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Local Government and Housing Act 1989

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This is the original version (as it was originally enacted).

43Borrowing powers

(1)Subject to the following provisions of this Part, as part of the proper management of their affairs, a local authority may borrow money for any purpose relevant to their functions under any enactment.

(2)Except with the approval of the Secretary of State given with the consent of the Treasury, a local authority may not borrow money in any manner other than—

(a)by overdraft or short term from the Bank of England or from a body or partnership which, at the time the borrowing is undertaken, is an authorised institution within the meaning of the [1987 c. 22.] Banking Act 1987; or

(b)from the National Debt Commissioners or from the Public Works Loan Commissioners; or

(c)by means of a loan instrument;

and in paragraph (a) above borrowing “short term” shall be construed in accordance with section 45(6) below.

(3)In the exercise of the powers conferred by paragraphs (a) to (c) of subsection (2) above, a local authority may not, without the consent of the Treasury, borrow from a lender outside the United Kingdom or otherwise than in sterling.

(4)Subject to any provision made by regulations under subsection (5) below, for the purposes of this Part, a loan instrument is any document which, directly or by reference to any other document,—

(a)contains an acknowledgment (by the borrower, the lender or both) that a loan has been made to the local authority concerned or that, in connection with the provision of funds to the authority, a payment or repayment is due from the authority; and

(b)states the dates on which the authority are to make payments or repayments; and

(c)states the amount of each of those payments or repayments or the method by which that amount is to be calculated; and

(d)specifies the means, if any, by which the rights or obligations under the instrument are transferable; and

(e)except in the case of an instrument which is transferable by delivery, specifies the name or description of the person to whom payments or repayments are due; and

(f)in the case of an instrument issued by two or more local authorities acting jointly, states what proportion of the payments or repayments due are the responsibility of each of the authorities concerned.

(5)With the consent of the Treasury, the Secretary of State may make regulations—

(a)regulating the terms of loan instruments and the manner of their issue, transfer or redemption;

(b)restricting the issue of instruments which are transferable by delivery;

(c)regulating the manner in which any payments or repayments are to be made to the holder of the instrument; and

(d)making provision for the custody and, where appropriate, eventual destruction of documents relating to loan instruments;

and any document which, at the time it comes into being, does not comply with any provision then made under paragraphs (a) to (c) above is not a loan instrument for the purposes of this Part.

(6)Any approval given by the Secretary of State under subsection (2) above and any consent given by the Treasury under subsection (3) above may be given generally or in a particular case or to authorities of a particular description or by reference to borrowing or securities of a particular description and may be given subject to conditions.

(7)In so far as any local authority have power under any private or local Act to borrow money (whether for general or specific purposes), any such power shall cease to have effect for financial years beginning on or after 1st April 1990.

(8)Subject to subsection (7) above, subsections (2) to (6) above apply to all borrowing powers for the time being available to a local authority under any enactment, whenever passed.

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