Agenda item

To consider the attached HRA Business Plan and make recommendations to Cabinet prior to its decision at the meeting on 7 February 2022.

The Committee agreed to bring forward the HRA Business Plan, ahead of Corporate Plan Key Action Plan Year 4 2021/2 – Quarter 3 Corporate Performance reporting.

D Fenton (HRA Project Director) introduced the HRA business plan that had been developed in partnership with the Council’s retained consultant, A Marshall-Smith of Abovo-Consult. A bespoke HRA model was being used that enabled the Council to provide a reasonable cashflow projection over the next 30 years. It was based on evidential data from the Council’s current systems and projections for economic assumptions in the social housing sector. Furthermore, the plan gave the Council the ability to stress test. This was vital given the key dynamic risks such as, the borrowing rate and changes in Government legislation regarding social housing. In early 2020, the Council’s vision to ‘create great places where people wanted to live’ and the ‘more than bricks and mortar’ housing schemes were reflected in the HRA Business Plan. There was a clear link between poor housing and health. A new rent regime meant that the government had agreed the amount of rent that could be charged. The Council had a duty of care that its housing stock / properties were safe, dry and warm. Through good asset management and by undertaking regular maintenance and upgrades when these were needed, this helped to empower residents to feel proud of where they lived. Monies came from rents, high value property sales, sales of small parcels of land, obtaining planning permissions to develop of smaller plots of land and licensing income. In addition, Housing officers were reviewing the Local Plan and working with Qualis.

A Marshall-Smith highlighted some key criteria of the HRA Business Plan:

·       comparison of cash in, against cash spent

·       ensure HRA reserve balance did not go negative

·       loans were repaid when they were due

·       interest on loans was affordable

·       invest in stock

·       careful monitoring of right to buy receipts

·       there were adequate resources of a decent home standard

·       staffing costs were in line with the establishment

Basic assumptions had been built into the HRA business plan for accuracy. On capital spend, the Council’s current forecast was being used. The financial plan modelling aimed to balance all these criteria. The financial summary (page 61 of the agenda report) summarised the position on the loans and the HRA surplus carried forwards over 30 years – but was sustainable.

Councillor R Balcombe addressed the Committee giving an overview of questions raised by members at Stronger Communities Select Committee on 11 January 2022. A list of FAQs on the HRA Business Plan had also been issued as a supplementary agenda to provide members with as much information as possible.

Councillor S Murray supported the HRA Business Plan and that it was very important that recommendation (2) of the report – to receive a yearly update that would include stringent stress testing – was reviewed by members, but queried if this would be undertaken by the select committee or Overview and Scrutiny Committee. Councillor H Whitbread (Housing Services Portfolio Holder) replied that she had been asked to ensure that all points went to different levels of scrutiny and also, to Cabinet afterwards. She was proud of the Council’s capital housebuilding programme works, which were leading the way in Essex and at national level. Councillor M Sartin advised the Committee that recommendation (2) should be referred to the Overview and Scrutiny Agenda Planning Group (APG) to decide which scrutiny committee should review these yearly updates, which was agreed.

Councillor R Baldwin had noticed a lower cap on HRA borrowing in the 2018 budget and queried the cap in this business plan that showed a limit on borrowing of 70% of the value of the HRA. A Marshall-Smith replied councils had always had a much lower cap until 2018. This was an internal policy that was comparable with the cap banks would limit their borrowing to, for housing associations. Councillor Baldwin remarked that it was expensive to phase out gas boilers and upgrade heating systems, so had the Council made a decision on this yet? D Fenton replied that the Council did not have a solution yet for older properties but did for new properties The Council had put in a bid to E.ON Energy to retrofit fifty houses and to look at a number of solutions to see what the best option was for the Council and another pilot scheme was for solar power. This was a big problem, but research aligned with taking families out of fuel poverty.

RESOLVED:

(1)          That the Committee considered the safe and prudent HRA business plan, and recommended it to Cabinet, for approval;

(2)          That a yearly performance update, to include stringent stress testing, be received, and it was agreed that the Overview and Scrutiny APG decide which scrutiny committee this should go to;

(3)          That the Committee considered that the business plan included all assumed costs but not all income streams, and noted appendix B, which was an alternative plan including some potential income; and

(4)          That the Committee considered the opportunity to improve our estates, which would improve the life span of the Council’s assets, and feed into its ongoing work to ‘create great places where people want to live’.