Agenda item

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

The report of the Director of Function (Resources)/Section 151 Officer which set out the financial performance of the Housing Revenue Account for the period from 1 April to 30 June 2025 was presented for the Executive’s consideration.

Councillor Robin Williams, Deputy Leader and Portfolio Member for Finance, Corporate Business and Customer Experience presented the report noting that the revenue budget was set with a budgeted surplus of £6,291k.The gross capital budget for 2025/26 is £24,521k. Grant funding of £9,173k reduces the net budget to £15,348k. The combination of both the revenue budget and adjusted capital budget gave a planned budget deficit of £9,057k, of which £6,820k is to be funded from the HRA reserve, with the balance of £2,237k to be funded by external borrowing. The HRA revenue budget at the end of the second quarter has overachieved by £276k compared to the profiled budget and is projected to underspend by £404k at year end.  Capital expenditure has been increased by £1,492k to £24,521k and is projected to be £2,465k under budget at year end. The increased grant income of £9,173k is expected to be spent in full. The forecast deficit combing both revenue and capital is now £6,188k which is £2,869k less than the budget. The HRA is ringfenced and 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 performance of the HRA revenue budget has remained steady, generating year end surplus each year which is reinvested in existing stock or new housing development. The Council has previously  drawn on the HRA reserve to support investment as it has continued to develop and acquire new housing, reaching a high point in 2025/26. As a result, the HRA reserve balance has reduced and is expected to stand at around £1.7m by year end which is considered the minimum acceptable level under the HRA Business Plan. Future housing development will therefore need to be funded from borrowing which will generate revenue costs. The Council may need to review its future housing development plans in light of this and other factors such as Welsh Government’s Rent Policy and the level of rental income achieved.

The Chief Executive advised that the Council has been effective in increasing the availability of local housing over the years. However, the existing funding process is not considered fit for purpose and without change there is a risk of increased homelessness, placing further pressure on the Council’s revenue budget. Projections for this budget are not improving making this issue wider than capital considerations alone. The Council is working to influence change and to ensure that Welsh Government’s policies better reflect the needs of  local authorities that retain their housing stock as well as those that have transferred stock to housing associations.

The Executive acknowledged the fine balance between rental policy and the requirement to maintain housing stock to quality standards. However, it was noted that the Council has made significant progress in transforming and acquiring housing in recent years. While the Council is developing policies to bring empty properties back into use as homes, reducing the waiting list which is currently around 800 will depend on new development. The current plan includes 155 new homes highlighting the need for further investment if the waiting list is to be addressed.

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 2025/26.

·      The forecast outturn for 2025/26.