Localism Act 2011

CHAPTER 1 Council tax

72 Referendums relating to council tax increases

(1) In Part 1 of the Local Government Finance Act 1992 (council tax: England and Wales) after Chapter 4 insert the Chapter set out in Schedule 5.

(2) Schedule 6 (council tax referendums: further amendments) has effect.

73 References to proper accounting practices

In section 21(4) of the Local Government Act 2003 (enactments to which provisions about references to proper accounting practices apply)—

(a) at the end of paragraph (c) insert—

“(ca) the Local Government Finance Act 1992 (c. 14),”, and

(b) for the “and” at the end of paragraph (d) substitute—

“(da) the Greater London Authority Act 1999 (c. 29), and”.

74 Council tax calculations by billing authorities in England

Before section 32 of the Local Government Finance Act 1992 insert—

“31A Calculation of council tax requirement by authorities in England

(1) In relation to each financial year a billing authority in England must make the calculations required by this section.

(2) The authority must calculate the aggregate of—

(a) the expenditure which the authority estimates it will incur in the year in performing its functions and will charge to a revenue account, other than a BID Revenue Account, for the year in accordance with proper practices,

(b) such allowance as the authority estimates will be appropriate for contingencies in relation to amounts to be charged or credited to a revenue account for the year in accordance with proper practices,

(c) the financial reserves which the authority estimates it will be appropriate to raise in the year for meeting its estimated future expenditure,

(d) such financial reserves as are sufficient to meet so much of the amount estimated by the authority to be a revenue account deficit for any earlier financial year as has not already been provided for,

(e) any amounts which it estimates will be transferred in the year from its general fund to its collection fund in accordance with section 97(4) of the 1988 Act, and

(f) any amounts which it estimates will be transferred from its general fund to its collection fund pursuant to a direction under section 98(5) of the 1988 Act and charged to a revenue account for the year.

(3) The authority must calculate the aggregate of—

(a) the income which it estimates will accrue to it in the year and which it will credit to a revenue account, other than a BID Revenue Account, for the year in accordance with proper practices,

(b) any amounts which it estimates will be transferred in the year from its collection fund to its general fund in accordance with section 97(3) of the 1988 Act,

(c) any amounts which it estimates will be transferred from its collection fund to its general fund pursuant to a direction under section 98(4) of the 1988 Act and will be credited to a revenue account for the year, and

(d) the amount of the financial reserves which the authority estimates it will use in order to provide for the items mentioned in subsection (2)(a), (b), (e) and (f) above.

(4) If the aggregate calculated under subsection (2) above exceeds that calculated under subsection (3) above, the authority must calculate the amount equal to the difference; and the amount so calculated is to be its council tax requirement for the year.

(5) In making the calculation under subsection (2) above the authority must ignore payments which must be met from its collection fund under section 90(2) of the 1988 Act or from a trust fund.

(6) In estimating under subsection (2)(a) above the authority must take into account—

(a) the amount of any expenditure which it estimates it will incur in the year in making any repayments of grants or other sums paid to it by the Secretary of State, and

(b) the amount of any precept issued to it for the year by a local precepting authority and the amount of any levy or special levy issued to it for the year.

(7) But (except as provided by regulations under section 41 below or regulations under section 74 or 75 of the 1988 Act) the authority must not anticipate a precept, levy or special levy not issued.

(8) For the purposes of subsection (2)(c) above an authority’s estimated future expenditure is—

(a) that which the authority estimates it will incur in the financial year following the year in question, will charge to a revenue account for the year in accordance with proper practices and will have to defray in the year before the following sums are sufficiently available—

(i) sums which will be payable for the year into its general fund and in respect of which amounts will be credited to a revenue account for the year in accordance with proper practices, and

(ii) sums which will be transferred as regards the year from its collection fund to its general fund, and

(b) that which the authority estimates it will incur in the financial year referred to in paragraph (a) above or any subsequent financial year in performing its functions and which will be charged to a revenue account for that or any other year in accordance with proper practices.

(9) In making the calculation under subsection (3) above the authority must ignore—

(a) payments which must be made into its collection fund under section 90(1) of the 1988 Act or to a trust fund, and

(b) subject to paragraphs (b) and (c) of subsection (3) above, sums which have been or are to be transferred from its collection fund to its general fund.

(10) The Secretary of State may by regulations do either or both of the following—

(a) alter the constituents of any calculation to be made under subsection (2) or (3) above (whether by adding, deleting or amending items);

(b) alter the rules governing the making of any calculation under subsection (2) or (3) above (whether by deleting or amending subsections (5) to (9) above, or any of them, or by adding other provisions, or by a combination of those methods).

(11) Calculations to be made in relation to a particular financial year under this section must be made before 11th March in the preceding financial year, but they are not invalid merely because they are made on or after that date.

(12) This section is subject to section 52ZS below (which requires a direction to a billing authority that the referendum provisions in Chapter 4ZA are not to apply to the authority for a financial year to state the amount of the authority’s council tax requirement for the year).

(13) In this section “BID Revenue Account” has the same meaning as in Part 4 of the Local Government Act 2003.

31B Calculation of basic amount of tax by authorities in England

(1) In relation to each financial year a billing authority in England must calculate the basic amount of its council tax by applying the formula—

where—

• R is the amount calculated (or last calculated) by the authority under section 31A(4) above as its council tax requirement for the year;

• T is the amount which is calculated by the authority as its council tax base for the year and, where one or more major precepting authorities have power to issue precepts to it, is notified by it to those authorities (“the major precepting authorities concerned”) within the prescribed period.

(2) Where the aggregate calculated (or last calculated) by the authority for the year under subsection (2) of section 31A above does not exceed that so calculated under subsection (3) of that section, the amount for item R in subsection (1) above is to be nil.

(3) The Secretary of State must make regulations containing rules for making for any year the calculation required by item T in subsection (1) above; and a billing authority must make the calculation for any year in accordance with the rules for the time being effective (as regards the year) under the regulations.

(4) Regulations prescribing a period for the purposes of item T in subsection (1) above may provide that, in any case where a billing authority fails to notify its calculation to the major precepting authorities concerned within that period, that item must be determined in the prescribed manner by such authority or authorities as may be prescribed.

(5) The Secretary of State may by regulations do either or both of the following—

(a) alter the constituents of any calculation to be made under subsection (1) above (whether by adding, deleting or amending items);

(b) provide for rules governing the making of any calculation under that subsection (whether by adding provisions to, or deleting or amending provisions of, this section, or by a combination of those methods).”

75 Council tax calculations by major precepting authorities in England

Before section 43 of the Local Government Finance Act 1992 insert—

“42A Calculation of council tax requirement by authorities in England

(1) In relation to each financial year a major precepting authority in England must make the calculations required by this section.

(2) The authority must calculate the aggregate of—

(a) the expenditure the authority estimates it will incur in the year in performing its functions and will charge to a revenue account for the year in accordance with proper practices,

(b) such allowance as the authority estimates will be appropriate for contingencies in relation to amounts to be charged or credited to a revenue account for the year in accordance with proper practices,

(c) the financial reserves which the authority estimates it will be appropriate to raise in the year for meeting its estimated future expenditure, and

(d) such financial reserves as are sufficient to meet so much of the amount estimated by the authority to be a revenue account deficit for any earlier financial year as has not already been provided for.

(3) The authority must calculate the aggregate of—

(a) the income which it estimates will accrue to it in the year and which it will credit to a revenue account for the year in accordance with proper practices, other than income which it estimates will accrue to it in respect of any precept issued by it, and

(b) the amount of the financial reserves which the authority estimates that it will use in order to provide for the items mentioned in paragraphs (a) and (b) of subsection (2) above.

(4) If the aggregate calculated under subsection (2) above exceeds that calculated under subsection (3) above, the authority must calculate the amount equal to the difference; and the amount so calculated is to be its council tax requirement for the year.

(5) In making the calculation under subsection (2) above the authority must ignore payments which must be met from a trust fund.

(6) In estimating under subsection (2)(a) above an authority must take into account—

(a) the amount of any expenditure which it estimates it will incur in the year in making any repayments of grants or other sums paid to it by the Secretary of State, and

(b) in the case of an authority which is a county council, the amount of any levy issued to it for the year.

(7) But (except as provided by regulations under section 74 of the 1988 Act) the authority must not anticipate a levy not issued.

(8) For the purposes of subsection (2)(c) above an authority’s estimated future expenditure is—

(a) that which the authority estimates it will incur in the financial year following the year in question, will charge to a revenue account for the year in accordance with proper practices and will have to defray in the year before the following sums are sufficiently available—

(i) sums which will be payable to it for the year, and

(ii) sums in respect of which amounts will be credited to a revenue account for the year in accordance with proper practices, and

(b) that which the authority estimates it will incur in the financial year referred to in paragraph (a) above or any subsequent financial year in performing its functions and which will be charged to a revenue account for that or any other year in accordance with proper practices.

(9) In making the calculation under subsection (3) above the authority must ignore payments which must be made into a trust fund.

(10) In estimating under subsection (3)(a) above the authority must take into account the sums which the authority estimates will be paid to it in the year by billing authorities in accordance with regulations under section 99(3) of the 1988 Act.

(11) The Secretary of State may by regulations do one or both of the following—

(a) alter the constituents of any calculation to be made under subsection (2) or (3) above (whether by adding, deleting or amending items);

(b) alter the rules governing the making of any calculation under subsection (2) or (3) above (whether by deleting or amending subsections (5) to (10) above, or any of them, or by adding other provisions, or by a combination of those methods).

(12) This section is subject to section 52ZT below (which requires a direction to a major precepting authority that the referendum provisions in Chapter 4ZA are not to apply to the authority for a financial year to state the amount of the authority’s council tax requirement for the year).

42B Calculation of basic amount of tax by authorities in England

(1) In relation to each financial year a major precepting authority in England must calculate the basic amount of its council tax by applying the formula—

where—

• R is the amount calculated (or last calculated) by the authority under section 42A(4) above as its council tax requirement for the year;

• T is the aggregate of the amounts which are calculated by the billing authorities to which the authority issues precepts (“the billing authorities concerned”) as their council tax bases for the year for their areas, or (as the case may require) for the parts of their areas falling within the authority’s area, and are notified by them to the authority within the prescribed period.

(2) Where the aggregate calculated (or last calculated) by the authority for the year under subsection (2) of section 42A above does not exceed that so calculated under subsection (3) of that section, the amount for item R in subsection (1) above is to be nil.

(3) The Secretary of State must make regulations containing rules for making for any year the calculation required by item T in subsection (1) above; and the billing authorities concerned must make the calculations for any year in accordance with the rules for the time being effective (as regards the year) under the regulations.

(4) Regulations prescribing a period for the purposes of item T in subsection (1) above may provide that, in any case where a billing authority fails to notify its calculation to the precepting authority concerned within that period, that item must be determined in the prescribed manner by such authority or authorities as may be prescribed.

(5) The Secretary of State may by regulations do either or both of the following—

(a) alter the constituents of any calculation to be made under subsection (1) above (whether by adding, deleting or amending items);

(b) provide for rules governing the making of any calculation under that subsection (whether by adding provisions to, or deleting or amending provisions of, this section, or by a combination of those methods).”

76 Calculation of council tax requirement by the Greater London Authority

(1) Section 85 of the Greater London Authority Act 1999 (calculation of component and consolidated budget requirements) is amended as follows.

(2) In the section heading for “budget” substitute “council tax”.

(3) In subsection (1) for “43” substitute “42A”.

(4) In subsection (4)—

(a) in paragraph (a) for the words from “, other than” to “the 1988 Act” substitute “in accordance with proper practices”, and

(b) in paragraph (b)—

(i) for “expenditure to be charged” substitute “amounts to be charged or credited”, and

(ii) after “for the year” insert “in accordance with proper practices”.

(5) In subsection (5) for paragraph (a) substitute—

“(a) the income which the Authority estimates will accrue to or for the body in the year and which will be credited to a revenue account for the year in accordance with proper practices, other than income which the Authority estimates will accrue in respect of any precept issued by it;”.

(6) In subsection (6)(b) for “budget” substitute “council tax”.

(7) In subsection (7) for “budget” substitute “council tax”.

(8) In subsection (8) for “budget” in both places substitute “council tax”.

(9) Omit subsection (9).

(10) Section 86 of that Act (provisions supplemental to section 85) is amended as follows.

(11) After subsection (1) insert—

“(1A) In making any calculation under subsection (4) of section 85 above the Authority shall ignore payments which must be met from a trust fund.

