§ Borrowing by local authorities
§ 1. Without prejudice to section 109 above—
- (a) a principal council may borrow money for the purpose of ending money to another authority (including a police, river, or harbour authority) under paragraph 13 or 14 below; and
- (b) a local authority other than the Greater London Council may borrow money for any other purpose or class of purpose approved for the purposes of this subparagraph by the Secretary of State and in accordance with any conditions subject to which the approval is given.
§ 2.—(1) Where a local authority are authorised by or under this Act or any other enactment to borrow money, they may raise the money—
- (a) by mortgage;
- (b) by the issue of stock;
- (c) by the issue of debentures or annuity certificates under the Local Loans Act 1875;
- (d) by the issue of bonds :
- (e) by the issue of bills;
- (f) by an agreement entered into with the Public Works Loan Commissioners under section 2 of the Public Works Loans Act 1965; or
- (g) by any other means approved by the Secretary of State with the consent of the Treasury.
§ (2) The powers conferred by this paragraph shall be exercisable subject to and in accordance with the following provisions of this Part of this Schedule.1802
§ 3. The power of a local authority to borrow money by any means includes power to raise money by those means outside the United Kingdom or in a foreign currency, but only with the consent of, and in accordance with any conditions specified by, the Treasury.
§ 4.—(1) The Secretary of State may by regulations made with the consent of the Treasury—
- (a) prescribe the form of any mortgage deed to be entered into for the purpose of any borrowing by a local authority;
- (b) regulate the issue of stocks and bonds for any such purpose, including the terms on which they are to be issued;
- (c) regulate the manner of transfer, dealing with and redeeming any mortgage created, or stocks or bonds issued, for any such purpose;
- (d) apply all or any of the provisions of section 224 above, with or without modifications to any such mortgage deed, stock or bonds.
§ (2) Different provisions may be made under this paragraph for securities of different classes.
§ (3) A statutory instrument containing regulations under this paragraph shall be subject to annulment in pursuance of a resolution of either House of Parliament.
§ 5.—(1) A local authority may borrow by the issue of bills, payable within twelve months from the date of issue—
- (a) any sum which they are authorised to borrow, by or under this Act or any other enactment; or
- (b) such sums as may be required for the purpose of defraying expenses (including those payable by them to meet the expenses of other local authorities) pending the receipt of revenues receivable by them in respect of the financial year in which those expenses are chargeable.
§ (2) The aggregate of the amount outstanding on hills issued by a local authority under sub-paragraph (1) above shall not exceed a sum equal to such proportion of the authority's estimated gross income derived from rates during the current financial year as may be prescribed by an order made by the Treasury or, if no such proportion is so prescribed—
- (a) in the case of a county council or the Greater London Council, a sum equal to one-fifth of that income; and
- (b) in any other case, a sum equal to one-fifth of the proportion of that income retained by the council for its own purposes during that year.
§ (3) A local authority shall not borrow by the issue of bills in any financial year during which the authority's estimated gross income derived from rates does not exceed £3 million or such other sum as may be prescribed by an order made by the Treasury.
§ (4) A statutory instrument containing an order under this paragraph shall be subject to annulment in pursuance of a resolution of either House of Parliament.1803
§ 6. A local authority may issue bonds transferable by delivery (with or without endorsement) and other securities so transferable, but only with the consent of, and in accordance with any conditions specified by, the Treasury.
§ 7.—(1) Where expenditure incurred by a local authority for any purpose is defrayed by borrowing, the local authority shall subject to paragraph 9(8) below, in each year debit the account from which that expenditure would otherwise fall to be defrayed with a sum equivalent to an instalment of principal and interest combined such that if paid annually it would secure the payment of interest at the due rate on the outstanding principal together with the repayment of the principal not later than the end of the fixed period.
§ (2) Sub-paragraph (1) above shall not prevent a local authority from debiting the said account with a sum larger than that specified in that sub-paragraph.
§ 8. A local authority who borrow money under paragraph 1(b) above may during the fixed period borrow further sums, without the approval of the Secretary of State under that sub-paragraph, for the purpose of repaying the money so borrowed.
