Agenda item

To submit the report of 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 2024/25 was presented for the Executive’s consideration.

Councillor Robin Williams, Deputy Leader and Portfolio Member for Finance and Housing presented the report noting that the revenue budget was set with a budgeted surplus of £8,369k.The gross capital budget for 2024/25 totalled £29,573k, which was reduced to a net budget of £18,485k through £10,578k in grant funding and £509k from the earmarked reserve balance. The combination of the revenue budget and adjusted capital budget gave a planned deficit of £10,116k,  of which £7,011k was to be funded from the HRA reserve, with the balance of £3,105k to be funded by external borrowing.

At the end of Quarter 4, the HRA revenue account showed an underspend of £543k compared to the budget. Capital expenditure was £2,105k below budget at year end. Grant income was overachieved by £6,623k and capital receipts were £632k above budget. The year-end deficit combining both revenue and capital was £214k, which is £9,902k less than budgeted. The variance is primarily due to a reduction in the capital deficit as explained in section 9 of the report.

The opening balance of the HRA reserve stood at £8.189k. The budget allowed for the use of £7.011k from this balance leaving a minimum reserve level of £1.177k in line with the HRA Business Plan. However, only £214k was needed to fund the combined revenue and capital in year deficit, resulting in a closing HRA reserve balance of £7,975k.

Councillor Robin Williams highlighted that the HRA is ringfenced meaning that its reserves 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 confirmed that the original intention had been to reduce the HRA reserve to a level equivalent to 5% of the income budget, approximately £1.6m. Due to underspending and more significantly, additional grant funding which covered a large portion of capital expenditure, the HRA reserve balance remains considerably higher than anticipated at the start of the financial year. It will be used to fund capital expenditure in 2025/26, thereby reducing the reserve balance and avoiding external borrowing and its associated costs. The Section 151 Officer referred to Appendix C of the report which detailed the housing development budget for 2024/25 and the schemes it supported. Some of these schemes had since been completed and were now tenanted.

The Executive acknowledged the investment in new developments and the much needed housing they provided, while also recognising the challenges ahead, particularly in meeting the requirements of the new Welsh Housing Quality Standards 2023 and the costs this would entail. Members agreed that fulfilling these standards is important for improving housing quality and ensuring tenant wellbeing, but that doing so would require additional Welsh Government support. They were reassured by the findings of a recent stock condition  survey which rated the Council’s housing stock among the best of all stock-retaining authorities in Wales in terms of quality, placing the Council in a strong position.

The Chief Executive stated that the Council has an ambitious housing programme both in terms of developing new housing and investing in existing stock. However, maintaining this programme at its current level will be difficult, if not impossible, without changes. Decisions will need to be made regarding prioritisation. The Council, through the Leader and the Deputy Leader and Portfolio Member for Finance and Housing, continues to seek  influence to ensure that the current level of investment can be sustained.

It was resolved to note the position in respect of the financial performance of the Housing Revenue Account (HRA) for 2024/25.