Section 111: Application of Part IV of Local Government and Housing Act 1989
194.Section 111 brings the GLA and the four functional bodies within a slightly modified form of the local government capital finance system. This was established by Part IV of the Local Government and Housing Act 1989, and has effect with respect to the finances of most local authorities in England and Wales and a number of other public authorities, including police authorities and combined fire authorities. (Authorities and bodies covered by the system are referred to in Part IV as "local authorities").
195.Part IV regulates the use for capital purposes of borrowed money, credit and capital receipts. Capital purposes include, in particular, the acquisition of land, buildings or equipment, and the construction or improvement of buildings. Capital spending may also be funded from an authority’s revenue resources and from any grants they are issued for capital purposes. The two latter sources of finance are not regulated by Part IV itself. However, the use of revenue for capital purposes is subject to the same constraints that apply to an authority’s revenue spending generally; controls on the use of grants depend upon any conditions attached to the grants.
196.Part IV also requires amounts to be set aside out of capital receipts and revenue to meet credit liabilities and regulates the use of such amounts.