The Local Government (Prescribed Expenditure) (Amendment) (No. 2) Regulations 1988

2.  The Local Government (Prescribed Expenditure) (Consolidation and Amendment) Regulations 1987((1)) are amended as follows—;

(a) in regulation 2, after the definition of “housing association” insert—;

“ “land”, except where the context otherwise requires, includes buildings and structures on land;

“share capital and loan capital” means share capital and loan capital (within the meaning of section 78 of the Finance Act 1986((2))) of any body corporate which is not an authority to which Part VIII of the Act applies;”;

(b) in regulation 3(2), for “paragraphs 2, 4 or 5” substitute “paragraphs 2, 4, 5 or 10”;

(c) in regulation 4(1)(c), omit the words from “except to the extent of” to the end of that sub-paragraph, and omit the word “and” before sub-paragraph (d);

(d) after regulation 4(1)(d) insert—;

“(e) land, vehicles, vessels, movable and immovable plant, machinery and apparatus if the authority disposing of the asset had no interest in it immediately before 1st April 1981 and the subsequent acquisition of an interest by the authority—;

(i) did not involve the authority in prescribed expenditure, or involved expenditure the amount of which was, for the purposes of Part VIII of the Act, nil;

(ii) was not by way of a transfer by operation of law;

(iii) was not pursuant to an agreement approved by the Secretary of State as an agreement for the sale of new town community related assets;

(iv) was not pursuant to an agreement under section 39 of the New Towns Act 1981((3)); and

(v) was not pursuant to a scheme approved or made by the Secretary of State under Part III of the New Towns Act 1981; and

(f) land, vehicles, vessels, movable and immovable plant, machinery and apparatus where, if the authority were the party acquiring the asset under the transaction instead of the party disposing of it, the acquisition—;

(i) would not involve the authority in prescribed expenditure; or

(ii) would involve expenditure the amount of which was, for the purposes of Part VIII of the Act, nil.”;

(e) after regulation 4 insert—;

“Classes of assets to be treated as if they were mentioned in section 75(2)

4A.   The following classes of assets shall be treated as if they were mentioned in section 75(2) of the Act—;

(1) share capital and loan capital where the acquisition of the asset by the authority involved the authority in prescribed expenditure, the amount of which was, for the purposes of Part VIII of the Act, other than nil; and

(2) share capital and loan capital of a company formed in pursuance of section 59, or under sections 61 or 67, of the Transport Act 1985((4)), where the acquisition of the asset by the authority did not involve prescribed expenditure, or involved expenditure the amount of which was, for the purposes of Part VIII of the Act, nil.”;

(f) in regulation 5, after the words “which are mentioned in” insert the words “paragraphs 1 to 12 of, and sums equal to the amounts mentioned in paragraph 13 of,”;

(g) in regulation 9, at the end, add—;

“and, where any consideration given by the authority for the carrying out of the works is not in money, to make payments in respect of expenditure on the works equal to the value of any such consideration when and as any such consideration is given by the authority.”;

(h) in Schedule 1, after item 9, add the following item—;

“10.   Share capital and loan capital 30% 50%”;

(i) for paragraph 7 of Schedule 2 substitute—;

“7.   Such part of any payment made to a highway authority by the Secretary of State under any agency arrangement whereby the authority discharges any functions of the Secretary of State as a highway authority for the purposes of section 1(1) of the Highways Act 1980((5)) as is equal to the payments made by the authority in respect of prescribed expenditure in the discharge of its obligations under that arrangement.”;

(j) for paragraph 10 of Schedule 2 substitute—;

“10.   Such part of any payment made to a local authority by a special, district, regional or former area health authority in respect of a project as is equal to the payments made by the recipient authority in respect of prescribed expenditure on that project.”;

(k) in paragraph 11 of Schedule 2, omit item (v), and for items (a), (l) and (s) substitute at the appropriate places the following items—;

“(a) the Training Commission,

(l) the National Council for Educational Technology,

(s) the British Railways Board,”;

(l) in Schedule 2, at the end, add—;

“13.   —;

(1) Where an authority disposes of leasehold interests in land held for any purpose other than the purposes of Part II of the Housing Act 1985((6)), or where any such interest belonging to the authority comes to an end by any means, any amount which the authority was taken to have paid under section 80 of the Act on the acquisition of that interest or any superior interest in the land, and the amount of any prescribed expenditure incurred by an authority on the construction, preparation, conversion, improvement, renewal or replacement of buildings or structures on the land.

