Section 72

SCHEDULE 5 New Chapter 4ZA of Part 1 of the Local Government Finance Act 1992

This is the Chapter referred to in section 72(1)—

“CHAPTER 4ZA Referendums relating to council tax increases

5Interpretation of Chapter

52ZA Interpretation of Chapter

(1) In this Chapter—

(a) a reference to a billing authority is to a billing authority in
England,

(b) 10a reference to a major precepting authority is to a major
precepting authority in England, and

(c) a reference to a local precepting authority is to a local
precepting authority in England.

(2) In this Chapter—

(a) 15a reference to an authority is to an authority of a kind
mentioned in subsection (1) above;

(b) a reference to a precepting authority is to an authority of a
kind mentioned in subsection (1)(b) or (c) above.

(3) Section 52ZX below defines references in this Chapter to an
20authority’s relevant basic amount of council tax.

Determination of whether increase excessive

52ZB Duty to determine whether council tax excessive

(1) A billing authority must determine whether its relevant basic
amount of council tax for a financial year is excessive.

(2) 25Sections 52ZF to 52ZI below (duty to hold referendum etc in case of
excessive council tax increase by billing authority) apply where the
amount mentioned in subsection (1) above is excessive.

(3) A major precepting authority must determine whether its relevant
basic amount of council tax for a financial year is excessive.

(4) 30Sections 52ZJ and 52ZK and 52ZN to 52ZP below (duty to hold
referendum etc in case of excessive council tax increase by major
precepting authority) apply where an amount mentioned in
subsection (3) above is excessive.

(5) A local precepting authority must determine whether its relevant
35basic amount of council tax for a financial year is excessive.

(6) Sections 52ZL to 52ZP below (duty to hold referendum etc in case of
excessive council tax increase by local precepting authority) apply
where the amount mentioned in subsection (5) above is excessive.

(7) A determination under this section for a financial year must be made
as soon as is reasonably practicable after principles under section
52ZC below for that year are approved by a resolution of the House
of Commons under section 52ZD below.

52ZC 5Determination of whether increase is excessive

(1) The question whether an authority’s relevant basic amount of
council tax for a financial year (“the year under consideration”) is
excessive must be decided in accordance with a set of principles
determined by the Secretary of State for the year.

(2) 10A set of principles—

(a) may contain one principle or two or more principles;

(b) must constitute or include a comparison falling within
subsection (3) below.

(3) A comparison falls within this subsection if it is between—

(a) 15the authority’s relevant basic amount of council tax for the
year under consideration, and

(b) the authority’s relevant basic amount of council tax for the
financial year immediately preceding the year under
consideration.

(4) 20If for the purposes of this section the Secretary of State determines
categories of authority for the year under consideration—

(a) any principles determined for the year must be such that the
same set is determined for all authorities (if more than one)
falling within the same category;

(b) 25as regards an authority which does not fall within any of the
categories, the authority’s relevant basic amount of council
tax for the year is not capable of being excessive for the
purposes of this Chapter.

(5) If the Secretary of State does not determine such categories, any
30principles determined for the year under consideration must be such
that the same set is determined for all authorities.

(6) A principle that applies to the Greater London Authority and that
constitutes or includes a comparison falling within subsection (3)
above may only provide for—

(a) 35a comparison between unadjusted relevant basic amounts of
council tax,

(b) a comparison between adjusted relevant basic amounts of
council tax, or

(c) a comparison within paragraph (a) and a comparison within
40paragraph (b).

(7) In determining categories of authorities for the year under
consideration the Secretary of State must take into account any
information that the Secretary of State thinks is relevant.

52ZD Approval of principles

(1) 45The principles for a financial year must be set out in a report which
must be laid before the House of Commons.

(2) If a report for a financial year is not laid before the specified date or,
if so laid, is not approved by resolution of the House of Commons on
or before the specified date—

(a) no principles have effect for that year, and

(b) 5accordingly, no authority’s relevant basic amount of council
tax for the year is capable of being excessive for the purposes
of this Chapter.

