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Agenda item
HRA Business Plan
(D Fenton) To consider the updated HRA business plan and recommendations.
Minutes:
A bespoke HRA model had been used to enable the Council to provide a reasonable cashflow projection of the next 30 years and was based on evidential data from the Council’s current systems and projections for economic assumptions in the social housing sector. Furthermore, the plan gives the Council the ability to stress test which was vital given the key dynamic risks such as the borrowing rate and changes in Government legislation regarding Social Housing.
Officers had taken both a safe and prudent approach when developing the business plan, with a balance between borrowing, developing, and improving the housing stock. The agreed minimum £2m revenue working capital balance had been maintained throughout the plan. Although all costs has been included in the plan, some potential income had not been included because at present it could not be quantified. The Plan would be amended and updated year on year and throughout, to respond to changes, which would maintain a safe and prudent approach.
The report set out the context, background and what the decent home standard were, in conjunction with factors that would affect the plan including the Council’s house building programme, major works, a stock and condition survey and a sector risk profile.
The Housing Services Portfolio Holder advised that it was a very detailed and complex report which provided regeneration and the council’s housing building programme, which would ensure that the more deprived areas of the community were invested, and it improved the health of those residents.
The Committee asked the following questions;
· Why had a consultant been used to produce the HRA business plan? The Housing and Property Director advised that EFDC had always used a consultant to write the HRA business plan due to its complexity and additional software required to produce the plan.
· If there were changes to the assumption within the plan, would it be altered? The Housing and Property Director advised that the HRA plan would be reviewed yearly by this Committee, O&S and Cabinet to give assurances and to monitor any changes.
· Why did the HRA Surplus assumptions increase extensively between the years 19 (2039/40) and 20 (2040/41) and 29 (2049/50) and 30 (2050/21) in the Financing Summary on page 45 of the agenda? The Housing and Property Director advised that they would come back with clarification on this point, although the Consultant advised it could be a drop in terms of capital spend due the stock survey being 10 years old. Therefore, a Stock Control Survey was being commission.
· Would the HRA pick up any costs that the General fund should pick up? The Housing and Property Director assured the Committee that would not happen.
· Could further details be provided on the areas of the district that would receive urgent works funds set out on page 41 of the agenda. The Housing and Property Director advised that in each case an estate condition survey would take place to establish what upgrades and enhancements were required; what cyclical programme would be carried out in communal areas; and a detailed consultation with Ward members and residents. Therefore the figures were indicative at this time.
It was also mentioned that the wording ‘urgent’ should be reconsidered in relation to urgent works due to the period of time that theses works would be carried out over.
· Had inflation and energy prices been taken into consideration? The Housing and Property Director advised that the current rate of inflation had been applied, although the business plan would be continually updated as well. The Consultant advised that in relation to energy costs, these did not really affect the HRA because they were costs related to the tenants themselves and the service charges that would be recharged to the tenants. It was worth pointing out that the tenant’s rents were also linked to inflation, so if the consumer inflation rises, the rental figure would also rise. Therefore unless the Government put a limit on a rental increase, this would not affect the business plan.
· Could clarification be given on who set the limit for sharing the Right to Buy receipts between the Treasury and the local authority. The Consultant advised that the Treasury had set each of local authorities’ limits, through a debt settlement arrangement populated by the Government in 2012. This figures for each authority was different depending on the amount of RTB properties sold, house prices and income collected from the rents which serviced the debt settlement.
· Why did the figures for the years 19 (2039/40) and 20 (2040/41) within the Financing Summary (on page 45 of the agenda) rise and fall significantly? The Consultant advised that this was due to a loan repayment of £33,656m in year 20 (2040/41) rather than a refinancing of a loan. It was noted that the HRA surplus would remain above the £2m requirement.
· What HRA assets were available to the Council to sell? The Housing and Property Director advised there were ransom strips, small parcels of land, possible properties that were no longer suitable and locations within the Local Plan.
· Had the Decent Home Standards been considered? The Housing and Property Director advised that it was widely expected that the Decent Home Standards would remain unchanged, although it was expected that within the Charter for Social Housing (White paper) there would be a focus on communities.
· In relation to the Decent Home Standards, had there been any consideration to the future removal of gas fires and boilers? The Housing and Property Director advised that the council were looking into a range of possibilities. The Stock Condition Survey would identify any work that would be required to enable the Council to meet its commitment to the Council’s net zero target. Furthermore, the Council was currently looking at piloting a scheme for solar panels and Tesla batteries to assist with fuel poverty.
· What were the Decent Home Standards? The Housing and Property Director advised that there was a complex criteria, but for example things like the time taken to replace a kitchen, bathroom, rewiring and the quality of the fabric of the building. The criteria could be found through the following link: A decent home: definition and guidance - GOV.UK (www.gov.uk)
RESOLVED:
(1) That the Committee noted the Safe and Prudent HRA business plan, and recommended to the Cabinet for approval;
(2) That the Committee received a yearly performance update, that would include stringent stress testing;
(3) That the Committee noted that the business plan included all assumed costs but not all income streams, as such the Committee also noted appendix B (attached) which was an alternative plan including some potential income; and
(4) That the Committee noted the opportunity to improve the estates which would improve the life span of the Council’s assets and feed into the ongoing work to ‘create great places where people want to live’.
Supporting documents:
- Item 8 Report MTFP, item 30. PDF 737 KB
- Item 8 Risk-Register for HRA business plan (002), item 30. PDF 297 KB
- Item 8 HRA business plan eia, item 30. PDF 272 KB
- Appendix B, item 30. PDF 104 KB