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Subject:
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Housing Revenue
Account Budget & Capital Investment Programme 2022/23 and
Medium-Term Financial Strategy
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Date of Meeting:
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24 February 2022
10 February 2022 – Policy &
Resources Committee
19 January 2022 – Housing Committee
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Report of:
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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 2022/23 as required by the Local
Government & Housing Act 1989. Members are required to consider
the revenue budget proposals including investments and
re-investments 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 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.
1.3
Although the HRA is not subject to the same funding constraints as
the General Fund, it is a ring-fenced account within the General
Fund and 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 costs
with comparator organisations is used to identify opportunities for
better economy, efficiency and service delivery.
1.4
Investment continues within the HRA to ensure council homes are
safe and 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 2022/23 is a total of
£85.077m covering the following areas:
•
£56.128m on Delivery of New Council Homes
•
£20.335m on Improving Housing Quality & Standards
•
£4.457m on Sustainability & Carbon Reduction
•
£2.915m on Tackling Inequality
•
£1.242m on Supporting well-run services for the city
2
RECOMMENDATIONS:
That the Housing
Committee:
2.1
Approves a rent increase of up to 4.1% in line with government
legislation as detailed in paragraph 4.9 of the report.
2.2
Approves the service charges and fees as detailed in Appendix 2 to
the report.
2.3
Notes the Medium-Term Financial Strategy and 30-year financial
projections shown in Appendix 4 to the report.
That Housing Committee approves and recommends to Policy &
Resources Committee:
2.4
That the updated HRA Revenue Budget for 2022/23 as shown in
Appendix 1 to the report be agreed and recommended to full Council
for approval;
2.5
That an earmarked reserve of £1.500m for the Covid-19
recovery work required to clear the backlog of responsive repairs
and voids be set up as per paragraph 5.1 of the main report.
2.6
That a contribution to the rent reduction reserve of £1.200m
be made from the general reserves held by the HRA as per paragraph
5.1 of the main report.
2.7
That a contribution to the Sustainability and Retrofit reserve of
£1.200m be made from the general reserves held by the HRA as
per paragraph 5.1 of the main report.
2.8
That the Capital Programme Budget of £85.077m for 2022/23 be
agreed and notes the 3-year programme as set out in Appendix 4 to
the report and recommended to full Council for approval; and
That Full Council:
2.9
Approves the updated HRA Revenue Budget for 2022/23 as shown in
Appendix 1 to the report.
2.10 Approves the
Capital Programme Budget of £85.077m for 2022/23 and notes
the 3-year programme as set out in Appendix 3 to the report.
3
HRA BUDGET STRATEGY
3.1
The HRA Budget aims to balance the priorities of both the council
and council housing residents within the context of the
council’s Housing Strategy, HRA Asset Management Strategy and
the Housing Committee’s priorities and work plan 2019-23
which set out the overall direction for Housing in the city over
the 4-year period. As well as these commitments, the budget
strategy anticipates the significant legal and regulatory changes
we expect to follow from the post Grenfell review of building
safety through the Building Safety Bill and the proposals that will
change how social landlords operate encompassed in the Social
Housing White Paper. The investment required
on these items is still evolving, and as a result the revenue and
capital budgets as well as the reserves position outlined in the
paper may require adjustment in 2022/23 and/or later
years.
3.2
The Budget Strategy also reflects the council’s decisions,
following extensive consultation, concerning the delivery of
customer service, quality assurance, responsive repairs, and empty
property refurbishments, planned maintenance and improvement
programmes, and major capital projects to council housing stock
following the expiry of the previous contractual arrangements in
March 2020. Most significantly, this included the insourcing of the
Housing Repairs & Maintenance service.
Housing Committee
Priorities and Work Plan – 2019-2023
3.3
The priorities and work plan for the Housing Committee and Housing
service for the four years between 2019-2023 were agreed in
September 2019 in order to inform future reporting to Committee on:
key areas of officer focus and delivery; budget strategy, asset
review, investment plans and resource allocation; resident
engagement and formal consultation; engagement and consultation
with partners and key stakeholders.
3.4
Key priorities of the Work Plan in relation to the Housing Revenue
Account Budget & Capital Investment Programme 2022/23 are:
Priority
1: Improving Housing Supply
To respond to the opportunities to increase housing supply
following the lifting of the HRA borrowing cap and deliver new
council homes utilising the cross-directorate housing delivery team
to drive projects forward. Since May 2019 there have been 270
additional council homes delivered through the New Homes for
Neighbourhoods, Hidden Homes, and the Home Purchase programme.
