Issue - meetings

This report sets out the proposed Housing Revenue Account (HRA) Business Plan, Revenue Budget and Capital Programme for 2023/24.

Recommendation

The Executive recommends to the Council, that:

1.    the rent level for Council dwellings be increased by up to 4% from the 22/23 level with effect from 1 April 2023 within the permitted guidelines contained within the Government’s rent setting policy;

2.    the service charges in senior living accommodation be increased by 4% per week from 1 April 2023 to £20.90;

3.    the recharge for energy costs in HRA properties be increased by 4% per week from 1 April 2023;

4.    the revised HRA Business Plan for 2023/24 to 2052/53 as set out in Annexe 1 be approved;

5.    the approval change for the fees and charges as set out in Annexe 4 is noted

6.    the Housing Revenue Account Capital Programmes as shown in Annexe 5 & Annexe 6 be approved; and,

7.    the financing of the capital programmes be approved in line with the resources shown in Annexe 7.

8.    to deliver the works identified in the maintenance budgets it is recommended that authority is delegated to the Executive Head of Housing, in consultation with the s151 Officer and Co-Portfolio Holder for Housing, to procure and enter into contracts valued over £100,000 shown in Annexe 8.

86.1     Cllr Jerry Hyman left the Council Chamber having previously declared a Disclosable Pecuniary Interest in relation to this item.

86.2     The Leader introduced the HRA Business Plan, Revenue Budget and Capital Programme and recommended it to Council for approval, which was duly seconded by Cllr Mirylees. Before passing to Cllr Merryweather to provide a detailed presentation on the proposals, the Leader again thanked the Finance Officers for their hard work over many months to develop a balanced budget despite the ad hoc approach of the government in releasing information on various funds available to local authorities, even as late as January.

86.3     Cllr Merryweather, Portfolio Holder for Finance, Commercial and Assets, presented the budget proposals for the HRA:

“We now turn to the ring-fenced account into which our social housing rental incomes are received, which, together with some other income can only be used for legally prescribed purposes. These include not only the recurring annual costs of operating, administering and maintaining our Council homes but also:

·         Major repairs and upgrades;

·         New affordable home developments, and

·         The servicing and repayment of a £189m mortgage that the Council was required to take out in 2012 to transfer the HRA to the self-financing basis that it’s been on since then.

The HRA is self-financing which means that it is our Council house tenants alone who most directly experience the financial costs and benefits of the decisions that we take.  We work to a long-range business plan that extends out by a rolling 30-year horizon but this year’s review cycle has been extraordinary on at least 4 counts:

·         First, the impacts of Covid have been transitioning into impacts of the cost-of-living / inflation crunch which is affecting not only our tenants but also our own ability to provide our Landlord services;

·         Second, the government has provided us with a limited opportunity to increase rents by up to 7% ostensibly to mitigate for the cost inflation we experience.

·         Third, the pressing need to plan for the improvement of our housing stock to meet our energy performance and efficiency goals which are at least in line with those that are being set nationally by central government, and

·         Fourth, we have started to plan for the repayment of the 2012 mortgage by 2040/41 which will release a very significant net permanent improvement in the annual HRA operating account.

So it was in December 2022 that we agreed to change the mortgage debt strategy so as to rephase our net debt principal repayments to free up rent income now to fund housing maintenance and the energy efficiency programme.

Excluding both activity growth and cost savings, we expect that inflation will increase our costs by around £1.4m in 2023/24 – including legacy impacts from 2022/23 -  but that, after allowing for compensating interest and receipts, the net impact will be contained to about £1.0m.  This approximates to the 4% rent increase that is proposed in the recommendation which is also consistent, we believe, with the good intentions behind  ...  view the full minutes text for item 86

This report sets out the proposed Housing Revenue Account (HRA) Business Plan, Revenue Budget and Capital Programme for 2023/24.

This report contains the following Annexes:

·         Annexe 1 – HRA 30 Year Business Plan 2023/24 to 52/53

·         Annexe 2 – HRA Business Plan Movements 2023/24

·         Annexe 3 – HRA Key Budget Variances 2023/24

·         Annexe 4 – HRA Fees & Charges

·         Annexe 5 – HRA Capital Programme

·         Annexe 6 – Housing Delivery Programme

·         Annexe 7 – HRA Reserves Statement

·         Annexe 8 – HRA Contracts over £100k

Recommendation

It is recommended that the Executive, after considering the comments from the Resources Overview and Scrutiny Committee, makes the following recommendations to Council, that:

1.    the rent level for Council dwellings be increased by up to 4% from the 22/23 level with effect from 1 April 2023 within the permitted guidelines contained within the Government’s rent setting policy;

2.    the service charges in senior living accommodation be increased by4% per week from 1 April 2023 to £20.90;

3.    the recharge for energy costs in HRA properties be increased by 4% per week from 1 April 2023;

4.    the revised HRA Business Plan for 2023/24 to 2053/54 as set out in Annexe 1 be approved;

5.    the approval change for the fees and charges as set out in Annexe 4 is noted

6.    the Housing Revenue Account Capital Programmes as shown in Annexe 5 & Annexe 6 be approved; and,

7.    the financing of the capital programmes be approved in line with the resources shown in Annexe 7.