(2) In this paragraph a leasehold interest means one which—;

(a) has an unexpired term not exceeding twenty years which is not capable of being renewed or extended so that the unexpired term and any renewal or extension of the interest together exceed twenty years;

(b) if it is granted to commence on the expiry of another interest, does not, together with any interest in the same land previously disposed of by the authority, exceed twenty years.”;

(m) for paragraph 3 of Part I of Schedule 3 substitute—;

“3.   —;

(1) Expenditure on the acquisition of an interest in land to which this sub-paragraph applies except where—;

(a) it is intended at the time of acquisition that some person shall erect a building on the land for the authority; or

(b) at the time of the acquisition the authority already owns the freehold of the land or has a leasehold interest in the land the term of which is greater than the term which is being acquired; or

(c) there is in force at the time of acquisition or has been in force at any time during the five years immediately preceding the acquisition, a development agreement;

and in this sub-paragraph, “development agreement” means an agreement to which the acquiring authority is party and which requires or entitles—;

(i) another person to develop all or any part of the land in question; or

(ii) that authority to acquire an interest in (or a right to use) the whole or any part of that land once specified conditions as to the development of the land are satisfied.

(2) Sub-paragraph (1) applies to a leasehold interest for a term not exceeding three years unless—;

(a) it is a lease which creates a tenancy to which Part II of the Landlord and Tenant Act 1954((7)) (security for business and professional tenants) applies, except where a court has authorised an agreement excluding in relation to that tenancy the provisions of sections 24 to 28 of that Act; or

(b) the term of the lease, when added to the length of any period before the acquisition of the lease (but after 1st April 1980) for which the authority was entitled to the rents and profits of the land or during which it occupied the land, exceeds three years.

(3) Sub-paragraph (l) also applies to a leasehold interest (in this paragraph referred to as “the later interest”) acquired by the authority to commence on the expiry of an earlier interest of the authority in the land in question where—;

(a) the earlier interest was a lease acquired by the authority before 1st April 1980, for a term which did not exceed 20 years, or

(b) the earlier interest was a lease acquired by the authority on or after 1st April 1980 and before 10th March 1988 and the term of the earlier interest, together with the term of any other leases of in the land in question acquired by the authority on or after 1st April 1980 including the later interest, does not exceed 20 years.

(4) For the purposes of this paragraph the term of any lease shall be taken to be the period unexpired at the date of acquisition by the authority on the assumption that any right or option to renew it or to extend its term is exercised, provided that no such assumption shall be made in relation to any right to apply to the court for a new tenancy under Part II of the Landlord and Tenant Act 1954.”;

(n) In Part I of Schedule 3, after paragraph 13 insert—;

“13A.   Expenditure on the acquisition of share capital or loan capital where the acquisition is of an investment falling within Parts I or II of Schedule 1 to the Trustee Investments Act 1961((8)).”.

(1)

S.I. 1987/2186.

(2)

1986 c. 41.

(3)

1981 c. 64.

(4)

1985 c. 67.

(5)

1980 c. 66.

(6)

1985 c. 68.

(7)

1954 c. 56.

(8)

1961 c. 62, amended by the Post Office Act 1969 (c. 48), Trustee Savings Banks Act 1976 (c. 4), Finance Act 1982 (c. 39), Building Societies Act 1986 (c. 53), Income and Corporation Taxes Act 1988 (c. 1), S.I. 1962/658, 2611, 1964/703, 1404, 1966/401, 1968/470, 1972/1818, 1973/1332, 1393, 1975/1710, 1977/831, 1878, 1982/1086, 1983/772, 1525, 1985/1780 and 1986/601.