Agenda item

Housing Revenue Account (HRA) Medium Term Financial Strategy (MTFS) 2018/19 (Cabinet - 7 November 2018)

 

Cabinet

 

RECOMMENDED TO COUNCIL

 

Approval of  the HRA Medium Term Financial Strategy as set out in Appendix 1 to this report, to include:

 

·         noting changes in financial assumptions as detailed in Appendix B to the HRA MTFS.

·         mid-year revenue budget changes, as detailed in Appendix D(1) to the HRA MTFS, which impact future forecasts for the HRA.

·         mid-year capital budgets changes, as detailed in Appendix E to the HRA MTFS, to include recognition of the virement of resource of £1,560,000 from the unallocated acquisition / new build budget for the acquisition of market dwellings, to ensure that right to buy receipts are appropriately reinvested in 2018/19.

·         updates in the new build budget and the new build schemes included in the Housing Capital Investment Plan, incorporation of the latest budgetary figures in respect of approved new build schemes, inclusion of new pipeline schemes with associated budgetary provision and re-phasing of expenditure in line with anticipated build timetables.

·         changes in anticipated receipt and use of capital resources for the HRA, as included in Appendix H to the HRA MTFS.

·         noting the HRA budget strategy for 2019/20, to include the exemplification of efficiency savings of £142,000, to facilitate the creation of a corresponding strategic investment fund also of £142,000 for 2019/20, with both reducing to £95,000 per annum from 2020/21 onwards for a further 4 years.

·         noting the early proposals for bids and savings in the HRA, as detailed in Appendix D (2) to the HRA MTFS in advance of formal consideration as part of the HRA Budget Setting Report in February 2019.

 

Appendix L to the HRA MTFS contains exempt information as defined in paragraph 3 of Part 1 of Schedule 12A of the Local Government Act 1972 (as amended). The press and public are likely to be excluded from the meeting during any discussion on this confidential appendix..

Decision:

Council AGREED to

 

Approve the HRA Medium Term Financial Strategy as set out in Appendix 1 to this report, to include:

 

·         noting changes in financial assumptions as detailed in Appendix B to the HRA MTFS.

·         mid-year revenue budget changes, as detailed in Appendix D(1) to the HRA MTFS, which impact future forecasts for the HRA.

·         mid-year capital budgets changes, as detailed in Appendix E to the HRA MTFS, to include recognition of the virement of resource of £1,560,000 from the unallocated acquisition / new build budget for the acquisition of market dwellings, to ensure that right to buy receipts are appropriately reinvested in 2018/19.

·         updates in the new build budget and the new build schemes included in the Housing Capital Investment Plan, incorporation of the latest budgetary figures in respect of approved new build schemes, inclusion of new pipeline schemes with associated budgetary provision and re-phasing of expenditure in line with anticipated build timetables.

·         changes in anticipated receipt and use of capital resources for the HRA, as included in Appendix H to the HRA MTFS.

·         noting the HRA budget strategy for 2019/20, to include the exemplification of efficiency savings of £142,000, to facilitate the creation of a corresponding strategic investment fund also of £142,000 for 2019/20, with both reducing to £95,000 per annum from 2020/21 onwards for a further 4 years.

·         noting the early proposals for bids and savings in the HRA, as detailed in Appendix D (2) to the HRA MTFS in advance of formal consideration as part of the HRA Budget Setting Report in February 2019.

 

Minutes:

Council AGREED that Appendix L to the Housing Revenue Account (HRA) Medium Term Strategy (MTFS) contained exempt information, namely information relating to the financial or business affairs of the Council (and/or landowner), and that the public interest in maintaining the exemption outweighed the public interest in disclosing the information.

 

The Chairman accordingly indicated that in the event of any discussion on the exempt appendix it would be necessary to exclude the press and public.

 

Councillor Hazel Smith, Lead Cabinet Member for Housing, proposed the recommendation of the Cabinet, at its meeting held on 7 November 2018, regarding the approval of the HRA MTFS 2018/19.  In so doing,  she referred to various developments since the HRA MTFS had been prepared, most notably the Government’s announcement in the Autumn of the immediate lifting of the HRA borrowing cap and the consequent need to build capacity to take advantage of that opportunity.  A report on the Green Paper was expected in the new year.  The Lead Cabinet Member for Housing further commented that there were now 2,438 households on the housing waiting list and provision of affordable homes therefore needed to be a high priority. She noted that it would be necessary to update her Foreword to the HRA MTFS to reflect those changes and any subsequent developments before the final version came to Council as part of the budget setting process.

 

Councillor John Williams seconded the motion.

 

Councillor Mark Howell asked the Lead Cabinet Member for Housing:

 

(a)  Whether it would be possible to build the 149 houses referred to on page 99 for £114k each?

 

(b)  Whether the 4% penalty interest payable referred to on page 104 was an extra 4% per year or at the end of 3 years and if the interest had to be repaid, this would be 3 year’s compound interest?

 

(c)  With respect to proposals on page 106, whether this would also be done for  Ermine Street Housing?

 

(d)  With respect to page 112, what action was being taken on rent arrears, particularly having regard to the changes to Universal Credit?

 

(e)  With respect to page 128 and the time limited S106 agreement, whether a guarantee could be given that these would not be returned to the developer?

 

In response, the Lead Cabinet Member for Housing:

 

(a)  Reminded Members that 30% of the cost of the houses could be funded by right to buy receipts and noted that roll forward budgets from Section 106 commuted sums were also available in the HRA capital fund to support the development of new build properties. The average cost per house was estimated to be in the region of £167k to £170k. 

 

(b)  Explained the basis on which the interest was calculated where Right to Buy Receipts were not spent within three years, noting that at the end of the three years the interest of 4% above the base rate was compounded and was therefore punitive.  She referred to her recent attendance at the Homes 2018 event where another local authority had indicated that it did not attempt to spend receipts in order to avoid the risk of having to repay the punitive interest.

 

(c)  Reminded the Council that the priorities for  Ermine Street Housing were currently to generate income for the Council and to be a good landlord.  Whilst it was anticipated that the priorities for Ermine Street Housing would be reviewed at the appropriate time, its role was currently to generate income and it was necessary to charge a market rent. 

 

(d)  Was pleased to report that the level of rent arrears in the previous month had been the lowest for some time.  The Council was monitoring the impact of Universal Credit and working to support a small number of families.

 

(e)  Advised that the Council was aware of the deadlines for spending the commuted Section 106 sums for affordable housing and would be working to make sure that these sums were spent within those timescales. 

 

Councillor Sue Ellington noted that whilst rent arrears for current tenants had gone down from £424,032 at the end of March to £413,314 at the end of September, there had been a corresponding increase in former tenants’ arrears by approximately £31,000.  She asked whether the reduction in current tenants’ rent arrears was attributable to eviction of any former tenants.  The Lead Cabinet Member for Housing indicated that she would arrange to provide a written response to Councillor Ellington,  but referred to the difficulty of securing repayment of arrears from former tenants.

 

Council by affirmation

 

RESOLVED:

 

To approve the HRA Medium Term Financial Strategy as set out in Appendix 1 to the report, to include:

 

·         noting changes in financial assumptions as detailed in Appendix B to the HRA MTFS.

·         mid-year revenue budget changes, as detailed in Appendix D(1) to the HRA MTFS, which impact future forecasts for the HRA.

·         mid-year capital budgets changes, as detailed in Appendix E to the HRA MTFS, to include recognition of the virement of resource of £1,560,000 from the unallocated acquisition / new build budget for the acquisition of market dwellings, to ensure that right to buy receipts are appropriately reinvested in 2018/19.

·         updates in the new build budget and the new build schemes included in the Housing Capital Investment Plan, incorporation of the latest budgetary figures in respect of approved new build schemes, inclusion of new pipeline schemes with associated budgetary provision and re-phasing of expenditure in line with anticipated build timetables.

·         changes in anticipated receipt and use of capital resources for the HRA, as included in Appendix H to the HRA MTFS.

·         noting the HRA budget strategy for 2019/20, to include the exemplification of efficiency savings of £142,000, to facilitate the creation of a corresponding strategic investment fund also of £142,000 for 2019/20, with both reducing to £95,000 per annum from 2020/21 onwards for a further 4 years.

·         noting the early proposals for bids and savings in the HRA, as detailed in Appendix D (2) to the HRA MTFS in advance of formal consideration as part of the HRA Budget Setting Report in February 2019.

 

Supporting documents: