Agenda and minutes

(Assistant to the Chief Executive) To declare interests in any item on this agenda.

There were no declarations of interest pursuant to the Council’s Code of Member Conduct.

To confirm the minutes of the last meeting of the Committee held on 15 March 2010 (previously circulated).

RESOLVED:

That the minutes of the meeting held on 15 March 2010 be taken as read and signed by the Chairman as a correct record.

Section 100B(4)(b) of the Local Government Act 1972, together with paragraphs 6 and 25 of the Council Procedure Rules contained in the Constitution require that the permission of the Chairman be obtained, after prior notice to the Chief Executive, before urgent business not specified in the agenda (including a supplementary agenda of which the statutory period of notice has been given) may be transacted.

In accordance with Operational Standing Order 6 (non-executive bodies), any item raised by a non-member shall require the support of a member of the Committee concerned and the Chairman of that Committee. Two weeks’ notice of non-urgent items is required.

It was noted that there was no other urgent business for consideration by the Cabinet Committee.

(Director of Finance & ICT) To consider the attached report (FCC-025-2009/10).

Appendix 3, the comments fo the Tenants & Leaseholders Federation, attached.

The Director of Finance & ICT introduced a report upon the Government’s proposals to replace the current Housing Revenue Account (HRA) Subsidy System. In attendance was also the Council’s appointed Consultant from ConsultCIH, and the Chairman of the Council’s Tenants & Leaseholders Federation.

The Consultant from ConsultCIH presented the report prepared on the implications of the proposed HRA reforms upon the Council. The proposal by the Government had been based upon moving towards a self-financing HRA system in which the current subsidies were exchanged for a one-off adjustment of housing debt, after which rental surpluses and Right-to-Buy receipts would be retained by local authorities in their entirety, under clause 313 of the Housing & Regeneration Act 2008. The debt settlement from the Government for the Council had been set at £164.4million, but after offsetting the HRA’s current surplus of £22.8million this would result in an actual debt allocation of £157.6million. The difference between the two figures would be retained as borrowing potential for the Council to provide further housing, which when allied to grants from the Homes & Communities Agency could provide an additional 240 social housing properties over the next 30 years. A model had been produced for the Council, based upon the existing HRA five-year forecast and a number of  key assumptions, including general inflation of 2% and long-term debt interest rates of 6%. If revenue surpluses were set aside for repayment, then the debt could be paid off in 18 years and reserves built up to £450million after 35 years. However, a key issue for the Council would be the subsequent effect upon the General Fund, as the proposal would involve the Council losing its debt free status.

In response to questions from Members, the Consultant added that the proposed debt allocation could currently only happen on a voluntary basis, although this position could change in the future. It was felt that the proposed debt settlement could benefit councils with decent housing stock as more funds would be available to pay back the debt. It was confirmed that the Public Works Loan Board would provide loans for the proposed debt, which should be fixed for a long period with stable interest rates and repayment plans, but it would still require careful Treasury Management by the Council.

A letter was read out by the Director of Finance & ICT from an  individual member of the Tenants & Leaseholders Federation (TLF), before the Chairman of the Federation summarised it’s formal views:

(i)         the current subsidy system was immoral and unfair to the Council’s tenants, as the surpluses were used to fund non-housing Government spending;

(ii)        concern over the proposed rejection of the Government’s offer, although the potential effect on the Council’s General Fund was acknowledged;

(iii)       the Council was urged to accept the Government’s offer if the effects upon the General Fund could be overcome;

(iv)       support for the Government’s proposal for Councils to retain 100% of their Right-to-Buy receipts; and

(v)        to consult with the Federation over the possible transfer of non-housing assets from  ...  view the full minutes text for item 51.