Agenda item

Review draft budget and consider financial plans including proposed rent increase.

The Board were asked to make comments on the recommendations in the report going to the Executive.  Annalisa Howson addressed the Board and gave a presentation on the HRA draft budget.  She advised that the Strategic Review recommended that the council keep a £2 million reserve.  She noted that the report made recommendations for the yearly budget. 

Annalisa Howson advised the Board that the report recommended an up to 4% rent increase.  The Government cap on rent increases, would allow up to 7%; therefore would 5% be a more realistic proposal?  She noted that the impact on tenants and on the business Plan should be considered and balanced. She noted that 40% of tenants pay full rent, 26% of tenants were on Universal Credit and 17% received full housing benefit and a further 17% partial housing benefit.  She advised the Board that the service had a strong track record of rent collection and the 1% target of rent arrears had not been exceeded. It was noted that a 7% increase would allow £100,000 additional revenue on the 30-year business plan.

Annalisa Howson advised the Board that the second recommendation related to Senior living service charge increase of 4% to £20.90pw. She noted that the draft capital programme included all improvement plans. She advised that it included a £14 million budget for next year and that the council would need to seek additional borrowing over 12 years to fund new initiatives for stock improvements and new homes.

Robert Stratford from the Tenants panel noted that inflation should be into consideration, along with council tax increases and inflation costs on food. He felt that rents should be kept at 4%. The rent increase was going to hit vulnerable tenants.  Annalisa Howson acknowledged the concern and recognised the need for a “goldilocks” increase.  She also explained that state pensions and benefits were to increase by 10% and average wages were also increasing.

Councillor Mulliner sought further information (in chart form) on the how the debt would be smoothed out as rent reductions reduced cash flow for the council significantly. It was noted that O&S Resources committee recommended this rent increase be revised. Councillor Mulliner also felt that all tenants should be treated fairly, and the pension increase should be considered, and that inflation suggested 5% was reasonable based on a cap of 7%.

Councillor Follows advised the Board that the Executive have had the same debate. It was advised that rent increases were formulated by CPI inflation plus 1%, which would put social housing rents into a much higher bracket (11%) which is why a cap was set by government. It was noted that the council was looking at grades within that cap and with the comments made in the O&S Recourses committee attempting to balance rent prices with costs of new builds; must be realistic. It was felt that Executive should re-discuss as recommended by the Overview and Scrutiny Resources Committee. Comments made by the LSAB would also be considered by Executive.

Chris Austin from the Tenants panel noted the challenges and agreed a 5% increase.

Danielle Sleightholme queried if this would mean the council would see an increase in vulnerable people and would the Hardship fund continue to support these tenants, she also noted that the very limited take up on the Hardship Fund suggested that information about the fund were not accessible.  Danielle also queried the community room charges in Annex 4.

Responding to the queries Annalisa Howson advised the Board that the Hardship fund was still active and used as a last resort where other options had been exhausted. She noted that some tenants may be holding back from applying and tenants should be encouraged to access the fund.

Candice Keet advised that a 4% increase would look at £26 million of additional borrowing while 5% would lead to £21 million of borrowing. Annalisa Howson advised that there was no way to avoid capital projects and additional borrowing. She added that to ensure maintenance of resources for tenants the revenue would be needed, as the cost of building new homes were very high. It was also stated that council rent increases would also warrant housing benefit increases. Additionally, Community room charges in Annex 4 applied to renting/using the room for events or functions, not casual use.

Danielle Sleightholme queried if there were any capital works that could be put off reducing borrowing.  Responding to the query, Candice Keet advised that Capital works could not be put off as it was likely to increase costs in future. She added that Capital funding for major repairs were largely funded by a depreciation charge, so putting off capital works would not help as the charge would need to be made anyway.

Recommendation: To revisit the discussion on a 4-5% rent increase by Executive. The Chair asks members of the Board to comment on the benefits of 4% or 5% increase. Cllr Follows recommended that officers minute the comments made in the debate and pass on to Executive. It was agreed that the Executive should look at the minutes of the meeting and take into consideration the comments made when formulating the decision.