The Service Subsidy Agreements (Tendering) (England) (Amendment) Regulations 2004

Amendment of the Service Subsidy Agreements (Tendering) (England) Regulations 2002

5.  After regulation 3 insert—

“Exclusions from section 89(1) of the Act: authority’s forecast expenditure greater than £600,000

3A.— (1) This regulation applies to service subsidy agreements that are made at a time when an authority’s forecast expenditure for the current financial year exceeds £600,000.

(2) Subject to paragraphs (4) and (5), where this regulation applies there is excluded from section 89(1) of the Act any agreement (an “excluded agreement”) which satisfies the criteria in paragraph (3) or such of those criteria as may apply.

(3) The criteria are that—

(a) at the time the agreement is made, the aggregate amount of service subsidies payable in the current financial year under—

(i) the excluded agreement, and

(ii) all other service subsidy agreements made by that authority otherwise than by acceptance of a tender invited pursuant to section 89(1) of the Act,

does not exceed one quarter of the authority’s forecast expenditure for that year, and

(b) where the excluded agreement will remain in force after the end of the financial year in which it was made, the aggregate amount of service subsidies payable under it in any subsequent financial year during which it remains in force cannot exceed one quarter of the forecast expenditure current at the time it was made.

(4) For the purposes of this regulation, the aggregate amount of service subsidies payable in any period under a service subsidy agreement shall:

(a) include any specific amount the payment of which is dependent on a contingency; and

(b) exclude any amount payable under the agreement at any time after the end of the financial year in which it was made and which becomes payable—

(i) as a direct consequence of an increase in an index published by the Government of movements in prices or costs; or

(ii) pursuant to any provision of the agreement whereby an increase in the amount of service subsidies payable is not to exceed a figure calculated by reference to such an index.

(5) This regulation shall not exclude from section 89(1) of the Act any service subsidy agreement that will remain in force for a period exceeding 5 years.”