Local Government (Scotland) Act 1975

Borrowing U.K.

1 (1) Without prejudice to section 69 of the Act of 1973 (subsidiary powers of local authorities), a local authority may borrow such sums as may be required for any of the following purposes—

(a) for acquiring any land which the authority have power to acquire;

(b) for erecting any building which the authority have power to erect;

(c) for the execution of any permanent work or the provision of any plant or the doing of any other thing which the authority have power to execute, provide or do and which involves expenses of a capital nature or for the payment of any sum of a capital nature;

(d) for the purpose of lending to a relevant authority or to any community council established for the area of the local authority or any part thereof under Part IV of the Act of 1973;

(e) for any other purpose for which the authority are authorised under any enactment to borrow.

[F1 (2) With the consent of the Secretary of State, a local authority may borrow, on such terms and conditions as to repayment as the Secretary of State may in so consenting allow, such sums as are required to meet expenses, other than expenses to which sub-paragraph (1) above relates, which the authority have power to incur in the exercise of any of their functions (excluding functions relating to a public utility undertaking); but the Secretary of State shall give such consent only if satisfied that the expenses are of such a nature that they should be met by such borrowing.]

(3) A local authority may borrow such sums as are necessary in order to provide working capital or to meet any other expenses, not being expenses of a capital nature, required for the purposes of any public utility undertaking carried on by the authority:

Provided that—

(a) the total sums borrowed under this sub-paragraph and for the time being outstanding shall not, except with the consent of the Secretary of State, exceed an amount representing one half of the gross revenue of the undertaking for the immediately preceding financial year;

(b) any sum borrowed under this sub-paragraph to defray expenses shall be repaid as soon as reasonably practicable and in any case before the expiration of the period within which money borrowed to meet such expenses is ordinarily repaid in the case of such an undertaking, so however that any sum borrowed under this sub-paragraph shall be repaid before the expiration of two years from the date of borrowing, unless the consent of the Secretary of State is obtained to repayment thereof being spread over a longer period, and such consent may be given subject to such conditions as the Secretary of State may determine.

(4) Sub-paragraphs (1)(a), (b) and (c) and (2) above shall apply to a water development board and to a river purification board as they apply to a local authority.

(5) In this paragraph “public utility undertaking” means a transport or other revenue-producing undertaking of a local authority.

Textual Amendments

F1 Sch. 3 para. 1(2) substituted by Local Government (Miscellaneous Provisions) (Scotland) Act 1981 (c. 23, SIF 81:2), s. 27

2 (1) Where a local authority are authorised under a statutory borrowing power to borrow money, they may raise the money— S

(a) by mortgage,

(b) by overdraft from a bank,

(c) by the issue of stock,

(d) by the issue of bonds,

(e) by the issue of bills,

(f) by an agreement entered into with the Public Works Loan Commissioners under section 2 of the M1 Public Works Loans Act 1965, or

(g) by any other means approved by the Secretary of State with the consent of the Treasury.

(2) The powers conferred by this paragraph shall be exercisable subject to and in accordance with the following provisions of this Schedule; and a local authority having power under a local enactment to borrow money by way of any method referred to in sub-paragraph (1) above shall not exercise that power in accordance with the provisions of that enactment.

Marginal Citations

M1 1965 c. 63.

3 S A local authority may borrow by way of temporary loan or overdraft from a bank or otherwise any sums which they may temporarily require—

(a) for the purpose of defraying expenses (including the payment of sums due by them to meet the expenses of other authorities) pending the receipt of revenues receivable by them in respect of the year in which those expenses are chargeable;

(b) for the purpose of the raising of a loan in the exercise of any statutory borrowing power.

4 S The power of a local authority to borrow money by any means includes power to raise money by those means outside the United Kingdom or in a foreign currency, but only with the consent of, and in accordance with any conditions specified by, the Treasury.

5 (1) The Secretary of State may by regulations made with the consent of the Treasury— U.K.

