Waverley Borough Council Committee System - Committee Document
Meeting of the Council held on 18/02/2003
APPENDIX A.4 - HOUSING REVENUE ACCOUNT, REVENUE ESTIMATES AND RENT LEVELS 2003/2004
WAVERLEY BOROUGH COUNCIL
COUNCIL MEETING – 18TH FEBRUARY 2003
REPORT OF THE EXECUTIVE – 4TH FEBRUARY 2003
HOUSING REVENUE ACCOUNT REVENUE ESTIMATES AND RENT
[Wards Affected: N/A]
1. The draft Estimates were compiled in October and submitted to the Executive for comment and consideration on 10th December 2002. The Housing Subsidy Determinations for 2003/04 and other guidance on housing policy has been received from the Office of the Deputy Prime Minister (ODPM) since that time and are detailed below. The Executive gave final consideration to the Estimates at their meeting of 4th February.
2. The final Subsidy Determinations for 2003/2004 were received from the ODPM on 18th December 2002. Increases in management and maintenance allowances are higher than Ministers had previously planned in order to take account of the resource implications of moving guideline rents toward the formula rent for rent restructuring purposes. The result for Waverley has been an increase in the maintenance allowance of 7% and in the management allowance an increase of 4.8%. Waverley’s guideline rent for the purposes of calculating subsidy entitlement has increased by some 5.8%. Despite this notional increase in allowances it is estimated that Waverley’s subsidy will reduce by some £550,000 to £788,000 in 2003/04.
3. The ODPM has confirmed its earlier proposals to change the rent rebate subsidy limitation system for 2003/04 and future years so that local authorities benefit progressively from separating out service charges. Work has begun on identifying service charges that were previously part of Waverley’s pooled rent and this will ultimately be reflected in the published 2003/04 HRA Estimates.
4. A letter of 12 December 2002 from the ODPM confirmed the proposals in the June 2002 consultation paper that the cost of transitional protection, for tenants who at 31st March 2003 are in receipt of support services but not in receipt of housing benefit, should be met by local authorities from their ‘windfall’ (the amount that will be released by disaggregating support costs from the HRA but not reducing rents). Current indications are that approximately 30% of those tenants in receipt of support are not in receipt of housing benefit. Ministers have also decided that authorities should retain their discretion to account for the support services that they deliver to tenants of their HRA dwellings either within the HRA or within the General Fund. As there is currently no justification for a change of accounting policy it is proposed that Waverley continues to account for Support Services within the HRA. The overall effect of the Supporting People regime on the HRA is expected to be neutral, certainly in the first year, but continuing to account for support costs within the HRA will retain a degree of flexibility for the future. However, the support costs that have been identified for supporting people purposes are shown separately within the HRA (
with consequent reductions in costs within the S & M Special Account.
Rent Increase 2003/04
5. In addition to the variations included in the Draft Estimates circulated in December, a further variation will be required in the S & M Special Account to allow for the anticipated extra cost of the re-negotiated Environmental Cleaning Contract. The effect of this and the other proposed budget variations and the level of subsidy estimated as a result of the HRA Subsidy Determination for 2003/04 is a shortfall well in excess of £0.5m in the HRA before the application of any rent increase. The Director of Finance stressed at the Finance Seminar on 8th October that a prudent level of reserves must be maintained and that the HRA working balance is approaching the level below which he and the District Auditor feels it should not fall. For this reason it was considered that no more than £36,000 should be used from balances in 2003/04. The projections incorporated in the Strategy are as follows:-
Balance at start of Year
Contribution to Revenue
Balance at end of Year
6. Although the Management Board preferred option was for an average 5.75% rent increase with an associated use of balances of some £30,000 the consensus of the Executive was that an average rent increase of 5.5% with the slightly higher use of balances would still sustain the HRA working balance at an acceptable level. The Director of Finance confirmed his agreement with this approach. Members are reminded that a shortfall of £95,000 approximates to a 1% rent increase. Detailed rent options are attached at
and summarised in the table below together with the associated impact on balances.
USE OF BALANCES
Observations of the Community Overview and Scrutiny Committee
7. The Committee was indeterminate on the question of rent levels for the year 2003/04. Options A and F on Annexe 15 were unanimously discounted but, although all other options were considered, the Committee reached no clear consensus that could be passed to the Executive. The Committee did endorse the proposal to continue to account for support costs within the HRA.
8. The Executive accordingly
11. Waverley Borough Council continues accounting for the cost of support delivered to tenants of its HRA dwellings within the HRA under the Supporting People regime to be introduced on 1st April 2003;
12. the rent levels of HRA dwellings be increased from 7th April 2003 by an average of 5.5%;
13. the weekly charge for a separate garage rented by a Council tenant be increased by 5.5% from 7th April 2003; and
14. the weekly charge for a separate garage rented by a non-Council tenant be increased by 5.5% from 7th April 2003.
There are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to this report.