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Agenda Item No. 9(h)

 

 

THE VALE OF GLAMORGAN COUNCIL

 

COUNCIL MEETING: 6TH MARCH, 2013.

 

REFERENCE FROM CABINET: 25TH FEBRUARY, 2013.

 

C1232    FINAL HOUSING REVENUE ACCOUNT BUDGER PROPOSALS 2013/14 (L) (SCRUTINY COMMITTEE – HOUSING AND PUBLIC PROTECTION)

 

Cabinet considered the budget for the financial year 2013 /14 and also considered the rents and service charges for the forthcoming rent year beginning on 1st April, 2013.

 

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 Act required 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 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 was heading for a deficit, they must take steps as are reasonably practical to prevent this deficit. A local authority was 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 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 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.

 

The initial HRA budget proposals was 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.

 

It was expected that the HRA would 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 was ring fenced any surplus or deficit at the year end would increase or decrease the Housing Revenue Account Balance.

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 meant that the cost of price increases and pay awards should be included.

 

Due to the nature of the HRA in that it is ring fenced and any growth had to be funded from the balance, no cost pressures had been formally identified.  The budget was presented in the traditional objective analysis format.

The proposed 2013/14 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 Tennant Participation Groups.
  • Housing Repairs - This budget related to the revenue 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.
  • Capital Expenditure from Revenue Account (CERA) - This budget related to a contribution made from the Housing Revenue Account to fund capital expenditure.  There was 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 related 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.

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

 

The committed growth of £7.336M was due to a number of factors:

  • An increase in the CERA contribution of £7.349M was 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 would 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 was 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 would now be brought up to Welsh Housing Quality Standards using Housing Improvement Plan funding as indicated in the Housing Business Plan.  This would decrease the expenditure required on revenue repairs for the period.

Rent increases were 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 would be subject to Housing Benefit Rent Rebate Limitations, which meant that the HRA would be liable for a proportion of the additional increase. Therefore, it was usual practice that the Vale of Glamorgan Council increases 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 £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 was 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.

 

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%

 

Garage Rents - The rent of freestanding garages was currently £6.34 per week.  It was proposed that rent for all garages was increased by 3.55% to £6.57 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 £142.69 per week, it iwas proposed that the weekly rent charge was increased by 3.55% to £147.76 per week. As rooms at the hostel were classified as HRA dwellings, the rents charged were 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 of six units of accommodation.  The current weekly charge was £475.72. It was proposed that the charge be increased by a maximum of 3.55%, in line with the recommended increase for the Hostel. The weekly charge would, therefore, be £492.61 per week.

 

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

 

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

 

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

 

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 charges by 3.55%.

 

Sewerage Treatment Plants - The charge to owners of all purchased and private dwellings connected to Council owned and maintained treatment plants were currently £301.54 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 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 were still in the process of calculating the charge.

 

This was a matter for Council decision.

 

RESOLVED –

(1)         T H A T 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)         T H A T the increases suggested for rent and other services be approved and recommended to Council, as set out in paragraphs 13-25.

 

(3)         T H A T  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)         T H A T 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 decisions

 

(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

 

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