The Local Authorities (Capital Finance) Regulations 1990

• (d) any reference to a local authority’s total non-housing receipts is a reference to the total of the receipts which the authority are required to bring into account to determine their adjusted initial credit ceiling other than any receipts falling within sub-paragraph (b) above.

PART II — HOUSING AND NON-HOUSING AMOUNTS FOR SUBSEQUENT FINANCIAL YEARS

3

• (1) A local authority’s housing amount for any financial year other than that beginning on 1st April 1990 shall be–

• (a) if the housing component of the authority’s adjusted credit ceiling on the last day of the immediately preceding financial year is nil or is less than nil, nil; and

• (b) if the authority’s housing component is greater than nil an amount equal to the housing component less the amount, if any, by which the non-housing component of the authority’s adjusted credit ceiling on the last day of the immediately preceding financial year is less than nil, provided that the authority’s housing amount shall not thereby be less than nil;

and for the purposes of paragraph (b) above the authority’s non-housing component is the amount determined by the authority in accordance with paragraph 5 below.

• (2) In relation to a local authority’s housing amount for the financial year beginning on 1st April 1991, the housing component of the authority’s adjusted credit ceiling on 31st March 1991 shall, subject to sub-paragraph (4) below, be the amount by which the total of–

• (a) the housing component of the authority’s adjusted initial credit ceiling, and

• (b) the amount of any housing increase in the authority’s adjusted credit ceiling in the financial year beginning on 1st April 1990,

exceeds the amount of any housing reduction of the authority’s adjusted credit ceiling in that year, and if there is no such excess, the housing component of the authority’s adjusted credit ceiling on 31st March 1991 shall be nil, or, as the case may be, a negative amount.

• (3) In sub-paragraph (2) above, the reference to the housing component of the authority’s adjusted initial credit ceiling is a reference to the amount by which the authority’s total housing advances exceeds their total housing receipts determined in accordance with sub-paragraphs (a) and (b) respectively of paragraph 2 above, or if there is no such excess, nil or, as the case may be, a negative amount.

• (4) If, by virtue of paragraph 16(2) of Schedule 3 to the Act, a local authority’s minimum revenue provision for the financial year beginning on 1st April 1990 is nil, the housing component of the authority’s adjusted credit ceiling on 31st March 1991 shall be increased by the aggregate of the amounts, if any, which would have been set aside by the authority in that year by virtue of regulation 25(1)(b) and (2)(c) in respect of–

• (a) any advances which were made for the purpose of meeting expenditure which, if it had been charged on 1st April 1990 to a revenue account, would have been required, under Part VI of the Act, to be charged to their Housing Revenue Account or Housing Repairs Account; and

• (b) any transitional credit arrangements for any purpose for which, if expenditure had been incurred and charged to a revenue account on 1st April 1990, it would have been required, under Part VI of the Act, to be charged to their Housing Revenue Account or Housing Repairs Account; if the authority’s initial credit ceiling had been greater than nil.

• (5) In relation to a local authority’s housing amount for a financial year beginning on or after 1st April 1992 (referred to in this sub-paragraph and sub-paragraph (6) below as “the current year”), the housing component of the authority’s adjusted credit ceiling on the last day of the immediately preceding financial year (referred to in this sub-paragraph and sub-paragraph (6) below as “the preceding year”) shall, subject to sub-paragraph (6) below, be the amount by which the total of–

• (a) the housing component of the authority’s adjusted credit ceiling on the last day of the financial year beginning two years before the beginning of the current year, and

• (b) the amount of any housing increase in the authority’s adjusted credit ceiling in the preceding year,

exceeds the amount of any housing reduction of the authority’s adjusted credit ceiling in the preceding year, and if there is no such excess, the housing component of the authority’s adjusted credit ceiling on the last day of the preceding year shall be nil, or, as the case may be, a negative amount.

• (6) If, by virtue of paragraph 15(2) of Schedule 3 to the Act, a local authority’s minimum revenue provision for the preceding year is nil, the housing component of the authority’s adjusted credit ceiling on the last day of the preceding year shall be increased by the aggregate of the amounts, if any, which would have been set aside by the authority in the preceding year by virtue of regulation 26(1)(b) and (c) and (2)(c) in respect of–

• (a) any advances falling within paragraph (a) of sub-paragraph (4) above;

• (b) the housing use of any supplementary credit approvals; and

• (c) any transitional credit arrangements falling within paragraph (b) of sub-paragraph (4) above;

if the authority’s credit ceiling on the last day of the financial year beginning two years before the beginning of the current year had been greater than nil.

4

For the purposes of paragraph 3(2) and (5) above,–

• (a) the amount of any housing increase in a local authority’s adjusted credit ceiling in a financial year shall be the amount, if any, by which their adjusted credit ceiling is increased during that year in accordance with paragraph 11(1) of Schedule 3 to the Act in respect of the housing use of any credit approvals other than credit approvals which fall within section 54(5); and

• (b) the amount of any housing reduction of a local authority’s adjusted credit ceiling in a financial year (“the year”) shall be the aggregate of–

• (i) either–

• (a) if the year begins on 1st April 1990 and the housing component of the authority’s adjusted initial credit ceiling is a positive amount, 2 per cent. of that amount; or

• (b) if the year begins on or after 1st April 1991 and the housing component of the authority’s adjusted credit ceiling on the last day of the immediately preceding financial year is a positive amount, 2 per cent. of that amount; and

• (ii) the amount, if any, by which their adjusted credit ceiling is reduced during the year in accordance with paragraph 12(1) of Schedule 3 to the Act in respect of any amounts set aside which–

• (a) fall to be set aside under section 59(1) or 61(4) or under paragraph 7(2) of Schedule 3 to the Act in relation to the disposal of houses, dwellings or other property of the authority to which section 74(1) applied immediately before the disposal, or in the case of a disposal before 1st April 1990, to which section 74(1) would have applied if the disposal had been made on 1st April 1990; or

• (b) are set aside in accordance with a determination under section 50(3)(c) or 60(2) referring to a credit arrangement which is excluded for the purposes of paragraph 11(2) of Schedule 3 to the Act by virtue of regulation 22 and which is for a purpose for which, if expenditure had been incurred and charged to a revenue account, it would have been required, under Part VI of the Act, to be charged to their Housing Revenue Account or Housing Repairs Account.

5

• (1) A local authority’s non-housing amount for any financial year other than that beginning on 1st April 1990 shall be–

• (a) if the non-housing component of the authority’s adjusted credit ceiling on the last day of the immediately preceding financial year is nil or is less than nil, nil; and

• (b) if the authority’s non-housing component is greater than nil an amount equal to the non-housing component less the amount, if any, by which the housing component of the authority’s adjusted credit ceiling on the last day of the immediately preceding financial year is less than nil, provided that the authority’s non-housing amount shall not thereby be less than nil;

and for the purposes of paragraph (b) above the authority’s housing component is the amount determined by the authority in accordance with paragraph 3 above.

• (2) In relation to a local authority’s non-housing amount for the financial year beginning on 1st April 1991, the non-housing component of the authority’s adjusted credit ceiling on 31st March 1991 shall, subject to sub-paragraph (4) below, be the amount by which the total of–

• (a) the non-housing component of the authority’s adjusted initial credit ceiling, and

• (b) the amount of any non-housing increase in the authority’s adjusted credit ceiling in the financial year beginning on 1st April 1990,

exceeds the amount of any non-housing reduction of the authority’s adjusted credit ceiling in that year, and if there is no such excess, the non-housing component of the authority’s adjusted credit ceiling on 31st March 1991 shall be nil, or, as the case may be, a negative amount.

• (3) In sub-paragraph (2) above, the reference to the non-housing component of the authority’s adjusted initial credit ceiling is a reference to the amount by which the authority’s total non-housing advances exceeds their total non-housing receipts determined in accordance with sub-paragraphs (c) and (d) respectively of paragraph 2 above, or if there is no such excess, nil or, as the case may be, a negative amount.

• (4) If, by virtue of paragraph 16(2) of Schedule 3 to the Act, a local authority’s minimum revenue provision for the financial year beginning on 1st April 1990 is nil, the non-housing component of the authority’s adjusted credit ceiling on 31st March 1991 shall be increased by the aggregate of the amounts, if any, which would have been set aside by the authority in that year by virtue of regulation 25(1)(b) and (2)(c) in respect of–

• (a) any advances other than advances falling within paragraph 3(4)(a) above; and

• (b) any transitional credit arrangements other than transitional credit arrangements falling within paragraph 3(4)(b) above;

if the authority’s initial credit ceiling had been greater than nil.

• (5) In relation to a local authority’s non-housing amount for a financial year beginning on or after 1st April 1992 (referred to in this sub-paragraph and sub-paragraph (6) below as “the current year”), the non-housing component of the authority’s adjusted credit ceiling on the last day of the immediately preceding financial year (referred to in this sub-paragraph and sub-paragraph (6) below as “the preceding year”) shall, subject to sub-paragraph (6) below, be the amount by which the total of–

• (a) the non-housing component of the authority’s adjusted credit ceiling on the last day of the financial year beginning two years before the beginning of the current year; and

• (b) the amount of any non-housing increase in the authority’s adjusted credit ceiling in the preceding year,

exceeds the amount of any non-housing reduction of the authority’s adjusted credit ceiling in the preceding year, and if there is no such excess, the non-housing component of the authority’s adjusted credit ceiling on the last day of the preceding year shall be nil, or, as the case may be, a negative amount.

• (6) If, by virtue of paragraph 15(2) of Schedule 3 to the Act, a local authority’s minimum revenue provision for the preceding year is nil, the non-housing component of the authority’s adjusted credit ceiling on the last day of the preceding year shall be increased by the aggregate of the amounts, if any, which would have been set aside by the authority in the preceding year by virtue of regulation 26(1)(b) and (c) and (2)(c) in respect of–

• (a) any advances other than advances falling within paragraph 3(4)(a) above;

• (b) the non-housing use of any supplementary credit approvals; and

• (c) any transitional credit arrangements other than transitional credit arrangements falling within paragraph 3(4)(b) above;

if the authority’s credit ceiling on the last day of the financial year beginning two years before the beginning of the current year had been greater than nil.

6

For the purposes of paragraph 5(2) and (5) above,–

• (a) the amount of any non-housing increase in a local authority’s adjusted credit ceiling in a financial year shall be the aggregate of–

• (i) the amount, if any, by which their adjusted credit ceiling is increased during that year in accordance with paragraph 11(1) of Schedule 3 to the Act in respect of any credit approvals other than credit approvals which fall within section 54(5) or in accordance with paragraph 14(2) of Schedule 3 to the Act provided that no account is taken for this purpose of any increase in the authority’s adjusted credit ceiling falling within paragraph 4(a) above; and

• (ii) the excess amount;

• (b) the amount of any non-housing reduction of a local authority’s adjusted credit ceiling in a financial year (“the year”) shall be the amount, if any, by which–

• (i) the amount, if any, by which their adjusted credit ceiling is reduced during that year in accordance with paragraph 12(1) or 14(1) of Schedule 3 to the Act provided that no account is taken for this purpose of any reduction in respect of amounts set aside by virtue of regulation 25(1)(b) and (2)(c) or, as the case may be, regulation 26(1)(b) and (c) and (2)(c),

exceeds

• (ii) the amount of any housing reduction of the authority’s adjusted credit ceiling in the year by virtue of paragraph 4(b) above;

• (c) in sub-paragraph (a) above, the excess amount is the amount, if any, by which the amount falling within paragraph (ii) of sub-paragraph (b) above exceeds the amount falling within paragraph (i) of that sub-paragraph.

7

In this Part of this Schedule,–

• (a) “housing use” in relation to a credit approval means the extent to which a credit approval is used by a local authority as mentioned in section 56(3) where in reliance on the credit approval–

• (i) expenditure is defrayed, which, if it had been charged to a revenue account, would have been required, under Part VI of the Act, to be charged to their Housing Revenue Account or Housing Repairs Account, or

• (ii) the authority enter into, or agree to a variation of, a credit arrangement for any purpose for which, if expenditure had been incurred and charged to a revenue account, it would have been required, under Part VI of the Act, to be charged to their Housing Revenue Account or Housing Repairs Account;

• (b) “non-housing use” in relation to a credit approval means the extent to which a credit approval is used by a local authority as mentioned in section 56(3) other than as described in sub-paragraph (a) above.

PART III — THE RELEVANT AMOUNT

8

• (1) A local authority’s relevant amount shall be the amount, if any, by which the authority’s adjusted credit ceiling on the last day of the immediately preceding financial year exceeds the amount, if any, by which amount A exceeds amount B.