(1B) In estimating under subsection (4)(a) of section 85 above—

(a) in the case of any functional body, the Authority shall take into account the amount of any expenditure which it estimates will be incurred in the year in respect of the body under section 43(1) of the Local Government Act 2003 or in paying any BID levy for which the body is liable, and

(b) in the case of the Mayor, the Authority shall take into account the amount of any expenditure which it estimates will be incurred in the year in respect of the Authority under section 43(1) of the Local Government Act 2003 or in paying any BID levy for which the Authority is liable.”

(12) After subsection (2A) insert—

“(2B) In estimating under subsection (4)(a) of section 85 above in the case of the Mayor, the Authority shall take into account the amount of any expenditure which the Authority estimates it will incur in the year in pursuance of regulations under section 99(3) of the Local Government Finance Act 1988.”

(13) After subsection (4) insert—

“(4A) In making any calculation under subsection (5) of section 85 above, the Authority must ignore payments which must be made into a trust fund.

(4B) In estimating under subsection (5)(a) of section 85 above in the case of the Mayor, the Authority shall take into account—

(a) the amounts which the Authority estimates will be paid to it in the year by billing authorities in accordance with regulations under section 99(3) of the Local Government Finance Act 1988, and

(b) the amount of any expenditure which it estimates will be incurred in the year by the Authority in making any repayments of grants or other sums paid to the Authority by the Secretary of State.

(4C) In estimating under subsection (5)(a) of section 85 above in the case of a functional body, the Authority shall take into account the amount of any expenditure which it estimates will be incurred in the year in making by or in respect of the body any repayments of grants or other sums paid to or for the body by the Secretary of State.

(4D) In estimating under subsection (5)(a) of section 85 above in the case of the Mayor’s Office for Policing and Crime, the Authority must use such amounts as may be prescribed by the Secretary of State as the sums that are payable to the Mayor’s Office for Policing and Crime in respect of the following items—

(a) redistributed non-domestic rates,

(b) revenue support grant,

(c) general GLA grant, and

(d) additional grant.

(4E) In subsection (4D) above, “prescribed” means specified in, or determined in accordance with, either—

(a) the appropriate report or determination, or

(b) regulations made by the Secretary of State,

as the Secretary of State may determine in the case of any particular item and any particular financial year or years.

(4F) In subsection (4E) above, “the appropriate report or determination” means—

(a) in the case of an item specified in paragraph (a) or (b) of subsection (4D) above, the local government finance report for the financial year in question,

(b) in the case of the item specified in paragraph (c) of that subsection, the determination under section 100 below for the financial year in question, and

(c) in the case of the item specified in paragraph (d) of that subsection, the report under section 85 of the Local Government Finance Act 1988 relating to that item.”

(14) In subsection (5)(b) for “(4)” substitute “(4F)”.

(15) Omit subsection (6).

77 Calculation of basic amount of tax by the Greater London Authority

(1) Section 88 of the Greater London Authority Act 1999 (calculation of basic amount of tax) is amended as follows.

(2) In subsection (1) for “44” substitute “42B”.

(3) For subsection (2) substitute—

“(2) In relation to each financial year the Authority shall calculate the basic amount of its council tax by applying the formula—

where—

• R is the amount calculated (or last calculated) by the Authority under section 85(8) above as its consolidated council tax requirement for the year;

• A is the amount of the special item;

• T is the aggregate of the amounts which are calculated by the billing authorities to which the Authority issues precepts (“the billing authorities concerned”) as their council tax bases for the year for their areas and are notified by them to the Authority within the prescribed period.”

(4) Omit subsections (3) to (5).

(5) In subsection (8) for paragraph (b) substitute—

“(b) provide for rules governing the making of any calculation under that subsection (whether by adding provisions to, or deleting or amending provisions of, this section, or by a combination of those methods).”

(6) Section 89 of that Act (additional calculations: special item for part of Greater London) is amended as follows.

(7) For subsection (4) substitute—

“(4) For dwellings in any part of Greater London to which the special item relates, the amount in respect of the special item is given by the formula—

where—

• S2 is the amount of the special item;

• TP2 is the aggregate of the amounts which are calculated by the billing authorities to which the Authority has power to issue precepts as respects the special item (“the billing authorities concerned”) as their council tax bases for the year for their areas and are notified by them to the Authority within the prescribed period.”

