Policy & Resources Committee

 

Date of meeting:  9 February 2023

 

Agenda Item 124

 

 


 

 

 

 

 

officer Amendment

 

HRA Housing Revenue Account Budget & Capital Investment Programme 2023/34 and Medium-Term Financial Strategy

 

 

1.           Minor Revision to the wording of the recommendations in the report. To read as follows:

 

That Policy & Resources Committee agree:

 

2.7 That the updated HRA Revenue Budget for 2023/24 as shown in section 4 of the Housing Committee report (page 548) and Appendix 1 (page 559) to that report be agreed and recommended to Full Council for approval as amended by the Joint Labour/Green amendment set out on page 539 and described in the ‘Implications of amendments’ document on pages 517-537.

 

2.8 A capital programme of £57.791m for 2023/24 and recommends to Full Council for approval the 5-year programme as set out in Appendix 3 (page 569) as amended by the Joint Labour/Green amendment set out on page 539 and described in the ‘Implications of amendments document on pages 517-537.

 

2.           Update on page numbers referred to in Implications of amendments (pages 517 – 537). Changes in red.

 

 

 

 

 

 

 

 

 

 

Implications of amendments agreed at January 18th Housing Committee – Agenda Item, 60 Housing Revenue Account Budget & Capital Investment Programme 2023/24 and Medium-Term Financial Strategy

Member decisions made at the January 18th Housing Committee to the Housing Revenue Account Budget & Capital Investment Programme 2023/24 and Medium-Term Financial Strategy report were based on agreement to the attached joint Labour / Green Amendment to item 60.

The committee agreed amendments impact on the following paragraphs.

The paragraph below explains the implication of amendment 2, this was not in the original Housing Committee report and should be read after paragraph 4.7 of the 18th January Housing Committee report pack.

 

As outlined in table 3 below social rents are to be uplifted by the permitted 7%, as amended by Housing Committee a more tailored approach is being taken for the Living Wage rents. The uplifts for these rent levels are to be capped at the average cash increase for social rents. This equates to a 4.5% and 3.4% increase for 27.5% Living Wage rents and 37.5% Living Wage rents respectively. LHA Rates are frozen at the current rates.

 

Paragraph 4.11 of the 18th January Housing Committee report pack should now read a 15.5% increase and 16.7% increase for gas and electricity respectively instead of 50%.

 

Amendment 3 impact (Paragraph 6.13)– ‘Increase the home purchases in the Capital programme by adding 15 purchases for TA use’.

 

The introduction paragraph in appendix 4 to the 18th January Housing Committee report pack should now read.

The focus for the Medium Term Financial Strategy (MTFS), outlined in Appendix 4, will remain on delivering the key priorities. However, to ensure Value for Money is maintained, an assumption has been made that the MTFS will identify efficiencies of c.0.5% per annum of expenditure budgets (excluding financing costs). This will also include a review of all income streams during 2023/24 to ensure the HRA maximises all of its income streams. As amended by Housing Committee, this includes ‘exploring increasing commercial rents in HRA properties by 3% (with discretion to waive increases where social value may be at risk), raising up to £17k to add to the working balance’.

 

 

 

 

 

 

 

The committee agreed amendments impact on the following tables.

Revenue Implications:

Replacement for table 1 on page 144 548

Table 1 – 2023/24 Revenue Budget changes

 2022/23 Adjusted budget

2023/24

Inflation

2023/24

Investments

2023/24

Other Changes

2023/24 Original Budget

2023/24

FTE

Expenditure

 £'000

 £'000

 £'000

 £'000

 £'000

 

Housing Investment & Asset Management

4,997

312

0

24

5,333

      64.6

Housing Management & Support

5,846

607

0

(76)

6,377

      15.1

Housing Strategy & Supply

1,515

51

0

(110)

1,456

      37.6

Repairs & Maintenance

14,112

990

1,146

(54)

