Explanatory note

These Regulations amend the Local Authorities (Capital Finance) Regulations 1997 (“the 1997 Regulations”).

A new regulation 12B is inserted into the 1997 Regulations in order to deal with the effects of the application to local authorities of a new accounting standard, “FRS 17”, which requires future liabilities for retirement benefits to be recognised in local authorities' accounts. Section 42 of the Local Government and Housing Act 1989 provides that certain expenditure of a local authority is not required to be charged to a revenue account of the authority. The new regulation 12B provides that expenditure on liabilities for certain retirement benefits which a local authority has appropriated to a pension reserve as required by proper accounting practices need not be charged to a revenue account (regulation 2(2)).

Regulation 16 of the 1997 Regulations defines “private finance transactions”. Such transactions are deemed to be credit arrangements for the purposes of section 48(1) of the Local Government and Housing Act 1989 by virtue of regulation 17 of the 1997 Regulations. The definition of private finance transaction in regulation 16 is amended to include the provision of, or carrying out of works in relation to, housing land (regulation 2(3)).