Agenda item

Housing Revenue Account (HRA) Draft Budget 2022-23 and MTFP Proposals

Decision:

RESOLVED:-

(KEY DECISION)

That the Executive recommended for approval to Full Council the following:-

a. The draft 2022/23 Housing Revenue Account Budgets consisting of the Corby Neighbourhood Account and the Kettering Neighbourhood Account as set out in Appendix A.

b. an increase in dwelling rents for 2022/23 of 4.1% (based on the Consumer Price Index (CPI) for September 2021 3.1% + 1%) which is in line with the Department for Levelling Up, Housing and Communities (DLUHC) Policy statement on rents for social housing.

c. The draft Housing Revenue Account Medium Term Financial Plan consisting of the Corby Neighbourhood Account and the Kettering Neighbourhood Account, for 2023/24 to 2026/27 as set out in Appendix B.

Reason for Recommendations: To ensure that the Council complies with its Constitution in setting the budget for North Northamptonshire.

Minutes:

Cllr Lloyd Bunday, Executive Member for Finance and Transformation introduced a report that sought approval for the proposed draft budget for the Housing Revenue Account (HRA) for 2022/23 and the key principles on which it was based, together with the Medium-Term Financial Plan (MTFP) that covered the following four years (2023/24 – 2026/27). The report also set out the proposals regarding rent increases of 4.1% for 2022/23 as required by the Housing Act 1985. This would result in an average rise in weekly rental to £85.54 in Kettering and £81.07 in Corby.

The meeting heard that the HRA was a separate ring-fenced account within the Council for the income and expenditure associated with its housing stock. The HRA did not directly impact on the Council’s wider General Fund budget or on the level of Council Tax, with income primarily received through the rents and other charges paid by tenants and leaseholders. The Council owned in excess of 8,200 properties, with a further 884 leasehold properties. This amounted to a projected rental income in excess of £34m.

Local Government Reform meant that the Council held two separate Neighbourhood Accounts, namely Corby and Kettering. Work was planned to be undertaken during 2022/23 to start to move to a single HRA for North Northamptonshire. This would be achieved by developing a new 30-year Business Plan and would also involve the harmonisation of rent and services.

Cllr Bunday stated that the social rent policy of previous governments had resulted in a cumulative loss of rental income amounting to some £130m, which would have a significant impact on this account going forward.

The proposals before members, and the HRA as a whole, had been discussed and debated as part of the Finance and Resources Scrutiny Committee sessions and with tenants representing each of the Neighbourhood Accounts. A summary of the comments was included as an appendix to the report.

Cllr Bunday drew attention to the medium-term position 2023 to 2027 that showed a deficit for Corby Neighbourhood Account of £1.860m and a surplus for Kettering Neighbourhood Account of £3.921m, this was mainly due to the structuring of loans against housing stock.

The Council was required by law to avoid budgeting for a deficit on the HRA, in practice the Council was therefore expected to maintain a reasonable balance of HRA reserves to cover any contingencies, with the Executive Director for Finance reviewing these balances annually as part of their risk assessment of the budget. It had been determined that the level of reserves should remain unchanged at £800k for the Corby Neighbourhood Account and that the Kettering Neighbourhood Account be increased from £300k to £650k. This aligned the two Neighbourhood Accounts, so the minimum balances were around 4% of the total budget.

Numbers of “Right to Buy” properties and the number of empty properties must also be taken into account, this was predicted to reduce revenue by approximately £500k. New properties had been added to the stock during 2021 and it was envisaged that there would be further additions in coming years.

Cllr Bunday concluded by noting that as the HRA was a ring fenced, self-financing account with rental levels set by the Housing Rent Regulator, there remained little room for movement save in efficiencies in aggregation and service improvement.