Waverley Borough Council Home Page Waverley Borough Council Home Page


Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 07/02/2005
Draft Housing Revenue Account Revenue Estimates 2005/06



Summary & Purpose
As part of the budget process, this report seeks the views of the Executive on the draft Housing Revenue Account (HRA) Estimates for 2005/06. The detail of the draft Subsidy Determinations was confirmed by the Office of the Deputy Prime Minister (ODPM) with only minor change and the Estimates therefore remain broadly as the first draft seen by the Executive in December. The observations of the Community Overview and Scrutiny Committee are set out in the report.

Quality of Life Implications
Natural Resource Use
Pollution Prevention and Control
Biodiversity and Nature
Local Environment
Social Inclusion
Safe Communities
Local Economy
Natural
Resource Use
Pollution
Prevention and Control
Biodiversity
and Nature
Local
Environment
Social
Inclusion
Safe, Healthy
and Active
Communities
Local
Economy
N/A
N/A
N/A
N/A
Positive
Positive
Positive


APPENDIX C.4
WAVERLEY BOROUGH COUNCIL

EXECUTIVE – 7TH FEBRUARY 2005

Title:
DRAFT HOUSING REVENUE ACCOUNT REVENUE ESTIMATES
2005/06

[Wards Affected: All]

Summary and purpose:

As part of the budget process, this report seeks the views of the Executive on the draft Housing Revenue Account (HRA) Estimates for 2005/06. The detail of the draft Subsidy Determinations was confirmed by the Office of the Deputy Prime Minister (ODPM) with only minor change and the Estimates therefore remain broadly as the first draft seen by the Executive in December. The observations of the Community Overview and Scrutiny Committee are set out in the report.

Quality of life implications – social, environmental & economic (sustainable development):

E-Government implications:

There are no E-Government implications.

Resource and legal implications:

This report has no legal implications. Significant financial implications are outlined in the main report.

Introduction

1. The HRA budget for 2005/06 is being prepared against the background of the Council’s stock options appraisal. The Council has now decided that stock transfer is the most appropriate and viable solution for meeting the decent homes standard, securing the future management of the housing stock and enabling additional affordable homes across the Borough. However, it is necessary, in the interim, to maintain a robust HRA that will begin to deliver an improved housing service to the tenants. This means having regard to rent levels for 2005/06 that will make such service improvements possible as well as maintaining HRA balances of at least 1m.

Rent Restructuring/Subsidy

2. The subsidy determinations were received from the ODPM on 17th December 2004. During the summer the ODPM carried out its three-year review of rent re-structuring. Unexpectedly, the implementation of changes has been deferred for a year in order to fully investigate the issues raised. The key proposals were to change bedroom weightings for larger houses and move to the use of RSL averages for all social landlords.

3. Even without these changes, Waverley’s guideline rent has undergone a significant increase of 6.7% from 61.87 in the current year to 66.02. However, the increase in notional income that results from this is largely offset by a significant uplift in Waverley’s maintenance allowance with a resulting estimated increase in Waverley’s payment to the national subsidy pool of some 200,000.

4. When applying the principles of rent restructuring to Waverley’s actual rent, and having regard to the Government’s guidance on absolute limits on annual rent increases, it is estimated that the maximum by which Waverley’s average rent should be increased in 2005/06 is 6.3%

5. Given the need to improve HRA services and repairs, Chief Officers’ Group reluctantly recommends an increase of 6.3% to help secure improvements and provide some flexibility for the future.

2005/06 Draft Revenue Estimates

6. Considerable cost will be incurred in supporting the shadow board of a new organisation and in setting up that organisation. The most significant difference, therefore, to the draft Estimates that Members considered in November is the proposal at line 10 of the HRA Summary to earmark 380,000 of resources for this purpose. This sum is consistent with the pre-ballot costs estimated by the financial consultants to the options appraisal process and can ultimately be offset against the capital receipt upon stock transfer. The Council’s Housing Options Consultant considers this amount to be appropriate.

Supporting People

7. The draft estimates anticipate in excess of 650,000 of Supporting People (SP) funding. This is the level at which it is estimated that housing-related support provided by the Council might be funded in 2005/06. This will be subsequent to the review of the Sheltered Accommodation service begun in January 2005 and having regard to the pressure on SP funding nationally.

8. The latest information from the Surrey SP unit is that Government deems Surrey to be over-funded by some 34% and will therefore be making annual cuts in the funding it passes to Surrey. Although providers in Surrey will therefore not be receiving even inflationary increases in their funding, the cuts will not be passed on in the immediate future. The current relatively healthy HRA position and the contribution to capital expenditure relies largely on the SP funding and is likely to become more difficult to sustain in view of these funding issues.

Rent Increase 2005/06

9. The proposed variations to the HRA, including the funding to support the shadow board of the new organisation, use all of the estimated HRA working balance. Columns 3 and 5 of the HRA summary at Annexe 1 illustrate the effect of the budget proposals without any increase in rent levels. The effect of various rent increases is modelled at Annexe 2. The potential gradual decline of SP funding, together with the increased pressures for an improved service, necessitates maintaining robust working balances. Members are urged to consider increasing rents by 6.3% to enable a strong position to be maintained.

10. No increase in the current level of income from garage rents is reflected in the estimates. The income in the current year from garages is falling short of the budgeted level due to many garages in a poor state of repair and void. It is considered that a rent increase of the order being sought would restore the income to the 270,000 level.

Observations of the Community Overview and Scrutiny Committee

11. The Community Overview and Scrutiny Committee acknowledged the difficulties the Council faced as a consequence of the Government’s rent restructuring review and recognised the need to maintain a robust HRA at a time of great change for the service. However, the Committee did not support the recommendation of the Chief Officers’ Group to increase rents by 6.3% (Option D). The Committee were, however, prepared to support Option C, a rent increase of 6%.

Recommendation

It is recommended that the Executive makes the following recommendations to Council:-

3. that the weekly charge for a separate garage rented by a non-Council tenant be increased by 6.3% from 4th April 2005.

Background Papers ( DoF )

Housing Revenue Account Subsidy Determinations 2005-06.

CONTACT OFFICER:

Name: Glennis Pope Telephone: 01483 523252

e-mail: gpope@waverley.gov.uk

comms/executive/2004-05/415