Agenda item

This report presents the Housing Revenue Account (HRA) revenue and capital budgets for 2012/13 and considers the impact of the introduction of self–financing from 1 April 2012. It also provides details of proposed rent and service charges levels for 2012/13 and considers rent-charging inconsistencies in two areas and proposals for correcting these.  

Discussion:

The Chief Finance Officer introduced the report advising that it set out the 2012/2013 revenue and capital proposals for the Housing Revenue Account (HRA) including proposals for rent and service charges increases. The committee was also informed that the Localism Act had created an exciting opportunity for the council by introducing the self-financing regime for the HRA that removed the former Housing Subsidy calculation and this was described in paragraphs 2.1 – 2.4 of the report.

The Housing Subsidy system would come to an end on 31 March 2012 and this meant that the council would no longer need to pay an annual subsidy payment to government which had been worked out by a formula. The cost of this, in 2011/2012, had been £1.8 million. However, the new self-financing regime would require the council to take on additional debt of
£19.1 million and the cost of this would fall on the HRA. The graph at table 3 of the report (page 24 of the agenda) showed that were all the surplus monies allocated for the purpose of paying off this debt, it should be paid off in the 17^th year of the 30 year plan and thereafter the council would generate a surplus in income for the HRA, which was a huge benefit to the council.

The committee was also advised that the government had previously determined that council rents and service charges would progress to converge with those of Registered Social Landlords (RSLs) with a target date of April 2015. The proposed increase in rents for 2012/2013 was to achieve that convergence; the proposed increase in service charges was to continue the agreement made last year that charges should increase progressively to fully recover costs by 2014/2015. The report also contained details of some inconsistencies in rent charging schemes and an inequality in classification of some properties.

The Chief Finance Officer also highlighted the capital budget for the HRA advising that the detailed plan for capital works for housing was currently being revised in conjunction with the Asset Management Strategy, it was estimated that the cost of capital works would be £5.5 million. The report also highlighted the hard work of staff in the housing section to achieve a decrease in the turnaround period of void properties and the decrease in the level of rent arrears.

The committee asked whether the new debt to be taken on by the HRA of £19.1 million for the self-financing scheme would be amended at any time in the future and was assured that this figure would not change.

Members commented that the inconsistency with rent charging, as set out in paragraph 6 of the report, was a practical and sensible approach to resolving this situation.

Members asked about the convergence of rents between council housing and those of RSLs and whether the council had reached the required figure? Officers advised that the council continued to reduce the gap between rents which were getting closer and this was set out in Appendix B (page 35) of the report.

Some Members voiced concern about the proposed rent increases, as the average increase was 7–8% which would be very difficult for a lot of families in this difficult economic time. They also requested further information about the planned maintenance programme in order to be kept fully informed. Officers advised that there was a cross-party Asset Management Group, chaired by the Portfolio Holder for housing, and details of the planned maintenance were reported there for consideration. Members requested that this information was also made available outside of this group and officers agreed that the information would be reported to overview and scrutiny in the future.

Decision:

The committee agreed to recommend to Cabinet:

(a)the proposed revenue and capital budgets for 2012/2013, inclusive of an average rent increase of £5.39 per week (based upon 50 collection weeks and equating to an increase of 7.26%);

(b) that service charges for 2012/13 reflect the costs incurred in providing that service, where possible, and that where costs are not fully recovered, the uplift is such that costs can be fully recovered by 2014/15 using above inflation increases to do so as per Appendix C to this report. The average increase will be 5.99%;

(c)  that the application of the Warden Service charge to residents in the Annexe at Longford Court be applied over a three year period with effect from 1 April 2012 for current tenants;

(d) properties identified with “pods” at Beatty Avenue and Cornwallis Avenue to be charged for only bedrooms on the upper floors of properties from
1 April 2012 and pods, regardless of their usage, be disregarded for rent charging purposes;

(e) refunds to be made to current tenants only, who have been overcharged for rent for properties in Beatty Avenue and Cornwallis Avenue;

(f)  that the approach for rent charging for any further properties identified that have “pods” fitted, be set as described in the context of this report in the future.

The committee requested that:
 

(g)a detailed breakdown of the planned maintenance programme for housing services is submitted to overview and scrutiny in the near future.