(3) If the Secretary of State does not propose to determine a set of
principles for a financial year, the Secretary of State must lay a report
10before the House of Commons before the specified date giving the
Secretary of State’s reasons for not doing so.

(4) In this section “the specified date”, in relation to a financial year,
means the date on which the local government finance report for the
year under section 78A of the 1988 Act is approved by resolution of
15the House of Commons.

52ZE Alternative notional amounts

(1) The Secretary of State may make a report specifying an alternative
notional amount in relation to any year under consideration and any
authority.

(2) 20An alternative notional amount is an amount which the Secretary of
State thinks should be used as the basis of any comparison in
applying section 52ZC above in place of the authority’s relevant
basic amount of council tax for the preceding year.

(3) A report under this section—

(a) 25may relate to two or more authorities;

(b) may be amended by a subsequent report under this section;

(c) must contain such explanation as the Secretary of State thinks
desirable of the need for the calculation of the alternative
notional amount and the method for that calculation;

(d) 30must be laid before the House of Commons.

(4) Subsection (5) below applies if a report under this section for a
financial year is approved by resolution of the House of Commons
on or before the date on which the report under section 52ZD above
for that year is approved by resolution of the House of Commons.

(5) 35Section 52ZC above has effect, as regards the year under
consideration and any authority to which the report relates, as if the
reference in subsection (3) of that section to the authority’s relevant
basic amount of council tax for the financial year immediately
preceding the year under consideration were a reference to the
40alternative notional amount for that year.

(6) In this section “year under consideration” has the same meaning as
in section 52ZC above.

Excessive increase in council tax by billing authority

52ZF Billing authority’s duty to make substitute calculations

(1) The billing authority must make substitute calculations for the
financial year in compliance with this section; but those calculations
5do not have effect for the purposes of Chapter 3 above except in
accordance with sections 52ZH and 52ZI below.

(2) Substitute calculations for a financial year comply with this section
if—

(a) they are made in accordance with sections 31A, 31B and 34 to
1036 above, ignoring section 31A(11) above for this purpose,

(b) the relevant basic amount of council tax produced by
applying section 52ZX below to the calculations is not
excessive by reference to the principles determined by the
Secretary of State under section 52ZC above for the year, and

(c) 15they are made in accordance with this section.

(3) In making the substitute calculations, the authority must—

(a) use the amount determined in the previous calculation for
the year under section 31A(3) above so far as relating to
amounts which the authority estimates it will accrue in the
20year in respect of redistributed non-domestic rates, revenue
support grant, additional grant, special grant or (in the case
of the Common Council only) police grant, and

(b) use the amount determined in the previous calculation for
the year for item T in section 31B(1) above and (where
25applicable) item TP in section 34(3) above.

(4) For the purposes of subsection (2) above the authority may treat any
amount determined in the previous calculation under section 31A(3)
above as increased by the amount of any sum which—

(a) it estimates it will accrue in the year in respect of additional
30grant, and

(b) was not taken into account by it in making the previous
calculation.

52ZG Arrangements for referendum

(1) The billing authority must make arrangements to hold a referendum
35in relation to the authority’s relevant basic amount of council tax for
the financial year in accordance with this section.

(2) Subject as follows, the referendum is to be held on a date decided by
the billing authority.

(3) That date must be not later than—

(a) 40the first Thursday in May in the financial year, or

(b) such other date in that year as the Secretary of State may
specify by order.

(4) An order under subsection (3) above must be made not later than—

(a) 1 February in the financial year preceding the year
45mentioned in paragraph (b) of that subsection, or

(b) in the case of an order affecting more than one financial year,
1 February in the financial year preceding the first of those
years.

(5) The persons entitled to vote in the referendum are those who, on the
5day of the referendum—

(a) would be entitled to vote as electors at an election for
members for an electoral area of the billing authority, and

(b) are registered in the register of local government electors at
an address within the billing authority’s area.

(6) 10In this section—

• “electoral area” means—

  (a)

  where the billing authority is a district council, a
  London borough council or the Common Council of
  the City of London, a ward;

  (b)

  15where the billing authority is a county council, an
  electoral division;

  (c)

  where the billing authority is the Council of the Isles
  of Scilly, a parish;

• “register of local government electors” means the register of
  20local government electors kept in accordance with the
  provisions of the Representation of the People Acts.

(7) This section is subject to regulations under section 52ZQ below.

52ZH Effect of referendum

(1) The billing authority must inform the Secretary of State of the result
25of the referendum.

(2) Subsection (3) below applies if the result is that the billing authority’s
relevant basic amount of council tax for the financial year is
approved by a majority of persons voting in the referendum.

(3) The authority’s calculations from which that amount was derived
30continue to have effect for that year for the purposes of this Act.

(4) Subsection (5) below applies if the result is that the billing authority’s
relevant basic amount of council tax for the financial year is not
approved by a majority of persons voting in the referendum.

(5) The substitute calculations made in relation to the year under section
3552ZF above have effect in relation to the authority and the financial
year.

52ZI Failure to hold referendum

(1) If the billing authority fails to hold a referendum in accordance with
this Chapter, the substitute calculations made in relation to the year
40under section 52ZF above have effect in relation to the authority and
the financial year.

(2) If the authority has not made those substitute calculations, during
the period of restriction the authority has no power to transfer any
amount from its collection fund to its general fund; and sections 97
45and 98 of the 1988 Act have effect accordingly.

(3) In subsection (2) above “the period of restriction” means the period—

(a) beginning with the latest date on which the referendum
could have been held, and

(b) ending with the date (if any) when the billing authority
5makes the substitute calculations.

Excessive increase in council tax by precepting authority

52ZJ Major precepting authority’s duty to make substitute calculations

(1) The major precepting authority must make substitute calculations
for the financial year in compliance with this section.

(2) 10Substitute calculations made for a financial year by a major
precepting authority other than the Greater London Authority
comply with this section if—

(a) they are made in accordance with sections 42A, 42B and 45 to
48 above,

(b) 15the relevant basic amount of council tax for the year
produced by the calculations is not excessive by reference to
the principles determined by the Secretary of State under
section 52ZC above for the year, and

(c) they are made in accordance with this section.

(3) 20Substitute calculations made for a financial year by the Greater
London Authority comply with this section if—

(a) they are made by applying the relevant London provisions
and sections 47 and 48 above to the Authority’s substitute
consolidated council tax requirement for the year, and

(b) 25they are made in accordance with this section.

(4) In making the substitute calculations, a major precepting authority
other than the Greater London Authority must—

(a) use the amount determined in the previous calculation under
section 42A(3) above so far as relating to amounts which the
30authority estimates it will accrue in the year in respect of
redistributed non-domestic rates, revenue support grant,
additional grant, special grant or police grant, and

(b) use the amount determined in the previous calculation for
item T in section 42B(1) above or (where applicable) item TP
35in section 45(3) above.

(5) For the purposes of subsection (2) above the authority may treat any
amount determined in the previous calculation under section 42A(3)
above as increased by the amount of any sum which—

(a) it estimates it will accrue in the year in respect of additional
40grant, and

(b) was not taken into account by it in making the previous
calculation.

(6) In making the substitute calculations, the Greater London Authority
must use any amount determined in the previous calculations for
45item T in section 88(2) of the Greater London Authority Act 1999 or
for item TP2 in section 89(4) of that Act.

