Agenda item

HRA - Draft Budget, Medium Term Plan and Capital Strategy

To consider the draft capital and revenue budget estimates, the medium term financial plan and the capital strategy (report of the Executive Director Commercialisation (S151 Officer)  enclosed)


Consideration was given to the report of the Executive Director Commercialisation (S151 Officer) which provided information on the draft capital and revenue budget estimates, the medium term financial plan and the capital strategy.


The appendices to the report outlined the 2016-17 revenue and capital estimates for the HRA, the outline position to 2019-20, the medium term financial plan and the capital strategy.  The medium term financial plan set out the framework within which the budget was to be set to ensure that it enabled the Council to achieve its own corporate objectives.  The capital strategy set out the framework for the capital budget setting.


During recent years, the Council, alongside many public sector service providers had experienced financial pressures in various combinations; public sector funding cuts, all time low returns on cash deposits and a national economic downturn affecting jobs, housing and business growth.  During this same period the basis on which the public sector was funded had undergone unprecedented reform, radical changes that affected the Council’s funding financial position both directly and indirectly included National Welfare Reform, Localisation of Council Tax Relief, Business Rates Retention, New Homes Bonus and reduction and in some cases removal of a range of grant funding sources. Each change brought elements of uncertainty in terms of impact.


Since the inception of self-financing, central government changes had had a major impact on the 30 year Business Plan of the HRA. The increase in discounts available to tenants had lead to increased sales of units, national rent policy has changed twice in the last two years, pay to stay regulations were coming through and charges for higher value property in respect of forced sale on void were also coming through Parliament.


Despite these challenges, and as a result of the Council’s prudent financial management, the HRA had been positioned to secure a sustainable financial future across the medium term with no dependency on reserves.  This position was enabling the Council time to further develop the financial strategy and to identify and deliver a clear replacement programme in line with the 1 for 1 replacement agreement entered into with Central Government. 


This change had already started with the formation of the Housing Growth Group and some changes had been delivered early, with accelerated savings, in respect of the proposed changes in the asset replacement policy


Further changes were being considered including the formation of a property services function for the authority which would include asset management and had responsibility for the capital programme including the proposed affordable housing projects, planned maintenance, works on void properties and responsive repairs. 


The Interim Chief Accountant advised that the biggest issue currently was the setting of the rent for the forthcoming year.  Under normal circumstances, a recommendation for the rent policy for the forthcoming year would have been made.  The Government was currently progressing a bill through Parliament to make the National Rent Policy mandatory, but as this had not yet received Royal Assent, no determination for the HRA had been issued.  The three options currently available to the Authority were:


1.    To follow the headline changes to policy with regard to rent reduction, and decrease all rents by 1%.

2.    To do nothing until the bill has gone through and the National Rent Policy has been set.

3.    To continue with the local rent policy and increase all rents.


The Committee felt that the ‘do nothing’ option was currently the best choice and that this should be its recommendation to the Council. 




a)    That the HRA draft capital and revenue budget estimates, the medium term financial plan and the capital strategy be forwarded for consideration by the Cabinet;


b)    That with regard to the National Rent Policy, it be recommended to the Council that it do nothing until the Welfare Reform and Work Bill had gone through Parliament and the National Rent Policy had been set; and


c)    That it be recommended to the Council that the revisions to the Asset Management Plan, particularly in respect of useful life changes proposed for current and future use,  be adopted.


(The Housing Landlord Manager left the meeting following discussion of this item).

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