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Subject:
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Housing Revenue Account Budget & Capital
Investment Programme 2020/21 and Medium Term Financial Strategy
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Date of Meeting:
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11 February 2021
25 February 2021 – Budget Council
20 January 2021 – Housing Committee
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Report of:
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Acting Chief Finance Officer
Executive Director for Housing, Neighbourhoods
& Communities
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Contact Officer:
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Name:
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Craig Garoghan
Martin Reid
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Tel:
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01273 29-1262
01273 29-3321
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Email:
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craig.garoghan@brighton-hove.gov.uk
Martin.Reid@brighton-hove.gov.uk
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Ward(s)
affected:
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All
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FOR GENERAL
RELEASE
1
PURPOSE OF REPORT AND POLICY CONTEXT
1.1
This report presents the proposed Housing Revenue Account (HRA)
revenue and capital budget for 2021/22 as required by the Local
Government & Housing Act 1989. Members are required to consider
the revenue budget proposals including investments and
re-investments (service pressures) and changes to rents, fees and
charges and the capital programme. This report also sets out the
Medium Term Financial Strategy and a 30 year financial
forecast.
1.2
The HRA contains the income and expenditure relating to the
council’s social landlord duties covering approximately
11,700 rented properties and 2,900 leasehold properties. The income
and expenditure relating to these properties, including rent
rebates, is accounted for separately from the council’s other
services and activities which form part of the council’s
General Fund.
1.3
Investment continues within the HRA to ensure council homes are
maintained to the Brighton & Hove decent homes standard, to
provide investment to reduce the carbon footprint of council
housing and to increase the number of affordable homes available
across the city to help tackle the City’s housing crisis. The
capital investment proposal for 2021/22 is a total of
£69.819m over the following areas:
• £44.539m on Delivery of
New Council Homes
• £17.940m on Improving
Housing Quality & Standards
• £4.390m on
Sustainability & Carbon Reduction
• £2.480m on Tackling
Inequality
• £0.470m on Supporting
well-run services for the city
2
RECOMMENDATIONS:
That the Housing
Committee:
2.1
Approves a rent increase of up to 1.5% in line with government
legislation as detailed in paragraph 4.15 of the report.
2.2
Approves the service charges and fees as detailed in Appendix 3 to
the report.
2.3
Notes the proposal to set up a capital reserve of £4.010m for
use in 2021/22 and beyond as discussed in paragraph 4.13.
2.4
Notes the proposal to use £1.200m of the Direct Revenue
Funding to fund Housing First purchases as discussed in paragraph
4.11.
2.5
Notes the proposal to use £0.680m of the Direct Revenue
Funding to fund general acquisition purchases as discussed in
paragraph 4.12.
2.6
Notes the current HRA forecast outturn for 2020/21 in Appendix 1 to
the report of a £0.860m underspend.
2.7
Notes the Medium-Term Financial Strategy and 30-year financial
projections shown in Appendix 5 to the report.
2.8
Notes the requirement that further work on identifying resources
will have to be considered to meet Carbon neutral aims 2030.
That Housing Committee approves and recommends to Policy &
Resources Committee:
2.9
That the updated HRA revenue budget for 2021/22 as shown in
Appendix 2 be agreed and recommended to full Council for
approval;
2.10
Notes the 3-year programme as set out in Appendix 4 and that the
Capital Programme Budget of £38.395m for 2021/22 be agreed
and recommended to full Council for approval.
That Full Council:
2.11
Approves the HRA revenue budget for 2021/22 as shown in Appendix
2.
2.12
Notes the 3-year programme as set out in Appendix 4 and approves
the Capital Programme Budget of £38.395m for 2021/22
3
HRA BUDGET STRATEGY
3.1
The HRA budget aims to balance the priorities of both the council
and council housing residents in the context of the council’s
Housing Strategy, HRA Asset Management Strategy, and the Housing
Committee’s priorities and work plan 2019-23 which sets out
the overall direction for Housing over the 4-year period. As well
as these, the budget strategy considers the significant legal and
regulatory changes following the review of building safety
standards.
3.2
The budget strategy also reflects the council’s decision to
bring the delivery of the Repairs & Maintenance Service back in
house from March 2020. This includes further investment in
proposals to ensure that customer service, quality assurance,
responsive repairs and empty property refurbishments, planned
maintenance and improvement programmes, and major capital projects
continue to be delivered efficiently and provide value for money
for tenants and leaseholders.