There are a further 276 new council homes currently on target be
delivered by May 2023, this will be achieved by:
1. Continuing
to deliver new build projects under the ‘New Homes for
Neighbourhoods’ programme.
2.
Maintaining the Hidden Homes programme to refurbish and convert
under used or unused spaces within existing council stock into new
homes.
3. Where
needs are assessed, creating a 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.
4. Purchasing
homes under the ‘Home Purchase Policy’ and seeking
opportunities to purchase homes supplied as part of new housing
developments in the city, typically known as ‘S106
sites.
5.
Commissioning new, adapted homes and ensuring best use of existing
adapted / accessible housing in order to promote independent
living, which has been demonstrated to deliver significant cost
benefits.
6. Supporting
households wanting to downsize to increase the supply of available
family housing.
Priority 2: Improving Housing Quality
7. Continue
to meet the council’s landlord obligations with regards to
health and safety, including continuing to review and enhance fire
safety measures for residents.
8. Review and
plan for future investment by utilising the results of the Stock
Condition Survey of housing stock which was undertaken in early
2020. The council will continue to undertake a rolling 20% of
surveys each year over the next five years to ensure all the
council housing stock is surveyed.
9. Continue
to respond to emerging guidance around building safety standards
and the draft Building Safety Bill following the Grenfell Tower
tragedy.
10. Anticipate emerging guidance arising from Social Housing White
paper, including a review of the Decent Homes Standard, which sets
the minimum quality that social homes should meet, and more
consistency in safety measures across social and private rented
housing.
11. To work in consultation with tenants and leaseholders to agree
planned maintenance, improvement programmes and major capital
projects based on updated information on our stock.
12. Continue to promote the highest possible 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 seek to maintain 100% achievement of the council’s
housing stock meeting the Decent Homes Standard 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 activities
(e.g. Transport). To support the city’s objective of becoming
carbon neutral by 2030.
15. Support for improvements and initiatives to reduce fuel poverty
will be maintained and enhanced where possible.
16. Support early actions to improve public areas of the
council’s housing estates through the environmental
improvements budget to enable the council to respond with greater
speed to issues impacting upon tenants’ satisfaction levels
with their neighbourhood as a place to live.
Priority
3: Improving Housing Support
17. Ensure that as services are reviewed, they are accessible and
safe for all.
18. Continue investment in specialist tenancy management and
support services to support vulnerable council housing residents
and work with Community Safety to resolve housing issues and
harassment in a timely manner.
19. Early intervention for families struggling with accommodation,
including 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. Support people to ‘downsize’ when they choose and
provide a range of options for them, including accessible tools to
support decision making.
22. Promote better links between seniors housing schemes and
surrounding communities.
23. Ensure new housing development includes community spaces, where
need is identified, and resources allow.
24. Ensure the new repairs and maintenance service meets the needs
of tenants and leaseholders.
25. Ensure tenants continue to be supported during and after the
effects of the COVID-19 pandemic.
4
HRA REVENUE BUDGET PROPOSALS 2022/23
4.1
The proposed HRA budget for 2022/23 is shown in Appendix 1
alongside the main budget variations, areas for investment and
other changes in resources.
4.3
Inflation of 2% has been applied to Direct Employees, and 1% to
Premises, Transport and Supplies & Services. Adjustments are
made to specific areas based on known data, which can be above or
below the standard 1% applied. Most income budgets are zero-based
(that is they are recalculated each year rather than changing
incrementally) and therefore budgets are estimated based on known
increases in costs or inflation. Total expenditure inflation
provided for is £0.998m and income inflation of
£2.496m.
Investments
4.4
The budget provides new investment of £3.465m for priority
areas identified, these are detailed in table 1 below.
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Table 1 - Identified priority areas for
investment
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£’000
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A review for the cost of repairs &
maintenance was undertaken. This identified that there is a
potential pressure coming from external sources i.e. inflation and
cost of sub-contractors resulting in a requirement to increase
costs associated with the new contractor’s framework for
repairs and maintenance.
