If you are a local authority, this section applies to you if you have a financial strategy under section 101A of the Local Government Act 2002. You must have this strategy if you give a guarantee for someone else's debt, like the Funding Agency's debt or another local authority's debt to the Funding Agency. You have to say in your financial strategy how you will handle giving securities to secure the obligations under the guarantee.

You need to think about how you will manage the risks of giving guarantees for other people's debts. Your financial strategy should include your policy on giving securities that secure these obligations. This means you have to clearly outline how you will handle situations where you give a guarantee for someone else's debt.

When you give a guarantee, you are promising to pay someone else's debt if they cannot pay it themselves. Your financial strategy should explain how you will make sure you can pay these debts if needed, by giving securities to secure the obligations under the guarantee.