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Agenda Item No

 

The Vale of Glamorgan Council

 

Cabinet Meeting: 24 February, 2014

 

Report of the Leader

 

Final Housing Revenue Account Budget Proposals 2014/15

 

Purpose of the Report

1.         To set the budget for the financial year 2014/15 and to set the rents and service charges for the forthcoming rent year beginning on 7th April 2014.

Recommendations

It is recommended that:-

           

1.         The final budget proposals for 2014/15 are recommended to Council as outlined below:-

 

Proposed Budget

2014/15

 

£'000

HRA General

(15,876)

Housing Repairs

2,614

HRA Subsidy Payable to WG

5,043

General Management

1,253

Special Services

877

Capital Expenditure from Revenue Account (CERA)

7,987

Central Support & Operational Buildings

1,276

Capital Financing

340

(Surplus)/Deficit for the Year

 

3,514

Working Balance Brought Forward

(5,441)

Working Balance Carried Forward

(1,927)

 

 

 

2.         The increase suggested for rent and other services are approved and recommended to Council, as set out in paragraphs 13-24.

3.         The following charges for 2014/15 financial year be recommended to Council:-

50 Week Basis

 

Current Charges

 

Proposed Charges

 

Heating

 

£8.20 per week

 

£9.37 per week

 

Warden Support Charge

 

£7.08 per week

 

£7.08 per week

 

Warden Management Charge

 

£3.54 per week

 

£3.54 per week

 VCAS:

- Piper

- Communicall

 

 
£4.02 per week
£4.56 per week 
 

 

 
£4.19 per week
£4.75 per week

 

Grounds Maintenance

 

                  £1.22 per week

 

                  £1.24 per week

 

Cleaning of communal areas

 

£1.91 per week

 

£1.83 per week

 

Lighting of communal areas

 

£1.34 per week

 

£1.12 per week

 

Laundry Facilities

 

£0.18 per week

 

£0.23 per week

 

Window Cleaning

 

£0.27 per week

 

£0.28 per week

 

Lift Maintenance

 

£1.08 per week

 

£0.49 per week

 

Door Entry

 

£0.46 per week

 

£0.28 per week

 

Intercom

 

£0.69 per week

 

£1.00 per week

 

Sewerage Treatment Plants

 

£311.01per annum

 

 

      Based on the Rateable Value (RV) from the Welsh Water Schedule 2014-15

 

 

 

 

 

4.         All changes to rents and service charges are implemented from 7th April 2014 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 issued on 3rd February 2014 which provided an all-Wales average weekly guideline rent increase of 4.2%, for the Vale of Glamorgan this equates to a 4.14% guideline rent increase.

6.         The initial HRA budget proposals were considered by Cabinet on the 18th November 2013 (minute no. C2073). They were subsequently referred to Housing and Public Protection Scrutiny Committee on 4th December 2013 who noted the proposals as did Corporate Resources Scrutiny Committee on 10th December 2013. Cabinet on 16th December resolved that the contents of the report be noted and that the report be forwarded to the Budget Working Group.

Base Budget 2014/15

 

7.         The Budget Strategy for 2014/15 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.

8.         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.

9.         The proposed 2014/15 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 Tenant Participation Groups.

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

·               HRA 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. 

·               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.

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

2013/14

Original Budget

Inflation / Pay Award

Committed Growth / (Savings)

Estimated Rent Increase

2014/15

Proposed Budget

£000

£000

£000

£000

£000

8,452

55

            (4,331)

(662)

3,514

 

 

 

 

 

11.      The committed savings of £4,331,000 are due to a number of factors:

·               A decrease in the CERA (Capital Expenditure from Revenue Account) budget of (£4,395,000) is required in order to finance the Housing Improvement Programme and meet Welsh Quality Housing Standards by 2017. This takes into account the estimated available revenue surpluses available according to the latest Business Plan revision December 2013.

·               A decrease in the provision for HRA Subsidy payable to WG based on the latest draft guidance issued (£218,000).

·               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 is thought to be less than originally budgeted for.

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

·               A reduction in the expected insurance charges for 2014/15 of (£24,000)

These have been partially offset by:-

·               Staff restructure of £200,000 which is 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, rechargeable works recovery and welfare reform and make it fit for forthcoming challenges.

·               An increase in Capital Financing charges of £193,000 in relation to unsupported borrowing being taken out for the first time in 2014/15 to fund the Housing Improvement Programme.

