Local Government Finance Act 1988 (c. 41)

(The document as of February, 2008)

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Revenue support grant

78 Revenue support grant

(1) For each chargeable financial year the Secretary of State shall pay a grant (to be called revenue support grant) to receiving authorities and specified bodies in accordance with this Part.

(2) For each chargeable financial year the Secretary of State shall make a determination under this section.

(3) A determination shall state--

(a) the amount of the grant for the year,

(b) what amount of the grant he proposes to pay to receiving authorities, and

(4) Different amounts may be stated under subsection (3)(c) above in relation to different specified bodies.

(5) Before making a determination the Secretary of State shall--

(a) consult such representatives of local government as appear to him to be appropriate, and

(b) obtain the Treasury's consent.

(6) A determination shall be specified in a report (to be called a revenue support grant report) and the report shall be laid before the House of Commons.

(7) As soon as is reasonably practicable after the report is laid before the House of Commons the Secretary of State shall send a copy of it to each notifiable authority.

79 Effect of report's approval

(1) This section applies where in accordance with section 78 above a determination as regards revenue support grant has been made for a financial year and specified in a report which has been laid before the House of Commons.

(2) If the report is approved by resolution of the House of Commons the Secretary of State shall pay the amount stated in the determination as the amount of the revenue support grant for the year.

(3) The Secretary of State shall pay to receiving authorities the amount stated in the determination under section 78(3)(b) above, and shall pay to specified bodies the aggregate of the amounts stated in the determination under section 78(3)(c) above.

(4) The amount falling to be paid to receiving authorities shall be distributed among and paid to them in accordance with sections 80 to 83 below or sections 80 to 84 below (as the case may be).

(5) The amount to be paid to a particular specified body shall be the amount stated in relation to it under section 78(3)(c) above.

(6) Where a sum falls to be paid to a specified body by way of revenue support grant it shall be paid at such time, or in instalments of such amounts and at such times, as the Secretary of State determines with the Treasury's consent; and any such time may fall within or after the financial year concerned.

80 Distribution reports

(1) The Secretary of State shall make a report containing the basis on which he proposes (subject to any report under section 84 below) to distribute among receiving authorities those amounts of revenue support grant which fall to be paid to such authorities under this Part.

(2) Before making the report the Secretary of State shall notify to such representatives of local government as appear to him to be appropriate the general nature of its intended contents.

(3) The report shall be laid before the House of Commons.

(4) As soon as is reasonably practicable after the report is laid before the House of Commons the Secretary of State shall send a copy of it to each notifiable authority.

(5) After making the report the Secretary of State may make a further report or reports, and any such report--

(a) may replace any previous report under this section, or

(b) may amend any previous report under this section.

(6) A report under subsection (5)(a) above shall contain a revised basis on which the Secretary of State proposes (subject to any report under section 84 below) to distribute the amounts mentioned in subsection (1) above.

(7) A report under subsection (5)(b) above shall contain amendments to the basis of distribution contained in the report which it amends.

(8) Subsections (2) to (4) above shall apply to any report under subsection (5) above as they apply to one under subsection (1) above.

(9) A report under this section shall state the day on which it is to come into force and the first financial year for which it is to operate.

81 Effect of distribution reports

(1) This section applies where in accordance with section 80 above a report has been made and laid before the House of Commons.

(2) If the report is approved by resolution of the House of Commons it shall come into force on the day stated in the report.

(3) If the report is made under section 80(1) or (5)(a), on and after the day it comes into force the basis it contains shall have effect as regards revenue support grant payable for all chargeable financial years beginning with the first financial year for which it states it is to operate; but this is subject to the effect of any subsequent report under section 80(5).

(4) If the report is made under section 80(5)(b), on and after the day it comes into force the basis it amends read subject to the amendments shall have effect as regards revenue support grant payable for all chargeable financial years beginning with the first financial year for which it states it is to operate; but this is subject to the effect of any subsequent report under section 80(5).

82 Calculation of sums payable

(1) As soon as is reasonably practicable after a revenue support grant report for a financial year has been approved by resolution of the House of Commons, the Secretary of State shall calculate what sum falls to be paid to each receiving authority by way of revenue support grant for the year in accordance with the basis of distribution for the time being effective (as regards grant payable for the year) under section 81 above.

