The Local Authorities (Capital Finance) Regulations 1990

Part IV of the Regulations makes provision with respect to credit arrangements, which under the Act comprise leases and certain contracts where consideration is to be given by a local authority after they have received consideration under the contract in question. Regulation 6 has the effect of making various types of leases and contracts which would otherwise be credit arrangements not credit arrangements.

Sections 50(2) and 51(4) of the Act require that a local authority must have available an amount of credit cover on entering into or varying a credit arrangement. Such an amount may be obtained by using a credit approval (as described in the following paragraph) or by setting aside an amount as provision for credit liabilities. An amount which is set aside may then only be used for certain purposes, set out in section 64 of the Act. The Act also provides, in section 44(1), for a limit (the “aggregate credit limit”) on the total amount of borrowing and outstanding liabilities under credit arrangements which a local authority may have at any time. Regulations 7 and 8 make special provision in the case of leases for calculating the amount which is required as credit cover and which is subject to the aggregate credit limit.

Part V of the Regulations lists the grants which, under section 57 of the Act, are to result in the reduction or extinguishment of credit approvals issued to an authority. Credit approvals, which are issued by the Secretary of State or any other Minister to local authorities under sections 53 and 54 of the Act, enable an authority to enter into or vary credit arrangements and not to charge expenditure to a revenue account.

Part VI of the Regulations relates to capital receipts. Section 58 of the Act provides for certain sums received by authorities to be capital receipts. Regulations 11 to 13 provide for further sums to be treated as capital receipts and for certain sums not to be capital receipts. Section 59 of the Act requires local authorities to set aside part of each capital receipt (“the reserved part”) as provision for credit liabilities. Schedule 1 to the Regulations specifies the amount of the reserved part in the case of different types of capital receipts and disposals. Subsections (8) and (9) of section 59 set out how the amount of a capital receipt is to be treated as reduced for the purposes of that section. Regulations 15 to 19 (and Schedule 2 to the Regulations) make provision for reductions in five further cases. Section 61 of, and Part II of Schedule 3 to, the Act provide for consideration which is not wholly in money paid to an authority to be treated in broadly the same way as capital receipts. Regulation 20 describes the ways in which calculation of the amount set aside is to differ in the case of consideration not wholly in money.

Part VII of the Regulations makes provision in respect of a local authority’s credit ceiling, which is one of the components of the aggregate credit limit. Schedule 3 to the Regulations lists certain modifications of the credit ceiling. By virtue of regulation 22, no account is to be taken of certain credit arrangements in determining an authority’s credit ceiling on or after 1st April 1990.

Part VIII of the Regulations concerns minimum revenue provision, which is the minimum amount to be set aside by a local authority as provision for credit liabilities in any financial year from their revenue account or accounts. Schedule 4 to the Regulations provides for certain adjustments to the credit ceiling which affect the amount of minimum revenue provision. Regulations 25 and 26 and Schedule 5 to the Regulations describe how the amount of minimum revenue provision is to be calculated.

Part IX of the Regulations makes provision for the application of Part IV of the Act to borrowing by authorities where the liability has been statutorily transferred to another authority.

Footnotes

[^f00001]: 1989 c. 42.

[^f00002]: 1972 c. 70.

[^f00003]: 1985 c. 68. Section 516 is amended by section 132(5) of the Local Government and Housing Act 1989.

[^f00004]: 1988 c. 40.

[^f00005]: 1988 c. 50.

[^f00006]: 1981 c. 64.

[^f00007]: 1980 c. 65.

[^f00008]: 1972 c. 11.

[^f00009]: 1948 c. 5. Part of subsection (3) of section 3 was repealed by Part I of Schedule 10 to the Police Act 1964 (c. 48) and subsection (4) was repealed by Part XIII of Schedule I to the Statute Law (Repeals) Act 1986 (c. 12).

[^f00010]: Part of subsection (1)(a) of section 31 was repealed by Schedule 30 to the Local Government Act 1972 and subsection (1)(c) was inserted by paragraph 1(7) of Schedule 11 to the Local Government Act 1985 (c. 51).

[^f00011]: 1973 c. 62.

[^f00012]: 1977 c. 42. Section 63(7) was amended by section 121(3) of, and paragraph 5 of Part I of Schedule 14 to, the Housing Act 1988.

[^f00013]: 1979 c. 55. Subsection (6) of section 59 was amended by section 12(10) of the Local Government Act 1985 and section 59 was further amended by section 189 of the Local Government and Housing Act 1989.

[^f00014]: 1954 c. 56.

[^f00015]: Section 522 is repealed by Part II of Schedule 12 to the Act subject to the savings contained in the Local Government and Housing Act (Commencement No. 5 and Transitional Provisions) Order 1990 (S.I. 1990/431).

[^f00016]: Section 245 of the 1985 Act is amended by section 98(5).

[^f00017]: Section 259 of the 1985 Act is amended by section 98(6).

[^f00018]: Section 312 is repealed by Part II of Schedule 12 to the Act subject to the savings contained in the Local Government and Housing Act 1989 (Commencement No. 4) Order 1990 (S.I. 1990/191).

[^f00019]: Section 569 is amended by section 157(8) of the Local Government and Housing Act 1989.

[^f00020]: 1972 c. 70.

[^f00021]: 1973 c. 37.

[^f00022]: 1963 c. 33. Paragraph (a) and part of paragraph (b) of section 23(3) were repealed with savings by Schedule 17 to the Local Government Act 1985 (c. 51).

[^f00023]: 1981 c. 64.

[^f00024]: 1972 c. 70. Part of paragraph 1(b) of Schedule 13 was repealed by Schedule 17 to the Local Government Act 1985 (c. 51).

[^f00025]: 1985 c. 51.

[^f00026]: 1986 c. 31.

[^f00027]: 1985 c. 67.

[^f00028]: 1948 c. 5.

[^f00029]: 1985 c. 69.

[^f00030]: 1988 c. 50.

[^f00031]: Section 41 was repealed by Schedule 18 to the Housing Act 1988.

[^f00032]: 1974 c. 44. Section 29 was repealed by Schedule 1 to the Housing (Consequential Provisions) Act 1985 (c. 71).

[^f00033]: 1980 c. 65.

[^f00034]: 1924 c.xxxvii. Section 5 was repealed by section 40(1) of the City of London (Various Powers) Act 1960 (c.xxxvi).

[^f00035]: 1974 c. 40.

[^f00036]: 1970 c. 42.

[^f00037]: 1976 c. 57.

[^f00038]: 1944 c. 31. Section 41 of the Education Act 1944, which defines further education, is substituted by section 120 of the Education Reform Act 1988 (c. 40).

[^f00039]: 1985 c. 51.

[^f00040]: 1972 c. 70.

[^f00041]: 1963 c. 33.

[^f00042]: 1973 c. 37.