negative figures are shown in the net expenditure tables. This is due to income/receipts exceeding the expenditure in a particular category.
3.4 Retail Prices Index: Rail fares are 5 parts per 1,000 (or 0.5%) of the Retail Prices Index. Bus and coach fares are also 5 parts per 1,000 (or 0.5%). 'Motoring costs' accounts for 14.6% of the Retail Prices Index. This breaks down into:
6.2% Purchase of vehicles ( CHBK)
2.2% Maintenance of motor vehicles ( DOCT)
3.8% Petrol and Oil ( DOCU)
2.4% Tax and Insurance.( DOCV)
Car parking charges are included under 'Maintenance of motor vehicles'.
3.5 Resource Accounting and Budgeting (also known as Accruals): Under resource accounting income is shown when it is earned, and costs are shown when they are incurred, the timing of the cash movement is irrelevant. The costs of a capital asset are spread ('depreciated') evenly over its useful life. A capital charge is also made against the value of the asset.
3.6 Cash Accounting: Income is shown when money is received, and costs are shown when payment is made. All receipts and payments made in a financial year are included in the cash accounts for that period. The whole cost of a capital asset is recorded when it is bought.
4. Sources & Further Information
4.1 The statistics in this chapter come from the following sources: