Top

Top

Matter which the Chairman has decided is urgent by reason of the need to inform Cabinet of the outcome of consideration by the Scrutiny Committees

 

Agenda Item No.

 

 

THE VALE OF GLAMORGAN COUNCIL

 

CABINET: 16TH DECEMBER, 2013

 

REFERENCE FROM SCRUTINY COMMITTEE (CORPORATE RESOURCES): 10TH DECEMBER, 2013

 

 

“           Initial Housing Revenue Account Budget Proposals 2014/2015 and Revised Budget 2013/2014 (DVSH) –

 

The report had been previously considered by the Scrutiny Committee (Housing and Public Protection) at its meeting held on 4th December 2013.  Following consideration at the time the Committee recommended

 

“(1)      That the revised budget estimate for 2014/15 be noted.

 

(2)       T H A T the Initial Housing Revenue Account budget proposals for 2014/15 be noted.

 

(3)       T H A T the next financial monitoring report submitted for consideration contain a breakdown of expenditure allocated against each of the following budget headings:

 

·                General Management

·                Special Services

·                Central Support and Operational Buildings.â€

 

The Scrutiny Committee (Corporate Resources) was now considering this matter as the lead Scrutiny Committee for overseeing the budget process.

 

Each local housing authority was required under Section 74 of the 1989 Local Government and Housing Act to keep a Housing Revenue Account.  Section 76 of the above Act required 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 was not in deficit at the year end.  In addition, local authorities were also required during the course of the year to review their HRA expenditure and income and if, on the basis of the information available, the account was heading for a deficit, they must take steps as were reasonably practicable to prevent such deficit.  Such a deficit would be carried forward and must be made good the following financial year.  Each local authority should endeavour to have a working balance on the HRA, for any exceptional circumstances that may arise. 

 

The level of rent increases was based on the Subsidy Determination issued by the Welsh Government (WG).  This would not be known until January 2014.  An average rent increase of 3%, based on the latest Business Plan, had been included in the 2013/14 initial budget proposals.  Set out below is a summary table comparing the original budget with the proposed revised estimate.

 

 

2013/2014 Original Budget

2013/2014 Proposed Revised Estimate

Variance Favourable (-) Adverse (+)

 

£'000

£'000

£'000

Housing Revenue Account

8,452

8,129

    (323)

 

The net anticipated deficit had decreased by (£323,000) due to an increase in net income of (£324,000), because of an extra rent week in 2013/2014; recharges had decreased by (£56,000); there was a saving of (£109,000) on staff costs due to vacancies; (£32,000) reduction in Council Tax expenditure on empty properties.  In addition there was a (£25,000) saving on insurance costs.  Further savings on the budget were: the HRA Subsidy payment was expected to be (£159,000) lower than current estimates; the anticipated growth in the bad debt provision had reduced by (£85,000), based on the current bad debt level.  In addition there were further savings totalling (£4,000) on various other items in the Housing Revenue Account.  These savings had been offset by budget increases of £30,000 on the repairs budget because of changes to the Gas Servicing contract costs, the Capital Expenditure from Revenue Account (CERA) had increased by £279,000, due to demands on the Housing Improvement Programme (£186,000 slippage, £600,000 expenditure on Voids, £150,000 Sheltered scheme acceleration, offset by additional useable capital receipts utilised (£657,000)) .  There had also been an increase in the loss of rental income through increased void days due to WHQS £162,000.

 

The Budget Strategy for 2014/15 outlined that in order to establish a baseline, services should prepare revenue budget for next year based on the cost of providing the current level of service and approved policy decisions.  This meant that the cost of price increases and pay awards should be included. 

 

Due to the nature of the HRA in that it was ring fenced and any growth had to be funded from its revenue balance, no cost pressures had been formally identified.  The budget was presented in the traditional objective analysis format.  The proposed 2014/15 budget was detailed in Appendix A to the report.  The 2013/14 Summary Cost Centre Analysis was detailed in Appendix B to the report which broke down the budget over the types of expenditure.  

 

The charges for rent and other services provided by the Housing Service were reviewed annually and would be subject to a future report once the information had been received from the WG.  Detailed below is a summary of the original budget for 2013/14 with the proposed budget for 2014/15. 

 

2013/2014

Original

Budget

Inflation /

 Pay Award

Committed

Growth /

(Savings)

Estimated Rent

Increase

2014/2015

Proposed

Budget

£000

£000

£000

£000

£000

8,452

38

(4,591)

(476)

3,423

 

A provision for general inflation included an allowance of 1% for 2014/15.  A 1% increase in pay amounted to approximately £13,000.

 

The rent increase was estimated at 3% based on the latest Housing Business Plan, for 2014/2015 this equated to (£476,000).  The actual rent increase was not due for release until January 2014.

 

The net saving of (£4,591,000) was due to a number of factors:

 

·                A decrease in Capital Expenditure from Revenue Account (CERA) to finance the Housing Improvement Programme of (£4,995,000). The amount of revenue contribution required was dictated by available revenue balances and the value of the Housing Improvement Programme.

·                A (£120,000) decrease in Central Support recharges.

·                A decrease in the expected growth in the bad debt provision of (£135,000).  The original anticipated loss of rent due to the welfare reform accommodations cap was thought to be less than originally budgeted for.

·                A decrease in insurance charges of (£24,000).

·                The above savings have been offset by an increase in staff expenditure.  A restructure was being drafted for 2014/2015, which could cost an additional £200,000, but was intended to strengthen the service in terms of dealing with anti-social behaviour, statutory compliance (e.g. fire risk assessment work, gas and electrical safety), asset management and welfare reform  and make it fit for forthcoming challenges.

·                An increase in the provision of HRA Subsidy payable to WG based on the current guidance issued of £195,000

·                An increase in Capital Financing charges of £193,000 in relation to unsupported borrowing being taken out for the first time in 2014/2015 to fund the Housing Improvement Programme.

·                A decrease in interest earned on Revenue Balances £80,000.

·                Further budget increases of £15,000

 

As indicated in earlier reports considered, Scrutiny Committees were being consulted on the budget proposals with the Scrutiny Committee (Corporate Resources) being the lead Scrutiny Committee who would be required to respond to the Cabinet on the budget by no later than 13th  December 2013.  Cabinet’s final proposals on the budget would be considered by the Council on 5th March 2014.

 

The Housing Revenue Account working balance at 1st April 2014 would be £5.441m. 

 

Having regard to the above and related issues it was

 

RECOMMENDED -

 

(1)       T H A T the revised budget estimate for 2014/15 be noted.

 

(2)       T H A T the Initial Housing Revenue Account budget proposals for 2014/15 be noted.

 

Reasons for recommendations

 

(1)       In acknowledgement of monitoring the budget for 2013/14.

 

(2)       To inform Cabinet of the outcome of the scrutiny process on the matter.â€