Apples and oranges? Why it’s difficult to compare Scottish and English local government funding

The Financial Scrutiny Unit is often asked to make Scotland vs England comparisons on various financial measures. When it comes to local government, comparing the different areas north and south of the border is more complex than it may at first seem, ultimately because the functions of local authorities differ widely between each country.

To illustrate this, we’ll use two examples – funding for local authorities, and Council Tax.

Funding for local authorities

Changes over time

At the outset, it’s important to understand that just comparing trends in local authority funding within one country can be both challenging and confusing. This is because of changes to the way funding is structured and delivered over time – a prime example would be the removal of police and fire services funding from the Scottish local government settlement in 2013-14. This type of change means that adjustments need to be made to compare funding year-on-year.

The SPICe briefing on Local Government Finance: Facts and Figures 2010-11 to 2017-18 explains more about these challenges.

Comparable figures

It’s then important to make sure the equivalent figures are being looked at. In both England and Scotland, draft or estimated figures are published for the local government settlement each year, but they take place at different stages of the Budget process, which means they can’t be easily compared – you would have to look at the final figures, which aren’t often made available for some time after the end of the financial year. In 2017 the Budget timetable in England was updated, and Scotland will be moving to a new Budget timetable for the formation of the 2019-20 Budget, which may further complicate matters.

You would also have to make a decision on how you define local government funding. Is it total funding? Or is it just the revenue funding that is used for delivering core services? What about adding in income from Non-Domestic rates or Council Tax?

Differing functions of local authorities

Even once you have found the most comparable figures possible, you’re still comparing very different things. For instance-

  • The functions and responsibilities of local authorities are different between countries.
  • Treatment of Non-Domestic Rates Income is different between different countries, and has changed over time – e.g. differences in the English approach mean numbers before and after 2013-14 are not comparable with each other.
  • In 2013-14, as mentioned, local authorities in Scotland lost responsibility and funding for police and fire functions, whereas in some instances, where fire service boundaries coincide with county council boundaries, fire funding in England is still routed through local authorities (police funding is not).
  • There are also differences between the funding for health care. English upper-tier authorities have received public health funding since 2013, whereas in Scotland all direct funding for health (not including the indirect funding for Health and Social Care integration) is routed through NHS Scotland budgets.

Ultimately, it would be so complex to strip out all of these differences and account for them that the final figures would be very loose estimates. Percentage changes for funding in each country over time might show a comparative trend to some extent, but the figures for each country should not be compared to one another.

Council Tax

We’re often asked to look at whether Council Tax has increased more in Scotland or England. We’ve already seen that local authorities in the two countries have different functions and responsibilities – this means from the offset that the calculations around Council Tax and subsequent rates are different. For example, in 2017-18 the average Band D rate in Scotland was £1,173, whereas in England it was £1,591.

The historical application of Council Tax between Scotland and England differs – in Scotland the Council Tax rate was frozen at 2007-08 levels between 2008-09 and 2016-17, but there was no freeze in England.

The structure of the Council Tax bands differ as well between Scotland and England. For instance, in Scotland Band G properties are those which fall within the valuation range (in accordance with 1991 estimates) of £106,001 to £212,000, and the rate is set at a ratio of 47/24 against the Band D rate. In England the valuation range is £160,001 to £320,000, with a 15/9 ratio against the Band D rate.

Finally, the level at which Council Tax increases are capped differs between the two countries. For 2018-19, increases in Scotland will be capped at 3%, whereas in England the cap will be 6% (taking into account the health and social care precept).

So can we make comparisons?

These kinds of policy and historic differences will affect a number of SPICe policy areas, and local government finance is just one example. While we will always try to provide an answer to questions we are asked comparing Scotland and England, in some cases it really does run the risk of being a case of comparing apples and oranges!

Ailsa Burn-Murdoch, Senior Researcher, Financial Scrutiny Unit