Agenda item

To set out and seek approval of an updated Housing Revenue Account (HRA) Business Plan, which includes proposed changes in 2023/24 along with budget proposals for 2024/25.

RESOLVED that Cabinet -

(a)   approves the updated Housing Revenue Account (HRA) 30 year Business Plan, which includes the proposed revised position for 2023/24 along with budget proposals for 2024/25; and

(b)   requests the Resources and Services Overview and Scrutiny Committee’s comments on this latest HRA financial forecast.

Cabinet considered a joint report of the Housing & Planning Portfolio Holder and the Corporate Finance & Governance Portfolio Holder (A.6), which set out and sought approval of an updated Housing Revenue Account (HRA) Business Plan, which included proposed changes in 2023/24 along with budget proposals for 2024/25. 

Members were aware that, similarly, to the General Fund’s long-term forecast, a ‘live’ 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. It was reported that a number of changes had been made to the business plan for 2024/25 onwards that largely reflected increased inflationary pressures. Some of those pressures were also being experienced in 2023/24, with corresponding adjustments set out accordingly.

Cabinet was informed that, unlike last year when the Government had intervened and had set a rent increase ‘cap’, and unless the Council heard to the contrary, it was proposed to increase rents in-line with the formula set out by the Regulator for Social Housing which allowed rents to increase by up to CPI+1% each year. 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 and the imbalance it would create as expenditure would be increasing ahead of income. Such an impact had been experienced when the Government had required Councils to reduce rents by 1% over the 4 year period from 2016/17 to 2019/20 and that continued to have an impact over the long-term life of the business plan.

Members were advised that, based on the above, the average weekly rent proposed for 2024/25 was £100.89 (£93.68 in 2023/24). After taking into account the various adjustments set out in Appendix A to report A.6, there was an estimated budget deficit of £0.764m in 2023/24 and an estimated surplus of £0.180m in 2024/25. In respect of 2023/24, this was £0.484m more than the budgeted deficit.

Cabinet heard that it was proposed to fund the estimated deficit for 2023/24 by calling money from HRA balances as an alternative to reducing expenditure, which was partly offset by the proposal to transfer the estimated surplus in 2024/25 to the same reserve. HRA General Balances were currently estimated to total £3.572m at the end of 2024/25 (after taking account of the use of balances highlighted above) that would remain available to support the 30 year Business Plan and associated risks to the forecast.

Members were told that there would undoubtedly be further changes required to the forecast before the detailed estimates were finalised for reporting to Cabinet in January 2024, which would provide the opportunity to revisit the above proposals accordingly.

It was further reported that the proposed HRA Capital Programme for 2024/25 reflected the commitment to maintain the necessary investment in the existing tenant’s homes. HRA debt continued to reduce year on year as principal was repaid with a total debt position at the end of 2024/25 forecast to be £32.535m, which also took into account the refinancing of an historic loan via an internal borrowing approach.

Cabinet was made aware that, in addition to requesting comments from the Resources and Services Overview and Scrutiny Committee, it was also proposed to consult with the Tenant’s Panel during January 2024, with the outcome reported to Cabinet later that month, when the final HRA budget proposals would be considered for recommending onto to Full Council in February 2024.

In order to enable Cabinet to approve the most up to date HRA Business Plan which set out a revised position for 2023/24 along with the proposed HRA budget for 2024/25 for consultation with the Resources and Services Overview and Scrutiny Committee:-

It was moved by Councillor M E Stephenson, seconded by Councillor Baker and:-

RESOLVED that Cabinet -

(a)   approves the updated Housing Revenue Account (HRA) 30 year Business Plan, which includes the proposed revised position for 2023/24 along with budget proposals for 2024/25; and

(b)   requests the Resources and Services Overview and Scrutiny Committee’s comments on this latest HRA financial forecast.