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A | |
Bill | |
[AS AMENDED IN STANDING COMMITTEE A] | |
To | |
To make provision about finance, and other provision, in connection with | |
local and certain other authorities; to provide for changing the dates of local | |
elections in 2004; to amend the Audit Commission Act 1998; and for connected | |
purposes. | |
Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and | |
consent of the Lords Spiritual and Temporal, and Commons, in this present | |
Parliament assembled, and by the authority of the same, as follows:— | |
Part 1 | |
Capital finance etc and accounts | |
Chapter 1 | |
Capital finance etc | |
Borrowing | 5 |
1 Power to borrow | |
A local authority may borrow money— | |
(a) for any purpose relevant to its functions under any enactment, or | |
(b) for the purposes of the prudent management of its financial affairs. | |
2 Control of borrowing | 10 |
(1) A local authority may not borrow money if doing so would result in a breach | |
of— | |
(a) the limit for the time being determined by or for it under section 3, or | |
(b) any limit for the time being applicable to it under section 4. | |
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(2) The Secretary of State may, in relation to specific borrowing by a particular | |
local authority, by direction disapply subsection (1)(b), so far as relating to any | |
limit for the time being applicable under section 4(1). | |
(3) A local authority may not, without the consent of the Treasury, borrow | |
otherwise than in sterling. | 5 |
(4) This section applies to borrowing under any power for the time being available | |
to a local authority under any enactment, whenever passed. | |
3 Duty to determine affordable borrowing limit | |
(1) A local authority shall determine and keep under review how much money it | |
can afford to borrow. | 10 |
(2) In the case of the following authorities, namely— | |
(a) the Greater London Authority, and | |
(b) a functional body, | |
the Mayor shall determine and keep under review how much money the | |
authority can afford to borrow. | 15 |
(3) Before making any determination under subsection (2), the Mayor shall | |
consult the London Assembly. | |
(4) Before making a determination under subsection (2) for a functional body, the | |
Mayor shall consult that body. | |
(5) The Secretary of State may by regulations make provision about the | 20 |
performance of the duty under subsection (1) or (2). | |
(6) Regulations under subsection (5) may, in particular— | |
(a) make provision about— | |
(i) when a determination under subsection (1) or (2) is to be made, | |
(ii) how such a determination is to be made, and | 25 |
(iii) the period for which such a determination is to be made; | |
(b) make provision about the monitoring of an amount determined under | |
subsection (1) or (2); | |
(c) make provision about factors to which regard may be had in making a | |
determination under subsection (1) or (2) or in monitoring an amount | 30 |
determined under that subsection. | |
(7) Regulations under subsection (5) may include provision requiring a person | |
making a determination under subsection (1) or (2) to have regard to one or | |
more specified codes of practice, whether issued by the Secretary of State or | |
another. | 35 |
(8) A local authority’s function under subsection (1) shall be discharged only by | |
the authority. | |
(9) Section 38(1) of the Greater London Authority Act 1999 (c. 29) (delegation by | |
Mayor) does not apply in relation to functions under subsection (2). | |
(10) In this section— | 40 |
“functional body” has the same meaning as in the Greater London | |
Authority Act 1999; | |
“local authority” does not include the Greater London Authority or a | |
functional body; | |
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“Mayor” means Mayor of London. | |
4 Imposition of borrowing limits | |
(1) The Secretary of State may for national economic reasons by regulations set | |
limits in relation to the borrowing of money by local authorities. | |
(2) The Secretary of State may by direction set limits in relation to the borrowing | 5 |
of money by a particular local authority for the purpose of ensuring that the | |
authority does not borrow more than it can afford. | |
(3) Different limits may be set under subsection (1) or (2) in relation to different | |
kinds of borrowing. | |
(4) A local authority subject to a limit set under subsection (1) may transfer any | 10 |
headroom it has in relation to the limit to another local authority subject to a | |
corresponding limit. | |
(5) The Secretary of State may by regulations make provision about the exercise of | |
the right under subsection (4) and may, in particular, make provision about— | |
(a) the circumstances in which a local authority is to be regarded as having | 15 |
headroom for the purposes of that subsection, and | |
(b) the amount of headroom which it has for those purposes. | |
(6) Where an amount is transferred under subsection (4), this Chapter shall have | |
effect— | |
(a) in relation to the transferor, as if the limit in relation to which the | 20 |
headroom exists were reduced by that amount, and | |
(b) in relation to the transferee, as if the corresponding limit to which it is | |
subject were increased by that amount. | |
5 Temporary borrowing | |
(1) Subject to subsection (2), any limit for the time being determined by or for a | 25 |
local authority under section 3, or applicable to it under section 4, shall be | |
treated for the purposes of this Chapter as increased by the amount of any | |
payment which— | |
(a) is due to the authority in the period to which the limit relates, but | |
(b) has not yet been received by it. | 30 |
(2) In the case of a limit determined under section 3, or set under section 4(2), | |
subsection (1) shall not apply to any payment whose delayed receipt was | |
taken into account in arriving at the limit. | |
6 Protection of lenders | |
A person lending money to a local authority shall not be bound to enquire | 35 |
whether the authority has power to borrow the money and shall not be | |
prejudiced by the absence of any such power. | |
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Credit arrangements | |
7 “Credit arrangements” | |
(1) For the purposes of this Chapter, a local authority shall be taken to have | |
entered into a credit arrangement where— | |
(a) it enters into a transaction which gives rise to a liability on its part, and | 5 |
(b) the liability is a qualifying liability. | |
(2) A transaction entered into by a local authority is to be taken for the purposes | |
of subsection (1) as giving rise to a liability on the part of the authority if— | |
(a) it falls in accordance with proper practices to be treated for the | |
purposes of the authority’s accounts as giving rise to such a liability, or | 10 |
(b) it falls in accordance with regulations made by the Secretary of State to | |
be treated as falling within paragraph (a). | |
(3) The reference in subsection (1)(b) to a qualifying liability is to any liability other | |
than— | |
(a) a liability to repay money, | 15 |
(b) a liability in respect of which the date for performance is less than 12 | |
months after the date on which the transaction giving rise to the | |
liability is entered into, and | |
(c) a liability of a description specified for the purposes of this provision by | |
regulations made by the Secretary of State. | 20 |
8 Control of credit arrangements | |
(1) A local authority may not enter into, or vary, a credit arrangement if doing so | |
would result in a breach of— | |
(a) the limit for the time being determined by or for it under section 3, or | |
(b) any limit for the time being applicable to it under section 4. | 25 |
(2) In applying those limits for the purposes of subsection (1)— | |
(a) entry into a credit arrangement shall be treated as the borrowing of an | |
amount of money equal to the cost of the arrangement, and | |
(b) variation of a credit arrangement shall be treated as the borrowing of | |
an amount of money equal to the cost of the variation. | 30 |
(3) The Secretary of State may by regulations make provision about the calculation | |
for the purposes of subsection (2) of the cost of a credit arrangement or a | |
variation and may, in particular, make provision about the treatment of | |
options. | |
(4) The Secretary of State may by regulations impose additional restrictions on the | 35 |
power of a local authority to enter into or vary credit arrangements. | |
Capital receipts | |
9 “Capital receipt” | |
(1) Subject to subsection (3), references in this Chapter to a capital receipt, in | |
relation to a local authority, are to a sum received by the authority in respect of | 40 |
the disposal by it of an interest in a capital asset. | |
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(2) An asset is a capital asset for the purposes of subsection (1) if, at the time of the | |
disposal, expenditure on the acquisition of the asset would be capital | |
expenditure. | |
(3) The Secretary of State may by regulations— | |
(a) make provision for the whole of a sum received by a local authority in | 5 |
respect of the disposal by it of an interest in a capital asset, or such part | |
of such a sum as may be determined under the regulations, to be | |
