Chapter 2: Other Provision Local government capital finance New section 12A: Risk-mitigation directions
Subsection (1) permits the Secretary of State to address financial risk to an authority by giving risk mitigation directions where a trigger event occurs and where such a direction would be appropriate and proportionate.
	Subsection (2) defines a trigger event for the purposes of issuing a risk mitigation direction. These are where a risk threshold (see section 12B) is exceeded, where a local authority reports that its resources are unlikely to meet its financial obligations or the Secretary of State takes action to prevent that report having to be made.
	Subsections (3), (4) and (5) provide a definition for ‘risk-mitigation directions’ and provide for what those directions may do. This includes setting limits on borrowing, which may vary according to the type of borrowing, and requiring property to be sold but may extend to requiring any appropriate and proportionate action by the authority to address financial risk. A risk mitigation direction is required to specify the time by which it must be complied with or for which it is to have effect.
	Subsection (6) requires the Secretary of State to have regard to the impact on local service provision and the Best Value Duty in deciding whether to issue a direction.
	Subsection (7) provides discretion to the Secretary of State to factor the impact upon central government objectives which might arise from a risk management direction in deciding whether to exercise the power to give that direction.
	Subsection (9) defines ‘financial risk’ as the potential that a local authority will not be able to meet its current and planned spending within its resources amount exceeding the amount borrowed to facilitate the spending.
	Subsection (8) provides for the limitations upon the issuing of risk mitigation directions under section 12C to apply for the purposes of this section, being that Secretary of State must provide notice to a local authority and have considered the written representation from that authority before a risk mitigation direction can be issued.