Housing Committee
Priorities and Work Plan 2019 to 2023
3.3
The priorities and work plan for the Housing Committee and Housing
service for the four year period of 2019-2023 was agreed in
September 2019 in order to inform future reporting to Committee
on:
1. key
areas of officer focus and delivery;
2.
budget strategy, asset review, investment plans and resource
allocation;
3.
resident engagement and formal consultation;
4.
engagement and consultation with partners and key
stakeholders.
3.4
Key elements of the work plan in relation to the HRA Revenue Budget
and Capital Investment Programme 2021/22 include:
Providing additional affordable homes:
1. Continued
delivery against the target of 800 additional council homes,
including new builds and purchasing homes.
2. Develop
the existing Hidden Homes programme.
Achieving carbon reductions and sustainability in housing including
addressing fuel poverty:
3. Develop an
action plan to ensure housing contributes to making the city carbon
neutral by 2030.
4. Develop a
new PV and energy efficiency strategy for council homes.
Improving council housing and community involvement:
5. Work with
tenants to develop a ‘decent environment’ standard.
6. Develop a
fire safety programme with tenants and residents.
3.5
The Housing Strategy priorities included in developing the HRA
Revenue Budget and Capital Programme are:
Priority
1: Improving Housing Supply
Respond to the opportunities to increase housing supply following
the lifting of the HRA borrowing cap, and deliver at least 800
additional council homes within 4 years utilising the cross
directorate housing delivery team to drive projects forward,
including:
1. Continue
the ‘New Homes for Neighbourhoods’ programme. The
programme has been successful and since summer 2015 has completed
225 new council homes across 14 projects. It has sites currently
identified for an estimated total of 470 additional new affordable
homes.
2. Maintain
and enhance the Hidden Homes programme to refurbish and convert
under-used or unused spaces within existing council stock into new
homes. 15 new homes have been delivered since the inception of the
programme with a further 11 due to be delivered in 2021/22.
Planning permission has also been granted for a further three homes
at Manor Road, Whitehawk. A pipeline of potential sites has been
developed to deliver approximately 18 homes by 2023.
3. Continue
to increase the supply of council owned temporary accommodation
allowing the council to achieve savings against the costs of
procuring more expensive accommodation from the private market
either through existing frameworks or spot purchase. The conversion
of Oxford Street, Brighton provides for 10 new temporary
accommodation homes and is due for completion in 2021. In September
2020 the council completed the purchase of 38 self-contained flats
at Gladstone Court, Brighton for new emergency accommodation. New
opportunities continue to be assessed to increase the provision of
council owned temporary and emergency accommodation, where cost
effective to do so.
4.
Continuation of the Home Purchase Policy scheme which has so
far enabled the council to buy 78 properties since its inception in
September 2017 with a further 28 going through the sales process,
and other applications being assessed this financial year. This
report proposes an additional budget of £14.313m for 2021/22
which will, if approved, provide for the purchase of approximately
60 more properties. The council will continue to look at purchasing
affordable housing units supplied as part of new housing
developments in the city (typically known as S106 sites) as well as
making use of the increased Scheme of Delegations limit to
£0.500m afforded to officers.
5. Continued
purchase of homes for use under the Housing First project with a
proposed budget of £4.000m set aside for the purchase of up
to 18x1 bed properties and funding this from Direct Revenue Funding
and borrowing as described in paragraph 4.11.
6. The
provision of £3.000m has also been set aside in the capital
programme for opportunities which may arise for the general
acquisition of properties in the HRA. This can be used for
purchases of homes to be used for General Needs or Temporary
Accommodation but will be dependent on the business case, which
will be subject to review by the Housing Supply Member Board and
subsequently approved by Housing Committee. The funding is proposed
to come from Direct Revenue Funding and borrowing as outlined in
paragraph 4.12.
7. Commission
new, adapted homes and ensure best use of existing adapted and/or
accessible housing to promote independent living, to deliver cost
benefits to health and social Care services (Children and
Adults).
Priority
2: Improving Housing Quality
8. Ensure the
council’s landlord obligations with regards to health and
safety, including continuing to review and enhance fire safety
measures for residents.
9. In line
with the new arrangements for the delivery of repairs in-house, a
stock condition survey was undertaken in early 2020. This will
allow the council to review and plan for future investment in the
quality of its homes, including addressing issues that may not have
been fully picked up under the existing investment and programme
plans. The council will undertake a rolling 20% of surveys each
year over the next five years to ensure all the council housing
stock is surveyed.
10. Continue to respond to emerging guidance around building safety
standards and the draft Building Safety Bill following the Grenfell
Tower tragedy.
