Waverley Borough Council Home Page Waverley Borough Council Home Page


Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 07/12/2004
DRAFT HOUSING REVENUE ACCOUNT REVENUE ESTIMATES
2005-06



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 2005/06. The draft estimates were considered by the Community Overview & Scrutiny Committee before the receipt of draft subsidy determinations from the Office of the Deputy Prime Minister (ODPM). The draft estimates now have regard to the estimated effect of those draft determinations on the 2005/06 HRA.

Quality of Life Implications
Natural Resource Use
Pollution Prevention and Control
Biodiversity and Nature
Local Environment
Social Inclusion
Safe Communities
Local Economy
Natural
Resource Use
Pollution
Prevention and Control
Biodiversity
and Nature
Local
Environment
Social
Inclusion
Safe, Healthy
and Active
Communities
Local
Economy
N/A
N/A
N/A
N/A
Positive
Positive
Positive


APPENDIX C2
WAVERLEY BOROUGH COUNCIL

EXECUTIVE - 7TH DECEMBER 2004

_________________________________________________________________________
Title:
DRAFT HOUSING REVENUE ACCOUNT REVENUE ESTIMATES
2005-06
[Wards Affected: ALL]
_________________________________________________________________________
Summary and purpose:

As part of the budget process, this report seeks the views of the Executive on the draft Housing Revenue Account (HRA) Estimates for 2005/06. The draft estimates were considered by the Community Overview & Scrutiny Committee before the receipt of draft subsidy determinations from the Office of the Deputy Prime Minister (ODPM). The draft estimates now have regard to the estimated effect of those draft determinations on the 2005/06 HRA.
_________________________________________________________________________
Quality of life implications – social, environmental & economic (sustainable development):

Natural Resource Use
Pollution Prevention and Control
Biodiversity and Nature
Local Environment
Social Inclusion
Safe, Healthy and Active Communities
Local Economy
N/A
N/A
N/A
N/A
Positive
Positive
Positive

E-Government implications:

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.


_________________________________________________________________________

Introduction

1. The HRA budget for 2005-06 is being prepared against the background of the Council’s stock options appraisal. Whilst members are seeking the most appropriate and viable solution for meeting the decent homes standard and the future management of the housing stock it is still necessary to maintain a robust HRA. This means having regard to rent levels for 2005-06, maintaining and, where possible, enhancing the level of service to tenants as well as maintaining HRA balances at a prudent level.

2. Considerable cost will be incurred in supporting the shadow board of a new organisation and in setting up that organisation. The HRA Summary at line 10 includes a proposal to earmark 380,000 of resources for this purpose. Rent Restructuring/Subsidy

3. The draft subsidy determinations were received from the ODPM on 9th November. During the summer the ODPM carried out their three-year review of rent re-structuring. Unexpectedly, the implementation of changes has been deferred for a year in order to fully investigate the issues raised. The key proposals were to change bedroom weightings for larger houses and move to the use of RSL averages for all social landlords.

4. Even without these changes Waverley’s guideline rent has undergone a significant increase of 6.7% from 61.87 in the current year to 66.02. The 61.87 is first uplifted by inflation plus 1.5% real increase resulting in an amount of 64.62 then a further increase in line with the rent restructuring formula of 1/7 of the difference between 64.62 and Waverley’s formula rent for 2005-06. However, the increase in notional income that results from this is largely offset by a significant uplift in Waverley’s maintenance allowance with a resulting estimated increase in Waverley’s payment to the national subsidy pool of some 200,000.

5. When applying the principles of rent restructuring to Waverley’s actual rent, and having regard for the Government’s guidance on absolute limits on annual rent increases, it is estimated that the maximum by which Waverley’s average rent should be increased in 2005-06 is 6.3%

2005/06 Draft Revenue Estimates

6. A first draft of the 2005/06 HRA revenue estimates is attached at Annexe 1 incorporating the estimated effect of the draft subsidy determinations.

7. The draft base estimates contain a small number of variances from the current year position:

a. The employee costs and support cost charges vary each year because, at the start of the budget process, staff review the amount of time they spend on the various services they are involved with. The most significant change in the draft estimates is in the amount of housing staff time charged to repairs and maintenance. Some of the cost has shifted to the capital budget and the remainder to the capital works expenses budget. b. The estimate for responsive repairs in 2005-06 allows for contract inflation.

c. The increase in hired and contracted services in the Supervision & Management Special account reflects the increased annual charge for environmental cleaning. 8. In addition to the built-in variances outlined above the draft estimates contain a number of proposed variations, summarised on page 2. The most significant of these is the proposed 380,000 fund for the new organisation as outlined above. Many of the other proposals are concerned with service improvements that the Council needs to strive to put in place for the benefit of its tenants whatever decision is made for the future management of the housing stock.

9. The draft estimates anticipate in excess of 650,000 of Supporting People (SP) funding. This is the level at which it is estimated that housing-related support provided by the Council might be funded in 2005/06. This will be subsequent to the review of the Sheltered Accommodation service due to be carried out in January 2005 and having regard to the pressure on SP funding nationally.


Rent Increase 2005/06 10. Line 15 on the summary page of the 2005-06 draft estimate shows the estimated rent income before any rent increase. The estimated effect of the subsidy determinations and the proposed variations is a shortfall in excess of 1m prior to any rent increase. At Annexe 2 the rent options model shows the effect of a range of increases on the draft estimates.

Conclusion

11. In view of the additional costs that will be incurred in setting up an ALMO/RSL, the Executive is recommended to consider accepting a 6.3% increase in the average rent for 2005-06 in line with Government proposals contained in the draft subsidy determinations.

Recommendation

It is recommended that the Executive notes the proposals contained in the draft HRA Estimates and further considers them in January with a recommendation to Council once the Government has issued its final decisions with regard to subsidy for 2005/06.

________________________________________________________________________
Background Papers ( DoF )

There are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to this report.
________________________________________________________________________

CONTACT OFFICER:

Name: Glennis Pope Telephone: 01483 523252




comms/exec/04-05/334
40792