Issue - meetings

To consider the report of the Chief Finance Officer.

Corporate Services Scrutiny Committee considered the report at its meeting on 25 January 2018 and its comments will be reported.

The Chief Finance Officer presented the report setting out the proposed 2018/19 prudential indicators for capital finance for adoption by the Council and set the annual statement of Minimum Revenue Provision (MRP). He explained that the prudential system was based on self-regulation, allowing the Council the freedom to borrow for capital investment where it was affordable. The Housing Revenue Account remained exempt from making minimum revenue provision, but could make voluntary contributions.

The Chief Finance Officer stated that the minimum revenue provision had not changed, but following a Government consultation, it was likely that new indicators would be established in the new financial year, requiring a new report to be presented to full council.

Corporate Services Scrutiny Committee considered the report at its meeting on 25 January 2018 and its comments were reported.

RECOMMENDED that Council adopt the:-

(1)        Prudential Indicators set out in Appendix A-C of the report as presented; and

(2)        Annual Statement of Minimum Revenue Provision for the Council.

To consider the report of the Chief Finance Officer.

The Chief Finance Officer presented the report on the Prudential Code for Capital Finance in Local Authorities (Incorporating the Annual Statement of Minimum Revenue Provision), which advised Members of the proposed 2018/19 prudential indicators for capital finance for adoption by the Council and set the annual statement of Minimum Revenue Provision (MRP). The objectives of the code are to ensure within the framework that the capital investment plans of local authorities were affordable, prudent and sustainable.

Members were informed of the changes to the Prudential Code which required Full Council approval along with the Statement of Minimum Revenue Provision (MRP).  He discussed the proposed Prudential Code Indicators and summarised appendices A-C, which depict the indicators for the next three years and highlighted the key issues to Members:-

·         the Capital Financing Requirement: shows the amount that the Council needs to borrow;

·         the Operational Boundary: sets the amount of borrowing that the Council intends to keep within over the period covered by the indicators. This would be the limit of borrowing; and

·         the Authorised Limit: the maximum that the Section 151 Officer was allowed to borrow to cover the Operational Boundary and day to day cash flow needs.  The Council was not allowed to exceed this amount of borrowing without first authorising an increase to the limit

The Chief Finance Officer also referred to a Government consultation which would include new requirements around governance and transparency. Increasingly, a one size fits all approach was no longer appropriate given the increasing variation in the objectives and nature of local authority investment activity. A number of changes to the Prudential System were due to come into force for the 2018/19 financial year, but that had not been confirmed.  There may be implications from the revision of the Code and a further report for the new financial year may be required.

The main changes included:-

·      definition of prudent provision in the MRP guidance;

·      meaning of a change to the revenue account;

·      impact of changing methods of calculating MRP; and

·      an introduction of a maximum life of economic assets.

Corporate Services Scrutiny Committee noted the report and requested Executive and Council to note and approve the adoption of:-

(1)  the Prudential Indicators set out in Appendix A-C; and

(2)  the Annual Statement of Minimum Revenue Provision for the Council