Local Government Finance Act 1987

Rate support grant: future years

1 Rate fund revenue accounts.

(1) Every local authority shall keep for each year an account, to be known as—

(a) a general rate fund revenue account, in the case of a district council or London borough council,

(b) a county fund revenue account, in the case of a county council,

(c) a general fund revenue account, in the case of a joint authority or the Inner London Education Authority, or

(d) a revenue account in respect of the general rate, in the case of the Common Council or the Council of the Isles of Scilly.

(2) In this Part of this Act “rate fund revenue account” means an account kept by virtue of subsection (1) above.

(3) The items of account debited to the rate fund revenue account of an authority shall include all items of defined revenue expenditure, and the items of account credited to the rate fund revenue account of an authority shall include all items of defined revenue income; and the proper practices to be observed in compiling accounts shall have effect accordingly.

(4) For the purposes of subsection (3) above defined revenue expenditure is all expenditure which is (or is to be) met by the authority concerned and which is of a revenue nature, other than—

(a) expenditure which by virtue of any enactment, or the proper practices to be observed in compiling accounts, must be debited to an account mentioned in subsection (6) below, or

(b) expenditure which in accordance with those practices can be, and is, debited to an account so mentioned.

(5) For the purposes of subsection (3) above defined revenue income is all income which is (or is to be) received by the authority concerned and which is of a revenue nature, other than—

(a) income which by virtue of any enactment, or the proper practices to be observed in compiling accounts, must be credited to an account mentioned in subsection (6) below, or

(b) income which in accordance with those practices can be, and is, credited to an account so mentioned.

(6) The accounts are the following accounts kept by the authority concerned—

(a) any account listed in Schedule 1 to this Act, and

(b) any other account specified in respect of the year concerned by the Secretary of State.

(7) Where the authority concerned is the Common Council expenditure does not fall within subsection (4) above unless (in addition to meeting the provisions of that subsection) it falls to be defrayed out of the general rate or out of income falling to be credited in aid of the general rate.

(8) Where the authority concerned is the Common Council income does not fall within subsection (5) above unless (in addition to meeting the provisions of that subsection) it is income from the general rate or income falling to be credited in aid of the general rate.

(9) This section shall have effect in relation to future years.

2 Rate fund revenue accounts: further provisions.

(1) The practices to be observed in deciding as regards a particular year the matters mentioned in subsection (2) below shall be the practices mentioned in subsection (3) below.

(2) The matters are—

(a) what expenditure or income is of a revenue nature for the purpose of debiting or crediting items of account to a rate fund revenue account,

(b) which of the following items of account are to be debited or credited to a rate fund revenue account, namely, items which are not items of expenditure or income and items which are items of expenditure or income but are not of a revenue nature,

(c) whether a particular item of account is to be debited or credited to a rate fund revenue account for the year concerned or to such an account for some other year, and

(d) other matters in connection with the compilation of a rate fund revenue account.

(3) The practices are the proper practices applicable to accounts (by whatever name known) kept by local authorities for the year beginning in 1986 for the entry of items of the same kind as those falling to be entered in rate fund revenue accounts, but taking into account variations of practice occurring from time to time.

(4) The Secretary of State may specify in respect of any year kinds of expenditure or income which are to be regarded as of a revenue nature for the purpose of debiting or crediting items of account to a rate fund revenue account.

(5) Before making a specification under subsection (4) above the Secretary of State shall consider the practices mentioned in subsection (3) above, but such a specification may override those practices.

(6) Subsection (1) above shall have effect subject to section 1(3) above and to any specification under subsection (4) above.

3 Meaning of local authorities' expenditure.

(1) For the purposes of Part VI of the 1980 Act relevant expenditure of a local authority in relation to any future year is the aggregate of the debit items of account for the year—

(a) reduced by the aggregate of the credit items of account for the year, and

(b) adjusted by making such additions or subtractions (or both) as are specified in respect of the year concerned by the Secretary of State.

(2) For the purposes of subsection (1) above the debit items of account for a year are the items of account (whether of expenditure or otherwise but excluding excepted items) debited to the authority’s rate fund revenue account for the year.

(3) For the purposes of subsection (1) above the credit items of account for a year are the items of account (whether of income or otherwise but excluding excepted items) credited to the authority’s rate fund revenue account for the year.

(4) For the purposes of subsection (2) above the following are excepted items—

(a) items of account representing sums falling to be paid to another local authority, or the Receiver, by virtue of a precept or other instrument, and

(b) items of account representing expenditure under section 1(1) of the [1962 c. 12.] Education Act 1962 (awards for university and comparable courses).

(5) For the purposes of subsection (3) above the following are excepted items—

(a) items of account representing relevant grants to the authority, and

(b) items of account representing rate support grants to the authority.

(6) Subsection (1) above shall have effect subject to any enactment (whenever passed) having the effect that anything is, or is not, to be treated for the purposes of Part VI of the 1980 Act as relevant expenditure of a local authority in relation to the year concerned.

(7) For the purposes of Part VI of the 1980 Act the total expenditure of a local authority in relation to any future year is the expenditure which is for those purposes the authority’s relevant expenditure in relation to the year—

(a) reduced by the amount of any item of account which is credited to the authority’s rate fund revenue account for the year and represents a relevant grant to the authority, and

(b) adjusted by making such additions or subtractions (or both) as are specified in respect of the year concerned by the Secretary of State.

(8) The Secretary of State may specify in respect of the year concerned the manner in which, and the factors by reference to which, the amount of any addition or subtraction specified under subsection (1) or (7) above shall be calculated; and an addition or subtraction specified under subsection (1) or (7) above may or may not represent an item of account debited or credited to the authority’s rate fund revenue account for the year.

(9) In relation to any future year subsections (7) and (8) above shall have effect instead of the definition of “total expenditure” in section 56(8) of the 1980 Act.

(10) For the purposes of subsections (5) and (7) above relevant grants are grants mentioned in section 54(2)(a), (b) or (c) of the 1980 Act other than those mentioned in sub-paragraph (i), (ii) or (iii) of section 54(2)(a).