§ 9.—(1) Where a sum is borrowed before or after the coming into force of this Schedule, but not before 31st July 1963 (being the commencement date for the Local Government (Financial Provisions) Act 1963) by a local authority for any of the following purposes, that is to say,—
- (a) meeting expenditure on the construction of new, or the extension or alteration of existing, works forming or to form part of an undertaking of a revenue-producing character;
- (b) carrying out on land any other operations, being operations of a prescribed kind or operations specified in relation to that land by direction of the Secretary of State;
- (c) acquiring land for the purpose of the construction thereon of new, or the extension or alteration of existing, works forming or to form part of an undertaking of a revenue-producing character, or for the purpose of the carrying out thereon of operations of a kind prescribed by virtue of paragraph (b) above, or operations specified in relation to that land by direction of the Secretary of State;
- (d) acquiring land specified by direction of the Secretary of State;
§ (2) Where—
- (a) land is acquired by a local authority before or after the coming into force of this Schedule, but not before 31st July 1963; and
- (b) a sum is borrowed by the authority for the purpose of the acquisition; and
- (c) the acquisition is not for a purpose :nentioned in sub-paragraph (1)(c) above; and
- (d) the land is subsequently appropriated for a purpose so mentioned;
§ (3) Where before 31st July, 1963 land has been acquired by a local authority, and a sum was borrowed by the authority for the purpose of the acquisition, and either—
- (a) the land was acquired for a purpose mentioned in sub-paragraph (1)(c) above, or (not having been so acquired) was before that date appropriated for such a purpose, but the construction, extension or alteration of the works or the carrying out of the operations that constitutes the purpose for which the land was acquired or appropriated was not begun till after that date, or was begun but not completed before that date; or
- (b) the land was, on or after that date, appropriated for a purpose mentioned in the said sub-paragraph (1)(c);
§ (4) A local authority's power of suspension is a power to suspend, in whole or in part, any annual provision required to be made during the permitted period for the repayment of the principal.
§ (5) A local authority's power of borrowing tinder this sub-paragraph is a power to borrow money for the payment of all or any of the interest clue in respect of the permitted period on the principal.
§ (6) The permitted period in relation to a sum borrowed as mentioned in sub-paragraph (1)(d) above is a period not longer than ten years, nor beginning ten years or less before the expiration of the fixed period for that sum, and in any other case is a period not longer than five years, nor beginning five years or less, before the expiration of the fixed period for the sum originally borrowed; but the Secretary of State may in any case, if requested to do so by the local authority by whom the sum was borrowed, substitute for the references in the foregoing provision to ten years or the references in that provision to five years a longer period so requested.
§ (7) A sum borrowed by virtue of subparagraph (5) above for the payment of interest on the principal must be repaid within the fixed period for the principal.
§ (8) Where by virtue of paragraph 7 above a local authority are required to debit a sum to any account and they suspend, in whole or in part, any annual provision for the repayment of the principal, they may refrain from debiting to that account an amount equal to the amount of the annual provision so suspended.
§ 10.—(1) A local authority may, without the approval of the Secretary of State under paragraph 1(b) above, borrow by way of temporary loan or overdraft from a bank or otherwise any sums which they may temporarily require—
- (a) for the purpose of defraying expenses (including the payment of sums due by them to meet the expenses of other authorities) pending receipt of revenues receivable by them in respect of the period of account in which those expenses are chargeable;
- (b) for the purpose of defraying, pending the raising of a loan which the authority have been authorised to raise, expenses intended to be defrayed by means of the loan.
§ (2) Where a local authority borrow money under this paragraph for a purpose mentioned in paragraph 1(b) above or, in the case of the Greater London Council, a purpose authorised by any local enactment and subsequently raise a loan for that purpose, the loan shall, to the extent of the sum borrowed temporarily, be treated for the purposes of this Part of this Schedule as having been made at the time of the temporary borrowing.
§ 11.—(1) All money borrowed by a local authority, whether before or after the coming into force of this Schedule, shall be charged indifferently on all the revenues of the authority.
§ (2) Subject to sub-paragraph (3) below, all securities created by a local authority, whether under this Part of this Schedule or any other enactment or instrument under an enactment, shall rank equally without any priority.
§ (3) This paragraph shall not affect any priority existing at, or any right to priority conferred by a security created before, 1st June 1934.
