Stockport Metropolitan Borough Council is set to loan £15m to its wholly-owned services management company to decarbonise its vehicle fleet.
As part of an environmental services strategy, which the council is set to release in the summer, Stockport has sought approval to lend a subsidiary company capital to purchase green alternative vehicles to decarbonise its fleet, an authority document has revealed.
At a Cabinet meeting on 25 June, members are set to approve a new loan facility of £15m to Totally Local Company (TLC), who maintain Stockport’s fleet of 140 vehicles.
According to the agreement, the £15m is based on current market values for diesel vehicles as the green equivalent prices and related infrastructure “are not yet known”.
It suggested that the emerging environmental services strategy is “likely” to recommend a transition to biofuels for the existing or new fleet using diesel. Currently, 65% of TLC’s fleet has “fully depreciated”, making now a good time to transition the fleet, the document stated.
Stockport council has set the target of reaching net zero by 2030, whilst becoming carbon neutral by 2038.
The length of the loan requested is six years and will be fully drawn down by March 2030, with the interest rate charged by the council matching the Public Works Loan Board rate plus 0.25%, the agreement explained.
Stockport has previously loaned to TLC, with it first lending £9.6m in 2018 to enable the fleet strategy. The council document stated that TLC has “repaid or [is] repaying all previous loans with no issues”, with the sale of assets an option if unpaid loans should occur.
However, the document acknowledged that borrowing costs are higher than its previous loan facility to TLC, which will result in increased financing and revenue costs.
This comes as the Bank of England has today (20 June) kept interest rates on hold at 5.25% despite inflation falling to 2% yesterday, leaving rates at a 16-year high.
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