Agenda item

To submit a report by the Director of Function (Resources)/Section 151 Officer.

The report of the Director of Function (Resources)/Section 151 Officer setting out the financial position of the Housing Revenue Account (HRA) for Quarter 1 2024/25 was presented for the Executive’s consideration.

The report was presented by Councillor Robin Williams, Deputy Leader and Portfolio Member for Finance who reported that the HRA revenue surplus/deficit at the end of the first quarter shows an underspend of £270k compared to the profiled budget. The forecast at year end is an underspend of £23k as detailed in Appendix A to the report. The capital expenditure is £93k below the profiled budget at the end of quarter 1 but is forecasted to be on budget at the year-end as explained in Appendix B to the report. The £10,578k budget for grant income is expected to be achieved in full and £509k from the earmarked reserve will be utilised in full by the year end. The forecast deficit (combining both revenue and capital) is £10,093k which is £23k under the budget.

The Director of Function (Resources)/Section 151 Officer advised with regard to the future HRA position that while the HRA reserve has in the past held a healthy balance which has been used to fund capital expenditure on new housing developments and on maintaining the Council’s existing housing stock to Welsh Housing Quality Standards (WHQS), the balance on the reserve is expected to reduce to £1,177k by the end of the current financial year. This being so, consideration will have to be given to how the cost of maintaining the existing stock will be funded in future and while borrowing is possible it is not sustainable to be borrowing annually to maintain the housing stock as it would not add anything to HRA income levels. Whilst maintenance costs have been affected by high inflation in the past three years, rental income has not kept pace to the same extent meaning that the surplus on the revenue side has reduced with less available for capital expenditure. In addition, The WHQS have been updated by Welsh Government in 2023 to set new more exacting targets for social housing which will be more costly to meet. These matters will be considered in putting together the HRA Business Plan and Strategy and it is likely that those remaining councils in Wales with their own housing stock will need to have a conversation with Welsh Government about the quality standards and rent levels and how sustainable the situation is going forwards. The Section 151 Officer confirmed that the current year is not affected by those issues with sufficient funding available to invest in the existing housing stock and to undertake new development as planned.

Councillor Robin Williams in proposing the report agreed that the situation needs to be reviewed either in terms of rent levels or the expectations regarding the maintenance of the housing stock to the Welsh Housing Quality Standards, and while the Council is committed to continuing to provide high quality social housing, it is becoming difficult to meet the expectations of the WHQS in practice on a year-by-year basis and a discourse at national level is required.  

It was resolved to note the following –

• The position set out in respect of the financial performance of the Housing Revenue Account (HRA) for Quarter 1 2024/25.
• The forecast outturn for 2024/25.