11. To work in consultation with tenants and leaseholders to agree
planned and major works programmes based on updated information on
our stock for the provision of planned maintenance, improvement
programmes and major capital projects and develop a new Asset
Management Strategy.
12. Continue to promote the Improved building, space and
environmental standards in all new council homes being built to
high sustainability levels.
13. Continue to improve council housing sustainability standards
and maintain 100% Decent Homes Standard compliance whilst investing
in other priorities that promote the health and wellbeing of
residents.
14. Continue to improve the energy efficiency performance of both
the council’s housing stock, and from our own service
delivery and other activities (e.g. future fleet procurement). To
support the city’s objective of becoming carbon neutral by
2030 as outlined in the Housing Action Towards Carbon Neutral 2030
Report for Housing Committee to consider.
15. Support for improvements and initiatives to reduce fuel
poverty, will be maintained and enhanced where possible.
16. Improve shared areas of the council’s housing estates
through the environmental improvements budget to respond with
greater speed to issues impacting on tenants’ satisfaction
with their estates and their neighbourhoods.
Priority
3: Improving Housing Support
17. Ensure that as services are reviewed, they are safe for all and
that we improve accessibility of our customer facing services both
in person and online.
18. Continued investment in specialist tenancy management and
support services for vulnerable council housing residents and work
with the Community Safety Team to resolve issues including
anti-social behaviour and harassment in a timely manner.
19. Early intervention for families struggling with issues such as
their housing costs and sustaining their tenancy, including through
money advice and tenancy support.
20. Ensure that adaptations are carried out at the right time to
support people to stay in their homes when they want to.
21. Through the use of the Transfer Incentive Scheme support
tenants to ‘downsize’ when they choose and provide a
range of options for them, including accessible tools to support
decision making.
22. Improve links between seniors housing schemes and surrounding
communities.
23. Ensure new housing developments include community spaces, where
need is identified, and resources allow.
24. Ensure tenants continue to be supported during and after the
COVID-19 pandemic.
Council Housing (HRA) Asset Management Strategy
3.6
The HRA Asset Management Strategy acts as a link between Housing
Strategy priorities and investment programmes and reflects the
Housing Committee Work Plan 2019-23. In 2016 the HRA Asset
Management Strategy was agreed following extensive consultation and
work with residents with an Asset Strategy Review reported to the
then Housing & New Homes Committee on 20 September 2017
following the Grenfell Tower tragedy. A further update on Health
& Safety was reported to Housing Committee on 13 November 2019.
As outlined above, following our recent stock condition survey, we
propose to work in consultation with tenants and leaseholders to
develop a new Asset Management Strategy over Spring/Summer 2021
ahead of presenting to Housing Committee
3.7
The key objectives of the strategy are to:
25. Provide a framework for investment and maintenance of homes and
neighbourhoods to provide safe, good quality housing and support
services;
26. To invest in zero carbon initiatives to support the
city’s commitment of becoming carbon neutral by 2030;
27. Ensure financial viability of the HRA in the long and the short
term
3.8
The proposed Capital Investment Programme shown in Appendix 4
supports all of these objectives as discussed in Section 5
below.
4
HRA REVENUE BUDGET PROPOSALS 2020/21
4.1
The HRA is a ring-fenced account which covers the management and
maintenance of council owned housing stock. This must be in
balance, meaning that the authority must show in its financial
planning that HRA income meets expenditure and that the HRA is
consequently viable.
4.2
Although the HRA is not subject to the same funding constraints as
the General Fund it still follows the principles of value for money
and equally seeks to improve efficiency and achieve cost economies
wherever possible. Benchmarking of both service quality and cost
with comparator organisations is used to identify opportunities for
better efficiency and service delivery.
4.3
The forecast spend for the HRA in 2020/21 is shown in Appendix 1
and is estimated to be £0.860m. Part of the forecast
underspend has been used to create an earmarked reserve of
£0.440m for responsive repairs and maintenance works in
future years as approved by Policy & Resources Committee on 3
December 2020. Any further underspending in the Repairs and
Maintenance Service between now and the end of the financial year
will be used to top-up this reserve, subject to business needs.
This will be used to support the delivery of the repairs and
maintenance programme during 2021/22 to catch-up on repairs not
completed in this financial year due to the impact of Covid-19. The
remainder of any underspend currently estimated at £0.420m
will contribute to the sustainability and retrofit reserve.
4.4
The proposed HRA budget for 2021/22 is shown in Appendix 2 with the
main budget variations, areas for investment and other changes in
resources shown below.
Investments and
Re-investments
1. An
investment of £0.220m to increase resources by a further 4.7
full time equivalent (FTE) posts to deliver the in-house Repairs
& Maintenance Service during 2021/22 and beyond.
