The president of the Society of District Council Treasurers has told Rooom151 that the latest proposals on Minimum Revenue Provision (MRP) could lead to further service cuts and the loss of affordable housing.
Writing in a Room151 blog, Alison Scott said that the proposed changes to MRP, combined with earlier amendments to the PWLB rules and revisions to the Prudential Code, were intended by the government to prevent councils from adopting a more commercial approach.
“It is clear that the current raft of measures is not about improving how councils pursue and manage commercialisation, but closing it down completely. That, of course, is rightly the government’s decision to make but it is doing so without addressing funding gaps and will leave some councils facing cliff edges,” she writes.
The government is currently consulting on proposals that would address concerns that some councils exclude a proportion of their debt from the MRP determination, while others use capital receipts in place of the charge to the revenue account.
Scott points out in the blog, however, that while the MRP proposals are not retrospective in requiring councils to make additional provision for prior years, they do require them to apply current rules to past investment decisions.
“Some councils will be faced with a stark choice: sell assets and lose income or increase MRP provision. Both courses of action will result in cuts to services.”
She suggests that one unintended consequence will affect councils that have set up housing companies, where there is the possibility that “much of the [housing] investment will disappear along with much needed affordable housing”.
The MRP consultation closes on 8 February 2022.
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