(This note is not part of the Regulations)
These Regulations amend the Local Authorities (Capital Finance and Accounting) (England) Regulations 2003 (S.I. 2003/3146) (“the Principal Regulations”).
Regulation 3 updates the definitions in regulation 1 of the Principal Regulations. A definition of “securitisation transaction”, being a disposal for consideration by a local authority of a specified revenue stream or streams, is inserted.
Regulation 4(1) provides that a securitisation transaction must be treated as a credit arrangement for the purposes of section 7 (“credit arrangements”) of the Local Government Act 2003 (c. 26).
Regulation 4(2) replaces the term “fixed asset” with the current terminology in local government accounting practice.
Regulation 4(3) substitutes regulation 6 of the Principal Regulations so as to provide for the calculation of the cost of a securitisation transaction.
Regulation 5(1) amends regulation 7 of the Principal Regulations to make clear that redemption of a bond on its maturity, or purchase of a bond, does not constitute repayment of a loan or other financial assistance. Regulation 5(2) inserts new regulation 7A into the Principal Regulations. This provides that a sum received by a local authority in respect of the redemption on maturity of a bond, or the disposal of a bond, must be treated as a capital receipt, but only if the bond was acquired before 1 April 2012 and the expenditure on acquisition was treated as capital expenditure.
Regulation 6 provides that the value of any consideration received as a result of a securitisation transaction by a local authority must be treated as a capital receipt.
Regulation 7 removes the requirement for expenditure by local authorities on the acquisition of loan capital to be treated as capital expenditure. It also provides that expenditure incurred on the acquisition, production or construction of assets for use by, or disposal to, a person other than the local authority must be treated as capital expenditure, if it would have been capital expenditure had the assets been acquired, produced or constructed for use by the local authority.
Regulation 8 updates the title of one of the documents identified by the Secretary of State as constituting proper practices, in relation to the accounting practices for the accounts of a local authority.
An impact assessment has not been produced for this instrument as no impact on business or the private or voluntary sectors is foreseen.