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Agenda item

Housing Revenue Account – Business Plan 2019/20

Report of the Strategic Director of Adult Care, Housing and Public Health




1.    That Cabinet recommend to the Council to:


(a)  That the proposed 2019-20 Base Case Option 2 for the HRA Business Plan be approved.

(b)  That the plan be reviewed annually to provide an updated financial position.



Consideration was given the report which provided a detailed technical overview of the current position and the reason for changes to the Plan. This report was considered alongside proposed 2019-20 rents, service charges and budgets (Minute No. 91).


The Housing Revenue Account (HRA) recorded all expenditure and income relating to the provision of Council housing and related services, and the Council was required to produce a HRA Business Plan setting out its investment priorities over a thirty year period.


Following the introduction in 2012 of HRA self-financing, whereby the Council was awarded control over its HRA in return for taking on a proportion of national housing debt, Rotherham’s HRA was in a strong position with a healthy level of reserves.  A number of policies were introduced by Central Government that resulted in a reduction to HRA resources, namely:-


·             1% per annum reduction in Council rents over four years. 2019-20 is the final year of this policy.

·             Reinvigoration of the Right to Buy (RTB) (reduction of qualifying period to three years): Reducing stock

·             Welfare reform - bedroom tax, universal credit and benefits cap: Impacting on tenants’ ability to pay their rent, and increasing the resources required by the Council to collect rent from tenants in receipt of benefits.


At the time this resulted in the need for significant savings to be made over the life of the business plan.


The key shift in policies that had resulted in changes to underlying assumptions were:-


·             Agreed rent formula of CPI + 1% from 2020-21 onward for five years.

·             Removal of the HRA Debt Cap.

·             Removal of pay to stay which would have meant any household earning over £31,000 would have been required to pay at or near market rent.

·             Removing the proposed restriction of Housing Benefit to Local Housing Allowance rate for new tenants from April 2019.

·             Removal of the proposed enforced sale of higher value Council Properties.

·             Removing the planned restriction of Universal Credit Housing costs to the majority of 18-21 year olds.


Whilst there have been a number of welcomed policy changes, there were still multiple policies which would continue to impact directly or indirectly on the amount of resources available with the HRA Business Plan. These were:-


·             Roll out of full service Universal Credit to all remaining working age tenants in Rotherham since July 2018 onwards.

·             Ongoing Right to Buy eligibility.


The combined effect of these changes was likely to have a significant impact on the nature of housing provision in Rotherham, not just in terms of Council Housing.


Cabinet Members recognised the ongoing work mitigating the impact of welfare reform and the support being given to tenants for general financial pressures to help with money, benefits and debt advice through the Financial Inclusion Team.


This report had been considered by the Overview and Scrutiny Management Board as part of the pre-scrutiny process who were in support of the recommendations.


Resolved:-  That Council be asked to approve:-


(a)        The proposed 2019-20 Base Case Option 2 for the HRA Business Plan.

(b)        The plan being reviewed annually to provide an updated financial position.

Supporting documents: