Cabinet Member for Finance
In accordance with Council Procedure Rule 19.3, immediately after any vote is taken at a budget decision meeting of the Council the names of Councillors who cast a vote for the decision or against the decision or who abstained from voting shall be recorded in the Minutes of that meeting.
At its meeting on 11 February 2020, Cabinet considered Paper BCa/19/35, together with amendments to the Housing Revenue Account. Paper BC/19/36 now includes all the relevant updated information, together with the necessary recommendations.
Minutes:
212.1 The Chair of the Council invited Councillor Ward, to introduce Paper BC/19/36 and to move the recommendations in the report.
212.2 Councillor Ward stated that the Council had a sound 30-year business plan, which had resulted in favourable positions for both revenue and capital for 2020/21. This had been helped by the ending of the annual 1% rent reduction imposed by the Welfare Reform and Work Act 2016. The act now allowed rents to be increased by CPI (currently 1.7%) +1% for five years from 2020-21. The remaining 25 years of the Business Plan were based on an annual rent increase of CPI only. The full 30-year Business Plan was attached at Appendix B.
212.3 A fundamental review of housing services had been undertaken during 2019/20 to identify savings, efficiencies and income generation opportunities to achieve a sustainable business plan into the future. The scope of this review was provided in section 7.1 of the report.
212.4 The Council was continuing with an aspiration to increase the housing stock. New homes of all types would provide the Council with New Homes Bonus and Council Tax income, whilst additional council housing would deliver rental income and wider financial and social benefits.
212.5 The table in section 10.1 of the report detailed the HRA budget for 2020/21, based on a 2.7% rent increase, and highlighted the movement from the 2019/20 budget.
212.6 A surplus position of £334k was forecast, which was a significant improvement on the 2019/20 position. This had been achieved by reducing both revenue and capital budgets (table in 10.1). He proposed to transfer this surplus to the HRA reserves.
212.7 He outlined the key adverse movements as:
· A reduction in income of £187k, primarily due to 2020/21 being a 52-week year whereas 2019/20 was 53 weeks, and delays in new builds.
· An increase of £189k in general management costs due to staff costs and the transfer of an ICT budget to the HRA.
· An increase of £56k for Repairs and Maintenance.
· An increase of £68k for Property Services.
212.8 Set against these were favourable variances, notably a reduction in Revenue Contribution to Capital of £1.047m due to the revised capital programme.
212.9 In addition to the rent increase, it was proposed to increase sheltered housing charges by £2 per week to ensure recovery of the actual cost, but that utility charges were kept at the same level as the current year. Garage rents would remain at the current level and work was continued to look for alternative uses for unviable garage sites.
212.10 Next year would see a focus on the terms of all contracts (those more than £50k) being reviewed, to identify savings opportunities, as well as a decision whether on the long-term future of Building Services was via a joint venture with Flagship Housing. A review of the HRA Business Plan will also be undertaken. Income increases or savings would continue to be reflected in the budget and would be monitored during the year.
212.11 The Right to Buy sales were lower than those projected in the business plan. In 2018/19 Babergh sold 15 against an original projection of 27 sales. The reinvestment limit of 30% of Right to Buy sales income would be an increasing problem, as the building and acquisitions programme progressed.
212.12 A detailed breakdown of all the HRA earmarked reserves (revenue and capital) forecast to 31st March 2021 could be found in Appendix C and showed an improvement over the year of nearly £1.9m. Paragraph 6.2 of the report detailed the predicted movement in the revenue reserves over the next 30 years. It indicated a slight reduction from £12.9m to £12.6m. In paragraph 6.3 the debt repayment profile for the next 30 years, with all debt being repaid by 2049/50 was explained.
212.13 Paragraphs 11.1 to 11.4 summarised the capital investment programme for the next four years and Appendix A provided more detail. Section 6.4 gave a graphical view of the expenditure. Working with Iceni to identify development sites, the aim was to build a further 156 affordable homes and 23 for shared ownership over the period 2020/23. It was anticipated that a cumulative capital programme budget of just under £51.2m, which included £26.9m for new builds and acquisitions, would be financed from a number of sources as shown in paragraph 11.2 and the Appendix, including £11.7m borrowing. Strategic priority reserves would not be used to finance this programme.
