Agenda item - Housing Revenue Account Budget and Investment Programme 2016/17 and Medium Term Financial Strategy

Report of the Executive Director for Finance & Resources, and Acting Executive Director for Environment, Development & Housing (copy attached).  

(1)       That Housing & New Homes Committee recommend that Policy & Resources Committee:

 

(a)     Does not approve and recommend  to Council the HRA revenue budget for 2016/17 as shown in Appendix 1.

 

(b)     approves a rent reduction of 1% in line with draft government legislation as detailed in paragraph 3.7.

 

(c)     Does not approve service charges and fees as detailed in Appendix 2 or delegates authority to the Acting Executive Director of Environment, Development & Housing to make further amendments to communal service charges and laundry charges (to ensure cost recovery) once notification of new contract prices (from April 2016) has been received.

 

(d)     Does not approve the capital programme expenditure and financing budget of £43.047 million for 2016/17 or note the 4 year programme as set out in Appendix 3.

 

(e)     notes the Medium Term Financial Strategy and 30 year financial projections shown in Appendix 4.

 

(2)                   That an urgent meeting of all area panel representatives, housing   officers and interested elected members be held to obtain feedback     on capital programme priorities and revenue savings on the 2016/17      budget, and this feedback be passed onto Policy and Resources             Committee on 11 February 2016 for consideration.

 

(3)                   That a full consultation and engagement exercise be undertaken with       residents which is based on a programme agreed at an initial meeting             with tenant only chairs, panel chairs and officers to be held in    September 2016.

 

(4)                   That the results and recommendations from the consultation exercise        in (3) above be reported to the Committee with recommendations         for       the 2017/18 HRA revenue and capital budgets.

54.1   The Committee considered the report of the Acting Executive Director of Finance & Resources and the Acting Executive Director Environment, Development and Housing which presented the proposed Housing Revenue Account (HRA) revenue and capital budget for 2016/17 as required by the Local Government and Housing Act 1989.  Members were required to consider the revenue budget proposals including savings and service pressures as well as changes to rents, fees and charges and also the capital programme. The report also set out the Medium Term Strategy and 30 year forecast.

 

54.2   The report was presented by the Head of Financial Services (EDH) and the Interim Head of Property & Investment and Head of Housing Strategy, Development & Private Sector Housing.  

 

54.3   Councillor Mears referred to page 20, priority 3, bullet point 3 in relation to continued investment in specialist tenancy management & support services.  She stressed that housing was dealing with the most vulnerable people, and expressed concern that there was a proposal to reduce housing related support staff.  Councillor Mears referred to page 24, paragraph 5.2.  This stated that all area panel representatives and chairs had been sent a letter explaining the budget proposals. Councillor Mears stated that she had never received this letter. 

 

54.4   Councillor Mears had the following queries/comments in relation to the HRA Forecast Outcome 2015/16 & Revenue Budget 2016/17 in appendix 1. 

 

·       Employee figures - How many staff were employed by housing? 

·       A breakdown of support services charges budget for 2016/17.

·       Page 28 of the agenda in relation to a review of the funding of the capital programme - An explanation of the increased contribution of £1.100m from revenue surpluses to fund the capital programme was requested.

·       The reduction in agency costs from the end of the back scanning project -  How many agency staff were working in housing services? 

·       Responsive repairs savings - Clarity was required with regard to the figure of £300,000. 

·       Page 29, (5) - Clarity was required with regard to the Mears Accounting Adjustment. 

·       Page 30 - More details were required with regard to the number of tenants affected by service charges and where they lived in the city.

·       Page 31 - Communal heating costs at Elwyn Jones Court and Broadfields.  Why had Elwyn Jones Court seen an increase of 31% over 2 years? 

·       Major structural works, page 32 – More details are required.

·       Future capital project budget of £50k.  Was there extra funding as this has been funded in the past?

·       Page 33 - Councillor Mears did not support the reduction in the estate and environmental improvement budget. 

·       Page 35.  A breakdown of management and service costs was requested.  Councillor Mears said she would like to see the contribution from Seaside Homes.  

 

54.5   The Interim Executive Director stated that he had made a note of all          Councillor Mears comments.  Some of her queries would need written responses. 

 

54.6   The Head of Tenancy Services explained that Priority 3, bullet point 3 in relating to continued investment in specialist tenancy management & support services, related to the housing revenue account.  There were no plans to reduce the service. 

 

54.7   The Interim Executive Director explained that information on whether there were packages of care support for vulnerable tenants in housing stock was not available at the meeting.  Officers would look at the data base to obtain this information. 

 

54.8   The Head of Housing informed Members that she had been assured that a letter on the budget proposals had been sent out.  She would ensure Councillor Mears received the letter.

 

54.9   The Head of Financial Services reported that just under 300 people were employed by Housing Services.  She would supply a written reply with regard to the breakdown of support services budgets. 

 

54.10  Councillor Mears asked why staff in housing management were being increased.  The Interim Executive Director said he would need to produce a comparison.  The Chair requested that this be sent to all committee members as soon as possible and that all responses should be sent out as soon as possible to everyone. 

 

54.11  The Head of Financial Services explained that the increased contribution of £1.100m from the revenue surpluses was simply making use of the significant underspend in the HRA, by using this cash to fund the capital programme rather than the borrowing originally planned. This would actually save money in the long term due to lower interest repayments.

 

54.12  The Head of Financial Services explained that the £300,000 responsive repairs saving on page 28 is from a lower level of repairs due to less stock than previous years and from the impact of increased capital investment over the past few years.

 

54.13  The Head of Financial Services stated that a written response would be supplied on the numbers of agency staff.  With regard to page 29, accounting adjustments, it was explained that officers looked at the numbers of central establishment staff in the Mears establishment and looked at time spent by those staff on capital and revenue and then allocated the Mears staffing costs accordingly. For this year there were less responsive repairs so this meant that  £300,000 of staff costs were being transferred from revenue to capital.  It was explained that this has happened before and merely an accounting adjustment between accounts. Councillor Mears asked for an explanation to be sent to all members.

 

54.14  The Head of Financial Services reported that with regard to page 30 – numbers of tenants affected – Some service charges would affect some people but not all.  The Interim Executive Director said that a written response would be supplied to members on the cumulative effect of service charges.  

 

54.15  The Head of Financial Services reported that in respect of Page 31 Communal heating costs at Elwyn Jones Court and Broadfields, a written response would be supplied. The Chair stated that the written response would need to address why the charges were so much higher this year. 

 

54.16  The Interim Head of Property & Investment and Head of Housing Strategy, Development & Private Sector Housing referred to the query about major structural works, on page 32.  He would provide a further breakdown to councillors.   

 

54.17  The Interim Head of Property & Investment and Head of Housing Strategy, Development & Private Sector Housing referred to Page 33 relating to the estate and environmental improvement budget. He pointed out that on page 29 the report showed that there was significant unspent budget held in reserves.  A breakdown would be supplied to councillors.  The Chair stated that she understood that there had previously been an underspend on the estate development budget.  Councillors needed to understand how much was underspent.

 

54.18  Councillor Simson stated that tenants would be horrified if there was an underspend on the estate development budget.  There should not be an underspend. 

 

54.19  The Head of Financial Services referred to Page 35 relating to a request for a breakdown of management and service costs.  A written response would be provided to councillors.  The contribution from Seaside Homes was a capital receipt.  A full breakdown would be supplied to councillors.  

 

54.20  Councillor Gibson stated that Seaside Homes would be providing a capital receipt and this did not appear in the budget figures. 

 

54.21  Councillor Atkinson referred to the last bullet point of paragraph 3.1, Priority 1 – (Early intervention for families struggling with accommodation including money advice and tenancy support).  He asked how this would work.  The Head of Income, Involvement & Improvement explained that there were various methods of support and intervention such as family intervention projects.  Officers tried to intervene as soon as possible. Some joint working was funded by the DWP on budgeting support, increasing digital skills and employment support.  Officers were trying to identify families who needed help before their problems became a crisis.  Family coaches worked with each household’s specific needs.

 

54.22  Councillor Deane referred to paragraph 5.2 on page 24 relating to community engagement and consultation. She felt that the consultation had been spartan.  She asked how all tenants got to hear about the budget.  The Head of Income, involvement & Improvement stated that the consultation was limited by the timing of the committee and area panel meetings coupled with some sensitive staffing implications on which staff had not been consulted.  Various tenant groups and meetings had discussed aspects that fed into the budget, for example the asset management strategy.  However, focus groups had discussed broad budget headlines rather than the detail.

