Decision details

Matter for Decision

The Housing Revenue Account (HRA) Medium Term Financial Strategy (MTFS) is one of two long-term strategic financial planning documents produced each year for housing landlord services provided by Cambridge City Council.

 

The HRA MTFS provides 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 national and local 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 and Homelessness

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

a.    Financial assumptions as detailed in Appendix C of the document.

b.    2023/24 and future year revenue budgets, resulting from changes in financial assumptions and the financial consequences of changes in these and the need to respond to unavoidable pressures and meet new service demands, as introduced in Section 8, detailed in Appendix E and summarised in Appendix G of the Officer’s report.

ii.  Approved that delegated authority be given to the Assistant Director of Assets and Property or the Assistant Director of Development to be in a position to confirm that the authority can renew its investment partner status with Homes England.

 

The Executive Councillor for Housing and Homelessness recommended Council to:

iii. Approve proposals for changes in existing housing capital budgets, as introduced in Section 9 and detailed in Appendix F of the Officer’s report, with the resulting position summarised in Appendix H, for decision at Council on 30 November 2023.

iv.Approve proposals for new housing capital budgets, as introduced in Sections 6 and 7 and detailed in Appendix Eof the Officer’s report, with the resulting position summarised in Appendix H, for decision at Council on 30 November 2023.

v.  Approve the revised funding mix for the delivery of the Housing Capital Programme, recognising the latest assumptions for the use of Grant, Right to Buy Receipts, HRA Resources, Major Repairs Allowance and HRA borrowing, as summarised in Appendix H.

 

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 Head of Finance and Business Manager.

 

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

      i.          The transformation programme was looking at the way the city operations team worked and was reviewing the services provided across responsive and void repairs. A lot of work was being done across the council to ensure quality services were being provided to tenants.

     ii.          Information was provided to tenants about the financial support available to them. As part of communicating about rent increases tenants were reminded that they could speak with the council’s Financial Inclusion Officers to ensure that tenants were claiming all the financial support that they are entitled to. Specialist software also enabled information to be targeted to specific groups of individuals again to ensure that they were claiming financial support where they were able to.

   iii.          Rent restructuring was introduced in 2002 and this produced a calculated rent for each property the ‘target or formula rent’, which was initially above what tenants were paying in the vast majority of cases. Over a 10-year period tenants were moved from the rent that they were paying towards the ‘target rent’. Central government stopped the ability to move tenants to target rents; this could only happen when properties became vacant. The Council would increase rent to target rents when properties were void. However currently the cost of repairing void properties was higher than the increased rental income from those properties which had been increased to target rents. 

   iv.          Would check after the meeting whether there was any difference in tenant’s ability to pay their rent between those in affordable rented homes compared with social rented homes.

    v.          There was a trade-off between increasing rents and providing improvements to homes which would reduce energy costs. Before the Autumn Statement was released the next day it was not known whether Central Government would introduce a cap on rent increases from April 2024.

   vi.          Noted the net increase in council homes was relatively low but this was affected by [in some years] significant levels of tenants exercising their right to buy their property. Also a number of new homes were being provided as a result of redevelopment of existing sites, so some homes have had to be demolished in order to deliver a net gain of properties. Going forward expected to see an increase in the number of net new homes being delivered for example the East Barnwell redevelopment was expected to deliver a net gain of 110 new homes on that site and further new homes would be delivered at the Eddeva Park site. Cambridge City Council had done very well in comparison to other Councils.

 vii.          The Council was working towards housing stock being EPC ‘C’ standard by 2035.

viii.          The rent standard allowed the council to increase rents by ‘up to CPI plus 1%’ (with September being the CPI used). Therefore 7.7% was the maximum that rents could be increased by next year.

   ix.          The decision around market housing and rules on investments sat with the Section 151 Officer to be able to demonstrate that that any investment was not being done primarily for yield. For example, the provision of market housing on a scheme was not being done to generate profit for the council but was being done in order to deliver affordable housing.

    x.          To provide a comparison of our proposed borrowing compared to other councils, we would need to individually investigate the level of borrowing other local authorities had in their business plans for new build going forward. Cambridge had moved at quite a pace in delivering new homes within the HRA and were perhaps further ahead in terms of the planned level of borrowing compared to other councils.

   xi.          The Council’s direct emissions target for net zero was 2030 and not 2050 as included in the report.  

 

Post meeting clarification – The current climate change strategy includes two key items:

·       The target to reduce the Council’s direct emissions to net zero carbon by 2030.

·       The vision to reach net zero carbon in Cambridge by 2030, subject to Government, industry and regulators implementing the necessary changes to enable the city to achieve this. 

 

The Committee resolved to endorse the recommendation i to ii by 8 votes to 0 with 3 abstentions.

 

The Committee resolved to endorse the recommendation iii to v by 6 votes to 0 with 3 abstentions.

 

The Executive Councillor for Housing and Homelessness 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.