Issue - meetings

Matter for Decision

The Officer’s report presented the Housing Revenue Account (HRA) budget strategy for the 2013/14 budget cycle and specific implications, as outlined in the HRA Mid-Year Business Plan Update document, which is to be agreed in future.

 

The recommended budget strategy is based on detailed financial modelling and projections of the HRA’s expenditure and resources, in the light of local policies and priorities and national policy and economic context. Service managers have identified financial and budget issues and pressures and this information has been used to inform the HRA Mid-Year Business Plan Update.

 

Decision of Executive Councillor for Housing

The Executive Councillor recommended to Council:

 

Revenue – HRA

(i)                To agree the HRA budget strategy, process and timetable for the 2013/14 budget cycle as outlined in Section 9 of the Officer’s report and Business Manager & Principal Accountant’s addendum.

(ii)              To agree the revised HRA revenue, funding and reserves projections as shown in Appendix E, and the associated decisions in section 9 [of the Officer’s report and addendum], of the HRA Mid-Year Business Plan Update document.

(iii)            To approve the mid-year unavoidable expenditure items and savings, as detailed in Section 9 of the Officer’s report and addendum.

(iv)            To authorise the Director of Customer & Community Services, in consultation with the Director of Resources, to calculate and communicate final cash limits or savings targets based on the decisions taken in the report, as outlined in Section 9 of the Officer’s report and addendum.

 

Treasury Management

(v)              To approve the approach to determining the most appropriate borrowing route in respect of any additional HRA borrowing requirement, as outlined in Section 8 of the HRA Mid-Year Business Plan Update, delegating responsibility to the Director of Resources for the final decision, in consultation with the Executive Councillor, Chair, Vice Chair and Opposition Spokesperson for HMB.

 

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 Business Manager & Principal Accountant regarding the Housing Revenue Account (HRA) Mid-Year Business Plan Update.

 

The Business Manager & Principal Accountant updated her report with an addendum tabled at Committee amending HRA Mid-Year Business Plan section 9 details on pages 86, 88 and 91 (pages 116, 118 and 121 of the agenda).

 

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

 

(i)                Expressed concerns regarding the impact of changes to benefit payments that may affect tenants when universal credit is introduced.

(ii)              Raising rents above inflation could lead to more benefit claimants.

 

In response to Members’ questions the Director of Customer & Community Services, Head of City Homes plus Business Manager & Principal Accountant confirmed the following:

 

(i)                A report would be brought back to Housing Management Board (HMB) 8 January 2013 setting out support the City Council would give to tenants in light of changes to the benefits system. The Council Business Plan relied on predicted income from rent. Officers monitored levels of arrears. Housing Management plus Revenues & Benefits staff were working together to identify those whose income may be capped due to the changes to the benefits system; so the Council could offer support to prevent arrears occurring. The intention was to take preventative action before the benefits changes came into effect to mitigate issues in advance as much as possible. The Council were funding Citizen’s Advice Bureau to provide debt advice. Support was also provided through the Council Customer Access Centre.

(ii)              The Council has done little modelling of the impact that a lower rent increase may have on rent arrears, as historically arrears have been very low and the potential impact of the welfare benefit reforms is not yet quantifiable.

(iii)            Tenants may wish to downsize properties due to the introduction of universal credit. Alternatively, they could pay higher rent charges. This would be an individual choice if they found the rent of larger properties exceeded capped benefits. The Council had recently identified tenants who maybe affected and would liaise with them about their future intentions well before the changes come into force.

(iv)            The Council had two methods of acquiring new housing stock. It could purchase new build properties or exercise its option of first refusal to buy back former ‘right to buy’ properties (the latter has only been possible in recent years due to the way that the legislation was implemented). The HRA budget had an allocation of £300,000 that could be used to buy back former ‘right to buy’ properties. Officers used criteria to ascertain whether new build or buy back properties offered better value for money. Market rates were paid for both options.

(v)              The Council’s level of borrowing was in-line with figures set out in the Business Plan approved in February 2012. However, interest rates paid to the Public Works Loans Board were higher than expected. Government consultation on expected levels of borrowing may lead to a preferential rate reduction for future borrowing, with a reduction of 0.2%.

(vi)            The HRA self-financing model leads to a 1.6% saving target for management expenditure. Officers pass cost savings onto tenants, where costs are fully recharged. The HRA budget (including bids and savings targets) would be presented to HMB and Community Services Committees for consideration in early 2013, prior to a decision by the Executive Councillor.

(vii)          Appendix D of the Officer’s report set out sensitivities to the financial modelling for illustartive purposes. Any additional budgets required would form part of formal bids as part of the budget process. These would be confirmed in the budget to presented in early 2013.

(viii)        The Business Plan sets out information regarding projected levels of new build property rates. Details from the February 2012 edition would be updated in early 2013.

(ix)            The Director of Customer & Community Services undertook to ask the Head of Strategic Housing to liaise with Councillor Blencowe regarding net new affordable housing gain figures.

 

The Committee resolved by 9 votes to 0 to endorse the recommendations as amended to include the Business Manager & Principal Accountant’s addendum.

 

The Executive Councillor approved the recommendations as amended.

 

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

Not applicable.