Changes to the capital framework: Minimum Revenue Provision
This consultation seeks views on proposed changes to regulations to better enforce the duty of local authorities to make prudent Minimum Revenue Provision each year.
Local authorities can freely borrow and invest under legislation and guidance known as the Prudential Framework.
Notwithstanding these freedoms, authorities must make sure borrowing is affordable. Where capital expenditure is financed by borrowing, authorities have a statutory duty to set aside revenue funds to repay the principle of the debt; this is known as Minimum Revenue Provision (MRP).
The government has identified that some authorities are not sufficiently complying with this duty and is proposing changes to regulations to make sure that practices are prudent and consistent across the sector.