Decision details

Budget and Policy Framework Update - Housing Revenue Account and Capital Programme

Decision Maker: Cabinet

Decision status: Recommendations Approved

Is Key decision?: Yes

Is subject to call in?: Yes


As part of the forthcoming budget and planning process, issues that require key decisions to be taken may well arise.


(Cabinet Member with Special Responsibility Councillor Leytham)


Cabinet received a report from the Heads of Health & Housing and Financial Services which updated the Housing Revenue Account (HRA) revised budget position for the current year and set out the recommended budget for 2012/13 and future years under the new self-financing regime.  It also set out the updated Capital Programme for 2011/12 and a proposed programme to 2016/17.


The options, options analysis, including risk assessment and officer preferred option, were set out in the report as follows:


With regard to the Revised Budget, Cabinet could consider other proposals that may influence the Revised Budget for the year and the call on revenue balances.


The most obvious options available in respect of the 2012/13 rent increase were to:


i)                    Set the average housing rent at £69.22 i.e. an increase of 7.82%.  The benefit of this option would be that the Authority would be in line with the Government’s proposals to achieve convergence with no negative financial implications to the HRA.  Whilst this increase may appear large, this is only because currently, average council housing rents are below those of other social housing providers.


ii)                   Set the rent increase at a minimum level of 4.75%, broadly in line with previous projections. This would mean an actual average rent of £67.25, which would result in a total loss of income of £1.67M, over 5 years, when compared with Option 1. With no other compensating factors from the Government to offset the loss of income, the shortfall would have to be met from savings within the HRA or funded from Reserves.  This option would also considerably delay the Authority in achieving convergence, and may not support sustainability of the HRA in the longer term.


iii)                 Set the rent increase different to either of the proposed options above.


The options available in respect of the minimum level of HRA balances were to set the level at £350,000 in line with the advice of the Section 151 Officer, or to adopt a different level. Should Members choose not to accept the advice on the level of balances, then this should be recorded formally in the minutes of the meeting, and could have implications for the Council’s financial standing, as assessed by its external auditors. 


The options available in respect of the revenue budget projections and assumed rent levels for 2013/14 to 2014/15 were to recommend those as set out, or to consider other proposals for incorporation.  It should be noted that if Cabinet did not go with option 1 and decided on option 2 or other alternative rent levels for 2012/13 or future years’, these would alter the budget projections.


The options available in respect of the Capital Programme were:


i)                    To approve the programme in full, with the financing as set out;


ii)                   To incorporate other increases or reductions to the programme, with appropriate sources of funding being identified.


Any risks attached to the above would depend very much on what measures Members proposed, and their impact on the council housing service and its tenants.  As such, a full options analysis could only be undertaken once any alternative proposals were known.  It should be noted that Officers may require more time in order to do this. The risks attached to the provisional nature of current subsidy determinations will be managed through future reporting arrangements, as set out in the report attached to the agenda.


The Officer Preferred options were to:


-        approve the 2012/13 revised Revenue Budget as set out;

-        approve the provisions, reserves and balances positions as set out;

-        set a 7.82% increase in average rents, and to approve the draft revenue and capital budgets as set out in the appendices, for referral on to Council as appropriate.


Councillor Leytham proposed, seconded by Councillor Hanson:-


(1)        “That the recommendations, as set out in the report, be approved.”


Councillors then voted:-




(6 Members (Councillors Blamire, Bryning, Hanson, Leytham, Sands & Smith) voted in favour, 2 Members (Councillors Barry & Hamilton-Cox) voted against.)


(1)        That the Housing Revenue Account Revised Budget for 2011/12, as set out at Appendix A of the report, be recommended to Council for approval.


(2)        That the Housing Revenue Account Budget for 2012/13, also as set out at Appendix A, be recommended to Council for approval.


(3)        That Cabinet recommends to Council that the minimum level of HRA unallocated balances, be retained at £350,000 from 01 April 2012, and that the Statement on Reserves and Balances be noted and referred to Council for information.


(4)        That average council housing rents for the year commencing 01 April 2012 be set at £69.22, representing an increase of 7.82% in line with the Government’s assumptions in the national social rent restructuring policy.


(5)        That future year budget projections also be set in line with the national social rent restructuring policy with average rent increases of 4.64% for 2013/14 and 4.61% for 2014/15, and the resulting budget projections as set out at Appendix A be referred on to Council for approval. 


(6)        That the Capital Programme as set out at Appendix D be referred on to Council for approval.


(7)        That Cabinet notes that the proposed revenue budgets and capital programme have been referred to the District Wide Tenants Forum and that any issues arising will be fed back directly to Cabinet.


Officers responsible for effecting the decision:


Head of Health & Housing

Head of Financial Services


Reasons for making the decision:


The Council is required under statutory provisions to maintain a separate ring-fenced account for all transactions relating to the provision of local authority housing, known as the Housing Revenue Account (HRA).  This covers the maintenance and management of the Council’s housing stock. It is necessary to prepare separate revenue and capital budgets for the HRA each year, and to set the level of housing rents in sufficient time for the statutory notice of rent variations to be issued to tenants by 01 March.  The decision to set the rent increase for 2012/13 enables the deadline to be met, and enables Cabinet to recommend a balanced budget and fully financed Capital Programme for referral on to Council.


Report author: Nadine Muschamp

Publication date: 25/01/2012

Date of decision: 17/01/2012

Decided at meeting: 17/01/2012 - Cabinet

Effective from: 28/01/2012

Accompanying Documents: