Local Government, Planning and Land Act 1980

Financial provisions

15 Payment for construction or maintenance work undertaken in pursuance of delegated functions etc.

(1) Where a local authority or development body undertake construction or maintenance work which is functional work by virtue of paragraph (b) of section 8(1) above, they shall be entitled notwithstanding anything in any enactment or in the arrangements or agreement referred to in that paragraph, to a payment in respect of undertaking that work equal to the amount which, in accordance with this Part of this Act, would be credited to the DLO revenue account kept by them in respect of work of that description if the work so undertaken were functional work by virtue of paragraph (a) of that subsection.

(2) Subject to subsection (3) below, nothing in subsection (1) above applies to functional work undertaken in pursuance of an arrangement or agreement entered into before the appointed day.

(3) If an arrangement or agreement entered into before the appointed day provides for the delegation of a function for an indefinite period or for a period terminable by the parties to it or by either or any of them, this section shall apply to work undertaken in pursuance of the arrangement or agreement in the first financial year which begins after the appointed day and in subsequent financial years.

16 General financial duty: treatment of deficits

(1) Every local authority or development body who undertake construction or maintenance work—

(a) of any of the descriptions specified in subsection (2) of section 10 above; or

(b) of any description specified by regulations under subsection (4) of that section,

whether under works contracts or by way of functional work or both, shall secure that, in respect of each financial year, their revenue from work of that description shows such positive rate of return on the capital employed for the purpose of carrying out the work as the Secretary of State may direct.

(2) Subject to subsection (3) below, the rate of return on capital employed shall be determined for the purposes of this section by such method as the Secretary of State may direct.

(3) The rate of return shall in all cases be determined on a current cost accounting basis.

(4) If at the end of any financial year any DLO revenue account of a local authority or development body is in deficit, the amount of the deficit shall be charged—

(a) in the first instance to any DLO reserve fund established by them; and

(b) subject thereto—

(i) in the case of a local authority in England or Wales, to their rate fund; and

(ii) in the case of a local authority in Scotland or a development body, to their general fund.

(5) In subsection (4) above, the reference in paragraph (a) to a DLO reserve fund established by a local authority or development body is a reference to a fund the sole purpose of which is to meet any expenditure incurred by them in connection with construction or maintenance work undertaken by them, whether under works contracts or by way of functional work.

(6) In subsection (4)(b) above " rate fund"—

(a) (in relation to the Greater London Council, means any fund for which a precept is issued;

(b) in relation to the Common Council of the City of London and the Council of the Isles of Scilly, means the general rate; and

(c) in relation to any other local authority, means the county fund or general rate fund.

17 Rates of return: powers of Secretary of State

(1) If in respect of any financial year the rate of return shown on the capital employed by a local authority or development body for the purpose of carrying out construction or maintenance work—

(a) of any of the descriptions specified in subsection (2) of section 10 above ; or

(b) of any description specified in regulations under subsection (4) of that section,

as determined under section 16 above, is less than the rate for the time being required under section 16(1) above they shall notify the Secretary of State of that fact not later than the expiration of 6 months from the end of that financial year.

(2) Subject to subsection (7) below, if by virtue of subsection (1) above a local authority or development body come under a duty to give a notification to the Secretary of State in respect of the same description of construction or maintenance work in each of three consecutive financial years, they shall prepare a report in respect of that description of work.

(3) It shall be the duty of the local authority or development body

(a) to consider any report prepared under subsection (2) above; and

(b) to send a copy to the Secretary of State.

(4) The Secretary of State shall have power at any time, if he thinks fit, to direct a local authority or development body to make and submit to him, within such time as he may specify in the direction, a special report—

(a) on all the construction or maintenance work undertaken by them during the three years preceding the date of the direction; or

(b) on the work of any of the descriptions specified in subsection (2) of section 10 above or of any description specified in regulations under subsection (4) of that section which they have undertaken during that period.

(5) If—

(a) the Secretary of State has given a direction under subsection (4) above; and

(b) either—

(i) he has received a special report within the time specified in the direction; or

(ii) he has not received a report within that time,

he may direct that, with effect from such date as may be specified in the direction, the local authority or development body to whom the direction under subsection (4) above related shall cease to have power to undertake construction or maintenance work or any description of such work, whether under works contracts or by way of functional work.

(6) A direction under subsection (5) above may provide that the authority or body to whom it relates shall cease to have any power such as is mentioned in that subsection—

(a) during a period specified in the direction; or

(b) until such conditions as the Secretary of State may specify in the direction are satisfied; or

(c) without specifying a period or conditions.

(7) A local authority or development body need not notify the Secretary of State under subsection (1) above or prepare a report under subsection (2) above—

(a) if the Secretary of State has directed under subsection (5) above that they should cease to have power to undertake construction or maintenance work or a description of such work ; and

(b) if it is only in respect of work to which that direction relates that a required rate of return was not shown.

(8) If the Secretary of State directs that a local authority or development body shall cease to have power to undertake construction or maintenance work of any description, the direction shall have effect notwithstanding any enactment by virtue of which they are required or authorised to discharge a function conferred on some other public authority or body.

(9) If, at any time after a direction has been given under subsection (5) above with respect to a local authority or development body, it appears to the Secretary of State that within any particular time the authority or body would, apart from the direction, be able to undertake any description of construction or maintenance work which they are no longer empowered to undertake in such a manner that they would comply with section 16(1) above, he may direct that they shall have power to undertake that description of work from a date specified in the direction.

(10) A direction under subsection (9) above may impose such conditions on the resumption of construction or maintenance work by a local authority or development body as the Secretary of State considers appropriate.

(11) A direction under this section may contain such transitional and consequential provisions as the Secretary of State considers appropriate including, in particular, in the case of a direction under subsection (5), provisions with respect to construction or maintenance work which is in progress and works contracts under which commitments are outstanding immediately before the date on which the direction takes effect.