212.14 Councillor Ward MOVED recommendations 3.1 to 3.9 in the report, which was SECONDED by Councillor Jan Osborne.
212.15 Councillor Beer asked if unused garages sites, would be utilised to make space for parking places for the surrounding estates.
212.16 Councillor Jan Osborne, Cabinet Member for Housing, responded that a review was being undertaken and included an option for utilisation of unused garage space. However, some sites had dual tenure.
212.17 Councillor Maybury queried the increase of £2 per week for the sheltered housing services and whether this was in addition to the increase in rent.
212.18 Councillor Ward confirmed that this was the case and that the increase in Sheltered Services costs was as a result of an increase in costs.
212.19 Councillor Maybury questioned why garage rents were not being increased and added that many garages were used for storage. She thought that an increase in garage rent would help to free up garage sites, which could then be used for housing.
212.20 In response to Councillor Maybury’s further questions regarding garage rents, Councillor Ward explained that garages were often tied to the Council’s housing provision and that its was not viable to increase garage rents, as this would only generate a small increase in income.
212.21 Councillor Jan Osborne added that this was the reason for the review of garage sites and to establish, which sites were no longer required.
212.22 Councillor Hardacre referred to the graph on page 102 and if this indicated an inability to build further housing during the first two years.
212.23 The Assistant Director for Housing responded that the graph was an indication of the current situation and he expected that the graph would shift in line with new builds coming forward over the next few years.
212.24 Councillor McCraw referred to questions raised at the Overview and Scrutiny Committee regarding the proposed 229 houses to be built in the district and the confirmation at the Committee meeting that it was the intention for further building programmes going forward.
212.25 Councillor Hinton queried page 106 for the Capital Investment Programme for the HRA. He wondered where the income from the Right to Buy scheme receipts were included and the resulting losses from the rental income from the sale of the housing stock.
212.26 The Assistant Director for Housing referred to table 11.2 which included the Right to Buy receipts, however, Right to Buy had been declining during the past years and the HRA Business Plan would be revised to reflect this.
212.27 Councillor Maybury asked for the actual receipts figures for the Right to Buy and the Assistant Director for Housing would provide these outside the meeting.
212.28 Recommendations 3.1 to 3.9 were put to Members for voting and the vote was CARRIED.
212.29 In accordance with Council Procedure Rule 19.3 the vote was recorded as follows:
FOR |
AGAINST |
ABSTAIN |
Cllr Clive Arthey |
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Cllr Peter Beer |
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Cllr Dave Busby |
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Cllr Trevor Cresswell |
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Cllr Derek Davis |
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Cllr Mick Fraser |
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Cllr Honor Grainger-Howard |
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Cllr Kathryn Grandon |
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Cllr Ric Hardacre |
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Cllr John Hinton |
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Cllr Michael Holt |
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Cllr Bryn Hurren |
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Cllr Leigh Jamieson |
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Cllr Elisabeth Malvisi |
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Cllr Margaret Maybury |
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Cllr Alastair McCraw |
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Cllr Mary McLaren |
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Cllr Mark Newman |
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Cllr John Nunn |
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Cllr Adrian Osborne |
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Cllr Jan Osborne |
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Cllr Alison Owen |
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Cllr Lee Parker |
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Cllr John Ward |
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Total 24 |
Total 0 |
Total 0 |
It was RESOLVED: -
1.1 That the HRA revenue budget proposals for 2020/21 and longer-term outlook set out in the report be approved.
1.2 That the HRA capital budget proposals for 2020/21 set out in Appendix A in the report be approved.
1.3 That the CPI + 1% increase of 2.7% in Council House rents, equivalent to an average rent increase of £2.38 a week be implemented.
1.4 That garage rents are kept at the same level as 2019/20.
1.5 That Sheltered Housing Service charges be increased by £2 per week to reduce the subsidy by £26k.
1.6 That Sheltered Housing utility charges are kept at the same level as 2019/20.
1.7 That the budgeted surplus of £334k be transferred to the HRA reserves in 2020/21.
1.8 That in principle, Right to Buy (RTB) receipts should be retained to enable continued development and acquisition of new council dwellings.
1.9 That the revised 30-year HRA Business Plan in Appendix B be noted.
Supporting documents: