Agenda item

As detailed in the recommendations.

Councillor Johnson introduced the report and explained that local authorities were required to set a Minimum Revenue Provision (MRP) policy each financial year.  Local authorities were required to set aside some of their revenue resources as provision for the repayment of debt.

Regulations required an authority to make an amount of MRP which it considered to be ‘prudent’.  The Regulations themselves did not define ‘prudent’ provision.  Welsh Government (WG) had provided guidance which made recommendations to local authorities on the interpretation of the term and authorities were required to prepare an annual statement of their policy on making minimum provision.

The Council, as part of the budget strategy, conducted detailed reviews of its MRP policy in 2016/17 and 2017/18 and amended the policy as a result.  No changes were required to the policy for 2023/24.

RESOLVED:

(a)       That the following be approved and recommend 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 year 2023/24 for the balance of outstanding capital

expenditure funded from supported borrowing fixed as at 31st March

2017. The calculation will be the ‘annuity’ method over 49 years.

·         Option 3 (Asset Life Method) be used for the calculation of the MRP in

2023/24 for all capital expenditure funded from supported borrowing

from 1st April 2016 onwards. The calculation will be the ‘annuity’ 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 Method) be used for the calculation of the MRP in

2023/24 for all capital expenditure funded from unsupported

(prudential) borrowing or credit arrangements. The calculation will be

the ‘annuity’ method over an appropriate number of years, dependent

on the period of time that the capital expenditure is likely to generate

benefits.

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

·         Option 3 (Asset Life Method) be used for the calculation of the HRA’s

MRP in 2023/24 for the balance of outstanding capital expenditure

funded from debt fixed as at 31st March 2021. The calculation will be

the ‘annuity’ method over 50 years.

·         Option 3 (Asset Life Method) be used for the calculation of the HRA’s

MRP in 2023/24 for all capital expenditure funded from debt from 1st

April 2021 onwards. The calculation will be the ‘annuity’ method over

an appropriate number of years, dependent on the period of time that

the capital expenditure is likely to generate benefits.

(c)        That the following be approved 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 (loan) 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. The capital

repayment / capital receipt will be set aside to repay debt, and is the

Council’s MRP policy for repaying the loan.