Local Government Act 2003 (c. 26)

I1S. 1 in force at 27.11.2003 for W. for the purpose of and in relation to financial years beginning on or after 1.4.2004 by S.I. 2003/3034, art. 2, Sch. 1 Pt. I (with Sch. 2 para. 3)

I2S. 1 in force at 1.4.2004 for E. by S.I. 2003/2938, art. 7(a) (with art. 8, Sch.)

2Control of borrowingE+W

(1)A local authority may not borrow money if doing so would result in a breach of—

(a)the limit for the time being determined by or for it under section 3, or

(b)any limit for the time being applicable to it under section 4 [F1, or]

[F2(c)any limit for the time being applicable to it under section 12A.]

(2)The Secretary of State may, in relation to specific borrowing by a particular local authority, by direction disapply subsection (1)(b), so far as relating to any limit for the time being applicable under section 4(1).

(3)A local authority may not, without the consent of the Treasury, borrow otherwise than in sterling.

(4)This section applies to borrowing under any power for the time being available to a local authority under any enactment, whenever passed.

Textual Amendments

F1Word in s. 2(1) inserted (31.1.2024) by Levelling-up and Regeneration Act 2023 (c. 55), ss. 78(3)(a), 255(2)(p) (with s. 247); S.I. 2024/92, reg. 2(a)

F2S. 2(1)(c) inserted (31.1.2024) by Levelling-up and Regeneration Act 2023 (c. 55), ss. 78(3)(b), 255(2)(p) (with s. 247); S.I. 2024/92, reg. 2(a)

Commencement Information

I3S. 2 in force at 27.11.2003 for W. for the purpose of and in relation to financial years beginning on or after 1.4.2004 by S.I. 2003/3034, art. 2, Sch. 1 Pt. I (with Sch. 2 para. 3)

I4S. 2 in force at 1.4.2004 for E. by S.I. 2003/2938, art. 7(a) (with art. 8, Sch.)

3Duty to determine affordable borrowing limitE+W

(1)A local authority shall determine and keep under review how much money it can afford to borrow.

(2)In the case of the following authorities, namely—

(a)the Greater London Authority, and

(b)a functional body,

the Mayor shall determine and keep under review how much money the authority can afford to borrow.

(3)Before making any determination under subsection (2), the Mayor shall consult the London Assembly.

(4)Before making a determination under subsection (2) for a functional body, the Mayor shall consult that body.

(5)The Secretary of State may by regulations make provision about the performance of the duty under subsection (1) or (2).

(6)Regulations under subsection (5) may, in particular—

(a)make provision about—

(i)when a determination under subsection (1) or (2) is to be made,

(ii)how such a determination is to be made, and

(iii)the period for which such a determination is to be made;

(b)make provision about the monitoring of an amount determined under subsection (1) or (2);

(c)make provision about factors to which regard may be had in making a determination under subsection (1) or (2) or in monitoring an amount determined under that subsection.

(7)Regulations under subsection (5) may include provision requiring a person making a determination under subsection (1) or (2) to have regard to one or more specified codes of practice, whether issued by the Secretary of State or another.

(8)A local authority’s function under subsection (1) shall be discharged only by the authority.

(9)Section 38(1) of the Greater London Authority Act 1999 (c. 29) (delegation by Mayor) does not apply in relation to functions under subsection (2).

(10)The power under subsection (7) is not to be read as limited to the specification of an existing document.

(11)In this section—

“functional body” has the same meaning as in the Greater London Authority Act 1999 (c. 29);
“local authority” does not include the Greater London Authority or a functional body;
“Mayor” means Mayor of London.

Commencement Information

I5S. 3 in force at 27.11.2003 for W. for the purpose of and in relation to financial years beginning on or after 1.4.2004 by S.I. 2003/3034, art. 2, Sch. 1 Pt. I (with Sch. 2 para. 3)

I6S. 3(1)-(4) (8) (9) (11) in force at 1.1.2004 for E. by S.I. 2003/2938, art. 5 (with art. 8, Sch.)

I7S. 3(5)-(7) (10) in force at 18.11.2003 for E. by S.I. 2003/2938, art. 3(a) (with art. 8, Sch.)

4Imposition of borrowing limitsE+W

(1)The Secretary of State may for national economic reasons by regulations set limits in relation to the borrowing of money by local authorities.

(2)The Secretary of State may by direction set limits in relation to the borrowing of money by a particular local authority for the purpose of ensuring that the authority does not borrow more than it can afford.

(3)Different limits may be set under subsection (1) or (2) in relation to different kinds of borrowing.

(4)A local authority subject to a limit set under subsection (1) may transfer any headroom it has in relation to the limit to another local authority subject to a corresponding limit.

(5)The Secretary of State may by regulations make provision about the exercise of the right under subsection (4) and may, in particular, make provision about—

(a)the circumstances in which a local authority is to be regarded as having headroom for the purposes of that subsection, and

(b)the amount of headroom which it has for those purposes.

(6)Where an amount is transferred under subsection (4), this Chapter shall have effect—

(a)in relation to the transferor, as if the limit in relation to which the headroom exists were reduced by that amount, and

(b)in relation to the transferee, as if the corresponding limit to which it is subject were increased by that amount.

Commencement Information

I8S. 4 in force at 27.11.2003 for W. for the purpose of and in relation to financial years beginning on or after 1.4.2004 by S.I. 2003/3034, art. 2, Sch. 1 Pt. I (with Sch. 2 para. 3)

I9S. 4(1)-(3) (5) in force at 18.11.2003 for E. by S.I. 2003/2938, art. 3(a) (with art. 8, Sch.)

I10S. 4(4)(6) in force at 1.4.2004 for E. by S.I. 2003/2938, art. 7(b) (with art. 8, Sch.)

5Temporary borrowingE+W

(1)Subject to subsection (2), any limit for the time being determined by or for a local authority under section 3, or applicable to it under section 4 [F3or 12A], shall be treated for the purposes of this Chapter as increased by the amount of any payment which—

(a)is due to the authority in the period to which the limit relates, but

(b)has not yet been received by it.

(2)In the case of a limit determined under section 3, or set under section 4(2) [F4or 12A], subsection (1) shall not apply to any payment whose delayed receipt was taken into account in arriving at the limit.

Textual Amendments

F3Words in s. 5(1) inserted (31.1.2024) by Levelling-up and Regeneration Act 2023 (c. 55), ss. 78(4)(a), 255(2)(p) (with s. 247); S.I. 2024/92, reg. 2(a)

F4Words in s. 5(2) inserted (31.1.2024) by Levelling-up and Regeneration Act 2023 (c. 55), ss. 78(4)(b), 255(2)(p) (with s. 247); S.I. 2024/92, reg. 2(a)

Commencement Information

I11S. 5 in force at 27.11.2003 for W. for the purpose of and in relation to financial years beginning on or after 1.4.2004 by S.I. 2003/3034, art. 2, Sch. 1 Pt. I (with Sch. 2 para. 3)

I12S. 5 in force at 1.4.2004 for E. by S.I. 2003/2938, art. 7(a) (with art. 8, Sch.)

6Protection of lendersE+W

A person lending money to a local authority shall not be bound to enquire whether the authority has power to borrow the money and shall not be prejudiced by the absence of any such power.

Commencement Information

I13S. 6 in force at 27.11.2003 for W. for the purpose of and in relation to financial years beginning on or after 1.4.2004 by S.I. 2003/3034, art. 2, Sch. 1 Pt. I (with Sch. 2 para. 3)

I14S. 6 in force at 1.4.2004 for E. by S.I. 2003/2938, art. 7(a) (with art. 8, Sch.)