Decision details

Approval of latest financial assumptions for the HRA financial forecasts, of any in year budgetary changes for the HRA and of the approach to setting the budget for 2021/21.

Matter for Decision

The Housing Revenue Account (HRA) Medium Term Financial Strategy (MTFS) provided an opportunity to review the assumptions incorporated as part of the longer-term financial planning process, recommending any changes in response to new legislative requirements, variations in external economic factors and amendments to service delivery methods, allowing incorporation into budgets and financial forecasts at the earliest opportunity.

 

Decision of Executive Councillor for Housing (part 1):

      i.         Approved the Housing Revenue Account Medium Term Financial Strategy attached, to include all proposals for change in:

a)   Financial assumptions as detailed in Appendix B of the document.

b)   2020/21 revenue budgets and future year forecasts as introduced in Section 5, resulting from changes in financial assumptions and the financial consequences of change and the need to respond to unavoidable pressures, including the impact of the coronavirus pandemic, as introduced in Section 5, detailed in Appendix D and D (1) of the document and summarised in Appendices G (1) and G (2).

    ii.         Delegated authority to the Strategic Director to be in a position to confirm that the authority can renew its investment partner status with Homes England.

 

Decision of Executive Councillor for Housing (part 2) to recommend to Council to:

   iii.         Approve proposals for changes in existing housing capital budgets, as introduced in Sections 6 and 7 and detailed in Appendix E of the document, with the resulting position summarised in Appendix H, for decision at Council on 22 October 2020.

  iv.         Approve the revised funding mix for the delivery of the Housing Capital Programme, recognising the latest assumptions for the use of Devolution Grant, Right to Buy Receipts, HRA Resources, Major Repairs Allowance, Section 106 Funding and HRA borrowing.

    v.         Extend the existing delegated authority to the Strategic Director in consultation with the Executive Councillor for Housing to approve use of Council land as sites for rough sleeper next steps POD’s on an individual basis based on the criteria as set out in the Housing Development Options for Homeless People report to Housing Scrutiny Committee in January 2020.

 

Reason for the Decision

As set out in the Officer’s report.

 

Any Alternative Options Considered and Rejected

Not applicable.

 

Scrutiny Considerations

The Committee received a report from the Assistant Head of Finance and Business Manager.

 

The Assistant Head of Finance and Business Manager:

        i.       Corrected an error in the report on pages 87 and 126 where the void assumption had been increased from 1% to 1.2% in the earlier modelling but this had been returned to the previous 1% but had not been corrected within the text in the report. 

      ii.        Referred to p133 of the agenda and appendix E which showed that extra resource had been allocated for fire door investment in relation to the committee’s discussion regarding the estates and facilities service review and compliance update. (See minute reference 20/31/HSC).

 

The Committee made the following comments in response to the report:

      i.         Noted that the white paper on planning may have an impact on affordable housing in the future.

    ii.         Queried the use of the consumer price index (CPI) within the report and noted that the implications of the covid-19 pandemic could impact assumptions for future years.

   iii.         Noted that reserves had been used to fill the gap where there were rent arrears to avoid the council having to consider cutting services to tenants.  Asked whether rent arrears had increased over the last 6 months.

  iv.         Queried what a budget virement was and asked if a list of definitions for acronyms could be provided to assist in understanding details in financial reports. 

 

The Assistant Head of Finance and Business Manager said the following in response to Members’ questions:

      i.         Rent arrears had been extrapolated up until the end of the year, if any assumptions were needed in respect for future years impact, this would be picked up in the January 2021 Housing Revenue Account Budget Setting Report.

    ii.         The Council was governed by a rent standard and were only allowed to increase rent up to CPI plus 1% measured using CPI at the preceding September.  If the rate of the CPI in September 2020 was different to that assumed then this would have a direct impact on the income assumptions made within the MTFS. The impact of the covid-19 pandemic had meant that more people had been forced to claim benefits however she felt that prudent assumptions had been made in respect of income for the current year.  Officers were actively working with tenants to ensure that they claimed the benefits that they were entitled to.  The sums incorporated into the MTFS assume that the council build houses in the new programme to Passivhaus standards, but the ability to do this would be dependent upon the constraints of each site as it is identified and brought forward for decision. If the Council were to build to higher standards initially then the council would not be able to deliver the number of affordable houses that they hoped to build. There is however, a clear aspiration to move to build to net zero carbon over the life of the programme, again dependent on site constraints.

   iii.         Rent arrears had increased by £500,000 over the past 6 months however the rate of increase had stabilised recently. The adjustment made to the MTFS was prudent, but a further full lockdown could have an additional impact.

  iv.         A budget virement was when money was moved or reallocated from one budget to another within the same financial year, with officers having delegated authority to do this in some cases.  Any capital budget virements are shown in the MTFS for transparency.  Agreed an acronyms definition section would be included within the January Budget Setting Report.

 

The Committee resolved unanimously to endorse recommendations 2.1 and 2.2.

 

The Committee resolved by 5 votes to 0 to endorse recommendations 2.3 - 2.5.

 

The Executive Councillor approved the recommendations.

 

Conflicts of Interest Declared by the Executive Councillor (and any Dispensations Granted)

No conflicts of interest were declared by the Executive Councillor.