16,194

    201.4

Tenancy Services

12,233

1,153

438

219

14,043

    214.7

Revenue Contribution to Capital

19,096

0

0

185

19,281

 

Capital Financing Costs

5,865

0

0

489

6,354

 

Total Expenditure

63,664

3,113

1,584

677

69,038

    533.5

Income

 £'000

 £'000

 £'000

 £'000

 £'000

 

Rents Dwellings

(55,954)

(3,946)

0

(808)

(60,708)

 

Rents Car Parking / Garages

(1,000)

(119)

0

(17)

(1,136)

 

Commercial Rents

(600)

0

0

0

(600)

 

Service Charges

(5,924)

(396)

0

15

(6,305)

 

Other Income

(186)

(3)

0

(100)

(289)

 

Total Income

(63,664)

(4,464)

0

(910)

(69,038)

 

DEFICIT / (SURPLUS)

0

(1,351)

1,584

(233)

0

 

 

 

 

 

 

 

 

 

 

 

Replacement for table 3 on page 146 550

Table 3 - Average weekly rent increases

 

Rent Type

No. of tenancies

22/23 Average weekly rent

 

£

23/24 Estimated average weekly rent              £

% increase

Social

11,209

89.7

95.98

7.0%

Affordable at 27.5% Living Wage

46

137.55

143.75

4.5%

Affordable at 37.5% Living Wage

139

185.06

191.36

3.4%

Affordable at LHA

206

184.65

184.65

0.0%

Affordable at LHA TA

167

158.13

158.13

0.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Replacement for table for budget reconciliation table in appendix 1 on page 155 559

Budget Reconciliation

 

 

Inflation

 £'000

 £'000

Inflation related to the cost of utilities

 885

Inflation related to the cost of Repairs & Maintenance for works and materials

 938

Inflation related to salary costs

 750

Corporate Inflation rates applied to other expenditure (including SSC's)

 540

 

Total Expenditure Inflation

 3,113

Income

Rent inflation

(3,946)

Service Charge inflation as per appendix 3

(396)

Corporate Inflation rates applied to other income

(122)

Total Income Inflation

(4,464)

Total Inflation related changes

 

(1,351)

Investments

 £'000

 £'000

Expenditure

 

 

Investment in the HRA apprenticeship programme.

     426

 

Investment required for the Transition Team, including a key procurement role to assist with the continued implementation and optimisation of the in-house Repairs and Maintenance Service.

     245

 

Net revenue investment in resources to comply with Health & Safety requirements e.g. permanent Electrical Testing Resource.

     335

 

Professional fees associated with the resourcing of specialist support for materials supply chain re-procurement-required by the in-house Repairs and Maintenance service.

     140

 

Investment in Tenancy Services that will ensure further support is provided for the increasing number of complex tenant’s’ cases, Anti-Social Behaviour issues and wider stock growth in the HRA.

     181

 

Short term increase in the bad debt provision to reflect the current collection rate.

       92

 

Increased investment in the tenancy fraud service.

       60

 

Management of ASH Die back works on HRA estates.

       55

 

Medium term plan to replace furniture at the council’s Seniors Housing schemes.

       50

 

Total Investments & Reinvestments changes

 

  1,584

Other Changes

 £'000

 £'000

Expenditure

 

 

Increase in Financing Costs

 489

Salary changes to ensure funding matches changes affecting all staff, including the low pay implementation and the assumed NJC pay award for 2023/24.

(160)

Direct Revenue Funding (DRF) Adjustment

 185

Net increase of other changes to bring budgets in line with expenditure

 163

 

 Total Expenditure Other Changes

677

Income

 

Increase in new Supply rents

(808)

Other changes to bring budgets in line with income

(102)

 

 Total Income Other Changes

 

(910)

Total Other Changes

(233) 

Deficit / (Surplus)

-


Replacement for table in appendix 2 on page 161 565

 

 

Tenants Charged (No.)

Approx. not eligible for Housing Benefit (No.)

2022/23 Average Weekly Charge      

£

2023/24 Average Weekly Charge         £

Average Increase/Decrease        £

Average Increase/Decrease    %

Comments

Service Charges Eligible for Housing Benefit

 

 

 

 

 

 

 

Seniors Housing - Common Ways

876

209

£11.46

£11.01

-£0.45

-4%

Charge increased in previous years to reflect increase in cleaning charge.

Communal Cleaning

5,465

2,996

£3.22

£3.62

£0.40

12%

The increase reflects pay and price inflation.

Seniors Housing - Laundry

850

191

£2.80

£3.20

£0.40

14%

The change is as a result of higher electricity prices and reflects 15.5% of the utility inflation increase being introduced in 2023/24.

Seniors Housing - Intensive Management

873

195

£23.42

£24.67

£1.25

5%

Increase relates to costs incurred in providing the IH service.

Grounds Maintenance

5,777

2,777

£0.86

£0.93

£0.07

8%

The increase reflects the increased costs of the service
due to recent revisions to the City Parks costings and charges to reflect actual costs.

TV Aerials

5,837

2,854

£0.84

£0.91

£0.07

8%

The increase reflects annual servicing contract inflation and reactive repairs.

Door Entry Servicing and Maintenance

4,020

2,358

£0.57

£0.62

£0.04

7%

The increase reflects contract inflation.

Electricity - Communal Ways

5,482

2,879

£1.01

£1.17

£0.16

16%

The change is as a result of higher electricity prices and reflects 15.5% of the utility inflation increase being intrododuced in 2023/24.

Lift Servicing and Maintenance

2,606

1063

£1.07

£1.20

£0.13

12%

The increase reflects annual contract inflation and reflects
reactive repair costs.

 

 

 

 

 

 

 

 

 

 

 

Tenants Charged (No.)

Approx. not eligible for Housing Benefit    (No.)

2022/23 Average Weekly Charge

 £

2023/24 Average Weekly Charge         £

Average Increase/Decrease        £

Average Increase/Decrease    %

Comments

Service Charges NOT Eligible for Housing Benefit

 

 

 

 

 

 

 

Water Charges

242

N/A

£4.98

£5.61

£0.63

13%

The increase is due to forecast inflation increase for water charges.

Communal Heating – Electricity

127

N/A

£11.77

£13.59

£1.82

15%

The change is as a result of higher electricity prices and reflects 15.5% of the utility inflation increase being intrododuced in 2023/24.

Communal Heating – Gas

1,234

N/A

£8.13

£9.39

£1.26

15%

The change is as a result of higher electricity prices and reflects 16.7% of the utility inflation increase being intrododuced in 2023/24.

Garages and Car Parking

2,629

N/A

£9.88

£10.88

£1.00

10.1%

CPI September inflationary increase.

Mobility Scooter and Cycle Storage

35

N/A

£2.60

£2.86

£0.26

10.1%

CPI September inflationary increase.

 

 

 

 

Capital Implications:

Replacement for table in appendix 3 on page 165  569

 

 

For Approval

For info

 

 

Proposed Budget 2023/24
£'000

Profiled Budget 2023/24
£'000

Total Budget 2023/24
£'000

Provisional Budget 2024/25
£'000

Provisional Budget 2025/26
£'000

Provisional Budget 2026/27
£'000

Provisional Budget 2027/28
£'000

Description

Programme Expenditure

 

 

 

 

 

 

 

 

Delivery of New Council Homes

 

 

 

 

 

 

 

 

Home Purchase Policy

18,750

1,000

19,750

6,250

4,500

2,650

 

Continued delivery of the Home Purchase Policy. As amended 2023/24 budget would allow up to 75 properties. 25 properties in 2024/25 and 20 properties 2025/26 and 10 properties in 2026/27.

