Agenda Item No: 18
THE VALE OF GLAMORGAN COUNCIL
CABINET MEETING : 7th FEBRUARY 2007
JOINT REPORT FROM THE DIRECTORATE OF COMMUNITY
SERVICES AND THE DIRECTOR OF FINANCE, ICT AND PROPERTY.
FINAL HOUSING REVENUE ACCOUNT BUDGET
PROPOSALS 2007/2008 AND REVISED BUDGET 2006/2007
Purpose of Report
1. To set the
budget for the financial year 2007/2008 and to report on the
revised estimates for the current financial year.
Background
2. Each local
housing authority is required by 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 is not in
deficit at the year end.
3.
During the course of the year, Local Authorities must review their
Housing Revenue Account expenditure and income and if, on the basis
of 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 will need to demonstrate that the deficit has arisen through
exceptional circumstances and that it has revised its original
proposals so far as reasonably practical to avoid the deficit. Such
a deficit shall be carried forward and must be made good the
following year.
4.
Each Local Authority should endeavour to have a working balance on
the Housing Revenue Account (HRA), for any exceptional
circumstances that may arise.
5.
The Local Government Act 2003 sets out a number of changes to the
Housing finance system. The aims of these reforms are to enable all
local authorities to effectively and efficiently manage their
business as landlords, to encourage sound investment decisions and
good overall performance, making maximum use of the resources
provided and to ensure all available housing resources are
distributed fairly.
6.
The level of rent increase is based on the Draft Subsidy
Determination issued by the Welsh Assembly Government (WAG) on 1st
December 2006, which provides a proposed rent increase of 5.6%.
7.
Cabinet considered the initial budget proposals on 22nd November
2006, Community Safety and Wellbeing Scrutiny Committee on
27th November 2006 and Corporate Resources
5th December 2006. The minutes and recommendations of
Scrutiny were reported to Cabinet on the 13th December
2006 and referred by them for consideration by the Budget Working
Group (C2819). Consequently, the Cabinet Budget Working Group
noted all the Scrutiny recommendations and took responses into
account in drafting the final budget proposals for Cabinet’s
consideration.
8.
The Director of Finance, ICT & Property has been asked to
examine a fair apportionment of the security costs at Harbour View,
Penarth between the General Fund and the Housing Revenue
Account.
9.
The consultants have now completed a review of the Housing Revenue
account Business Plan and the Council’s Housing Stock
Options. One of the recommendations made was a review of the
charging basis for council tenant rents. Consultants have begun
work on this but the current charging basis will continue from
April 2007.
Revised Estimates
10. Set
out below is a table comparing the original budget with the
proposed revised estimate.
|
|
2006/07
|
2006/07
|
Variance
|
|
|
Original
Budget
|
Proposed
Revised
Estimate
|
(+)Favourable
(-) Adverse
|
|
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
Housing Revenue Account
|
(127)
|
(7)
|
-120
|
11.
The net increase of £120,000 in this budget is due to several
reasons. An increase in security measures at High View is likely to
cost around £80,000. Electricity and gas prices have
also risen by approximately £55,000 on sheltered properties and
communal lighting during the year. General efficiency savings
account for any reductions in budget.
Base Budget 2007/08
12. Cabinet approved the budget
strategy for 2007/08 on 19th July 2006 as part of the
2006/07 – 2009/10 Medium Term Financial Plan (Minute No.
C2575).
13.
The Budget Strategy for 2007/08 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 means the cost of
price increases and pay awards should be included.
14. Due to the nature of the
Housing Revenue Account in that it is ring fenced and any growth
has to be funded from the balance, no Cost Pressures have been
formally identified. The budget is presented in the traditional
objective analysis format.
15.
The proposed 2007/08 budget is set out at Appendix A. The
effects of the Housing Subsidy Determination, including the
recommended rent increase has been included.
(a)
HRA (General) - This budget head relates to
general expenditure such as insurance and audit fees and income
from rents. The recommended rent increase has been included as well
as the increase in the management and maintenance allowance as
directed from WAG and distributed via the Housing subsidy
calculation.