(2) At any time after making a calculation under subsection (1) above the Secretary of State may make one further calculation of what sum falls to be paid to each receiving authority by way of revenue support grant for the year in accordance with the basis of distribution for the time being effective (as regards grant payable for the year) under section 81 above.

(3) If the Secretary of State decides that he will leave out of account information received by him after a particular date in making a calculation under subsection (1) or (2) above the calculation shall be made accordingly.

(4) Subsection (3) above applies only if the Secretary of State informs each notifiable authority in writing of his decision and of the date concerned; but he may do this at any time before the calculation is made under this section (whether before or after a determination is made for the year under section 78 above).

(5) As soon as is reasonably practicable after making a calculation under subsection (1) or (2) above the Secretary of State shall--

(a) inform each receiving authority of the sum he calculates falls to be paid to it by way of revenue support grant for the year, and

(b) inform each authority falling within section 76(3)(b) to (g) above of the sum he calculates falls to be paid by way of revenue support grant for the year to any receiving authority to which it has power to issue a precept.

(6) Subsection (5)(b) above shall not have effect in the application of this Part to Wales.

83 Payment of sums

(1) Where a calculation is made under section 82(1) above the Secretary of State shall pay to each receiving authority any sum calculated as falling to be paid to it.

(2) The sum shall be paid in instalments of such amounts, and at such times in the financial year concerned, as the Secretary of State determines with the Treasury's consent.

(3) Where a calculation is made under section 82(2) above and the sum it shows as falling to be paid to a receiving authority exceeds that shown as falling to be paid to it by the calculation for the financial year concerned under section 82(1) above, the Secretary of State shall pay to the authority a sum equal to the difference.

(4) The sum shall be paid at such time, or in instalments of such amounts and at such times, as the Secretary of State determines with the Treasury's consent; but any such time must fall after the end of the financial year concerned.

(5) Where a calculation is made under section 82(2) above and the sum it shows as falling to be paid to a receiving authority is less than that shown as falling to be paid to it by the calculation for the financial year concerned under section 82(1) above, a sum equal to the difference shall be paid by the authority to the Secretary of State on such day after the end of the financial year concerned as he may specify; and if it is not paid on or before that day it shall be recoverable in a court of competent jurisdiction.

84 Special provision for transitional years

(1) The Secretary of State may lay before the House of Commons a report containing provision about--

(a) the calculation under section 82(1) above for a transitional year, and

(b) any calculation under section 82(2) above for such a year;

and the following provisions of this section shall apply to the report (if any).

(2) The report shall provide that the basis of distribution in accordance with which such a calculation is to be made shall be the basis which would have applied (apart from the report) but read subject to adjustments set out in the report.

(3) The report--

(a) must be laid before the beginning of the first transitional year;

(b) must contain provision for each transitional year;

(4) As soon as is reasonably practicable after the report is laid before the House of Commons the Secretary of State shall send a copy of it to each notifiable authority.

(5) If the report has been laid in accordance with this section, and is approved by resolution of the House of Commons, subsection (6) below shall have effect as regards a transitional year.

(6) The basis of distribution in accordance with which--

(a) the calculation under section 82(1) above, and

(b) any calculation under section 82(2) above,is to be made for the year shall be the basis which would have applied (apart from the report) but read subject to adjustments set out for the year in the report.

(7) Subject to subsection (6) above, the provisions of this Act relating to any such calculation shall apply as they apply to a calculation made, or falling to be made, in accordance with an unadjusted basis.

(8) In deciding whether to lay a report, and in deciding its contents, the Secretary of State may make such assumptions and estimates as he sees fit as to income, expenditure, balances and other matters (financial or otherwise) in relation to receiving authorities and other bodies, whether as regards any transitional year or otherwise.

Additional grant

85 Additional grant

(1) This section applies where a revenue support grant report for a chargeable financial year has been approved by the House of Commons, and before the year ends the Secretary of State forms the view that fresh circumstances affecting the finances of local authorities have arisen since the approval.

(2) For the year concerned the Secretary of State may pay a grant (to be called additional grant) to receiving authorities in accordance with this Part.

