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Agenda Item No.

 

THE VALE OF GLAMORGAN COUNCIL

 

SCRUTINY COMMITTEE (HOUSING AND PUBLIC PROTECTION): 2ND NOVEMBER, 2011

 

SCRUTINY COMMITTEE (CORPORATE RESOURCES): 8TH NOVEMBER, 2011

 

REFERENCE FROM CABINET: 19TH OCTOBER, 2011

 

 

C1480        DRAFT HOUSING BUSINESS PLAN 2011 (L AND HCS) (SCRUTINY - CORPORATE RESOURCES) -

 

The Welsh Government required all local authorities who wished to retain their stock to submit annually an acceptable Housing Business Plan that included a detailed financial forecast in the form of a 30 year financial model.  The revised draft of the Housing Business Plan was appended to the report.  The following table summarised the major changes made to the base model assumptions within the Plan:

 

Assumption

November 2010

October 2011

Minimum level of balances to be maintained

 

£450,000 in real terms

£600,000 in real terms

Rents

£68.50 per week (average) calculated on a 52 week basis for 2010/2011, and to increase by inflation target +1% from 2011/12 onwards in line with the notional rent guideline increase as per latest WAG determination.

 

£72.24 per week (average) calculated on a 52 week basis for 2011/2012, and to increase by inflation target +1% from 2012/13 onwards in line with the notional rent guideline increase as per latest WAG determination.

All other revenue income and expenditure

Based on 2010/11 budget

Based on 2011/12 budget including additional staff, consultancy fees and IT improvements and investments.

 

Penarth Heights HRA Useable Capital Receipts (UCRs)

£1,910,134

£1,849,716

Land Sales

£300,000 in total with 50% useable.

Assumed use in Year 4 2013/14

 

£200,000 in total with 50% useable.

Assumed use in Year 4 2013/14

Other Capital Spends

Disabled Adaptations

£280k (Yr 1) + £260k pa (Yr 2-30)

 

£600k (Yr 1) - Hostel

Disabled Adaptations

£240k pa + (8% fees)

 

 

£872k (Yr 1-30) - Hostel and Temporary Accommodation

 

Estate Safety Improvements

 

None

£50k pa (Year 2-6)

 

Further details in relation to the above were contained within the report.

 

The latest projections were shown at Appendix E(i) and E(ii) of the Plan and showed a reduction in the maximum amount of unsupported debt (Prudential Borrowing) at any time of £31.18m. (previously £35.12m.) and an increase in revenue surplus after 30 years to £104.68m. (previously £58.68m.).  Based on Prudential Borrowing of £32.02m. it was anticipated that the Council could make early repayments during the later years of the Plan and repay any outstanding debt by 2028/29 (previously 2034/35).  The following table indicated a summary of the movement in the financial position compared to the previous base:

 

 

November 2010

October

2011

Difference

WHQS Target

Prudential Borrowing

Peak Debt

Repayment of Debt

Revenue Surplus in Year 30

2016/17

£38.06m.

£35.12m.

2034/35

£58.68m.

2016/17

£32.02m.

£31.18m.

2028/29

£104.68m.

No Change

-£6.04m.

-£3.95m.

-6 years

+£46m.

 

As regards sensitivity analysis and risk assessment, attention was drawn to the fact that one of the major risks to the Council was the impact of Prudential Borrowing which was required to ensure that the Welsh Housing Quality Standard (WHQS) was met in 2016/17.  Reference was also made within the Plan to other potential risks.  For sensitivities 5 and 6 (risks in the receipt of the Major Repairs Allowance) modelled in the Plan, whilst the Council’s Housing Business Plan was technically viable the level of peak debt could be potentially viewed by the Council as an unacceptable level of risk.  Additionally, the HRA reserve surplus at year 30 was considerably reduced.  Whilst the above table showed that there was capacity for the Council to absorb a degree of risk, significant changes to some assumptions could have a severe impact and potentially make the existing investment programme financially unviable.  Further details were contained within the report as to the level of risk and particular attention drawn to the need to consider whether the risk to the Council was deemed reasonable. 

 

It was recognised that consultation was required prior to the Housing Business Plan being finalised.  It was consequently proposed that the draft Plan be referred to the Tenants Consultation Panel and to the Scrutiny Committee (Corporate Resources) and the Scrutiny Committee (Housing and Public Protection).  Thereafter the Plan would be brought back to Cabinet in November with a view to its being presented to Council for approval in December 2011.  The Cabinet Member drew attention to the fact that consultation would also be undertaken with the trade unions prior to the submission of the Plan to the Council.  It was noted that the Council could consider spending above the level currently assumed in the Plan.  Additional capital funding could be made available, for example, on environmental improvements and a further option could be for further revenue expenditure to support and improve service delivery - or a combination of both.  Leaseholders would be responsible for a proportion of costs of the improvement works and it was considered critical that a procedure was put in place to minimise any unrecoverable costs. 

 

This was a matter for endorsement by the Cabinet and approval by the Council.

 

RESOLVED -

 

(1)       T H A T the changes to the draft Housing Business Plan as outlined in the report be noted.

 

(2)       T H A T the draft Plan be referred to the Scrutiny Committee (Corporate Resources) and to the Scrutiny Committee (Housing and Public Protection).

 

(3)       T H A T the draft Plan be referred for consultation with the Tenants Panel.

 

(4)       T H A T the Housing Business Plan be brought back to Cabinet following consultation.

 

Reasons for decisions

 

(1)       To update the draft Business Plan with the latest available information.

 

(2)       To provide opportunity for comment from the Scrutiny Committees.

 

(3)       To seek the views of tenants.

 

(4)       To report the proposed final Housing Business Plan prior to its submission to Council.”

 

Attached as Appendix - Report to Cabinet: 19th October 2011