Proposed revised 2025/26 Minimum Revenue Provision Policy Statement

(for approval)

For all debt where the government has provided revenue support (supported capital expenditure), the MRP policy will be:

· Provision on a straight-line basis over 50 years.

For all debt where the government does not provide revenue support:

· Where the debt relates to an asset, the council will set aside a sum equivalent to repaying the debt over the life of the asset either in equal instalments or on an annuity basis over a maximum life of 50 years. The method to be adopted will be determined according to which is the most appropriate over the life of the asset.

· Where the debt relates to expenditure which is subject to a capitalisation direction issued by the government, the council will set aside a sum equivalent to repaying the debt over a period consistent with the nature of the expenditure on an annuity basis for a maximum of period of 20 years in accordance with the Statutory Guidance.

· Capital expenditure financed by borrowing will not be subject to an MRP charge until the financial year after the expenditure has been incurred, or in the case of assets under construction, MRP will be delayed until the relevant asset becomes operational.

Where the debt relates to capital loans to a third party:

· Where capital loans are provided to a 3rd party incorporating an annual repayment structure such as annuity or equal instalments of principal, the principal repayments will be set aside annually as capital receipts to finance the initial capital advance in lieu of making MRP over the loan term.

· Where capital loans are provided on a maturity basis, then the following approach will apply in accordance with the revised MHCLG MRP Guidance:

o Commercial Loans – MRP provided over the associated asset life of the underlying assets acquired by the 3^rd party

o Service Loans – the authority will

§ apply a statutory exemption in making MRP, recognising any future Expected Credit Loss in accordance with proper accounting practices, or

§ provide MRP using the same methodology as for commercial loans

· Where the debt relates to the i360 Limited, the council will set aside MRP on an annuity basis for a period equal to the original loan period.

Where the debt relates to the Living Wage Joint Venture:

· For loans to the Living Wage Joint Venture to develop housing and subsequently dispose of these assets on completion, the council will set aside the capital receipt at the point of transfer in lieu of making an MRP payment. Loans to the Living Wage Joint Venture are considered to be service related and as such the council can apply a statutory exemption for setting aside MRP.

For on-balance sheet PFI schemes and leases, the MRP policy will be:

· MRP will be measured as being equal to the element of the principal repayment that goes to write down the equivalent balance sheet liability.

There is the option to charge more than the prudential provision of MRP each year through a Voluntary Revenue Provision (VRP). The cumulative amount of any future VRP will be included in the MRP Policy Statement to enable the Authority to ‘offset’ this against future MRP charges. As at 31 March 2025 no VRP has been made by the Authority.