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Agenda Item No. 7(e)

 

THE VALE OF GLAMORGAN COUNCIL

 

COUNCIL MEETING: 7TH MARCH, 2012

 

REFERENCE FROM CABINET: 29TH FEBRUARY, 2012

 

 

C1634     FINAL HOUSING REVENUE ACCOUNT BUDGET PROPOSALS 2012/13 (L) (SCRUTINY - HOUSING AND PUBLIC PROTECTION) -

 

Cabinet considered the budget for the financial year 2012/13 and also considered the rents and service charges for the forthcoming rent year beginning on 2nd April 2012.  Each local housing authority was required to keep a Housing Revenue Account.  Section 76 of the 1989 Local Government and Housing 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 HRA was not in deficit at the year end. 

 

During the course of the year, local authorities must review 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 would need to demonstrate that the deficit had arisen through exceptional circumstances and that it had revised its original proposals so far as was reasonably practical to avoid the deficit.

 

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

 

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

 

The initial HRA budget proposals were considered by Cabinet on 16th November 2011 and were subsequently referred to Scrutiny Committee (Housing and Public Protection) 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.  Scrutiny Committee (Corporate Resources) on 20th December 2011 had 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 had noted the recommendations.

 

It was still expected that the HRA would outturn on target in 2011/12 at a surplus of £2,204k., as had been reported to Cabinet on 1st February 2012.  As the HRA was ring fenced, any surplus or deficit at the year end would increase or decrease the HRA balance.

 

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 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 the balance, no Cost Pressures had been formally identified.  It was presented in the traditional objective analysis format.

 

The proposed 2012/13 budget was set out at Appendix A to the report.

  • HRA (General) - this budget head related to net income from rents and service charges as well as general expenditure such as Disabled Adaptations team and Tenant Participation Groups
  • Housing Repairs - this budget related to the repairs and maintenance service for the Council Housing Stock
  • Housing Subsidy Payable - this budget related to the estimated proportion of rent payable to WG
  • General Management - this budget head related 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 related 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 and Operational Building Charges - this budget related 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 related to a contribution made from the HRA to fund capital expenditure
  • Capital Financing - costs associated with financing debt.

In summary, the change in the controllable budget was itemised as follows:

 

2011/12

Original

Budget

Inflation /

Pay Award

Committed

Growth/

Savings

Estimated

Rent

Increase

2012/13

Proposed

Budget

£000

£000

£000

£000

£000

(3,922)

32

4,627

(726)

11

 

The committed grown of £4,627,000 was due to a number of factors:

  • an increase in Capital Expenditure from Revenue Account 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 £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 had 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.

Rent increases were based on the Subsidy Determination issued by the WG.  The Subsidy Determinations specified a guideline rent increase for each local authority and any increase over and above this would be subject to Housing Benefit Rent Rebate Limitations which mean that the HRA would be liable for a proportion of the additional increase.  Therefore it had been usual practice that the Vale of Glamorgan Council increased the average actual rent by no more than the equivalent increase in guideline rent.

 

Rent Levels - the guideline rent increase set by the WG for subsidy purposes was 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 was 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 was 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%

 

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

 

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

 

28 Evans Street, Barry - this property, owned by the Council, was let to Llamau Housing Trust and comprised six units of accommodation.  The currently weekly charge was £452.94 and it was proposed that the charge be increased by a maximum of 5.03% in line with the recommended increase for the Hostel.  The weekly charge would therefore be £475.72 per week.

 

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

 

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

 

The following charges were not affected by the HRA Subsidy Determinations but were 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:

 

Heating - the cost of providing heating to sheltered properties had decreased.  It was 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 was due to a reduction in rates.

 

Warden Management and Support Charge - it was proposed that the Warden Management and Support Charge be increased from £9.44 per week to £9.89 per week.  The Support Charge element had decreased from £6.68 to £6.35 per week due to a reduction in warden support costs.  Where tenants were eligible, the support costs would be paid through the Supporting People Grant.

 

Vale Community Alarm Service (VCAS) - This was a charge which formed part of the inclusive rent, but was separately identifiable.  It had been proposed to increase the VCAS charge by 5.03%.

 

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

 

This was a matter for determination by the Council.

 

RESOLVED -

 

(1)       T H A T the final budget proposals for 2012/13 be 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 and 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)       T H A T the increase suggested for rent and other services as set out in paragraphs 11 to 19 of the report be approved and recommended to Council.

 

(3)       T H A T 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)       T H A T all changes to rents and service charges be 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 decisions

 

(1)       As required by Statute.

 

(2)       In order that new rent levels are set within the specified Welsh Government 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.”

 

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