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Agenda Item No

The Vale of Glamorgan Council

 

Cabinet Meeting 25th February 2013

 

Report of the Leader

 

Final Housing Revenue Account Budget Proposals 2013/14

 

Purpose of the Report

1.         To set the Housing Revenue Account (HRA) budget for the financial year 2013/14 and to set the rents and service charges for the forthcoming rent year beginning on 1st April 2013.

Recommendations

It is recommended that:-

           

1.         The final Housing Revenue Account (HRA) budget proposals for 2013/14 are recommended to Council as outlined below:-

 

Proposed Budget

2013/14

 

£'000

HRA General

(15,134)

Housing Repairs

2,482

HRA Subsidy Payable to Welsh Government

5,256

General Management

1,042

Special Services

880

Capital Expenditure from Revenue Account (CERA)

12,382

Controllable Budget 

6,908

Central Support & Operational Buildings

1,396

Capital Financing

148

(Surplus)/Deficit for the Year

8,452

Working Balance Brought Forward

(13,050)

Working Balance Carried Forward

(4,598)

 

 

2.         The increases suggested for rent and other services are approved and recommended to Council, as set out in paragraphs 13-25.

3.         That the following charges for 2013/14 financial year be recommended to Council:-

 

50 Week Basis

Current Charges

Proposed Charges

 

Heating

£7.09 per week

£8.20 per week

 

Warden Support Charge

£6.35 per week

£7.08 per week

 

Warden Management Charge

£3.54 per week

£3.54 per week

 

Vale Community Alarm Service

- Piper

- Communicall

£3.88 per week

£4.40 per week

£4.02 per week

£4.56 per week

 

Grounds Maintenance

  £1.19 per week

                  £1.22 per week

 

Cleaning of communal areas

£1.68 per week

£1.91 per week

 

Lighting of communal areas

£1.10 per week

£1.34 per week

 

Laundry Facilities

£0.15 per week

£0.18 per week

 

Window Cleaning

£0.24 per week

£0.27 per week

 

CCTV

£0.35 per week

£0.35 per week

 

Lift Maintenance

£1.05 per week

£1.08 per week

 

Door Entry

£0.45 per week

£0.46 per week

 

Intercom

£0.68 per week

£0.69 per week

 

Sewerage Treatment Plants

£301.54 per annum

      Based on the Rateable     

      Value (RV) from the

    Welsh Water Schedule 2013-14

 

4.         That all changes to rents and service charges are implemented from 1st April 2013 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 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 6th February 2013 which provided an all-Wales average weekly guideline rent increase of 4.6%, for the Vale of Glamorgan this equates to a 3.76% guideline rent increase.

6.         The initial HRA budget proposals were considered by Cabinet on the 19th November 2012 (minute no. C1912). They were subsequently referred to Housing and Public Protection Scrutiny Committee on 6th December 2012 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.

7.         It is expected that the HRA will outturn on target in 2012/13 at a deficit of £1.832M as reported to Housing and Public Protection Scrutiny Committee on 13th February 2013. 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 2013/14

 

8.         The Budget Strategy for 2013/14 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 2013/14 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 Tennant Participation Groups.

·                Housing Repairs - This budget relates to the revenue 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.

·                Capital Expenditure from Revenue Account (CERA) - This budget relates to a contribution made from the Housing Revenue Account to fund capital expenditure.  There is a significant increase in the CERA contribution this year in line with the Housing Business Plan in order to achieve Welsh Housing Quality Standards by 2017.

·                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 Financing - Costs associated with financing debt.

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

2012/13

Original Budget

Inflation / Pay Award

Committed Growth / Savings

Estimated Rent Increase

2013/14

Proposed Budget

£000

£000

£000

£000

£000

17

115

7,336

(560)

6,908

12.      The committed growth of £7.336M is due to a number of factors:

·                An increase in the CERA contribution of £7.349M is required in order to finance the Housing Improvement Programme and meet Welsh Quality Housing Standards by 2017.

·                An increase in the Provision for bad and doubtful debts of £166,000 as a consequence of an increase in the level of rent arrears anticipated following recent Central Government changes to the housing benefit system (Welfare Reform).

·                An increase of £153,000 in the provision of HRA Subsidy payable to WG based on the latest guidance issued (and as per the Housing Business Plan).

·                Staff changes and increments of £106,000.  Additional temporary staff will be employed to provide support and assistance to those affected by the Welfare Reform with an aim to restrict an increase in rent arrears to a minimum.

·                An increase in rent voids of £166,000 due to increased void days and a slower turnaround on void properties as a result of achieving Welsh Housing Quality Standards whilst the property is vacant.

·                An increase in the Insurance budget of £46,000 based on current spend compared with budget.

