Local Government Finance Act 1988

Part VIE+W Funds

FundsE+W

89 Collection funds.E+W

(1)Every [F1billing authority] shall establish, and then maintain, a fund (to be called its collection fund) in accordance with this Part.

(2)[F2Subject to [F3subsections (2A) to (2C)] below,]An authority’s collection fund must be established on 1 April 1990.

F4[(2A)In the case of a district council which is established for an area by an order under section 17 of the Local Government Act 1992 F5..., the collection fund must be established on the date on which by virtue of the order the structural or boundary change affecting the area comes into force.

F4(2B)In the case of—

(a)a county council which is established by such an order and to which are transferred by or in consequence of the order the functions of district councils in relation to the county council’s area, or

(b)an existing county council to which are transferred by or in consequence of such an order the functions of district councils in relation to the county council’s area,

the collection fund must be established on the date on which by virtue of the order the structural change concerned comes into force.]

[F6(2C)In the case of—

(a)a district council or London borough council established by an order under Part 1 of the Local Government and Public Involvement in Health Act 2007, or

(b)a county council to which the functions of district councils in relation to the county council's area are transferred by or in consequence of such an order,

the collection fund must be established on a date specified in the order or in regulations made under section 14 of that Act.]

(3)Section 101(1)(b) of the M1Local Government Act 1972 (delegation) shall not apply as regards the functions of an authority in relation to its collection fund.

(4)Any sum paid into an authority’s collection fund shall be used in [F7the making] of payments which are to be met from that fund or of transfers which are to be made from it.

(5)If not immediately required for the purpose of [F8making] those payments or transfers, the sum shall be held, invested or otherwise used in such manner as may be prescribed by regulations made by the Secretary of State.

[89AF9Principal councils in Wales.E+W

This Part does not apply to a Welsh county council or county borough council (for whom provision as to the establishment of a council fund is made by section 38 of the Local Government (Wales) Act 1994).]

[F1090 Payments to and from collection funds.E+W

(1)The following shall be paid into the collection fund of a billing authority—

(a)sums received by the authority in respect of council tax set by it in accordance with section 30 of the Local Government Finance Act 1992 (but not sums received by way of penalty),

(b)sums received by the authority from any major precepting authority [F11or the Secretary of State] under regulations made under section 99(3) below,

(c)sums received by the authority in respect of any non-domestic rate under this Act,

[F12(ca)sums received by the authority in respect of any business rate supplement,]

[F13(d)sums received by the authority under any of the following provisions of Schedule 7B (local retention of non-domestic rates) that are of a kind specified by the Secretary of State as falling to be paid into a billing authority's collection fund—

(i)paragraph 14(2) (payments by Secretary of State following local government finance report);

(ii)paragraph 14(9) or (10) (payments by Secretary of State following revised calculation);

(iii)paragraph 17(7) or (8) (payments by Secretary of State following amending report),

(da)sums received by the authority—

(i)under provision made by regulations under paragraph 7 of Schedule 7B (regulations about administration of payments in respect of the central share),

(ii)under provision made by regulations under paragraph 10 of that Schedule (administration of payments by billing authorities to major precepting authorities) by virtue of sub-paragraph (2)(e) or (f) of that paragraph (reconciliation payments),

(iii)under provision made by regulations under paragraph 11 of that Schedule (regulations about payments by billing authorities to major precepting authorities out of deductions from the central share),

(iv)under provision made by regulations under paragraph 33 of that Schedule (transitional protection payments),

(v)under provision made by regulations under paragraph 39 or 40 of that Schedule (designation of areas or classes of hereditament) by virtue of paragraph 41 of that Schedule (payments by billing authorities to relevant authorities), or

(vi)under provision made by regulations under paragraph 42 of that Schedule (payments by Secretary of State following estimates of amounts relating to designated areas or classes), and]

(e)any other sums which the Secretary of State specifies are to be paid into a billing authority’s collection fund.

[F14(1A)The reference in subsection (1)(ca) to sums received by a billing authority in respect of business rate supplements—

(a)includes a reference to financial contributions made to it for the purpose of enabling the project to which a business rate supplement relates to be carried out, but

(b)does not include a reference to sums returned or transferred to it by virtue of section 24(3)(b) of, or paragraph 3(2)(a) of Schedule 3 to, the Business Rate Supplements Act 2009.]

(2)The following payments shall be met from the collection fund of a billing authority—

(a)payments to be made by the authority in respect of the amount of any precept issued by a major precepting authority under Part I of the Local Government Finance Act 1992 (but not payments to be so made in respect of interest on such an amount),

(b)payments to be made by the authority to any major precepting authority [F15or the Secretary of State] under regulations made under section 99(3) below,

[F16(ba)payments to be made by the authority to a levying authority in accordance with provision made by or under the Business Rate Supplements Act 2009,]

[F17(c)payments to be made by the authority under any of the following provisions of Schedule 7B that are of a kind specified by the Secretary of State as falling to be met from a billing authority's collection fund—

(i)paragraph 14(1) (payments to Secretary of State following local government finance report);

(ii)paragraph 14(6) or (7) (payments to Secretary of State following revised calculation);

(iii)paragraph 17(4) or (5) (payments to Secretary of State following amending report),

(ca)payments made by the authority—

(i)under paragraph 6, or under provision made by regulations under paragraph 7, of Schedule 7B (payments in respect of the central share),

(ii)under provision made by regulations under paragraph 9 of that Schedule (payments by billing authorities to major precepting authorities),

(iii)under provision made by regulations under paragraph 10 of that Schedule (administration of payments by billing authorities to major precepting authorities) by virtue of sub-paragraph (2)(e) or (f) of that paragraph (reconciliation payments),

(iv)under provision made by regulations under paragraph 11 of that Schedule (regulations about payments by billing authorities to major precepting authorities out of deductions from the central share),

(v)under provision made by regulations under paragraph 33 of that Schedule (transitional protection payments),

(vi)under provision made by regulations under paragraph 39 or 40 of that Schedule (designation of areas or classes of hereditament) by virtue of paragraph 41 of that Schedule (payments by billing authorities to relevant authorities), or

(vii)under provision made by regulations under paragraph 42 of that Schedule (payments to Secretary of State following estimates of amounts relating to designated areas or classes),]

(d)payments to be made by the authority to another person in repaying, under regulations under this Act or Part I of the Local Government Finance Act 1992, excess receipts by way of non-domestic rates or of council tax, and

(e)any other payments which are to be made by the authority to another person and which the Secretary of State specifies are to be met from a billing authority’s collection fund.

(3)The power to specify under this section—

(a)includes power to revoke or amend a specification made under the power;

(b)may be exercised differently in relation to different authorities.]

91 General funds.E+W

(1)For the purposes of this section each of the following is a relevant authority—

(a)a district council,

[F18(aa)a county council to which have been transferred, by or in consequence of an order under section 17 of the Local Government Act 1992 [F19F20... or Part 1 of the Local Government and Public Involvement in Health Act 2007] , the functions of district councils in relation to the county council’s area,]

[F21(ab)the Greater London Authority,]

(b)a London borough council, and

(c)the Council of the Isles of Scilly.

(2)Every relevant authority shall establish, and then maintain, a fund (to be called its general fund) in accordance with this Part.

(3)[F22Subject to [F23subsections (3A) [F24to (3D)]] below,] An authority’s general fund must be established on 1 April 1990.

[F25(3A)In the case of a district council which is established for an area by an order under section 17 of the Local Government Act 1992 [F26or section 17 of the Regional Assemblies (Preparations) Act 2003], the general fund must be established on the date on which by virtue of the order the structural or boundary change affecting the area comes into force.

F25(3B)In the case of—

(a)a county council which is established by such an order and to which are transferred by or in consequence of the order the functions of district councils in relation to the county council’s area, or

(b)an existing county council to which are transferred by or in consequence of such an order the functions of district councils in relation to the county council’s area,

the general fund must be established on the date on which by virtue of the order the structural change comes into force F27....]

