Agenda item

Report of Deputy Chief Executive (Chief Finance Officer) and Director of Direct Services.

The committee considered the report of the Deputy Chief Executive (Chief Finance Officer) and Director of Direct Services which detailed the Housing Revenue Account (HRA) budget proposals, rent levels, service charges and heating costs for 2017/18, and the HRA Capital Programme 2016/20.  The 2017/18 budget was attached at Appendix 1 of the report. 

The 2017/18 budget showed a surplus of (£449k) from (£292k) in 2016/17, a change of (£157k) which was mainly due to the factors listed below.

The major changes between the 2016/17 and the 2017/18 budgets were:

Income increases and expenditure reductions:

·         Support charge (offset by increase in management fee) (£86k)

·         Reduction in the transfer to the Housing Regeneration and Investment Reserve (£424k)

Increase in expenditure and income reductions:

·         1% rent reductions £116k

·         Interest payments £64k

·         Management fee form new support charge £42k

·         Depreciation £94k

Members noted that the HRA budget was performing better than expected in the 30 year business plan due to various initiatives to control expenditure below that assumed in the business plan, lower than anticipated interest rates and higher rental income from affordable rents.  Members were requested to consider this with caution however, as the financial consequences of the high value council house levy were still unknown.  Currently the government’s intention in regrading this scheme was unclear and the Council was still waiting for details. The cost had been estimated at around £6m per year for four years.

The underlying HRA surplus had decreased between 2016/17 and 2017/18 due to the 1% rent decrease of £116k, increased borrowing costs resulting from the capital programme spending for 2016/17 of £64k and increase in the depreciation charge of £94k.  The levels of HRA balance and Housing Regeneration and Investment Reserve as at 31.3.18 were forecast to be £5m and £1.8m respectively. The Major Repairs Reserve was forecast to breakeven as expenditure was expected to equal contributions for 2017/18.

The committee noted that the rent levels had been prepared in accordance with the government’s requirement to reduce rents by 1% a year for each of the four years from 2016-17 based on the rent charge as at 8 July 2015.  Service charges, heating and water charges were fixed weekly amounts set at a level to recover the expected actual cost to be incurred for the respective properties in the forthcoming year.  The Support charge was recommended to be retained at the 2016/17 level and Garage rents would not be increased.

The total budgeted expenditure on the HRA Capital Programme was planned at £4.2m for 2017/18. All new capital expenditure was solely on major repairs, which was funded from cash backed depreciation, as borrowing would have reached the maximum allowed within the self-financing settlement. The Major Repairs programme was in line with the Asset Management Plan and HRA business plan model.

Queries were raised on the following points:

Garage Rents and voids – the Financial Services Manager advised that the reason for the voids was unknown; however it may be contributable to the poor state of repair in some areas.  The Deputy Chief Executive advised that the Asset Management Plan would be undertaking a review of the current garage provision to consider the options available.  The Financial Services Manager agreed to advise the committee regarding the number of Council owned garages following the meeting.

Eastbourne Homes Management fee – The Deputy Chief Executive advised that the fee had not changed for the last 6 years and that the fee not only covered the management and administration of the stock but repairs and maintenance of the housing stock.  The HRA was benchmarked against other similar authorities including Wealden and Lewes.  Eastbourne Homes were also included in the Joint Transformation Programme and the Board had agreed that staff would be shared between Eastbourne and Lewes to improve efficiency.

RESOLVED:  That the following be noted.

1) The HRA budget for 2017/18 and revised 2016/17 as set out in Appendix 1 of the report.

2) That social and affordable rents (including Shared Ownership) be decreased by 1% in line with a change in government policy.

3) That service charges for general needs properties be increased by 2.49%.

4) That service charges for the Older Persons Sheltered Accommodation be decreased by 7.14% to reflect a reduction in actual costs as well as notification of a reduction in heating and water costs.

5) That the Support charge for Sheltered Housing Residents remained at £7.50 per unit, per week.

6) That heating costs be set at a level designed to recover the estimated actual cost.

7) That water charges be set at a level designed to recover the estimated cost of metered consumption.

8) Garage rents would not be increased this year, to improve increasing garage voids.

9) That delegated authority be given to the Chief Executive, in consultation with the Cabinet Portfolio holders for Community Services and Financial Services and the Financial Services Manager, to finalise Eastbourne Homes’ Management Fee and Delivery Plan.

10) The HRA Capital Programme as set out in Appendix 2 of the report.