2. An
increase in salary on-costs of £0.350m is required to meet
the uptake of the Local Government Pension Scheme and the actual
cost of staff allowances, compared to the budget assumptions for
2020/21 following the TUPE transfer of staff from
Mears.
3. A
one- year investment of £0.437m to keep the transition team
in place to deliver the final phase of the delivery of the in-house
Repairs & Maintenance Service. This includes priority work on
harmonisation of staff terms and conditions; procuring a works
management system; procuring a materials supply chain; setting up a
supply chain for repairs and maintenance contractors; out of hours
call centre; and vehicle fleet procurement. In addition, the
transition team are responsible for major works contractor
procurement and framework set up.
4. The budget
includes a provision of £0.163m for an additional 1.81 FTE in
Property & Investment and the costs of consultancy services to
carry out a review of the new building safety guidance. This
investment will enable the council to fully understand and start to
implement the complex legal and regulatory changes following the
publication of the draft Building Safety Bill following the
Grenfell Tower tragedy. Future costs of delivering this will
be worked up during 2021/22, it is anticipated there will be
significant revenue and capital costs that need to be considered in
order to deliver the required changes.
5. An
investment of £0.050m toward 2 FTE to work on achieving our
priorities of carbon reductions and sustainability in housing,
including addressing fuel poverty and setting ambitious fuel
poverty targets. This is the net increase in budget requirement
following a review of the current structure and budget in place. In
addition to this a further one year investment of £0.025m is
provided for consultancy work to advise the council on the measures
required to implement the carbon reduction and sustainability
measures on council housing stock and to ensure all necessary due
diligence is undertaken.
6. An
investment of £0.075m is required to increase the budget for
the extra legal costs involved with the disrepair claims made under
the ‘Homes (Fitness for Human Habitation) Act 2018’
following its introduction on 31 March 2019. The rise is due to the
publicity around these from ‘no win, no fee’ legal
practices who are targeting social housing tenants.
Other Key Changes
4.7
The Estates Development Budget (EDB) is no longer part of the HRA
capital programme but has been transferred into the revenue budget
with no reduction in resources available. Examination of
expenditure over a number of years indicated that the majority of
expenditure has been of a revenue nature and therefore this year
the revenue budget includes £0.247m for EDB within the
employee and supplies & services headings as this service
transferred in-house from Mears during 2020/21. The current budget
strategy uses EDB reserves of £0.240m to support this,
augmenting this budget to a total of £0.487m for 2021/22 if
necessary. A reserves table is shown in Appendix 2 (note 4).
4.8
The budget proposals include a decrease in leaseholder service
charge income of £2.653m. This reflects the volume of work
that will be billed in 2021/22 following a full review of the works
forecast to be completed by March 2021. A number of projects will
not have been completed this financial year and the associated
service charges will be adjusted and billed to leaseholders in
September 2021. As previously reported to members, the
procurement of planned and major works contracts was paused and
delayed owing to Covid-19. The pandemic has also impacted on
progress of projects that were on site.
4.9
The budget proposes the continuation of the funding of up to
£0.040m for adult learning services to support ongoing work
across council housing estates. Area panels will be consulted prior
to the start of the new academic year. The outcome of this
consultation will determine the level of contribution; however it
will not exceed £0.040m.
4.10 The net revenue
budget results in an initial surplus of £21.500m which is
then used to provide ‘Direct Revenue Funding’ (shown
within expenditure at Appendix 2) in support of the capital
programme discussed in section 5 of this report.
4.11 The Direct
Revenue Funding which is required to fund the investment in
existing homes is £15.610m. This leaves a balance in funding
resources of £5.890m for use against other housing
initiatives during 2021/22 and beyond. To ensure the good progress
continues with the Housing First home purchases it is proposed to
use £1.200m of this balance to fund 30% of a new
£4.000m budget included in the capital programme (Appendix 4)
with the remainder being funded from HRA borrowing. This will
enable the purchase of up to 18x1 bed properties, ensuring the
borrowing required can be repaid from the new rental income. There
is the potential that further Government funding will also be made
available to fund the delivery of Housing First properties, where
this is the case this will continue to be optimised and used to
deliver these properties. There is revenue funding in Adult Social
Care budgets for this service in place already for an additional 10
homes with the remaining 8 homes subject to additional resources
being sought during the year.
