Issue - meetings

As detailed in the recommendations.

The Corporate Finance Manager introduced the report on Review of Minimum Revenue Provision (MRP).  The report outlined a review of the Council’s MRP Policy and recommended changes to the MRP calculation for past and outstanding capital expenditure which was funded from supported borrowing.

A detailed explanation was given on the different options available by the Finance Manager - Technical Accountancy, full details of which were outlined in the report.

Councillor Shotton thanked the Finance team for the hard work that had been undertaken on the review of MRP which would help the Council to achieve a balanced budget and protect services which would have otherwise been under threat.  A full explanation would also be given to Members at the special Corporate Resources Overview and Scrutiny Committee meeting on 30^th November 2016.

The Chief Executive explained that the review recommended a change in accounting practice with a more prudent approach to the repayment of debt and assisting with forward planning.  The suggestions had been discussed with Wales Audit Office (WAO) who did not have any objections to the proposals. 

RESOLVED:

(a)       That the following be approved and recommended to County Council for Council Fund (CF) outstanding debt, that:-

·         Option 3 (Asset Life Method) be used for the calculation of the MRP in financial years 2016/17 and 2017/18 for the balance of outstanding capital expenditure funded from supported borrowing as at 31^st March 2016. The calculation will be the ‘straight line’ method over 50 years.  This represents an in year change of the approved and adopted policy for 2016/17 which was previously to use Option 1 (Regulatory Method);

·         Option 3 (Asset Life Method) be used for the calculation of the MRP in 2017/18 for all capital expenditure funded from supported borrowing from 1^st April 2016 onwards.  The calculation will be the ‘straight line’ method over an appropriate number of years, dependent on the period of time that the capital expenditure is likely to generate benefits.  This represents a change of policy which was previously to use Option 1 (Regulatory Method); and

·         Option 3 (Asset Life Method) be used for the calculation of the MRP in 2017/18 for all capital expenditure funded from unsupported (prudential) borrowing or credit arrangements.  This represents a continuation of the approved and adopted policy for 2016/17.

(b)       That the following be approved and recommended to County Council for Housing Revenue Account (HRA) outstanding debt:

·         Option 2 (Capital Financing Requirement Method) be used for the calculation of the HRAs MRP in 2017/18 for all capital expenditure funded by debt.  This represents a continuation of the approved and adopted policy for 2016/17

(c)        That the following be approved and recommended to County Council that MRP on loans (which quality as capital expenditure) from the Council to NEW Homes to build affordable homes:

·         No MRP is made during the construction period.  The first loan to NEW Homes to be a short term loan of approximately 18 months which will be refinanced once construction is completed. This represents  ...  view the full minutes text for item 89