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1,218
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A review for the cost of voids was
undertaken. This identified that there is a potential pressure
coming from external sources i.e. inflation and cost of
sub-contractors resulting in a requirement to increase costs
associated with the new contractor’s framework for
voids.
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754
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The cost of harmonisation of staff
contracts was met from reserves during 2021/22 due to uncertainty
around the final costs. The cost has been reviewed and is now
recognised as part of the main budget for repairs & maintenance
with this amount relating to staff transferred from
Mears.
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520
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Additional investment required for the
vacancies held by Mears upon transfer these are being recruited in
order to deliver the repairs & maintenance service following
the decision to bring the service back in house. These are costs
linked to the harmonisation of contracts for those vacant posts at
the time of transfer.
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263
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Net increase in salary costs to reflect
the new agreed structure within the HRA to meet the latest key
priorities.
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217
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Investment for an additional year for the
Transition team including a key procurement role to continue to
assist with the continued implementation of the in house Repairs
and Maintenance Service.
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230
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Increased investment in staffing costs to
ensure statutory Health & Safety works are carried out on
tenants’ homes.
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178
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The Housing service entered into a
twenty-year lease agreement with Aviva Investors
for the Housing Centre on 2 July 2010,
expiring on 1 July 2030. The lease allows for rent reviews
every five years, the latest of which was undertaken in July 2020.
Based on current market conditions a negotiated figure of
£85k increase was agreed bringing the total rent payable up
to £270k and was seen a reasonable increase to accept from
the council’s corporate Estates Team.
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85
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Total investments
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3,465
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Other
Key Changes
4.5
The 2021/22 budget also provides for a range of other changes in
expenditure and income. These are outlined in the table below and
in Appendix 1 to this report.
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Table 2 - Other Changes to
resources
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£’000
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Increase in Employers National Insurance
contributions of 1.25%.
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171
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Increase in the capitalisation of
Salaries following a review of the capital projects being
undertaken during 2022/23.
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(440)
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Estimated increase
in the cost of Responsive Repairs and Voids works in relation to
the Temporary Accommodation units held within the HRA. This is a
result of the number of HRA Temporary Accommodation units
increasing during
2021/22.
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103
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Net increase in other minor budget
changes.
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64
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Net decrease in Revenue Contribution to
Capital.
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(1,774)
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Net decrease in financing
costs.
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(182)
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Net increase in rental income from the new homes’ rents.
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(461)
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Net increase in Service charge income from council tenants to
recover costs.
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(344)
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Change in the treatment of Leaseholder
Major Work income. Historically this has formed part of the revenue
budget figures and results in adjustments year-on-year to reflect
major works completed on leasehold properties. This change will see
this income treated as capital funding and will be reported in the
capital programme tables instead. This income will be managed on
the HRA Balance Sheet.
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896
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Total Other Changes
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(1,967)
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4.6
The net revenue budget results in a ‘surplus’ of
£19.867m which is then used to provide the Revenue
Contribution to Capital (shown within expenditure at Appendix 1) in
support of the capital programme.
4.7
This surplus is not sufficient to meet the capital investment in
existing homes during 2022/23 as outlined in Appendix 3 to this
report. The impact of this means that borrowing will be required to
meet this level of investment. The resources available to fund the
capital programme will be kept under review during the financial
year and any borrowing decision will be made in line with treasury
experts’ advice. A review of the HRA’s reserves
and borrowing position will be carried out on a regular basis and
reported in accordance with the council’s financial
regulations and procedures.
Rents and Service
Charges
4.8
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, the Target Rents
will apply to the granting of all new tenancies.
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Table 3 – Average weekly rent
increases
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Rent Type
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21/22 Average weekly rent
£
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22/23 Average weekly rent
£
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% Increase
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Social
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86.65
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90.20
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4.1%
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27.5% LW
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129.30
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134.60
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4.1%
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37.5% LW
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174.83
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182.00
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4.1%
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LHA
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174.24
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174.24
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0.0%
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4.10 When setting the
Affordable rents and Living Wage rents for individual properties,
consideration is given to the prevailing rates for Local Housing
Allowance (LHA) and the national living wage for the new financial
year. This is compared against the 4.1% increase to ensure they do
not exceed the permitted uplift.
4.11 Rents are not
calculated to include 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 2022/23 are set out in Appendix 2.