8.    to deliver the works identified in the maintenance budgets it is recommended that authority is delegated to the Executive Head of Housing, in consultation with the s151 Officer, to procure and enter into contracts valued over £100,000 shown in Annexe 8

The Executive RESOLVED to recommend to Council that:

1.    the rent level for Council dwellings be increased by up to 4% from the 22/23 level with effect from 1 April 2023 within the permitted guidelines contained within the Government’s rent setting policy;

2.    the service charges in senior living accommodation be increased by4% per week from 1 April 2023 to £20.90;

3.    the recharge for energy costs in HRA properties be increased by 4% per week from 1 April 2023;

4.    the revised HRA Business Plan for 2023/24 to 2053/54 as set out in Annexe 1 be approved;

5.    the approval change for the fees and charges as set out in Annexe 4 is noted

6.    the Housing Revenue Account Capital Programmes as shown in Annexe 5 & Annexe 6 be approved; and,

7.    the financing of the capital programmes be approved in line with the resources shown in Annexe 7.

8.    to deliver the works identified in the maintenance budgets it is recommended that authority is delegated to the Executive Head of Housing, in consultation with the Co-Portfolio Holders for Housing and the s151 Officer, to procure and enter into contracts valued over £100,000 shown in Annexe 8.

Reason: In order to approve the use of reserves and resources to fund Waverley Borough Council’s Landlord Services, the 30 year maintenance programme, deliver proposals for building new affordable homes and stock remodelling.

[This matter is recommended to Full Council for decision.]

The Portfolio Holder for Finance, Commercial and Assets, Cllr Mark Merryweather, presented the report which set out the proposed budget and capital programme for the Housing Revenue Account (HRA), which was the ring-fenced account entirely funded by council house rent income to meet the annual cost of operating, administering and maintaining council homes as well major repairs and upgrades, building new affordable homes, and servicing the legacy £189m mortgage the Council was required to take out in 2012 to transfer the HRA to a self-financing basis.

The HRA was self-financing and the annual budget had to balance. The rolling 30-year business plan had been reviewed during 2022/23 and in December 2022, Council had agreed to revise the mortgage debt strategy to rephase net repayments and free up rent income in the short-term to fund housing maintenance and the energy efficiency programme.

The net impact of inflation on costs in 2023/24 was estimated at around £1.1m and this had been part of the careful consideration of the appropriate level of rent increase. On balance, the Executive proposed a 4% increase in rents, service charges and energy recharges in 2023/24. Higher and lower rates of increase had been considered, and while 4% was felt to be fair, the Portfolio encouraged Council to consider and debate this fully.

The final recommendation, to delegate certain authority for work in the maintenance budget was considered beneficial for the delivery of the works identified.

Cllr Merryweather again thanked Officers for their work in developing the HRA budget over many weeks.

Cllr Jerry Hyman spoke on this item and noted that on Annexe 5, the budget for sewerage works would end after 2023/24. He also noted that the stock condition survey had been promised for many years and was desperately needed to plan works required for council housing stock.

The Leader advised that the cost for ongoing sewerage works would be met from the revenue budget rather than the capital budget. The Co-Portfolio Holder for Housing (Operations), Cllr Paul Rivers, advised that the council held a great deal of data about its housing stock, but recognised the need for a comprehensive stock condition survey to update records, and the procurement of a contractor was at an advanced stage.

In moving the recommendation, the Leader advised an amendment to recommendation 8, to include the Co-Portfolios for Housing in the delegation arrangements.

The Executive RESOLVED to recommend to Council that:

1.    the rent level for Council dwellings be increased by up to 4% from the 22/23 level with effect from 1 April 2023 within the permitted guidelines contained within the Government’s rent setting policy;

2.    the service charges in senior living accommodation be increased by 4% per week from 1 April 2023 to £20.90;

3.    the recharge for energy costs in HRA properties be increased by 4% per week from 1 April 2023;

4.    the revised HRA Business Plan for 2023/24 to 2053/54 as set out in Annexe 1 be approved;

5.    the approval change for the fees and  ...  view the full minutes text for item 84