§ Mr. Portillo
The autumn statement announced as part of the private finance initiative, certain changes affecting leasing by public sector bodies. As a form of procurement, leasing must be based on an assessment of value for money, taking into account the transfer of risk. If the great majority of the risk lies with the private sector, the capital value of leased assets will not be offset from departmental spending allocations or external financing limits. In addition, in the particular circumstances of the run-up to privatisation, British Rail will be allowed to lease some £150 million of new rolling stock.
Interim guidance on the private finance initiative as a whole was provided to Departments on 9 December and placed in the Library of the House. More detailed guidance on leasing will be available shortly.
Statutory rules require that local authorities in England and Wales should count leases as credit arrangements for which credit cover is needed, unless they are operating leases or other specified types of leases. In Scotland, authorities are similarly required to count certain categories of leases as capital transactions which must have capital allocation cover.