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Under the prudential capital finance system, introduced from 1 April 2004 in the Local Government Act 2003, there are no specific regulations relating to PFI. This is in contrast to the previous regime where the main PFI Regulations were found in the Local Authorities (Capital Finance) Regulations 1997 (SI 319/1997).
The following related legislation continues to be relevant:
- The Local Government (Contracts) Act 1997, together with the Local Authorities (Contracts) Regulations 1997 (SI 1997/2862) and amendments clarify the powers of local authorities to enter into contracts, including the arrangements necessary for PFI or other public-private partnership contracts. Further information is available here.
- The Construction Contracts Exclusion Order (SI 1998/648) exempts PFI contracts from parts of the Housing Grants, Construction and Regeneration Act 1996. Further information is available here.
Regulations pre 1 April 2004
PFI Regulations which applied to the local authority capital finance regime prior to 1 April 2004 can be found in the Local Authorities (Capital Finance) Regulations 1997 (SI 319/1997).
The relevant Regulations were:
8 Private finance transaction expenditure is capital
16 Meaning of private finance transaction
17 Private finance transactions are credit arrangements
40 Risk-transfer test for nil credit cover
41 DBFO building replacement scheme
42 DBFO additional buildings scheme
43-45 Equipment replacement schemes
112 Disposal of property under a private finance transaction
123 Excluded credit arrangement for debt-free authorities seeking SCAsThe Regulations above need to be read in conjunction with the following subsequent amendments:
1997/848 (1.4.97)
Minor drafting change.1998/371 (20.3.98)
Clarification of what was permitted under the PFI for housing. Also enabled fees payable by the Local Authority to be determined by a wider range of factors than originally provided for.1999/1852 (23.7.99)
ODPM Guidance Note Amendment to Regulation 16 removing all restrictions on price variations. The word “indemnity” was substituted for “undertaking” in sub-paragraph (2)(b) of Regulation 16 to remove concerns that the payment of compensation as a consequence of termination, following a step-in by lenders, may have been interpreted as an ‘undertaking’1999/3423 (1.4.2000) ODPM Guidance Note
Removal of contract structure test and replacement with off balance sheet accounting test.2001/723 (1.4.2001) ODPM Guidance Note
Refinement to wording in the off balance sheet accounting test aimed at PFI deals with long construction periods.2002/2299 (30.9.2002)
Extension Regulation 112 to apply to the Greater London Authority and functional bodies.2003/515 (1.4.2003) ODPM Guidance Note
Extension to Regulation 40 to local authorities engaging in new build PFI projects on housing land.
Enquiries to:
Central Private Finance Unit
Zone 1/A5
Eland House
Bressenden Place
London SW1E 5DU
Tel: 020 7944 4228
Fax: 020 7944 4259
E-mail: capital.finance@communities.gsi.gov.ukCLG is not responsible for the contents or reliability of the linked web sites and does not necessarily endorse the views expressed within them. Listing should not be taken as endorsement of any kind. We cannot guarantee that these links will work all of the time and we have no control over the availability of the linked pages.
CLG can only offer an informal interpretation of legislation and it is for the authorities to seek their own legal and accounting advice.
Last updated on 5 June 2008
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