Waverley Borough Council Committee System - Committee Document
Meeting of the Executive held on 02/12/2003
DRAFT HOUSING REVENUE ACCOUNT REVENUE ESTIMATES
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 2004/05. The report, which has been considered by the Community Overview and Scrutiny Committee, provides a preliminary indication of the base estimated position for 2004/05 at
Quality of Life Implications
Prevention and Control
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.
1. The financial year 2004/05 will see the completion of the Government’s reform of the HRA to a true landlord account. In recent years the reform has seen the introduction of resource accounting, rent restructuring and, with the enacting of the Local Government Bill in September 2003, the way is clear for the final step, the removal of rent rebates from the HRA, to take place in 2004/05.
2. To date there have been no Regulations issued on how the transfer of rebates from the HRA to the General Fund will be effected. The initial draft estimates reflect the assumption that the transfer will happen next year with the consequent effect on HRA subsidy. The removal of rent rebates from the HRA places Waverley in negative subsidy and the assumption has been made that the negative amount will be paid in full to the Government’s central pool. The Draft Subsidy Determinations, usually issued in mid-November, will hopefully clarify these issues as well as supplying the guideline allowances to inform the estimate of the negative subsidy amount. The Government is also carrying out a further review of Management and Maintenance allowances which will potentially have a further significant impact on Waverley’s subsidy position.
Stock and Rents
3. The last financial year 2002/03 saw a late surge in the sale of council houses, some 21 completions occurring in February and March compared with 34 completions in the previous 10 months. The trend has continued into the current year with some 80/90 completions likely on the basis of sales to date. This level of sales coupled with an increase in void levels as a result of the ongoing work at Kilnfields and long-term voids in some of the Council’s sheltered accommodation is having an inevitable impact on the estimated amount of rent income.
4. Current projections are that rent income in 2003/04 will fall short of the estimated amount and this has been reflected in the 2004/05 base estimate with a further reduction allowing for the impact of estimated sales in this current year. There is a similar reduction in income from garages because many garages in poor condition are awaiting demolition, with the consequent loss of income. This has also been reflected in the 2004/05 base estimate.
2004/05 Draft Revenue Estimates
5. A first draft of the 2004/05 HRA revenue estimates is attached at Annex 1.
At this early stage of the budget process the draft estimates are a guide to the possible position. Decisions to be made by the ODPM with regard to the transfer of rent rebates and the components of the housing subsidy calculation will inform significant areas of the budget and enable members to consider rent levels at a later date.
6. The draft estimates contain proposed variations, the most significant of which is a proposed reduction in the level of void work funded by the revenue account. Void properties often have quite major works carried out on them that can appropriately be funded from Waverley’s capital resources. It is also appropriate in light of Waverley’s Repairs and Maintenance Strategy that aims to minimise the expenditure on responsive maintenance in favour of a more planned approach.
7. No changes have been assumed to the level of Supporting People funding at this stage. The new funding regime has only been in place for some 7 months and with constant changes in eligible caseload it is difficult to estimate what the full-year effect might be. Waverley’s support services are due to be reviewed early in 2004 by Surrey County Council Supporting People Team, but any changes in funding as a result of this would not impact until 2005/06.
Rent Increase 2004/05
8. After taking account of proposed variations and with the impact of many significant changes still unquantified, the Estimates currently show a shortfall of some £850,000. This potentially high shortfall is largely as a result of changes in stock levels as discussed at points 2 and 3 above. The figures will almost certainly change as Government intentions are announced. However, a shortfall of £90,000 approximates to a rent increase of ½%.
Observations of the Community Overview and Scrutiny Committee
9. The Committee gave preliminary consideration to the draft HRA revenue estimates at its meeting on 11th November but had no specific comments it wished to pass to the Executive in the absence of detailed information from the ODPM on subsidy determinations which would not be available until later in the month.
It is recommended that the Executive notes the first draft of the revenue estimates prior to receiving draft housing subsidy determinations from the ODPM.
There are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to this report.
Ms G Pope