Agenda item

The Strategic Lead – Finance’s report presented the draft Housing Revenue Account (HRA) revenue and capital budgets for 2019/20 to the Housing Review Board. 

The report provided the Board with details of the year end forecast of the draft Housing Revenue Account (HRA) for 2018/19 and proposed budget for 2019/20.  This account showed the main areas of anticipated income and expenditure on landlord activities for the year ahead. Producing a Housing Revenue Account had been a statutory requirement for Councils who manage and own their housing stock for some time, and therefore was a key document for the Board to influence.

The Council had a prescribed timetable for the production of its budgets which involved the development of draft estimates and scrutiny by various member and officer groups. The report presented an opportunity for the Housing Review Board to input into this process.

The budget had been prepared to maintain Council homes to a high standard, with a comprehensive planned programme of expenditure, adaptations and routine repairs.  This included £4.4milion for major repairs, and day to day repairs, programme maintenance and one-off works totalling £4.5million.  The Portfolio Holder – Sustainable Homes and Communities highlighted that the Council put £8million back into the local economy through its spending.

Rents had decreased by 1% in line with legislation giving an estimated rental income from dwellings of £17.1million, and other income, including garage rents adding a further £1million in income. 

The draft budget proposed to generate a surplus of £1.154million in 2019/20.  This would be used to help finance the purchase of properties.  The HRA balance was maintained within the adopted range of £2.1million and £3.1million.  There was an additional £1.6million being held in the HRA Volatility Fund which would remain unchanged.

The Board’s attention was drawn to the properties purchased over the past 12 months, as contained in the report.

The Strategic Lead – Housing, Health and Environment presented to the Board the HRA budget and Business Plan.  He explained that the HRA Business Plan provided a long-term vision for the housing stock with detailed income and expenditure projections.  It needed to be regularly refreshed and updated and sat alongside the Housing Strategy.  The HRA Business Plan was a dynamic, core policy document for the Council, with the current version covering the period 2017-2020.  The Business Plan needed to be refreshed to consider:

·           The implication of a new maintenance contractor.

·           To reflect additional work on asset management planning and to further develop management information from the Housing IT system.

·           The end of rent reductions.

·           The implication of Universal Credit.

·           To reconsider the debt level and use of Right to Buy receipts linked to future development ambitions.

The aim of the Business Plan was to set a framework for investment/expenditure decisions in relation to tenants’ homes and housing services.  The mission was to achieve and maintain good (outstanding) quality homes and housing services for tenants and leaseholders.  The purpose of a Business Plan was:

·           Define housing business objectives.

·           Identify resources available and costs.

·           Provide a financial framework for service delivery.

·           Highlight key variables and pressures.

·           Identify the main income and expenditure items over a 30-year period.

·           Represent good practice to plan long term.

The key variables in budgeting were:

·            Housing Stock - Portfolio acquisitions/ RTB losses.

·            Income - Rent Policy increase/decrease.

·            Management       - Staff structure to provide services.

·            Major Repairs - Improvement programmes.

·            Responsive - Demand-led repairs.

·            Planned - Timescale for cyclical maintenance.

·            Loan interest        - Loans at fixed interest rates.

·            Inflation - Factor outside our control.

·            Prices - Cost/availability of labour & materials.

The anticipated income for 2019/20 was £18,075,360.  The main sources of income were from rents, garage rents and support charges.  A 3% increase on garage rents had been assumed.  It was the final year of the Government’s four-year rent reduction policy.  Rent collection performance was critical and must be closely monitored.  The rent policy in the HRA Business Plan was based upon social rents for the majority of the housing stock, with affordable rents for newer acquisitions.  The greatest risk to income was the transfer of tenants to Universal Credit. 

Areas of expenditure highlighted included:

·                Responsive maintenance.

·                Annual maintenance programmes – cyclical and servicing.

·                Supervision and management.

·                Debt charges.

·                Major repairs.

·                Major improvements/extensions.

·                Remodelling sheltered scheme.

·                Social Services adaptations.

Budget challenges included:

·  `      Future rent policy

·                Welfare Reforms – Universal Credit

·                Right to Buy sales

·                Cost of Integrated Asset Management contract

·                Increasing cost of compliance measures

·             An updated stock condition survey

·             Future borrowing plans (now no debt cap)

·             New build/acquisition ambitions

·             Sensitivity testing

The Board thanked the Strategic Lead – Housing, Health and Environment for his presentation and requested that it be circulated to the HRB members.

RECOMMENDED:  that Cabinet approve the Housing Revenue Account revenue and capital estimates.