Agenda item

The report presented the proposed Housing Revenue Account (HRA) Annual Budget and Capital Programme for 2020/21, as well as the Rent Setting and the Fees and Charges proposals for 2020/21.

The HRA is a ring fenced account was used to manage the Council’s housing stock of some 5,700 properties, with the Council acting as the Landlord.

In April 2012, under the Localism Act 2011, the HRA (under the administration of Taunton Deane Borough Council (TDBC)) moved away from a national subsidy system (which required an annual payment from the HRA to Central Government) to become ‘self-financing’. This enabled the Council to retain all rental income to meet the costs of managing and maintaining the housing stock, as well as meeting the interest payments and repayment of debt. As part of the self-financing agreement, a one-off payment of £85.198m was made to Government.

In order to manage the freedoms gained by the HRA through self-financing, a new 30-Year Business Plan (2012-2042) was introduced. This set out the Council’s overall aims and objectives for Housing Services, as well as laying out plans to manage the increased risks and opportunities.

The HRA Business Plan had been reviewed and updated annually since 2012, with a full review undertaken in 2016. In response to recent changes in national policies and local aspiration, another full and comprehensive 30-year Business Plan from 2020/21 onwards had recently been undertaken, with the support of consultants Savills, and can be found as a separate report called “HRA Business Plan Review”. The key changes in revenue budget from 2019/20 to 2020/21 were summarised as part of the report.

The HRA continued to face a number of risks and uncertainties, many of which could be significant but the actual financial impact was not known.

As part of the self-financing agreement, an individual housing revenue borrowing cap of £116m was implemented for TDBC. This meant the HRA was unable to exceed a capital borrowing requirement of £116m within the HRA Business Plan. In October 2018 this borrowing cap was officially removed.

The 2020 Business Plan review was undertaken as a direct result of a number changes in both national policies and local aspiration; since the debt cap removal in October 2018, the introduction of the Regulator of Social Housing’s new Rent Standard from April 2020 and a new Somerset Housing Strategy published in March 2019. There had been a declaration of a climate emergency and a new leadership aspiration to build 1000 new homes in 30 years.

The HRA 2020 Business Plan review was undertaken to assess the affordability and viability of these aspirational schemes and the financial impact of regulatory changes, to determine what schemes could actually be delivered and when.

The assumptions within the Business Plan indicated that the new build aspirations were affordable and viable but required the maximisation of future rental income through the application of options available within the boundaries of national policy, this would require significant capital investment and borrowing over the next 10 years. 

The HRA 2020 Business Plan aimed to deliver 1,000 new homes over the next 30 years with a net gain of 400 homes as a result of tenants purchasing their homes through estimated RTB sales.

In response to the HRA 2020 Business Plan, the table below provided a summary of the main proposed changes to the annual revenue budget estimates from 2019/20 to 2020/21. 

A summary of the overall HRA Revenue Budget for 2020/21 and 5-year Medium Term Financial Plan (MTFP), as a result of planned changes within the HRA 2020 Business Plan and other changes, was set out in Appendix A.

                        Debate

·        HRA income was ring fenced to manage housing stock. Clarification was provided that a portion of this funded transformation, this was in proportion with a cost split.

·        Concerns were expressed over the emphasis of carbon neutrality as part of the business plan. The HRA net zero target should refer to the Councils at 2030.

·        Information relating to the discretionary housing payment policy would be circulated to Councillors.

·        The committee expressed further concerns over increases in rents for new tenants.

·        4500 residents were actively looking for housing on home finder.

·        Savings achieved on insurance remained in the HRA budget.

            The Scrutiny Committee:-

1.     Supported the following proposed recommendations to the Executive and Full Council:

2.     In accordance with the Regulator of Social Housing’s new Rent Standard from April 2020, the Dwelling Rent for 2020/21 for existing tenants will be an increase of CPI+1% to the average weekly rent, from £80.87 per week to £83.05 per week.

3.     In accordance with the Regulator of Social Housing’s new Rent Standard from April 2020, the Dwelling Rent for 2020/21 for new tenants only will be an increase of CPI+1% plus an additional 5% for general needs to the average weekly rent, from £80.87 per week to £87.21 per week.

4.     In accordance with the Regulator of Social Housing’s new Rent Standard from April 2020, the Dwelling Rent for 2020/21 for new tenants only will be an increase of CPI+1% plus an additional 10% for sheltered/supported and extra care dwelling rents to the average weekly rent, from £80.87 per week to £91.36 per week.

5.     To increase non-dwelling rent and service charges in line with national policy by CPI+1% for 2020/21, with the exception of garages for private and shared ownerships tenants which would increase from £10.32 (including VAT) to £12.00 (including VAT). 

6.     To approve the HRA Annual Revenue Budget for 2020/21.

7.     To approve the HRA Capital Programme for 2020/21.