Agenda item

Cabinet Portfolio:                 Housing

Strategic Directorate:           Adult Care, Housing and Public Health

Consideration was given to a report presented for pre-decision scrutiny ahead of the Cabinet meeting scheduled for 23 December 2019, which provided a detailed technical overview of the current position of the Housing Revenue Account (HRA) Business Plan and the reasons for changes to the plan.

It was reported that the Housing Revenue Account 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 30 year period. Following the introduction in 2012 of HRA self-financing, the Council was awarded control over its HRA in return for taking on a proportion of national housing debt.

It was noted that since the last update to the plan, there had been no significant government policy changes that affected the business plan, however there were still some policies that had impacted on the plan:

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

·         Ongoing Right to Buy eligibility

·         Updated Guidance on Social rents permitting increases of CPI + 1% from 2020-21 onwards.

The Business Plan recognised the importance of continuing investment in new affordable homes, focused on the next five years and would continue to be amended and reported annually. Given the economic uncertainty the overall position remained challenging, but in view of the level of reserves and the previous decision to defer some investment in stock until later in the plan the ability to divert resources to fund housing growth and contribute to the Council Plan remained.

Members noted that, over the short to medium term forecast, the Business Plan showed a sustainable level of cash flow and balances; however over the longer term there would be a significant squeeze on resources due to inflationary pressures. It was further noted that the key risks in the Business Plan were increased Right to Buy sales above those planned for, interest rate rises above those planned and inflation. Those risks were monitored continuously and mitigated by the Housing Service with support from Financial Services.

Concerns were expressed that the level of rent arrears that had been amassed by claimants of Universal Credit and assurances were sought that the authority was responding positively to assist those individuals. In response, it was there were more officers were working closely with the Department of Work and Pensions (DWP), the government agency responsible for the delivery and implementation of Universal Credit, to mitigate the issue. In addition, officers were also working closely with Rotherham Citizens Advice Bureau and with colleagues in Neighbourhood Services. It was noted that approximately 2,500 tenants were also claimants of Universal Credit and the predictions in respect of bad debts against the HRA were better than forecast, but the arrears issue remained a significant challenge. Following on, the Cabinet Member for Housing confirmed that a political decision was taken to invest in the financial inclusion team in preparation for the impact of Universal Credit on council tenants. This has been successful to some degree when compared to neighbouring authorities.

Members sought clarification in respect of the assumptions for projected Right to Buy sales and what those assumptions were based upon. In response, it was confirmed that the assumptions were informed by historical data, but Members were also reminded that the Business Plan covered a thirty year period and it was difficult to plan in the long term for such eventualities. Assurances were also sought as to the length of time that someone had been a tenant in a council property before they could purchase that property under the Right to Buy Scheme. In response, it was explained that it was difficult to prevent such circumstances, but there were some protections for the authority.

Resolved:-

1.    That Cabinet be advised that the recommendations be supported.