5
HRA RESERVES and one-off funding 2022/23
1. Financial
risk relating to the post pandemic backlog of responsive repairs
works is a significant financial issue for 2022/23. Whilst revenue
budgets have been increased to reflect an increase in the contract
and material costs for business as usual in 2022/23, there is still
a need to clear the Covid-19 related backlog of responsive repairs
works, this requires funding from reserves. Following a review of
the service needs and other financial management measures, an
estimate for the cost of the backlog of works is £1.500m;
this needs to be earmarked within the reserves to ensure one-off
funding is available during the year to cope with this
pressure.
2. It is
anticipated that the reserves set aside to assist with delivering
new homes at either social rent or at 27.5% Living Wage rent levels
will be exhausted by April 2022. In order to continue this
programme under current policies it is considered prudent to
earmark £1.200m from general reserves for this use. This will
need to be kept under review in line with the work required around
assessing the strategic housing needs across Brighton & Hove
during 2022. This piece of work will determine the approach
required for the delivery of new affordable housing in the city and
the extent to which this reserve is required.
3. In the
2020/21 budget an earmarked reserve £4.010m was set up
used to contribute to funding the cost of delivering sustainability
initiatives in the HRA in relation to the city’s target of
achieving zero carbon status by 2030 and retrofit work required on
existing housing stock. A new retrofit task force in partnership
with neighbouring authorities, linked to the Greater Brighton
Economic Board, is underway to review the investment required for
sustainability measures as well as the funding that may become
available from Central Government. To further contribute to the
funding of future sustainability and retrofit works an additional
£1.200m has been earmarked from general reserves, this
reserve will be kept under review based on the outcome of the work
resulting from the retrofit task force.
4. Additional
investment is highly likely to be required as a result of the
outcome of the draft Building Safety Bill and the recommendations
of the “Building a Safer Future” programme delivered by
the Department of Levelling Up, Housing & Communities (DLUHC)
to improve safety and minimise the risk of fire in high rise
buildings. The nature and cost of this investment remains unknown,
and officers will review the financial position as this becomes
clearer and assess all financing options available.
5. There are
also risks associated with the general 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. The Social Housing White paper and related
consultation also considers other health & safety
improvements. The nature and cost of this investment is also
unknown, officers will review the financial position as this
becomes clearer and assess all financing options available.
5.2
Other reserves are in place to support specific areas of spend
within the HRA, a list of all reserves can be found at Appendix 1
to this report.
5.3
General reserves are kept under review by officers and monitored in
line with the increasing demands on the HRA resources to meet
statutory requirements and other key priorities. The remaining
£0.447m of general reserves is considered to be low in
relation to identified risks but because of the nature of the
reserves if funding were required urgently for health & safety
works then officers can recommend that reserves are reviewed and
their use switched subject to availability or, if the works
required are capital in nature, works could be funded by borrowing
or DRF depending on the in-year capital programme position. Changes
to reserves require Policy & Resources committee approval and
so would be presented accordingly if officers deemed this
necessary.
5.4
The council’s Section 151 Chief Finance Officer has reviewed
the level of reserves and provisions in accordance with the
requirements of Section 25 of the Local Government Act 2003 and
considers them to be adequate and reasonable for their
purpose.
5.5
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 2022/23 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
be reported to Committee.
6
HRA CAPITAL PROGRAMME 2022/23
6.1
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 current HRA Asset
Management Strategy and the Asset Strategy Review. The
service is finalising the draft HRA Asset Management Strategy
2022-27 ahead of resident consultation. The Programme also
reflects the delivery of planned maintenance, improvement
programmes and major capital projects to council housing
stock.
6.2
The council has continued to face significant challenges this
financial year in the delivery of its repairs and maintenance
service and planned maintenance and improvement programmes, not
only managing a new in-house repairs and maintenance service but
also dealing with the challenges that the COVID-19 pandemic
continues to present. The capital investment programme reflects the
level of investment to maintain stock to the required standard
whilst providing a programme that is deliverable during the next
financial year.
6.3
This report recommends that for 2022/23, a new capital budget of
£27.707m is approved for investment in existing housing
stock, £53.128m for the supply of new affordable housing and
a further £1.242m supporting well-run services for the
city.
6.4
The total proposed programme for 2022/23 and the funding
arrangements totalling £85.077m are shown in Appendix 3. This
programme includes budget of £36.766m 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 where necessary.
Improving Housing Quality
6.5
The 2022/23 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.