[F28(3C)In the case of the Greater London Authority, the general fund must be established on a date specified in regulations.]

[F29(3D)In the case of—

(a)a district council or London borough council established by an order under Part 1 of the Local Government and Public Involvement in Health Act 2007, or

(b)a county council to which the functions of district councils in relation to the county council's area are transferred by or in consequence of such an order,

the general fund must be established on a date specified in the order or in regulations made under section 14 of that Act.]

(4)Any sum received by a relevant authority [F30on or after the date on which it is required by this section to establish its general fund shall be paid into that fund]; but this does not apply to a sum which is to be paid into its collection fund or a trust fund.

(5)Any payment to be made by a relevant authority [F31on or after the date on which it is required by this section to establish its general fund shall be met from that fund]; but this does not apply to a payment which is to be met from its collection fund or a trust fund.

(6) After 31 March 1990 no district council or London borough council shall be required to keep a general rate fund; and the assets held in the general rate fund of such an authority immediately before 1 April 1990 (other than assets forming part of a trust fund) shall be transferred to its general fund on that date.

(7)After 31 March 1990 the Council of the Isles of Scilly shall not be required to keep any fund known as its general fund and required (apart from this subsection) to be kept under any order made under section 265 of the M2Local Government Act 1972; and the assets held in that fund immediately before 1 April 1990 (other than assets forming part of a trust fund) shall be transferred on that date to the Council’s general fund established under this section.

[F32(8)The assets held in the county fund of a [F33relevant county council] immediately before the reorganisation date (other than assets forming part of a trust fund) shall be transferred on that date to its general fund established under this section.]

[F34(9)In subsection (8)—

• “relevant county council” means—

  (a)

  a county council such as is referred to in subsection (3B)(b) above, or

  (b)

  an existing county council to which the functions of district councils in relation to the county council's area are transferred by or in consequence of an order under Part 1 of the Local Government and Public Involvement in Health Act 2007, and

• “the reorganisation date” means the date on which the council is required by this section to establish its general fund.]

92 General funds: supplementary.E+W

(1)In this section “relevant authority” has the same meaning as in section 91 above.

(2)The Secretary of State may make regulations—

(a)about the relationship of a relevant authority’s general fund to its other funds;

(b)providing for assets falling within a relevant authority’s general fund to be held in separate funds within the general fund.

(3)The regulations may provide that any fund established by a relevant authority on or after 1 April 1990, other than its collection fund or a trust fund, is to be maintained as a separate fund falling within its general fund.

(4)The regulations may provide that such assets as are transferred to a relevant authority’s general fund under [F35section 91(6), (7) or (8)] above and fall within a prescribed description shall be held in separate funds falling within the general fund; and the number and composition of the separate funds shall be such as are prescribed.

93 The City fund.E+W

(1)The Common Council shall establish, and then maintain, a fund (to be called the City fund) in accordance with this Part.

(2)The City fund must be established on 1 April 1990.

(3)Any sum received by the Common Council after 31 March 1990 shall be paid into the City fund if it is not a sum which is to be paid into its collection fund or a trust fund and—

(a)it is received in respect of the general rate, the poor rate or the St. Botolph tithe rate, or

(b)it would have fallen to be credited in aid of any of those rates had this Act not been passed.

(4)Any payment to be made by the Common Council after 31 March 1990 shall be met from the City fund if it is not a payment which is to be met from its collection fund or a trust fund and if, had this Act not been passed, it would have fallen to be met out of—

(a)the general rate, the poor rate or the St. Botolph tithe rate, or

(b)sums which, had this Act not been passed, would have fallen to be credited in aid of any of those rates.

(5)No sum shall be paid into, and no payment shall be met from, the City fund except in accordance with subsections (3) and (4) above.

(6)The assets of the Common Council subsisting immediately before 1 April 1990 shall be transferred to the City fund on that date if they are assets—

(a)subsisting in respect of the general rate, the poor rate or the St. Botolph tithe rate, or

(b)representing sums credited in aid of any of those rates.