§ 12. Two or more local authorities may combine to exercise their powers of borrowing under this Part of this Schedule jointly, and where they do so—
- (a) any limit on the amount which each authority may borrow shall apply to the amount which each authority receive from the joint loan;
- (b) paragraph 11 above shall apply to the money so borrowed as if references to a local authority were references to the local authority by whom the money is received.
§ Loans by local authorities
§ 13.—(1) A local authority or the Common Council may lend to another authority mentioned in sub-paragraph (2) below, on such terms as may be agreed between them, such sums as that other authority may require for any purpose for which that other authority are authorised to borrow money by or under this Act or any other enactment.
§ (2) The authorities to whom sums may be lent under sub-paragraph (1) above are local authorities, the Common Council, the Sub-Treasurer of the Inner Temple, the Under Treasurer of the Middle Temple, a joint board 1806 consisting of representatives of local authorities or any of the foregoing authorities and, without prejudice to the foregoing, a police or river authority.
§ 14.—(1) A principal council may make loans to a harbour authority for a harbour wholly or partly situated within the area of the council, on such terms as may be agreed between the council and the authority, for the purpose of enabling the harbour authority to do anything which they have power to do.
§ Funds of local authorities
§ 15.—(1) A local authority may in accordance with a scheme made by them establish and operate a loans fund for defraying any expenditure which the authority are authorised by or under any enactment to meet out of moneys borrowed by them and for the repayment or redemption of debt.
§ (2) A scheme made by a local authority under this section may be varied or revoked by a subsequent scheme made by them.
§ 16.—(1) Subject to the provisions of this Part of this Schedule, a local authority may establish either or both of the following funds, that is to say—
- (a) a capital fund, to be used for defraying any expenditure of the authority to which capital is properly applicable, or in providing money for repayment of loans (but not in making any annual payment required to be made in respect of loans);
- (b) a renewal and repairs fund, to be used for the purpose of defraying expenditure to be incurred from time to time in repairing, maintaining, replacing and renewing any buildings, works, plant, equipment or article, belonging to the authority.
§ (2) It is hereby declared that the reference to the authority in sub-paragraph (1)(b) above, in the case of a county council, includes a reference to a police authority which is a committee of that council.
§ (3) A fund established by a local authority under this paragraph shall not be used to meet, directly or indirectly, any expenditure incurred by the authority for the purposes of an undertaking of the authority, being a transport, water, district heating, harbour, dock, pier or ferry undertaking or a market or civic restaurant, except that such a fund may be used by the Greater London Council so to meet any expenditure incurred by them for the purpose of a civic restaurant.
§ (4) Pending the application of any such fund as aforesaid for the purposes authorised by this paragraph, the money in the fund shall (unless applied in any other manner authorised by or under any enactment) be invested in statutory securities.
§ (5) A local authority may close any fund established by them under any other enactment for a purpose for which a fund may be established under this paragraph and transfer any final balance standing to the credit of 1807 the former fund to any other fund established by them under this paragraph.
§ (6) In this paragraph "statutory securities" means any security in which trustees are for the time being authorised by law to invest trust moneys.
§ 17.—(1) Subject to the provisions of this paragraph, a local authority by whom a capital fund is established under paragraph 16 above may pay into that fund—
- (a) any sums derived from the sale of any property of the local authority, not being property held by them for a purpose expenditure on which is prohibited by paragraph 16(3) above;
- (b) the whole or any part of the surplus of the revenue income over the revenue expenditure of the revenue fund on 31st March in any year, except so far as required by law to be applied to or carried forward for any other purpose; and
- (c) such other sums from the revenue fund as the local authority may by resolution direct;
§ (2) The aggregate amount paid by a local authority into a capital fund under paragraphs (b) and (c) of sub-paragraph (1) above shall not, except with the consent of the Secretary of State, exceed in any year the equivalent of the product of a rate of 5p in the £, and no payment shall be made by the local authority into any such capital fund so as to make the fund exceed such sum as the Secretary of State may from time to time determine either generally or in any particular case.
§ (3) In the case of an application of money in any such capital fund, the amount to be applied shall not in any one transaction exceed such sum as the Secretary of State may determine generally or in any particular case.
§ (4) Except as provided by this paragraph, all money applied from any such capital fund may, if the local authority think fit, be repaid from the account to which that money is advanced by such annual instalments (with or without interest) and within such period as the local authority may determine.
