Agenda item

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.
2. He was concerned that many older tenants found the digital world intimidating with limited access, and he emphasised the vital role of face-to-face engagement for many.
3. He suggested that in devising these improvements, the council should recognise the necessity for additional front-facing staff to enhance communication and complaint handling.

Councillor Lee addressed the committee, and highlighted the following points:

1. That he noted a rise in the local housing allowance and asked about its implications.
2. He welcomed the proposal relating to the £45 million “Fabric First” program, however, he raised concerns regarding the commitment to addressing climate and nature challenges in building and retrofitting, considering the latest UN climate report and the upcoming COP climate talks.
3. He felt that there was a need to enhance housing building elements for climate and nature challenges and suggested a focus on a new metric centred on nature-based materials.
4. That excessive consumption of construction materials in the UK highlighted the urgency to shift towards sustainable materials and design approaches, aimed to reduce waste and environmental impact.
5. That the council's commitment to building new homes was welcomed, however, he encouraged the improvement of sustainable procurement processes and contracts to mitigate potential environmental impacts due to increased housing quantity.
6. That he proposed a three-point approach to enhance the housing business plan, focusing on fast and high-quality building retrofitting, considering pooled housing budgets and coordination with neighbouring authorities, and creating improved metrics for decision-making.

These points were responded to by Councillor Westwood, Cabinet Member for Housing, Gillian Knight, Corporate Head of Housing, and Simon Hendey, Strategic Director, accordingly.

The committee was asked to note and comment on the policy options for the 2024/25 Housing Revenue Account (HRA) rent setting and the HRA business plan.

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

1. Regarding Wastewater Treatment Plants, the following points were raised:
   1. the level of HRA subsidisation for private housing served by wastewater treatment plants.
   2. The cost-sharing for different house types.
   3. the risk of additional burden on smaller houses due to the current charging system, which treated a one-bedroom bungalow the same as a larger house.
   4. the costs of removing nutrients from wastewater treatment plants and ensuring maintenance cost increases do not impact tenants and residents.

2. That concerns about the disposal strategy's impact on temporary accommodation and the need for planning flexibility were raised.
3. That vital support for tenants during the cost-of-living crisis, extending beyond affordable housing and energy efficiency, was highlighted.
4. That the possibility of purchasing ex-council houses at reduced rates for retrofitting or renting them out was raised.
5. That concerns about shared ownership rents and their impact on constructing affordable homes were expressed.
6. That further additional information regarding the workforce implications and potential restructuring within the Housing Team was requested.
7. That ensuring service accessibility through non-digital means for those who preferred or who needed these options was emphasised.
8. That further information regarding benchmarking the council's affordable housing provision against other comparable councils was sought.
9. That inquiries were made regarding the timeline and considerations in disposing of land plots and properties, focusing on both monetary and community values.

These points were responded to by Councillor Westwood, Cabinet Member for Housing, Gillian Knight, Corporate Head of Housing, and Simon Hendey, Strategic Director, accordingly.

RESOLVED:

The committee agreed to ask the Cabinet Member to consider the following:

1.             The importance of ensuring accessibility to services for all whether utilising digital or non-digital methods.

2.             That the committee’s comments regarding wastewater treatment and cost recovery were considered as part of the formation of any future proposals.

3.             That the Cabinet Member and officers note the other comments of the committee as outlined above.