To set out and seek approval of an updated Housing Revenue Account (HRA) Business Plan, which includes proposed changes in 2024/25 along with budget proposals for 2025/26.

RESOLVED that -

(a)    the updated HRA 30 year Business Plan, which includes the proposed revised position for 2024/25 along with budget proposals for 2025/26, be approved; and

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

Cabinet considered a detailed joint report of the Housing and Planning Portfolio Holder and the Corporate Finance and Governance Portfolio Holder (A.11), which set out and sought its approval of an updated HRA Business Plan, which included proposed changes in 2024/25 along with budget proposals for 2025/26.

Members were reminded 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 few changes had been made to the business plan for 2025/26 onwards that largely reflected increased costs / inflationary pressures. Some of those pressures were also being experienced in 2024/25, with corresponding adjustments set out accordingly.

Cabinet was informed that, based on associated guidance from the Regulator for Social Housing, it was proposed to increase rents by CPI+1% in 2025/26. Based on the relevant reference CPI rate of 1.7%, the proposed increase in 2025/26 was 2.7%.

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 and greater imbalance it would create, as expenditure would be increasing significantly more than the level of rental income increases. Such an impact had been experienced when then 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 2025/26 was £103.49 (£100.89 in 2024/25).

After taking into account the various adjustments set out in Appendix A to the Portfolio Holders’ joint report, there continued to be an estimated budget surplus of £0.418m in 2024/25, albeit this was slightly behind the original estimated position of £0.493m. In terms of 2025/26, there was currently an estimated deficit of £1.170m. 

It was reported that the estimated deficit in 2025/26 was broadly due to the increase in costs associated with the repair and maintenance of the Council’s stock of social housing.

It was proposed to fund the estimated deficit for 2025/26 by calling on money from HRA balances as an alternative to reducing expenditure. This was partly offset by the transfer of the estimated surplus in 2024/25 to the same reserve.

Cabinet was reminded that, as has been the case in previous years, the use of reserves formed part of a wider managed approach that struck 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 Council continued to face. It was however recognised that this was not a sustainable long-term solution, but it enabled the Council to meet its key priorities in the immediate term, which could be revisited as part of the HRA Business Plan in future years. It would be important that the Council explored opportunities to balance the various competing issues during 2025/26, to inform the business plan and budget from 2026/27.

Members were advised that the HRA General Balances were currently estimated to total £2.556m at the end of 2025/26 (after taking account of the use of balances highlighted above) that remained available to support the 30-year Business Plan and associated risks to the forecast.

It was recognised that the proposed HRA Capital Programme for 2025/26 reflected the commitment to maintain the necessary investment in the existing homes of tenants.

It was noted that HRA debt continued to reduce year on year as principal was repaid with a total debt position at the end of 2025/26 forecast to be £31.120m, which also took into account the refinancing of an historic loan via an internal borrowing approach.

Cabinet was cognisant that there would undoubtedly be further changes required to the forecast before the detailed estimates were finalised for reporting to Cabinet in January 2025, which would provide the opportunity to revisit the above proposals accordingly.

In addition to requesting comments from the Resources and Services Overview and Scrutiny Committee, it was also proposed to consult with the Tenants’ Panel during January, with the outcome reported to Cabinet later that month, when the final HRA budget proposals would be considered for recommending onto Full Council in February 2025.

In order to enable Cabinet to agree the most up to date HRA Business Plan which set out a revised position for 2024/25 along with the proposed HRA budget for 2025/26 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 -

(a)    the updated HRA 30-year Business Plan, which includes the proposed revised position for 2024/25 along with budget proposals for 2025/26, be approved; and

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