4.12 To continue the
new provision of affordable housing at pace, a budget of
£3.000m has been included for purchases of homes outside of
the Home Purchase Policy and Housing First; this would allow
between 10-15 purchases, depending on the price agreed. To fund
this, it is proposed to fund £0.680m from the available
Direct Revenue Funding and the balance from HRA borrowing. This
ensures that the purchases will remain viable in the long term for
the HRA.
4.14 The impact of
using the Direct Revenue Funding in this manner is that the
borrowing requirement for 2022/23 increases. However, most treasury
experts expect the interest rate outlook to remain low for at least
24 months and therefore this is sustainable within the HRA
financial plan based on current assumptions. A review of the
HRA’s reserves and borrowing position will be carried out on
an annual basis and reported in accordance with the financial
regulations and procedures.
4.15 Social rents for
council homes are calculated in accordance with government
guidelines. Rent restructuring rules still apply and Target Rents
for each property are calculated based on the relative property
values, bedroom size and local earnings. Target Rents will apply to
the granting of all new tenancies. The MHCLG announced an increase to
social housing rents limited to the September Consumer Price Index
(CPI) plus 1% for 5 years from 2020/21. The CPI at September
2020 was 0.5% and therefore this budget proposes rent increases of
a maximum of 1.5%. When
setting the affordable rents and living wage rents for individual
properties consideration is given to the prevailing rates for LHA
and the living wage for the new financial year. This is compared
against the 1.5% increase to ensure they do not exceed the agreed
uplift.
4.17 Rents are not
calculated to consider any service charges and only include charges
associated with the occupation of a dwelling, such as maintenance
of the building and general housing management services. Service
charges are therefore calculated to reflect additional services
which may not be provided to every tenant or which may relate to
communal facilities rather than to a specific occupation of a house
or flat. Different tenants may receive different types of services
reflecting their housing circumstances. All current service charges
are reviewed annually to ensure full cost recovery and to identify
any service efficiencies which can be offset against inflationary
increases, to keep increases to a minimum. The proposed fees and
service charges for 2021/22 are set out in Appendix 3.
Reserves position and one-off funding
7. One
off funding in 2021/22 for the adult learning services provision of
£0.040m.
8. One
off funding in 2021/22 for the investment in ICT project of
£0.150m resources to bring forward the projects to replace
the Asset Management System and Works Management System.
9. The
cost of the harmonisation of staffing contracts across the in-house
service are unknown at this time. A full review of the on-going
cost implications of this will be undertaken during 2021/22 for
inclusion in the base budget for 2022/23.
10. Levels
of investment that may be required as a result of the outcome of
the draft Safety Bill and the recommendations of the
“Building a Safer Future” programme delivered by
Ministry of Housing, Communities and Local Government (MHCLG) to
improve safety and minimise the risk of fire in high rise
buildings. The capital programme already includes £1.000m for
new fire doors and £1.200m for sprinklers (installation of
any sprinkler system is subject to consultation with
residents);
11. Cost of
contract harmonisation following the TUPE of staff from Mears.
Future costs will be built into the base budget as per paragraph
4.6.
12. There
are general risks around the stock condition which could give rise
to a short term financial impact. The Social Housing white paper
“The charter for social housing residents” indicates
government will review the Decent Homes standard to consider if it
should be updated. Future changes may impact on the required
investment levels in order to maintain 100% compliance with the
standard.
4.20
Other reserves are in place to support specific areas of spend
within the HRA, these can be found Appendix 2 to this report.
4.21 The
council’s Section 151 Chief Finance Officer has reviewed the
level of reserves and provisions in accordance with the principles
of Section 25 of the Local Government Act 2003 and considers them
to be adequate and reasonable for their purpose in the context of
the removal of the debt cap and the self-financing mechanism
applicable to the HRA.
4.22 The Housing
Committee Work Plan priorities include consultation with tenants
and residents to develop the following: a ‘decent
environment’ standard; a policy for extending participatory
budgeting; and a fire safety programme. These priorities as
well as ongoing service reviews will continue to be undertaken in
2021/22 to ensure that resources accounted for in the HRA budget
are set correctly, that Value for Money is being provided and that
we are meeting the needs of our residents. Where it is deemed that
additional resources are required to further improve a service, an
individual business case will need to be approved. Within the
current resources there is the flexibility to switch resources
where necessary whilst keeping core services running. Any
major changes in budget resources during the year will come back to
Committee.
5
HRA CAPITAL PROGRAMME 2020/21
5.1
The Capital Programme targets investments that will ensure that the
HRA maintains and improves, where possible, the quality of housing
in line with the Asset Management Strategy outlined in section 3
above.
5.2
The Housing Capital Programme seeks to provide substantial
investment in the council’s housing stock and improve the
quality of homes. The implementation of the proposed programme will
take account of all relevant best practice guidelines and has been
informed by the priorities agreed in the Housing Committee Work
Plan (2019-23), HRA Asset Management Strategy and the Asset
Strategy Review report to Housing & New Homes Committee 20
September 2017. The Programme also reflects the delivery of planned
maintenance, improvement programmes and major capital projects to
council housing stock.
5.3
The council has faced significant challenges this financial year in
the delivery of planned and major works capital programmes.
As previously reported to Housing Committee, due to the Covid-19
outbreak planned works procurement was paused on 18 March 2020,
recommending on 15 June 2020. This significantly delayed
completion of procurement and mobilisation of our planned
maintenance and improvement works programme. The procurement
of a multi-contractor framework for major capital works was
impacted upon by the need to focus resources on the planned works
procurement along with a delay due to Covid-19. Planned and
major works programmes already on site were also delayed due to the
pandemic. In light of this and the challenges that the
COVID-19 pandemic continues to present, a review has been
undertaken of the capital investment programme to ensure the
correct level of investment is proposed to maintain and improve
stock to the required standard but also provide a programme that is
deliverable during the next financial year.
5.4
This report recommends that for 2021/22, a budget of £15.610m
is approved for investment in existing housing stock and a further
£22.635m for the supply of new affordable housing.
5.5
The proposed 2021/22 budget for investment in existing housing
stock is lower than last year’s budget as a result of the due
diligence work which continues to be undertaken on new contracts
and managing this through the COVID-19 pandemic. To ensure that
priority is given to key areas such as Health & Safety, a
review has been carried out of the 3 year capital programme
outlined in appendix 4. This has meant that there has been some
smoothing of expenditure from year 1 to years 2 and 3 to present a
programme that is deliverable, whilst maintaining the investment in
stock that is required.
5.6
The review needed to consider the reprofiled budget of
£9.520m from 2020/21 as reported in the month 7 Budget
Monitoring Report to P&R Committee. Therefore, the total
investment programme for 2021/22 is £25.280m.
5.7
The level of investment in existing stock over the next 3 financial
years however, totals £79.680m, this sees an increase of
£8.453m from last year’s 3 year budget estimate.
5.8
The total proposed programme for 2021/22 and the funding
arrangements totalling £69.819m are shown in Appendix 4. This
programme includes budget of £31.424m that has already been
approved, for example, where individual scheme approval has been
sought for new build schemes or where budgets for existing schemes
have been reprofiled, as approved by Policy & Resources
Committee. It is proposed to use the capital reserve of
£2.900m set aside during the 2020/21 HRA budget report to
fund part of the proposed 2021/22 capital programme.
5.9
The 2021/22 programme continues to prioritise the council’s
landlord obligations with regards to health and safety, including
continuing to review and enhance fire safety measures for residents
and those visiting or working on council homes. This is a key
responsibility and, as such, through the capital programme
proposals, it is ensured that the investment required is maintained
and made available ahead of other investment decisions. This
includes good practice procedures and resources to support the
management of asbestos, fire risk, legionella, gas and electrical
equipment, amongst others. This budget continues to support funding
for enhanced works to reduce fire risk.
5.10 The Capital
Programme is a key part of implementing the main aims of the
long-term asset management approach, which aims to maximise
investment in homes and support reductions in responsive repairs
need whilst providing safe, good quality housing and support
services, and also supporting new housing supply and financial
viability for the HRA.
5.11 Other assets,
such as car parks and garages, receive investment to ensure both
health and safety compliance and best use of these assets. There is
a review being undertaken of the garages and car parks held in the
HRA, this will include a review of the investment required to
maintain them in future years to ensure that it is set at the
correct level.
5.12 Based on
feedback from residents on their priorities, the programme
continues the commitment to invest in environmental improvements to
estates, external and common way repairs and decorations across the
city subject to resident consultation and analysis of information
to establish if replacement works are necessary.
5.13 The approved
capital programme for 2020/21 included investment in environmental
improvements around estates of £0.400m. A total budget of
£0.500m was approved for this work, £0.400m in the
capital programme and £0.100m in revenue. This level of
investment continues in the proposals for 2021/22, however, this
budget proposes that £0.280m is included in the capital
programme and £0.220m in the revenue budget, given the nature
of spend to date.
5.14 As well as works
relating to general environmental improvements outlined above. An
investment of £0.510m over the next 3 financial years to
refurbish 10 out of the 15 HRA owned playgrounds is included,
subject to approval of the report to the Environment, Transport and
Sustainability (ETS) committee on 19th January 2021. If
this proposal is not approved at ETS committee the capital
investment will reduce and therefore make those resources available
for any in year approved business cases bought forward.
