Waverley Borough Council Committee System - Committee Document
Meeting of the Council held on 17/02/2004
Draft Housing Revenue Account Revenue Estimates 2004/05
WAVERLEY BOROUGH COUNCIL
COUNCIL MEETING - 17TH FEBRUARY 2004
REPORT OF THE EXECUTIVE – 3RD FEBRUARY 2004
DRAFT HOUSING REVENUE ACCOUNT REVENUE ESTIMATES 2004/2005
[Wards Affected: All]
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.
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%. However, Ministers want the move to formula rents to be a gradual process 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
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 on the draft estimates in December, 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 included in the draft estimates at Annexe 18.
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
. 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, a view endorsed by the Executive. 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.
12. The Executive accordingly
15. the rent levels of HRA dwellings be increased from 5th April 2004 by an average of 5.0%;
16. the weekly charge for a separate garage rented by a Council tenant be increased by 5.0% from 5th April 2004; and
17. the weekly charge for a separate garage rented by a non-Council tenant be increased by 5.0% from 5th April 2004.
Housing Revenue Account Subsidy Determinations 2004/05.