These have been partially offset by:-

·                A reduction in housing revenue repairs of £650,000 as void properties will now be brought up to Welsh Housing Quality Standards using Housing Improvement Plan funding as indicated in the Housing Business Plan.  This will decrease the expenditure required on revenue repairs for the period.

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 £2.73 (3.76%) for the Vale of Glamorgan Council. A £2.73 increase as a percentage of the authority average actual weekly rent 2012/13 is equivalent to an increase of 3.55% in actual rent. After applying the transitional adjustments still in place following the rent harmonisation review, the average actual rent increase would be 3.59% per class 1 dwelling.

15.      The actual increase per property type is detailed below:-

    Type

Present Average Rent

 (Based on 50 Chargeable Wks)

Proposed Average Rent Incr (+)/ Decr (-)

(Based on 50 Chargeable Wks)

Proposed Average Rent for 2013-14

(Based on 50 Chargeable Wks

Average Increase

%

    

     Bungalow

£78.89 per week

+£3.12 per week

£82.01 per week

3.95%

     Flat

£69.40 per week

+£2.34 per week

£71.74 per week

3.37%

     House

£85.96 per week

+£3.13 per week

£89.09 per week

3.64%

     Maisonette

£75.59 per week

+£2.68 per week

£78.27 per week

3.55%

Average

Actual Rent

per Class 1

Dwelling

£78.89 per week

+£2.83 per week

£81.72 per week

    3.59%

 

16.      Garage Rents - The rent of freestanding garages is currently £6.34 per week.  It is proposed that rent for all garages is increased by 3.55% to £6.57 per week.  This percentage increase is in line with the recommended increase to dwelling rents (before transitional adjustments).

17.      Ty Iolo Hostel - The current charge for persons accommodated is £142.69 per week, it is proposed that the weekly rent charge is increased by 3.55% to £147.76 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. 

18.      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 £475.72. It is proposed that the charge be increased by a maximum of 3.55%, in line with the recommended increase for the Hostel. The weekly charge will, therefore, be £492.61 per week.

19.      Temporary Accommodation - The average current weekly charge including additional management, utility and service charge costs is £141.16. It is proposed that the rent element be increased by a maximum of 3.55%, in line with the WG recommended guideline increase. The weekly charge will, therefore, be £146.17 per week.

20.      Sheltered Housing Guest Suites - It is proposed that the charges for guest room facilities are increased by 3.55% to £11.01 per person per night for double occupancy and £15.75 for single occupancy.

21.      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:-

22.      Heating - The cost of providing heating to sheltered properties has increased.  It is proposed that the charge be increased from £7.09 per week to £8.20 per week based on the actual costs incurred in the 12 months prior to the budgeting period.

23.      Warden Management & Support Charge - It is proposed that the Warden Management and Support charge is increased from £9.89 per week to £10.62 per week.  The support charge element has increased from £6.35 to £7.08 per week.  Where tenants are eligible, the support costs will be paid through the Supporting People Grant (SPG).

24.      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 3.55%.

25.      Sewerage Treatment Plants - The charge to owners of all purchased and private dwellings connected to Council owned and maintained treatment plants are currently £301.54 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 2013/14 issued by Dwr Cymru Welsh Water. The Welsh Water Schedule was not available until the 20th February 2013 and officers in Housing are still in the process of calculating the charge.

Next Steps

26.      Cabinet's final budget proposals will be considered by Council at a meeting to be held on 6th March 2013.

Resource Implications (Financial and Employment)

27.      The Housing Revenue Account projected working balance at 1st April 2013 is £13.050M and is projected at £4.598M on 1st April 2014.  This significant reduction is a result of implementing the Housing Improvement Plan in order to achieve Welsh Housing Quality Standards by 2017.  It is anticipated that unsupported borrowing will be required in 2014/15 in order to achieve this target.

Sustainability and Climate Change Implications

28.      The promotion of sustainability and action to arrest climate change is a key consideration when allocating scarce resources in the budget to meet the needs of the present without compromising the ability of future generations to meet their needs.

Legal Implications (to Include Human Rights Implications)

29.      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

30.      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)

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

Corporate/Service Objectives

32.      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

33.      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)

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

Relevant Scrutiny Committee

35.      Housing and Public Protection.

Background Papers

Finance Department papers

Housing Business Plan - November 2012

Housing Revenue Account Subsidy and Item 8 Determination - for 2013/14

Contact Officer

Nicola Monckton - Accountant 01446 - 709444

Officers Consulted

Sian Davies - Managing Director

Miles Punter - Director of Visible Services and Housing

Mike Ingram - Operational Manager Public Housing Services

Responsible Officers:

Miles Punter - Director of Visible Services and Housing

Mike Ingram - Operational Manager Public Housing Services

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