The Local Authorities (Companies) (Amendment) (Wales) Order 2002

Explanatory Note

(This note is not part of the Order)

Article 14 of the Local Authorities (Companies) Order 1995 (“the 1995 Order”) requires an authority to have available an amount of credit cover for the liabilities of companies which, for the purposes of Part IV of the Local Government and Housing Act 1989 (“the 1989 Act”), are treated as companies regulated by the authority. Article 15(1) modifies Part IV by permitting an authority to treat a basic credit approval as increased by the amount by which its regulated companies reduce their liabilities. This Order amends article 14 of the 1995 Order so as to provide an additional mechanism by which an authority can provide that credit cover.

The amendments, which are set out in article 2(2), allow an authority to designate as credit cover provision, and treat as credit cover, any amount that has been treated as added to the authority’s basic credit approval in accordance with article 15 of the 1995 Order and in respect of which no determination has been made by an authority under section 56(1) of the 1989 Act (use of credit approvals). This Order also amends both article 14(2) and 15(1) of the 1995 Order to make it clear that those articles do not apply the whole of Part IV to such companies.

The Order also makes amendments relating to article 16(1) of the 1995 Order. The amendments allow an authority to disregard, as respect a company which becomes a regulated company in relation to the authority—

(a) expenditure defrayed by the company, after it becomes a regulated company, from monies accumulated before it became a regulated company, and

(b) liabilities of a regulated company under a credit transaction, whether entered into before or after the company became a regulated company.