The Local Government Reorganisation (Capital Money) (Greater London) Order 1987

Explanatory Note

(This note is not part of the Order)

This Order is primarily concerned with the distribution of capital receipts by the London Residuary Body to rating authorities in Greater London following the abolition of the Greater London Council: and with the enhancement of capital spending power under Part VIII of the Local Government, Planning and Land Act 1980 on account of such receipts. It also provides for the making of a grant to The Trust for London and for the transfer to the Inner London Education Authority of certain sums held by the abolished council.

Part I of the order defines terms used in the order. In particular, “capital money” is defined for the purposes of section 77 of the Local Government Act 1985 and the order.

Part II provides for notional additions to the net capital receipts of rating authorities (other than The Temples) and the Inner London Education Authority for the purposes of section 72(3) of the 1980 Act, to authorise further capital expenditure. For the financial year beginning on 1st April 1986 and subsequent years, the additions are based on the amounts derived from the disposal by the London Residuary Body of certain land and other property which it inherited on abolition and from the repayment to it of certain grants and advances of a capital nature but do not include amounts payable to the Exchequer or the European Commission by way of reimbursement of grant. For the financial year 1986/87 the additions also include amounts based on the capital receipts of the Greater London Council which had not been used before 1st April 1986.

Part III of the order provides for the making of a grant of £10 millions to The Trust for London and for the payment to the Inner London Education Authority of an amount which represents the part of the Greater London Councils’s revenue balances and unapplied capital receipts at the abolition date which is attributable to its functions as a local education authority. Receipts of the Residuary Body from the disposal of certain land and other property are to be passed to the rating authorites in accordance with a formula which is contained in the Schedule to the order. The formula permits the Residuary Body to retain amounts which reflect its expenditure on facilitating disposals and on financing loans raised for that purpose; and amounts payable to the Exchequer or the European Commission by way of reimbursement of grant.

Part IV of the order requires the Residuary Body to notify the rating authorities, the Inner London Education Authority and the Secretary of State of the amounts, both notional and actual, which are likely to be available for distribution and which are, in fact, distributed. The Residuary Body is required to use its best endeavours to secure that payments to the rating authorities are made on or before the last day of the financial year in question. To the extent that payments are not so made, they are treated as interest-free loans from the rating authorities to the Residuary Body.

The rating authorities are required to use money received under the order for purposes for which they may use capital money which they have received on the disposal of land under Part VII of the Local Government Act 1972. Some of the money received by the Inner London Education Authority under the order is to be used for those purposes; the rest is to be carried to its general fund.