The Local Authorities (Companies) (Amendment) (England) Order 2001
Citation, commencement and extent1.
(1)
This Order may be cited as the Local Authorities (Companies) (Amendment) (England) Order 2001 and shall come into force on 1st April 2001.
(2)
The amendments made by article 2 have effect in relation to local authorities in England.
Amendment of Order2.
(1)
(2)
In article 14 (application of Part IV: requirement for credit cover)—
(a)
“(5)
For the purposes of this article, in relation to any financial year beginning on or after 1st April 2001, one or more of the following amounts, in any combination, constitutes an amount of credit cover—
(a)
an amount which the authority determine to set aside from the usable part of the authority’s capital receipts or from a revenue account as provision to meet credit liabilities (being an amount over and above amounts required to be set aside by virtue of any other provision of Part IV);
(b)
an amount by which the authority determine to treat as reduced the balance of a credit approval;
(c)
an amount by which the authority determine to treat as reduced any credit cover provision designated in accordance with paragraph (8).”;
(b)
“(8)
Where, in relation to any financial year ending on or after 31st March 2001, a basic credit approval having effect for that year is, pursuant to article 15, treated as increased by any amount, the authority may—
(a)
where a determination under section 56(1) is made in respect of part only of that amount, designate all or part of the residue of that amount as credit cover provision; or
(b)
where no determination under section 56(1) is made in respect of any part of that amount, designate all or part of that amount as credit cover provision.”
(3)
In paragraph (1) of article 16 (liabilities of regulated companies)—
(a)
“(bb)
the company’s assets shall not be treated as reduced by the defraying, after the relevant date, of expenditure for any purpose, where that expenditure is defrayed from monies accumulated before the relevant date;”;
(b)
“(i)
any liability under a credit transaction (whether entered into by the company before, on or after the relevant date),”.
(4)
Signed by authority of the Secretary of State for The Environment, Transport and the Regions
Article 14 of the Local Authorities (Companies) Order 1995 (“the 1995 Order”) requires an authority to have available an amount of credit cover for the liabilities of companies which, for the purposes of Part IV of the Local Government and Housing Act 1989, are treated as companies regulated by the authority. This Order amends article 14 of the 1995 Order so as to provide an additional mechanism by which an authority can provide that credit cover. The amendments, which are set out in article 2(2), allow an authority to designate as credit cover provision, and treat as credit cover, any amount that has been treated as added to the authority’s basic credit approval in accordance with article 15 of the 1995 Order, in respect of which no determination has been made by an authority under section 56(1) of the 1989 Act (use of credit approvals).
The Order also makes amendments relating to article 16(1) of the 1995 Order. The amendments allow an authority to disregard, as respect a company which becomes a regulated company in relation to the authority—
expenditure defrayed by the company, after it becomes a regulated company, from monies accumulated before it became a regulated company, and
liabilities of a regulated company under a credit transaction, whether entered into before or after the company became a regulated company.