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Local Government Bill


Local Government Bill
Part 2 — Financial administration

    11

 

 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

5

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 (c. 14) (billing or major precepting authority) or section 85 of the

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

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is 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).

     (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.

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

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

the appropriate person.

 

 

Local Government Bill
Part 2 — Financial administration

    12

 

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

descriptions of financial reserve.

 27    Budget calculations: report on inadequacy of controlled reserve

     (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

5

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

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

authority on—

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           (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

for the financial year under consideration.

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

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           (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

the financial year concerned is less than the minimum amount

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

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     (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.

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

 28    Budget monitoring: general

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     (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

from time to time during the year.

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

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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.

     (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

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

deal with the situation.

     (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

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requirement) and—

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

calculations under review, or

 

 

Local Government Bill
Part 2 — Financial administration

    13

 

           (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

duty under subsection (1) applies.

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 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

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

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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

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

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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—

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

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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.

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

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           (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

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

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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

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

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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.

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

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London Authority Act 1999.

 30    Authorisation of agreements during the prohibition period

     (1)    In section 115 of the Local Government Finance Act 1988 (c. 41) (which sets out

the consequences for a relevant authority of the receipt of a report made by its

chief finance officer under section 114(3)), in subsection (6) (which prevents an

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Local Government Bill
Part 3 — Grants etc
Chapter 1 — Expenditure grant

    14

 

authority that has received such a report from entering into certain agreements

during the prohibition period), at the end there is inserted “unless the chief

finance officer of the authority authorises it to do so”.

     (2)    After that subsection there is inserted—

           “(6A)              The chief finance officer may only give authority for the purposes of

5

subsection (6) above if he considers that the agreement concerned is

likely to—

                  (a)                 prevent the situation that led him to make the report from

getting worse,

                  (b)                 improve the situation, or

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                  (c)                 prevent the situation from recurring.

           (6B)              Authority for the purposes of subsection (6) above shall—

                  (a)                 be in writing,

                  (b)                 identify the ground on which it is given, and

                  (c)                 explain the chief finance officer’s reasons for thinking that the

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ground applies.”

     (3)    In subsection (14) of that section (which defines certain terms used in that

section), after the definition of “the Assembly”, there is inserted—

                    ““chief finance officer” has the same meaning as in section 114;”.

Part 3

20

Grants etc

Chapter 1

Expenditure grant

 31    Power to pay grant

     (1)    A Minister of the Crown may pay a grant to a local authority in England

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towards expenditure incurred or to be incurred by it.

     (2)           A Minister of the Crown, or the National Assembly for Wales, may pay a grant

to a local authority in Wales towards expenditure incurred or to be incurred by

it.

     (3)    The amount of a grant under this section and the manner of its payment are to

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be such as the person paying it may determine.

     (4)    A grant under this section may be paid on such conditions as the person paying

it may determine.

     (5)    Conditions under subsection (4) may, in particular, include—

           (a)           provision as to the use of the grant;

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           (b)           provision as to circumstances in which the whole or part of the grant

must be repaid.

     (6)    In the case of a grant to a local authority in England, the powers under this

section are exercisable with the consent of the Treasury.

 

 

 
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