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 the Council Fund (CF):-

 

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 the 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 for the Housing Revenue Account (HRA):-
 

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
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.