(8) Omit subsections (5) and (6).

(9) In subsection (9) for paragraph (b) substitute—

“(b) provide for rules governing the making of any calculation under or by virtue of that subsection (whether by adding provisions to, or deleting or amending provisions of, this section, or by a combination of those methods).”

78 Council tax calculation by local precepting authorities in England

Before section 50 of the Local Government Finance Act 1992 insert—

“49A Calculation of council tax requirement by authorities in England

(1) In relation to each financial year a local precepting authority in England must make the calculations required by this section.

(2) The authority must calculate the aggregate of—

(a) the expenditure the authority estimates it will incur in the year in performing its functions and will charge to a revenue account for the year in accordance with proper practices,

(b) such allowance as the authority estimates will be appropriate for contingencies in relation to amounts to be charged or credited to a revenue account for the year in accordance with proper practices,

(c) the financial reserves which the authority estimates it will be appropriate to raise in the year for meeting its estimated future expenditure, and

(d) such financial reserves as are sufficient to meet so much of the amount estimated by the authority to be a revenue account deficit for any earlier financial year as has not already been provided for.

(3) The authority must calculate the aggregate of—

(a) the income which it estimates will accrue to it in the year and which it will credit to a revenue account for the year in accordance with proper practices, other than income which it estimates will accrue to it in respect of any precept issued by it, and

(b) the amount of the financial reserves which the authority estimates that it will use in order to provide for the items mentioned in paragraphs (a) and (b) of subsection (2) above.

(4) If the aggregate calculated under subsection (2) above exceeds that calculated under subsection (3) above, the authority must calculate the amount equal to the difference; and the amount so calculated is to be its council tax requirement for the year.

(5) For the purposes of subsection (2)(c) above an authority’s estimated future expenditure is—

(a) that which the authority estimates it will incur in the financial year following the year in question, will charge to a revenue account for the year in accordance with proper practices and will have to defray in the year before the following sums are sufficiently available, namely, sums—

(i) which will be payable to it for the year, and

(ii) in respect of which amounts will be credited to a revenue account for the year in accordance with proper practices, and

(b) that which the authority estimates it will incur in the financial year referred to in paragraph (a) above or any subsequent financial year in performing its functions and which will be charged to a revenue account for that or any other year in accordance with proper practices.

(6) This section is subject to section 52ZV below (which requires a direction to a local precepting authority that the referendum provisions in Chapter 4ZA are not to apply to the authority for a financial year to state the amount of the authority’s council tax requirement for the year).

49B Substitute calculations

(1) A local precepting authority which has made calculations in accordance with section 49A above in relation to a financial year (originally or by way of substitute) may make calculations in substitution in relation to the year in accordance with that section.

(2) None of the substitute calculations are to have any effect if the amount calculated under section 49A(4) above would exceed that so calculated in the previous calculations.

(3) Subsection (2) above does not apply if the previous calculation under subsection (4) of section 49A above has been quashed because of a failure to comply with that section in making the calculation.”

79 Council tax: minor and consequential amendments

Schedule 7 (council tax: minor and consequential amendments) has effect.

80 Council tax revaluations in Wales

(1) The Local Government Finance Act 1992 is amended as follows.

(2) In section 22B(3) (new Welsh valuation lists to be prepared on earlier of tenth anniversary of compilation of previous list and 1 April in such year as may be specified by the Welsh Ministers) for the words from “the earlier” to the end substitute “1 April in each year specified by order made by the Welsh Ministers.”

(3) In section 22B (compilation and maintenance of new valuation lists) after subsection (11) insert—

“(12) No order under subsection (3) may be made unless a draft of the statutory instrument containing it has been laid before, and approved by a resolution of, the National Assembly for Wales.”

(4) In section 113(1) and (2) (orders and regulations may make differential and incidental etc provision) for “National Assembly for Wales” substitute “Welsh Ministers”.

(5) In section 113(2) for “, they or it thinks” substitute “or they think”.

(6) In section 113(4) (power of National Assembly for Wales to make orders or regulations is exercisable by statutory instrument) for “National Assembly for Wales” substitute “Welsh Ministers”.