Report of the Deputy Chief Executive and City Treasurer, the Strategic Director (Growth and Development) and the Strategic Director (Neighbourhoods).

This report presents members with details on the proposed Housing Revenue Account (HRA) budget for 2023/24, an indication of the 2024/25 and 2025/26 budgets, alongside the outlook for the 30-year HRA business plan in light of the budget proposals.

The committee considered a report of the Deputy Chief Executive and City Treasurer, the Strategic Director (Growth and Development) and the Strategic Director (Neighbourhoods) which outlined the proposed Housing Revenue Account (HRA) budget for 2023/24, an indication of the 2024/25 and 2025/26 budgets, and the outlook for the 30-year HRA business plan in light of the budget proposals.

It also sought Executive approval to increase rents in line with current Government guidance of restricting rent increases to a maximum of 7% for all properties, except PFI properties, where standard increase of CPI +1% (11.1%) was proposed, also in line with Government policy.

Key points and themes within the report included:

• Social rents were subject to annual increases aligned to a national rent policy, which was usually up to the consumer price index (CPI) plus 1%. The cost-of-living crisis resulted in the Government launching a consultation exercise and it had been advised that the maximum social rent increase would be capped at 7%, with an exception for properties within PFI contracts;
• As a result of increased numbers of Right to Buy; the in-house management of the Northwards Housing stock; overspends on repairs and maintenance; heating charges; and PFI contractor costs, it was forecasted that expenditure would be £14.940m higher than income and this would need to be funded by additional use of reserves;
• The HRA budget complied with the statutory requirement to be in balance over the three-year budget strategy period, although there was a small deficit over the course of the 30-year business plan;
• The average weekly rent, including increases, which would come into effect from April 2023;
• Housing benefit levels had not been capped and the proposed rent increases would be covered in full for those residents in receipt of 100% housing benefit entitlement, and tenants in receipt of universal credit would also be partially protected from the impact of any increase in rents; and
• The impact over the life of the business plan of the proposed 7% rent increase for all properties, except PFI properties. At the end of 30 years the deficit with a 7% increase for all properties and 11.1% increase for PFI properties is c£19m, but if rents for every property were increased by 11.1% the position after 30 years shows a £123m improvement to a c.£104m surplus.

Key points and queries that arose from the committee’s discussions included:

• Noting the major impact of raising rents by 7%, as opposed to following usual practice and increasing by 11.1%, and the difference in revenue over 30 years because of this; 
• Whether loss of rent income as a result of bringing voids – properties which have been unoccupied for a period of time – back into use and retrofitting properties was accounted for in the 30-yearbusiness plan;
• Whether there was a procedure in place to refer tenants applying for the HRA hardship fund to the Corporate Core hardship fund to maximise resources; and
• Why the anticipated savings from the decision to bring Northwards-managed housing back into the Council had not been fully realised, and whether this would have affected the decision had it been known at the time.

The Executive Member for Housing and Development stated that the cost-of-living crisis and rising inflation had a direct impact on the HRA and rent-level setting. He stated that the Government’s instability and lack of attention on housing issues was causing local impacts in Manchester. He explained that the HRA was used to undertake repairs, maintenance, fire safety works, retrofitting and zero carbon improvements to 12,500 properties which were managed by the Council. Approximately 60% of tenants were in receipt of Housing Benefit or Universal Credit and would have their rents covered either in full or in part and it was proposed to significantly increase the hardship fund within the HRA from £200k a year to £1million, which he explained would be targeted at those most in need. He also stated that increases in communal heating charges were previously capped at 20% but recent rises in energy costs had impacted this and an increase was proposed.

In response to a member’s query, the Executive Member for Housing and Development confirmed that any loss of rent as a result of retrofitting had been factored into the HRA business plan. He emphasised the Council’s aim to improve homes to ensure properties were cheap to run and heat and that this could mean that the turnaround time for bringing voids back into use could be longer as a result of insulation and other energy investment works. He highlighted that a significant amount of work was being undertaken to reduce the number of voids.

The Executive Member for Housing and Development acknowledged the importance of referring residents to the Council’s support fund and that social, council and PFI tenants may be eligible for this. This would be communicated, and support would be maximised across the Council.

The Head of Finance for Corporate Core and Strategic Development explained that of the proposed savings from bringing the Northwards housing stock back in-house identified in the original business plan, around £1.6million had been realised to date. He reflected that some proposals within the retained business case were not realisable or deliverable, such as the closure of neighbourhood offices. He stated that the move to in-house management had begun to stabilise, and the efficiency of the operating model was being assessed to ensure an effective service going forwards. The Director of Housing Operations reiterated this and explained that it was within a different context from previously given the new Social Housing Bill and Regulatory Framework.

The Executive Member for Housing and Development stated that this would not have altered the decision to bring the Northwards housing stock back in-house and highlighted that over 90% of 1500 responding tenants initially surveyed were in favour.

He also stated that further savings would be made as leases on neighbourhood offices expired and were consolidated with existing premises.

Decision:

That the report be noted.