(a) prescribe the form of any mortgage to be entered into for the purpose of any borrowing by a local authority,

(b) regulate the issue of stocks and bonds or the creation of any other security for any such purpose, including the terms on which they are to be issued or created,

(c) regulate the manner of transfer, dealing with and redeeming any mortgage created, or stocks or bonds issued or any other security created for any such purpose,

(d) apply all or any of the provisions of sections 194 and 197 of the Act of 1973 (execution of deeds and inspection and deposit of documents) with or without modifications, to any such mortgage, stock, bonds or other security,

[F2 (dd) make provision for the custody and, where appropriate, eventual destruction of documents relating to any such stocks or bonds,]

(e) make such incidental, consequential and supplemental provision as appears to the Secretary of State to be necessary or proper for bringing the regulations into operation and giving them full effect.

(2) Different provisions may be made under this paragraph for securities of different classes.

(3) A statutory instrument containing regulations under this paragraph shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Textual Amendments

F2 Sch. 3 para. 5(1)(dd) inserted by Stock Transfer Act 1982 (c. 41, SIF 69), s. 5(2)

6 (1) A local authority may borrow by the issue of bills, payable within twelve months from the date of issue— S

(a) any sum which they are authorised to borrow under a statutory borrowing power; or

(b) such sums as may be required for the purpose of defraying expenses (including those payable by them to meet the expenses of other local authorities) pending the receipt of revenues receivable by them in respect of the year in which those expenses are chargeable.

(2) The aggregate of the amount outstanding on bills issued by a local authority under sub-paragraph (1) above shall not exceed—

(a) a sum equal to such proportion of the authority’s estimated gross income from [F3 rates, [F4 the council tax and the council water charge]] during the current year as may be prescribed by an order made by the Treasury; or

(b) if no such proportion is so prescribed, a sum equal to one-fifth of the authority’s estimated gross income as aforesaid.

(3) A local authority shall not borrow by the issue of bills in any year during which the authority’s estimated gross income as aforesaid does not exceed £3 million or such other sum as may be prescribed by an order made by the Treasury.

(4) A statutory instrument containing an order under this paragraph shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Textual Amendments

F3 Words substituted by Abolition of Domestic Rates Etc. (Scotland) Act 1987 (c. 47, SIF 81:2, 103:2), s. 6, Sch. 1 Pt. III para. 34

F4 Words in Sch. 3 para. 6 substituted (1.4.1993) by Local Government Finance Act 1992 (c. 14), s. 117(1), Sch. 13 para. 44(a) (with s. 118(1)(2)(4)); S.I. 1993/575, art. 2(c).

7 S A local authority may issue bonds transferable by delivery (with or without endorsement) and other securities so transferable, but only with the consent of, and in accordance with any conditions specified by, the Treasury.

8 (1) Subject to the provisions of this paragraph and notwithstanding anything in any other enactment, all money borrowed under any statutory borrowing power by a local authority shall be secured upon the whole funds, rates and revenues of the authority and not otherwise; and all money borrowed by a local authority by whatever method shall be deemed to have the same charge and security and shall rank pari passu.

In this sub-paragraph references to sums borrowed by a local authority shall be deemed to include references to any sum which was borrowed by some other authority, and which the local authority in consequence of a transfer of functions or otherwise are liable to repay to the creditors.

(2) The interest and dividends for the time being payable in respect of money so borrowed by a local authority shall be the first charge on the rates and revenues comprising the security for the said money.

(3) Sub-paragraphs (1) and (2) above shall not apply in the case of money borrowed for the purposes of the common good by an islands or district council having a common good, nor shall the security created by those sub-paragraphs include the common good of the islands area or district or the revenues thereof.

(4) Sub-paragraphs (1) and (2) above shall not apply in the case of money borrowed by a local authority for the purposes of any trust under any deed of trust or other document, nor shall the security created by those sub-paragraphs include the funds held under any such trust.

9 S Two or more local authorities may combine to exercise their powers of borrowing under this Schedule jointly, and where they do so—

(a) any limit on the amount which each authority may borrow shall apply to the amount which each authority receive from the joint loan;

(b) paragraph 8 above shall apply to the money so borrowed as if references to a local authority were references to the local authority by whom the money is received.