Part IIIU.K. Financial Provisions

Chapter IVU.K. Revenue Accounts and Capital Finance

Application of Part IV of Local Government and Housing Act 1989E+W

111 Part IV of 1989 Act to apply to Authority and functional bodies.E+W

(1)Section 39 of the M1Local Government and Housing Act 1989 (application of Part IV) shall be amended as follows.

(2)In subsection (1) (which specifies the authorities with respect to whose finances the Part applies) after paragraph (b) there shall be inserted—

“(bb)the Greater London Authority;

(bc)a functional body, within the meaning of the Greater London Authority Act 1999;”.

(3)In consequence of the amendment made by subsection (2) above, in subsection (1) the paragraph (bb) inserted after paragraph (a) by paragraph 88 of Schedule 16 to the M2Local Government (Wales) Act 1994 (county borough council) shall become paragraph (aa).

(4)In subsection (3) (bodies which may be prescribed by regulations under subsection (1)(k)) at the end of paragraph (c) there shall be inserted “ or ”.

Credit approvalsE+W+S

[F1112 Provisions to be in place of sections 53 to 55 of 1989 Act.E+W+S

(1)Sections 53 to 55 of the M3Local Government and Housing Act 1989 (basic and supplementary credit approvals and the criteria for issuing them) shall not apply in relation to the Authority or any of the functional bodies.

(2)Sections 113 to 117 below shall apply in relation to the Authority and the functional bodies in place of the provisions mentioned in subsection (1) above.]

F1113 Aggregate credit approval for Authority and functional bodies.E+W+S

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F1114 Additional credit approval.E+W+S

(1)Any Minister of the Crown may at any time issue to the Mayor, in the form of a notice in writing, a credit approval with respect to credit arrangements and expenditure for capital purposes.

(2)A credit approval issued under this section (an additional credit approval) shall have effect for such period as is specified in the approval.

(3)Where an additional credit approval is issued not more than six months after the end of a financial year, the period specified under subsection (2) above may be one which begins, or begins and ends, at any time during that financial year.

(4)Subsections (2) to (6) of section 113 above shall apply in relation to an additional credit approval as they apply in relation to an aggregate credit approval, but taking—

(a)any reference to the Secretary of State as a reference to the Minister of the Crown issuing the approval, and

(b)any reference to the financial year for which the approval is given as a reference to the period for which the approval has effect.]

115 Notification of category C or D allocations.E+W+S

(1)Where the Mayor makes an allocation from a category C or D amount—

(a)under an aggregate credit approval, to the Authority, or

(b)under an additional credit approval, to the Authority or a functional body,

he shall give notice of the allocation to each of the functional bodies.

F1(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)In the other provisions of this Chapter, any reference to notice of an allocation from a category C or D amount is a reference to the notice of the allocation given in accordance with subsection (1) or (2) above.

[F1116 Amortisation.E+W+S

(1)Where regulations made by the Secretary of State so require, an aggregate credit approval or an additional credit approval shall specify, directly or by reference to tables or other documents specified in the approval, an amortisation period.

(2)In this section amortisation period means a period during which a relevant authority is required to set aside, from a revenue account, as provision to meet credit liabilities, such amounts as may be appropriately determined.

(3)If regulations under subsection (1) above so provide, an aggregate credit approval or an additional credit approval may specify—

(a)different amortisation periods in relation to the use of the approval in respect of credit arrangements and expenditure for capital purposes of different descriptions; or

(b)different amortisation periods in relation to different amounts specified in the approval.

(4)Subsection (1) above does not apply in relation to a category B credit approval issued in respect of expenditure which is treated as expenditure for capital purposes of a relevant authority by virtue only of directions under section 40(6) of the M4Local Government and Housing Act 1989.

(5)But the Secretary of State or other Minister issuing a category B credit approval may specify in the approval, directly or by reference to tables or other documents specified in the approval, an amortisation period in respect of such expenditure as is mentioned in subsection (4) above.

(6)In subsection (2) above, appropriately determined means—

(a)in its application for the purposes of subsection (1) above, determined in accordance with regulations under that subsection; and

(b)in its application for the purposes of subsection (5) above, determined in accordance with the approval.

(7)In this section—

• category B credit approval means an aggregate credit approval or an additional credit approval to the extent that the approval consists of a category B amount;

• relevant authority, in the case of any credit approval, means an authority—

  (a)

  for which a category A or B amount is specified in the approval, or

  (b)

  to which a category C or D amount is allocated under the approval.]

