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Section 4: Imposition of borrowing limits

Local Government Act 2003 · 2003 c. 26View on legislation.gov.uk

Part 1: Capital finance etc and accounts — Chapter 1: Capital finance etc

The Secretary of State may for national economic reasons by regulations set limits in relation to the borrowing of money by local authorities.

The Secretary of State may by direction set limits in relation to the borrowing of money by a particular local authority for the purpose of ensuring that the authority does not borrow more than it can afford.

Different limits may be set under subsection (1) or (2) in relation to different kinds of borrowing.

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

The Secretary of State may by regulations make provision about the exercise of the right under subsection (4) and may, in particular, make provision about—

the circumstances in which a local authority is to be regarded as having headroom for the purposes of that subsection, and
the amount of headroom which it has for those purposes.

Where an amount is transferred under subsection (4), this Chapter shall have effect—

in relation to the transferor, as if the limit in relation to which the headroom exists were reduced by that amount, and
in relation to the transferee, as if the corresponding limit to which it is subject were increased by that amount.

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This legislation text comes from legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. These source and reuse terms cover the legislation text, not Remedy's commentary.

Reuse reviewed 21 August 2026 under Open Government Licence v3.0.