Issue - meetings

Report Reference: BHP49

Councillor Westwood, Cabinet Member for Housing; introduced the report, ref BHP 49 which set out proposals for the Housing Revenue Account (HRA) Rent Setting and Business Plan, (available here).  The introduction included the following points.

1. That the plan aimed to provide affordable Council housing, maintain, and expand the housing stock, and prioritise tenant welfare.
2. That the Housing Revenue Account (HRA) faced an unprecedented financial challenge.
3. That the HRA functioned as a ring-fenced landlord account, ensuring financial sustainability through rents and service charges.
4. That the HRA's 24/25 draft plan addressed both the high inflation and increased building costs.
5. That two significant work programs aimed to improve existing housing and construct energy-efficient new homes. £45 million was being invested in retrofitting council homes for energy efficiency, with an additional annual £2 million for repairs, maintenance, and staffing.
6. That modernising services, enhancing digital access, and improving customer service were deemed necessary and that £2 million was provisionally allocated for housing management system review and maintenance contracts.
7. That the HRA business plan aimed for sustainability, including a £45 million investment and a commitment to constructing 1,000 homes.
8. That it was proposed to acquire more homes from developers and adopt 80% market rents for new eco-friendly homes.
9. That proposed rent increases were based on CPI plus 1% for 24/25.
10. That measures encompassed cost recovery for service charges, revised rent increases for shared owners, and asset disposals for capital investments.
11. That comments and views on the draft HRA business plan were invited before final approval in March 2024.

Simon Hendey, Strategic Director provided the committee with a presentation which included the following:

1. The report projected a 7.7% rent increase for the upcoming financial year and provided a summary of anticipated expenses and income.
2. The Housing Revenue Account estimated an expenditure of £37.927 million, and an income of £36.476 million, resulting in a forecasted deficit of £1.451 million.
3. The proposed deficit offsetting approach involved identifying £318,000 in savings, using £492,000 from interest on balances, and funding the remaining deficit from changing balances, aiming to bring forward £640,000 in the next year.
4. The broader 30-year business plan highlighted:

a)    A £30 million investment to achieve EPC - C for all housing stock by 2030.

b)    Enhancements in Energy Efficiency, maintaining the Decent Homes Standard, increased repair and maintenance expenditure, and the delivery of new homes.

c)    Policy options focused on potential strategies such as property acquisition, rent adjustment at 80% of market rates, and prioritising energy-efficient homes, aiming to save £400,000 over two years (£318,000 in 24/25 and £82,000 the following year).

5. The plan included a disposals program, involving small plots of land and unfeasible vacant properties.
6. A proposal aimed at full cost recovery for service charges was pending review after consultation.

Julian Perkins on behalf of TACT addressed the committee and highlighted the following points.

1. The report on page 17 highlighted the need to enhance customer digital access and service, based on consultation, recent tenant satisfaction survey results, and a provisional budget of £2 million.  ...  view the full minutes text for item 6

RECOMMENDATIONS:

That:

1.             It is recommended that the committee comment on the proposals within the attached Cabinet Report, ref CAB 3432.

2.             It is noted that the committee will be presented with the detailed Housing Revenue Account report at its meeting on the 6th February 2024 prior to Cabinet on the 8th February 2024 and Full Council on the 22nd February 2024.

Councillor Westwood, Cabinet Member for Housing introduced the report, ref CAB3432 which set out proposals for the Housing Revenue Account (HRA) Business Plan and Budget Options, (available here) and which could be summarised as follows.

1.    That an unprecedented financial challenge was being faced in the Housing Revenue Account (HRA).

2.    That the HRA operated as a ring-fenced landlord account for social housing provision and that financial sustainability was needed to ensure rents and service charges covered expenditure.

3.    That the HRA had a 30-year financial planning horizon, requiring a viable business plan and that the period faced high inflation and increased building costs affecting housing provision.

4.    That over £45,000,000 was being invested in retrofitting council homes for energy efficiency.

5.    Prioritisation was crucial to deliver value and improve existing housing and new energy-efficient homes.

6.    Members were being presented with a sustainable business plan involving investments and targets.

7.    Business planning occurred annually, adapting to economic changes for viability.

8.    Surplus assets would be considered for disposal to fund greener housing initiatives.

9.    That investments aimed at digitising processes for customers were being made.

The committee was recommended to comment on the proposals within the report, ref CAB3432 which had been considered by the cabinet at its meeting on the 21 November 2023. These comments and any resolution of the committee would be tabled at the Cabinet Member Decision Day on the 4th of December 2023.

The report contained 14 recommendations, which covered a range of issues including the following:

1.    It introduced the draft HRA Business 30-year Plan for the period 2023-24 to 2052-53 with specific metrics detailed in Appendix 1.

2.    It sought approval for budget options specified in the report. It highlighted a proposed additional investment of £30 million over eight years until 2030-31 for retrofitting properties aimed at enhancing energy efficiency in council housing.

