The Local Authorities (Capital Finance and Approved Investments) (Amendment) Regulations 1995

Explanatory Note

(This note is not part of the Regulations)

These Regulations further amend the Local Authorities (Capital Finance) Regulations 1990 (“the principal Regulations”).

Regulation 3 amends regulation 2 of the principal Regulations to provide that expenditure on the acquisition or preparation of a computer program shall be expenditure for capital purposes if the program is acquired or prepared for use for a period of at least one year.

Regulation 4 amends regulation 7 of the principal Regulations to make further provision in respect of the initial cost of leases of land acquired by a local authority.

Regulation 7 of the principal Regulations is also amended to allow an authority to reduce the initial cost of a lease where their interest in another lease for which they provided credit cover has creased before the end of its term.

Regulation 5 amends regulation 8 of the principal Regulations to provide that where a lease of land falling within regulation 7(3) is varied by the grant of a new lease of the same land, the adjusted cost of the credit arrangement for the purposes of section 50(4)(b) shall be nil, provided that the new lease would, if granted when the original lease expired, fall within regulation 7(5F).

Regulation 6 amends regulation 14 of, and Schedule 1 to, the principal Regulations. The main effect of the amendments is that the reserved part of a local authority’s capital receipts shall be—

(a) 25 per cent. in specified cases where a receipt is received within a specified period in respect of a disposal of share capital or loan capital in a bus company or an airport company; and

(b) 50 per cent. in the case of the receipt derived from a disposal by a local authority of share or loan capital which—

(i) was acquired before 10th March 1988, or for the purposes of providing financial assistance under section 33 of the Local Government and Housing Act 1989m and was issued by a company not concerned with the provision of housing or housing services;

(ii) is in a company formed by, or with the participation of, the authority for any of the purposes referred to in section 145(1) of the Local Government Act 1972; or

(iii) is in a waste disposal company formed by, or with the participation of, the authority.

Regulation 7 amends regulation 20 of the principal Regulations to provide that where a local authority acquire shares in a company in consideration for the disposal of an asset, the reserved part of the notional capital receipt shall be nil if the asset was not acquired for housing purposes and if expenditure on acquiring the asset would be expenditure for capital purposes.

Regulations 8 to 11 make amendments to Part VII (credit ceiling), VII (minimum revenue provision), VIIIA (use of amounts set aside to meet credit liabilities) and IX (supplementary) of the principal Regulations to take account of the new police authorities established under section 3 of the Police Act 1964 (as substituted by section 2 of the Police and Magistrates' Courts Act 1994).

Regulation 12 amends Part II of Schedule 4 to the principal Regulations to provide that in determining a local authority’s adjusted credit ceiling no account shall be taken of amounts set aside as credit cover under the Local Authorities (Companies) Order 1995.

Regulation 13 further amends the Schedule to the Local Authorities (Capital Finance) (Approved Investments) Regulations 1990, which contain a list of investments approved by the Secretary of State for the purposes of Part IV of the Local Government and Housing Act 1989, to take account of new police authorities.