Other Acquisitions

 

5,205

5,205

                       

                     

                      

 

Budget for the purchase of properties outside of the Home Purchase Policy, where opportunities and business cases present
themselves.

Feasibility

350

 

350

300

200

                     

 

Feasibility budget required to bring forward the new supply pipeline.

Converting spaces in existing buildings

1,730

516

2,246

2,200

2,200

                     

 

Continued delivery of the Hidden Homes scheme where underutilised spaces are converted into new council homes.

Design Competition

682

1,625

2,307

                       

                     

                     

 

Previous budget approved for Frederick Street and Rotherfield Crescent profiled in the financial years to match the latest deliver programme.

Moulsecoomb Hub land

 

9,014

9,014

 

                     

                     

 

The appropriation is expected to take place during 2023/24. The November committee report requested further budget to bring the project up to the planning with final scheme and budget approval to be taken back to committee during 2022.The budget line reflects the approvals given to bring the scheme up to RIBA stage 3. Further detail can be found in the Housing Committee report from 22nd June 2022.

Windlesham Close

1,350

685

2,035

4,341

                      

                     

 

Approval given for this scheme at the 1st July 2022, the budget has been profiled to match the latest estimates of the cashflow.

Palace Place

                        

1,608

1,608

                     

                      

 

Approval given for this scheme at the 1st July 2022, the budget has been profiled to match the latest estimates of the cashflow.

Belgrave Day Centre, Portslade

934

                     

934

332

                     

                     

 

Purchase of 49 homes from HBH LLP at the Portslade site.

Coldean Lane, North of Varley Halls

6,160

(813)

5,347

857

                     

                     

 

Purchase of 127 homes from HBH LLP at the Coldean site. Final budget lines following the construction of homes during the previous financial years.

Total Delivery of New Council Homes

29,956

18,840

48,797

14,280

6,900

2,650

                     

 

Improving Housing Quality

 

 

 

 

 

 

 

 

Main Door Entry Systems & CCTV

817

 

817

700

700

700

700

Repair and replacement of Main Entrance Doors. Long term programme of door entry system replacements, as systems fail or reach the end of their serviceable life, with spare parts unable to be sourced. These two programmes are reviewed alongside each other and works coordinated where feasible to ensure value for money. Installation and upgrade of CCTV systems to increase security of blocks.

Water Tanks, Ventilation, Lighting & Lightning Protection & Fire Alarms

1,930

 

1,930

1,600

1,490

1,500

1,580

Projects help meet statutory requirements and ensure safety and welfare for residents through replacement and improvements.

Lifts

880

 

880

1,980

1,130

1,000

1,000

The lift replacement and upgrade programme is a long-term commitment to council residents. The majority of lifts have now been replaced since its inception, and the programme is under ongoing review to ensure it continues to provide good value for money.

Fire Safety & Asbestos Management

3,320

 

3,320

2,590

2,590

2,390

2,390

Effectively managing the risks of both fire and asbestos materials is an ongoing need. Includes both statutory requirements and provision for enhanced fire safety measures.  In particular, including provision for a programme of EWS1 surveys in 23/24.

Minor Capital Works

520

 

520

795

810

851

894

Investment in smaller capital repairs across the HRA stock as well as investing in car parks and garages.

Condensation & Damp Works

500

 

500

280

280

294

309

Health and welfare of council residents is assisted by tackling issues arising from condensation and damp in properties. The budget for 2023/24 has been increased following the tragic Rochdale Borough Homes case and will keep this budget under review.

Major Structural works

2,338

5,760

8,098

8,383

6,500

6,300

6,200

Meeting our landlord obligations through maintaining the structural and general external integrity of properties.

Major Empty Property works

220

 

220

220

220

220

220

Extensive refurbishment of empty homes prior to re-letting.

Cyclical Repairs & Decorations

1,384

 

1,384

1,605

1,188

1,247

1,309

External and common way repairs and decorations across the city help reduce ongoing costs and keep properties well maintained. Housing Investment and Asset Management team work closely with residents to ensure internal decorations in blocks are consistently delivered across the city.

