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Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 06/12/2005
Draft Housing Revenue Account Revenue Estimates 2006-7



Summary & Purpose
As part of the budget process, this report seeks the views of the Committee on the draft Housing Revenue Account (HRA) Estimates for 2006/07. The report provides Members with a preliminary indication of the base estimated position for 2006/07 on the assumption that the HRA will continue to exist. If tenants vote in favour of transfer a revised set of proposals will be brought before Members early in the new year.


Environmental implications:

There are no direct environmental implications as a result of the recommendations attached to this report.

Social / community implications:

The potential reduction of the landlord service in Waverley has implications for the quality of life of Waverley’s housing tenants and the environment in which they live.

E-Government implications:

There are no e-government implications arising from this report.

Resource and legal implications:

The report outlines the preliminary budget position for the HRA in 2006/07, the level of resources estimated to be required and the degree to which these resources are available, and gives an actual indication of the level of budget reductions required in 2006/07.

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Introduction

1. Pending the result of the ballot of tenants on the future of the housing stock, these draft estimates are prepared on the basis of the ‘status quo’. As such, the revenue estimates at Annexe 1 attempt to reflect some of the issues that will start to emerge if the housing stock remains in the Council’s ownership. However, Members should be aware that once the ballot result is known, the subsidy determination finalised and some of the issues are clarified, the second draft of the estimates that Members will see in January 2006 could be substantially different from the drafts that are being considering this evening.

2. Some of the most significant issues affect the draft estimates are:

If the tenants vote no to transfer, the Council will need to decide how it is to meet the Government’s decent homes standard by 2010/11. This will almost certainly mean carrying out a further appraisal of the options available and a provision of 50,000 is made for this purpose within the draft budget.

The Council will not have the capital resources available to implement a major programme of works and improvements. The lack of resources for renewing and replacing many building elements will place immediate increasing demands on the day-to-day repairs budget that again is reflected in the draft budget. Further re-alignment of the funding of cyclical work will put additional pressure on the day-to-day budget

Following the review of the Council’s Supporting People Services there will be a 25% reduction in grant funding in 2006/07 that necessitates reductions in the cost of providing support services.

Rent Levels

3. The draft subsidy determinations were received from the Office of the Deputy Prime Minister (ODPM) on 8th November. The determinations propose that Local Authority formula rents are recalculated from 2000/01 on the ‘new’ rent restructuring rules i.e. using the national average property value at January 1999 and national average rent at April 2000 that apply to Housing Associations. This has the effect of uplifting local authority formula rents and ensuring there can be exact convergence of rents between the two sectors.

4. The guideline limit on individual rent increases remains at RPI +1/2 %+ 2 with an additional requirement that average rent increases in 2006/07 and 2007/08 should not exceed 5%. In preparing the first draft of the HRA revenue estimates an average increase of 4.7% was assumed.

5. As a result of the allowances and guidelines indicated in the draft determinations it is estimated that the subsidy payable by Waverley in 2006/07 will be some 80,000 more than the amount indicated in the figures before you this evening.

Target Reductions

6. Having regard to the estimated increased negative subsidy position outlined above, the amount of target reductions in services is likely to be closer to 790,000 in 2006/07. This figure reflects savings that will need to be achieved to fund the anticipated increased costs, the major elements of which are outlined below and a full variations list at Annexe 2.

Summary of Main Changes

Cyclical Maintenance Last phase of re-alignment of funding to
revenue and due to inadequate capital
resources 339,000

Responsive Repairs Anticipated increase in demand if major
capital works programmes not put in place 250,000

Options Appraisal Cost of carrying out further appraisal 50,000

Other 70,000

709,000
Conclusion

7. With the result of the tenants’ ballot on stock transfer still unknown the draft HRA estimates for 2006/07 can only be prepared on the basis of the ‘status quo’. This begins to draw out some of the serious issues that the Council will face if it retains its landlord role. The Council’s lack of resources to carry out a major improvements programme will place severe pressure on the revenue account as day-to-day repairs cost are expected to escalate. Additional cost is likely to be incurred carrying out a further options appraisal. Service delivery will almost certainly have to be reviewed in order to contain costs at an affordable level.

Community Overview and Scrutiny Committee

8. The Committee gave initial consideration to the Draft HRA Revenue Estimates at its meeting on 14th November. It had no specific observations at this stage.

Recommendation

It is recommended that the Executive notes the proposals contained in the draft HRA Estimates and further considers them in January 2006 once the result of the stock transfer ballot is known.

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Background Papers (DoF)

Draft Housing Revenue Account (Item 8)and Housing Subsidy Determinations 2006-2007

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CONTACT OFFICER:

Name: Glennis Pope Telephone: 01483 523252 ......... E-mail …. gpope@waverley.gov.uk


Comms/exec/2005-06/219