The Local Authorities (Capital Finance and Accounting) (Wales) (Amendment) Regulations 2008

Welsh Statutory Instruments

2008 No. 588 (W.59)

LOCAL GOVERNMENT, WALES

The Local Authorities (Capital Finance and Accounting) (Wales) (Amendment) Regulations 2008

Made

3 March 2008

Laid before the National Assembly for Wales

5 March 2008

Coming into force

31 March 2008

The Welsh Ministers, in exercise of the powers conferred by sections 21(1), 24 and 123(1) of the Local Government Act 2003(1), make the following Regulations:

Title, commencement and application

1.—(1) The title of these Regulations is The Local Authorities (Capital Finance and Accounting) (Wales) (Amendment) Regulations 2008 and they come into force on 31 March 2008.

(2) These Regulations apply in relation to local authorities in Wales.

Amendments

2.  The Local Authorities (Capital Finance and Accounting) (Wales) Regulations 2003(2) are amended as specified in regulations 3 to 5.

Revenue provision

3.  For regulation 22 substitute—

“Calculation of minimum revenue provision

22.   A local authority must calculate for the current financial year an amount of minimum revenue provision which it considers to be prudent.”.

Early repayment of loans — premiums and discounts after 31 March 2007

4.  In regulation 24C—

(a) for paragraph (1)(b) substitute—

“(b) as a consequence of such early repayment—

(i) the local authority is required to pay a premium to the lender of the loan or is required, in accordance with proper practices, to account for an amount in respect of a premium as if it were required to pay such a premium; or

(ii) the lender of the loan gives the local authority a discount on the loan or the local authority is required, in accordance with proper practices, to account for an amount in respect of a discount as if the lender had given the local authority such a discount; and”;

(b) in paragraph (4), in the definition of “initial year”, after “repaid” insert—

• “;

• “replacement loan” means any loan of money to the local authority some or all of which the local authority treats, for accounting purposes, as a replacement for some or all of the loan referred to in sub-paragraph (a) of paragraph (1).”

Loans and guarantees

5.  After regulation 24D insert—

“Interest on stepped interest rate loans taken out by local authorities

24E.— (1) This regulation applies—

(a) where on any day before 21 January 2008 —

(i) a local authority had taken out a stepped interest rate loan, and

(ii) that loan had not been repaid in full; and

(b) in relation to financial years beginning on or after 1 April 2007.

(2) Where this regulation applies, the amount the local authority charges to its revenue account with respect to the interest payable on the loan must be either—

(a) the amount of the interest, if any, which it is due to pay in the financial year in accordance with the loan agreement for that loan; or

(b) calculated in accordance with the accounting practices identified in regulation 25.

(3) In this regulation, “stepped interest rate loan” means a loan taken out by a local authority at an interest rate which increases in one or more increments through the life of the loan.

Financial guarantees given by local authorities

24F.— (1) This regulation applies—

(a) where before 21 January 2008 a local authority has given a financial guarantee on behalf of another person; and

(b) in relation to financial years beginning on or after 1 April 2007.

(2) Where this regulation applies, the amount the local authority charges to its revenue account with respect to the guarantee must be calculated either—

(a) in accordance with proper practices for the financial year beginning on 1 April 2006; or

(b) in accordance with the accounting practices identified in regulation 25.”.

Brian Gibbons

Minister for Social Justice and Local Government, one of the Welsh Ministers

3 March 2008

Explanatory Note

(This note is not part of the Regulations)

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

Regulation 3 substitutes new provisions for those in the 2003 Regulations which deal with the calculation of minimum revenue provision — the amount that a local authority charges to its revenue account in respect of the financing of capital expenditure. New regulation 22 replaces the requirement that local authorities undertake detailed calculations with a new duty to make prudent provision.

Regulation 4 amends certain provisions of regulation 24C of the 2003 Regulations, which is concerned with premiums and discounts on loans taken out by local authorities that are repaid early, so that they mirror equivalent provisions in regulation 24B.

Regulation 5 inserts new regulations 24E and 24F into Part 6 of the 2003 Regulations. The new regulations give local authorities some flexibility in the way they account for stepped interest rate loans entered into before 21 January 2008 and financial guarantees they gave before that date.

(1)

2003 c. 26.

(2)

S.I. 2003/3239 (W.319), amended by S.I. 2007/1051(W.108); there are other amending instruments but none is relevant.