Issue - meetings

The Economy and Housing Policy Committee are asked to comment on the proposals contained within the attached Cabinet Report, ref CAB 3478.

Councillor Chris Westwood, Cabinet Member for Housing introduced the report, ref CAB 3478 which set out proposals for the Housing Revenue Account (HRA) Business Plan & Budget Options, (available here).

Councillor Westwood advised that the report had been reviewed by the Scrutiny Committee on 12 November 2024 and that the Cabinet had also reviewed the paper and approved the budget options detailed in Appendix 2 as a basis for consultation to inform the February 2025 budget setting. He advised that the Committee's views on the paper, including the budget options in Appendix 2, would be considered in preparing the February 2025 budget paper.

Councillor Westwood provided a brief introduction to the paper, which could be summarised as follows:

1.     The budget for 2024/25 was set against a backdrop of high interest rates and aimed to address inflationary pressures.

2.     Although CPI inflation had fallen to 1.7% in September 2024, below the Bank of England's target of 2%, key cost drivers for the HRA, such as energy and building materials, remained significantly high.

3.     The main cost pressures were identified as continuing inflationary pressures on building supplies, increased capital costs for maintaining existing housing stock, high capital financing interest rates, challenges in new homes viability due to high public works loan board interest rates and the recent agreement to purchase 146 affordable homes in Kings Barton.

4.     The Council had set rents in line with the rent standard and central government's guidelines, with the current basis being CPI plus 1% for 2025/26.

5.     The budget options supported the Council's commitment to increasing investment in customers' homes, delivering 1,000 new homes by 2032/33, and improving customer service for repairs and maintenance.

6.     Without addressing these pressures, there would have been insufficient resources to deliver a balanced budget over the 30-year planning period while meeting policy objectives.

7.     A savings target of £2 million per annum had been established, and officers had been working to identify potential opportunities for this.

8.     The approach to service charges would ensure that those who used the service paid for it, with measures to dampen any significant increases.

9.     Feedback from the TACT Board was broadly supportive of the proposed actions.

The committee was asked to comment on the proposals contained within the attached Cabinet Report, ref CAB 3478. The committee proceeded to ask questions and debate the report. In summary, the following matters were raised.

1. A question was asked regarding the impact on individuals of the CPI + 1% rent increase, specifically how it affected those who paid rent in full versus those on benefits, and the potential hardship it might cause.
2. Further clarification was sought on the proportion of people having their rents paid in full and those who might have been impacted by the rent increase.
3. A question was raised regarding page 28, particularly the impact of the rise in National Insurance on the cost of labour and prices for repairs and maintenance.
4. A further question was asked about the future pricing for  ...  view the full minutes text for item 7

1.    That the draft HRA Business 30-year Plan for 2024-25 to 2053-54 metrics shown in Appendix 3 and current 5 year projection at Appendix 1 be noted.

2.    That the business plan pressures identified in the 2024/25 business planning exercise as outlined in paragraphs 11.26 and 11.36 of report CAB3478, totalling £1.986m be noted.

3.    That the budget options outlined within report CAB3478 and detailed at Appendix 2 be approved as a basis for consultation to inform the February budget setting.

4.    That the reallocation of £0.25m from the one off investment budget set in the previous business plan be approved to meet actions arising from our self assessment of our consumer standards compliance and service improvements identified. 

5.    That the continuing strategy for New homes 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.

6.    That the current financial viability assessment for new build from para 11.15 to 11.25 of the report be noted.

7.    That it be noted that a revenue savings target of £2m has been set to assist with bridging the forecast gap in financing future capital expenditure.

8.    That the proposed timescale for asset disposals be noted, and that Barnes House disposal has been reconsidered for proposed use as Temporary Accommodation.

9.    That it be noted that based on the September 2024 CPI figure of 1.7% that the average formula rent increase for 2025-26 for all affordable and social housing will be 2.7%.

10.That it be noted that the budget in October announced a consultation for future rent settlement between now and December, which indicates preference for CPI+1 for 5 years into the future, and approve the application of this principle in the business plan model to mitigate the cost of new build developments and reduce long term debt burden to the HRA once the outcome of the consultation is known.

11.That continuing full cost recovery in tenant service charges in 2025/26 be approved and it be noted that charges will generally reduce following a softening of energy prices.

12.That it be noted that there is an ongoing workstream on the re-procurement of the repairs and maintenance contract. The Business plan provides for this to happen over the following two years at a provisional one-off cost of £0.4m in 2024/25, and estimated £0.3m in 2025/26.

As noted above, Councillor Becker declared a pecuniary interest in respect of this item and left the room during its consideration and took no part in the discussion or decision. 

Councillor Westwood introduced the report which included proposals to support the council’s commitment to increase retrofit investment in homes and to deliver the 1000 new homes programme by 2032/33.  The budget options had been reviewed by the TACT Board, who were broadly supportive, and their feedback would be considered as part of the ongoing budget process.

