Agenda item

Consideration was given to the report of the Chief Officer Resources which was presented to consider a proposed change to the Authority’s Minimum Revenue Provision (MRP) policy and the impact this will have on the minimum revenue provision going forward.

The Chief Officer Resources spoke to the report and highlighted the main points contained therein.

Councillor P. Baldwin left the meeting at this juncture.

A Member enquired regarding the cost of engaging Treasury Advisors, Link Asset Services, to conduct a review of the current MRP policy.  The Chief Officer Resources did not have the exact figure to hand but estimated that it was in the region of £2,000 to £3,000 and would be funded via the Resources service budget.

The Member raised concerns that this was pushing debt into the future for later administrations.   He felt that given the good settlements that this Authority had received from the Welsh Government that the Council should be doing more to mitigate cost pressures themselves.  He had concerns regarding future Authority administrations being able to use prudential borrowing in more austere budgetary conditions. The Member quoted from a previous MRP report where Members had been informed that “during the MRP reduction period up to 2022/23 the Authority would have a longer period of time to plan and implement longer term transformational savings that would contribute towards mitigating the MRP increase at the end of year five”.  He felt that this report now showed that that was a complete failure. 

The Chief Officer Resources did not agree with the Members comments and said they had identified and achieved a significant level of efficiencies and savings during the five year period and had been faced with additional unexpected cost pressures in addition to the MRP.

The Member was aware that the Chief Officer Resources was not in post at the time of the previous MRP report, but commented that Members had taken the decision to support, in the knowledge that this Council would find a way of mitigating those cost pressures coming in 2022/23, and felt that the administration had failed to do that and had to enter into another MRP agreement going forward which would put debt on to future generations to come.  The Member could not support the report and would propose an alternative recommendation following further debate. 

Another Member also felt this was storing up debt for future generations.  He quoted point 5.1.5. from the report - For the purpose of this report the Authority’s future capital expenditure estimates have not been included in the analysis and all options are based on the CFR position as at 31 March 2021 – and enquired if the £70 million that the Authority was borrowing and the payback of £1.4 million was not included in these calculations.  The Chief Officer Resources explained that this change in policy would not impact on the actual debt repayment made every year.  The £70m proposed loan from the Welsh Government was not included in the calculations for two reasons, the first was that the Council had yet to agree to accept the loan on a long term basis and the second reason was that if Council did agree to accept the loan, an income stream had been identified that would offset the MRP charge for that loan, therefore, it would have a neutral impact on the net MRP calculation going forward.

A Member commented that having listened to the Chief Officer Resources presentation of the report and opposing arguments and considering the positive impact of the report the Member proposed Option 2, this proposal was seconded.

In response, the Member reiterated that the figures would increase moving forward and the burden was going to be felt by future generations.  The Member again referred to the previous report that the Council would do all it could to mitigate cost pressures and consider additional resources for the future.  The proposal looked positive for the first five year period but up to 2033 the figures would increase and future Council administrations would be saddled by debt and felt that the Council could mitigate cost pressures using the favourable settlements received from the Welsh Government.

A Member proposed the following alternative recommendation:-

·        That the Council take the opportunity to deal with the situation now, using monies, following a better settlement from the Welsh Government, and not to store debt for the future.

This alternative recommendation was seconded.

A recorded vote was, therefore, requested.

In Favour of the alternative recommendation – Councillors S. Thomas, M. Cross, L. Elias and T. Smith.

Against the alternative recommendation – Councillors S. Healy, M. Cook, G.A. Davies, J. Hill, J. Holt, C. Meredith, J.P. Morgan and G. Paulsen. 

Councillor G. Collier abstained from voting.

The vote on the alternative recommendation was not carried.

The Chair, therefore, proposed Option 2 (preferred option).  This Option was seconded and therefore,

the Committee AGREED to recommend that the report be accepted and endorse Option 2; namely that Members scrutinised the proposals and recommend to Executive / Council to support the change of the supported borrowing element of the MRP from 2% straight line to a 50-year annuity basis and to changing the unsupported borrowing element of the MRP from an individual asset annuity basis to a weighted average annuity basis. This change is to be applied from 1st April 2021.