6.6
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
needs whilst providing safe, good quality housing and support
services, and also supporting new housing supply and financial
viability for the HRA. Other assets, such as car parks and garages,
receive investment to ensure both health and safety compliance and
best use of these assets.
6.7
Housing Fire, Health & Safety and our continued joint work with
East Sussex Fire & Rescue Service (ESFRS) in response to
housing fire health & safety matters arising following the
Grenfell Tower tragedy remains a priority. In particular,
concerning fire doors and sprinklers but also including other
measures. In light of this, the programme continues to provide
investment for potential additional works arising from the
government’s review of the Grenfell fire tragedy and
forthcoming Building Safety Bill. However, the response is still
evolving, and these investments may require adjustment in 2022/23
and/or later years.
6.8
The Capital Programme targets investments that will ensure that the
HRA maintains and improves, where possible, the quality of housing.
The programme will support the delivery of the following
commitments:
1. To ensure
that homes are compliant with health and safety standards and
emerging building safety legislation.
2. To
maintain 100% achievement of properties meeting the
government’s Decent Homes Standard and the local Brighton
& Hove Standard over the medium term.
3. To ensure
that all homes are as suitable as practicable for the needs of
their occupants, in line with council policy. For example, there is
a substantial investment commitment to providing adaptations and to
reducing overcrowding in the programme.
4. To ensure
homes are energy efficient and that there is continued improvement
in the energy performance of the housing stock, including through
modern heating systems to reduce carbon emissions and
resident’s fuel costs.
5. To
continue working closely with residents to help increase levels of
resident satisfaction with the quality of their home and
neighbourhood and to support proactive investment in and
maintenance of the council housing stock to enable a preventative
approach that allows for the ongoing reduction in the level of
responsive repair needs.
6.9
Additionally, 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.
Sustainability and Carbon reduction
6.10 Helping
residents to live in well-insulated, efficiently heated, healthy
homes addressing fuel poverty issues remains a key long-term
objective, which is supported through the capital programme. A
dedicated team is being put in place to focus on delivering on the
council’s commitment to improving the energy efficiency of
homes by 2030.
6.11 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 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, Housing will work collaboratively to ensure
contributions toward making the city carbon neutral by 2030 are
made.
6.12 Housing
Committee noted a report presented to the committee on
17th November 2021 that outlined the plans going forward
for making the city carbon neutral by 2030. This reported listed
the following as key areas of work to consider:
1.
Delivery of up to 1,500 solar PV panels; this investment is
included within the capital investment programme for the next 3
years.
2.
Identifying opportunities to work collaboratively with neighbouring
authorities, including with local partners on a ‘Retrofit
Taskforce’ within the Greater Brighton region led by Lewes
and Eastbourne authorities and the University of Brighton.
3.
Scoping out a new heating and hot water contract to offer low/zero
carbon options from 2023 onwards.
4. An
options appraisal for low/zero heating and hot water at communal
blocks in north Whitehawk currently served by gas has been
completed, this could lead to 265 flats moving from gas to air
source heat pumps over the next 2-3 years.
Delivery of new
Council Housing
6.13 Delivering new
affordable housing remains a key investment priority for the HRA
and is supported in the capital programme during 2022/23. Dedicated
staffing resources to continue to deliver on this priority are
included in the revenue budgets.
6.14 Delivering new
council homes under the Home Purchase Policy scheme remains a key
source of delivery for the HRA. The capital programme provides
budget of £23.375m for the purchase of up to 95 properties.
The use of these properties will continue to be reviewed in line
with the strategic housing need across the city and
will see the properties used for either General Needs
or Temporary Accommodation purposes. Keeping the flexibility in the
programme for the use of properties allows officers to react to any
changes in circumstances across the city.
6.15 In addition to
the Home Purchase Policy, the delivery of 10 properties under the
Housing First programme is provided for. These are the final 10
properties under the current programme for which capital and
revenue funding is available. Currently there is no indication at
this time that there will be any further capital or revenue funding
made available from Government to increase this provision. Officers
will continue to monitor the situation and if this changes then it
will be reported back to members through the Housing Supply Member
Board and Housing Committee where necessary.
