Local Government Finance Act (Northern Ireland) 2011

Document Number:2011 CHAPTER 10
 
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An Act to make provision for the financial affairs of district councils; to make provision relating to grants to district councils and for payments to councillors and other payments by district councils.

[16 th March 2011]

BE IT ENACTED by being passed by the Northern Ireland Assembly and assented to by Her Majesty as follows:

PART 1 FINANCIAL ADMINISTRATION

General

Duty to make arrangements

  1. —(1) A council shall make arrangements for the proper administration of its financial affairs.

    (2) A council shall designate an officer of the council as its chief financial officer.

    (3) Arrangements made by a council under subsection (1) shall be carried out under the supervision of its chief financial officer.

    Accounting practices

  2. —(1) Regulations may make provision about the accounting practices to be followed by a council, in particular with respect to the charging of expenditure to the general fund.

    (2) The Department may issue guidance about the accounting practices to be followed by a council, in particular with respect to the charging of expenditure to the general fund.

    (3) In any statutory provision, any reference to proper practices, in relation to accounts of a council, is to those accounting practices—

    (a) which the council is required to follow by virtue of any statutory provision, or

    (b) which, whether by reference to any generally recognised published code or otherwise, are regarded as proper accounting practices to be followed in the keeping of accounts of councils, either generally or of the description concerned.

    (4) In the event of conflict between practices falling within paragraph (a) of subsection (3) and practices falling within paragraph (b) of that subsection, only those falling within paragraph (a) are to be regarded as proper practices.

    (5) In this section “council” includes any local government body within the meaning of Part 2 of the Local Government (Northern Ireland) Order 2005 (NI 18).

    Annual budget

    Annual budget

  3. —(1) In each financial year a council shall cause to be submitted to it estimates of the income and expenditure of the council during the next financial year.

    (2) A council, before the prescribed date in each year—

    (a) shall consider the estimates for the next financial year;

    (b) may revise the estimates in such manner as the council thinks fit;

    (c) shall approve the estimates, subject to any revision under paragraph (b);

    (d) shall authorise the expenditure included in the estimates; and

    (e) shall fix for the next financial year the amount estimated to be required to be raised by means of rates made by the council.

    (3) No expenditure shall be incurred by or on behalf of a council unless—

    (a) previously authorised in accordance with the estimates approved by the council; or

    (b) otherwise previously authorised by the council; or

    (c) if not so authorised, necessarily incurred in circumstances of emergency;

    but any expenditure under paragraph (c) shall, as soon as reasonably practicable, be reported to the council with a view to being approved by the council.

    (4) A council may make standing orders for the purpose of giving effect to this section so long as they are not inconsistent with any statutory provision.

    Report by chief financial officer on estimates

  4. —(1) The chief financial officer of a council shall submit to the council a report on the robustness of the estimates.

    (2) A council shall have regard to that report when considering the estimates under section 3(2)(a).

    (3) In this section “the estimates” means the estimates submitted to the council under section 3(1).

    In-year review

  5. During each financial year a council shall keep its financial position under review.

    Reserves

    Reserves - general

  6. —(1) Regulations may make provision requiring a council to maintain financial reserves in accordance with the regulations.

    (2) The chief financial officer of a council shall submit to the council a report on the adequacy of any proposed financial reserves for a financial year.

    (3) A council shall have regard to that report when considering the estimates for that year under section 3(2)(a).

    Controlled reserves

  7. —(1) In this section “controlled reserve” means a financial reserve of a description prescribed under section 6(1) for the purposes of this section.

    (2) In the case of a controlled reserve, it shall not be regarded as appropriate for the balance of the reserve at the end of any financial year to be less than the minimum amount determined in accordance with regulations under section 6(1).

    (3) If in any financial year it appears to the chief financial officer of a council that a controlled reserve is or is likely to be inadequate, the chief financial officer shall report to the council on—

    (a) the reasons for that situation; and

    (b) the action, if any, which the chief financial officer considers it would be appropriate to take to prevent such a situation arising in relation to the corresponding reserve for the next financial year.

    (4) For the purposes of subsection (3) , a controlled reserve is inadequate if the balance of the reserve at the end of a financial year is less than the minimum amount determined in accordance with regulations under section 6(1).

    (5) A council shall have regard to any report under this section when considering the estimates for the next financial year under section 3(2)(a).

    Funds

    The general fund

  8. Subject to section 9 , all income of a council shall be carried to a fund to be called “the general fund”, and all expenditure falling to be discharged by the council shall be discharged out of that fund.

    Power to establish other funds

  9. —(1) A council may, in addition to any other fund established under this Part, establish such funds as it considers appropriate.

    (2) Any income arising from the investing of the money in any fund established under this section, or otherwise from the application of the fund, shall be carried to the fund.

    Limitation on application of funds

  10. —(1) A council shall not directly or indirectly apply any money under its control for any purpose not authorised specifically or generally by a statutory provision.

    (2) A council shall not directly or indirectly apply any money derived from trust funds for any purpose not authorised by the specific trusts affecting those funds.

    Borrowing

    Power to borrow

  11. A council may borrow money—

    (a) for any purpose relevant to its functions under any statutory provision; or

    (b) for the purposes of the prudent management of its financial affairs.

    Control of borrowing

  12. —(1) A council may not borrow money if doing so would result in a breach of—

    (a) the limit determined by it under section 13 , or

    (b) any limit applicable to it under section 14.

    (2) The Department may, in relation to specific borrowing by a particular council, by direction disapply subsection (1)(b) , so far as relating to any limit applicable under section 14(1).

    (3) A council may not, without the consent of the Department of Finance and Personnel, borrow otherwise than in sterling.

    (4) This section applies to borrowing under any power available to a council under any statutory provision.

    Duty to determine affordable borrowing limit

  13. —(1) A council shall determine and keep under review how much money it can afford to borrow.

    (2) Regulations may make provision about the performance of the duty under subsection (1).

    (3) Regulations under subsection (2) may, in particular—

    (a) make provision about—

    (i) when a determination under subsection (1) is to be made,

    (ii) how such a determination is to be made, and

    (iii) the period for which such a determination is to be made;

    (b) make provision about the monitoring of an amount determined under subsection (1);

    (c) make provision about factors to which regard may be had in making a determination under subsection (1) or in monitoring an amount determined under that subsection.

    (4) Regulations under subsection (2) may include provision requiring a council making a determination under subsection (1) to have regard to one or more specified codes of practice, whether issued by the Department or otherwise.

    (5) A council’s function under subsection (1) shall be discharged only by the council.

    (6) The power under subsection (4) is not to be read as limited to the specification of an existing document.

    Imposition of borrowing limits

  14. —(1) Regulations made with the consent of the Department of Finance and Personnel may for national economic reasons set limits in relation to the borrowing of money by councils.

    (2) The Department may by direction set limits in relation to the borrowing of money by a particular council for the purpose of ensuring that the council does not borrow more than it can afford.

    (3) A council subject to a limit set under subsection (1) may transfer any headroom it has in relation to the limit to another council subject to a corresponding limit.

    (4) Regulations made with the consent of the Department of Finance and Personnel may make provision about the exercise of the right under subsection (3) and may, in particular, make provision about—

    (a) the circumstances in which a council is to be regarded as having headroom for the purposes of subsection (3) , and

    (b) the amount of headroom which it has for those purposes.

    (5) Where an amount is transferred under subsection (3) , this Part shall have effect—

    (a) in relation to the transferor, as if the limit in...

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