The Local Authorities (Capital Finance and Accounting) (Amendment) (England) Regulations 2007

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. Regulations 3 and 7 do not apply to parish councils and charter trustees.

Regulation 2 amends regulation 25 of the Principal Regulations so that expenditure, incurred by a local authority on the acquisition or production of assets for use by another person, is treated as capital expenditure where it would be capital expenditure if those assets were acquired or produced for use by the local authority. Regulation 25 is also amended so that expenditure which is an investment in the shares of a Real Estate Investment Trust is not to be treated as capital expenditure by virtue of regulation 25.

Regulation 3 substitutes a new regulation 28 of the Principal Regulations which sets out how a local authority is to calculate its minimum revenue provision (that is, the minimum amount it must charge to a revenue account for a financial year, as required by regulation 27 of the Principal Regulations). There is a saving for cases where the minimum revenue provision would be less under regulation 28 as it exists immediately before the substitution than it would be under the new regulation 28. There is also a saving for the purposes of the interpretation of certain determinations made before 30th March 2007 under section 87 of, and Schedule 4 to, the Local Government and Housing Act 1989.

Regulation 4 inserts a new regulation 29A in the Principal Regulations which provides that capital expenditure need not be charged to a revenue account.

Regulation 5 inserts a new regulation 30A in the Principal Regulations, which is to be revoked on 1st April 2011. The new regulation provides that a local authority need not charge to a revenue account an amount, in respect of a payment to be made to an officer or employee for work done in the past for which he received unequal pay (where men and women were paid different amounts for similar work), until the authority has to pay that amount to him.

Regulation 6 inserts new regulations 30B to 30D in the Principal Regulations. Regulations 30B and 30C make provision for the amount which a local authority must charge or credit to a revenue account in respect of a premium or discount arising from the authority’s early repayment of a loan. Regulation 30D enables a local authority, which has given a loan to a person, to credit to its revenue account the full amount of interest which it is due to receive in each financial year in accordance with the loan agreement for that loan.

Regulation 7 substitutes a new Schedule for the existing Schedule to the Principal Regulations. The new Schedule contains a revised definition of Social HomeBuy disposal that includes a disposal where the purchaser pays to the local authority 100 per cent of the value of the interest in the dwelling or the cost of providing it, subject to any discount to which the purchaser is entitled. The revised definition means that a local authority may treat sums received from such a disposal as reduced, in accordance with regulation 14(1)(d) of the Principal Regulations, for the purposes of calculating how much needs to be paid to the Secretary of State (known as “pooling”) under regulation 12 of the Principal Regulations.

A full regulatory impact assessment has not been produced for this instrument as no impact on the private or voluntary sectors is foreseen.