Office of Public Sector Information
PART IV continued
(1) For each local authority there shall be an aggregate credit limit which, subject to subsection (2) below, at any time shall be the total at that time of—
(a) the authority’s temporary revenue borrowing limit;
(b) the authority’s temporary capital borrowing limit;
(c) the authority’s credit ceiling, as determined under Part III of Schedule 3 to this Act; and
(d) the excess of the authority’s approved investments and cash over their usable capital receipts;
but the reference in paragraph (d) above to approved investments and cash does not include investments or cash held for the purposes of such a superannuation fund or trust fund as is referred to in paragraph (h) or paragraph (i) of subsection (2) of section 42 above.
(2) On an application made by a local authority, the Secretary of State may direct that, for any period specified in the direction, the amount which, apart from the direction, would be the authority’s aggregate credit limit at any time during that period shall be increased by an amount specified in the direction with respect to that period; and any increase specified in a direction under this subsection may be expressed to have effect subject to compliance with such terms and conditions as may be so specified.
(3) Subject to subsection (4) below, an authority’s temporary revenue borrowing limit at any time is whichever is the less of—
(a) the total sums which at that time remain to be received by the authority and which, as income, fall or will fall to be credited to a revenue account of the authority for the current financial year; and
(b) the aggregate of—
(i) the total sums which, up to and including that time (whether in the current or a previous financial year), the authority have disbursed in respect of expenditure which falls to be charged to a revenue account of the authority for the current financial year; and
(ii) any relevant arrears in respect of which provision has been or is to be charged to such a revenue account or which have been or are to be written off and charged to such a revenue account;
and for the purposes of paragraph (b)(ii) above “relevant arrears” are amounts in respect of income which remain to be received by the authority and which, as income, fall to be credited to a revenue account of the authority for the financial year beginning two years before the beginning of the current financial year.
(4) At any time in a financial year the amount which, apart from this subsection, would be an authority’s temporary revenue borrowing limit shall be increased by the addition of an amount in respect of the immediately preceding financial year, being whichever is the less of—
(a) the excess (if any) of the total sums which, up to and including that time, the authority have disbursed in respect of expenditure falling to be charged to a revenue account of the authority for that preceding year over the total sums which, up to and including that time, the authority have received in respect of income falling to be credited to such a revenue account; and
(b) the total sums which at that time remain to be received by the authority and which, as income, fall or will fall to be credited to a revenue account of the authority for that preceding year.
(5) An authority’s temporary capital borrowing limit at any time is so much of the expenditure defrayed by the authority for capital purposes in the eighteen months ending at that time as is due to be, but at that time has not yet been, re-imbursed by any other person, excluding expenditure which is to be re-imbursed or met out of grants from a Community institution; and for this purpose it is immaterial whether the re-imbursement is due as a result of an obligation arising by statute, contract or otherwise or is to take the form of a grant or other obligation voluntarily undertaken.
(6) If at any time an authority’s usable capital receipts exceed their approved investments and cash referred to in paragraph (d) of subsection (1) above, the amount taken into account under that paragraph shall be a negative amount.
(7) Where an amount taken into account under paragraph (c) or paragraph (d) of subsection (1) above is a negative amount, it shall be a deduction in determining the total referred to in that subsection.
(8) Any reference in this section to an authority’s usable capital receipts at any time is a reference to the usable part of the authority’s capital receipts so far as they have not been applied before that time.
(1) Without prejudice to any other provision of this Part under which a local authority are required or authorised to set aside any amount as provision to meet credit liabilities, in each financial year a local authority shall, by virtue of this section, set aside, from such revenue account or accounts as the authority think fit, as provision to meet credit liabilities, an amount determined by the authority, being not less than the minimum revenue provision for that year referred to in Part IV of Schedule 3 to this Act.
(2) Where, by virtue of section 157 below, the Secretary of State makes to a local authority a commuted payment, within the meaning of that section, the authority shall, at the time the payment is received, set aside an amount equal to that payment as provision to meet credit liabilities.
(3) If, otherwise than by virtue of section 157 below, the Secretary of State or any other Minister of the Crown commutes into a single payment (or into a smaller number of payments than would otherwise be payable) sums which would otherwise have been paid to a local authority annually or by reference to any other period of time, the authority shall, at the time that single payment or, as the case may be, each of that smaller number of payments is received, set aside an amount equal to the payment as provision to meet credit liabilities.
(4) Where a local authority receive any sum by way of grant from a Community institution towards the authority’s expenditure on capital purposes, they shall at the time the sum is received, set aside an amount equal to that sum as provision to meet credit liabilities.
(5) A determination under subsection (1) above shall be made not later than 30th September in the financial year following that to which the determination relates.
(1) Amounts for the time being set aside by a local authority (whether voluntarily or pursuant to a requirement under this Part) as provision to meet credit liabilities may, subject to subsection (2) below, be applied only for one or more of the following purposes—
(a) to meet any liability of the authority in respect of money borrowed by the authority, other than a liability in respect of interest;
(b) to meet any liability of the authority in respect of credit arrangements, other than those excluded by regulations under paragraph 11 of Schedule 3 to this Act; and
(c) where a credit approval has been used as authority not to charge particular expenditure to a revenue account, to meet that expenditure.
