Agenda item

Report of the Cabinet Member Finance- TO FOLLOW

The Cabinet Member Finance introduced the report and explained that the current year marked the successful completion of a four-year plan to mitigate the rent reduction policy imposed by Government. The new social rent policy of allowing annual rent increases of CPI + 1% p.a. for five years and the abolition of the HRA debt cap ensured that additional resources would be available to increase the supply of affordable housing, further improve existing stock and invest in our communities.

The Cabinet Member Finance referred to the following highlights:

·         500 new affordable homes by 2023.

·         Completion of the new windows and doors programme for existing stock.

·         Installation of showers in all our properties.

·         Development of a carbon neutral strategy for new and existing stock and the delivery of housing services.

·         Delivery of 5 community investment plans, supported by a diverse range of partners and connecting with over 2,000 residents per quarter. These plans focus on employment and education, community safety, health and wellbeing, financial inclusion and involvement and engagement.

The Cabinet Member Finance explained that the Government’s new rent policy would commence in April 2020. Rents would be allowed to increase by CPI (as at previous September) +1% per annum for the next five years before a further review. The CPI for September 2019 was 1.7% giving a rent increase for 2020/21 of 2.7%.

The Cabinet Member Finance reported that after significant delays to the introduction of Universal Credit, the full rollout began in Cheltenham in December 2017. There were currently 996 claimants (November 2019) with 1,050 being anticipated by March 2020. Under present regulations there could eventually be up to 2,000 claimants, potentially placing considerable pressure on rent arrears. She reported that CBH was conducting a proactive campaign to provide support and information to all tenants affected by these changes. The impact on arrears would be closely monitored and the budget proposals reflected an increasing provision for bad debts.

The Cabinet Member referred to the consultation paper in the summer of 2018 which sought views on introducing more flexibility in the use of Right To Buy receipts to fund new build. Though any relaxation in the conditions of use would be welcome, the suggestions put forward in the document would be limited in their impact and the sector response was to request more wide-ranging reform, including the abolition of RTB. The consultation closed in early October 2018 and a response from the Government was still awaited.

The Cabinet Member Finance reported that the 30 year HRA Business Plan had been updated to reflect:-

·         Anticipated revenue outturn for 2019/20.

·         The proposed development and acquisition programme for the period from April 2020 to March 2023 which is forecast to deliver 500 new affordable units.

·         A contingency budget of £5.5m. for regeneration projects based on the assumption that there will be no additional revenue benefit from the investment.

·         A refreshed assessment of the 30 year “need to spend” on existing stock for both capital and revenue expenditure.

The revised capital programme for 2019/20 reflected variations identified during the year, most notably the acquisition of land in West Cheltenham (£11.5m) to enable the future development of new affordable housing.

In terms of existing housing stock, the detailed capital programme for 2020/21 and indicative programmes for the following two years were shown at Appendix 4. These reflected both the investment requirements for existing stock identified via stock condition surveys and a recent review of the 30 year capital programme. The sum set aside for component replacements each year would vary in line with anticipated lifecycles.

The Cabinet Member Finance highlighted that the capital programme also included an ambitious programme of new build and acquisitions delivering a further 500 affordable homes by 2023/24. A range of tenures would be provided with units developed for social rent, affordable rent and shared ownership. The mix and number would be dependent on the financial viability of each site, but an emphasis would be placed on affordability. A contingency of  £50,000 had been included in the revenue budget to support the delivery of this enhanced programme.

The proposed funding of the capital programme, together with a statement of balances on the major repairs reserve, was shown at Appendix 3. This reflected the significant increase in new build spend which would be financed by a combination of borrowing, grant, shared ownership sales and capital receipts.

Finally, the Cabinet Member Finance said that the end of rent reduction, certainty on rent policy for 5 years and the lifting of the debt cap all strengthened HRA viability and gave additional capacity to invest in both the existing stock and new build. As anticipated by the Housing Investment Plan approved by Council in October 2018 the budget proposals included an ambitious programme of new build and acquisition. This would complement the resources also made available to CBH to deliver new market rented units. The 30 year HRA Business Plan confirmed the longer term viability of this investment which would provide a significant boost to the stock of affordable housing in Cheltenham.

She wished to put on record her thanks to Cheltenham Borough Homes.

RESOLVED THAT

1.    The revised HRA forecast for 2019/20 be noted.

2. The interim HRA budget proposals for 2020/21 (shown at Appendix 2) be approved for consultation, including a proposed rent increase of 2.7% and changes to other rents and charges as detailed within the report.
3. The proposed HRA capital programme for 2020/21, as shown at Appendix 3, be approved.
4. Authority be delegated to the Executive Director Finance and Assets, in consultation with the Cabinet Member for Finance, to determine and approve any additional material that may be needed to support the presentation of the interim budget proposals for consultation.
5. Consultation responses be sought by 31^st January 2020.