Agenda item

This report advises Members of the latest position regarding the Housing Revenue Account (HRA) for 2020/21, the updated 30-year Business Plan and seeks approval of the 2020/21 budget.

The report contains the following Annexes:

Annexe 1 – Revised HRA Business Plan - 2020/21 to 2023/24

            Annexe 2 – Housing Fees and Charges

            Annexe 3 – Capital Programme comprising

·         Housing Core Programme

·         New Affordable Homes Programme

·         Stock Remodelling Programme

Annexe 4 – HRA Reserves Summary

Recommendation

The Executive makes the following recommendations to the Council, that:

1.    the rent level of Council dwellings be increased by 2.7% from the 2019/20 level with effect from 1 April 2020 in accordance with The Government’s permitted guidelines;

2.    the weekly charge for garages rented by both Council and non-Council tenants be increased by 25 pence per week excluding VAT from 1 April  2020;

3.    the service charge in sheltered accommodation be increased by 50 pence per week from 1 April 2020 to £19.50;

4.    the recharge for energy costs in sheltered accommodation (as appropriate) be increased by 50 pence per week from 1 April 2020;

5.    the revised HRA Business Plan for 2020/21 to 2023/24 as set out at Annexe 1 be approved;

6.    note the approval change for the fees and charges as set out in Annexe 2;

7.    the Housing Revenue Account Capital Programmes as shown at Annexe 3 be approved;

8.    the proposed use of the Working Balance Reserve and Contingency Reserves to fund Capital Programmes be approved; and,

9.    the financing of the capital programmes be approved in line with the resources shown in Annexe 4.

In accordance with the Local Authorities (Standing Orders) (England) (Amendment) Regulations 2014, a recorded vote will be taken on this item.

62.1    The Leader introduced the Housing Revenue Account (HRA) report, reminding Members that this was another area where the Council’s income stream and ability to provide services to residents was suffering from ill thought-out Central Government interference. The authority’s responsibility as a social landlord was with the management and maintenance of existing council homes, of which there were almost 5,000 rented and shared ownership homes in our Borough, and delivering housing by purchase or by building our own. Waverley was one of a dwindling number of councils still doing this.

62.2    The Right to Buy (RTB) scheme had seemed “a good idea at the time” but was not properly thought through. The Council was forced to sell houses at below market value and not even allowed to keep all the proceeds,resulting in a continued net loss of Social Housing. Even worse, national statistics showed that about 40% of social housing sold ended up being privately rented out at full market rates – a classic case of robbing the poorest to enrich those better off. There was little wonder that there is a nationally recognised crisis in available Social Housing.

62.3    The Government had also required Waverley to take £189 million of “assumed debt” by an enforced transfer of the HRA to a so-called “self-financing basis”; and a 4 year rent freeze; had robbed the council of badly needed income to maintain our current housing stock. Even applying the maximum rent increase now allowed by the Government, our tenants will be paying less in rent than 4 years ago

62.4    Waverley’s Corporate Strategy aimed to maximise the availability of housing that meets the needs of local people at all income levels and emphasised the value and worth of all residents. More and better affordable housing was needed for residents of the Borough in housing need, particularly the more vulnerable in our society. Despite the many difficulties outlined this Administration had put in place a viable business plan to aid delivery of these priorities.

62.5    The Council had to set a balanced HRA budget for 2020/21 in accordance with the updated 30-year Business Plan including the three-year Capital Programme. The plan which would be presented by Cllr Rosoman, the Housing Portfolio Holder, would provide the resources to fund the 30-year maintenance forecast and deliver proposals for building new quality affordable homes for those in need and investment in stock remodelling.

62.6    The Housing Portfolio Holder, Cllr Anne-Marie Rosoman outlined the detail of the proposed Housing Revenue Account Business Plan. In order to set a balanced HRA budget a combination of factors had to be considered, looking at statutory responsibilities, housing need and setting forward programmes within the Housing Strategy.

62.7    In 2012, Waverley had to take out £189m of borrowing to transfer the HRA to the new ‘self-financing’ basis.  This level of debt, and the cost of servicing it, could not be ignored. At the time the government allocated this debt to the Council, it was on the assumption that rents would rise annually with reference to the Retail Price Index. However, only 4 years later, in 2016, the Conservative Government implemented major changes to HRA finances requiring statutory annual rent reductions of 1% per year on year for four years. The impact was to remove a significant amount of resources from the HRA in future years, limiting the ongoing ability to develop or acquire new properties replacing the Right to Buy stock losses.

62.8    Last year, the Government announced that providers of social housing would be permitted to increase average weekly rents by CPI plus 1% for the five years starting 1 April 2020. CPI in September 2019 was 1.7% While this did not allow us to fully make up for those year on year reductions imposed over the last 4 years, it did allow some limited, but sadly still necessary, breathing space ,in which to catch-up. It was proposed that the maximum allowed rent increase in 2020/21 be approved in order to fund annual repairs, core maintenance programme and the new build and re-modelling capital programme and because of the cumulative effect on future rental streams.

62.9    The Business Plan assumed that in 2020/21 average rents would be increased by the maximum currently allowable ie 2.7% for 5 years and then assumed rents would increase by CPI only and that CPI is 2%. The table at 4.11 on page 137 of the agenda demonstrated the cumulative effect on rental streams applying 3 scenarios and assumed for simplicity that the stock level would remain the same throughout the 30 Year HRA Business Plan. The table at 4.11 on page 138 provided details of how this would affect tenants according to bedroom numbers. Even with the rent increase average rents would still be below the 2016 level.

