The Local Authorities (Capital Finance and Accounting) (Amendment) (England) (No. 2) Regulations 2004

Explanatory Note

(This note is not part of the Regulations)

These Regulations amend the Local Authorities (Capital Finance and Accounting) (England) Regulations 2003 (“the Principal Regulations”) and apply only in relation to local authorities in England.

Regulation 2 of these Regulations inserts a definition of “small scale disposal”, and other definitions for the purposes of that term, into regulation 1(5) of the Principal Regulations. A small scale disposal is a disposal by a local authority of an interest in housing land where the Secretary of State has consented to the disposal subject to the local authority being satisfied that the majority of secure and introductory tenants are not opposed to it. A disposal is not a small scale disposal unless the aggregate number of dwelling-houses disposed of by the authority in the five year period ending on the date of the disposal does not exceed 499.

Regulation 3 of these Regulations provides for small scale disposals to be excluded from the requirements to pool receipts from the disposals of housing land that are in regulation 12 of the Principal Regulations.

Some local authorities acquired dwellings and other land from the Commission for the New Towns (now, together with the Urban Regeneration Agency, known as English Partnerships) or a development corporation on the basis that the whole or part of the consideration for the land was to be given by the local authority when it subsequently disposed of the land. Regulation 4 of these Regulations inserts a new regulation 20A in the Principal Regulations. This provides that, for the purposes of the pooling of a percentage of the capital receipts, derived from housing land, under regulation 12 of the Principal Regulations, the capital receipts may be treated as reduced by an amount equal to the value of the consideration that the local authority is required to give English Partnerships on making the disposal.

Regulation 5 of these Regulations excludes small scale disposals from those disposals for which notional capital receipts have to be determined under regulation 22 of the Principal Regulations.

Regulation 6 of these Regulations amends the provisions in regulation 28 of the Principal Regulations concerning the calculation of minimum revenue provision. The calculation is amended to reflect the differences between local authorities which are housing authorities, required to keep a Housing Revenue Account, and other local authorities. The latter would not have had a housing amount and a non-housing amount under Part XII of the Local Authorities (Capital Finance) Regulations 1997 nor do they have an opening HRA capital financing requirement. Where the capital financing requirement at the end of the preceding financial year is a nil or negative amount, the minimum revenue provision (including any additional amount of minimum revenue provision) for the current financial year is to be treated as nil.

Regulation 7 requires that any decision, to treat an amount as a capital receipt under regulation 33, must be made before 1st October 2005. Any amount treated as a capital receipt is to be treated as if it were received in the financial year beginning on 1st April 2004.

A full regulatory impact assessment has not been produced for this instrument as it has no impact on the costs of businesses, charities or voluntary bodies; neither does it have significant financial impact on any public bodies.