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Agenda item
Agenda item
MINIMUM REVENUE PROVISION POLICY REVIEW
To consider and recommend to Council the
revised Minimum Revenue Provision Policy 2020/21. Once approved
form this will part of the Council’s budget framework.
Decision:
The Executive resolved as
follows:
- To
recommend that the Council approves the revised Minimum Revenue
Provision Policy 2020/21 set out within Appendix 5b, to the
Executive report.
- To
recommend to the Council that in approving the revised Minimum
Revenue Provision Policy Council endorses the following amendments
which had been included in the document:
- The Council has accepted the principle that any capital receipts
which it determines in future should be set aside in order to
reduce the outstanding amount of capital debt liability may, if
desired, be taken to represent a debt liability reduction that has
been made in lieu of a corresponding amount of prudent provision
that would otherwise have been made in a particular financial
year. Any such setting aside of capital
receipts will not, however, apply to those capital receipts which
represent the repayment of loan principal amounts in respect of
loans made in earlier financial years which have been treated as
capital expenditure, but not subjected to an Minimum Revenue
Provision charge.
- The policy changes reflected above will in future be represented
as a new local Option for the ongoing determination of an amount of
Minimum Revenue Provision which is considered each year to be
prudent.
- In
respect of new capital debt liability incurred after 1st April
2008, the Authority’s Policy continues to adopt the
principles outlined in Option 3 (asset life method) that are
exemplified in the Minimum Revenue Provision Guidance, whereby the
liability will be charged over a period that is reasonably
commensurate with that over which the new capital expenditure is
estimated to provide a benefit to the Authority.
- Any credit arrangements or expenditure treated as capital
expenditure under Direction or Regulation will either have Minimum
Revenue Provision determined under Option 3, or otherwise related
to the estimated life of the underlying asset. For example, a loan granted to a third party
towards “capital expenditure” will, where Minimum
Revenue Provision is considered to be necessary, be related to the
life of the asset towards which the financial assistance is being
provided.
- Whether any charges are appropriate for this type of activity
after taking account of the different powers available to
it.
- Minimum Revenue Provision will not be charged (voluntarily) on
any Part II (Housing Revenue Account related) housing
debt.
- Minimum Revenue Provision will not be charged on loans made to
wholly owned subsidiaries or other third parties where such loans
are treated as capital expenditure in cases where there are
satisfactory and supportable repayment obligations attached to
those loans. Unlike other types of capital receipt, the capital
receipts that will arise from these repayments will be set aside
generally or specifically to reduce the outstanding amount of
capital debt liability in respect of these loans. The anticipated receipts will be kept under review
on an annual basis in order to ensure that the deferment of Minimum
Revenue Provision remains prudent.
- Following the identification of savings in respect of financial
years 2004/05 – 2018/19, totalling £23.808m, (in
respect of an increase of £34.743m to Adjustment A, and
earlier year revenue contributions to capital of £13.054m,
(adjusted for alternate Minimum Revenue Provision liability)), the
Council will determine for any subsequent financial year the extent
to which they propose to reduce the amount of Minimum Revenue
Provision liability that would have arisen, but for these
savings. Additionally, the Council will
continue to apply the higher amount of Adjustment A indicated above
to have been identified.
Supporting documents: