The report of the Strategic Director (Growth and Development) and Deputy Chief Executive and City Treasurer is attached.

(Councillor Midgley declared a disclosable pecuniary interest in this item and withdrew from the meeting while it was considered).

A report by the Strategic Director (Development) and City Treasurer presented the proposed budget for the Housing Revenue Account (HRA) for 2020/21 and indicative budgets for 2021/22 and 2022/23.

The report set out the requirements placed on the Council with respect to the HRA budget:

·         the Council had to formulate proposals or income and expenditure for the financial year which sought to ensure that the HRA would not show a deficit balance;

·         to keep a HRA in accordance with proper practice to ensure that the HRA is in balance taking one year with another; and

·         the HRA must, in general, balance on a year-to-year basis so that the costs of running the Housing Service must be met from HRA income.

Under a variety of arrangements, the Council owns and manage just under 16,000 properties within the HRA. The arrangements included three PFI schemes and the stock managed by either Northwards Housing or other Registered Social Landlords. During 2019/20 the Council was anticipating selling around 193 properties under the Right to Buy scheme.

Included in the report was the forecast for the HRA in 2019/20 to have an in-year surplus of £3.029m, compared to a budgeted deficit of £10.147m, and the main reasons for that change were explained in the report.

Following the four years of then annual 1% per cent rent reduction, the Government had agreed that rent policy for five years commencing in 2020/21 was able to revert to the Consumer Prices Index rate of inflation +1%, and that increase had been included within the proposed budget for 2020/21. For the approximately 1,000 properties where formula rent had not yet been achieved, the rent would be increased to formula rent when that property was next re-let.

Gas for the communal heating systems was sourced as part of the City Council’s overall gas contract. The existing wholesale gas contract expired shortly, and latest prices indicated that the current wholesale gas price would reduce by 7% with effect from April 2020. Therefore, in order to ensure that the costs of gas used were recovered through the tariffs charged for tenants and residents on a scheme-by-scheme basis, it would be necessary to reduce the current heating charges by between 0% and 36%. Appended to the report was a complete schedule of proposed heating tariffs for pay by rent and pay by prepayment card, showing the percentage change for 2020/21. All bar one of the schemes would see a reduction in fuel costs in 2020/21.

The report proposed that the Northwards management fee for 2020/21 be increased to reflect the costs of pay awards in 2020/21. That would equate to a rise of 1.55% or £315,000 in 2020/21.

In order to ensure that the increase applied to garage rents remained in line with that applied to dwelling rents, it was proposed that 2020/21 garage rents be increased by 2.7%, which would see an increase in the rental of between 5p and 13p per week.

Due to the continued roll out of Universal Credit and the anticipated impact on residents the business plan had made prudent provision for an increased contribution towards the provision for bad debts. Their remained a risk that the further roll out of Universal Credit could impact on rent collection rates in later years. Therefore, the 2020/21 contribution to the bad debt provision was to remain at the 2019/20 actual rate of 1%. It would then be increased annually by 0.5% from 2021/22 until 2023/24 at which point it will peak at 2.5%. It was then planned to reduce by 0.5% per year until staying at 1.5% for the remainder of the plan.

The report also explained the other key changes in the HRA budget for 2020/21, and the full budget was presented as set out below.

Decisions

1.         To note the forecast 2019/20 HRA outturn as being a surplus of £3.029m.

2.         To approve the 2020/21 HRA budget and to note the indicative budgets for 2021/22 and 2022/23.

3.         To approve the proposed 2.7% increase to dwelling rents, and delegate authority for the setting of individual property rents to the Director of Housing and Residential Growth in consultation with the Deputy Chief Executive and City Treasurer and the Executive Member for Housing and Regeneration and the Executive Member for Finance and Human Resources.

4.         To approve that where the 2020/21 rent is not yet at the formula rent level, the rent is revised to the formula rent level when the property is re-let.

5.         To approve the proposed 2020/21 changes for communal heating charges as outlined above and set out in detail in the report’s appendix 2.

6.         To approve the proposed increase in the 2020/21 Northwards management fee as set out above.

7.         To approve the proposed increase in garage rental charges as described above.