Issue - meetings

This report sets out the revised Housing Revenue Account Business Plan strategy following the completion of the strategic review commissioned in February 2022.

          This report contains the following Annexes:

·                 Annexe 1 – HRA Business Plan 2022/23 to 2052/53 

·                 Annexe 2 – Housing Reserves

·                 Annexe 3 – Housing New Build Summary

Recommendation

It is recommended that the Council, after consideration of the recommendations of the Executive, and after considering the comments from the Landlord Services Advisory Board and Resources Overview and Scrutiny Committee, resolves:

1.     To approve the revised HRA business plan strategy set out in this report.

2.     To approve the proposed movements, restrictions and purposes of reserves as set out in annexe 2.

63.1     The Leader of the Council moved the recommendations which were duly seconded by Cllr Paul Rivers, Co-Portfolio Holder for Housing (Operations). 

63.2     A review of the 30-year HRA Business Plan had been commissioned in February 2022, with the aim of addressing the challenges in the Plan and ensuring it was on a sustainable financial footing. The HRA Business Pan was a rolling 30-year self-financing plan to deliver key long-term strategies and commitments within the Corporate Plan including managing, maintaining, and building new social and affordable housing for Waverley tenants. Since its origins in 2012 there had been a number of unforeseen challenges to the basic assumptions of the Business Plan: the government had imposed four years of rent decreases, followed by four years of capped rent increases which had impacted on income assumptions; asset management priorities like fire safety improvements and decent home standard requirements, and the Council’s commitment to decarbonization had added to planned maintenance costs; and more recent increases in inflation had impacted on cost budgets across all areas. The strategic review addressed how the Council would meet debt repayments, fund housing maintenance and development of new affordable homes, and maintain adequate levels of reserves.

63.3     Cllr Seaborne agreed in principle with the need to revise the HRA Business Plan s. raises issue with section 4.13 of the report that explained the proposed approach to fund new homes building through a combination of Right to Buy (RtB) receipts and borrowing. The level of RtB receipts was uncertain, but Cllr Seaborne wanted to understand better the assumptions that had been made in the revised Business Plan about these receipts and the corresponding amount of borrowing expected in order to make an informed decision, given the risks around potentially high levels of borrowing. Cllr Seaborne also noted that some of the figures in the annexes had changed between being considered by different committees and these changes needed to be clarified. Cllr Cosser echoed the concerns regarding variations in the details of the annexes.

63.4     At the invitation of The Mayor, the Section 151 Officer advised that the reason for variation in the details set out in the annexes was due to the borrowing rate changing in the period that these reports had been flowing though the committee process. There had been no other changes to the annexes. With this assurance, the Leader commended the recommendations to Council.

63.5     The Mayor moved to a vote and it was

RESOLVED that

1.    the revised HRA Business Plan strategy as set out in the report be approved; and

2.    the proposed movements, restrictions and purposes of the reserves as set out in Annexe 2 of the report be approved.

This report sets out the revised Housing Revenue Account Business Plan strategy following the completion of the strategic review commissioned in February 2022.

This report contains the following Annexes:

·                 Annexe 1 – HRA Business Plan 2022/23 to 2052/53 

·                 Annexe 2 – Housing Reserves

·                 Annexe 3 – Housing New Build Summary

Recommendation

It is recommended that the Executive, after considering the comments from the Landlord Services Advisory Board and Resources Overview and Scrutiny Committee, make the following recommendations to Council, that:

1.     To approve the revised HRA business plan strategy set out in this report.

2.     To approve the proposed movements, restrictions and purposes of reserves as set out in annexe 2.

RESOLVED that the Executive, after considering the comments from the Landlord Services Advisory Board and Resources Overview and Scrutiny Committee, recommends to Council:

1.               To approve the revised HRA business plan strategy set out in this report.

2.               To approve the proposed movements, restrictions and purposes of reserves asset out in annexe 2.

Reason:

To provide the resources to fund Waverley Borough Council’s Landlord Services operations, maintenance programme, zero carbon commitments and building new affordable homes on a long-term financially sustainable basis.

[This is a recommendation to Council and therefore not subject to call-in]

Councillor Merryweather, Portfolio Holder for Finance, Commercial and Assets presented the report which set out the current position with the Housing Revenue Account.  The report set out the same structural and economic risks as the previous report on the agenda.  The Government had announced a cap on the amount by which social rent could be raised at 7%, however the Council’s intention would be to shield its tenants from a big rise in rents and limit any increase to 4%.  He thanked the officers involved for their work; and the members of the Landlord Services Advisory Board and the Resources Overview and Scrutiny Committee.  The Leader echoed the thanks and welcomed the constructive engagement with the tenants.

Councillor Mulliner spoke on the report, highlighting that it would have been helpful to see the inflationary pressures spelled out in the report in terms of the impact on current costs.  If rents were only increased by 4% it would reduce the ability of the HRA to fund itself and not rely on future borrowing.  He suggested a simpler way of explaining the financial analysis.

The Leader voiced concern over the restrictions placed on local government by central government in respect of building social housing.  He thanked the officers in the Housing team for their work.

In response, Councillor Merryweather clarified that the rents received were ringfenced for the operation, building and maintenance of new social housing.  The cost of decarbonisation existing social housing would also need to be resolved.  The Leader advised that he and Councillor Williams had written to the Government to seek clarification on how local authorities will fund the work required to meet Government targets on energy efficiency. 

RESOLVED that the Executive, after considering the comments from the Landlord Services Advisory Board and Resources Overview and Scrutiny Committee, recommends to Council:

1.               To approve the revised HRA business plan strategy set out in this report.

2.               To approve the proposed movements, restrictions and purposes of reserves asset out in annexe 2.

Reason:

To provide the resources to fund Waverley Borough Council’s Landlord Services operations, maintenance programme, zero carbon commitments and building new affordable homes on a long-term financially sustainable basis.