3.    It discussed strategic changes from direct home delivery to acquiring affordable housing from developers and utilising Right to Buy resources.

4.    It noted the financial assessment for new build sites, proposed adjustments in rent rates for viability, set revenue savings targets, and outlined plans for property disposal and cost recovery initiatives.

5.    It acknowledged ongoing evaluations of the housing management system and procurement plans, ensuring the sustainability of the 30-year plan to deliver affordable housing goals.

The committee was advised that recommendation number 9 of CAB3432 had been amended at the cabinet meeting and was now: “That, subject to consultation, the terms of individual leases and a review of costs, the move to full cost recovery for private connections of the council’s sewage treatment works be approved and note that this will include transitional protection and be achieved within a five-year timeframe.”

Councillor Wallace addressed the committee and raised several matters which could be summarised as follows:

1.    He noted that there was a plan in Appendix 1 to increase the debt turnover ratio by almost 50% from .21 and 2023/24 to .30 in 2031/2032  ...  view the full minutes text for item 6

1.    That the draft HRA Business 30-year Plan for 2023-24 to 2052-53 metrics shown in Appendix 1 of report CAB3432 be noted.

2.    That the budget options outlined within report CAB3432 be approved.

3.    That the proposed additional investment in the council housing stock of £30m over the next eight years to 2030-31 to retrofit properties on a fabric first basis to help improve their energy efficiency and reduce energy costs for tenants be noted. This additional annual investment brings the total annual investment here to £5.625m a year and £45m in total.

4.    That the proposed strategic change in direction moving from a plan based upon direct delivery of new homes to one based upon a mixture of actively acquiring s106 affordable housing directly from developers alongside future development with grant funding and using Right to Buy resources be noted.

5.    That the current financial viability assessment for new build be noted and that at present all potential development sites based on current assumptions evaluated this year have not been assessed as being financially viable within the existing viability model (see paragraphs 12.3 -12.6 of the report).

6.    That the proposed move to 80% market rent to help improve the viability of new homes development and to mitigate the increasing cost of delivery be noted.

7.    That it be noted that a revenue savings target of £400k over two years has been set to assist with bridging the forecast gap in financing future capital expenditure.

8.    That the disposal in principle of Barnes house in 2024-25 be approved, and in addition two strips of land with one surplus HRA property per year over the next eight years to generate additional capital receipts to help fund the increased investment requirement over these years.

9.    That subject to consultation, the terms of individual leases and a review of costs, the move to full cost recovery for private connections of the council’s sewage treatment works be approved and note that this will include transitional protection and be achieved within a five-year timeframe.

Councillor Westwood introduced the report and emphasised the proposals to invest in homes to support the aim of going “greener faster” in addition to reducing heating bills for tenants so as to address the cost of living crisis.

Councillor Becker declared an interest in respect of item 9 (report CAB3432) as a private householder connected to one of the council’s sewage treatment works.  She took no part in the discussion or decision on recommendation 9 of the report.

Ian Tait and David Chafe (TACT) spoke during public participation as summarised briefly below.

Ian Tait

He reiterated his comments made at the Cabinet Committee: Housing on 14 November regarding a request that the council seek to purchase land in order to build a new council house estate.  He queried the high build cost for new homes quoted in the report when the council was currently buying homes for significantly less than this in Whiteley.  He also believed that using Section 106 provisions did not increase the overall number of new homes being provided.

David Chafe (TACT)

He thanked Councillor Westwood, the Strategic Director and officers for assisting TACT in understanding the proposals included in the report.  A full TACT meeting would be held in due course in order to provide a formal response in time for consideration of the HRA Business Plan and Budget at Cabinet in February 2024.

At the invitation of the Leader, Councillors Wallace and Horrill addressed Cabinet as summarised briefly below.

Councillor Wallace

As for CAB3430 above, he believed the report should have been considered at Scrutiny Committee prior to Cabinet.  He asked the following questions: a) the implications of the proposed increase in debt to turnover ratio set out in Appendix 1 of the report; b) requested more information on how the £30m spend on retrofit would be spent; c) the implications of the new strategy to buy affordable homes; d) requested a specific standard be stipulated on reduction to energy costs; e) requested further detail on the consultation proposed in relation to sewage treatment works; f) whether the proposed rent increases had been reviewed with TACT and the Citizens Advice Bureau; g) what percentage increase was anticipated for service charges.

Councillor Horrill

She agreed with Councillor Wallace that the report should have been considered at Scrutiny Committee prior to Cabinet.  She asked the following questions: a)  did the commitment to provide 1000 new homes include new build and rural schemes? b) requested more specific reference to the ongoing maintenance of existing properties; c) asked for reassurance that the increased rent levels for the newer more energy efficient properties would not be applied to existing properties? d) what types of HRA properties were being considered for sale? e) requested further information regarding the proposals to move to full cost recovery for private connection to the council’s sewage treatment works.

Councillor Westwood responded to the points raised above, including confirming that the new higher rent proposal would not be applied to tenants living in existing properties but  ...  view the full minutes text for item 9