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Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 03/02/2004
APPENDIX B.4 - DRAFT HOUSING REVENUE ACCOUNT REVENUE ESTIMATES 2004-2005



Summary & Purpose
The Executive last considered the draft Estimates on 6th January 2004. Since that time the Community Overview and Scrutiny Committee, whose comments are incorporated in this report, has further considered the draft estimates and the possible level of rent increase in 2004/05.

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 B.4
WAVERLEY BOROUGH COUNCIL

EXECUTIVE – 3RD FEBRUARY 2004

Title:
DRAFT HOUSING REVENUE ACCOUNT REVENUE
ESTIMATES 2004-05
[Wards Affected: All]

Summary and purpose:

The Executive last considered the draft Estimates on 6th January 2004. Since that time the Community Overview and Scrutiny Committee, whose comments are incorporated in this report, has further considered the draft estimates and the possible level of rent increase in 2004/05.

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

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

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 ODPM issued the 2004-05 HRA Subsidy Determinations on 18th December 2003 and the impact of the allowances and guidance contained within the Determinations has now been taken into account in the draft HRA Revenue Estimates for 2004/05. Members are reminded that the subsidy determinations indicate a notional level of spend/income for the major items in the HRA. These notional amounts feed into a notional HRA and establish the amount of subsidy due to be received from or paid to the ODPM. This subsidy amount then forms a significant item in the “real” HRA. Some of the major items within the subsidy calculation are discussed below.

Housing Subsidy

2. The main components of the notional HRA that establish the amount of subsidy due or payable are the management and maintenance allowances, major repairs allowance and guideline rent. For 2004/05 the ODPM has reviewed many of the factors that determine the amounts an individual authority receives. As a result, Waverley will be receiving a higher maintenance allowance and higher major repairs allowance than previously anticipated. However, as a result of the review, Waverley’s target allowance in the notional account for the cost of management per property is now less than the current year’s allowance. The management allowance is consequently frozen with an inflation only increase.

3. The Government’s process of rent restructuring wants social rents to take account of the condition and location of properties, local earnings and property size. These aspects are reflected in the formula rent for each property that is then uprated each year by inflation and a real terms increase. For 2004/05 this increase is 3.96%. Ministers want the move to formula rents to be a gradual process however and, therefore, issue councils with an annual guideline rent reflecting the progress toward the formula rent. It is this guideline rent that determines the amount of rent income in the notional calculation and helps determine the subsidy amount. The increase in Waverley’s guideline rent for 2004/05 is 6.1%

4. Until now rent rebates have formed a significant element of the housing subsidy calculation but from 1st April 2004 will start to be accounted for in the General Fund where the Government will meet 100% of the cost of rebates granted. There may be a residual cost if any overpayments of benefit are not fully recovered and in future these costs must be born by the General Fund. There will, however, be a two-year transitional period in which any such costs can remain in full in the HRA for 2004/05 and an amount up to half of the costs in 2005/06. After this, authorities will be expected to have adjusted to the new arrangements.

2004/05 Draft Revenue Estimates

5. The HRA draft revenue estimates at Annexe 1 have regard to the proposals in the HRA Subsidy Determinations. The estimated effect of all the proposed changes is to reduce the estimated negative subsidy amount for 2004/05, presented to Members in December, from 8.4m to some 7.8m.

6. Significant allowance has been made in the draft estimates for additional costs as a result of the ongoing stock options appraisal process. In addition to the basic cost of the Independent Tenants’ Advisor contained within the consultancy budget, it has been thought prudent to include variations to allow for the costs associated with tenant empowerment and also to include a general contingency as the costs of telephone surveys, publicity and communications are likely to be substantial.


7. As outlined in the initial report in December on the draft estimates, there is a proposed movement of work on void properties from the revenue to the capital account. Conversely, it is now felt appropriate to allow for a greater level of spend on cyclical work to be funded from the revenue account and a variation to this effect is include in the draft estimates at Annexe 1.

Supporting People

8. For the purposes of the 2004/05 Estimates, it is assumed that there will be no change in the level of Supporting People funding and that grant to meet the identified support costs of 995,950 in the HRA will continue to be receivable. It is proposed that some 300,000 will be spent on transitional support and the balance of 695,950 will be used to support capital works in accordance with the current year’s practice, which accords with ODPM guidance.

Observations of the Community Overview & Scrutiny Committee

9. The Committee had no further observations on the draft Estimates and agreed that the proposal to increase rents by an average of 5% be recommended to the Executive.

Rent Levels 2004/05

10. A range of rent options for 2004/05 is attached at Annexe 2. The estimated working balance at 1st April 2004 is lower than that estimated when the current year’s budget was approved. This allows for a potentially greater use of balances in 2003/04 as a result of an estimated shortfall in rent income outlined in the report to the Executive on 2nd December 2003. Although officers will be working to minimise the potential shortfall, it is considered prudent to anticipate some impact on balances.

11. Having regard to all the above factors, the Officers consider that an average rent increase of 5.0% in 2004/05 could be applied to housing rents. This would meet the anticipated demands on the HRA in 2004/05 and restore the working balance to a level that the Director of Finance and the District Auditor consider adequate. Due to the nature of rent restructuring and the setting of individual rents for different properties, members are reminded that rent increases will vary around the average level set.

Recommendation

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

1. that the rent levels of HRA dwellings be increased from 5th April 2004 by an average of 5.0%;

2. that the weekly charge for a separate garage rented by a Council tenant be increased by 5.0% from 5th April 2004; and

3. that the weekly charge for a separate garage rented by a non-Council tenant be increased by 5.0% from 5th April 2004.

Background Papers (DoF)

Housing Revenue Account Subsidy Determinations 2004-05.

CONTACT OFFICER:

Name: Ms G Pope Telephone: 01483 523252
e-mail: gpope@waverley.gov.uk

comms/executive/2003-04/466