94 The City: further provisions.E+W

(1)The Secretary of State may make regulations—

(a)about the relationship of the City fund to other funds of the Common Council;

(b)providing for assets falling within the City fund to be held in separate funds within the City fund;

(c)prohibiting the Common Council from establishing funds.

(2)The regulations may provide that any fund established by the Common Council on or after 1 April 1990, and falling within a prescribed description, is to be maintained as a separate fund falling within the City fund.

(3)The regulations may provide that such assets as are transferred to the City fund under section 93(6) above and fall within a prescribed description shall be held in separate funds falling within the City fund; and the number and composition of the separate funds shall be such as are prescribed.

(4)The regulations may provide that the Common Council shall not establish or maintain on or after 1 April 1990 a fund into which both the following must or may be paid—

(a)sums which must be paid into the City fund under section 93(3) above, and

(b)other sums.

(5)The regulations may provide that the Common Council shall not establish or maintain on or after 1 April 1990 a fund from which both the following must or may be met—

(a)payments which must be met from the City fund under section 93(4) above, and

(b)other payments.

CalculationsE+W

F3695. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W

F3796. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W

Transfers between fundsE+W

[97 F38Principal transfers between funds.E+W

(1)Subject to subsection (2) below, a billing authority which has made calculations in accordance with sections [F3931A, 31B and 34 to 36] of the Local Government Finance Act 1992 (originally or by way of substitute) shall transfer from its collection fund to its general fund an amount which shall be calculated by applying the formula—

(2)Where the amount given by subsection (1) above is a negative amount, the authority shall transfer the equivalent positive amount from its general fund to its collection fund.

[F42(2A)The Secretary of State may by regulations make provision requiring a billing authority to transfer from its collection fund to its general fund such amounts as may be specified in or determined in accordance with the regulations by reference to—

(a)sums received by the authority in respect of non-domestic rates under this Act, and

(b)sums received by the authority under or by virtue of Schedule 7B (local retention of non-domestic rates) and required to be paid into its collection fund by virtue of provision made by or under section 90(1)(d) or (da).

(2B)The Secretary of State may by regulations make provision requiring a billing authority to transfer from its general fund to its collection fund such amounts as may be specified in or determined in accordance with the regulations by reference to sums received by the authority in respect of non-domestic rates under this Act.]

(3)Where in accordance with regulations under section 99(3) below a billing authority has estimated that there is a surplus in its collection fund for the preceding year, it shall transfer from its collection fund to its general fund an amount equal to so much of the surplus as, in accordance with the regulations, the authority calculates to be its share.

(4)Where in accordance with regulations under section 99(3) below a billing authority has estimated that there is a deficit in its collection fund for the preceding year, it shall transfer from its general fund to its collection fund an amount equal to so much of the deficit as, in accordance with the regulations, the authority calculates must be borne by it.

F43(4A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)In this section and sections 98 and 99 below, any reference to a billing authority’s general fund shall be construed in relation to the Common Council as a reference to the City fund.]

98 Other transfers between funds.E+W

F44(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F44(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)Regulations under section 89(5) above may include provision that—

(a)any sum to which they relate shall be transferred from an authority’s collection fund to its general fund F45. . .;

(b)the sum so transferred shall be held, invested or otherwise used in such manner as may be prescribed;

(c)a sum equal to the sum transferred shall be transferred to the authority’s collection fund from its general fund F45. . .;

F46(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)If the Secretary of State directs it to do so, a [F47billing authority] shall transfer from its collection fund to its general fund F48. . . such an amount as is specified in, or calculated in a manner specified in, the direction; and the transfer shall be made at such time as is specified in the direction.

(5)If the Secretary of State directs it to do so, a [F47billing authority] shall transfer to its collection fund from its general fund F49. . . such an amount as is specified in, or calculated in a manner specified in, the direction; and the transfer shall be made at such time as is specified in the direction.

