Agenda Item No. 8(h)








C3090        Housing Business Plan 2016 (L & HBMCS) (Scrutiny Committee - Corporate Resources) –


Cabinet was presented with the Housing Business Plan 2016.


The Welsh Government (WG) required all local authorities who retained their housing stock to submit annually an acceptable Housing Business Plan that incorporated a detailed financial forecast in the form of a 30 year financial model. 


The Business Plan was the primary tool for a local authority's housing landlord service and included all assets within the Council's Housing Revenue Account (HRA).


The deadline to submit the Business Plan in draft to WG was 29 February, 2016.  The submission would then form the basis of the Major Repairs Allowance (MRA) grant application, a pivotal financing component for the Housing Improvement Programme.


Average 2016/2017 rents were £87.69 calculated on a 52 week basis (equivalent 50 week average rent would be £91.21).  It was assumed that rents would increase by inflation plus 1.5% annually until 2018/2019, when the increase would revert to inflation plus 1%.  These assumptions were in line with Welsh Government Policy on Social Housing Rents.


The Major Repairs Allowance was £2.76M per annum.  No inflation had been assumed on this grant.


The Plan was able to afford a new build and regeneration scheme of £22.53M in the first 5 years to 2020/2021, and a further £145.5M in years 6-30.


All other revenue income and expenditure was based on the 2016/2017 budget.


The provision for doubtful debts had remained at 6% of rental income to allow for the negative impact of Welfare Reform and in particular, Universal Credit on rent collection.  The provision was increased to 6% originally in 2015/2016 but was not required as the Universal Credit roll out did not occur.  It was seen as prudent therefore, to maintain the provision with a reduction to 3% from Year 2 (2017/2018) onwards. 


The latest projections were attached at Appendix F(i) and F(ii) to the Business Plan.  The total amount of debt outstanding in any year would be £103.7M, which was the Limit on Indebtedness set during the HRA Subsidy Buy-out on 2nd April 2015.


A summary of the movement in the financial position was included in the table below:-



December 2014   Business Plan

February 2016   Business Plan


WHQS Target

April 2017

April 2017

No Change

Revenue Surplus at   year 30




Repayment of Debt

Year 25

Year 30

+5 years

Peak Debt





The main reason for the differences was due to the actual subsidy buyout deal being less favourable in terms of loan profile and interest rates than originally assumed. This had caused greater than anticipated charges to the Housing Revenue Account for Debt Charges. Therefore, less revenue resources were available for capital expenditure, and so more borrowing was required to sustain the same level of investment.


There were a number of risks associated with the assumptions used in the financial projections for the business plan.  The results were shown at Appendix H attached to the plan.


The Business Plan was most sensitive to the cessation or reduction of the Major Repairs Allowance (MRA) and a reduction in annual rental increases.  Sensitivities 5 and 6 explored these risks and the level of investment currently identified in the Plan would not be affordable without a breach of the Limit of Indebtedness.  In addition the HRA Revenue Surplus at year 30 was considerably reduced. 


In broad terms the Housing Business Plan was both viable and sustainable in terms of meeting the Councils obligations on Welsh Housing Quality Standard for existing stock, the level of debt, and the potential for New Build and Regeneration.


After this item was presented, the Leader amended paragraph 23 of the report headed “Policy Framework and Budget”, to state that “This report is a matter for Council decision”. The Cabinet Member for Housing, Building Maintenance and Community Safety confirmed that Welsh Government had agreed a Draft Housing Business Plan could be issued prior to it being approved by Council.


This was a matter for Council decision


Cabinet, having considered the report and all the issues and implications contained therein


RESOLVED – T H A T the use of article 14.14 of the Council's Constitution (urgent decision procedure) be authorised to enable a draft copy of the Housing Business Plan 2016 to be sent to Welsh Government by 29 February, 2016 deadline with the proviso that a final version will be sent following Council approval on 2 March, 2016.


Reason for decision


To obtain approval for the Housing Business Plan 2016.



Report to Cabinet