5.15 The Housing Fire
Health & Safety Update report to Housing & New Homes
Committee on 19 September 2018 updated members on the continued
joint work with East Sussex Fire & Rescue Service (ESFRS) in
response to housing fire health & safety matters arising
following the Grenfell Tower tragedy. In particular,
concerning fire doors and sprinklers. In light of this, the
programme continues to provide investment of £2.510m in
2021/22, £2.420m in 2022/23 and £1.710m in 2023/24 for
potential additional works arising from the government’s
review of the Grenfell fire tragedy. This is also supported by the
delivery of a new contract for the replacement of doors.
5.16 Helping
residents to live in well-insulated, efficiently heated, healthy
homes remains a key long-term commitment, which is supported
through the capital programme and setting aside of resources in a
reserve. Past progress on achieving this has been consistently
good, with national Standard Assessment Procedure (SAP) energy
rating performance monitoring being used to benchmark these. Key
investments that contribute to these include installing energy
efficient heating systems, high efficiency boilers, heating
controls, efficient doors, windows, insulation and renewable or
community energy schemes, where appropriate. In line with the
Housing Committee Work Plan, the council will work collaboratively
to ensure housing contributes to making the city carbon neutral by
2030. as outlined in the Housing action towards Carbon Neutral 2030
report presented to Housing Committee.
5.17 A report
presented to the June 2020 Housing Committee received approval for
budget of £1.750m to deliver new Solar PV panels across the
housing stock, this has been included in the budget proposals
outlined in appendix 4. In addition to this capital programme
includes the budget to increase the supply further subject to a
report being presented to Housing Committee no later than the
fourth quarter of 2021 i.e. ahead of 2022 Budget Council. It is
recognised that further allocation within the budget may be
required.
5.18 Investment also
includes £2.540m in 2021/22 to replace old inefficient
heating systems and £1,100m to install a district heating
network at Elwyn Jones Court. A further £4.800m over the
following two years is also provided to continue to replace
inefficient heating systems across all stock and to consider a
range of opportunities to improve the energy rating of the council
stock and to identify projects that will help to contribute to the
target of being carbon neutral by 2030
6
HRA MEDIUM TERM & 30 YEAR FINANCIAL FORECASTS
6.1
The introduction of self-financing in 2012 provided additional
resources from the retention of all rental income and, through
greater control locally, enabled longer term planning to improve
the management and maintenance of council homes.
6.2
The medium term and 30 year financial forecasts are provided in
Appendix 5 along with the business planning assumptions used for
income and expenditure.
6.3
Since the Government removed the restrictions on borrowing in the
HRA in October 2018, the council has developed plans to build and
purchase additional council homes in the City. The current plans to
deliver at least 800 additional council homes in the city by April
2023 have been incorporated in the capital programme 2021/22
– 2023/24 where scheme approval has already been given as
well as those schemes in the pipeline in the 30 Year business
plan.
6.4
Essentially, the financial plan shows that the HRA has healthy
financial indicators to borrow to source future funding for
regeneration and development. However, any borrowing must remain
affordable. This means that each scheme should be funded either
from the new rental stream (net of any management and maintenance
costs), set aside resources or from current tenants’ rents,
rent rebates (Housing Benefits) and service charges. The
current 30 year forecast assumes the building and purchasing of new
homes in the next five years to 2025/26 will be in line with the
pipeline shown in Appendix 5. This includes projects that will be
presented to future Housing Committees and Policy & Resources
Committees for final scheme and budget approval
6.5
Revenue reserves have been maintained in the business plan at a
minimum set out in paragraph 4.19 for the time being, but this will
be revised annually, this is to ensure that there are sufficient
reserves in place to help fund the cost of complying with the new
Building Safety Bill and any harmonisation costs associated with
the new house Repairs & Maintenance Service. A working balance
of £3.000m will be maintained as a minimum during the course
of the 30 year business plan.
6.6
The MHCLG announced an increase to social housing rents limited to
the Consumer Price Index (CPI) plus 1% for 5 years from 2020/21.
Therefore, the 30 year business plan shown at Appendix 5 assumes
rent increases of CPI plus 1% for 4 years from 2021/22 and
increases at CPI thereafter. Assuming other factors remain
stable, this will help to sustain the HRA in the medium term.
