Agenda item

This report will follow.

This item was taken before item 34.

Ms Corbett presented the report in respect of:

·         Management of the Housing Revenue Account (HRA) post  HRA reform;

·         The HRA Financial Strategy, the HRA MTFS for the five years, 2013/14 to 2017/18, and the HRA Revenue Budget for the year 2013/14; and

·         The proposed increase in dwelling rents for 2013/14.

The HRA Financial Strategy was required to:

·         finance both the annual interest and repayments of the principal debt (£217.4 million after HRA reform) as it becomes due (£9.582 million being repaid in 2013/14);

·         achieve a  viable on-going maintenance programme that maintained stock in good repair;

·         increase the HRA reserves balance to protect against future stocks or unanticipated events to circa £35 million by 2022;

·         free resources for investment on new initiatives, including new housing supply; and

·         to repay debt as it becomes due.

The strategy was set in the context of:

·         Local authorities being ‘self financing’ and having to manage their housing assets to ensure that HRA stock can be supported and maintained from HRA income;

·         General Reserves being currently less than four weeks rent;

·         Investment required in respect of previous lack of investment and elements not covered by the Decent Homes programme, for example lifts or public realm;

·         LBHF rents were lower than those of tri-borough partners and Wandsworth and there was a reliance on disposal of void properties to  fund capital works; and

·         The HRA Medium Term Financial Strategy (MTFS) transformation programme was underway, comprising market testing of: Repairs and Maintenance; and Housing Services for the South of the Borough.

The key financial risks included: the impact of welfare reforms; the impact of higher void rates of fixed term tenancies; general market risk on re-procurement of contracts; loss of income due to high levels of Rights to Buys; and additional health and safety requirements.

The HRA MTFS savings proposed £2.7 million in 2013/14, rising to £4 million per annum by 2014/15. These savings were offset by £2.2 million of growth, primarily due to increases in corporate recharges, changes in accounting rules regarding the treatment of non-dwellings depreciation, a reduction in income due to Rights to Buy and an additional budget for fixed wiring electrical testing, which is a Health and Safety requirement.

The Council’s ability to increase rents over and above the rent restructuring formulae needed to be viewed in the context of the pressures on the HRA. The rationale for reviewing the Council’s rent policy was set out in the report. The results of benchmarking Council rents against those charged in other neighbouring boroughs had demonstrated that Hammersmith & Fulham rents were considerably lower. In addition, the benchmarking had identified that current rent levels disadvantaged tenants who lived in smaller properties.

An increase in bad debt provision had been made to provide some protection against the impact on rent collection rates as a result of the various strands of the Government’s Welfare Reform Programme. It was likely that the risk would increase in future years.

Councillor Cowan considered that staff back office savings of 12% were too low and queried whether these savings had been benchmarked against other councils. Mr Barrett advised that £6 million in savings had been taken out between 2008 and 2010, and the current HRA MTFS Transformation Programme was projecting a further saving of £2.7 million in 2013/14 and an ongoing annual revenue saving of £4 million per annum from 2014/15 onwards.

Mr Barrett further advised that the twin objectives were to achieve greater cost efficiency and to improve service quality. The saving would be achieved through a combination of re-procurement, market testing and transforming the way teams worked and services were delivered.

Mr Barrett also drew Members’ attention to Appendix 2 of the report which projected a reduction in FTEs from 375 to 210 between 2013/14 and 2014/15 onwards. These projections would be subject to the outcome of the market testing exercises currently underway.

ACTION

A report on housing management costs, to include staffing would be added to the work programme.

Action: Mel Barrett

RESOLVED THAT:

The Committee noted the report.