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Session 2002 - 03
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Local Government Bill


Local Government Bill
Part 1 — Capital finance etc and accounts
Chapter 1 — Capital finance etc

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Investment

 12    Power to invest

A local authority may invest—

           (a)           for any purpose relevant to its functions under any enactment, or

           (b)           for the purposes of the prudent management of its financial affairs.

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Miscellaneous

 13    Security for money borrowed etc

     (1)    Except as provided by subsection (3), a local authority may not mortgage or

charge any of its property as security for money which it has borrowed or

which it otherwise owes.

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     (2)    Security given in breach of subsection (1) shall be unenforceable.

     (3)    All money borrowed by a local authority (whether before or after the coming

into force of this section), together with any interest on the money borrowed,

shall be charged indifferently on all the revenues of the authority.

     (4)    All securities created by a local authority shall rank equally without any

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priority.

     (5)    The High Court may appoint a receiver on application by a person entitled to

principal or interest due in respect of any borrowing by a local authority if the

amount due remains unpaid for a period of two months after demand in

writing.

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     (6)    The High Court may appoint a receiver under subsection (5) on such terms,

and confer on him such powers, as it thinks fit.

     (7)    The High Court may confer on a receiver appointed under subsection (5) any

powers which the local authority has in relation to—

           (a)           collecting, receiving or recovering the revenues of the local authority,

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           (b)           issuing levies or precepts, or

           (c)           setting, collecting or recovering council tax.

     (8)    No application under subsection (5) may be made unless the sum due in

respect of the borrowing concerned amounts to not less than £10,000.

     (9)    The Secretary of State may by order substitute a different sum for the one for

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the time being specified in subsection (8).

 14    Information

A local authority shall supply the Secretary of State with such information

relating to any of the matters dealt with in this Chapter, and at such time, as he

may request.

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Local Government Bill
Part 1 — Capital finance etc and accounts
Chapter 1 — Capital finance etc

    7

 

Supplementary

 15    Guidance

In carrying out its functions under this Chapter, a local authority shall have

regard—

           (a)           to such guidance as the Secretary of State may issue, and

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           (b)           to such other guidance as the Secretary of State may by regulations

specify for the purposes of this provision.

 16    “Capital expenditure”

     (1)    Subject to subsection (2), references in this Chapter to capital expenditure, in

relation to a local authority, are to expenditure of the authority which falls to

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be capitalised in accordance with proper practices.

     (2)    The Secretary of State may—

           (a)           by regulations provide that expenditure of local authorities shall be

treated for the purposes of this Chapter as being, or as not being, capital

expenditure;

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           (b)           by direction provide that expenditure of a particular local authority

shall be treated for the purposes of this Chapter as being, or as not

being, capital expenditure.

 17     External funds

     (1)    For the purposes of this Chapter—

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           (a)           borrowing of money by a local authority for the purposes of an external

fund shall be treated as not being borrowing by the authority;

           (b)           the temporary use by a local authority of money forming part of an

external fund, if not for a purpose of the fund, shall be treated as

borrowing by the authority;

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           (c)           entry into a credit arrangement by a local authority for the purposes of

an external fund shall be treated as not being entry into a credit

arrangement by the authority;

           (d)           a disposal by a local authority of—

                  (i)                 an interest in an asset which, at the time of the disposal, is an

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asset of an external fund, or

                  (ii)                an investment held for the purposes of such a fund,

                         shall be treated as not being a disposal by the authority;

           (e)           the making of an investment by a local authority for the purposes of an

external fund shall be treated as not being the making of an investment

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by the authority;

           (f)           expenditure incurred by a local authority in respect of payments out of

an external fund shall be treated as not being expenditure of the

authority.

     (2)    In this section, references to an external fund, in relation to a local authority,

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are to—

           (a)           a superannuation fund which the authority is required to keep by

virtue of the Superannuation Act 1972 (c. 11), or

           (b)           a trust fund of which the authority is a trustee.

 

 

Local Government Bill
Part 1 — Capital finance etc and accounts
Chapter 1 — Capital finance etc

    8

 

 18    Local authority companies etc

     (1)    The Secretary of State may for the purposes of this Chapter by regulations

make provision for things done by or to a body mentioned in subsection (2) to

be treated in such cases and to such extent as the regulations may provide as

done by or to a local authority specified in, or determined in accordance with,

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the regulations.

     (2)    Those bodies are—

           (a)           a Passenger Transport Executive,

           (b)           a company which, in accordance with Part 5 of the Local Government

and Housing Act 1989 (c. 42) (companies in which local authorities

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have interests), is under the control, or for the time being subject to the

influence, of a local authority or a Passenger Transport Executive, and

           (c)           a trust to which the provisions of section 69 of that Act (companies

subject to local authority influence) are applicable because of an order

under section 72 of that Act (trusts influenced by local authorities).

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     (3)    A local authority to which regulations under this section apply and any body

or bodies falling within subsection (2)(a) or (b) with which the regulations link

the authority are referred to in this section as the members of a local authority

group.