(3) Where the Secretary of State proposes to pay additional grant for a financial year he shall make a determination under this section.

(4) A determination shall state--

(a) the amount of the grant for the year, and

(b) the basis on which he proposes to distribute it among receiving authorities.

(5) Before making a determination the Secretary of State shall obtain the Treasury's consent.

(6) A determination shall be specified in a report and the report shall be laid before the House of Commons.

(7) As soon as is reasonably practicable after the report is laid before the House of Commons the Secretary of State shall send a copy of it to each notifiable authority.

86 Effect of report's approval

(1) This section applies where in accordance with section 85 above a determination as regards additional grant has been made for a financial year and specified in a report which has been laid before the House of Commons.

(2) If the report is approved by resolution of the House of Commons--

(a) the Secretary of State shall pay the amount stated in the determination as the amount of the additional grant for the year, and

(b) the amount shall be distributed on the basis stated in the determination.

(3) Where a sum falls to be paid to a receiving authority by way of additional grant it shall be paid at such time, or in instalments of such amounts and at such times, as the Secretary of State determines with the Treasury's consent; and any such time may fall within or after the financial year concerned.

(4) The Secretary of State may direct a receiving authority to which he pays any sum by way of additional grant to pay all or such part of the sum as he may specify to such relevant precepting authority or authorities as he may specify.

(5) For the purposes of subsection (4) above an authority is a relevant precepting authority in relation to a receiving authority if it has power to issue a precept to the receiving authority.

(6) Subsections (4) and (5) above shall not have effect in the application of this Part to Wales.

Transport grants

87 Transport grants

(1) The Secretary of State shall pay to a defined council a grant for a chargeable financial year if he accepts that at least some of its estimated relevant transport expenditure for the year is appropriate to be taken into account for the purposes of this section.

(2) The amount of the grant shall be a proportion of so much of the council's estimated relevant transport expenditure for the year as he accepts under subsection (1) above.

(3) The proportion shall be such as is determined for the year by the Secretary of State and shall be the same as regards each council to which a grant is paid for the year under this section.

(4) A grant under this section shall be paid at such time, or in instalments of such amounts and at such times, as the Secretary of State thinks fit; and any such time need not fall within the financial year concerned.

(5) In deciding whether to accept any of a council's estimated relevant transport expenditure for a financial year under subsection (1) above, and how much of it to accept, the Secretary of State may have regard to the following matters (in addition to any other matters he thinks fit)--

(a) whether the council's relevant transport expenditure for any preceding financial year or years is greater or smaller than its estimated relevant transport expenditure for that year or those years;

(b) the extent (if any) to which it is greater or smaller.

(6) The total accepted under subsection (1) above as regards all defined councils for a particular financial year shall not exceed such amount as is approved by the Treasury for the year.

88 Transport grants: supplementary

(1) This section applies for the purposes of section 87 above.

(2) Each of the following is a defined council--

(a) a county council,

(b) a metropolitan district council,

(d) the Common Council.

(3) A council's relevant transport expenditure for a financial year is the expenditure it calculates it incurred in the year in connection with--

(a) highways or the regulation of traffic (where the council is English), or

(b) highways, the regulation of traffic or public transport (where the council is Welsh).

(4) But in making the calculation expenditure shall be left out of account unless, at the time the calculation is made, it is prescribed expenditure for the purposes of Part VIII of the [1980 c. 65.] Local Government, Planning and Land Act 1980.

(5) A council's estimated relevant transport expenditure for a financial year is the expenditure it estimates it will incur in the year in connection with--

(a) highways or the regulation of traffic (where the council is English), or

(b) highways, the regulation of traffic or public transport (where the council is Welsh).

(6) But in making the estimate expenditure shall be left out of account unless, at the time the estimate is made, it is prescribed expenditure for the purposes of Part VIII of the Local Government, Planning and Land Act 1980.

Part VI Funds

Funds

89 Collection funds

(1) Every charging authority shall establish, and then maintain, a fund (to be called its collection fund) in accordance with this Part.

(2) An authority's collection fund must be established on 1 April 1990.

(3) Section 101(1)(b) of the [1972 c. 70.] Local Government Act 1972 (delegation) shall not apply as regards the functions of an authority in relation to its collection fund.

