Decision Details

Implemented

Housing Revenue Account (HRA) Budget Report 2023/24 to 2026/27

ES/1396

No

Committee

Cabinet

Tue 3 Jan 2023

No

Report of the Cabinet Members with responsibility for Resources and Housing 

Cabinet is recommended to approve the following for review and consideration by the Scrutiny Committee as part of the Budget process:

1. The draft HRA budget for 2023/24, and the indicative figures for 2024/25 to 2026/27;
2. Movements in HRA Reserves and Balances;
3. Proposed rent increase of up to 6%. 1% less than the Government 7% rent Cap for 2023/24 rent setting.
4. Service charges and associated fees for 2023/24;
5. Rent and Service Charges to be charged over a 50-week period unless being used for Temporary Accommodation when a 52-week period will be applied.

Cabinet is recommended to note the following:

6. Revised outturn position for 2022/23;
7. Changes affecting public and private sector housing and welfare to be noted;
8. Effects of the cost-of-living crisis to the HRA to be noted.

Financial Services, Corporate Performance & Risk Management

Housing Operations & Landlord Services

Brian Mew

As per report

No

Cabinet approved the following for review and consideration by the Scrutiny Committee as part of the Budget process:

1. The draft HRA budget for 2023/24, and the indicative figures for 2024/25 to 2026/27;
2. Movements in HRA Reserves and Balances;
3. Proposed rent increase of up to 6%. 1% less than the Government 7% rent Cap for 2023/24 rent setting.
4. Service charges and associated fees for 2023/24;
5. Rent and Service Charges to be charged over a 50-week period unless being used for Temporary Accommodation when a 52-week period will be applied.

Cabinet noted the following:

6. Revised outturn position for 2022/23;
7. Changes affecting public and private sector housing and welfare to be noted;
8. Effects of the cost-of-living crisis to the HRA to be noted.

To enable Members to review, consider and comment upon the Council’s Housing Revenue Account budgets, the proposed rental rent increase, service and other charges and movements in reserves and balances, before making final recommendations to Full Council on 22 February 2023. This report also forms the basis of Scrutiny Committee’s review of the Budget at its meeting on 19 January 2023 as required under the Budget and Policy Framework.

To advise Members of the wider housing and welfare changes that will impact on future service delivery

HRA Budget Setting
The Housing Revenue Account Budget forms part of the Council’s Budget and Policy Framework. The Council is required to set an annual budget and therefore no other options have been considered for this.

Rent Setting
Under normal circumstances, following four years of compulsory rent reduction, setting rents from 2020/21 below the maximum permitted under the Rent Standard is not recommended for the following reasons:
1) Under self-financing, the debt settlement figure that the Council can afford is based on a valuation of the Council’s housing stock. This valuation is based on assumptions about income and need to spend over 30 years and that the Council will follow the Government’s social rent policy. Therefore, the main disadvantage of setting rents lower than that permitted by the Rent Standard is the loss of revenue over the 30 years of the HRA business plan, the ability to service the debt and the adverse impact this will have on investment in the Council’s existing housing stock and the delivery of the housing development programme as currently planned. There is an expectation from Government for the social housing sector to make the best use of their resources to provide the homes needed. 
2) The HRA has the option to borrow additional funds for future projects, as the borrowing cap has been removed, but the affordability of taking any additional borrowing would need to be assessed. At this time there is no requirement for additional borrowing, but this situation could change if rental income streams are not maintained to the level included in the budget, or there are additional costs relating to compliance, decarbonisation, or the housing development programme.
In addition to this, the Council’s cumulative outstanding amount of debt finance is measured by the Capital Financing Requirement (CFR). This increases with new debt-financed capital expenditure and reduces with Minimum Revenue Provision (MRP). The CFR is expected to increase by £77.48 million between 2022/23 and 2026/27 which is due to capital projects potentially being financed through borrowing. Statutory guidance is that debt should remain below the CFR. The 
Council expects to comply with this in the medium term, but the scale of the capital programme as currently drafted is such that the Council would begin to approach its borrowing limits over the life of the proposed programme if other sources of finance were not available, although the programme as presented does not pre-empt the realisation of capital receipts. However, due to the unexpected high levels of inflation during 2022/23, for rent setting of 2023/24 only, there is a small opportunity to increase rents slightly below the government guidance

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