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

This report presents members with details on the proposed Housing Revenue Account (HRA) budget for 2022/23 and an indication of the 2023/24 and 2024/25 budgets.

It seeks approval for the 2022/23 HRA budget and follow the Government’s guideline rent increase of 4.1% for all properties.

It is also proposed that the City Council continue with the policy of realigning rents on properties at below formula rent, to the formula rent level when the property is re-let.

The Committee considered a report of the Strategic Director (Growth and Development), the Strategic Director (Neighbourhoods) and the Deputy Chief Executive and City Treasurer, which set out the details on the proposed Housing Revenue Account (HRA) budget for 2022/23 and an indication of the 2023/24 and 2024/25 budgets.

Key points and themes of the report included:-

·                The HRA Budget Position for 2021/22, which as of December 2021, was forecasting that net expenditure would be £11.621m lower than budget, inked to delays in capital projects;

·                Although the expenditure is lower than originally forecast, it is still more than the annual income and the forecast in-year deficit of £5.073m will be drawn down from the HRA reserve

·                The Budget Strategy 2022/23 - 2024/25,

·                The management of Housing Stock and the implications of “Right to Buy” on rental income;

·                Details of the various budget assumptions;

·                A proposed 4.1% increase to dwelling rents and garage rents

·                A proposal to establish a £200,000 hardship fund to support vulnerable tenants; and

·                The Reserves Forecast 2022/22 to 2024/25

Some of the key points that arose from the Committees discussions were:-

·                Whilst welcoming the proposed hardship fund, what was the timeframe for the distribution of these funds;

·                Would the hardship fund be available to just Council housing tenants or for also other social housing tenants;

·                PFI housing partners should be encouraged to contribute to the hardship funding;

·                In relation to investment proposals, was there scope in the budget for any additional HRA council housing;

·                Was there any indication from Government of additional funding to assist in the retrofitting of existing properties to achieve zero carbon targets, either direct to Manchester or via the Combined Authority;

·                What lobbying was taking place to address the need for further government funding to deliver more social rent homes in Manchester and when was the current round of this policy going to be reviewed;

·                How many properties associated with the operational overspend of £0.947 where council properties;

·                Clarity was sought on the proposed heating tariffs;

·                What was the current level of bad debt and consequently how had it been determined that the ongoing forecast requirement was 1% for the life of the plan;

·                What was the capital expenditure on fire safety and what was anticipated to be the level of spend required to meet legislative requirements and the cost of going beyond this requirement to meet any potential future changes in legislation;

·                What funding was being allocated on the decent homes programme, with reference around improved kitchen and bathroom facilities

The Director of Housing Operations advised that the process for distributing the hardship fund would be finalised over the coming weeks using the established mechanisms ins place for welfare support use during the Covid crisis. 

The Executive Member for Housing and Employment confirmed that the hardship fund would only be available to tenants in council owned housing stock (Northwards) and those in Council controlled housing stock, including tenants who resided in properties within the two PFI schemes.  Other Registered Providers were also establishing their own hardship funds to support their tenants

The Executive Member for Housing and Employment advised that the current budget outlined the two housing schemes and also investment in existing stock in terms of air source heat pumps, thermal insulation and triple glazing and improving existing stock to net zero carbon standards.  Further capital outlay into further housing stock was an ambition of the HRA to deliver on the Council’s priorities in delivering social rent homes in north and east Manchester.

The Executive Member for Housing and Employment advised he would look into when the current policy on government funding for more social rent homes was to be removed.  He added a lot of work had taken place on safety improvements to towers blocks and money was set aside on the HRA to continue this work.  In addition he reported that Greater Manchester had been successful in receiving £10.5 million to help with the retrofit works. Details of how this was to be distributed were yet to be announced but Manchester would be lobbying strongly to get a fair share of this.

The Head of Finance agreed to provide details following the meeting on the number social HRA properties that were contributing to the operational overspend.  He also advised that as the increase in gas process was at present unknown, Officers had outlined a range of various pricing models to give an indication of what the increase could potentially be and was based on the volume of consumption against price.  He also agreed to confirm why the pay by point of sale for Northwards 2/4 Blocks was not proposed to increase in comparison to other schemes.

The Committee was advised that in relation to bed debt, there had been an underspend for the last few years as the impact of the roll out of Universal Credit and the pandemic had been lower than originally forecasted.  Therefore, the business plan had been adjusted for 2022/23 onwards.  The forecast provision for bad debt in 2021/22 was around 0.65% of rental income, and so the ongoing forecast requirement of 1% for the life of the plan was a 0.5% reduction from the previous assumption in the business plan.  The collection rates and level of bad debts would be kept under review

The Director of Housing Operations advised that the majority of capital programme spend over the last two years had been on fire safety and compliance.  In terms of the Asset Management priorities, these had been focussed on decent homes, re-roofing, widow replacement and replacement of kitchen and bathrooms.  He agreed to provide the Capital Programme to members of the committee for information.

Decision

The Committee endorse the recommendations that the Executive:-

·                Approve the 2022/23 HRA budget as presented in Appendix 1 and note the indicative budgets for 2023/24 and 2024/25.

·                Approve the proposed 4.1% increase to dwelling rents, and delegate the setting of individual property rents, to the Director of Housing Operations and the Deputy Chief Executive and City Treasurer, in consultation with the Executive Member for Neighbourhoods and Executive Member for Housing and Employment. 

·                Approve the establishment of a £200,000 hardship fund to support vulnerable tenants, and to delegate the design and operation of the fund to the Director of Housing Operations and the Deputy Chief Executive and City Treasurer, in consultation with the Executive Member for Neighbourhoods and Executive Member for Housing and Employment.

·                Approve the proposal that where the 2022/23 rent is not yet at the formula rent level, the rent is revised to the formula rent level when the property is re-let.

·                Approve that communal heating charges are increased in line with the published % increase to the OFGEM price cap and delegate authority to the Deputy Chief Executive and City Treasurer and City Solicitor in consultation with the Executive Member for Housing and Employment to approve the charges.   

·                Approve the proposed 2022/23 Operational Housing management costs as detailed in paragraphs 5.28 to 5.29.

·                Approve the proposed increase in garage rental charges as outlined in paragraph 6.1