Water Industry Act 1991

Chapter IIFinancial Assistance for Undertakers

151Financial contributions to rural services

(1)Subject to subsection (2) below and to such conditions as the Treasury may determine, the Secretary of State, in any case in which it appears to him to be desirable to do so, may undertake to make a contribution out of money provided by Parliament towards the expenses incurred—

(a)by a water undertaker in providing a supply of water in a rural locality or in improving an existing supply of water in such a locality;

(b)by a sewerage undertaker in making adequate provision for the sewerage of a rural locality or for the disposal of such a locality’s sewage.

(2)The Secretary of State shall not undertake to make a contribution under this section towards the expenses of making provision for the sewerage of a rural locality, or for the disposal of such a locality’s sewage, unless he is satisfied that the need for making the provision is due to anything done or proposed to be done—

(a)to supply water in pipes in that locality; or

(b)to increase the supply of water in pipes in that locality.

(3)An undertaking given by the Secretary of State under this section shall provide for the making of the contribution in the form of such lump sum payment or payments, or such periodical payments towards revenue expenditure, as may appear to the Secretary of State to be appropriate.

(4)The Secretary of State may withhold, or reduce the amount of, any contribution which he has undertaken to make towards the expenses incurred by a relevant undertaker in respect of any works or transaction, if it appears to him either—

(a)that any of the works have been carried out in an unsatisfactory manner;

(b)that—

(i)the effectiveness of any of the works is substantially less than as estimated in the proposals submitted to him by the relevant undertaker; and

(ii)the difference is due to any default, for which the undertaker is responsible, in the formulation of the proposals;

or

(c)that there has been any default in the carrying out of the transaction.

152Grants for national security purposes

(1)The Secretary of State may, out of money provided by Parliament, make grants to relevant undertakers for the purpose of defraying or contributing towards any losses they may sustain by reason of compliance with directions given under section 208 below in the interests of national security.

(2)The approval of the Treasury shall be required for the making of grants under this section.

153Government financial assistance where special administration orders made

(1)Where a special administration order is for the time being in force in relation to a company, the Secretary of State, may, with the consent of the Treasury—

(a)make to the company grants or loans of such sums as appear to him to be appropriate for the purpose of facilitating the achievement of the purposes of the order;

(b)agree to indemnify the person appointed to achieve the purposes of the order in respect of liabilities incurred and loss or damage sustained by that person in connection with the carrying out of his functions under the order.

(2)The Secretary of State may, with the consent of the Treasury, guarantee, in such manner and on such conditions as he may think fit, the repayment of the principal of, the payment of interest on and the discharge of any other financial obligation in connection with any sum which is borrowed from any person by a company in relation to which a special administration order is in force at the time when the guarantee is given.

(3)Without prejudice to any provision applied in relation to the company by Schedule 3 to this Act—

(a)the terms and conditions on which a grant is made to any company under this section may require the whole or a part of the grant to be repaid to the Secretary of State if there is a contravention of the other terms and conditions on which the grant is made; and

(b)any loans which the Secretary of State makes to a company under this section shall be repaid to him at such times and by such methods, and interest on the loans shall be paid to him at such rates and at such times, as he may, with the consent of the Treasury, from time to time direct.

(4)Any grant or loan made under this section and any sums required to be paid by the Secretary of State in respect of an indemnity given under this section shall be paid out of money provided by Parliament.

(5)Any sums received under subsection (3) above by the Secretary of State shall be paid into the Consolidated Fund.

154Guarantees under section 153

(1)This section applies in relation to any guarantee given by the Secretary of State under section 153 above.

(2)Immediately after a guarantee to which this section applies is given, the Secretary of State shall lay a statement of the guarantee before each House of Parliament.

(3)Where any sum is paid out for fulfilling a guarantee to which this section applies, the Secretary of State shall, as soon as possible after the end of each financial year (beginning with that in which the sum is paid out and ending with that in which all liability in respect of the principal of the sum and in respect of the interest thereon is finally discharged), lay before each House of Parliament a statement relating to that sum.

(4)Any sums required by the Secretary of State for fulfilling a guarantee to which this section applies shall be paid out of money provided by Parliament.

(5)Without prejudice to any provision applied in relation to the relevant company by Schedule 3 to this Act, if any sums are paid out in fulfilment of a guarantee to which this section applies, the relevant company shall make to the Secretary of State, at such times and in such manner as the Secretary of State may from time to time direct—

(a)payments of such amounts as the Secretary of State may so direct in or towards repayment of the sums so paid out; and

(b)payments of interest, at such rate as the Secretary of State may so direct, on what is outstanding for the time being in respect of sums so paid out;

and the consent of the Treasury shall be required for the giving of a direction under this subsection.

(6)Any sums received by the Secretary of State under subsection (5) above shall be paid into the Consolidated Fund.

(7)In subsection (5) above “the relevant company” in relation to a guarantee, means the company which borrowed the sums in respect of which the guarantee was given.