Agenda item

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

Recommendations:

That Cabinet recommends to Council to: -

1.    Approve the proposed 2024-25 Base Case Option C for the HRA Business Plan.

2.    Note that the Business Plan will be reviewed annually to provide an updated financial position.

3.    Agree that Council dwelling rents are increased by 7.7% in 2024/25 (Option 3).

4.    Agree that the Council should retain the policy of realigning rents on properties at below formula rent to the formula rent level when the property is re-let to a new tenant.

5.    Agree that shared ownership rents are increased by 9.4% in 2024/25.

6.    Agree that charges for garages and parking spaces, communal facilities, cooking gas and use of laundry facilities are increased by 6% in 2024/25.

7.    Agree that the District Heating unit charge per Kwh is set at 15.27 pence per kwh, a decrease of 4.2% (0.67 pence per khw).

8.    Agrees that the decision to reduce the price of District Heating Charges further during 2024-25 be delegated to the Assistant Director of Housing in conjunction with the Assistant Director of Financial Services following consultation with the Cabinet Member for Housing. The delegation would only be used to respond to a change in Government policy or a significant change in the Ofgem price cap that has the effect of necessitating a lower unit price.

9.    Approve the draft Housing Revenue Account budget for 2024/25 as shown in Appendix 6.

Consideration was given to the report which, alongside providing the draft Housing Revenue Account (HRA) budget for 2024/25, recommended proposed changes in housing rents, non-dwelling rents, District Heating charges and other service charges. Cabinet were asked to recommend to Council that Council dwelling rent be increased by 7.7%

The proposed 2024/25 HRA Business Plan made funding provision of £126m for hundreds more Council homes by 2026 and committed £856m to investment in the housing stock, alongside day-to-day housing management and repairs and maintenance costs. Over the short to medium term forecast, the Business Plan was operating at or around the minimum balance, with a small surplus of £9.432m by Year 30 of the Business Plan period. However, it was likely that investment in decency and energy efficiency would need to increase over the coming years: the Business Plan made provision for enhanced stock condition surveys which would support future investment decisions.

The overall position remained challenging. Substantial inflationary pressures were evident in some costs increasing by more than 15% over the last 2 years, pressures felt most acutely in the Housing Delivery Programme. The Government’s decision to limit rent increases in 2022/23 led to a permanent reduction of financial capacity within the Business Plan. It was likely that investment in the quality and energy efficiency of the Council stock would need to be increased over the coming years, putting further strain on the Business Plan. At the same time, the Council wished to support tenants to manage their finances during a cost-of-living crisis, recognising that housing costs were often the largest single financial outgoing residents faced.

The Government’s rent setting policy allowed social housing providers to increase rents by Consumer Price Inflation (CPI) plus 1%, i.e. 7.7% in 2024-25. Around two-thirds of tenants in Rotherham were in receipt of Housing Benefit or Universal Credit which would wholly or partially cover their rent. Given the rate of inflation in 2023-24, a one-off rent cap was introduced for one year and was set at 7%, which the Council followed. The housing rent options and their impact on the HRA Business Plan were set out in paragraph 2.9 to 2.12 of the report.

It was also proposed to increase HRA non-dwelling rent fees and charges for 2024/25 by 6%. This was detailed in Appendix 4 to the report. In relation to District Heating Charges, it was recommended that the Council match the Ofgem Price Cap January to March 2024. This option would see a reduction in the unit rate to 15.27 pence per kwh and would mean an average annual cost per user of £960. There would be an average deficit of £280 per user as full cost recovery would not be achieved. This would mean the HRA would be paying c£353k in 2024/25 towards the cost of District Heating. This was c£1m lower than the contribution in 2023/24 would have been had the Council not received EBDS income.

The challenges of increasing rent were acknowledged, and a number of support measures were set out in the report, starting at paragraph 2.25.7. These included the RMBC Tenancy Support Service; Age UK Age Related Benefit Advisory Service; the Council’s Discretionary Housing Payment Fund; Employment Solutions; the Council’s Energy Crisis Support Fund; the Council’s Advocacy and Appeals Team; Foodbanks; the Social Supermarket; Rotherfed and Citizens Advice Rotherham.

The Assistant Director of Housing stated that some of the figures in Appendix 3 to the report were incorrect. The correct figures were provided to the Clerk and would be published as a supplementary document to the agenda. The figures specifically related to the Capital Repairs and Maintenance Investment – excluding savings required and the reserves section of the appendix.

Appendix 1 was the HRA Operating Statement. Appendix 2 related to the rent payable by number of bedrooms. Appendix 3 was the HRA Business Planning assumptions and Appendix 4 was a summary of Modelled Business Plan Scenarios. Non-dwelling rent, service charges and furnished home charges for 2024/25 were attached as Appendix 5 with the HRA Budget 2024/25 at Appendix 6. The affordability analysis was attached at Appendix 7.

The report was considered by the Overview and Scrutiny Management Board (OSMB), who advised that the recommendations be supported. The Board particularly supported the details of support in the report. They had also been reassured that these details were shared widely through a number of different methods, not just digitally.

Resolved:

That Cabinet recommends to Council to:

1.    Approve the proposed 2024-25 Base Case Option C for the HRA Business Plan.

2.    Note that the Business Plan will be reviewed annually to provide an updated financial position.

3.    Agree that Council dwelling rents are increased by 7.7% in 2024/25 (Option 3).

4.    Agree that the Council should retain the policy of realigning rents on properties at below formula rent to the formula rent level when the property is re-let to a new tenant.

5.    Agree that shared ownership rents are increased by 9.4% in 2024/25.

6.    Agree that charges for garages and parking spaces, communal facilities, cooking gas and use of laundry facilities are increased by 6% in 2024/25.

7.    Agree that the District Heating unit charge per Kwh is set at 15.27 pence per kwh, a decrease of 4.2% (0.67 pence per khw).

8.    Agrees that the decision to reduce the price of District Heating Charges further during 2024-25 be delegated to the Assistant Director of Housing in conjunction with the Assistant Director of Financial Services following consultation with the Cabinet Member for Housing. The delegation would only be used to respond to a change in Government policy or a significant change in the Ofgem price cap that has the effect of necessitating a lower unit price.

9.    Approve the draft Housing Revenue Account budget for 2024/25 as shown in Appendix 6.