Issue - meetings

To propose additional wording to the Minimum Revenue Provision (MRP) Policy Statement 2017/18 due to an omission (report of the Executive Director Commercialisation (S151) is enclosed).

Consideration was given to the report of the Executive Director – Commercialisation (s151) proposing additional wording to the Minimum Revenue Provision (MRP) Policy Statement 2017/18 due to an omission.

Councillors noted that the Council was required to pay off an element of General Fund capital spend each year through a revenue charge (minimum revenue provision).  Communities and Local Government (CLG) regulations require Full Council to approve an MRP Policy Statement in advance of each year. The 2017/18 MRP Policy Statement was approved by Full Council on 22 February 2017.

When the MRP Policy was submitted for approval on 22 February 2017 a paragraph was added as follows:

“Any loans to Welland Homes and South Holland Local Housing Company which are classed as capital expenditure will increase the Council’s CFR.  The Council will earmark the repayment of the loans to reduce the CFR and therefore will not apply MRP on such loans.”

The Council had made loans to Welland Homes and also purchased an equity stake in the Company. Both the loans and the purchase of equity are classified as capital expenditure and subject to MRP charges in accordance with the Council’s MRP Policy.

The purchase of equity in the Company was not referred to in the added paragraph above and it was therefore recommended that the following paragraph be added to section 2.3 of the MRP Policy contained in the Treasury Management Strategy 2017/18.

“Any equity investment made in Welland Homes and South Holland Local Housing Company which is classed as capital expenditure will increase the Council’s Capital Financing Requirement (CFR).  The Council will earmark the proceeds from any sale of equity interest to reduce the CFR and therefore will not apply MRP on such equity investments.”

The recommended change to the MRP policy was submitted for scrutiny to Governance and Audit Committee on 14 December 2017 as part of the Mid Term Treasury Report 2017/18. The Committee supported the recommendation and had referred the additional paragraph to Council as requested for approval.

DECISION:

1)    That the following paragraph be inserted into section 2.3 of the Treasury Management Strategy, Minimum Revenue Provision Policy Statement and Annual Investment Strategy 2017/18:

“Any equity investment made in Welland Homes and South Holland Local Housing Company which is classed as capital expenditure will increase the Council’s Capital Financing Requirement (CFR).  The Council will earmark the proceeds from any sale of equity interest to reduce the CFR and therefore will not apply MRP on such equity investments.”