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Agenda Item No.

 

THE VALE OF GLAMORGAN COUNCIL

 

SCRUTINY COMMITTEE (HOUSING AND PUBLIC PROTECTION): 1ST DECEMBER, 2011

 

REFERENCE FROM CABINET: 16TH NOVEMBER, 2011

 

 

C1512           INITIAL HOUSING REVENUE ACCOUNT BUDGET PROPOSALS 2012/2013 AND REVISED BUDGET 2011/2012 (L) (SCRUTINY - HOUSING AND PUBLIC PROTECTION) -

 

Approval was sought for the revised estimates 2011/12 and the initial budget proposals for 2012/13 so that they may be submitted to Scrutiny Committee for consultation.  During the course of the year, local authorities must review the HRA expenditure and income and, if on the basis of the information available, the account was heading for a deficit, they must take steps to prevent this 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 Subsidy Determination issued by WG.  This was not due to be released until January 2012 although a provision figure was due during December 2011.  An average rent increase of 3%, based on the latest Business Plan, had been included in the 2012/13 initial budget proposals. 

 

Set out below was a table comparing the original budget with the proposed revised estimate:

 

 

2011/12

Original

Budget

2011/12

Proposed Revised Estimate

Variance

Favourable (-)

Adverse (+)

 

£’000

£’000

£’000

Housing Revenue Account

(2,176)

(2,204)

(28)

 

The net increased surplus of £28,000 in this budget was due to several reasons.  The Housing Repairs budget had reduced by £500,000; central support recharges had reduced by £126,000; capital costs had reduced by £73,000 as a result of increased receipts; the Hostel refurbishment and staff restructure was expected to save £100,000; and other small budget savings amounted to £5,000.  These savings had been offset by an increase in capital expenditure from revenue account (CERA) of £751,000 to finance the planned capital improvement programme.  As a result there had also been a decrease in anticipated interest earned on HRA balances of £25,000.

 

The Base 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.

 

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

 

·       HRA (General) - this budget head related to net income from rents and services charges as well as general expenditure such as insurance, audit and legal fees.

·       Housing Repairs - this budget related to the repairs and maintenance service undertaken on the Council Housing Stock.

·       HRA Subsidy Payable - this budget related to the estimated proportion of rent payable to the Welsh Government.

·       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 from the Housing Revenue Account to fund capital expenditure.

·       Capital Financing - cost associated with finance debt.

 

The charges for rent and other services provided by Housing Service were reviewed annually.  These would be subject to a future report once the information had been received from the Welsh Government.  Set out below was a table summarising the original budget for 2011/12 with the proposed budget for 2012/13:

 

2011/2012

Original

Budget

Inflation /

 Pay Award

Committed

Growth /

Savings

Estimated Rent

Increase

2012/2013

Proposed

Budget

£000

£000

£000

£000

£000

(2,177)

32

5,252

(442)

2,665

 

The provision had been made for general inflation including an allowance of 1% for pay awards in 2012/13.  A 1% increase in pay amounted to approximately £12,000. 

 

Committed Growth represented £5,252,000 which was due to the following factors:

 

·       an increase in Capital Expenditure from Revenue Account (CERA) to finance the housing improvement programme £5,132,000

·       an increase in increments and staff changes to support the delivery of the housing improvement programme £219,000

·       an increase in the provision of HRA Subsidy payable to the Welsh Government based on their latest guidance issued - £121,000

·       an increase in Central Support recharges as a result of increased resources required to deliver the Housing Improvement Programme £194,000

·       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 data base and housing improvement programme £50,000

·       a reduction in county court recharge income £26,000

·       an increase in the Incentive To  Move scheme £24,000.

 

The above had been offset by the following:

 

·       a reduction in Housing Repairs £440,000

·       a reduction in Capital costs £70,000

·       a reduction in insurance costs £39,000

·       an increase in water commission income £22,000

·       other budget adjustments and savings totalling £3,000.

 

The next stage was for the estimates to be submitted to the Scrutiny Committee (Housing and Public Protection) for consultation.  Corporate Resources Scrutiny Committee would be the lead Scrutiny Committee and would consider both the Initial Housing Revenue Account Revenue Budget Proposals and any comments that the Scrutiny Committee (Housing and Public Protection) had made.  Responses from the Scrutiny Committee were required by 20th December 2011. 

 

The Cabinet’s final budget proposals would be considered by Council at its meeting to be held on 7th March 2012.

 

This matter was for Executive decision.

 

RESOLVED -

 

(1)       T H A T the revised budget estimate for 2011/12 be approved.

 

(2)       T H A T the initial budget proposals for 2012/13 be approved for consultation with the Scrutiny Committee (Housing and Public Protection).

 

(3)       T H A T the increase for rent and other services be subject to a future report as soon as the information was available from the Welsh Government.

 

Reasons for decisions

 

(1)       To facilitate monitoring of the revised budget.

 

(2)       In order that Cabinet be informed of the comments of the Scrutiny Committee before making a final proposal on the budget.

 

(3)       In order to meet the statutory deadline to notify tenants of the new charges as required by Statute.”

 

 

Attached as Appendix - Report to Cabinet: 16th November 2011

 

 

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