Agenda item

The Cabinet gave consideration to a report of the Director of Finance which set out the latest Housing Revenue Account (HRA) outturn estimate for 2018/19, the detailed budget for 2019/20 and strategic estimates for the four years 2020/21 through to 2023/24. The report also set out the recommended dwelling and non-dwelling rents and service charge increases to be applied from April 2019.

It was reported that after taking all relevant issues into account, the projected financial position for 2018/19 was estimated to be a £2.506m positive variance when compared to the original budget forecast for 2018/19 approved by Council February 2018 Budget meeting. The majority of this variance was attributed to the re-profiling of HRA funded capital schemes into later years due to revisions to planned spending profiles.

The financial position for 2019/20 showed an estimated HRA closing balance of £19.477m which was considered to be sufficient to meet future operational commitments and the potential financial pressures identified in the risk assessment.

The 2019/20 position had been presented after allowing for an increase in rent of 3.4%.

Members noted the Government had already advised that Private Finance Initiative (PFI) properties would be exempt from Central Government’s 1% Social Rent Reduction Programme. As all Oldham housing stock was contained within two PFI schemes, the 2019/20 budget would follow historic rent setting guidance of Consumer Price Index (CPI) plus 1%, resulting in an increase of 3.4% (CPI was taken as at September 2018).

The proposed HRA budget report was presented for consideration by the Overview and Scrutiny Performance and Value for Money Select Committee on 24 January 2019 The Select Committee was content to commend the report to Cabinet for approval. The Cabinet Member for Finance and Corporate Resources highlighted a recommendation from the Select Committee in relation to financial hardship. The Select Committee agreed that due to the 53 week rent year in 2019/20 and the fact that Universal Credit had been designed around a 52 week rent year, options should be considered to assist tenants in receipt of Universal Credit so that they did not fall into arrears.

Options/Alternatives considered

In order that the Council complied with legislative requirements it must consider and approve a Housing Revenue Account budget for 2019/20.

Within the summer budget announcement of July 2015, the Government imposed a 1% per annum social rent reduction for 4 years. All Oldham housing stock would be exempt from this decrease and an increase would be applied in accordance with current Government guidance.

Should the Council not wish to continue with the established practice of following Government guidelines, 2 potential scenarios had been assessed:

-       proposed rent increase of 3.4% is changed to 2%

-       proposed rent increase is removed altogether

The loss to the Housing Revenue Account in 2019/20 in terms of income would be £0.114m at a 2% increase and £0.278 with no rent increase.  The cumulative impact of this income loss over the life of the Business Plan would have a lasting and significant impact on the long term financial strength of the HRA.

RESOLVED – That:

1. The forecast Housing Revenue Account outturn for 2018/19 as per Appendix A to the report be approved and commended to Council. 
2. The proposed Housing Revenue Account budget for 2019/20 as per Appendix B to the report be approved and commended to Council.
3. The strategic estimates for 2019/20 to 2023/24 as per Appendix D to the report be approved and commended to Council.
4. The proposed increase to dwelling rents for all properties of 3.4% be approved and commended to Council.
5. The proposed increase to non-dwelling rents as per individual contracts be approved and commended to Council.
6. The Private Finance Initiatives 2 and 4 service charges are unchanged be approved be approved and commended to Council.
7. The proposal that Private Finance Initiative 2 concierge charges are set in line with actual costs for full recovery be approved and commended to Council.
8. The proposal that the Council takes whatever action is within its powers to support tenants in receipt of Universal Credit who are impacted by there being 53 rent weeks in 2019/20 be approved and commended to Council.