Minimum Revenue Provision post-consultation proposal

Overview

Following a consultation on proposed changes to regulations, aimed at strengthening compliance with the duty to make Minimum Revenue Provision (MRP), the government has been made aware of concerns raised by a number of authorities that the changes may have unintended consequences where authorities have made capital loans.

While the intent of the changes is to make sure that prudent MRP is made each year, as well as prevent practices that result in under-provision of MRP, the government has also been clear that it does not want to stymie sensible investment or cause undue financial pressures. We have carefully considered the sector’s concerns, balanced against the government’s objective of strengthening the duty to make MRP and to safeguard against practices that result in under-provision. To recognise the specific issue with respect to capital loans, we amended the proposals to provide additional flexibilities with respect to capital loans. 

The government will issue a full response to the consultation in due course.  The intent of this survey is to test these proposals with the sector and stakeholders to make sure that they address the specific concerns raised but do not create additional risk to either the government’s objectives or to the sector. This is particularly important given the technical nature of the changes.  The evidence gathered in this exercise will inform the government’s final response.

Responses to this survey should be completed with regards to  Annex A – Post consultation regulation changes which sets out the text that would be introduced into regulations (see Related Documents Below). Please note that the Statutory Guidance on Minimum Revenue Provision (Statutory Guidance) will be revised to reflect the changes in regulations.

Why your views matter

1. To test that the amendment addresses concerns raised with respect to making MRP on capital loans.

2. To ensure that the wording of the proposed regulation changes meets the policy intent and does not have any unintended consequences.

What happens next

The evidence collected will inform the government's formal response, along with evidence collected through the original consultation.