(1)For the purposes of this Chapter, a local authority shall be taken to have entered into a credit arrangement where—
(a)it enters into a transaction which gives rise to a liability on its part, and
(b)the liability is a qualifying liability.
(2)A transaction entered into by a local authority is to be taken for the purposes of subsection (1) as giving rise to a liability on the part of the authority if—
(a)it falls in accordance with proper practices to be treated for the purposes of the authority’s accounts as giving rise to such a liability, or
(b)it falls in accordance with regulations made by the Secretary of State to be treated as falling within paragraph (a).
(3)The reference in subsection (1)(b) to a qualifying liability is to any liability other than—
(a)a liability to repay money,
(b)a liability in respect of which the date for performance is less than 12 months after the date on which the transaction giving rise to the liability is entered into, and
(c)a liability of a description specified for the purposes of this provision by regulations made by the Secretary of State.
(1)A local authority may not enter into, or vary, a credit arrangement if doing so would result in a breach of—
(a)the limit for the time being determined by or for it under section 3, or
(b)any limit for the time being applicable to it under section 4.
(2)In applying those limits for the purposes of subsection (1)—
(a)entry into a credit arrangement shall be treated as the borrowing of an amount of money equal to the cost of the arrangement, and
(b)variation of a credit arrangement shall be treated as the borrowing of an amount of money equal to the cost of the variation.
(3)The Secretary of State may by regulations make provision about the calculation for the purposes of subsection (2) of the cost of a credit arrangement or a variation and may, in particular, make provision about the treatment of options.