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The Committee received report ES/0082 of the Leader of the Council and Cabinet Member with responsibility for Resources, the Cabinet Member with responsibility for Housing, and the Assistant Cabinet Member for Resources.
The Assistant Cabinet Member for Resources, Councillor Cook, introduced the report, which outlined the Housing Revenue Account (HRA) Income and Expenditure Budgets for the financial years 2020/21 to 2023/24 and noted the forecast position for 2019/20. In addition to this, a summary of its reserves and balances was included.
The report identified that the HRA budgets were fully funded from existing HRA funds to meet the Council’s HRA spending plans. This included the capital investment programme and reserve balances as per the HRA Financial Business Plan. Councillor Cook advised that there was currently no requirement for any additional borrowing.
Councillor Cook outlined information from the report's executive summary, which stated that since 1 April 2016, the Welfare Reform and Work Act 2016 had required social landlords to reduce their rents by 1% each year for four years (‘the social rent reduction’). In October 2017, the Government announced that at the end of the four-year rent reduction, there would be a return to annual rent increases of up to the Consumer Price Index (CPI) plus 1% for at least five years. This would be implemented through the Rent Standard set by the Regulator of Social Housing rather than through legislation.
On 26 February 2019 the Secretary of State for Housing, Communities and Local Government published a ‘Direction to the Regulator’ to set a Rent Standard that would apply from 1st April 2020. Alongside this Direction, the Government also issued a policy statement on rents for social housing (the Policy Statement) and the Regulator is required to have regard to this when setting its Rent Standard. For the first time, the Government had directed the Regulator to apply its Rent Standard to all registered providers of social housing, including local authorities. Details of the Policy Statement and Rent Standard from 2020 were provided in the report.
The Committee was advised that the new rent policy would permit the Council to increase its rents for at least five years by up to the Consumer Price Index (CPI) plus 1%. The proposed new average rent in 2020/21 would be £84.95, which was an increase if £1.90 from 2019/20. Councillor Cook confirmed that service charges could only be at cost and that the proposed average charge for 2020/21 would be £12.85, a decrease of £1.02 on 2019/20.
The capital and revenue elements of the HRA budget were set out; Councillor Cook considered that what was proposed was consistent with allowing the Council to carry out works as appropriate.
The working balance of the HRA budget was stated as £4.958m, which was said to be well above the total acceptable level of income.
The Chairman invited questions to Councillor Cook, Councillor Kerry, and the officers present.
Councillor Cook was asked by a member of the Committee if the outcome of the recent General Election and the formation of a new Government would have any impact on the HRA budget. The Committee was advised that the impact of the General Election had been a consideration when the budget had been prepared, but that it was too early to make any assumptions on how the result would impact the budget.
Another member of the Committee raised issues in her Ward where residents had reported difficulties in paying rent and Council Tax and asked if there was any concern about the increase in non-paying tenants. The Chairman added his own concerns regarding the increasing rent arrears, noting that the Council's housing stock was a taxpayer asset that should be providing a return. He asked what plans were being put in place to rigorously manage the rent arrears.
The Tenant Services Manager informed the Committee that the increase in rent arrears could be attributed directly to the recent reforms of the welfare system. She explained that under the legacy benefits system, if a claimant was entitled to maximum housing benefit this was paid to their account the day rent was taken, resulting in a zero balance. The Committee was advised that under the new Universal Credit system, housing benefit credit is paid five weeks after rent due dates.
In response to the issue, the Council had bought in predictive analytic software in order to better identify those tenants who needed to be chased for rent arrears and to actively predict tenants who are likely to go into arrears before they do so. A portal for tenants was also being tested, which would allow them to directly access their rent account, make payments, and seek assistance, as well as automating some processes through text messaging. The Tenant Services Manager attributed recent reductions in rent arrears to this new software.
The Tenant Services Manager explained that the Council had also purchased a 'former tenants' module for the analytic software, which would allow the Housing team to address rent arrears with those tenants no longer living in a Council-owned property. She noted that a Financial Inclusion Officer had been employed who would be able to work with tenants to maximise benefits, make referrals to debt counselling, and help reduce their outgoings. She assured the Committee that action was taken on rent arrears and that eviction usually occurred when tenants refused to pay, and that the Housing team aimed to work to help tenants who are willing but unable to pay.
The Tenant Services Manager said that a result of eviction was that tenants are made homeless and are therefore supported by the Council's homelessness services, which puts a strain on the General Fund budget. "Deep Dive" work on voids was also being undertaken and the results of this performance review would be presented to HOBTS along with strategies to reduce void times.
The Chairman sought assurances from officers that positive steps were being taken to reduce arrears. The Tenant Services Manager said that those tenants with rent arrears entered into agreements to pay a portion of their arrears each month along with their monthly rent amount. She said that the main concern now was managing the migration of claimants on to Universal Credit, which was due to be completed by 2023. It was hoped that additional resources could be put in place to make agreements with these tenants in advance, so that they were paying ahead of the transfer and that the change to Universal Credit did not impact their rent accounts.
A member of the Committee referred to under-occupancy of larger dwellings and noted that other authorities were offering alternative incentives for downsizing through packages to help people move and refurbish. He asked if this was something that could be introduced in East Suffolk.
The Tenant Services Manager confirmed that similar packages were being offered either as monetary payments or as payments directly to removals companies, but acknowledged that this was not promoted as well as it could be. It was stated that there was a significant demand for one-bedroom accommodation in the District and this restricted downsizing. The Tenant Service Manager said that alternatives were being explored to reduce under-occupancy.
In response to a request for eviction figures, the Tenant Services Manager agreed to arrange for these to be included in the Minutes of the Meeting. She noted that in the region the average for evictions was fewer than ten a year for rent arrears. It was explained that as the County Courts issued repossession to the Council, the cut-off point was dependent on a tenant's engagement with that process.
Following the meeting, the Tenant Services Manager advised the Democratic Services Officer that 13 tenants had been evicted for rent arrears during the 2019/20 financial year (to date) and that there had been an average debt of £3,090.64.
It was confirmed that the Council had first refusal on buying back any stock sold via the Right to Buy scheme and that there was an interest in buying back larger properties, should the opportunity arise. The Tenant Services Manager noted that the Council was not often aware of such sales until after a solicitor had been instructed and suggested that it could be advertised that sellers can approach the Council first. In response to an offer from a member of the Committee, the Tenant Services Manager said that it would be helpful if Members notified housing if they became aware of such sales in their Wards.
In response to a question on garages the Committee was advised that these were low-earning and that a significant portion of the Council's stock had been constructed from concrete and were reaching the end of their life and were therefore scheduled for demolition. The resulting land would be allocated for either development or other uses, such as car parking.
The Chairman asked if the Council was intending to build new houses to meet demand or if it was working to a specific target number and queried what the barriers to development were. He also asked if the Council had protected itself from claims of social engineering through the development of social housing.
Councillor Kerry stated that it was the ambition of the Council to either build or acquire 50 houses per year. He noted that as a Registered Provider, the Council was in a strong position when it came to purchasing properties. The Senior Accountant added that the main barrier to development was housing land; the Council was in a strong financial position to build new houses, but it had been difficult to find appropriate housing land at an appropriate price. It was highlighted that the Housing Development team was a small one but hoped to be at full capacity by March 2020.
In response to a question regarding discretionary payments the Tenant Services Manager explained that this grant, supplied by Government, could be topped up based on a calculation of how many of a council's tenants were HRA tenants. It was confirmed that the grant money received by the Council increased each year and had been sufficient for the number of tenants applying for funds.
There being no further questions, the Chairman moved to the recommendation set out in the report.
On the proposition of Councillor Lynch, seconded by Councillor Topping it was by unanimous vote
RESOLVED
To recommend that Cabinet and Full Council:
1. Approve the Housing Revenue Account Budget for 2020/21, and the indicative figures for 2021/22 to 2023/24;
2. Note the forecast outturn position for 2019/20;
3. Approve the movements in Reserves and Balances as presented in Appendix D;
4. Approve the average weekly rent for 2020/21 of £84.95 over a 50-week collection year, an average weekly increase of £1.90 or 2.3%;
5. Note the new Rent Policy Statement and Rent Standard for 2020 with effective from 1st April 2020;
6. Approve the Service Charges and associated fees for 2020/21, Appendix B; and
7. Note the changes affecting public and private sector housing and welfare.