(b)
General Management - This budget head relates to
the general management of the Council’s housing stock, for work
carried out within the Housing division, and for various issues
relating to the Council tenancies excluding the repairs and
maintenance function.
(c)
Special Services - This budget relates to the
running expenses and the cost of staff employed directly within the
Housing Division, in relation to functions such as elderly
services, running the hostel etc. The increase is largely due to
increased security at High View (Penarth Heights) and increased
fuel costs for sheltered homes and communal lighting in blocks of
flats.
(d)
Housing Repairs Fund Contribution - This budget
relates to the repairs and maintenance service for the Council
housing stock.
(e)
Central Support & Operational Building Charges
- This budget relates to the services provided by other
Departments, and the cost of office accommodation occupied by the
Housing Divisions staff.
(f)
Capital Financing - This budget includes debt
charges for any capital works undertaken relating to the Housing
Revenue Account.
Proposed Increases in Charges
16. The
charges for rent and other services provided by the Housing
Division are reviewed annually.
(a) Rent
Levels – Until the work currently being undertaken by the
consultants on Rent restructuring has been finalised, it is
proposed that, for next year, annual rent levels will continue to
be linked to the previous year’s council tax bands rather than the
new bands. The increase recommended by the Welsh Assembly
Government for subsidy purposes is £2.67 per week per property, an
increase of 5.6% on guideline rent. If the increase is
limited to the subsidy guidance a rent increase could be
implemented as follows: -
|
Band
|
Present Average
Rent
(53 week
basis)
|
Proposed Increase (53 week basis)
|
Proposed Average Rent
(53 week basis)
|
|
A
|
£47.83
|
£1.46
|
£49.29
|
|
B
|
£57.78
|
£2.67
|
£60.45
|
|
C - F
|
£63.94
|
£3.22
|
£67.16
|
The Vale of Glamorgan Housing
Department currently charge over 50 weeks of the year, therefore
the actual increase would be: -
|
Band
|
Present Average
Rent
(51 week
basis)
|
Proposed Increase (51 week basis)
|
Proposed Average Rent
(51 week basis)
|
|
A
|
£49.74
|
£1.52
|
£51.26
|
|
B
|
£60.09
|
£2.78
|
£62.87
|
|
C-F
|
£66.50
|
£3.35
|
£69.85
|
(b)
Garages Rents – The rent of freestanding garages
is currently £4.82 per week. It is suggested that rent for
all garages be increased by 5.6% to £5.09 per week. This
percentage increase is in line with the recommended increase to
dwelling rents.
(c)
Heating – During 2005 domestic fuel bills paid by
the Council increased by 40%. It was recommended that this increase
be phased in and that the heating charges for sheltered housing
units for 2006/2007 be increased by 20%, and the further 20% in
2007/2008. The new charges will range between £7.10 and
£10.28 for the next financial year.
(d)
Sheltered Housing Guest Suites – It is suggested
that the charges for guest room facilities are increased by 5.6%
(in line with rent increase) to £8.53 per person per night for
double occupancy and £12.20 for single occupancy.
(e)
Sewerage Treatment Plants – The charge to owners
of all purchased and private dwellings connected to Council owned
and maintained treatment plants is currently £211.57 per
annum. Based on the average charge payable if the properties
were connected to the main sewerage system the charge for 2006/07
should be increased to £226.32 per annum. It is suggested
that the charges should be increased to £226.32.
(f)
Hostel – The current charge for persons
accommodated at Hafan Treharne, Barry is £102.12 per week.
Increasing this charge by 5.6% (in line with the rent increase)
would give a weekly charge of £107.84, however, this is subject to
confirmation of 2007/2008 thresholds from DWP.