(7) In this Chapter—

• “the relevant London provisions” means sections 88 and (where
  applicable) 89 of the Greater London Authority Act 1999;

• “the Authority’s substitute consolidated council tax
  5requirement”, in relation to a financial year, means the
  Authority’s substitute consolidated council tax
  requirement—

  (a)

  agreed under Schedule 6 to the Greater London
  Authority Act 1999, or

  (b)

  10set out in its substitute consolidated budget as agreed
  under that Schedule,

  as the case may be.

52ZK Major precepting authority’s duty to notify appropriate billing
authorities

(1) 15The major precepting authority must notify each appropriate billing
authority—

(a) that its relevant basic amount of council tax for a financial
year is excessive, and

(b) that the billing authority is required to hold a referendum in
20accordance with this Chapter.

(2) A notification under this section must include a precept in
accordance with the following provisions; but that precept does not
have effect for the purposes of Chapters 3 and 4 above except in
accordance with sections 52ZO and 52ZP below.

(3) 25A precept issued to a billing authority under this section by a major
precepting authority other than the Greater London Authority must
state—

(a) the amount which, in relation to the year and each category
of dwellings in the billing authority’s area, has been
30calculated by the precepting authority in accordance with
sections 42A, 42B and 45 to 47 above as applied by section
52ZJ above, and

(b) the amount which has been calculated by the precepting
authority in accordance with section 48 above as applied by
35section 52ZJ above as the amount payable by the billing
authority for the year.

(4) Dwellings fall within different categories for the purposes of
subsection (3) above according as different calculations have been
made in relation to them as mentioned in paragraph (a) of that
40subsection.

(5) A precept issued to a billing authority under this section by the
Greater London Authority must state—

(a) the amount which, in relation to the year and each category
of dwellings in the billing authority’s area, has been
45calculated by applying, in accordance with section 52ZJ
above, the relevant London provisions and section 47 above
to the Authority’s substitute consolidated council tax
requirement, and

(b) the amount which has been calculated by the Authority in
accordance with section 48 above as applied by section 52ZJ
above as the amount payable by the billing authority for the
year.

(6) 5Dwellings fall within different categories for the purposes of
subsection (5) above according as different calculations have been
made in relation to them as mentioned in paragraph (a) of that
subsection.

(7) A major precepting authority must assume for the purposes of
10subsections (3) and (5) above that each of the valuation bands is
shown in the billing authority’s valuation list as applicable to one or
more dwellings situated in its area or (as the case may be) each part
of its area as respects which different calculations have been made.

(8) The Secretary of State must by regulations prescribe a date by which
15a notification under this section must be made.

(9) This section does not require the Greater London Authority to notify
a billing authority to which this subsection applies unless the
Authority’s unadjusted relevant basic amount of council tax for the
year is excessive.

(10) 20Subsection (9) above applies to a billing authority if the special item
within the meaning of section 89(2) of the Greater London Authority
Act 1999 does not apply to any part of the authority’s area.

52ZL Local precepting authority’s duty to make substitute calculations

(1) The local precepting authority must make substitute calculations for
25the financial year in compliance with this section.

(2) Substitute calculations for a financial year comply with this section
if—

(a) they are made in accordance with section 49A above, and

(b) the relevant basic amount of council tax produced by
30applying section 52ZX below to the calculations is not
excessive by reference to the principles determined by the
Secretary of State under section 52ZC above for the year.

52ZM Local precepting authority’s duty to notify appropriate billing
authority

(1) 35The local precepting authority must notify its appropriate billing
authority—

(a) that its relevant basic amount of council tax for a financial
year is excessive, and

(b) that the billing authority is required to hold a referendum in
40accordance with this Chapter.

(2) A notification under this section must include a precept in
accordance with subsection (3) below; but that precept does not have
effect for the purposes of Chapters 3 and 4 above except in
accordance with sections 52ZO and 52ZP below.

(3) 45The precept must state, as the amount payable by the billing
authority for the year, the amount which has been calculated by the

local precepting authority under section 49A above as applied by
section 52ZL above.

