To approve an amendment to the minimum revenue provision policy in the treasury management strategy.

(a)  It be recommended to full Council that an amendment be approved to the current MRP policy within the Treasury Management Strategy to be based on the estimated life of the assets, in accordance with regulations, and the method of repayment to be through an annuity calculation (providing a consistent overall annual borrowing charge).

1.    Continue using the current MRP policy approach to debt write down, which is a combination of reducing balance and straight line.

Advantages

It is a simpler approach to the write down of debt than the annuity method.

Disadvantages

The current debt write down approach does not reflect the flow of benefits from the assets funded from borrowing as the charge is higher in earlier years. In addition it does not fully write down the borrowing balance due to the reducing balance method applied to supported borrowing.

2.    The revised debt write down approach could be implemented with effect from 1 April 2004. Advice from independent advisors and external auditors is that an implementation date of 1 April 2008 is reasonable.

3.    The council is able to devise its own debt write down approach within the MRP policy; no alternative options to those presented in this report have been identified.