     (4)    Regulations under this section may include—

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           (a)           provision for the application of any of the provisions of this Chapter to

members of a local authority group subject to such modifications as the

regulations may specify;

           (b)           provision as to the way in which—

                  (i)                 dealings between members of a local authority group, or

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                  (ii)                changes in the capitalisation or capital structure of a company

in a local authority group,

                         are to be brought into account for the purposes of this Chapter.

 19    Application to parish and community councils

     (1)    In sections 2(3) and (4), 6, 9 to 13, 15, 16, 17(1)(a), (b) and (d) to (f) and (2) and

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18, references to a local authority include a parish council, a community

council and charter trustees.

     (2)    Schedule 1 (which makes provision about capital finance in relation to parish

and community councils and charter trustees) has effect.

     (3)    The appropriate person may by regulations—

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           (a)           apply any of the other provisions of this Chapter to parish or

community councils or charter trustees, or parish or community

councils or charter trustees of any description, with or without

modifications, and

           (b)           make any corresponding disapplication of any of the provisions of

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Schedule 1.

 20    Directions

     (1)    Directions under this Chapter shall be in writing.

 

 

Local Government Bill
Part 1 — Capital finance etc and accounts
Chapter 2 — Accounts

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     (2)    Directions under this Chapter may be expressed to have effect in specified

circumstances or subject to specified conditions.

     (3)    Any power to give a direction under this Chapter includes power to give a

direction varying or revoking a previous direction given in exercise of the

power.

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Chapter 2

Accounts

 21    Accounting practices

     (1)    The Secretary of State may by regulations make provision about the accounting

practices to be followed by a local authority, in particular with respect to the

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charging of expenditure to a revenue account.

     (2)    In any enactment to which this subsection applies, reference to proper

practices, in relation to accounts of a local authority, is to those accounting

practices—

           (a)           which the authority is required to follow by virtue of any enactment, or

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           (b)           which are contained in a code of practice or other document which is

identified for the purposes of this provision by regulations made by the

Secretary of State.

     (3)    In the event of conflict between practices falling within paragraph (a) of

subsection (2) and practices falling within paragraph (b) of that subsection,

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only those falling within paragraph (a) are to be regarded as proper practices.

     (4)    Subsections (2) and (3) apply to any enactment contained in—

           (a)           this Act,

           (b)           any Act passed after or in the same Session as this Act,

           (c)           the Local Government and Housing Act 1989 (c. 42),

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           (d)           the Audit Commission Act 1998 (c. 18), and

           (e)           subordinate legislation (within the meaning of the Interpretation Act

1978 (c. 30)) whenever made.

     (5)    In this section, “local authority” includes a parish council, a community council

and charter trustees.

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 22    “Revenue account”

     (1)    References to a revenue account, in relation to a local authority, are to one of

the following accounts for a financial year of the authority—

           (a)           a revenue account which the authority is required to keep by virtue of

any enactment;

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           (b)           a revenue account which the authority is required to keep in order to

comply with proper practices;

           (c)           any other revenue account which the authority decides to keep in

accordance with proper practices.

     (2)    This section has effect for the purposes of—

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           (a)           the Local Government and Housing Act 1989,

           (b)           any enactment passed after or in the same Session as that Act, and

 

 

Local Government Bill
Part 1 — Capital finance etc and accounts
Chapter 3 — General

    10

 

           (c)           any earlier enactment amended by that Act or an enactment falling

within paragraph (b).

     (3)    In this section, “local authority” includes a parish council, a community council

and charter trustees.

Chapter 3

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General

 23    “Local authority”

     (1)    The following are local authorities for the purposes of this Part—

           (a)           a county council;

           (b)           a county borough council;

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           (c)           a district council;

           (d)           the Greater London Authority;

           (e)           a functional body, within the meaning of the Greater London Authority

Act 1999 (c. 29);

           (f)           a London borough council;

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           (g)           the Common Council of the City of London, in its capacity as a local

authority, police authority or port health authority;

           (h)           the Council of the Isles of Scilly;

           (i)           the Greater London Magistrates’ Courts Authority;

           (j)           an authority established under section 10 of the Local Government Act

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1985 (c. 51) (waste disposal authorities);

           (k)           a joint authority established by Part 4 of that Act (fire services, civil

defence and transport);

           (l)           a joint planning board constituted for an area in Wales outside a

National Park by an order under section 2(1B) of the Town and Country

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Planning Act 1990 (c. 8);

           (m)           a fire authority constituted by a combination scheme;

           (n)           a police authority established under section 3 of the Police Act 1996

(c. 16);

           (o)           any other body specified for the purposes of this subsection by

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regulations under subsection (2).

     (2)    The Secretary of State may by regulations specify for the purposes of

subsection (1) any body which is (or any class of bodies each of which is)—

           (a)           a levying body, within the meaning of section 74 of the Local

Government Finance Act 1988 (c. 41),

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           (b)           a body to which section 75 of that Act applies (bodies with power to

issue special levies),

           (c)           a body to which section 118 of that Act applies (other bodies with

levying powers),

           (d)           a local precepting authority as defined in section 69 of the Local

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Government Finance Act 1992 (c. 14).

     (3)    Regulations under subsection (2) may provide for this Part to have effect, in

relation to a body specified under that subsection, subject to exceptions or

modifications.

 

 

 
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