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 an update on the proposed Housing Revenue Account (HRA) budget for 2024/25 and sets out the key assumptions being used in developing the next year’s budget and 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 (Neighbourhoods) and the Strategic Director (Growth and Development) which presented an update on the proposed Housing Revenue Account (HRA) budget for 2024/25 and set out the key assumptions being used in developing the next year’s budget and the outlook for the 30-year HRA business plan in light of the budget proposals.

Key points and themes within the report included:

• The proposed rent increase for 2024/25 was 7.7%;
• The current budget position for the HRA as at period 6, with a forecasted overspend of £2.879m;
• The current budget assumptions for 2023/24, including rental income;
• There was no indication in the government’s recent Autumn Statement that a rent cap would be applied as it had for 2023/24;
• Management of housing stock and property numbers;
• Other income and Private Finance Initiative (PFI) schemes;
• Communal heating and a proposal to increase the tariffs to residents in line with the price cap as set by Ofgem from 1 January 2024 which would be reviewed in April 2024 when the next price cap announcement was due;
• Debt financing and borrowing costs;
• Capital investment;
• The overall reserves position forecast; and
• Recognising the difficulties faced by tenants in light of the current cost of living crisis, whilst seeking to balance the need to have a balanced HRA business plan.

Some of the key points and queries that arose from the committee’s discussions included:

• If consideration had been given to lengthening the business plan to 35 or 40 years, as a result of increased interest rates;
• Whether a rent increase cap would be implemented for 2024/25 as it had been for the current year and, if so, how this would affect the HRA budget;
• Whether planning changes announced in the Autumn Statement would impact retrofitting and the installation of heat pumps;
• Challenges with access to properties and how this affected the project repairs percentage;
• How future risk and changes, such as in fire safety measures, were factored into the business plan;
• The assessment undertaken in the decision not to bring the housing repairs contact in-house;
• Welcoming the reduction in the number of void properties;
• The cap on the number of properties the Council could purchase;
• If Private Finance Initiative (PFI) housing stock was subject to Right-to-Buy, and whether this was excluded from current assumptions of the Council’s future housing stock;
• Whether there would be any communication with residents in communal heating schemes about proposed increases to tariffs in line with the price cap as set by Ofgem from 1st January 2024;
• Whether any consideration had been given to moving to individual heating schemes, as opposed to communal schemes, to give residents more control over their usage and bills; and
• If there were any issues with non-payment of communal heating charges.

The Executive Member for Housing and Development introduced the item and explained that the HRA was a ringfenced account for the Council’s housing services and the report outlined the long-term 30-year business plan and the immediate budget and rent-setting decisions. He stated that there was an ongoing commitment to housing retrofit, fire safety, tackling damp and mould and capital investment to improve housing stock across the city.

In response to queries, the Head of Finance (Corporate Core and Strategic Development) explained that the business plan was a rolling plan with the 30-year timeframe set as part of the financing, but it did look beyond 30 years in reality.

The Director of Housing Services advised that the government would consult on rent policy from 2025 and changes to the current arrangements were not expected before then. He also acknowledged challenges with gaining access to properties to undertake necessary repairs and this differed between schemes and jobs but that this impacted around 10-15% of repairs. He also advised that there were different powers for repairs relating to health and safety and gas. Members were informed that this was a key feature of resident bulletins and the Executive Member for Housing and Development stated that the Housing Advisory Board had recently discussed this. He noted that the Council’s responsibility was to communicate appropriately and in a coherent way to engage with residents on the importance of providing access where necessary.

In response to a query regarding heat pumps, the Executive Member for Housing and Development explained that the recently announced changes to planning policy would provide a greater degree of flexibility regarding where air source heat pumps were sited. He noted that there was a wider issue around opportunities to work with residents to transition homes to more efficient heat sources.

The Head of Finance (Corporate Core and Strategic Development) stated that the business plan included long-term assumptions and that there was a programme of short- and medium-term assumptions. He advised that there was a projected estimate of £23m which covered the business plan for certain amount of time, but work was ongoing in Housing Services to commission an asset management plan to provide condition surveys and would help to create an estimate of cost requirements for the future and whether the projected £23m was sufficient. 

The Director of Housing Services explained that the Major Contracts Oversight Board would consider the delivery model assessment for the Council’s housing repairs and maintenance contract in December. This assessed the current market and opportunities to recommission, but the Director of Housing Services acknowledged a motion passed previously by the Council to insource contracts.

In response to a question regarding the cap on the number of properties the Council could purchase, the Head of Finance (Corporate Core and Strategic Development) informed members that this was introduced in the 2022/23 financial year and aimed to encourage increased supply within the housing market through new building as opposed to acquiring existing homes. He stated that the cap would be phased in over a number of years and amounted to 50% of the Council’s capital receipts for properties sold under Right-to-Buy in 2022/23 and would reduce to 30% over time.

The Executive Member for Housing and Development highlighted that the HRA 30-year business plan was predicated on the ability for housing stock to grow. He expressed his vision to bolster the HRA through increased Council-owned housing stock and cited developments in Collyhurst and Silk Street as examples of this.

The Executive Member for Housing and Development also confirmed that Right-to-Buy did apply to PFI properties.

Regarding questions around communal heating schemes, the Executive Member for Housing and Development reiterated a member’s comment on the importance of communicating any tariff changes. He noted that around 2000 tenants were part of a communal heating scheme and stated that any communications would signpost any resident who might struggle financially as a result of the increase to the Community Living Fund. This Fund amounted to £1m this year and it was hoped that this would be repeated in 2024/25 to support those most in need.

The Executive Member for Housing and Development stated that individual heating schemes was being reviewed through capital funding to ensure that the Council’s housing stock was energy efficient and had appropriate heating arrangements. He reiterated work to implement ground source heat pumps and other measures across Council housing in the city.

In concluding the item, the Executive Member for Housing and Development welcomed the committee’s comments and advised that rent-setting for Council-owned properties would be included in the budget process in February 2024.

Decision:

That the report be noted.