(g) 62.315.6%
The weekly charge will therefore be £382.60.
and Vale Community Alarm
Service and by the Vale Community Alarm Service ares as
follows: -
|
Service
|
Current
Charge
(51 Week
Basis)
|
Proposed
Increase
|
Proposed
Charge
(51 Week
Basis)
|
|
Warden
|
£6.44
|
£0.19
|
£6.63
|
|
Piper
|
£2.77
|
£0.08
|
£2.85
|
|
Communicall
|
£3.21
|
£0.10
|
£3.31
|
17. In
summary the change in budget is itemised as follows: -
|
2006/2007Original
Budget
|
|
Net
Saving
|
2006/2007
Proposed
Budget
|
|
£’000
|
£’000
|
£’000
|
£’000
|
|
(127)
|
136
|
(418)
|
(409)
|
The net saving of £418,000 is due to an
increase in the amount of interest earned on HRA balances
(£110,000), annual rent increase (£545,000) and general budget
adjustments and efficiency savings (£66,000). An anticipated
increase in the subsidy repayable to WAG (£225,000), a reduction in
rent income due to Right To Buy sales reducing the stock level
(£39,000) and an increase in central recharges (£39,000) have
offset this.
Resource Implications (financial and
employment)
18.
The working balance projected for 2007/2008 is £3,082,000, which is
sufficient.
Legal Implications (to include Human Rights
implications)
19. The
Council under the 1989 Local Government and Housing Act have a
legal obligation to set a budget for the Housing Revenue Account.
Notices of any increases have to be sent to tenants 28 days in
advance of the new charges coming into effect.
Crime and Disorder Implications
20. Many
HRA activities have a positive impact on the reduction of crime and
the fear of crime.
Equal Opportunities Implications (to
include Welsh Language issues)
21.
Housing Services are carried in accordance with the Councils equal
opportunities policies and practices.
Corporate / Service Objectives (to include
stakeholder consultation)
22.
Housing Services support the following Corporate/Service
objectives: -
Social Wellbeing and Tackling Disadvantage
·
Ensuring that all Vale residents have access to good quality,
affordable and appropriate accommodation that is sufficient for
their needs.
Environmental
Improvement
·
Maintaining and improving the quality of the public housing
stock
Community Leadership
·
Encouraging tenants and residents to participate in the management
of housing stock.
Policy Framework and Budget
23. This report is following
the procedure laid down in the Constitution for the making of the
budget and so needs to be referred to Council.
Implications for Consultation
24. The
Scrutiny Committees have been consulted on the initial budget
proposals.
Relevant Scrutiny Committee
RECOMMENDATIONS
It is recommended that:
(i) The revised estimate 2006/07
approved as outlined below.
(ii) The final budget proposal for
2007/08 is approved as outlined below: -
|
Revised
Estimate
|
Objective
Analysis
|
Annual
Estimate
|
|
2006/2007
|
|
2007/2008
|
|
£’000
|
|
£’000
|
|
(6,886)
|
HRA General
|
(7,575)
|
|
987
|
General Management
|
1,074
|
|
585
|
Special Services
|
670
|
|
3,014
|
Housing Repairs Contribution
|
3,068
|
|
1,393
|
Central Support & Operational
Buildings
|
1,454
|
|
900
|
Capital Financing
|
900
|
|
(7)
|
Net Expenditure / Income
|
(409)
|
|
|
|
|
|
(2,666)
|
Working Balance Brought Forward
|
(2,673)
|
|
|
|
|
|
(2,673)
|
Working Balance Carried
Forward
|
(3,082)
|
(iii) The increase suggested for rent
and other services are approved. The increases are
implemented from 2nd7 and that increase notices are sent to tenants
28 days in advance of the new charges coming into effect. The
charges for 2007/2008 are as follows: -
|
51 Week Basis
|
Current
Charges
|
Proposed
Charges
|
|
Rent – Dwelling
|
|
|
|
Band A (average)
|
£49.74 per week
|
£51.26 per week
|
|
Band B (average)
|
£60.09 per week
|
£62.87 per week
|
|
Band C to F (average)
|
£66.50 per week
|
£69.85 per week
|
|
Garage Rent
|
£4.82 per week
|
£5.09 per week
|
|
Heating
|
£5.92 to £8.57 per week
|
£7.10 to £10.28 per week
|
|
Warden Support
Charge
|
£6.44 per week
|
£6.63 per week
|
|
Piper System
|
£2.77 per week
|
£2.85 per week
|
|
Communicall
System
|
£3.21 per week
|
£3.31 per week
|
|
Sheltered Housing Guest
Suites
|
|
|
|
Double Occupancy (per night)
|
£8.08 per person
|
£8.53 per person
|
|
Single Occupancy (per night)
|
£11.55 per person
|
£12.20 per person
|
|
|
|
|
|
Sewerage Treatment
Plants
|
£211.57 per annum
|
£226.32 per annum
|
|
Hostel – 53 Week
Basis
|
£102.12 per week
|
£107.84 per week
|
|
28 Evans Street – 53 Week
Basis
|
£362.31 per week
|
£382.60 per week
|
(iv).
The Director of Finance, ICT & Property report to Cabinet on a
fair apportionment of the security costs at Harbour View, Penarth
between General Fund and the Housing Revenue Account
Reasons for Recommendations
(i)
To facilitate monitoring of the revised budget.
(ii)
As required by statute.
(iii) In order to meet the statutory
deadline to notify tenants of the new charges as required by
Statute.
(iv) To ensure a fair apportionment
of the costs
Background Papers
Finance Department papers
Medium Term Financial Plan 2006/07 – 2009/10
Contact
Officers:
Sian Davies
Director of Finance, ICT and Property
(01446) 709202
Alun Billinghurst
Acting Head of Housing and Community Safety
(01446) 709488
The following Chief Officers have been
consulted on the contents of this report: -
Acting Head of Housing and Community
Safety
APPENDIX
A
|
REVENUE BUDGET
|
|
|
|
|
|
|
|
|
HOUSING REVENUE ACCOUNT
|
|
|
|
|
|
|
|
|
|
|
|
|
ANNUAL
|
REVISED
|
Objective
Analysis
|
INITIAL
BUDGET
|
|
BUDGET
|
BUDGET
|
|
PROPOSALS
|
|
2006/2007
|
2006/2007
|
|
2007/2008
|
|
|
|
|
|
|
£000
|
£000
|
|
£000
|
|
|
|
|
|
|
(6,960)
|
(6,886)
|
HRA General
|
(7,575)
|
|
|
|
|
|
|
1,063
|
987
|
General Management
|
1,074
|
|
|
|
|
|
|
440
|
585
|
Special Services
|
670
|
|
|
|
|
|
|
3,014
|
3,014
|
Housing Repairs Contribution
|
3,068
|
|
|
|
|
|
|
(2,443)
|
(2,300)
|
|
(2,763)
|
|
|
|
|
|
|
1,416
|
1,393
|
Central Support & Operational
Buildings
|
1,454
|
|
|
|
|
|
|
0
|
0
|
Capital Expenditure from Revenue
|
0
|
|
|
|
|
|
|
900
|
900
|
Capital Financing
|
900
|
|
|
|
|
|
|
(127)
|
(7)
|
Net Expenditure / Income
|
(409)
|
|
|
|
|
|
|
|
|
|
|
|
(2,666)
|
(2,666)
|
Working Balance Brought Forward
|
(2,673)
|
|
|
|
|
|
|
|
|
|
|
|
(2,793)
|
(2,673)
|
Working Balance Carried
Forward
|
(3,082)
|
|
|
|
|
|
|
Table of Reserves
|
Total
|
Housing Revenue
Account
|
Repairs
Reserve
|
|
|
£000
|
£000
|
£000
|
|
Balance as at 1st April
2006
|
3,200
|
2,666
|
534
|
|
|
|
|
|
|
|
3,021
|
7
|
3,014
|
|
|
|
-
|
(3,014)
|
|
Balance as at 31st March
2007
|
3,207
|
2,673
|
534
|
|
|
|
|
|
|
Movement in
|
3,477
|
409
|
3,068
|
|
Movement out
|
(3,068)
|
-
|
(3,068)
|
|
Balance as at 31st March
2007
|
3,616
|
3,082
|
534
|