·               A decrease in interest earned on Revenue Balances £78,000.

·               Further budget increases of £90,000.

Proposed Increases in Charges

12.      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.

13.      Rent Levels - The guideline rent increase set by the WG for subsidy purposes is an increase of £3.30 for the Vale of Glamorgan Council. A £3.30 increase as a percentage of the authority's average actual weekly rent in 2013-14 is equivalent to an increase of 4.14% in actual rent.

14.      The target rent increase per property type is detailed below:-

    Type

Present Average Target Rent

 (Based on 50 Chargeable Wks)

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

(Based on 50 Chargeable Wks)

Proposed Average Target Rent for 2014/15

(Based on 50 Chargeable Wks)

 

     Bungalow

  £82.02 per week

         +£3.40 per week

     £85.42 per week

     Flat

£71.62 per week

+£2.97 per week

£74.59 per week

     House

£89.24 per week

+£3.69 per week

£92.93 per week

     Maisonette

£78.27 per week

+£3.24 per week

£81.51 per week

     TOTAL

£81.75 per week

+£3.38 per week

£85.13 per week

 

15.      Garage Rents - The rent of freestanding garages is currently £6.57 per week.  It is proposed that rent for all garages are increased 4.14% to £6.84 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 £147.76 per week, it is proposed that the weekly rent charge are increased 4.14% to £153.88 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 £492.61. It is proposed that the charge be increased by a maximum of 4.14%, in line with the recommended increase for the Hostel. The weekly charge will therefore be £513.00 per week.

18.      Temporary Accommodation - The average current weekly charge including additional management, utility and service charge costs is £146.17. It is proposed that the rent element be increased by a maximum of 4.14%, in line with the WG recommended guideline increase. The weekly charge will therefore be £152.22 per week.

19.      Sheltered Housing Guest Suites - It is proposed that the charges for guest room facilities are increased by 4.14% to £11.47 per person per night for double occupancy and £16.40 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 states 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 increased.  It is proposed that the charge be increased from £8.20 per week to £9.37 per week based on the actual costs incurred in the 12 months prior to the budgeting period.

22.      Warden Management & Support Charge - It is proposed that the Warden Management and Support charge remain unchanged for 2014/15.  Changes to the Supporting People Grant funding criteria (funding will be based on need rather than tenure) could result in significant changes to the funding structure of the Councils Sheltered Housing Service and could mean that charges will change again.  For this reason it seems appropriate to leave the charges at 2013/14 levels for the time being.

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 4.14%.

24.      Sewerage Treatment Plants - The charge to owners of all purchased and private dwellings connected to Council owned and maintained treatment plants are currently £311.01 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 2014/15 issued by Dwr Cymru Welsh Water. The Welsh Water Schedule was not available at the time of writing.

Next Steps

25.      Cabinet's final budget proposals will be considered by Council at a meeting to be held on 5th March 2014.

Resource Implications (Financial and Employment)

26.      The Housing Revenue Account projected working balance at 1st April 2014 is £5.441M and is projected at £1.927M on 1st April 2015.  This reduction is a more favourable position than that detailed in the Housing Business Plan 2013, mainly due to the higher than anticipated rent increase.  Implementing the Council's Housing Business Plan and associated Improvement Programme, is essential in meeting the Welsh Housing Quality Standard by April 2017.

Sustainability and Climate Change Implications

27.      Improving homes to the Welsh Housing Quality Standard provides tenants with modern, energy efficient homes

Legal Implications (to Include Human Rights Implications)

28.      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

29.      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)

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

Corporate/Service Objectives

31.      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

32.      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)

33.      The Corporate Management Team has been consulted on this report. The initial budget proposals do not require Ward Member consultation.

Relevant Scrutiny Committee

34.      Housing and Public Protection is the relevant Scrutiny

Background Papers

Housing Business Plan - December 2013

Housing Revenue Account Subsidy and Item 8 Determination - latest guidance.

Contact Officer

Lori Bigglestone- Accountant

01446 709236

Officers Consulted

Sian Davies  - Managing Director

Miles Punter - Director of Visible Services and Housing

Hayley Selway - Head of Housing & Building Services

Mike Ingram - Operational Manager Public Housing Services

Responsible Officers:

Miles Punter - Director of Visible Services and Housing

Sian Davies - Managing Director

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