Local government finance regime

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This subtopic provides an overview of the local authority finance regime in terms of management and accounting that must be adhered to.

Local authority investment

Local authorities in England and Wales have extensive powers to borrow money and to make investments. How they do this is largely determined by the Local Government Act 2003 (LGA 2003) and statutory instruments issued under its powers.

A local authority may invest:

  1. •

    for any purpose relevant to its functions under any enactment, or

  2. •

    for the purposes of the prudent management of its financial affairs

In exercising investment, local authorities must have regard to the guidance issued by the Secretary of State.

Capital finance

Capital finance differs from revenue finance as revenue expenditure has to be met from current income whereas capital expenditure can be met by borrowing or capital receipts, and the costs can be spread over the period in which the benefits of the expenditure are expected to accrue.

The Prudential System is a comparatively simple framework that encourages investment in capital assets, which local government needs to improve services and relies on for accounting

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Latest Local Government News

Planning injunction granted to restrain unlawful rebuilding and hardstanding on sensitive land (Wealden District Council v Devall)

Planning analysis: In Wealden DC v Devall, the High Court held that the owners’ rebuilding of a derelict barn and creation of extensive hardstanding on environmentally sensitive land were building/operational works amounting to ‘development’ for which planning permission was required. Applying the South Bucks framework in section 187B of the Town and Country Planning Act 1990 (TCPA 1990), the court treated the breaches as deliberate and granted a final injunction with mandatory restoration as a necessary and proportionate response to prevent rapid residential occupation and uphold planning control.

Notification duties on discharge of the main housing duty, and public law defences to possession claims for temporary accommodation (Wandsworth LBC v Young)

Local Government analysis: The Court of Appeal has ruled on two important points arising from a claim for possession of temporary accommodation, following the cessation of a local authority’s main housing duty to a homeless applicant under section 193 of the Housing Act 1996 (HA 1996). Firstly, the Court confirmed that local authorities are not under any duty to inform applicants that they have a separate right to request a review of a decision to discharge duty, eg where the duty ceases because an applicant has accepted or refused an offer of alternative accommodation, in addition to their right to suitability review. Secondly and in any event, the Court confirmed there were no exceptional circumstances to justify raising a local authority’s alleged failure to comply with duties under Part VII of the HA 1996 as a public law defence to possession proceedings, where a defendant had failed to make use of their right to s 202 review or s 204 appeal to pursue those arguments. Written by Tara O’Leary, barrister at Cornerstone Barristers.

Court confirms enforcement notice can be validly served by fixing it to main entrance of multi-occupier site (Turner v SSHCLG)

Planning analysis: In Turner v SSHCLG, the High Court held that for enforcement under sections 172 and 329(2) of the Town and Country Planning Act 1990 (TCPA 1990) , 'premises' ordinarily means the whole planning unit, so fixing a notice conspicuously to a site's main entrance of a multi-occupier site validly serves occupiers. Practically, this confirms that local planning authorities can serve enforcement notices at a site's main access point without needing to affix copies within each individual occupier's compound, provided the notice is clearly visible and reasonably likely to come to occupiers' attention.

High Court considers whether school faith-based over-subscription criteria amount to race discrimination (CKT and DGT v Twyford CE Academies Trust)

Local Government analysis: This case considered the question of whether the application of a faith-based over-subscription criteria favouring a particular Christian denomination could amount to indirect discrimination under the Equality Act 2010 in relation to the protected characteristic of race. The court held that while the application of the criteria did amount to indirect discrimination, it was a proportionate means of achieving a legitimate aim. On the application of Bank Mellat v HM Treasury (No 2), the court also determined that the oversubscription policy was a measure rationally connected to the legitimate objective of maintaining the ethos of a particular denomination. Mr Justice Bourne in his judgment also discusses the parliamentary intention behind faith-based over-subscription criteria and the issues arising from public sector duty. Written by Philip Wood, principal associate at Browne Jacobson and Daljit Sambhi, solicitor apprentice at Browne Jacobson.

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