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 performance of the Housing Revenue account for Quarter 2 2024/25 was presented for the Executive’s consideration.

The report was presented by Councillor Robin Williams, Deputy Leader and Portfolio Member for Finance and Housing and showed that the HRA revenue surplus at the end of Quarter 2 is an underspend of £604k compared to the profiled budget. The forecast at year end is an overspend of £424K as detailed in sections 5 to 8 of the report and at Appendix A. Capital expenditure is forecasted to be £1,023k above budget at year end as detailed in section 9 of the report and at Appendices B and C. Grant income is expected to overachieve by £1,612k and an additional £128k in capital receipts is also expected. The forecast deficit (combining both revenue and capital) is now £9,823k which is £293k less than the budget. The HRA is ringfenced and its reserves are only available to be used in conjunction with the Council’s housing stock. They cannot be transferred to the General Fund, nor can General Fund reserves be used to fund the HRA.

The Director of Function (Resources)/Section 151 Officer advised that the HRA position has changed over time the principle being that the HRA revenue surplus from rental income is reinvested in the existing housing stock and the surplus, together with the Welsh Government Major Repair Allowance, have in the past been sufficient to cover the costs of the investment with the development of new housing being funded through borrowing. However, rent increases in line with Welsh Government rent policy have not kept pace with day to day repair and maintenance costs including the cost of materials, contractors and staff pay meaning the HRA surplus has reduced to a point whereby the surplus and grant funding are not now sufficient to meet the costs of keeping the stock up to date and in good condition as well as fulfilling the new increased expectations of the WHQS 2023. While HRA reserves have been used to make up the shortfall, the situation will have to be reviewed in the long-term and a dialogue initiated with Welsh Government about rent policy and the expectations for maintaining social housing to the required standard. The Council is committed to developing new social housing and is forecasted to spend £18m on new developments in 2024/25 as evidenced by Appendix C to the report. As with stock maintenance the strategic approach to future stock development will have to be considered and this will be reflected the HRA Business Plan to be submitted in the new year.

The Executive highlighted the development of 192 new social housing units in 2024/25 as per Appendix C which shows the emphasis which the Council places on investing in new council homes, and while the Executive agreed with the principle of the WHQS 2023 in seeking to ensure the quality of social housing, the challenges which meeting the requirements of the new Standard entails were noted as was the need for the resources to ensure councils with their own housing stock are able to do so. 

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 2 2024/25.
• The forecast outturn for 2024/25.