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Waverley Borough Council Committee System - Committee Document

Meeting of the Council held on 21/02/2006
REPORT OF THE EXECUTIVE – 7TH FEBRUARY 2006 -
DRAFT HOUSING REVENUE ACCOUNT REVENUE ESTIMATES 2006-07



APPENDIX A.4
WAVERLEY BOROUGH COUNCIL

COUNCIL MEETING – 21ST FEBRUARY 2006

REPORT OF THE EXECUTIVE – 7TH FEBRUARY 2006


DRAFT HOUSING REVENUE ACCOUNT REVENUE ESTIMATES
2006-07

Introduction

1. The tenants’ vote to retain the Council as their landlord has some serious consequences for the HRA and the housing service that are reflected in the draft revenue estimates at Annexe 17.

2. The draft estimates reflect the estimated negative housing subsidy for 2006/07, estimated rent income and depreciation at levels indicated in the subsidy determinations issued by the Office of the Deputy Prime Minister (ODPM) on 21st December.

3. The draft estimates also make provision for:-



Carrying out a further options appraisal 30,000
Re-alignment of balance of cyclical maintenance budget 339,000
Additional costs new measured term contract 250,000
Increased demand responsive repairs 100,000
719,000

The Council must still determine how it will meet the Government’s decent homes standard by 2010/11. Additional consultancy costs, publicity, printing and distribution costs may all be incurred. A provision of 30,000 is therefore included in the draft estimates.

Despite the severe budgetary constraints it is intended that the new measured term contract (MTC) will offer tenants an enhanced service. The revised specification offers the availability of appointments from 8a.m. to 8p.m. and allows for the contractor to carry out some work to the external fabric of dwellings. This will include repairs to windows as Waverley will be unable to resource a window replacement programme or reinstate a programme of external decoration as reported to the Executive on 10th January. The enhanced specification together with a general increase in contract rates is estimated to cost the additional 250,000 reported above.

As the Council does not have the capital resources available to implement a major programme of works and improvements, there is likely to be increased need for unplanned day-to-day repairs.


In addition to the above a phased reduction of support costs following the review of the Council’s Supporting People Services is required. A 25% reduction must be achieved in the three years commencing 2006/07 in line with the proposed reduction in grant funding from Surrey County Council. Savings of some 40,000 have been achieved so far for 2006/07 due to the demolition of Dorlcote but a further 37,000 must be achieved.

Subsidy and Rent Levels

4. The final subsidy determinations for 2006/07 were received from the Office of the Deputy Prime Minister (ODPM) on 21st December. 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.

5. 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%. The draft estimates reflect increased rent income at this level. An increase of 5% will increase Waverley’s average rent from 76.93 per week to 80.78.

6. Waverley currently incurs rent rebate subsidy limitation due to actual rents being above Government guidelines. This means that some 9% of total rent rebates paid is funded by the HRA instead of Government subsidy. Therefore if Waverley were to increase rents further above guidelines the HRA would have to pay for additional benefit costs. In any event, in the recent consultation on the proposed stock transfer, Waverley committed to increasing rents in line with government policy guidelines and in order to maintain this position, the Council will not wish to go beyond the guidelines set.

7. Garage rents are currently 7.50 per week except for the new garages at Beaufort Road that are let at 8.78. It is recommended that garage rents should be increase by 6.7% that would take the majority of garage rents to 8 per week and the new garages to 9.37.

Observations of the Community Overview and Scrutiny Committee

8. The Committee considered the proposals for 2006/07 and agreed that the proposed budget for carrying out a further options appraisal should be reduced to 30,000 and a budget of 20,000 for Community Safety should be retained.

Current Budget Position

9. The observations of the Overview and Scrutiny Committee are reflected in the revised draft budget at Annexe 17 together with a reduction of the revenue contribution to capital that was proposed by officers in the report to the Executive on 10th January. As stated at that time this alternative avoids other reductions to the housing service but it reduces the Council’s ability to deliver more efficient programmed capital works and will potentially increase the need for more responsive day-to-day repairs. There is no provision within the budget for external decorations.

10. Rent income has been updated to reflect the level of increase outlined in this report. 11. The HRA balance at 1m is considered by the Director of Finance to be the appropriate level. It is not possible to draw on it to achieve budget reductions and/or keep rents down.

Officer Proposals

12. Changes made to the draft estimates as outlined in this report leave target reductions of 212,000 still to be found.

13. During 2006/07 the Director of Housing and officers will continue to review and examine services and costs in order to identify further reductions for 2006/07 and the years beyond.

Conclusion

14. The outcome of the tenants’ ballot has left the Council with some difficult choices to make in order, not only to maintain its housing service but also, to achieve the Government’s decent homes standard by 2010/11. Decisions made with regard to service delivery and retaining a balanced HRA may impact on the level of resources available for the achievement of decent homes.

15. The Executive

RECOMMENDS that

13. the weekly charge for a separate garage rented by a Council tenant be increased by 6.7% from 3rd April 2006; and

14. the weekly charge for a separate garage rented by a non-Council tenant be increased by 6.7% from 3rd April 2006.

________________________________________________________________________
Background Papers (DoF)

Housing Revenue Account and Housing Subsidy Determinations 2006-2007

________________________________________________________________________

CONTACT OFFICER:

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

Comms/council/2005-06/075