6.16 The provision of
£3.000m has been set aside in the capital programme for
opportunities which may arise for the general acquisition of
properties in the HRA, supplementing the £3.000m approved as
part of the 2021/22 budget report. This augmented budget of
£6.000m can be used for purchases of homes outside of the
Home Purchase Policy to be used for General Needs or Temporary
Accommodation but will be dependent on the individual business
case, which will be subject to review by the Housing Supply Member
Board and subsequent approval by Housing Committee.
6.17 Other delivery
routes included in the capital programme include the continuation
of the Hidden Homes programme, where work continues on utilising
under-used spaces. As well as this, work continues at pace on the
two sites at Portslade and Coldean that are being purchased from
Homes for the City of Brighton & Hove LLP and on various
projects under the New Homes for Neighbourhoods programme.
6.18 Only projects
that have received scheme and budget approval have been included in
the capital programme, this is a result of the need for an
individual business case for each project to be signed off. The
inclusion of any further budget would not be considered prudential
or sufficiently robust to support its inclusion without concrete
plans, with the detailed business cases needing full sign off from
Committee.
7
HRA MEDIUM TERM & 30 YEAR FINANCIAL FORECASTS
7.1
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.
7.2
The medium term and 30 year financial forecasts are provided in
Appendix 4 along with the assumptions and risks identified for
income and expenditure.
7.3
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. Those programmes
which have been approved at Committee are included in the plan and
these total a further 400 homes.
7.4
Revenue reserves have been maintained as per the reserves balances
at April 2022, 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 risks outline in paragraph 5.1. For
forecasting purposes, a working balance of £3.000m is assumed
to be maintained as a minimum during the course of the 30 year
forecast but this is subject to annual review and recommendation by
the Chief Finance Officer.
7.5
The government 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 4
assumes rent increases of CPI plus 1% for 3 years from 2022/23 and
increases at CPI thereafter. Assuming other factors remain
stable, this will help to sustain the HRA in the medium term.
8
ANALYSIS & CONSIDERATION OF ANY ALTERNATIVE OPTIONS
8.1
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 24 February 2022. 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, currently 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.
9
COMMUNITY ENGAGEMENT & CONSULTATION
10
CONCLUSION
10.1 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.
10.2 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.
11
FINANCIAL & OTHER IMPLICATIONS:
Financial
Implications:
11.1 The financial
implications are contained within the main body of the report.
Finance Officer Consulted:
Craig
Garoghan
Date: 10/01/2021
Legal
Implications:
11.2 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 when the Building Safety Bill
currently making its way through Parliament is enacted. The
measures outlined in the report will assist the council in
discharging those duties.
11.3 The Housing and
Local Government Act 1989 regulates the HRA. The requirement in the
Act to set a balanced budget is noted in section 10 of the
report.
Lawyer
Consulted: Liz
Woodley
Date: 16/12/21
Equalities
Implications:
11.4 The HRA budget
funds services for people with a range of needs including those
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:
11.5 The HRA budget
will fund a range of measures that will benefit and sustain the
local environment. This capital programme supports the affordable
warmth and fuel poverty strategy brought forward from Public
Health. Improving housing energy efficiency is a key
contributor to the Carbon Emissions reduction commitment and will
help to reduce the number of residents affected by fuel poverty and
rising energy costs.
11.6 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:
11.7 Financial risks
have been assessed throughout the development of the
council’s HRA annual budget, Medium Term Financial Strategy
and 30 year financial forecast. A number of key sensitivities
and scenarios continue to be reviewed to ensure that the service
understands the business impact of decision making and include
areas such as:
·
Impacts of the government’s Housing & Planning Act and
Welfare Reform legislation;
·
Potential impact of the post Grenfell tragedy review of building
regulations and / or standards;
·
Potential impact of the Social Housing White Paper;
·
Inflationary risk where expenditure inflation is greater than
income, particularly the risks around build cost inflation and
future governments’ social rent policies;
·
Managing interest rate fluctuations and the debt portfolio;
·
Long term capital and maintenance responsibilities compared with
available resources; and;
·
Balancing regeneration and redevelopment needs with tenants’
priorities.
SUPPORTING DOCUMENTATION
Appendices:
1
Appendix 1: HRA Revenue Budget 2022/23
2
Appendix 2: Fees and Service Charges 2022/23
3
Appendix 3: Capital Programme and Funding 2022/23 –
2024/25
4
Appendix 4: HRA Medium Term Financial Strategy & 30 Year
Financial Forecast
Documents in Members’ Rooms
None
Background Documents
None