Agenda item

To consider a recommendation from Cabinet in respect of approving the Housing Revenue Account Business Plan for 2019/20.

Further to Minute No. 92 of the meeting of the Cabinet held on 21^st January, 2019 consideration was given the report which provided a detailed technical overview of the current position and the reason for changes to the Housing Revenue Account Business Plan.

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.

Engagement work with tenants was ongoing and the Council had received national funding bodies support to the Housing Growth Programme.  Funding had also been received to support the prevention of, and support to, victims and survivors of domestic abuse, rough sleepers and the Council would work towards supporting the most vulnerable of people.

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 and legislation 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.

The Council would continue to invest in the future of its Council housing services in Rotherham and £51 million had already been agreed to deliver new housing across Rotherham.  A further £54 million was earmarked for future housing to invest in the future and to try and replace as many of those homes lost through the Right to Buy each year.

Tenants would also receive a welcome 1% rent reduction in 2019/20 whilst at the same time the feeling the pressures from the welfare reform measures and the roll-out of Universal Credit. 

Councillor Reeder sought clarification on how high value properties could return £2 million each year if they had not been sold.

In response the Cabinet Member explained about the Government decision and formulae relating to high value properties which mean here in Rotherham  there was payment for the privilege of keeping those high value properties amounting to around £2 million a year or until they were sold.

With the amount of people desperately waiting for Council housing those properties were kept.  That decision had since been quashed.

Resolved:-  (1)  That the proposed 2019-20 Base Case Option 2 for the HRA Business Plan be approved.

(2)  That the Plan be reviewed annually to provide an updated financial position.

Mover:-  Councillor Beck                        Seconder:-  Councillor Alam