Clause 8 - Control of credit arrangements
Local Government Bill
11:15 am
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
The Under-Secretary's point is irrelevant. The Bill refers to
''the cost of the arrangement''.
In a credit arrangement, that will be the value of the asset, the cost of the asset, plus the servicing costs over the life of the arrangement. The fact that the asset may have a declining value will not affect the payments that have to be made under the credit arrangement. I am trying to get at whether it is appropriate that the element of the credit arrangement that is tantamount to the debt service cost should be included in the capital value in the case of a credit arrangement, although it is not included where the local authority borrows and purchases the asset. In that case, only the amount of borrowing, not the stream of debt service costs, will count against the borrowing limit.