(4) The Secretary of State must by regulations prescribe a date by which
the notification must be made.

52ZN 5Arrangements for referendum

(1) A billing authority that is notified under section 52ZK or 52ZM
above must make arrangements to hold a referendum in relation to
the precepting authority’s relevant basic amount of council tax for
the financial year in accordance with this section.

(2) 10Where the referendum is one of two or more referendums required
to be held in respect of the same calculation, it is to be held on—

(a) the first Thursday in May in the financial year, or

(b) such other date as the Secretary of State may specify by order.

(3) Otherwise the referendum is to be held on a date decided by the
15billing authority; but this is subject to subsection (4) below.

(4) That date must be not later than—

(a) the first Thursday in May in the financial year, or

(b) such other date in that year as the Secretary of State may
specify by order.

(5) 20An order under subsection (2) or (4) above must be made not later
than—

(a) 1 February in the financial year preceding the year
mentioned in paragraph (b) of that subsection, or

(b) in the case of an order affecting more than one financial year,
251 February in the financial year preceding the first of those
years.

(6) The persons entitled to vote in the referendum are those who, on the
day of the referendum—

(a) would be entitled to vote as electors at an election for
30members for an electoral area of the billing authority that
falls wholly or partly within the precepting authority’s area,
and

(b) are registered in the register of local government electors at
an address that is within both—

(i) 35the precepting authority’s area, and

(ii) the billing authority’s area.

(7) Subject to subsection (8) below, the billing authority may recover
from the precepting authority the expenses that are incurred by the
billing authority in connection with the referendum.

(8) 40The Secretary of State may by regulations make provision for cases
in which—

(a) subsection (7) above does not apply, or

(b) that subsection applies with modifications.

(9) In this section—

• 45“electoral area” means—

  Localism BillPage 309

  (a)

  in relation to a district council, a London borough
  council or the Common Council of the City of
  London, a ward;

  (b)

  in relation to a county council, an electoral division;

  (c)

  5in relation to the Council of the Isles of Scilly, a parish;

• “register of local government electors” means the register of
  local government electors kept in accordance with the
  provisions of the Representation of the People Acts.

(10) This section is subject to regulations under section 52ZQ below.

52ZO 10Effect of referendum

(1) The precepting authority must inform the Secretary of State of the
result of the referendum or (as the case may be) each of them.

(2) Subsection (3) below applies if—

(a) in a case where one referendum is held in respect of the
15precepting authority’s relevant basic amount of council tax
for the financial year, that amount is approved by a majority
of persons voting in the referendum, or

(b) in a case where two or more referendums are held in respect
of that amount, that amount is approved by a majority of
20persons voting in all of those referendums taken together.

(3) The precepting authority’s calculations that include that amount or
(as the case may be) from which that amount was derived continue
to have effect for the year for the purposes of this Act.

(4) Subsections (5) and (6) below apply if—

(a) 25in a case where one referendum is held in respect of the
precepting authority’s relevant basic amount of council tax
for a financial year, that amount is not approved by a
majority of persons voting in the referendum, or

(b) in a case where two or more referendums are held in respect
30of that amount, that amount is not approved by a majority of
persons voting in all of those referendums taken together.

(5) Any precept issued to a billing authority under section 52ZK or
52ZM above as part of a notification that triggered the referendum
has effect as a precept issued to that billing authority for the year for
35the purposes of Chapter 3 above.

(6) Where the precept was issued to a billing authority by a local
precepting authority under section 52ZM above, section 36A above
has effect in relation to the billing authority as if it required the
authority to make calculations in substitution on the basis of the
40precept (rather than permitting it to do so).

(7) In the case of a major precepting authority other than the Greater
London Authority, section 30 above has effect by virtue of subsection
(5) above in relation to that precept as if—

(a) references to amounts calculated under Chapter 4 above
45were to amounts calculated as mentioned in section 52ZJ(2)
above, and