Agenda item

Report of the Cabinet Member Finance

(in accordance with legislation a recorded vote will be taken on this item)

The Cabinet Member Finance, Councillor Rowena Hay, introduced the report which summarised the Housing Revenue Account (HRA) revised forecast for 2016/17 and the Cabinet’s budget proposals for 2017/18. She made the following points :

·         Regardless of the decision to decrease rents by 1% a year, resulting in a loss of rental income to the HRA budget of £6.7 million in the period up to March 2020, the council had stuck to its strategy and the budget achieved a great deal.

·         The budget proposed to spend £4 million on repairs and maintenance and nearly £8 million on property improvements and major works. £2.7 million was being budgeted for new build and acquisitions, and there would continue to be a budget for spending on benefits advice, employment initiatives and services for older and disabled people.

·         The budget was sustainable and reserves were healthy.

·         To cope with the reduction in HRA income, the four year strategy, adopted last year, proposed to make management savings of £1.7 million. It was now expected that this be exceeded. She referred to paragraph 7.2 of the report and stated that a further management cost saving of £135,000 over the next 3 years was expected to be achieved.

·         By saving costs, realigning the HRA capital programme and using reserves, existing services levels would be maintained as well as being able to retain the decent homes standard, continued delivery of the major windows and doors replacement programme and completion of the new build programme up to March 2018, whilst still leaving £1.5 million in reserves for contingency.

·         Particular challenges would still be faced, for example, higher value asset sales and the pay and stay earnings related scheme.

·         The single highest risk to the business plan was stated as being the HRA financial projection over 30 years with so much change happening at short notice. However, a range of scenarios had been tested to show sensitivity to changes in rent policy after 2020.

·         CBH were commended in coping with financial challenges and the Cabinet Member Finance was pleased to point out that the revised financial forecast showed a net increase in the operating surplus for 2016/2017 and that budget proposals for the following year overall did not show huge change. Savings in operational costs in the current year were being used to support additional future spending.

The Cabinet Member Finance concluded by stating that due to aforementioned uncertainties and the erosion of the self-financing settlement, it remained unclear whether the additional operating surpluses forecast in the last 30 year business plan would be restored after 2020. She continued that this, together with the potential unknown impact of high value asset sales, meant that until these two key areas were clearer, the focus would be on the medium term. It was highlighted that each change from the Government reduced the council’s ability to find desperately needed affordable housing, which was one of the highest priorities.

The Cabinet Member Finance thanked both Cheltenham Borough Homes and Cheltenham Borough Council finance teams for their hard work on this budget and their ability to ensure key goals were still being achieved.

The following comments and questions were raised by Members and responses given:

·         With regard to the decrease in rents it was asked whether it would be preferable if rents increased. In response the Cabinet Member Housing stated that it was more of an issue of self-financing and that it would be preferable to have the choice to increase or decrease rents locally.

·         Given the decrease in rent imposed on social housing providers and subsequent other changes it was in the interests of all social housing providers to ensure that tenants paid rent and on time. The question was asked as to whether CBH would be able to continue its plans and  build on its progress given the incoming universal credit system.  A report from the Institute for Fiscal Studies indicated that families on universal credit would be heavily impacted as basic outgoings such as food and clothing increased. How could CBH ensure that tenants did not get to a position where they had to make basic choices?  In response the Cabinet Member Housing stated that CBH did provide support in terms of debt and benefit advice which was supported by the voluntary sector but acknowledged that it was a real struggle for some tenants. He stated that 70% of tenants were on housing benefit but with the homeless issue rising the system was struggling to cope. Everything that could be done was being done and CBH were thanked for their standard of work with and for tenants which would continue in the future.

·         It was noted that the 1% rent decrease made a marginal difference to individual tenants but when aggregated at an authority level it was a significant sum and a huge amount if aggregated on a national level.

·         Members noted that the 1% rent reduction equated to £6 million for CBH which was a huge cut. Rent decreases were having knock on consequences for the whole industry with developers pulling out of developments due to their business cases no longer being feasible. It was recognised that a rethink of stimulating the house building market and financing development was vital.

·         Members commended the £8 million investment programme in property improvements next year which included the £2.3 million on new build which was significant in the national context with Cheltenham being third in terms of the number of new council houses built last year.

·         The Cabinet Member Housing recognised CBH’s work and its route and branch reorganisation as a result to achieve management savings. He had been impressed by the staff engagement to achieve this. He also highlighted the Plans and Progress as laid down in the report on ‘Service Improvement Programme’, ‘Reactive Repair’ and CBH’s hard work in emergency situations were regarded as positive points.

·         It was noted that Cheltenham provided more accommodation than other districts put together for example, for the Syrian Refugee Programme and accommodation delegated to veterans.

·         The Conservative Group supported the recommendations and recognised the valuable work being done. Cheltenham was setting a high standard.

·         Even though investment could be seen in improving council stock, concerns were expressed in the lack of effort from other agencies who should be providing services. The underlying causes of homelessness, for example, lack of investment in mental health and social service provision.

·         Many Members were not aware of the good work which was going on behind the scenes on mental health. An example of this was the work of @HeadsUpChelt which could be found on twitter.

·         It was a shame that empty brown field sites couldn’t be turned into single dwellings, rather than sites being overwhelmed with too many homes. CBH have a good record with garage sites but it was a shame more could not be done.

In accordance with the legislation a recorded vote was required. Therecommendations were passed unanimously.

Voting For 36: Councillors Babbage, Barnes, Baker, Bickerton, Britter, Clucas, Coleman, Collins, Fisher, Flynn, Harman, Harvey, C Hay, R Hay, Hobley, Jeffries, Jordan, Lillywhite, Mason, H McCloskey, P McCloskey, McKinlay, Nelson, Oliver, Parsons, Payne, Ryder, Savage, Seacome, Sudbury, Thornton, Wheeler, Whyborn, Wilkinson, Williams and Willingham.

RESOLVED THAT

1. the revised HRA forecast for 2016/17 be noted
2. the HRA budget proposals for 2017/18 (Appendix 2) including a proposed rent decrease of 1% and changes to other rents and charges as detailed within the report be approved
3. the proposed HRA capital programme for 2017/18 as shown at Appendix 3 be approved.