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Agenda Item No. 9(d)

 

THE VALE OF GLAMORGAN COUNCIL

 

COUNCIL MEETING: 5 MARCH  2014

 

REFERENCE FROM CABINET:  24 FEBRUARY 2014

 

C2210      FINAL HOUSING REVENUE ACCOUNT BUDGET PROPOSALS 2014/15 (L) (SCRUTINY COMMITTEE – HOUSING AND PUBLIC PROTECTION) -

 

Approval was sought for 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.

 

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 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 was not in deficit at the year end.

 

The level of rent increase was 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.

 

The initial HRA budget proposals was considered by Cabinet on the 18th November 2013 (Minute No. C2073) and 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.

 

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 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.  The budget was presented in the traditional objective analysis format.

The proposed 2014/15 budget was set out at Appendix A attached to the report.

  • HRA (General) - This budget head related to net income from rents and service charges as well as general expenditure such as Tenant Participation Groups.
  • Housing Repairs - This budget related to the revenue repairs and maintenance service for the Council Housing Stock. 
  • HRA 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. 
  • 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 budget was 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

 

 

 

 

 

 

The committed savings of £4,331,000 were due to a number of factors:

  • A decrease in the CERA (Capital Expenditure from Revenue Account) budget of (£4,395,000) was required in order to finance the Housing Improvement Programme and meet Welsh Quality Housing Standards by 2017. This took 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 had been partially offset by:-

  • Staff restructure of £200,000 which 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, 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.

Rent increases were based on the Subsidy Determination issued by the WG. The Subsidy Determinations specified 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 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 £3.30 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.

 

The target rent increase per property type was 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

 

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

 

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

 

Sheltered Housing Guest Suites - It was proposed that the charges for guest room facilities be increased by 4.14% to £11.47 per person per night for double occupancy and £16.40 for single occupancy.

 

The charges in the following paragraphs 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 £8.20 per week to £9.37 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 remained unchanged for 2014/15.  Changes to the Supporting People Grant funding criteria (funding would 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 would change again.  For this reason it seemed appropriate to leave the charges at 2013/14 levels for the time being.

 

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 4.14%.

 

Sewerage Treatment Plants - The charge to owners of all purchased and private dwellings connected to Council owned and maintained treatment plants were currently £311.01 per annum, based on the average charge payable if the properties were connected to the main sewerage system. It was proposed that these dwellings continued 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.

 

The final budget proposals would be considered by Council at a meeting to be held on 5th March 2014.

 

This was a matter for Council decision.

 

RESOLVED –

 

It was recommended to Council :-

           

(1)          T H A T the final budget proposals for 2014/15 be 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)          T H A T the increase suggested for rent and other services be approved and recommended to Council, as set out in paragraphs 13-24 of the report.

 

(3)          T H A T 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)          T H A T all changes to rents and service charges be implemented from 7th April 2014 and that increase notices be 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 were set within the specified Welsh Government (WG) guidelines, and that the budget accurately reflects any changes necessary.

 

(3)          In order that new charges were 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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