Agenda item

The Service Director – Housing presented a report on the HRA Budget 2024/25. It detailed the draft estimates of the Housing Revenue Account for 2024/25 that were presented to Cabinet on 27.02.24 and Full Council on 28.02.24. Also presented was the draft HRA budget for 2024/25 and the Medium-Term Financial Plan (MTFP) for the years 2024/25 to 2028/29.

The deficit for 2023/24 was forecast to be £858k (as at period 8), which was an improved position of £2.223m against the original budget, primarily due to a number of funding and financing adjustments such as removing the planned £3.389m revenue contribution to fund the capital programme and pausing the voluntary repayment of debt (£1.841m). Table 1 in the officer’s report summarised the forecast outturn for 2023/24 against the original budget.  The main variances included:

•        Rents

•        Repairs and maintenance

•        Depreciation charges

•        Provision for the repayment of debt

•        Direct Revenue Financing

The financial strategy for the HRA was to deliver a balanced and sustainable budget which was self-financing in the longer term, and which reflected both the requirements of tenants and the strategic vision and priorities of the Council.

The HRA was not permitted to run at an overall deficit and risks must continue to be identified and managed effectively. A minimum working balance of £3.5m (increased annually by inflation) was maintained to avoid the risk of the HRA moving into a position of negative balance in the event of an exceptional cost(s) arising.

The MTFP, in Appendix 1 of the officer’s report, showed that the HRA balance was anticipated to fall to £5.071m in 2024/25. 

New service pressures of £3.673m had been included within the budget for 2024/25, some of which were one off, whilst £1.625m were ongoing and had been built into budgets from 2025/26. These pressures were essential activities but in the short-term represented costs over and above the base budget. However, many of the activities would deliver savings in future financial years. A full breakdown of the service pressures was set out in Appendix 2 of the officer’s report.

A key service pressure for scrutiny by this Committee is Void Properties. It was reported that a range of activity is underway to improve the Council’s performance in dealing with voids – reducing the number and speeding up the relet process. It is recommended that £1m of additional funding be allocated in 2024/25 (£750k from revenue and £250k has been included with the capital programme) for the procurement of external contractors to undertake this work and reduce the backlog of void properties.

The current rate of void properties is 3.57% and it is estimated that this commission will bring 200 empty homes back into use within 2024/25, reducing the void rate to 2.5%. These assumptions have been built into the medium-term financial plan and will deliver substantial savings in lost rent and reduced council tax payments from 2024/25.

Pending the procurement of the external contractors, there will however be additional costs associated with the current level of void properties in 2024/25; an additional £427k in lost rental income and £267k in additional council tax payments. The activity set out to reduce the level of voids was reported to mitigate this pressure from 2025/26.

It was reported that Transformation Activities would require £200k in 2024/25. This included the development of a more efficient and effective model of delivering repairs and maintenance services, the implementation of better ICT systems, and the review of red-book staff’s payment arrangements/ terms and conditions. As the provision of £300k in 2023/24 remains unspent, this will be carried forward into 2024/25 so that the total funding for transformation activity in 2024/25 will be £700k.

It was reported that savings proposals for 2024/25 included:

•        Savings from Vacant Post

•        Phasing out Voluntary Sector Advice Agency Grants

•        Changes to Careline

The budget estimates for 2024/25 were shown in Table 2 of the officer’s report and compared the movements to the original budget estimates for 2023/24. The MTFP shown at Appendix 1 evidenced a working balance, over and above the minimum of £3.5m (updated by inflation), in all years through 2028/29. However, the 2024/25 budget had a gap of £729k which had been covered by an allocation from the working balance and, whilst the deficits over the MTFP reduced year on year, it was not until 2028/29 that the MTFP did not rely on the use of the working balance to achieve a balanced budget position.

Members discussed the proposed new ICT system and the amount of investment it would be receiving. The Service Director- Housing assured members that it was not a new system being designed, more of consolidation of changes within the system, transferring everything into a central place. Members requested that the Service Director – Housing return to this Committee in September to give an update on the ICT Housing system.

Members questioned why only 200 voids were being given to external contractors rather than the full amount of 296. The Service Director – Housing reported that there was a balance between not wanting to increase financial pressures further, whilst also keeping a workload for CBC staff. The Council had to be mindful of the affordability and capacity of the sector, detailing that both soft and hard market testing had taken place. The Cabinet Member for Housing stated that the Council did not want to outsource all of the work and wished to keep as much in-house as possible. It was reported that there were a number of new apprentices who would be able to help with the back log of work.

Members asked whether the specific voids to be given to contractors had been assessed in terms of difficulty of completion and also if there would be break clauses within the contract depending on an assessment of the standard of work completed. It was reported that sampling of the voids had taken place to ensure that a cross section of properties would be contracted out. There was however a balance to be achieved as there are current voids which are on the Council’s specific match list so these properties would need to be escalated. It was reported that there would be rules within the contract to ensure a successful outcome. It was desirable to have an element of contractor competition whilst also utilising local labour in order to add social value.

RESOLVED –

1.     That the forecast outturn for the Housing Revenue Account for the current financial year, 2023/24 be noted.

2.     That the Service Director – Housing return to this Committee in September to report on the Housing ICT system.