Select Committee on Delegated Powers and Deregulation Third Report

Annex (Continued)


Memorandum by the Department of Trade and Industry

Purpose of the Bill

1.      The Bill amends section 33 of the Electricity Act 1989 (`the Act') so that the definition of "leviable electricity" in that section is extended to include all electricity from nuclear sources supplied by licensed electricity suppliers. Without this measure electricity currently generated from nuclear sources under the Primary Nuclear Contract (a 'qualifying arrangement' under section 33(7A) of the Act) would cease to attract the Levy when the Primary Nuclear Contract expires on 31 March 1998. This would lead to a slight upward pressure on electricity prices.

2.      The Bill also contains a power for the Secretary of State, by regulations, to make all electricity supplied by licensed electricity suppliers subject to the Levy. Were the Bill to enter into force and the power to be exercised, the power would affect electricity generated from renewable sources outside of the 'qualifying arrangements' mentioned in section 33(7A) of the Act. 'Qualifying arrangements' are those made pursuant to Non-Fossil Fuel Orders and Scottish Renewable Orders made under section 32 of the Act, through which support is provided to electricity produced from renewable sources.

Provisions with Delegated Powers

Section 1(3)

3.      In order to avoid a small upward pressure in electricity prices, mentioned above, which would occur if the Levy is not extended to include all nuclear generated electricity, the measure in section 1(2) of the Bill must be brought into effect before 31 March 1998. The Government has not yet decided whether to extend the Levy to include renewable electricity generated outside of 'qualifying arrangements' but will consider whether to do so in the light of a review. However, the results of that review will not be available in time to include firm proposals in the Bill and to meet the 31 March 1998 deadline. Consequently section 1(3) allows the Secretary of State to make all electricity subject to the Fossil Fuel Levy by regulations to avoid the need to bring forward further primary legislation should this further amendment to section 33 of the Act prove desirable.

4.      The power in section 1(3) is subject to annulment in pursuance of a resolution of either House. This is the procedure applicable to all regulation making powers currently in the Act and would seem to be appropriate to this case also as the power is closely defined.

Section 2 (3) and (4)

5.      Section 2 contains the usual arrangement for the commencement of the Bill and provides for any necessary transitional provisions or savings to be included in the commencement order. As usual, there is no Parliamentary scrutiny of the exercise of the powers contained in these provisions.

25 June 1997


Memorandum by the Department of the Environment, Transport and the Regions

This memorandum explains the proposed use of the delegated powers provisions in the Local Government (Contracts) Bill.

Clause 1 - Contracts for provision of assets or services

Subsection (5) enables the Secretary of State to make regulations amending subsection (4).

Purpose: to amend the definition of "Assets" as defined in subsection (4) for the purposes of the whole Act.

Reason for proposing delegated powers It may be necessary to clarify that the Bill extends to contracts involving a particular sort of asset where any doubt arises as to whether or not the asset in question falls within clause 1(4).

Procedure: negative resolution.

Clause 3: the certification requirements

Subsection (2) paragraph (f) requires certificates issued under clause 3 to deal in a manner prescribed in regulations with any matters required by regulations to be dealt with in such certificates.

Purpose: that certain matters as to the contents of a certificate may be prescribed in regulations, in addition to those specified in clause 3 (2).

Reason for proposing delegated powers It may be necessary to add to the matters to be covered in a certificate. For example, if the type of contract which could be certified were to change through regulations made under clause 4 then the type of information to be included in the certificate might change; an instance of this would be if it was decided to introduce a de minimis value for certifiable contracts.

Procedure: negative resolution.

Subsection (2) paragraph (g) This requires the certificate to confirm that the local authority has complied with or is to comply with any requirement imposed by regulations with respect to the issue of certificates.

Purpose: to enable the procedure for issuing certificates to be prescribed.

Reason : to ensure that certificates, which have important consequences, are issued at the right level within local authorities and receive appropriate scrutiny before issue. It is possible, for example, that it might become desirable for certificates to be sealed by the authority rather than signed or witnessed by a certain person (such as the monitoring officer of a local council). Appropriate procedures may change as public-private partnership contracts develop or the law changes.

Procedure: negative resolution.

Subsection (3) provides that regulations may specify the person who is to sign the certificate.

Purpose: that the position of the person who is to sign the certificate may be specified

Reason for proposing delegated powers: It is anticipated that it will be desirable to specify a person at an appropriate level as signatory in order to ensure adequate consideration of the content of the certificate from the point of view of the authority and any private sector party to the relevant contract. It may be necessary to change the specification as public-private partnership contracts develop or the law changes.

Procedure: negative resolution.

Clause 4 - Certification requirements: supplementary

Subsection (4) enables the Secretary of State to make regulations amending subsection (2) or (3).

Purpose: so that the sort of contract that a local authority can certify may be varied by regulations.

Reason for proposing delegated powers: It may be necessary to amend the description of the type of contract that may be certified. For example, a minimum value or term may need to be specified.

Procedure: affirmative resolution.

Clause 9: Grants Relating to Expenditure in Respect of Magistrates' Courts

Clause 9 inserts subsection (4A) of section 57 into the Justices of the Peace Act 1997 enabling the Lord Chancellor to make regulations under which expenditure by authorities responsible for providing accommodation for magistrates' courts is not to be capital expenditure.

Purpose: The local authority capital finance regulations, under Part IV of the Local Government and Housing Act 1989, were recently amended to define regular payments to contractors under partnership contracts as capital expenditure. This was done because partnership contracts are arrangements under which authorities obtain the use of assets on credit. Section 50 of the 1989 Act says that credit arrangements may only be used in connection with capital expenditure. But because partnership contracts may involve a large service element, it has been questioned whether they are properly for capital purposes. So the capital finance regulations were amended to make clear that they were capital for the purposes of Part IV of the 1989 Act.

This caused difficulties for the Lord Chancellor's Department, in relation to partnership contracts for magistrates' courts. Section 57 of the Justices of the Peace Act 1997 makes separate provision for grants towards capital expenditure and towards revenue expenditure. Section 72 defines "capital" expenditure by reference to the definition under Part IV of the 1989 Act. Payments under partnership contracts therefore need to be funded by capital grant. But the capital grant regime is insufficiently flexible for this purpose. Where, under normal accounting practice, these regular payments would be treated as revenue, the Lord Chancellor's Department wishes to support them from its scheme of revenue grants.

Reason for proposing delegated power: to remove a difficulty with public private partnership contracts for magistrates courts where it has been questioned whether they are properly for capital purposes within section 50 of the 1989 Act. This will enable partnership schemes in relation to magistrates courts to be supported out of revenue grants.

Procedure: negative resolution.

Clause 10: Regulations

Subsection (1) provides that all regulations made under the Bill may make different provision for different purposes or cases, including different areas. This means, for example, that there could be varying arrangements for different classes of local authorities.

Purpose: to provide flexibility in making regulations, for example different provisions may be required for district councils and police authorities

Subsection (2) provides that any regulations under clause 4(4), defining the types of contracts to be covered by the Bill, are to be made under the affirmative resolution procedure in Parliament. See under clause 4 above.

Subsection (3) provides that all other regulations under the Bill will be subject to the negative resolution procedure.

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