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Agenda Item No

 

The Vale of Glamorgan Council

 

Cabinet Meeting 29th February 2012

 

Report of the Leader

 

Final Housing Revenue Account Budget Proposals 2012/2013

 

Purpose of the Report

1.             To set the budget for the financial year 2012/13 and to set the rents and service charges for the forthcoming rent year beginning on 2nd April 2012.

Recommendations

It is recommended that:-      

1.             The final budget proposals for 2012/13 are recommended to Council as outlined below:-

 

Proposed Budget

2012/13

 

£'000

HRA General

(14,904)

Housing Repairs

3,060

HRA Subsidy Payable to WG

5,103

General Management

903

Special Services

816

Capital Expenditure from Revenue Account (CERA)

5,033

Controllable Budget 

11

Central Support & Operational Buildings

1,755

Capital Financing

136

(Surplus)/Deficit for the Year

1,902

 

Working Balance Brought Forward

(14,331)

 

Working Balance Carried Forward

(12,429)

 

2.             The increase suggested for rent and other services are approved and recommended to Council, as set out in paragraphs 11-19.

3.             That the following charges for 2012/13 financial year be recommended to Council:-

50 Week Basis

Current Charges

Proposed Charges

 

Heating

£9.15 per week

£7.09 per week

 

Warden Support Charge

£6.68 per week

£6.35 per week

 

Warden Management Charge

£2.76 per week

£3.54 per week

 

VCAS:

- Piper

- Communicall

£3.70 per week

£4.21 per week

£3.88 per week

£4.40 per week

 

Grounds Maintenance

              £1.17 per week

                  £1.19 per week

 

Cleaning of communal areas

£1.63 per week

£1.68 per week

 

Lighting of communal areas

£1.03 per week

£1.10 per week

 

Laundry Facilities

£0.11 per week

£0.15 per week

 

Window Cleaning

£0.24 per week

£0.24 per week

 

CCTV

£0.35 per week

£0.35 per week

 

Lift Maintenance

£0.32 per week

£1.05 per week

 

Door Entry

£0.40 per week

£0.45 per week

 

Intercom

£0.49 per week

£0.68 per week

 

Sewerage Treatment Plants

£286.35 per annum

      Based on the Rateable     

      Value (RV) from the

      Water Schedule 2012-13

 

4.             That all changes to rents and service charges are implemented from 2nd April 2012 and that increase notices are sent to tenants 28 days in advance of the new charges coming into effect. 

Reasons for the Recommendations

1.             As required by statute.

2.             In order that new rent levels are set within the specified Welsh Government (WG) guidelines, and that the budget accurately reflects any changes necessary.

3.             In order that new charges are approved in time for any administration changes to be carried out.

4.             In order to meet the deadline to notify tenants of the new charges as required by Statute

Background

2.             Each local housing authority is required under Section 74, of the 1989 Local Government and Housing Act to keep a Housing Revenue Account.  Section 76 of the Act requires Local Authorities to set a budget for their Housing Revenue Account (HRA) on an annual basis.  The budget must be such that the Housing Revenue Account is not in deficit at the year end.

3.             During the course of the year, Local Authorities must review their HRA expenditure and income and if, on the basis of the information available the account is heading for a deficit, they must take steps as are reasonably practical to prevent this deficit. A Local Authority is not prohibited from being in deficit but will need to demonstrate that the deficit has arisen through exceptional circumstances and that it has revised its original proposals so far as reasonably practical to avoid the deficit.  Such a deficit shall be carried forward and must be made good the following year.

4.             Each Local Authority should endeavour to have a working balance on the HRA, for any exceptional circumstances that may arise.

5.             The level of rent increase is based on the Housing Subsidy Determination issued by the WG. The HRA Subsidy Determination was not issued until the 1st February 2012 which provided an all-Wales average weekly guideline rent increase of 5.1% (RPI), for the Vale of Glamorgan this equates to a 5.34% guideline rent increase.

6.             The initial HRA budget proposals were considered by Cabinet on the 16th November 2011 (minute no. C1512). They were subsequently referred to Housing and Public Protection Scrutiny Committee on 1st December 2011 who noted the proposals and recommended that the suggested increase for rent and other services be subject to a further report to the Scrutiny Committee once information became available from the WG. Corporate Resources on 20th December 2011 approved that the recommendations of the Scrutiny Committee (Housing and Public Protection) be noted and forwarded to Cabinet and the Budget Working Group. The Budget Working Group have noted the recommendations.

7.             It is still expected that the HRA will outturn on target in 2011/12 at a surplus of £2,204k, as reported to Cabinet on 1st February 2012. As the Housing Revenue Account is ring fenced any surplus or deficit at the year end will increase or decrease the Housing Revenue Account Balance.