§ 18.—(1) Subject to the provisions of this paragraph, a local authority by whom a renewal and repairs fund is established under paragraph 16 above may from time to time pay into that fund such sums as they think tit from the revenue fund and shall so pay a sum equal to the amount of any income arising from the renewal and repairs fund.
§ (2) No payment shall be made by a local authority into any such renewal and repairs fund so as to make the fund exceed such sum as the Secretary of State may from time to time determine either generally or in a particular case.
§ (3) The purposes for which any such renewal and repairs fund may be applied shall not include expenditure for the purposes of an undertaking of the authority in respect of 1808 which the authority are authorised to provide a reserve fund.
§ 19.—(1) Notwithstanding anything in any enactment a local authority may use, for any purpose for which the authority has a statutory power to borrow, any money forming part of, but not for the time being required for the purposes of, any fund of theirs to which this paragraph applies; and where any such money is so used the following provisions of this paragraph shall have effect.
§ (2) The money so used shall be repaid to the said fund as follows :—
- (a) it shall be repaid as and when it is required for the purposes of that fund;
- (b) if not required to be repaid earlier under paragraph (a) above, it shall be repaid within the period within which a loan raised under the statutory power would be repayable, or at such time before the expiration of that period as the authority may resolve :
- (c) the repayment shall be made out of the revenue fund of the authority, or out of money which would have been applicable to the repayment of a loan raised under the statutory power, and shall be made by the method by which a loan raised under the statutory power would be repayable.
§ (3) In the accounts of the revenue fund of the authority, an amount equal to interest at the appropriate rate on the money so used and for the time being not repaid shall be credited to the said fund and debited to the undertaking or purpose for which the money is so used.
§ (4) The statutory power shall be deemed to be exercised by the use of money under this paragraph as fully in all respects as if a loan of the same amount had been raised in exercise of the power.
§ (5) This paragraph applies to any fund established for the repayment of debt, or as a reserve, or for the maintenance, renewal or repair of property, or for superannuation of staff, or for insurance, or otherwise for meeting future expenditure of a capital or nonrecurring nature, or for any like purpose.
(6) In this paragraph—
interest at the appropriate rate" means interest at such rate as may be determined by the authority to be equal as nearly as may be to the rate of interest which would be payable on a loan raised on mortgage under the statutory power;
statutory power to borrow" means a power to borrow conferred by or under this Act or any other enactment, except the power to borrow by way of temporary loan or overdraft conferred by paragraph 10 above.
§ (7) The powers conferred by this paragraph are in addition to, and not in derogation of, the powers conferred by or under any other enactment.
§ 20. A person lending money to a local authority shall not be bound to inquire whether the borrowing of the money is legal or regular or whether the money raised was 1809 properly applied and shall not be prejudiced by any illegality or irregularity, or by the misapplication or non-application of any of that money.
§ 21. This Part of this Schedule shall not apply to—
- (a) any mortgage of property effected under section 310 of the Public Health Act 1936 or any previous corresponding enactment or the power of a local authority under that section to effect a mortgage; or
- (b) any local bonds issued under section 138 of the Housing Act 1957 or any previous corresponding enactment, or the power conferred on a local authority by that section to issue local bonds.
§ 22.—(1) In this Part of this Schedule—
§ " debentures" includes debenture stock;
§ "fixed period", in relation to any money borrowed, means the period within which the money is to be repaid as determined by the local authority with the consent of the Secretary of State or, in the case of the Greater London Council, of the Treasury;
§ "revenue fund" means the county fund, the general rate fund, the general fund of the Greater London Council or the general rate of the City, as the case may be.
§ (2) In paragraphs 15 to 19 above "local authority" includes the Common Council and a combined police authority which is a body corporate.1810
§ PART II")
§ page 284, line 9, leave out paragraph 2.
§ page 285, line 2, leave out paragraph 4.
§ line 33, leave out paragraph 6 and insert—
§ line 41, leave out paragraph 7.
§ page 286, line 36, at end insert—
§ (" (iA) in a parish or community part of which is so subject, the part which is not so subject")
§ line 41, leave out from ("area") to end of line 42 and insert ("in England not falling within sub-paragraph (i), (iA) or (ii) above")
§ line 44, leave out ("those") and insert ("the foregoing")
§ House adjourned at eight minutes before nine o'clock.