[F1117 Criteria for issuing credit approvals.E+W+S

(1)In determining any amount to be specified in an aggregate credit approval or an additional credit approval, the Secretary of State or other Minister may have regard, subject to the following provisions of this section, to such factors as appear to him to be appropriate.

(2)Without prejudice to the generality of subsection (1) above, the Secretary of State or other Minister may, in particular, have regard—

(a)to the amount of any grants or contributions which it appears to him that a relevant authority has received and is likely to receive from any person in respect of expenditure incurred by the authority or to be incurred by the authority before the expiry of the period for which the credit approval is to have effect; and

(b)subject to subsection (3) below, to the amount of capital receipts which it appears to him that any relevant authority has received, might reasonably be expected to have received or to receive or is likely to receive before the expiry of the period for which the credit approval is to have effect.

(3)In determining any amount to be specified in an aggregate credit approval or an additional credit approval, the Secretary of State or other Minister shall not take account of capital receipts—

(a)to the extent that a relevant authority is required to set aside the receipts as provision for credit liabilities;

(b)to the extent that they are received as mentioned in subsection (7) of section 59 of the M5Local Government and Housing Act 1989; or

(c)to the extent that their amount falls to be treated as reduced for any purpose under subsection (8) or (9) of that section.

(4)In determining any amount to be specified in the aggregate credit approval or in an additional credit approval to be issued to the Mayor in any financial year, the Secretary of State or other Minister shall not take account of the extent to which it appears to him that any relevant authority is, or is likely to be, in a position to finance expenditure for capital purposes from a revenue account.

(5)In this section relevant authority, in the case of any credit approval, means—

(a)as respects a category A or B amount, the authority for which the amount is to be specified, and

(b)as respects a category C or D amount, any authority to which an allocation from that amount may be made by the Mayor in accordance with the approval.]

[F1118 Part IV of 1989 Act and credit approvals under this Chapter.E+W+S

(1)Where a category A or B amount is specified for an authority in an aggregate credit approval or an additional credit approval, so much of the approval as relates to that amount shall be treated for the purposes of Part IV of the M6Local Government and Housing Act 1989 (other than sections 53 to 55) as a credit approval issued to that authority under that Part.

(2)Where an allocation from a category C or D amount specified in an aggregate credit approval or an additional credit approval is made by the Mayor—

(a)to the Authority, or

(b)to a functional body,

the notice of the allocation (read with so much of the credit approval as relates to the allocation) shall be treated for the purposes of Part IV of the M7Local Government and Housing Act 1989 (other than sections 53 to 55) as a credit approval issued under that Part to the Authority or, as the case may be, to the functional body.

(3)Section 56 of the M8Local Government and Housing Act 1989 (use of basic credit approvals and supplementary credit approvals) shall apply in relation to a credit approval treated by virtue of subsection (1) or (2) above as issued under Part IV of that Act as it applies in relation to a basic credit approval or a supplementary credit approval.

(4)Any reference in this Chapter to the use of an aggregate credit approval or an additional credit approval is a reference to the use, under Part IV of the M9Local Government and Housing Act 1989 or any other enactment, of any credit approvals treated as issued under that Part by virtue of the application of subsection (1) or (2) above in relation to the aggregate credit approval or, as the case may be, the additional credit approval (and related expressions shall be construed accordingly).]

Capital receipts and mutual grantsE+W+S

119 Power to redistribute capital receipts of functional bodies.E+W+S

(1)The Secretary of State may make regulations for and in connection with conferring on the Mayor power to direct any functional body to pay to the Authority such percentage as may be specified in the direction of so much of the usable part of the body’s capital receipts as may be so specified.

(2)The power conferred on the Mayor must be exercisable only for the purpose of enabling the amount paid under such a direction (the relevant amount) to be applied towards meeting expenditure for capital purposes of another functional body or of the Authority (the assisted body).

