Issue - meetings

Capital Strategy

Meeting: 27/01/2021 - Budget Scrutiny Committee (Item 6b)

6b Capital Strategy pdf icon PDF 369 KB

Additional documents:

Meeting: 30/01/2020 - Budget Scrutiny Committee (Item 596)

596 Capital Strategy pdf icon PDF 401 KB

Additional documents:


b)         Capital Strategy


The Capital Strategy was intended to provide a high level, concise overview of how capital expenditure, capital financing and treasury management activity contributed to the provision of the Authority’s services. 


           Introduced by 2017 edition of the Prudential Code.

           Capital expenditure was where the Council spent money on assets, such as property or vehicles that would be used for more than one year.

           Assets below £10,000 were not capitalised.


Capital Financing


All capital expenditure must be financed either from:-


           External sources such as government grants and other contributions.

           The Council’s own resources (revenue, reserves and capital receipts) or

           Debt, which is borrowing and leasing.


When Capital is Financed by Debt


           Debt is only a temporary source of finance, since loans must be repaid.

           Therefore it was replaced over time by other financing, usually from revenue, which was known as minimum revenue provision (MRP).

           Alternatively, proceeds from selling capital assets (known as capital receipts) may be used to replace the debt.

           The Council’s cumulative outstanding amount of debt finance was measured by the capital financing requirement (CFR).

           This increases with new debt-financed capital expenditure and reduces with MRP and capital receipts used to replace debt.


The Capital Strategy contained:


           Capital expenditure plans – summary.

           Capital expenditure plans – detail.

           How the capital expenditure would be financed – summary.

           The revenue implications of capital debt.

           Estimated capital financing requirements.

           The minimum revenue provision statement.