treated as not being a capital receipt for the purposes of this Chapter; | |
(b) make provision for the whole of a sum received by a local authority | |
otherwise than in respect of the disposal by it of an interest in a capital | 10 |
asset, or such part of such a sum as may be determined under the | |
regulations, to be treated as being a capital receipt for the purposes of | |
this Chapter. | |
(4) Where a sum becomes payable to a local authority before it is actually received | |
by the authority, it shall be treated for the purposes of this section as received | 15 |
by the authority when it becomes payable to it. | |
10 Non-money receipts | |
(1) The Secretary of State may by regulations apply section 9 to cases where— | |
(a) a local authority makes a disposal of the kind mentioned in subsection | |
(1) of that section and the consideration for the disposal does not consist | 20 |
wholly of money payable to the authority, or | |
(b) a local authority receives otherwise than in the form of money anything | |
which, if received in that form, would be a capital receipt under that | |
section. | |
(2) Regulations under subsection (1) may, in particular— | 25 |
(a) make provision for a local authority to be treated as receiving a sum of | |
such an amount as may be determined under the regulations; | |
(b) make provision about when the deemed receipt is to be treated as | |
taking place. | |
11 Use of capital receipts | 30 |
(1) The Secretary of State may by regulations make provision about the use of | |
capital receipts by a local authority. | |
(2) Regulations under subsection (1) may, in particular— | |
(a) make provision requiring an amount equal to the whole or any part of | |
a capital receipt to be used only to meet— | 35 |
(i) capital expenditure, or | |
(ii) debts or other liabilities; | |
(b) make provision requiring an amount equal to the whole or any part of | |
a capital receipt to be paid to the Secretary of State. | |
(3) The power under subsection (1), so far as relating to provision of the kind | 40 |
mentioned in subsection (2)(b), shall only apply to receipts which a local | |
authority derives from the disposal of an interest in housing land. | |
(4) The reference in subsection (3) to housing land is to any land, house or other | |
building in relation to which the local authority is, or has been, subject to the | |
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(4) duty under section 74 of the Local Government and Housing Act 1989 (c. 42) | |
(duty to keep Housing Revenue Account). | |
(5) Regulations under subsection (1) may include provision authorising the | |
Secretary of State to set-off any amount which an authority is liable to pay to | |
him under this section against any amount which he is liable to pay to it. | 5 |
Investment | |
12 Power to invest | |
A local authority may invest— | |
(a) for any purpose relevant to its functions under any enactment, or | |
(b) for the purposes of the prudent management of its financial affairs. | 10 |
Miscellaneous | |
13 Security for money borrowed etc | |
(1) Except as provided by subsection (3), a local authority may not mortgage or | |
charge any of its property as security for money which it has borrowed or | |
which it otherwise owes. | 15 |
(2) Security given in breach of subsection (1) shall be unenforceable. | |
(3) All money borrowed by a local authority (whether before or after the coming | |
into force of this section), together with any interest on the money borrowed, | |
shall be charged indifferently on all the revenues of the authority. | |
(4) All securities created by a local authority shall rank equally without any | 20 |
priority. | |
(5) The High Court may appoint a receiver on application by a person entitled to | |
principal or interest due in respect of any borrowing by a local authority if the | |
amount due remains unpaid for a period of two months after demand in | |
writing. | 25 |
(6) The High Court may appoint a receiver under subsection (5) on such terms, | |
and confer on him such powers, as it thinks fit. | |
(7) The High Court may confer on a receiver appointed under subsection (5) any | |
powers which the local authority has in relation to— | |
(a) collecting, receiving or recovering the revenues of the local authority, | 30 |
(b) issuing levies or precepts, or | |
(c) setting, collecting or recovering council tax. | |
(8) No application under subsection (5) may be made unless the sum due in | |
respect of the borrowing concerned amounts to not less than £10,000. | |
(9) The Secretary of State may by order substitute a different sum for the one for | 35 |
the time being specified in subsection (8). | |
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