Purpose

Local Authorities are required each year to
set aside some of their revenue resources as provision for the
repayment of debt. The report presents the Council’s draft
policy on Minimum Revenue Provision

Content

(a)       That the following
be approved and recommended to County Council for Council Fund (CF)
outstanding debt:
·        
Option 3 (Asset Life Method) be used for the calculation of the MRP
in financial year 2025/26 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 2025/26 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 MRP in
2025/26 for all capital expenditure funded from unsupported
(prudential) borrowing or credit arrangements, including
MIM.  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 recommended to 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 2025/26 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 2025/26 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 it be
approved and recommended to County Council that MRP on loans from
the Council to North East Wales (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 back into use, capital (loan)
repayments will be made by North East Wales (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.