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

Councillor Lee

He raised a number of points reiterating statements he had made at Scrutiny Committee.  These included querying the TC25 efficiency proposals related to the housing programme to provide sustainable homes for the future and proposals to address future risks in terms of borrowing costs or reducing grant levels.  He emphasised the importance of invest to save and digitalisation of decarbonisation measures.  He was concerned that the proposal to purchase new homes (rather than the council build them) could result in an  energy performance gap between what was predicted by the EPC and what was delivered by developers.

Councillor Horrill

She supported the majority of proposals in the report.  She referred to comments and requests for additional data made at Scrutiny Committee which had not yet been received.  She raised the following queries: further clarity on service charges in relation to sewage treatment works; the risk of not having an up-to-date housing stock condition survey; whether the TACT Board had been given the opportunity to properly consider the report’s proposals.

Councillor Westwood responded to the comments made including confirming that the budget proposals would be considered by the TACT Board prior to Cabinet in February 2025 and that further consultation would be undertaken with all the council’s housing tenants.

Councillor Tod referred to the discussion of the report at Scrutiny Committee on 12 November and the draft minutes which had been circulated to Cabinet and other members present prior to the Cabinet meeting.  The Strategic Director confirmed that the request for tenant service charge information and data would be made available to all members, as requested,  as part of the February 2025 consideration of the budget.

Cabinet agreed to the following for the reasons set out in the report and outlined above.

RESOLVED:

1.                That the draft HRA Business 30-year Plan for 2024-25 to 2053-54 metrics shown in Appendix 3 of the report and current 5 year projection at Appendix 1 be noted.

2.                That the business plan pressures identified in the 2024/25 business planning exercise as outlined in paragraphs 11.26 and 11.36 of the report, totalling £1.986m be noted.

3.                That the budget options outlined within the report and detailed at Appendix 2 be approved as a basis for consultation to inform the February budget setting.

4.                That the reallocation of £0.25m from the one off investment budget set in the previous business plan be approved  ...  view the full minutes text for item 8

RECOMMENDATION:

It is recommended that the committee scrutinise and comment on the proposals within the attached draft cabinet report, ref CAB3478 which is to be considered by cabinet at its meeting on the 20 November 2024.

Councillor Chris Westwood Councillor, Cabinet Member for Housing introduced the report, ref CAB3478 which set out proposals for the HRA Business Plan and Budget Options, (available here).   The introduction included the following points.

1.             The budget for the previous financial year was set against a background of high interest rates and designed to tackle inflationary pressures.

2.             CPI inflation had since fallen to 1.7% in September 2024, below the Bank of England's target of 2%. However, costs had not fallen; the pace of increase had slowed, but key cost drivers such as energy and building materials remained significantly high.

3.             The main cost pressures came from five areas:

a.    Continuing inflationary pressures on building supplies and construction.

b.    The capital costs of maintaining the existing housing stock at the decent homes standard.

c.     Increased costs of repairs and maintenance.

d.    High capital financing interest rates.

e.    New homes viability challenges due to high Public Works Loan Board interest rates.

4.             The Council must set its rents in line with the rent standard and Central Government's Social Housing rent-setting guidelines, currently CPI plus 1% for 2025/26.

5.             The budget options supported the council's commitment to increase investment in homes, accelerate green initiatives, deliver the 1,000 New Homes programme by 2032/33, and improve customer service and experience for repairs and maintenance.

6.             A savings target of £2 million per annum had been established to mitigate these pressures, with officers meeting regularly to identify and quantify potential opportunities.

7.             The approach to service charges would ensure that those who use the services pay for them, but the council would seek to ensure that any increase in service charges would be dampened.

8.             The budget options would be further developed and subject to consultation to achieve a viable and sustainable HRA Business Plan.

9.             The Tenants and Council Together (TACT) Board had reviewed the budget options and was broadly supportive. Their feedback would be considered as part of the ongoing budget process.

Councillor Danny Lee addressed the committee and highlighted the following points. Councillor Lee raised concerns about the financial stress on the HRA and the need for clear sustainability goals. He emphasised the importance of adopting digital ways of working to improve efficiency and future-proof housing. He also questioned the shift from in-house construction to purchasing homes and the plan to address the energy performance gap.

Councillor Caroline Horrill addressed the committee and highlighted the following points. Councillor Horrill raised concerns about the lack of a rural housing programme and sought clarification on budget allocations and service charges. She also highlighted the risk of insufficient condition data on HRA assets and was concerned about any potential cuts to the tenant involvement budget as referenced in Appendix 2 of the report.

The committee was recommended to scrutinise and comment on the proposals within the attached draft cabinet report, ref CAB3478 which was to be considered by the cabinet at its meeting on 20 November 2024.

The committee proceeded to ask questions and  ...  view the full minutes text for item 7