To set out and seek approval of an updated Housing Revenue Account (HRA) Business Plan, which includes proposed changes to the budget in 2025/26 along with HRA budget proposals for 2026/27.

RESOLVED that Cabinet –

(a)     approves the updated Housing Revenue Account (HRA) 30-year Business Plan, which includes the proposed revised position for 2025/26, along with HRA budget proposals for 2026/27; and

(b)     requests the Resources and Services Overview and Scrutiny Committee’s comments on this latest HRA financial forecast, as required by the Council’s Budget and Policy Framework Procedure Rules.

Cabinet considered a joint report of the Housing & Planning Portfolio Holder and the Corporate Governance & Finance Portfolio Holder (A.5) which set out and sought Cabinet’s approval of an updated Housing Revenue Account (HRA) Business Plan, which included proposed changes to the budget in 2025/26 along with HRA budget proposals for 2026/27.

It was reported that, in continuing the approach from previous years, an HRA Business Plan was maintained on an on-going basis, with the most up to date position in December each year being ‘translated’ into the detailed budget for the following year for consultation with the Resources and Services Overview and Scrutiny Committee.

Cabinet was advised that several changes had been made to the Business Plan that largely reflected increased costs / inflationary uplifts. Some of those costs were also being experienced in 2025/26, with corresponding adjustments set out accordingly.

Members were made aware that, in accordance with its earlier commitments, the Government had issued rent setting guidance that was expected to remain in place for up to 10 years, which set out annual increases of up to CPI+1% each year over the 10-year period. In-line with this guidance, it was proposed to increase rents by CPI+1% in 2026/27. Based on the relevant reference CPI rate of 3.8%, the proposed increase in 2026/27 would be 4.8%.

As was the case in previous years, it was acknowledged that, although Councils could set lower increases, this would be a very difficult approach to adopt in terms of the future sustainability of the HRA Business Plan, given the ‘telescopic’ impact this would have, along with the imbalance it would create, as expenditure could increase ahead of corresponding increases in rental income.

Cabinet was informed that, based on the above, the average weekly rent proposed for 2026/27 was £108.46 (£103.49 in 2025/26). After considering the various adjustments set out in Appendix A, annual deficits of £1.278m and £0.650m were forecast for 2025/26 and 2026/27 respectively, which could be met by using money from reserves.

Members were aware that, as had been the case in previous years, this formed part of a managed approach with the corresponding use of reserves seeking to maintain the necessary balance of ‘protecting’ the investment in tenants’ homes whilst recognising the need to use reserves to respond to the on-going financial challenges that the HRA continued to face. It was however recognised that this was not a sustainable long-term solution, but it enabled the Council to continue to meet its key priorities in the immediate term whilst acknowledging that future years of the forecast were expected to deliver offsetting annual surpluses from as early as 2028/29. Those future forecast surpluses were primarily achievable via the planned reduction in debt and interest costs, as outstanding loans were repaid alongside the longer-term certainty provided by the Government’s commitment to a ten-year rent setting policy of CPI + 1%.

It was highlighted that HRA debt continued to reduce year on year as principal was repaid with a total debt position at  ...  view the full minutes text for item 91