(3)The provision that may be made by regulations under subsection (1) above includes provision—

(a)with respect to the percentage or maximum percentage that may be specified in a direction;

(b)with respect to the portion of the usable part of a functional body’s capital receipts in respect of which a direction may be issued;

(c)requiring a direction to be complied with before the expiration of a prescribed period;

(d)requiring the Mayor, within such time or in such manner as may be prescribed, to notify the functional bodies of decisions taken with respect to the exercise of powers conferred by the regulations;

(e)for and in connection with enabling the Mayor to permit the relevant amount to be applied towards meeting expenditure for capital purposes of the assisted body generally or to require it to be applied towards meeting only such expenditure of a particular description;

(f)for and in connection with treating the whole or a prescribed part of the relevant amount as added to the usable part of the capital receipts of the assisted body, for the purposes of Part IV of the M10Local Government and Housing Act 1989;

(g)for and in connection with requiring an assisted body to apply the relevant amount only for the purposes for which it was paid to the body.

(4)In this section prescribed means prescribed by regulations.

120 Capital grants between Authority and functional bodies.E+W+S

(1)The Authority may pay grants towards meeting expenditure for capital purposes incurred or to be incurred by a functional body for the purposes of, or in connection with, the discharge of the functions of that body.

(2)A functional body may, with the consent of the Mayor, pay a grant towards meeting expenditure for capital purposes incurred or to be incurred by another functional body, or by the Authority, for the purposes of, or in connection with, the discharge of the functions of the body to which the grant is made.

(3)A grant under this section must not be made subject to any limitation in respect of the expenditure for capital purposes which it may be applied towards meeting.

(4)A grant under this section must be applied by the recipient body solely towards meeting expenditure for capital purposes incurred or to be incurred by that body for the purposes of, or in connection with, the discharge of its functions.

121 Revenue grants between Authority and functional bodies.E+W+S

(1)The Authority may pay grants towards meeting expenditure, other than expenditure for capital purposes, incurred or to be incurred by a functional body for the purposes of, or in connection with, the discharge of the functions of that body.

(2)A functional body may, with the consent of the Mayor, pay a grant towards meeting expenditure, other than expenditure for capital purposes, incurred or to be incurred by another functional body, or by the Authority, for the purposes of, or in connection with, the discharge of the functions of the body to which the grant is made.

(3)A grant under this section must not be made subject to any limitation in respect of the expenditure which it may be applied towards meeting (other than that the expenditure must not be expenditure for capital purposes).

(4)A grant under this section must be applied by the recipient body solely towards meeting expenditure incurred or to be incurred by that body for the purposes of, or in connection with, the discharge of its functions, other than expenditure for capital purposes.

The Mayor’s capital spending planE+W+S

122 Form and contents.E+W+S

(1)The Mayor shall, in accordance with the following provisions of this section and sections 123 and 124 below, prepare for each financial year a capital spending plan for the functional bodies.

(2)A capital spending plan shall consist of the sections described in subsections (3) to (6) below.

(3)Section A of a capital spending plan shall consist of a statement for each functional body of the Mayor’s estimates of the following amounts—

(a)the total amount of capital grants likely to be paid to the body during the year by any person other than the Authority;

(b)the amount, at the beginning of the year, of F2... the body’s capital receipts; and

(c)the amount by which the [F3body’s capital receipts are] likely to be increased by capital receipts which it appears to the Mayor the functional body might reasonably be expected to receive, or is likely to receive, during the year.

(4)Section B of a capital spending plan shall consist of a statement for each functional body of the following amounts—

(a)if the Mayor has decided a minimum amount of grant which the Authority is to pay to the body for the year under section 120(1) above, that minimum amount;

[F4(b)the total of the amounts which the Mayor expects the body—

(i)to borrow in the year, or

(ii)to be treated as borrowing in the year because of section 8(2) of the Local Government Act 2003 (under which entry into, or variation of, a credit arrangement is treated as a form of borrowing).]

(5)Section C of a capital spending plan shall consist of a statement for each functional body of the total of the following amounts—

(a)the total amount of [F5capital expenditure] which the Mayor expects the body to incur during the year; and

[F6(b)the total of the amounts which the Mayor expects the body to be treated as borrowing in the year because of section 8(2) of the Local Government Act 2003;]

and in this section the total of those amounts is referred to as the body’s total capital spending for the year.

(6)Section D of a capital spending plan shall consist of an analysis of each functional body’s total capital spending for the year showing—

(a)the amount which the Mayor expects the body to meet out of capital grants;

(b)the amount which he expects the body to meet out of F7... its capital receipts;

[F8(c)the amount which he expects the body to meet by borrowing or entering into or varying credit arrangements;]

(d)the amount which he expects the body to meet by making a charge to a revenue account.

