Credit ceiling of new authority
7.—(1) Part III of Schedule 3 to the 1989 Act shall apply to determine the credit ceiling of a new authority and a National Park authority subject to the provisions of this article.
(2) For the purposes of Part IV of the 1989 Act, the credit ceiling on 1st April 1996 of a new authority shall be the aggregate of—
(a)the amount which would, apart from this paragraph, have been its credit ceiling on that date;
(b)the credit ceilings at the end of 31st March 1996 of its undivided old authorities (if any); and
(c)the total of its credit ceiling shares (if any) for its divided old authorities, calculated, as the case may be, in accordance with paragraph (3) or (4) below.
(3) In relation to a divided old authority, the credit ceiling share for the designated authority is the amount calculated in accordance with the following formula—
where—
C is the credit ceiling of the divided old authority at the end of 31st March 1996; and;
T is the total of the credit ceiling shares of the participant authorities calculated in accordance with paragraph (4) below.
(4) In relation to a divided old authority, the credit ceiling share for a participant authority is an amount equivalent to the amount by which the credit ceiling of the divided old authority would have been reduced if at the end of 31st March 1996 it had set aside an amount as provision sufficient to meet the transferred credit liabilities transferred from it to the participant authority by the Property Order.
(5) For the purposes of paragraph (4) above, a transferred credit liability is—
(a)any liability of the participant authority in respect of money borrowed by the divided old authority, other than a liability in respect of interest; or
(b)any liability of the participant authority in respect of a credit arrangement entered into by the divided old authority, other than one excluded by regulations under paragraph 11 of Schedule 3 to the 1989 Act.
(6) Any reference in this article to the credit ceiling of an old authority is a reference to its credit ceiling determined in accordance with the provisions of Part III of Schedule 3 to the 1989 Act.