35. A Local Authority may borrow to fund capital expenditure. Local Authorities may borrow from a number of sources including banks and other financial institutions. Most Local Authorities borrow from the UK Government's Public Works Loan Board (PWLB). In addition to borrowing Local Authorities may finance capital investment through other credit arrangements such as finance leases and Public Finance Initiatives (PFI) including the Non Profit Distribution model (NPD). The NPD model was developed and introduced as an alternative to, and has since superseded, the traditional PFI model in Scotland. The sum of borrowing and any credit arrangement to finance capital investment is termed Capital Debt.
36. Councils estimated that total HRA debt was nearly £3.6bn as at 31 March 2017, an increase of around £140m (3%) since 31 March 2016. However the debt decreased for eight councils and was no higher for six councils. Part of the increase in debt since 2007 is a consequence of increased borrowing by councils to meet the capital costs of new build housing and improvements to existing houses (see section 12) and reductions in receipts from the sale of council houses under RtB scheme (see section 13) which closed on 31 July 2016. Whilst council housing debt is forecast to rise to £4.2bn (up £600 million) by 2017-18.
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