(6)Different directions may be given to different authorities under [F50subsection (4) or (5)] above.

Regulations about fundsE+W

[F5199Regulations about funds.E+W

(1)The Secretary of State may make regulations about the discharge of the following liabilities of a billing authority—

(a)the liability to pay anything from its collection fund or its general fund in respect of any precept issued by a major or local precepting authority under Part I of the Local Government Finance Act 1992;

(b)the liability to transfer anything from its collection fund under section [F5297(1) or (3) or regulations under section 97(2A) above]; and

(c)the liability to transfer anything from its general fund under section 97(2) or (4) above [F53or regulations under section 97(2B) above].

(2)The regulations may include provision—

(a)that anything falling to be paid or transferred must be paid or transferred within a prescribed period;

(b)that anything falling to be paid or transferred must be paid or transferred in instalments of such amounts, and at such times, as are determined by the billing authority in accordance with prescribed rules;

(c)that the billing authority must inform any precepting authorities when instalments will be paid and how they are to be calculated;

(d)that if an instalment is not paid to a precepting authority in accordance with the regulations, it is to be entitled to interest on the amount of the instalment;

(e)as to the circumstances in which the billing authority is to be treated as having discharged the liabilities mentioned in subsection (1) above;

(f)as to the recovery (by deduction or otherwise) of any excess amount paid by the billing authority to any precepting authority in purported discharge of the liability mentioned in subsection (1)(a) above; and

(g)as to the transfer back of any excess amount transferred by the billing authority in purported discharge of the liability mentioned in subsection (1)(b) or (c) above.

(3)The Secretary of State may by regulations make provision as regards any financial year—

(a)that a billing authority must estimate at a prescribed time in the preceding financial year and in accordance with prescribed rules whether there is a deficit or surplus in its collection fund for that year and, if so, the amount of the deficit or surplus;

(b)that any surplus or deficit so estimated shall in the financial year concerned—

(i)be shared among, or be borne between, the billing authority and [F54one or more relevant authorities] in accordance with prescribed rules; or

(ii)in the case of the financial year beginning in 1993, belong solely to, or be borne solely by, the billing authority;

(c)that the billing authority must within a prescribed period inform [F55prescribed relevant authorities] of the effects of any estimates and rules mentioned in paragraphs (a) and (b) above;

(d)as to the manner in which any payments which fall to be made by a billing authority or a [F56relevant authority] by virtue of any provision included in regulations under paragraph (a) or (b) above must be made;

(e)as to the period within which, or time or times at which, any such payments or instalments of such payments must be made; and

(f)as to the recovery (by deduction or otherwise) of any excess amount paid by a [F57relevant authority] or a billing authority in purported discharge of any liability arising by virtue of any provision included in regulations under paragraph (a) or (b) above.

F58(3A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F58(3B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F59(3C)In subsection (3) “relevant authority” means—

(a)a major precepting authority, or

(b)the Secretary of State.

(3D)Regulations under subsection (3) may make separate provision in relation to council tax and non-domestic rates, with the effect that—

(a)more than one estimate is to be made by a billing authority of whether there is a deficit or surplus in its collection fund for a financial year and, if so, of the amount of the deficit or surplus,

(b)each estimate takes into account different amounts to be paid into or met from that fund, and

(c)each estimate has different consequences as to the payments to be made, or other functions to be exercised, by the billing authority, major precepting authorities or the Secretary of State.]

(4)The Secretary of State may make regulations requiring transfers between funds, or adjustments or assumptions, to be made to take account of any substitute calculation under section [F6031A(4)] of the Local Government Finance Act 1992.

(5)The Secretary of State may make regulations providing that sums standing to the credit of a billing authority’s collection fund at any time in a financial year must not exceed a total to be calculated in such manner as may be prescribed.

(6)Regulations under subsection (5) above in their application to a particular financial year (including regulations amending others) shall not be effective unless they come into force before 1 January in the preceding financial year; but this does not affect regulations which merely revoke others.]