The Local Authorities (Capital Finance and Approved Investments) (Amendment No. 2) Regulations 1995

Explanatory Note

(This note is not part of the Regulations)

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

Regulations 3 and 4 make provision as to the consequences of a default in the payment of principal or interest under certain approved investments. If specified conditions are met, expenditure on making an investment in substitution for a relevant approved investment shall not be expenditure for capital purposes and does not have to be charged to a revenue account.

Regulation 4 also excludes from the requirement that all expenditure shall be charged to a revenue account expenditure which consists of the application for specified purposes, or the transfer, of amounts set aside as provision for credit liabilities.

Regulation 5 amends regulation 8 of the principal Regulations to provide that where a lease of land is varied by the grant of a new lease of the same land, the adjusted cost of the credit arrangement shall be nil, provided that the new lease would, if granted when the original lease expired, fall within regulation 7(5C), (5D) or (5F) of the principal Regulations.

Regulation 6 amends regulation 13 of the principal Regulations to provide that, if specified conditions are met, the sums received in respect of the disposal of an investment which, at the time of disposal, is not an approved investment shall not be capital receipts.

Regulation 7 amends 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—

(a) the reserved part of a local authority’s capital receipts shall be 10 per cent. where a receipt is received within a specified period in respect of a disposal of land which is used as a car park, or comprises a crematorium or, in whole or part, comprises shops; and

(b) a local authority shall not be required to set aside part of its capital receipts as provision to meet credit liabilities notwithstanding that they still have certain outstanding debt (other than short-term borrowing).

Regulation 9 amends regulation 26A of the principal Regulations to provide that an authority may have the use of amounts set aside as provision to meet credit liabilities notwithstanding that they still have certain outstanding debt (other than short-term borrowing).

Regulations 8 and 10 make further amendments to Part VIII of the principal Regulations (minimum revenue provision) and Part II of Schedule 3 to the principal Regulations (credit ceiling on or after 1st April 1990) 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 10 also amends Part II of Schedule 3 to the principal Regulations to provide that the credit ceiling of a local authority shall be increased where the authority apply the amount set aside as provision to meet credit liabilities to meet any levy payable under section 136 of the 1993 Act.

Regulation 11 amends Part II of Schedule 5 to the principal Regulations which describes how an authority required to keep a Housing Revenue Account calculate the housing and non-housing amounts for the purposes of minimum revenue provision. The modification affects the determination of the non-housing amount.

Regulation 12 further amends the Local Authorities (Capital Finance) (Approved Investments) Regulations 1990 to provide that an authority may meet the conditions for their longer-term investments to be approved investments notwithstanding that they still have certain outstanding debt (other than short-term borrowing).