123 Preparation.E+W+S

[F9(1)For each financial year, the Mayor shall prepare a draft of the capital spending plan for the year.]

(2)Before 15th January in the financial year preceding that to which the capital spending plan relates, the Mayor shall—

(a)send a copy of the draft to the Assembly and to each functional body; and

(b)invite them to submit their comments on the draft to him in writing within 21 days.

(3)Before finally determining the contents of the capital spending plan, the Mayor shall consider any comments submitted in accordance with the invitation under subsection (2)(b) above and make such revisions of the draft as he thinks fit, having regard to those comments.

(4)Before 28th February in the financial year preceding that to which the capital spending plan relates, the Mayor shall—

(a)send the plan to the Secretary of State; and

(b)send a copy of the plan to the Assembly and to each functional body.

(5)A copy of the capital spending plan shall be kept available for the appropriate period by the Mayor for inspection by any person on request free of charge at the principal offices of the Authority at reasonable hours.

(6)A copy of the capital spending plan, or any part of it, shall be supplied to any person on request during the appropriate period for such reasonable fee as the Mayor may determine.

(7)In this section the appropriate period in the case of a capital spending plan is the period of six years beginning with the date of publication of that plan pursuant to this section.

Supplementary provisionsE+W+S

124 Admissible factors in preparing capital spending plan etc.E+W+S

(1)In preparing a capital spending plan for any financial year, the Mayor may take account of such factors as appear to him to be appropriate.

(2)The reference in subsection (1) above to preparing a capital spending plan for a financial year includes a reference to deciding, in the case of each of the functional bodies,—

(a)the minimum amount of grant which the Authority is to pay to the body for the year under section 120 above; and

[F10(b)the amounts to be transferred to the body under section 32(5) of the Local Government Act 2003 (Mayor’s power to transfer expenditure grant);]

(3)Without prejudice to the generality of subsection (1) above, the Mayor may in particular take account of—

(a)the capital spending plans for such financial years which have ended as he may determine; and

(b)the amounts of each functional body’s total capital spending specified in section C of each of those plans which have been met as described in each of the paragraphs of subsection (4) below.

(4)Those amounts are—

(a)the amount met out of capital grants made to the body;

[F11(b)the amount met out of F12... the body’s capital receipts;

[F13(c)the amount met by borrowing or entering into or varying credit arrangements;]

(d)the amount met by making a charge to a revenue account.]

125 Information.E+W+S

(1)The Mayor may serve on a functional body a notice requiring the body to supply to him such information as is specified in the notice and required by him for the purpose of deciding whether to exercise his powers, and how to perform his functions, under this Chapter.

(2)If the information specified in a notice under this section is in the possession or under the control of the functional body on which the notice is served, the body 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 body, within the meaning of section 127 below, or by such other person as may be specified in the notice; and

(b)under arrangements made by the Audit Commission for Local Authorities and the National Health Service in England and Wales.

(3)If a functional body fails to comply with subsection (2) above, the Mayor may decide—

(a)whether to exercise his powers, and how to perform his functions, under this Chapter, or

(b)whether the body has acted, or is likely to act, in accordance with this Chapter,

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 Chapter, or

(b)whether a functional body has acted, or is likely to act, in accordance with this Chapter,

the Mayor 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.

126 Interpretation of Chapter IV.E+W+S

(1)In this Chapter, unless the context otherwise requires—

• additional credit approval shall be construed in accordance with section 114 above;

• aggregate credit approval shall be construed in accordance with section 113 above;

• capital receipts has the same meaning as in Part IV of the M11Local Government and Housing Act 1989 (see section 58 of that Act);

• capital spending plan means a capital spending plan under section 122 above;

• category, denoted by a following capital letter and used in relation to an amount, shall be construed in accordance with section 113(5) above;

• expenditure for capital purposes has the same meaning as in Part IV of the M12Local Government and Housing Act 1989 (see section 40 of that Act);

• notice, in relation to an allocation from a category C or D amount, shall be construed in accordance with section 115(3) above;

• the usable part, in relation to capital receipts, has the same meaning as in Part IV of the M13Local Government and Housing Act 1989 (see section 60 of that Act);

• use, in relation to an aggregate credit approval or an additional credit approval, shall be construed in accordance with section 118(4) above.

(2)References in this Chapter to credit arrangements, or to entering into credit arrangements, shall be construed in accordance with Part IV of the M14Local Government and Housing Act 1989 (see section 48 of that Act).