 

54.23  Councillor Gibson raised the following questions/comments:

 

·       What consultation had been carried out with tenants to cut the estate development budget?

·       Would it be possible in future years reports to include the previous years capital budget for each  item?  There had been a massive cut in insulation improvements.  What was the justification for such a large cut?  How was this rationalised in the light of the comment in paragraph 5.4 – (community engagement and consultation) which stated …”all housing should be of a good standard, and well insulated, to help with fuel costs.”

·       Seaside Homes – would it contribute to the 2016/17 budget  and would it appear on a revised programme?

·       Concern was expressed about the £1m drop in the lift replacement programme.  Councillor Gibson had understood it would be a priority for tenants. 

·       What consultation has been undertaken with children on the play bus saving which is funded via HRA.           

·       Although he could see the contribution to the General Fund was reducing he suggested that the council should hold a review of support services to ensure we are accounting correctly for only items appropriate to the HRA.

 

54.24  The Chair stated that very few council tenants’ children were reached by the play bus.   This money came out of the HRA budget.  The Chair of Children, Young People & Skills Committee was working on a scheme which would ensure all children benefited from it. 

 

54.25  The Acting Executive Director stated that a breakdown of support service charges to the general fund could be supplied to committee members. 

 

54.26  The Interim Head of Property & Investment/Head of Housing Strategy, Development & Private Sector Housing referred to the comment on insulation.  He reported that officers consulted on major works.  An enormous amount was invested in energy reduction.  Councillor Gibson replied that the insulation budget was down by more than major works had increased.  He would like more information. 

 

54.27  The Chair stressed that cladding would have made homes more energy efficient but this work had not be agreed by the Planning Committee. 

 

54.28  The Interim Head of Property & Investment/Head of Housing Strategy, Development & Private Sector Housing referred to the comment on the lift replacement programme.  Those in more urgent need of repair were being replaced.  Lifts were a significant priority.  Councillor Mears stated that it would be helpful to have a report back on the lift replacement programme.  The Chair endorsed this request.

 

54.29  The Head of Financial Services reported that in relation to Seaside Homes, capital receipts from batches 9 and 10 had been included in the 2015/16 capital programme.  A written response would be sent to councillors showing where funding was approved and tracking finances. 

 

54.30  The Head of Income, Involvement & Improvement commented that officers had not consulted specifically on the estate development budget.

 

54.31  Councillor Penn referred to page 23.  She was concerned that the impact of the Welfare Reform & Work Bill 2015.  She asked if there would be a report on the impact on residents.  The Interim Head of Property & Investment and Head of Housing Strategy, Development & Private Sector Housing replied that there was ongoing consultation and a workshop would be arranged.  The Chair confirmed that she would want a report back to committee. 

 

54.32  Councillor Miller echoed Councillor Mears’ concerns about the cost of management and service costs.  He hoped this could be scrutinised as much as possible.  The Interim Executive Director replied that management costs included the cost of support staff in other services.   

 

54.33  Councillor Miller asked questions relating to the premises, premises – other, transport, supplies and services, support services from other departments budgets. He also asked why the electricity costs were increasing when generally they were reducing and also why Service Charges on page 27 were £6.886m and only £3.441m on page 35. 

 

54.34  The Head of Financial Services replied that she could provide a breakdown on transport, supplies and services and support services from other departments which included services such as finance, IT, Democratic Services and HR.  Electricity prices were going up by an average of 22% because the contract has been in place for three years and this reflects the end of that contract where prices have remained static.  Service charges on page 27 include Leaseholder service charges whereas those on page 35 referred to only tenants.

 

54.35  Councillor Simson asked whether the payment of Business Rates for Car parks was a new initiative.  The Head of Tenancy Services replied that the Revenue & Benefits Team had not sought to recover Business Rates from Housing Services before for car parking from non-council tenants and leaseholders.  They would be charging from the next financial year so this was a new service charge.

 

54.36  Councillor Wealls considered the report complicated and inadequate for members to scrutinise and was missing a great deal of detail.  He felt that the detail could have been placed in the appendices.  The Chair replied that there were a number of new councillors on the committee and it would have been difficult to have a more detailed report.  There had never been detail on the previous year’s budget.  She felt that there was everything the Committee needed to know in the condensed report.   The Chair thanked officers for the hard work carried out on the budget report.  

