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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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 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.

Supplementary

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 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

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

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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

be capitalised in accordance with proper practices.

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     (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;

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

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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—

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

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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;

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

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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

asset of an external fund, or

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                  (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

by the authority;

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           (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.

 

 

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

    8

 

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

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.

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 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

 

 

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

    9

 

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

Schedule 1.

 20    Directions

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

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

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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.

Chapter 2

10

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

charging of expenditure to a revenue account.

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     (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

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

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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,

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

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     (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),

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

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           (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.

 22    “Revenue account”

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     (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;

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

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comply with proper practices;

 

 

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

    10

 

           (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—

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

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

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           (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

10

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),

 

 

Local Government Bill
Part 2 — Financial administration

    11

 

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

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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 24    Wales

In its application to Wales, this Part, except section 19 and Schedule 1, has effect

as if for any reference to the Secretary of State there were substituted a

reference to the National Assembly for Wales.

Part 2

10

Financial administration

 25    Budget calculations: report on robustness of estimates etc

     (1)    Where an authority to which section 32 or 43 of the Local Government Finance

Act 1992 (billing or major precepting authority) or section 85 of the Greater

London Authority Act 1999 (c. 29) (Greater London Authority) applies is

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making calculations in accordance with that section, the chief finance officer of

the authority must report to it on the following matters—

           (a)           the robustness of the estimates made for the purposes of the

calculations, and

           (b)           the adequacy of the proposed financial reserves.

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     (2)    An authority to which a report under this section is made shall have regard to

the report when making decisions about the calculations in connection with

which it is made.

     (3)    In this section, “chief finance officer”, in relation to an authority, means the

officer having responsibility for the administration of the authority’s financial

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affairs for the purposes of—

           (a)           section 151 of the Local Government Act 1972 (c. 70),

           (b)           section 73 of the Local Government Act 1985 (c. 51),

           (c)           section 112 of the Local Government Finance Act 1988 (c. 41),

           (d)           section 6 of the Local Government and Housing Act 1989 (c. 42), or

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           (e)           section 127(2) of the Greater London Authority Act 1999.

 26    Minimum reserves

     (1)    This section has effect in relation to the estimation of financial reserves for the

purpose of calculations in accordance with—

           (a)           section 32 of the Local Government Finance Act 1992 (calculation by

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billing authority of budget requirement for financial year),

           (b)           section 43 of that Act (corresponding provision for major precepting

authority), or

           (c)           section 85 of the Greater London Authority Act 1999 (calculation by

Greater London Authority of component and consolidated budget

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requirements for financial year).

 

 

Local Government Bill
Part 2 — Financial administration

    12

 

     (2)    In the case of a controlled reserve, it shall not be regarded as appropriate for

the balance of the reserve at the end of the financial year under consideration

to be less than the minimum amount determined in accordance with

regulations made by the appropriate person.

     (3)    In subsection (2), “controlled reserve” means a financial reserve of a

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description specified for the purposes of this section by regulations made by

the appropriate person.

     (4)    Different provision may be made under subsection (2) for different

descriptions of financial reserve.

 27    Budget calculations: report on inadequacy of controlled reserve

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     (1)    This section applies where an authority to which section 32 or 43 of the Local

Government Finance Act 1992 (c. 14) or section 85 of the Greater London

Authority Act 1999 (c. 29) applies is making calculations in accordance with

that section.

     (2)    If in relation to the previous financial year it appears to the chief finance officer

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that a controlled reserve is or is likely to be inadequate, he must report to the

authority on—

           (a)           the reasons for that situation, and

           (b)           the action, if any, which he considers it would be appropriate to take to

prevent such a situation arising in relation to the corresponding reserve

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for the financial year under consideration.

     (3)    For the purposes of subsection (2)—

           (a)           a controlled reserve is a financial reserve of a description specified by

regulations under section 26(3), and

           (b)           such a reserve is inadequate if the balance of the reserve at the end of

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the financial year concerned is less than the minimum amount

determined in accordance with regulations under section 26(2).

     (4)    An authority to which a report under this section is made shall have regard to

the report when making decisions about the calculations in connection with

which it is made.

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     (5)    In this section, “chief finance officer” has the same meaning as in section 25.

 28    Budget monitoring: general

     (1)    Where in relation to a financial year an authority to which section 32 or 43 of

the Local Government Finance Act 1992 (billing or major precepting authority)

applies has made the calculations required by that section, it must review them

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from time to time during the year.

     (2)    In carrying out a review under subsection (1), an authority must use the same

figures for financial reserves as those used in the calculations under review,

except in the case of financial reserves to meet a revenue account deficit from

an earlier financial year.

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     (3)    If as a result of carrying out a review under subsection (1) it appears to the

authority that carried out the review that there has been a deterioration in its

financial position, it must take such action, if any, as it considers necessary to

deal with the situation.

 

 

Local Government Bill
Part 2 — Financial administration

    13

 

     (4)    For the purposes of subsection (3), there is a deterioration in an authority’s

financial position if on the review an amount falls to be calculated under

section 32(4) or 43(4) of the Local Government Finance Act 1992 (c. 14) (budget

requirement) and—

           (a)           none fell to be calculated under that provision at the time of the

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calculations under review, or

           (b)           an amount did then fall to be calculated under that provision and the

amount then calculated is less than the amount calculated on the

review.

     (5)    Where substitute calculations have effect, it is those calculations to which the

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duty under subsection (1) applies.

 29    Budget monitoring: Greater London Authority

     (1)    Where in relation to a financial year the Greater London Authority has made

the calculations required by section 85(3) to (7) of the Greater London

Authority Act 1999 (c. 29) (calculation of component budget requirement for

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each constituent body), each of the bodies in respect of which the calculations

have been made must from time to time during the year review the calculations

relating to it.

     (2)    In carrying out a review under subsection (1), a body must use the same figures

for financial reserves as those used in the calculations under review, except in

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the case of financial reserves to meet a revenue account deficit from an earlier

financial year.

     (3)    If as a result of carrying out a review under subsection (1) it appears to the body

that carried out the review that there has been a deterioration in its financial

position, it must—

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           (a)           take such action, if any, as it considers necessary to deal with the

situation, and

           (b)           if it is a functional body, report the deterioration to—

                  (i)                 the Mayor of London, and

                  (ii)                the Chair of the London Assembly.

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     (4)    A report under subsection (3)(b) shall—

           (a)           include a statement of the reasons for the deterioration, and

           (b)           set out what action, if any, the body making the report proposes to take

to deal with the situation.

     (5)    For the purposes of subsection (3), there is a deterioration in a body’s financial

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position if on the review an amount falls to be calculated under section 85(6) of

the Greater London Authority Act 1999 (component budget requirement)

and—

           (a)           none fell to be calculated under that provision at the time of the

calculations under review, or

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           (b)           an amount did then fall to be calculated under that provision and the

amount then calculated is less than the amount calculated on the

review.

     (6)    Where substitute calculations have effect, it is those calculations to which the

duty under subsection (1) applies.

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     (7)    In this section, “functional body” has the same meaning as in the Greater

London Authority Act 1999.

 

 

 
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