Base Budget 2012/13

8.             The Budget Strategy for 2012/13 outlined that, in order to establish a baseline, services should prepare revenue budgets for next year based on the cost of providing the current level of service and approved policy decisions. This means that the cost of price increases and pay awards should be included.

9.             Due to the nature of the HRA in that it is ring fenced and any growth has to be funded from the balance no Cost Pressures have been formally identified.  The budget is presented in the traditional objective analysis format.

10.        The proposed 2012/13 budget is set out at Appendix A.

·               HRA (General) - This budget head relates to net income from rents and service charges as well as general expenditure such as Disabled Adaptations team and Tennant Participation Groups.

·               Housing Repairs - This budget relates to the repairs and maintenance service for the Council Housing Stock. 

·               Housing Subsidy payable - This budget relates to the estimated proportion of rent payable to WG.

·               General Management - This budget head relates to the general management of the Council's housing stock, for work carried out within the Housing service, and for various issues relating to the Council tenancies excluding the repairs and maintenance function.

·               Special Services - This budget relates to the running expenses and the cost of staff employed directly within the Housing service, in relation to functions such as sheltered housing schemes, running the hostel and temporary accommodation.

·               Central Support & Operational Building Charges - This budget relates to the services provided by other Departments within the Council, and the cost of office accommodation occupied by the Housing Services staff.

·               Capital Expenditure from Revenue Account (CERA) - This budget relates to a contribution made from the Housing Revenue Account to fund capital expenditure/.

·               Capital Financing - Costs associated with financing debt.

11.        In summary the change in the controllable budget is itemised as follows:-

2011/2012

Original Budget

Inflation / Pay Award

Committed Growth / Savings

Estimated Rent Increase

2012/13

Proposed Budget

£000

£000

£000

£000

£000

(3,922)

32

4627

(726)

11

12.        The committed growth of £4,627,000 is due to a number of factors:

·               An increase in Capital Expenditure from Revenue Account (CERA) to finance the Housing Improvement Programme £4,753,000

·               An increase in increments and staff changes to support the delivery of the Housing Improvement Programme £221,000

·               An increase in the provision of HRA Subsidy payable to WG based on the latest guidance issued (and as per Housing business plan) £27,000

·               An increase in the bad debt provision as per latest business plan assumptions £60,000

·               An increase in the provision of software upgrades and licence fees to drive forward and monitor the asset database system in conjunction with the Housing Improvement Programme £50,000

·               A reduction in county court recharge income £26,000

·               An increase in the incentive to move scheme £24,000

These have been partially offset by:-

·               A reduction in housing repairs £440,000

·               A reduction in insurance costs £39,000

·               An increase in water commission income £22,000

·               Other budget adjustments totalling £33,000

Proposed Increases in Charges

13.        Rent increases are based on the Subsidy Determination issued by the WG. The Subsidy Determinations specify a guideline rent increase for each local authority; any increase over and above this will be subject to Housing Benefit Rent Rebate Limitations, which means that the HRA will be liable for a proportion of the additional increase. Therefore it is usual practice that the Vale of Glamorgan Council increases the average actual rent by no more than the equivalent increase in guideline rent.

14.        Rent Levels - The guideline rent increase set by the WG for subsidy purposes is an increase of £3.68 (5.34%) for the Vale of Glamorgan Council. A £3.68 increase as a percentage of the authority average actual weekly rent 2011-12 is equivalent to an increase of 5.03% in actual rent. After applying the transitional adjustments still in place following the rent harmonisation review the average actual rent increase would be 5.02% per class 1 dwelling.

The actual increase per property type is detailed below:-

Type

Present Average Rent

 (Based on 50 Chargeable Wks)

Proposed Average Rent Increase(+)/Decrease(-)

(Based on 50 Chargeable Wks)

Proposed Average Rent for 2012-13

(Based on 50 Chargeable Wks

Average Increase %

Bungalow

£74.66 per week

+£4.22 per week

£78.88 per week

5.66%

Flat

£66.39 per week

+£3.02 per week

£69.41 per week

4.56%

House

£81.70 per week

+£4.24 per week

£85.94 per week

5.19%

Maisonette

£72.44 per week

+£3.15 per week

£75.59 per week

4.35%

TOTAL

£75.13 per week

+£3.77 per week

£78.90 per week

    5.02%

 

15.        Garage Rents - The rent of freestanding garages is currently £6.04 per week.  It is proposed that rent for all garages are increased 5.03% to £6.34 per week.  This percentage increase is in line with the recommended increase to dwelling rents (before transitional adjustments).