• (2) Amount A is the aggregate of–

• (a) so much of the amount determined in accordance with paragraph 8(1)(a) of Schedule 3 to the Act as is in respect of advances falling within regulation 25(1)(b);

• (b) the amount determined in accordance with paragraph 8(1)(b) of Schedule 3 to the Act; and

• (c) so much of the amount of any supplementary credit approvals falling within section 54(5) as has been used by the authority as mentioned in section 56(3) in any financial year preceding the current financial year.

• (3) Amount B is the aggregate of–

• (a) any amounts set aside in any financial year preceding the current financial year by the authority by virtue of regulations 25(1)(b) and (2)(c) and 26(1)(b) and (c) and (2)(c); and

• (b) if, by virtue of paragraph 15(2) or 16(2) of Schedule 3 to the Act, the authority’s minimum revenue provision for any financial year preceding the current financial year is nil, any amounts which would have been set aside by the authority in such a year by virtue of regulations 25(1)(b) and (2)(c) and 26(1)(b) and (c) and (2)(c) if the authority’s initial credit ceiling or, as the case may be, the authority’s credit ceiling had been greater than nil.

Signed

Chris Patten — Secretary of State for the Environment — 2nd March 1990

Peter Walker — Secretary of State for Wales — 28th February 1990

Explanatory note

(This note is not part of the Regulations)

These Regulations, which are made under Part IV of the Local Government and Housing Act 1989 (“the Act”), are concerned with the new capital finance system for local authorities which operates from 1st April 1990. The new system replaces the controls on capital expenditure contained in Part VIII of the Local Government, Planning and Land Act 1980. The Regulations apply to England and Wales and are to come into force on 1st April 1990.

Part II of the Regulations makes minor amendments to the definition of expenditure for capital purposes provided in section 40 of the Act.

Part III of the Regulations relates to the requirement in section 41(1) of the Act for all expenditure incurred by a local authority to be charged to a revenue account. Section 42 excludes certain expenditure from this requirement. Regulation 4 makes a minor amendment to one of the categories of expenditure which are excluded.

Part IV of the Regulations makes provision with respect to credit arrangements, which under the Act comprise leases and certain contracts where consideration is to be given by a local authority after they have received consideration under the contract in question. Regulation 6 has the effect of making various types of leases and contracts which would otherwise be credit arrangements not credit arrangements.

Sections 50(2) and 51(4) of the Act require that a local authority must have available an amount of credit cover on entering into or varying a credit arrangement. Such an amount may be obtained by using a credit approval (as described in the following paragraph) or by setting aside an amount as provision for credit liabilities. An amount which is set aside may then only be used for certain purposes, set out in section 64 of the Act. The Act also provides, in section 44(1), for a limit (the “aggregate credit limit”) on the total amount of borrowing and outstanding liabilities under credit arrangements which a local authority may have at any time. Regulations 7 and 8 make special provision in the case of leases for calculating the amount which is required as credit cover and which is subject to the aggregate credit limit.

Part V of the Regulations lists the grants which, under section 57 of the Act, are to result in the reduction or extinguishment of credit approvals issued to an authority. Credit approvals, which are issued by the Secretary of State or any other Minister to local authorities under sections 53 and 54 of the Act, enable an authority to enter into or vary credit arrangements and not to charge expenditure to a revenue account.

Part VI of the Regulations relates to capital receipts. Section 58 of the Act provides for certain sums received by authorities to be capital receipts. Regulations 11 to 13 provide for further sums to be treated as capital receipts and for certain sums not to be capital receipts. Section 59 of the Act requires local authorities to set aside part of each capital receipt (“the reserved part”) as provision for credit liabilities. Schedule 1 to the Regulations specifies the amount of the reserved part in the case of different types of capital receipts and disposals. Subsections (8) and (9) of section 59 set out how the amount of a capital receipt is to be treated as reduced for the purposes of that section. Regulations 15 to 19 (and Schedule 2 to the Regulations) make provision for reductions in five further cases. Section 61 of, and Part II of Schedule 3 to, the Act provide for consideration which is not wholly in money paid to an authority to be treated in broadly the same way as capital receipts. Regulation 20 describes the ways in which calculation of the amount set aside is to differ in the case of consideration not wholly in money.

Part VII of the Regulations makes provision in respect of a local authority’s credit ceiling, which is one of the components of the aggregate credit limit. Schedule 3 to the Regulations lists certain modifications of the credit ceiling. By virtue of regulation 22, no account is to be taken of certain credit arrangements in determining an authority’s credit ceiling on or after 1st April 1990.

Part VIII of the Regulations concerns minimum revenue provision, which is the minimum amount to be set aside by a local authority as provision for credit liabilities in any financial year from their revenue account or accounts. Schedule 4 to the Regulations provides for certain adjustments to the credit ceiling which affect the amount of minimum revenue provision. Regulations 25 and 26 and Schedule 5 to the Regulations describe how the amount of minimum revenue provision is to be calculated.

Part IX of the Regulations makes provision for the application of Part IV of the Act to borrowing by authorities where the liability has been statutorily transferred to another authority.

Footnotes

[^f00001]: 1989 c. 42.

[^f00002]: 1972 c. 70.

[^f00003]: 1985 c. 68. Section 516 is amended by section 132(5) of the Local Government and Housing Act 1989.

[^f00004]: 1988 c. 40.

[^f00005]: 1988 c. 50.

[^f00006]: 1981 c. 64.

[^f00007]: 1980 c. 65.

[^f00008]: 1972 c. 11.

[^f00009]: 1948 c. 5. Part of subsection (3) of section 3 was repealed by Part I of Schedule 10 to the Police Act 1964 (c. 48) and subsection (4) was repealed by Part XIII of Schedule I to the Statute Law (Repeals) Act 1986 (c. 12).

[^f00010]: Part of subsection (1)(a) of section 31 was repealed by Schedule 30 to the Local Government Act 1972 and subsection (1)(c) was inserted by paragraph 1(7) of Schedule 11 to the Local Government Act 1985 (c. 51).

[^f00011]: 1973 c. 62.

[^f00012]: 1977 c. 42. Section 63(7) was amended by section 121(3) of, and paragraph 5 of Part I of Schedule 14 to, the Housing Act 1988.

[^f00013]: 1979 c. 55. Subsection (6) of section 59 was amended by section 12(10) of the Local Government Act 1985 and section 59 was further amended by section 189 of the Local Government and Housing Act 1989.

[^f00014]: 1954 c. 56.

[^f00015]: Section 522 is repealed by Part II of Schedule 12 to the Act subject to the savings contained in the Local Government and Housing Act (Commencement No. 5 and Transitional Provisions) Order 1990 (S.I. 1990/431).

[^f00016]: Section 245 of the 1985 Act is amended by section 98(5).

[^f00017]: Section 259 of the 1985 Act is amended by section 98(6).

[^f00018]: Section 312 is repealed by Part II of Schedule 12 to the Act subject to the savings contained in the Local Government and Housing Act 1989 (Commencement No. 4) Order 1990 (S.I. 1990/191).

[^f00019]: Section 569 is amended by section 157(8) of the Local Government and Housing Act 1989.

[^f00020]: 1972 c. 70.

[^f00021]: 1973 c. 37.

[^f00022]: 1963 c. 33. Paragraph (a) and part of paragraph (b) of section 23(3) were repealed with savings by Schedule 17 to the Local Government Act 1985 (c. 51).

[^f00023]: 1981 c. 64.

[^f00024]: 1972 c. 70. Part of paragraph 1(b) of Schedule 13 was repealed by Schedule 17 to the Local Government Act 1985 (c. 51).

[^f00025]: 1985 c. 51.

[^f00026]: 1986 c. 31.

[^f00027]: 1985 c. 67.

[^f00028]: 1948 c. 5.

[^f00029]: 1985 c. 69.

[^f00030]: 1988 c. 50.

[^f00031]: Section 41 was repealed by Schedule 18 to the Housing Act 1988.

[^f00032]: 1974 c. 44. Section 29 was repealed by Schedule 1 to the Housing (Consequential Provisions) Act 1985 (c. 71).

[^f00033]: 1980 c. 65.

[^f00034]: 1924 c.xxxvii. Section 5 was repealed by section 40(1) of the City of London (Various Powers) Act 1960 (c.xxxvi).

[^f00035]: 1974 c. 40.

[^f00036]: 1970 c. 42.

[^f00037]: 1976 c. 57.

[^f00038]: 1944 c. 31. Section 41 of the Education Act 1944, which defines further education, is substituted by section 120 of the Education Reform Act 1988 (c. 40).

[^f00039]: 1985 c. 51.

[^f00040]: 1972 c. 70.

[^f00041]: 1963 c. 33.

[^f00042]: 1973 c. 37.