7
ANALYSIS & CONSIDERATION OF ANY ALTERNATIVE OPTIONS
7.1
The budget process allows all parties to engage in the scrutiny of
budget proposals and put forward viable alternative budget
proposals to Budget Council on 25 February 2021. Budget Council has
the opportunity to debate both the proposals recommended by Policy
& Resources Committee at the same time as any viable
alternative proposals.
The government
annually sets a limit rent, set to include CPI plus 1% increase,
which is used to determine how much housing benefit subsidy is
received from the Department for Work and Pensions. Rises above the
limit rent would reduce the amount of subsidy receivable by the
council.
8
COMMUNITY ENGAGEMENT & CONSULTATION
8.2
In the meantime, the Council will continue to use information
gleaned from the various areas of tenant feedback over the past two
years, as well as safety priorities and asset management data to
inform budget priorities.
9
CONCLUSION
9.1
The Local Government and Housing Act 1989 requires each local
authority to formulate proposals relating to income from rent and
charges, expenditure on repairs, maintenance, supervision and
management, capital expenditure and any other prescribed matters in
respect of the HRA. In formulating these proposals using best
estimates and assumptions, the Authority must set a balanced
account. This budget report provides a capital programme,
break-even revenue budget and recommends rent proposals in line
with current government guidance.
9.2
This report also provides the latest medium and long term forecasts
for the HRA. However, there are a number of uncertainties due to
impending government legislation, which mean that the current
forecasts should be treated with caution.
10
FINANCIAL & OTHER IMPLICATIONS:
Financial
Implications:
10.1
The financial implications are contained within the main body of
the report.
Finance Officer Consulted: Craig
Garoghan
Date: 08/01/2020
Legal
Implications:
10.2 In its landlord role, the council has contractual
obligations to its tenants and leaseholders to maintain the
structure of its housing stock. These obligations are complemented
by statutory duties in the Landlord and Tenant Act 1985 as amended.
The council must comply with other statutory regimes, including
those relating to health and safety, legionella and fire safety. It
is likely that further statutory requirements will be imposed if
the Building Safety Bill and Fire Safety Bill currently making
their way through Parliament are enacted. The measures outlined in
the report will assist the council in discharging those
duties.
The
Housing and Local Government Act 1989 regulates the HRA. The
requirement in the Act to set a balanced budget is referenced in
sections 4.1 and 9.1 of the report.
Lawyer Consulted: Liz
Woodley
Date: 16/12/2020
Equalities
Implications:
10.3 The HRA budget funds services to people with a range of needs
including related to age, vulnerability or health. All capital
programme projects undertaken include full consideration of various
equality issues and specifically the implications of the Equality
Act. To ensure that the equality impact of budget proposals are
fully considered as part of the decision making process, equality
impact assessments have been developed on specific areas where
required.
Sustainability
Implications:
10.4 The HRA
budget will fund a range of measures and contribute to a reserve to
fund future sustainability initiatives in the HRA and retrofit
works required that will benefit and sustain the local environment.
This capital programme supports the affordable warmth and fuel
poverty strategy brought forward from Public Health. Housing
is a key contributor to the Carbon Emissions reduction commitment
to make the city carbon neutral by 2030. The proposals will help to
reduce the number of residents affected by fuel poverty and rising
energy costs.
10.5 Project briefs are issued on all capital projects and require
due consideration of sustainability issues, including energy
conservation and procurement of materials from managed and
sustainable sources.
Any other Significant
Implications:
10.6 Financial
risks have been assessed throughout the development of the
council’s HRA annual budget and 30 year financial
model. A number of key sensitivities and scenarios are
modelled to ensure that the service understands the business impact
of decision making and include areas such as:
2.
Impacts of the government’s Housing & Planning Act and
Welfare Reform legislation;
3.
Potential impact of any post Grenfell tragedy review of building
regulations and / or standards;
4.
Inflationary risk where expenditure inflation is greater than
income, particularly the risks around build cost inflation and
future governments social rent policy;
5.
Managing interest rate fluctuations and the debt portfolio;
6. Long
term capital and maintenance responsibilities compared with
available resources;
7.
Balancing regeneration and redevelopment needs with tenants’
priorities.
SUPPORTING DOCUMENTATION
Appendices:
1. Appendix 1: HRA
Revenue Forecast Outturn 2020/21 (Month 7)
11 Appendix
2: HRA Budget 2021/22
12 Appendix
3: Fees and Service Charges 2021/22
13 Appendix
4: Capital Programme and Funding 2021/22 – 2023/24
14 Appendix
5: HRA Medium Term Financial Strategy & 30 Year Financial
Forecast
Documents in Members’ Rooms
None
Background Documents
None