Agenda item

This report covers the 2019/20 budget for the Council’s homes (also known as the annual Housing Revenue Account (HRA) budget).

Councillor Lisa Homan (Cabinet Member for Housing) and Emily Hill (Assistant Director, Corporate Finance) introduced the report that covered the proposed Housing Revenue Account (HRA) budget and the Financial Plan for Council Homes.

Emily Hill stated that the draft budget for Council homes for 2019/20 included the final year of the decision by the Chancellor of the Exchequer to reduce social housing rents by 1% each year for four years from April 2016. Moving forwards, it was noted that rents may need to increase in future years to support the effective management and maintenance of homes - Government announced last year that annual rent increases are likely to be limited to the Consumer Price Index (CPI + 1%) for at least five years from April 2020.

Councillor Lisa Homan explained that the Fire Safety Plus Programme (started in 2017) would continue to make sure that the Council’s homes and property meet high standards and this programme would move into the delivery phase. This would be supported by the new HRA Asset Management Strategy, which was approved at Cabinet on 3^rd December 2018 which set out the priorities for investment in the Council’s homes, with fire safety and health and safety compliance of primary importance.

Emily Hill highlighted that the repairs and maintenance contract with MITIE was being terminated and the Council would be introducing a more permanent, residents’ focused delivery model.

To enable the successful delivery of the Capital Programme, fire safety plus, and improved services to residents, restructures to the Growth and Place directorate were under way. This had resulted in budget growth of £1.94m in these areas of operations, which would enable on going revenue savings of £0.8m per annum from 2020/21 rising to £0.9m per annum from 2021/22. It was anticipated that these savings would materialise due to better stock condition following investment and savings from improved customer service.

In relation to rent increases, Councillor Lisa Homan assured the Committee that the Council had consulted residents about what the Council thought was a reasonable rent increase going forwards. Councillor Adronie Alford commented that she thought rent levels were meant to be on parity with Housing Associations. In response, Councillor Homan commented that the Council’s current rents were low and very competitive within the market place.

Councillor Rowan Ree asked what the impact was of the Right to Buy scheme on the HRA. Councillor Lisa Homan confirmed that at present, the Council was selling between 30 to 35 properties per year. David McNulty confirmed that the implications of Right to Buy on the HRA was a technical area and further information could be provided outside the meeting.

Action: David McNulty to provide further information on the Right to Buy scheme and HRA outside the meeting.

Councillor Adronie Alford asked about the Fire Safety Plus Programme and specifically how the Council made savings by investing. In response, Councillor Lisa Homan provided a detailed explanation of how infrastructure and maintenance savings could be made. She also explained that the Council was in the process of reprogramming the Capital Programme to ensure that the Fire Safety Plus recommendations could be implemented as a priority.

Adding additional detail, Emily Hill provided further information on the Asset Management Programme. She explained that savings would come from the repairs model and specifically by ensuring that repairs were carried out correctly first time. David McNulty commented that if the Council understood the asset better, then officers could invest capital in a more targeted way.

The Chair asked about future rent increases and how this meant that the Council would have additional funds to invest in rent repairs. In response, Councillor Lisa Homan explained there was a correlation between increased rental income and increasing the planned maintenance programme. In the past when the Council chose to reduce rents, residents were consulted (so that the implications for doors and windows maintenance were understood). David McNulty commented that Grenfell and the outcomes of the Hackett enquiry would determine what actions the Council needed to take in the future.

Councillor Zarar Qayyum noted that the MITIE contract was being terminated and asked what steps were being taken to mitigate risk. In response, Councillor Lisa Homan confirmed that a Cabinet report had been prepared which set out the arrangements for interim model to be implemented for 10 to 15 months as well as what the monitoring arrangements would be.

A resident stated it was their understanding that MITIE did not relinquish the contract and MITIE had sold the contract on to Mears. David McNulty confirmed that in accordance with standing orders, the Council had served notice for the repairs and maintenance contract and had provided 6-months’ notice in the usual way.

RESOLVED

That the Committee reviewed and commented on the report.