62.10  The Housing O&S Committee reviewed the draft HRA Business Plan last month and was largely in agreement with the recommendations set out in this report. We acknowledge that some people may need help and the Council had excellent support in place to help, particularly with the transition to Universal Credit. As of last month, over 4,100 tenants were in credit and arrears stood at only £164,000. Whilst recognising financial pressures, the Council had a responsibility to ensure that services to tenants were maintained and that we could deliver homes to those at all income levels.

62.11  The proposed rise in service charges in senior living accommodation broadly related to utilities. A schedule of fees and charges for various services to leaseholders and shared owners was given in Annexe 2, whilst Annexe 3 on page 149 showed the planned spend in 2020/21 and the following years on each of the three elements to the capital programme.

62.12  The 30-year Business Plan also included a programme to develop new affordable homes and a programme to remodel some of the existing stock.  The major regeneration project at Ockford Ridge continued to be a combination of redevelopment and remodelling existing dwellings.

62.13  The Corporate Strategy aimed to maximise the availability of housing that meets the needs of local people at all income levels, despite the impact of the previous 4 years’ rent reduction on future resources. There was still an ambitious plan to bring new affordable homes into our Borough and the proposed rent increase would help secure the resources to deliver.

62.14  Cllr Rosoman concluded by thanking Officers for their hard work and support, and commended the Budget for approval.

62.15  Cllr Julia Potts, as Leader of the Principal Opposition Group, spoke to confirm that the Waverley Conservative Group supported the HRA budget, unlike Cllr Follows last year. The Group did have concerns about the Climate Change agenda and the potential cost impact on the budget of retro-fitting 5000+ homes to meet the carbon neutral target, and the potential cost of this to lower income and vulnerable residents. Cllr Potts sought assurances from the Portfolio Holder that this would be carefully and sensitively managed.

62.16  Cllr Jenny Else referred to the climate change commitment, for the council to be carbon neutral by 2030, and noted that she could not see in the Business Plan the initiatives that would achieve this. Cost was an unknown factor, but even a conservative cost of £10,000 per property to retro-fit would come to around £50m. Cllr Else asked how this work was being planned, and how it was planned to be funded, and whether it was a realistic goal.

62.17  Cllr Paul Follows echoed the comments of the Leader with regard to the impact of central government policies on local government, and ultimately on social housing tenants. The Council had to maintain housing standards, and that required further funding. His opposition last year was to the government strategy of council house financing that negatively impacted on Waverley’s housing stock. Cllr Follows highlighted the need for genuinely affordable housing, and for better quality housing that was environmentally sustainable and cheaper for tenants to run. Costs of building to improved environmental standards were decreasing, as were the costs of retro-fitting energy saving features, and officers were looking innovatively at what could be achieved. Cllr Follows commended the HRA Budget to Council.

62.18 The Leader summed up by reminding Members that the aspiration to become carbon neutral by 2030 had recognised the need for additional government funding to reach this ambitious target, and he encouraged all Members to lobby government to deliver this. In closing, he commended the HRA Business Plan to Council for approval, and the recommendation was seconded by Cllr Follows.

62.19  In accordance with the Local Authorities (Standing Orders) (England) (Amendment) Regulations 2014, a recorded vote was taken on this item. The Mayor move the nine recommendations en bloc and these were approved, with 48 votes in favour and two abstentions. Accordingly,

Council RESOLVED that:

1.    the rent level of Council dwellings be increased by 2.7% from the 2019/20 level with effect from 1 April 2020 in accordance with the Government’s permitted guidelines;

2.    the weekly charge for garages rented by both Council and non-Council tenants be increased by 25 pence per week excluding VAT from 1 April  2020;

3.    the service charge in sheltered accommodation be increased by 50 pence per week from 1 April 2020 to £19.50;

4.    the recharge for energy costs in sheltered accommodation (as appropriate) be increased by 50 pence per week from 1 April 2020;

5.    the revised HRA Business Plan for 2020/21 to 2023/24 as set out at Annexe 1 of the agenda report be approved;

6.    the approval change for the fees and charges as set out in Annexe 2 of the agenda report be noted;

7.    the Housing Revenue Account Capital Programmes as shown at Annexe 3 of the agenda report be approved;

8.    the proposed use of the Working Balance Reserve and Contingency Reserves to fund Capital Programmes be approved; and,

9.    the financing of the capital programmes be approved in line with the resources shown in Annexe 4 of the agenda report.

For 48

Cllrs Brian Adams, Christine Baker, David Beaman, Roger Blishen, Peter Clark, Richard Cole, Steve Cosser, Martin D’Arcy, Kevin Deanus, Sally Dickson, Brian Edmonds, Patricia Ellis, David Else, Jenny Else, Jan Floyd-Douglass, Paul Follows, Maxine Gale, Michael Goodridge, John Gray, Michaela Gray, Joan Heagin, Val Henry, George Hesse, Daniel Hunt, Peter Isherwood, Jacquie Keen, Robert Knowles, Anna James, Andy MacLeod, Peter Marriott, Michaela Martin, Peter Martin, Mark Merryweather, Kika Mirylees, John Neale, Peter Nicholson, Nick Palmer, Julia Potts, Ruth Reed, Paul Rivers, Penny Rivers, John Robini, Anne-Marie Rosoman, Trevor Sadler, Liz Townsend, John Ward, Steve Williams, George Wilson

Abstentions 2

Cllrs Mary Foryszewski, Penny Marriott

Against 0