The Local Authorities (Capital Finance and Approved Investments) (Amendment) Regulations 1996

Explanatory Note

(This note is not part of the Regulations)

These Regulations further amend the Local Authorities (Capital Finance) Regulations 1990 (“the principal Regulations”).

Regulation 4 makes further provision in respect of the initial cost of leases of land acquired by a local authority. The main effect of the amendments is that certain leases acquired by the combined fire authorities constituted in consequence of the local government changes in England and Wales and the county councils which they supersede as fire authorities have a nil initial cost.

Regulation 5 inserts two new regulations which provide that if specified conditions are met, the initial cost of certain credit arrangements will be reduced. Regulation 7A of the principal Regulations applies in the case of a lease of a building by a local authority where—

(a) the authority decided, not earlier than five years preceding the date when they become the lessees, to cease using the same or a different building and to use the building demised by the lease for the same or a corresponding purpose, and

(b) the lessor has adapted the building demised by the lease to meet the authority’s requirements and has certain responsibilities for the upkeep of the building.

Regulation 7B of the principal Regulations applies in the case of a credit arrangement for—

(a) the replacement or improvement of the system for heating or lighting a building in which a local authority have a freehold or leasehold interest, or

(b) the improvement of the whole or part of the street lighting provided for a local authority’s area,

where the person who carries out the works is required under the arrangement or a separate contract to maintain and repair the system which he replaces or improves.

Regulations 7 and 8 amend regulation 14 of, and Part I of Schedule 1 to, the principal Regulations. The main effect of the amendments is that if specified conditions are met, the reserved part of certain capital receipts is reduced, or reduced for a specified period. The capital receipts to which these provisions apply are those derived from the disposal of share capital or loan capital in specified descriptions of company, or of land used as a school, an institution providing further education or education for adults, or an agricultural holding.

Regulation 9 amends the provision made in regulation 15 of the principal Regulations for treating a capital receipt derived from a disposal of recently acquired land as reduced for the purposes of section 59 of the Local Government and Housing Act 1989. The amendment extends to five years the maximum period which may elapse between the date of acquisition and the date of disposal of the land.

Regulation 10 substitutes a new regulation 18 of the principal Regulations. The new regulation makes provision for treating a capital receipt derived from a disposal of land as reduced for the purposes of section 59 of the 1989 Act where the authority decided, not earlier than five years preceding the disposal, to cease using the land and to acquire a new interest in the land after the disposal, or an interest in other land, or to carry out works on any land.

Regulation 11 substitutes a new Schedule 2 to the principal Regulations. For the purposes of regulations 7A and 18 of the principal Regulations, the new Schedule specifies uses of land by reference to different categories of purpose.

Regulation 12 amends regulation 20 of the principal Regulations. The main effect of the amendments is that where—

(a) in consideration for the disposal by a local authority of an interest in land, a person carries out works on the land, and

(b) there is granted to the authority by that person, or by the authority to that person, a right to use the land on completion of the works,

the reserved part of the notional capital receipt is nil.

Regulation 13 further amends regulation 26 of the principal Regulations (minimum revenue provision) to take account of the new police authorities established under section 3 of the Police Act 1964 (as substituted by section 2 of the Police and Magistrates' Courts Act 1994).

Regulation 14 amends regulation 26B of the principal Regulations to specify further bodies to which amounts set aside as provision to meet credit liabilities may be transferred. The further bodies are the newly constituted combined fire authorities and their constituent councils, and waste disposal authorities and their constituent councils.

Regulation 15 amends Part II of Schedule 3 to the principal Regulations (credit ceiling on or after 1st April 1990) to take account of the newly constituted combined fire authorities. The amendments modify the credit ceilings of such authorities and the county councils which they supersede as fire authorities.

Regulation 16 further amends the Schedule to the Local Authorities (Capital Finance) (Approved Investments) Regulations 1990, which contain a list of investments approved by the Secretary of State for the purposes of Part IV of the Local Government and Housing Act 1989, to take account of the newly constituted combined fire authorities.