 

54.37  At this point in the proceedings the Committee had a fifteen minute break to discuss amendments to the recommendations submitted by the Green Group.

 

54.38  Following the break Councillor Gibson explained that the reason he was putting the amendments was that he considered the budget consultation inadequate. There had been limited consultation and no Area Panel had had a meeting to discuss the budget.

 

54.39  Councillor Gibson proposed the following amendments to the committee.  The amendments were seconded by Councillor Mears.  

 

          2.2 – That the Housing & New Homes Committee agree that an urgent meeting of all area panel reps, housing officers and interested elected members be held to obtain feedback on capital programme priorities and revenue savings on the 2016/17 budget, and this feedback be passed onto Policy and Resources Committee on 11 February 2016 for consideration. 

 

          2.3 – That a full consultation and engagement exercise be undertaken with residents which is based on a programme agreed at an initial meeting with tenant only chairs, panel chairs and officers be held in September 2016.

 

          2.4 – That the results and recommendations from the consultation exercise in 2.3 be reported to the Committee with recommendations for the 2017/18 HRA revenue and capital budgets.

 

54.40  The Chair drew attention to page 24, paragraph 5.2, 5.3 and 5.4.  She stressed that there had clearly been resident consultation. There had been a city wide conference about spending priorities and residents had been free to ask questions.  There was already a tenant participation structure and she was keen not to involve more expenditure in order to have another structure. 

 

54.41  Councillor Gibson felt that the amendments would give tenants the opportunity to be more deeply involved in the budget process. 

 

54.42  Councillor Mears stated that the amendments would ensure that there was a proper consultation with tenants.  They currently felt disengaged with the budget process.

 

54.43  Councillor Hill expressed concern about the new paragraph 2.2.  This would be agreeing an urgent meeting which would report back to Policy & Resources Committee rather than this committee. 

 

54.44  Members voted on whether it was accepted that amendments 2.2, 2.3 and 2.4 be added to the recommendations.  Following a vote it was agreed by 6 votes to 4 that 2.2, 2.3 and 2.4 should be added to the recommendations. 

 

54.45  The Committee then voted on the amended recommendations.  Members voted by 4 votes to 6 for recommendation 2.1 (a) The recommendation was therefore not agreed.  Members unanimously agreed recommendation 2.1 (b).  Members voted by 4 votes to 6 for recommendation 2.1 (c).  The recommendation was therefore not agreed.  Members voted by 4 votes to 6 for recommendation 2.1 (d).  The recommendation was therefore not agreed.  Members unanimously agreed recommendation 2.1(e).  Members voted by 6 votes to 4 in favour of recommendations 2.2, 2.3 and 2.4. 

 

54.46  RESOLVED:-

 

(1)      That Housing & New Homes Committee recommend that Policy & Resources Committee:

 

(a)      Does not approve and recommend to Council the HRA revenue budget for 2016/17 as shown in Appendix 1.

 

(b)      approves a rent reduction of 1% in line with draft government legislation as detailed in paragraph 3.7.

 

(c)      Does not approve service charges and fees as detailed in Appendix 2 or delegates authority to the Acting Executive Director of Environment, Development & Housing to make further amendments to communal service charges and laundry charges (to ensure cost recovery) once notification of new contract prices (from April 2016) has been received.

 

(d)      Does not approve the capital programme expenditure and financing budget of £43.047 million for 2016/17 or note the 4 year programme as set out in Appendix 3.

 

(e)      notes the Medium Term Financial Strategy and 30 year financial projections shown in Appendix 4.

 

(2)                That an urgent meeting of all area panel representatives, housing   officers and interested elected members be held to obtain feedback    on capital programme priorities and revenue savings on the 2016/17 budget, and this feedback be passed onto Policy and Resources Committee on 11 February 2016 for consideration.

 

(3)                That a full consultation and engagement exercise be undertaken with        residents which is based on a programme agreed at an initial meeting     with tenant only chairs, panel chairs and officers to be held in          September 2016.

 

(4)                That the results and recommendations from the consultation exercise in (3) above be reported to the Committee with recommendations       for the 2017/18 HRA revenue and capital budgets.