Agenda item

(Cabinet Member with Special Responsibility Councillor Kerr)

Report of the Head of Housing and Health and Head of Financial Services (Report to follow)

Please note this report is to follow, because at the time of publishing this agenda information on housing subsidy for 2011/12 had not been received from the Government.

(Cabinet Member with Special Responsibility Councillor Kerr)

Cabinet received a report from the Head of Health and Housing and the Head of Financial Services which updated the Housing Revenue Account (HRA) revised budget position for the current year and set out the recommended budget for 2011/12 and future years.  It also set out the updated Capital Programme for 2010/11 and a proposed programme to 2015/16.

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 2011/12 rent increase are to:

i)                    Set the average housing rent at £64.20 i.e. an increase of 6.9% as proposed in paragraph 3.3.1.  This is largely in line with the Government’s Guideline Rent increase. 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 5.1% being the RPI inflation of 4.6% +.05%.  This would mean an actual average rent of £63.12, which would result in a loss of income of £210K with similar amounts for future years.  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 does not support sustainability of the HRA in the longer term.

The options available in respect of the minimum level of HRA balances are 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 2012/13 to 2013/14 are to recommend those as set out, or to consider other proposals for incorporation.  It should be noted that if Cabinet decides on alternative rent levels for 2011/12 or future years’, these would alter the budget projections.

The options available in respect of the Capital Programme are:

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 are 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.

The Officer Preferred options are to:

-        approve the 2010/11 revised Revenue Budget as set out;

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

-        set a 6.9% 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.

These are as reflected in the Member recommendations.

Councillor Kerr proposed, seconded by Councillor Ashworth:-

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

Councillors then voted:-

Resolved:

(4 Members (Councillors Ashworth, Kerr, Langhorn and Robinson) voted in favour, 2 Members (Councillors Barry and Fletcher) voted against and 2 Members (Councillors Blamire and Bryning) abstained.)

(1)        That the Housing Revenue Account Revised Budget for 2010/11, as set out at Appendix A, be recommended to Council for approval.

(2)        That the Housing Revenue Account Budget for 2011/12 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 2011, 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 2011 be set at £64.20, representing an increase of 6.9%.

(5)        That at present, future year budget projections assume average rent increases of 4.74% for 2012/13 and 4.71% for 2013/14 in line with the current Subsidy Determination, and the resulting budget projections also 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 had been referred to the District Wide Tenants Forum and that any issues arising had been fed back verbally at the meeting.

Officers responsible for effecting the decision:

Head of Housing and Health Services

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 therefore 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 ensures the deadline will be met and will enable a balanced budget and fully financed Capital Programme for referral on to Council.