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 for Council Fund (CF):-
 

·        
Option 3 (Asset Life Method) be used for the
calculation of the MRP in financial year 2024/25 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 2024/25 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 2024/25 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 for Housing Revenue Account
(HRA):-
 

·        
Option 3 (Asset Life Method) be used for the
calculation of the HRA’s MRP in 2024/25 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 2024/25 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 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 approved 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.