Issue - meetings
Minimum Revenue Provision - 2018/19 Policy
Meeting: 20/02/2018 - Cabinet (Item 139)
As detailed in the recommendations.
The Corporate Finance Manager introduced the Minimum Revenue Provision (MRP) – 2018/19 Policy report which recommended that the 2018/19 MRP remained the same as the previous year, for approval by Council.
The Chief Executive explained that the MRP was under urgent review following a recent voluntary independent peer review of the Council’s financial position. External advice was being sought from the Council’s retained advisors and the Wales Audit Office (WAO) as the Council’s auditors. MRP policy was for approval by Council annually. Given the review, it was therefore subject to change before the financial year was ended.
(a) That the following be approved and recommended to Council for Council Fund (CF) outstanding debt:
· Option 3 (Asset Life Method) be used for the calculation of the MRP in financial year 2018/19 for the balance of outstanding capital expenditure funded from supported borrowing fixed as at 31st March 2016. The calculation will be the ‘straight line’ method over 50 years
· Option 3 (Asset Life Model) be used for the calculation of the MRP in 2018/19 for all capital expenditure funded from supported borrowing from 1st April 2016 onwards. The calculation will be the ‘straight line’ or ‘annuity’ (where appropriate) method over an appropriate number of years, dependent on the period of time that the capital expenditure is likely to generate benefits
· Option 3 (Asset Life Model) be used for the calculation of the MRP in 2018/19 for all capital expenditure funded from unsupported (prudential) borrowing or credit arrangements
(b) That the following be approved to County Council for the Housing Revenue Account (HRA) outstanding debt:
· Option 2 (Capital Financing Requirement Method) be used for the calculation of the HRA’s MRP in 2018/19 for all capital expenditure funded by debt
(c) Members approve and recommend to County Council that MRP on loans from the Council to NEW Homes to build affordable homes through the Strategic Housing and Regeneration Programme (SHARP) (which qualify as capital expenditure in accounting terms) be as follows:
· No MRP is made during the construction period (of short duration) as the asset has not been brought into use and no benefit is being derived from its use
· Once the assets are brought into use, capital repayments will be made by NEW Homes. The Council’s MRP will be equal to the repayments made by NEW Homes. The repayments made by NEW Homes will be classed, in accounting terms, as capital receipts, which can only be used to fund capital expenditure or repay debt which is a form of MRP. The capital repayment / capital receipt will be set aside to repay debt, and is the Council’s MRP policy for repaying the loan.
(d) That it be noted that the MRP Policy is undergoing an urgent review and is, therefore, subject to change within the current financial year.