(2) Subject to the following provisions of this section if, on the date which is the relevant date for any financial year, a local authority’s credit ceiling, as determined under Part III of Schedule 3 to this Act, is a negative amount, any such amount as is referred to in subsection (1) above may in that financial year—
(a) be applied for purposes specified by regulations made by the Secretary of State; or
(b) be transferred to a body so specified.
(3) The aggregate of the amounts which may be applied by a local authority in accordance with subsection (2) above in any financial year shall not exceed the amount by which the authority’s credit ceiling on the relevant date is less than nil.
(4) References in subsections (2) and (3) above to the relevant date shall be construed as follows—
(a) for the financial year beginning on 1st April 1990, the relevant date is that date; and
(b) for any subsequent financial year, the relevant date is the last day of the preceding financial year.
(5) Regulations under subsection (2) above may specify conditions with which a local authority must comply in applying or transferring any amount as mentioned in that subsection and with respect to any amount so applied or transferred; and an amount shall not be taken to be applied or transferred under that subsection unless any such conditions are complied with.
(1) The Secretary of State may serve on a local authority a notice requiring the authority to supply to him such information as is specified in the notice and is required by him—
(a) for the purpose of deciding whether to exercise his powers, and how to perform his functions, under this Part; or
(b) for the purpose of ascertaining whether an authority have acted, or are likely to act, in accordance with this Part; or
(c) for the purpose of assisting the formulation of government economic policies;
but no information shall be required for the purpose specified in paragraph (c) above unless it relates to, or to plans or proposals about, the finances and expenditure of the authority or of any company in which the authority have an interest.
(2) If the information specified in a notice under this section is in the possession or under the control of the authority on whom the notice is served, the authority shall supply the information required in such form and manner, and at such time, as is specified in the notice and, if the notice so requires, the information shall be certified (according as is specified in the notice) in one or both of the following ways,—
(a) by the chief finance officer of the authority, within the meaning of section 5 above, or by such other person as may be specified in the notice; and
(b) under arrangements made by the Audit Commission for Local Authorities in England and Wales.
(3) If a local authority fail to comply with subsection (2) above, the Secretary of State may decide—
(a) whether to exercise his powers, and how to perform his functions, under this Part, or
(b) whether the authority have acted, or are likely to act, in accordance with this Part,
on the basis of such assumptions and estimates as he thinks fit.
(4) In deciding—
(a) whether to exercise his powers, and how to perform his functions, under this Part, or
(b) whether an authority have acted, or are likely to act, in accordance with this Part,
the Secretary of State may also take into account any other information available to him, whatever its source and whether or not obtained under a provision contained in or made under this or any other enactment.
(1) In this Part—
(a) “approved investments” means investments approved for the purposes of this Part by regulations made by the Secretary of State;
(b) “financial year” means the period of twelve months beginning on 1st April;
(c) “Minister of the Crown” has the same meaning as in the Ministers of the [1975 c. 26.] Crown Act 1975; and
(d) “1980 Act receipt” has the meaning given by section 58(4) above.
(2) For the purposes of this Part, a local authority—
(a) incur a liability in respect of a payment at the time when they become unconditionally liable to make the payment; and
(b) discharge a liability in respect of a payment at the time when they make the actual payment, whether or not they have at that time become unconditionally liable to do so.
(3) In relation to a credit arrangement,—
(a) any reference in this Part to consideration given or to be given by the local authority under the arrangement does not include a reference to any consideration which is given before the time the arrangement comes into being (as defined in section 48(3) above); and
(b) any reference in this Part to a liability of the local authority under the arrangement does not include a reference to a liability which is met by the making of a payment before that time.
(4) In relation to a local authority, references in this Part to proper practices are references to those accounting practices—
(a) which the authority are required to follow by virtue of any enactment; or
(b) which, whether by reference to any generally recognised published code or otherwise, are regarded as proper accounting practices to be followed in the keeping of the accounts of local authorities, either generally or of the description concerned;
but, in the event of any conflict in any respect between the practices falling within paragraph (a) above and those falling within paragraph (b) above, only those falling within paragraph (a) above are to be regarded as proper practices.
(5) Subsection (4) above has effect not only for the purposes of this Act but also for the purposes of—
(a) any enactment passed after or in the same Session as this Act; and
(b) Part III of the [1982 c. 32.] Local Government Finance Act 1982 and the [1988 c. 41.] Local Government Finance Act 1988.
(6) If, under or by virtue of any enactment, all or any of the liabilities of an authority (in this subsection referred to as “the original authority”) in respect of a loan to or borrowing (or money borrowed) by the authority have become liabilities of another local authority (in this subsection referred to as “the current authority”) then, in so far as regulations made by the Secretary of State so provide,—
(a) in relation to the current authority, any reference in this Part to a loan to or borrowing (or money borrowed) by that authority includes a reference to the loan to or borrowing (or money borrowed) by the original authority; and
(b) if the original authority is a local authority for the purposes of this Part, any reference to a loan to or borrowing (or money borrowed) by that authority excludes a reference to the loan, borrowing (or money borrowed) in respect of which the liabilities have become those of the current authority.
(7) For the avoidance of doubt, except as provided by section 44(5) above, any reference in this Part to borrowing by a local authority does not include a reference to the temporary use by an authority of money forming part of a particular fund of the authority for a purpose other than that of the fund.
Local Government and Housing Act 1989 (C. 42)