Agenda item

This report presents the Housing Revenue Account (HRA) capital and revenue budgets for 2013/14 and provides details of proposed rent and service charges levels for 2013/14.

Discussion:

The Chief Finance Officer introduced the report that set out the council’s expenditure against income which had resulted in a surplus of £1 million, together with £4 million brought forward from the previous year’s balance, resulting in £5 million future investment in the current housing stock. The committee was also advised that the proposed rent increase was set to a formula produced by the government to progress rent convergence between Local Authorities and Registered Social Landlords with a target date of April 2015.

The committee was further advised of the welfare reform, which would have a significant impact on rent collection as it radically changed the welfare benefits system from April 2013. The payment of Universal Credit in the future would also have a big effect, as benefits would be paid directly to the recipient and not, as at present, to the Local Authority. There was also the introduction of ‘bedroom tax’ for under-occupation of a property, for example tenants under-occupying a property by one bedroom would see a reduction in their housing benefit of 14%, those under-occupying by two bedrooms or more would see a reduction of their benefit by 25%. Members were informed that the council would write to all those affected, approximately 1300 residents, to advise them of these changes.

The Chief Finance Officer also informed the committee that the government had also localised Council Tax Benefit with the introduction, from 1 April 2013, of a new Council Tax Support scheme. This would have an impact on working-age benefit recipients such that they would be required to pay a contribution to their Council Tax in the order of 25%. These were likely to be the same tenants affected by the under occupation penalty and who would likely not have had to pay before. The average Council Tax demand at approximately £230 would make debt collection more difficult.

Members asked how many council-owned properties had not yet reached the government’s policy of rent convergence between Local Authorities and Registered Social Landlords and were advised that approximately 230 properties were not yet at that point.

The committee voiced its concern at the probable increase in rent arrears once the ‘bedroom tax’ and Universal Credit came into force and asked what measures were in place to overcome this. The Head of Housing Management advised that since October 2012 tenants were able to pay their rent by direct debit and officers would continue to encourage tenants to use this method to pay their rent. There was also a team of dedicated staff to advise tenants on welfare reform and the Citizens Advice Bureau (CAB) was also working with officers with the potential to develop financial assessments for customers, run financial workshops and be pro-active, as many customers were unused to managing their own monies.

The committee also discussed the problems facing tenants who may already have other debt, with their benefit being used to pay off the debt, rather than to pay their rent. Members discussed the possible role of Credit Unions and debt advice and were advised that (following a recommendation of the Fair Access to Credit task group review) officers had started to investigate future work with the voluntary sector and Credit Unions on this issue.

A Member questioned the rationale for a 2% or 50 year provision for the repayment of debt given that most mortgage lengths were usually 25 years. Officers advised that 2% had been the statutory requirement a few years ago but of more relevance was that the investment related to assets that had a life of 50 years.

Another Member asked whether the figures supplied in appendix one were correct and whether they were a general average or weighted average of council rents. Officers undertook to look into this and report back to the Member.

Another Member asked that the programme of re-modelling and improvements to sheltered housing identified to utilise the £5 million “headroom” monies would consider increasing the number of 1 bed and 2 bed sheltered accommodation available as, in the future, tenants would want to down-size in order to avoid the ‘bedroom tax’. Officers advised that there would be a report to the committee later in the year with proposals for utilising the “headroom”.

Decision:

The committee agreed to recommend to Cabinet:

(a)    The proposed revenue and capital budgets for 2013/2014, inclusive of an average rent increase of £2.90 per week (based upon 50 collection weeks and equating to an average increase of 3.75%);

(b)    Service charges for 2013/14 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, (excepting the Wardens Service Charge as set out in 4.2), using above inflation increases to do so as per Appendix B to this report. The average increase will be 5% or £0.38;

(c)     Officers to develop proposals for utilising headroom with the intention to submit a further report later in the year;

(d)    To approve the repayment of debt based on a minimum revenue payment of 2% on outstanding debt.