(4) Any sum paid into an authority's collection fund shall be used in settlement of payments which are to be met from that fund or of transfers which are to be made from it.

(5) If not immediately required for the purpose of settling those payments or transfers, the sum shall be held, invested or otherwise used in such manner as may be prescribed by regulations made by the Secretary of State.

90 Payments to and from collection funds

(1) The following shall be paid into the collection fund of an English charging authority--

(a) sums received by the authority in respect of its community charges (but not sums received by way of penalty),

(b) sums received by the authority in respect of any non-domestic rate under this Act,

(c) sums received by the authority under paragraph 5(10) of Schedule 8 below, regulations made under paragraph 6(5) of that Schedule, or paragraph 9 of that Schedule,

(d) sums received by the authority by way of revenue support grant,

(e) sums received by the authority by way of additional grant,

(f) sums received by the authority as interest on sums held or lent in accordance with section 89(5) above, and

(g) any other sums which the Secretary of State specifies are to be paid into an English charging authority's collection fund.

(2) The following payments shall be met from the collection fund of an English charging authority--

(a) payments to be made by the authority in respect of the amount of any precept issued under this Act or in respect of interest on such an amount,

(b) payments to be made by the authority to the Secretary of State under paragraph 5 of Schedule 8 below,

(d) payments to be made by the authority to another authority under a direction under section 86(4) above,

(e) payments to be made by the authority to another person in repaying, under regulations under this Act, excess receipts by way of community charges or of non-domestic rates,

(f) payments to be made by the authority to another person in respect of interest on repayments of excess receipts by way of non-domestic rates, and

(g) any other payments which are to be made by the authority to another person and which the Secretary of State specifies are to be met from an English charging authority's collection fund.

(3) The following shall be paid into the collection fund of a Welsh charging authority --

(a) sums received by the authority in respect of its community charges (but not sums received by way of penalty),

(b) sums received by the authority as interest on sums held or lent in accordance with section 89(5) above, and

(c) any other sums which the Secretary of State specifies are to be paid into a Welsh charging authority's collection fund.

(4) The following payments shall be met from the collection fund of a Welsh charging authority --

(a) payments to be made by the authority in respect of the amount of any precept issued under this Act or in respect of interest on such an amount,

(b) payments to be made by the authority to another person in repaying, under regulations under this Act, excess receipts by way of community charges, and

(c) any other payments which are to be made by the authority to another person and which the Secretary of State specifies are to be met from a Welsh charging authority's collection fund.

(5) The power to specify under this section--

(a) includes power to revoke or amend a specification made under the power;

(b) may be exercised differently in relation to different authorities.

91 General funds

(1) For the purposes of this section each of the following is a relevant authority--

(a) a district council,

(b) a London borough council, and

(2) Every relevant authority shall establish, and then maintain, a fund (to be called its general fund) in accordance with this Part.

(3) An authority's general fund must be established on 1 April 1990.

(4) Any sum received by a relevant authority after 31 March 1990 shall be paid into its general fund; but this does not apply to a sum which is to be paid into its collection fund or a trust fund.

(5) Any payment to be made by a relevant authority after 31 March 1990 shall be met from its general fund; but this does not apply to a payment which is to be met from its collection fund or a trust fund.

(6) After 31 March 1990 no district council or London borough council shall be required to keep a general rate fund; and the assets held in the general rate fund of such an authority immediately before 1 April 1990 (other than assets forming part of a trust fund) shall be transferred to its general fund on that date.

(7) After 31 March 1990 the Council of the Isles of Scilly shall not be required to keep any fund known as its general fund and required (apart from this subsection) to be kept under any order made under section 265 of the [1972 c. 70.] Local Government Act 1972; and the assets held in that fund immediately before 1 April 1990 (other than assets forming part of a trust fund) shall be transferred on that date to the Council's general fund established under this section.

92 General funds: supplementary

(1) In this section "relevant authority" has the same meaning as in section 91 above.

(2) The Secretary of State may make regulations--

(a) about the relationship of a relevant authority's general fund to its other funds;

(b) providing for assets falling within a relevant authority's general fund to be held in separate funds within the general fund.

(3) The regulations may provide that any fund established by a relevant authority on or after 1 April 1990, other than its collection fund or a trust fund, is to be maintained as a separate fund falling within its general fund.

(4) The regulations may provide that such assets as are transferred to a relevant authority's general fund under section 91(6) or (7) above and fall within a prescribed description shall be held in separate funds falling within the general fund; and the number and composition of the separate funds shall be such as are prescribed.

93 The City fund

(1) The Common Council shall establish, and then maintain, a fund (to be called the City fund) in accordance with this Part.

(2) The City fund must be established on 1 April 1990.

(3) Any sum received by the Common Council after 31 March 1990 shall be paid into the City fund if it is not a sum which is to be paid into its collection fund or a trust fund and--

(a) it is received in respect of the general rate, the poor rate or the St. Botolph tithe rate, or

(b) it would have fallen to be credited in aid of any of those rates had this Act not been passed.

(4) Any payment to be made by the Common Council after 31 March 1990 shall be met from the City fund if it is not a payment which is to be met from its collection fund or a trust fund and if, had this Act not been passed, it would have fallen to be met out of--

(a) the general rate, the poor rate or the St. Botolph tithe rate, or

(b) sums which, had this Act not been passed, would have fallen to be credited in aid of any of those rates.

(5) No sum shall be paid into, and no payment shall be met from, the City fund except in accordance with subsections (3) and (4) above.

(6) The assets of the Common Council subsisting immediately before1 April 1990 shall be transferred to the City fund on that date if they are assets--

(a) subsisting in respect of the general rate, the poor rate or the St. Botolph tithe rate, or

(b) representing sums credited in aid of any of those rates.

94 The City: further provisions

(1) The Secretary of State may make regulations--

(a) about the relationship of the City fund to other funds of the Common Council;

(b) providing for assets falling within the City fund to be held in separate funds within the City fund;

(2) The regulations may provide that any fund established by the Common Council on or after 1 April 1990, and falling within a prescribed description, is to be maintained as a separate fund falling within the City fund.

(3) The regulations may provide that such assets as are transferred to the City fund under section 93(6) above and fall within a prescribed description shall be held in separate funds falling within the City fund; and the number and composition of the separate funds shall be such as are prescribed.

(4) The regulations may provide that the Common Council shall not establish or maintain on or after 1 April 1990 a fund into which both the following must or may be paid--

(a) sums which must be paid into the City fund under section 93(3) above, and

(b) other sums.

(5) The regulations may provide that the Common Council shall not establish or maintain on or after 1 April 1990 a fund from which both the following must or may be met--

(a) payments which must be met from the City fund under section 93(4) above, and

(b) other payments.

Calculations

95 Calculations to be made by authorities

(1) In relation to each chargeable financial year a charging authority shall make the calculations required by this section.

(2) The authority must calculate the aggregate of --

(a) the expenditure it estimates it will incur in the year in performing its functions in the year (including an allowance for contingencies),

(b) the payments it estimates it will make in the year in defraying outstanding expenditure already incurred,

(c) the expenditure it estimates it will incur and will have to meet in the next financial year before amounts to be transferred as regards that year from its collection fund to its general fund or to the City fund (as the case may be) become sufficiently available, and

(d) the amount it estimates it will pay in the year into a fund or funds it has established under paragraph 16 of Schedule 13 to the [1972 c. 70.] Local Government Act 1972.

(3) The authority must calculate the aggregate of the sums it estimates will be paid in the year into its general fund or into the City fund (as the case may be).

(4) If the aggregate calculated under subsection (2) above exceeds that calculated under subsection (3) above the authority must calculate the amount equal to the difference.

(5) In making the calculation under subsection (2) above the authority must ignore payments which must be met from its collection fund under section 90(2) or (4) above or from a trust fund.

(6) In estimating under subsection (2)(a) above the authority shall take into account the amount of any levy or special levy issued to it for the year but (except as provided by regulations under section 74 or 75 above) shall not anticipate a levy or special levy not issued.

(7) In making the calculation under subsection (3) above the authority must ignore sums which have been or are to be transferred from its collection fund to its general fund or to the City fund (as the case may be).

(8) The Secretary of State may by regulations do one or both of the following--

(a) alter the constituents of any calculation to be made under subsection (2) or (3) above (whether by adding, deleting or amending items);

(b) alter the rules governing the making of any calculation under subsection (2) or (3) above (whether by deleting or amending subsections (5) to (7) above, or any of them, or by adding other provisions, or by a combination of those methods).

(9) Calculations to be made in relation to a particular financial year under this section must be made before 11 March in the preceding financial year, but they are not invalid merely because they are made on or after that date.

96 Substitute calculations

(1) An authority which has made calculations in accordance with section 95 above in relation to a financial year (originally or by way of substitute) may make calculations in substitution in relation to the year in accordance with that section, ignoring section 95(9) for this purpose.

(2) None of the substitute calculations shall have any effect if the amount calculated under section 95(4) would exceed that so calculated in the previous calculations.

(3) But subsection (2) above shall not apply if the previous calculation under section 95(4) has been quashed because of a failure to comply with section 95 in making the calculation.

Transfers between funds

97 Principal transfers between funds

An authority which has made calculations in accordance with section 95 above (originally or by way of substitute) shall transfer from its collection fund to its general fund or to the City fund (as the case may be) an amount equal to that calculated (or last calculated) under section 95(4).

98 Other transfers between funds

(1) An English charging authority which receives a sum by way of additional grant shall transfer from its collection fund to its general fund or to the City fund (as the case may be) an amount found by deducting B from A; and the Secretary of State may by direction specify the time at which the transfer is to be made.

(2) A is the sum received by the authority by way of additional grant, and B is such of that sum as the authority pays under a direction under section 86(4) above.

(3) Regulations under section 89(5) above may include provision that--

(a) any sum to which they relate shall be transferred from an authority's collection fund to its general fund or to the City fund (as the case may be);

(b) the sum so transferred shall be held, invested or otherwise used in such manner as may be prescribed;

(c) a sum equal to the sum transferred shall be transferred to the authority's collection fund from its general fund or from the City fund (as the case may be);

(d) together with the sum so transferred an additional sum representing interest and calculated in a prescribed manner shall be transferred.

(4) If the Secretary of State directs it to do so, a charging authority shall transfer from its collection fund to its general fund or to the City fund (as the case may be) such an amount as is specified in, or calculated in a manner specified in, the direction; and the transfer shall be made at such time as is specified in the direction.

(5) If the Secretary of State directs it to do so, a charging authority shall transfer to its collection fund from its general fund or from the City fund (as the case may be) such an amount as is specified in, or calculated in a manner specified in, the direction; and the transfer shall be made at such time as is specified in the direction.

(6) Different directions may be given to different authorities under subsection (1), (4) or (5) above.

Regulations about funds

99 Regulations about funds

(1) The Secretary of State may make regulations about the discharge of the following liabilities of a charging authority--

(a) the liability to pay anything from its collection fund in respect of any precept, and

(b) the liability to transfer anything from its collection fund under section 97 above.

(2) The regulations may include provision--

(a) that anything falling to be paid or transferred must be paid or transferred within a prescribed period,

(b) that anything falling to be paid or transferred must be paid or transferred in instalments of such amounts, and at such times, as are determined by the charging authority in accordance with prescribed rules,

(c) that the charging authority must inform any precepting authorities when instalments will be paid and how they are to be calculated,

(d) that if an instalment is not paid to a precepting authority in accordance with the regulations, it is to be entitled to interest on the amount of the instalment at such rate as may be prescribed,

(e) that the charging authority must calculate at a prescribed time and in accordance with prescribed rules the amount available in its collection fund to meet the liabilities mentioned in subsection (1) above,

(f) that any deficiency in or excess of such an amount is to be borne as between, or shared among, the charging authority and precepting authorities in accordance with prescribed rules,

(g) that the charging authority must inform any precepting authorities of the effects of any calculation and rules mentioned in paragraphs (e) and (f) above,

(h) as to the circumstances in which the charging authority is to be treated as having discharged the liabilities mentioned in subsection (1) above,

(i) as to the recovery (by deduction or otherwise) of any excess amount paid by the charging authority to any precepting authority in purported discharge of the liability mentioned in subsection (1)(a) above, and

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