Agenda item

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 and he enquired on the broader implications or risks resulting from nearly a 50% increase in HRA debt.

2.    He welcomed the additional £30 million investment in retrofitting homes and sought clarification on the allocation of this funding and the number of houses to be upgraded.

3.    He requested confirmation regarding the specific minimum energy standards for homes in the proposed programme.

4.    He advised of concerns about potential cost increases for residents due to wastewater cost reallocation and a breakdown of cost increases by location and further details about the planned consultation were requested.

5.    He believed that there was a potential average cost increase of around £500 per year, suggesting a need to understand its impact.

6.    He emphasised the importance of protecting residents during a cost-of-living crisis and sought confirmation on the process for reviewing rent and service charge increases with tenants.

The committee proceeded to ask questions and debate the report. In summary, the following matters were raised.

1.    Whether the recommendations in the report aligned with the previous recommendations on rent levels put forward by the 2015 Informal Policy Group.

2.    Concern was raised about the affordability of properties considering rising living costs and how affordability was being calculated.

3.    Mention was made of the need to consider the impact on existing tenants and the current 7% rent increase.

4.    That the latest Autumn Statement changes were factored into financial considerations.

5.    There was a question about exploring the cost-effectiveness of modular buildings amidst rising construction costs.

6.    Clarification was sought about the intent to recover full-service charges and ensuring proper consultation before implementing cost recovery measures.

7.    Whether funding changes for the Homes for Ukraine scheme might impact the budget approach.

8.    There was a request for emphasis on repairs and maintenance for existing residents, separate from new developments.

9.    There was a question regarding the interpretation of totals in specific tables on pages 31 and 32 of the report and the types of averages being shown.

These points were responded to by Councillor Westwood, Cabinet Member for Housing, Councillor Tod, Leader and Cabinet Member for Asset Management, Simon Hendey, Strategic Director, and Laura Taylor, Chief Executive accordingly and were noted by Councillor Westwood, Cabinet Member for Housing.

RESOLVED:

That officers and the Cabinet Member were requested to consider the following matters.

1.    To review the recommendations from the 2015 “New Build Rents Informal Policy Group Review”, to understand any potential impact with the proposals within this report.

2.    To consider how to provide clear and comprehensive communication for new residents of newly constructed homes, explaining not only the rental costs but also the breakdown of overall living expenses and home running costs.

3.    To review the assumptions and projections outlined in the report following the Autumn statement.

4.    To evaluate the individual recharge implications for private owners who use the HRA water treatment works and the management of these costs in the future.

5.    To clarify the “type of average” being presented in the tables within the report, particularly those presenting weighted average rents in section 14.

6.    To provide clarification in the report that the 80% of market rent policy would apply to new homes, while tenants in existing homes would continue under the current basis.

7.    To consider how the proposals for full cost recovery in tenant service charges in 2024-25 and for private connections of the council’s sewage treatment works could take into account appropriate resident/tenant consultation.

8.    To amend page 22 of the report pack that contains 2 paragraphs, both numbered 7.1