| LeasingWorld | Feature |
| SPECIAL FEATURE |
| Local Authority Leasing |
| – A LeasingWorld Special Report |
| Healthy optimism | ||
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Advisers are reporting a very good quarter-end to June. The
market has not got, and possibly may not ever get, back to the
£400 million levels of the early 2000s but advisers say they feel
more comfortable this year with the levels of new business. Have local authorities “forgiven” leasing and welcomed it back into the fold? The question has never been that simple, some local authorities never used leasing, some used it as a financial top-up mechanism, some used it only for specific assets, some didn’t know they were using it and some used it indiscriminately. What is certain is that the introduction of the Prudential Borrowing Code caused an initial “knee-jerk” reaction from many local authorities, which was to opt for Public Works Loan Board funds as the cheapest and simplest solution. However, the Prudential Borrowing Code does require its adherents to consider all relevant forms of financing and this message has been slowly filtering through. There was an |
education process to go through for finance departments at local
authorities which was bound to take time. Now, with the help
of advisers, many local authorities have started to do the
necessary analysis before committing to a particular form of
finance and this has led to leasing being given due consideration
in the financing decision. In the future, Options Appraisal should evolve and become even more sophisticated, thus giving leasing its fair share of opportunities. It would be interesting to compare the Business Case models of all the advisers together with those of all local authorities currently in use. Would all those models give the same, or similar, answers; if not then how close are they to mirroring best corporate finance practice? Perhaps one of the larger advisers, or possibly the Finance & Leasing Association, should set an example and commission a top business school to develop the common set of basic and undisputed principles of such a model? |
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