16.        Ty Iolo Hostel - The current charge for persons accommodated is £135.86 per week, it is proposed that the weekly rent charge are increased 5.03% to £142.69 per week. As rooms at the hostel are classified as HRA dwellings, the rents charged are also subject to Housing Benefit Rent Rebate Limitations, which means that hostel rents should be in line with the guideline rent increase issued by WG.

17.        28 Evans Street, Barry - This property, owned by the Council, is let to Llamau Housing Trust and comprises of six units of accommodation.  The current weekly charge is £452.94. It is proposed that the charge be increased by a maximum of 5.03%, in line with the recommended increase for the Hostel. The weekly charge will therefore be £475.72 per week.

18.        Temporary Accommodation - The average current weekly charge including additional management, utility and service charge costs is £134.40. It is proposed that the rent element be increased by a maximum of 5.03%, in line with the WG recommended guideline increase. The weekly charge will therefore be £141.16 per week.

19.        Sheltered Housing Guest Suites - It is proposed that the charges for guest room facilities are increased by 5.03% to £10.63 per person per night for double occupancy and £15.21 for single occupancy.

20.        The charges in the following paragraphs are not affected by the HRA Subsidy Determinations, but are based on the agreed Service Charge Policy which stated that charges would be based on the best estimated cost of providing the service in the forthcoming year, using prior year's information and any known contract costs:-

21.        Heating - The cost of providing heating to sheltered properties has decreased.  It is proposed that the charge be decreased from £9.15 per week to £7.09 per week based on the actual costs incurred in the 12 months prior to the budgeting period. This is due to a reduction in rates (£0.008/KWH).

22.        Warden Management & Support Charge - It is proposed that the Warden Management and Support charge is increased from £9.44 per week to £9.89 per week.  The support charge element has decreased from £6.68 to £6.35 per week due to a reduction in warden support costs. Where tenants are eligible, the support costs will be paid through the Supporting People Grant (SPG).

23.        Vale Community Alarm Service (VCAS) - This is a charge which forms part of the inclusive rent, but is separately identifiable.  It has been proposed to increase the VCAS charges by 5.03%.

24.        Sewerage Treatment Plants - The charge to owners of all purchased and private dwellings connected to Council owned and maintained treatment plants are currently £286.35 per annum, based on the average charge payable if the properties were connected to the main sewerage system. It is proposed that these dwellings continue to be charged at a similar sewerage rates to the Water Schedule 2012-13 issued by Dwr Cymru Welsh Water. The Welsh Water Schedule was not available until the 20th February and officers in Housing are still in the process of calculating the charge.

Next Steps

25.        Cabinet's final budget proposals will be considered by Council at a meeting to be held on 7th March 2012.

Resource Implications (Financial and Employment and Climate Change, if appropriate)

26.        The Housing Revenue Account projected working balance at 1st April 2012 is £14.331M

Legal Implications (to Include Human Rights Implications)

27.        The Council under the 1989 local Government and Housing Act have a legal obligation to set a budget for the Housing Revenue Account.  Notices of any increases have to be sent to tenants 28 days in advance of the new changes coming into effect.

Crime and Disorder Implications

28.        Many HRA activities have a positive impact on the reduction of crime and the fear of crime.

Equal Opportunities Implications (to include Welsh Language issues)

29.        Housing Services are carried out in accordance with the Councils Equal Opportunities policies and practices.

Corporate/Service Objectives

30.        Housing Services support the following Corporate/Service objectives:-

·               Social Well Being and Tackling Disadvantage

·               Ensuring that all Vale residents have access to good quality, affordable and appropriate accommodation that is sufficient for their needs.

·               Environmental Improvement

·               Maintaining and improving the quality of the public housing stock

·               Community Leadership

·               Encouraging tenants and residents to participate in the management of housing stock.

Policy Framework and Budget

31.        This report is following the procedure laid down in the Constitution for the making of the budget. It is a matter of endorsement by the Cabinet and approval by the Council.

Consultation (including Ward Member Consultation)

32.        The Corporate Management Team has been consulted on this report. 

Relevant Scrutiny Committee

33.        Housing and Public Protection is the relevant Scrutiny.

Background Papers

Finance Department papers

Housing Business Plan December 2011

Housing Revenue Account Subsidy (HRAS) and Item 8 Determinations for 2012-2013

 

Contact Officer

Collette Bevan - Temporary Accountant

 

Officers Consulted

Sian Davies - Director of Finance, ICT & Property

Tony Jaques - Head of Housing Services

 

Responsible Officer:

 

Sian Davies - Director of Finance, ICT & Property

Peter Evans - Director of Legal, Public Protection and Housing Services

 

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