Seniors Housing Improvements

330

 

330

330

330

200

200

Meets the identified need from November 2019 to invest in the council’s Seniors Housing schemes to improve security, accessibility and address any structural issues identified.  

Future capital projects

250

 

250

250

250

250

250

Specialist and other surveys to support future programmes.

Dwelling Doors

990

 

990

990

990

1,040

1,092

Replacing doors to properties with secure and efficient design helps residents feel safer. This programme includes the provision of fire-rated doors to dwellings where required.

Kitchens & Bathrooms

2,480

 

2,480

2,590

2,590

2,720

2,856

This budget helps to ensure homes comply with the Brighton & Hove Standard.

Rewiring - Domestic/ Communal

1,735

 

1,735

1,820

1,840

1,932

2,029

Safe and reliable and compliant electrical installations and efficient lighting are supported from this budget.

Windows

1,443

200

1,643

2,154

2,135

2,242

2,354

Window replacement programmes meet the council's landlord obligations, improve energy efficiency, warmth and reduce ongoing repair costs.

Roofing

1,223

 

1,223

1,205

1,100

1,155

1,213

Helps to extend the life of assets, improves insulation and reduces responsive repairs.

Sustainability & Carbon Reduction

                        

 

                       

                       

                     

 

 

 

Domestic/Communal Heating Improvements

2,230

 

2,230

2,530

2,640

2,772

2,911

Efficient and modern replacement heating systems improve thermal comfort, reduce carbon emissions and resident fuel costs.

Energy Efficiency & Low Carbon Heating

1,670

 

1,670

1,740

3,300

2,000

2,000

This programme will help take up a range of opportunities to further improve the energy rating of our homes and to identify projects that will help move towards zero carbon from our service delivery activities by 2030.

New Solar Panels Programme

440

800

1,240

1,540

1,540

1,000

1,000

Project Management support is now in place to deliver the solar PV programme, procurement of a new contract has begun and should be in place Spring 2023. We are planning a 3 year programme delivering up to 1000 new systems, budgets have been re-profiled on this basis.

Tackling Inequality

                        

 

                        

                       

                     

 

 

 

Environmental Improvements

625

100

725

360

360

360

360

This budget funds environmental and communal area improvement work based on resident priorities.
It also includes provision for the refurbishment of housing owned playgrounds (as reported to ETS Committee in January 2021).

Disabled Aids & Adaptations

1,600

 

1,600

1,600

1,600

1,600

1,600

Enabling vulnerable residents to continue to live independently in their homes through investment in housing adaptations.

Conversions & Extensions

660

 

660

700

730

750

750

Tackling overcrowding across the city is of key importance to ensure good quality housing.

Total Investment in existing Housing Stock

27,585

6,860

34,445

35,962

34,313

32,523

33,217

 

Total Other Projects

250

                      

250

250

100

100

100

 

Total Programme

57,791

25,700

83,491

50,492

41,313

35,273

33,317

 

Programme Funding

 

 

 

 

 

 

 

 

Revenue Contribution to investment in existing housing stock

19,281

19,281

18,757

19,830

18.313

18,589

24/25 to 27/28 figures are illustrative and will be adjusted accordingly as the 30 year business plan is updated.

Borrowing

31,187

20,872

52,059

24,103

19,953

16,165

14,728

Borrowing required to fund capital investment.

HRA reserves

1,090

 

1,090

4,800

 

 

 

Useable revenue and capital reserves.

Capital Receipts

525

                     

525

                       

                     

 

 

Capital receipts for use against new housing delivery.

RTB Receipts

2,028

1,074

3,102

2,652

1,350

795

 

Retained RTB receipts for New Build.

Energy Grants/FITs

180

 

180

180

180

 

 

Funding received to support sustainability and carbon projects.

Grant Funding

                        

2,649

2,649

                       

 

 

 

Land Release Funding grant received and Homes England grant for the purchase of HBH LLP Properties.

Commuted Sums

2,700

300

3,000

 

 

 

Funding to support the purchase of properties through the Home Purchase Policy.

Leaseholder Income

800

 

800

 

 

 

 

 

Earmarked rent reserve

 

805

805

 

 

 

 

 

Total Funding

57,791

25,700

83,491

50,492

41,313

35,273

33,317

 

 

 

 

 

 

 

Medium Term Financial Strategy Implications:

Replacement for tables in appendix 4 on page 175 and 177 579 and 581

 

 

2023/24

2024/25

2025/26

2026/27

2027/28

 

Expenditure

 

 

 

 

 

Management & Service Costs

  23,854

  25,764

    26,150

  26,504

    26,866

Repairs and Maintenance

  18,226

 20,339

   21,332

  21,709

    22,076

Other Costs

    1,323

   1,388

     1,416

    1,444

      1,473

Borrowing costs

    6,354

    8,023

      8,565

   9,462

      9,826

Total Expenditure

  49,757

  55,514

    57,463

 59,119

    60,241

Income

 

 

 

 

 

Rental Income

(60,708)

(65,518)

(68,227)

(68,307)

(69,512)

Service Charges (Tenants)

(4,611)

(4,833)

(5,015)

(5,009)

(5,100)

Other Income

(3,719)

(3,920)

(4,051)

(4,116)

(4,218)

Total Income

(69,038)

(74,271)

(77,293)

(77,432)

(78,830)

Net Revenue Income

(19,281)

(18,757)

(19,830)

(18,313)

(18,589)

 

 

 

 

 

 

 

 

Years
 1-5

Years
6-10

Years
11-20

Years
21-30


Total

 

 

£'000

£'000

£'000

£'000

£'000

Expenditure

 

 

 

 

 

Management & Service Costs

  129,138

     139,413

         311,958

        363,163

        943,672

Repairs and Maintenance

  103,682

     116,119

         264,403

        315,961

        800,165

Other Costs

      7,044

         7,821

           18,169

           22,149

          55,183

Borrowing costs

    42,230

       64,808

         137,347

        148,439

        392,824

Total Expenditure

  282,094

     328,161

         731,877

        849,712

     2,191,844

Income

 

 

 

 

 

Rental Income

(332,272)

(368,131)

(838,781)

(1,002,294)

(2,541,478)

Service Charges (Tenants)

(24,568)

(27,042)

(62,127)

(74,885)

(188,622)

Other Income

(20,024)

(22,714)

(54,183)

(67,697)

(164,618)

Total Income

(376,864)

(417,887)

(955,091)

(1,144,876)

(2,894,718)

Net Revenue Income

(94,770)

(89,726)

(223,214)

(295,164)

(702,874)

Capital Expenditure

 

 

 

 

 

Capital Investment programme

  171,260

     154,814

         313,819

        307,637

        947,530

Development

    72,627

                -  

                     -  

                    -  

          72,627

Total Expenditure

  243,887

     154,814

         313,819

        307,637

     1,020,157

Funded By:

 

 

 

 

 

Other Capital Income

(22,109)

                -  

                     -  

                    -  

(22,109)

Borrowing

(127,008)

(65,088)

(95,267)

(21,969)

(309,332)

HRA Reserves

(0)

(1,752)

(2,444)

(24,632)

(28,828)

Direct Revenue Funding

(94,770)

(87,974)

(216,108)

(261,036)

(659,888)

Total Funding

(243,887)

(154,814)

(313,819)

(307,637)

(1,020,157)

Opening HRA reserves

(3,000)

(3,000)

(3,000)

(7,662)

(3,000)

(To) / From Reserves

0

0

(4,662)

(9,496)

(14,158)

Cash surplus at year 30

(3,000)

(3,000)

(7,662)

(17,158)

(17,158)