Agenda item

The Government introduced a rent setting formula which covered a 5-year period (2020/21 to 2024/25). The rent setting formula was based on the Consumer Price Index (CPI) for September (of the previous financial year) + 1%. This was introduced following four years of consecutive rent reductions of 1%.

         When the current rent policy was set in 2019, inflation was forecast to be around 2% in 2022 and 2023. In July 2022 CPI was 10.1% and DLUHC (Department for Levelling Up Housing Communities) issued a consultation on the basis that if CPI were to remain at or above this level in September 2022, this would permit social housing rent increases from 1 April 2023 to 31 March 2024 of 11.1% or more. CPI in September was at the same level as in July 2022 which would have resulted in rent increases of 11.1% had government continued with the current rent setting formula.

         The increase in inflation was placing considerable pressure on many households, including those living in social housing. Providers of social housing had to consider both the pressures facing the tenants and pressures facing the financial sustainability of the HRA, when looking at setting rent levels for 2023/24.

         In the face of these exceptional challenges, the Government issued a consultation to make a temporary amendment to the CPI+1% policy for 2023/24. This new Direction would require the Regulator to amend its Rent Standard so that the current CPI+1% limit on annual rent increases would be subject to a ceiling from 1 April 2023 to 31 March 2024. By law, the Government were required to consult on a draft direction, and they issued a consultation on 31st August 2022.

         The consultation sought views on having an upper limit on the maximum permitted annual rent increase a Registered Provider is allowed to implement and the consultation considered three options at which rents could be capped these were 3%, 5% and 7%.  

         The Autumn Budget was made on 17th November 2022 and the Chancellor announced that Social Housing Rents would be capped at 7% for the financial year 2023/24.

         To help maintain and protect levels of service provision and to continue investment into the housing stock the Council consulted on an average rent increase of 7% for 2023/24. Both the Corby and Kettering Neighbourhood Accounts had increased rents in line with the maximum amount permissible in previous years and this approach continued with this strategy. Taking this into account the draft Neighbourhood Accounts showed a balanced position for 2023/24.

         The scrutiny process for the Draft HRA Budget Proposals was undertaken by the Finance & Resources Committee at a meeting on the 23rd January. This was reported to the Finance & Resources Committee meeting on 30th January for ease of reference Appendix D provided a summary of comments made from the scrutiny meeting.

         The draft HRA Budget had been discussed and debated with the TAP over a series of 3 meetings (as detailed in Section 1.4). The final budgets reflected a rental increase of 7% which was agreed by the TAP.

         Beyond 2023/24, the Medium-term position (2024/25 to 2027/28) for the Corby Neighbourhood Account showed a deficit of £1.385m whilst the Kettering Neighbourhood Account shows a surplus of £1.750m.  The main reason for the difference between the two Neighbourhood Accounts resulted from how the loans for self-financing were structured. The Corby Neighbourhood Account was increasing its contribution for the repayment of the loans whereas the Kettering Neighbourhood account was reducing its repayments, and this was as a result of how the loans were structured.

         The Medium-Term position assumed that rent increases of 4% would be applied each year over the Medium-Term. Rent increases would be subject to an annual consultation with tenants and the rent levels would be dependent on the rent setting formula for 2024/25 which was based on the CPI in September of the previous year plus 1%. The final year of the current five-year rent setting policy would be 2024/25 – this could be subject to change depending on the levels of CPI – such announcements would likely be made in summer 2023.

Councillor Lloyd Bunday MOVED the report’s recommendations. These were SECONDED by Councillor Lee Wilkes.

Councillor Bunday reminded Council that currently two neighbourhood accounts were in operation for Corby and Kettering however work was underway towards consolidation and the development of a 30-year business plan and a Housing Strategy.

Councillor Bunday highlighted the key elements of the HRA proposals, including the requirements to set a prudent level of reserves.

The following amendments to the report received from the Labour Group were MOVED by Councillor Lyn Buckingham and SECONDED by Councillor Ross Armour: -

• The issue - The HRA Budget Report outlines some risks to this year's budget because of the cost-of-living crisis, we understand the pressures on our tenants and our services, however the response to this perceived problem is to increase the bad debt provision across the district by £137k in Corby and £27k in Kettering (although we do not understand the disparity between these figures) 

As a forward-thinking proactive council, we think that instead of just putting money into bad debt that there is a need to work alongside the government's proposal for numeracy education programme by helping vulnerable tenants understand and engage with financial budgeting, this would also have a positive impact both socially and on other services in the long term and increase wellbeing especially in our left behind areas. This would also assist the councils work with the poverty truth commission set up last year. 

Proposal: It is proposed that a fund of £44k be put aside for this proactive work taken from the dedicated reserves. 

By repurposing parts of the budget on proactive measures rather that reactive measures we still maintain a balanced budget but that by investing in building skills and capacity we aim to have tenancies that can become sustainable, we all understand what the impact and cost of evictions are on families and the more education we can give to our tenants on being able to help themselves the better.

Whilst we understand there is a raft of organisations that can advise and assist tenants like Money management advice which is available from external agencies such as Citizen’s advice. The Council also employs a number of staff to assist with financial inclusion which includes2 Full time financial inclusion officers in Corby and 2Full time equivalent Tenancy Support Workers-in Kettering, all funded by the HRA, however 4 members of staff and whilst they do an amazing job, will be overwhelmed with a tenant pool of 8,000 tenants many of whom will be struggling. 

• The correlation between Health and poor Housing has long been understood, and when those conditions are seriously affecting the health of our children and adding to our health inequalities, then we must respond quickly and decisively if we don't, and something happens we could all be culpable of Corporate manslaughter.

Many of our properties have problems including that of mould and damp which has been ignored for years, all this proposal does is make sure that there is a dedicated programme around the Housing Health and Safety Rating Scheme which will take into consideration a full assessment and the speed in which hazards are resolved and clears the problem up once and for all. 

The proposal is that we as a council have a targeted programme of seeking out those Category One hazards that occur in our social housing stock but are responded top on an ad hoc basis at the moment: to fund this element of a targeted programme it is proposed that: -

£250,000 be repurposed from the repairs and maintenance budget across both areas, £150,000 for Corby £100,000 Kettering, to ensure full assessments are put in place at the earliest opportunity.

Councillor Lyn Buckingham moved the Labour Group amendments. In doing so, Councillor Buckingham thanked Housing staff for their work during the previous year in difficult circumstances and increasing demand. Councillor Buckingham felt that it was important that the Council provided as much support as possible to its tenants during the current difficult economic climate.

Following debate a vote was taken on the amendments. The amendments fell.

Councillor Hakewill on behalf of the Green Alliance Group provided a response to the budget proposals within the report.

Following debate of the substantive motion, a vote was conducted.

RESOLVED that: -

a)       The 2023/24 Housing Revenue Account Budgets consisting of the Corby Neighbourhood Account and the Kettering Neighbourhood Account as set out in Appendix A be approved.

b)       An increase in dwelling rents for 2023/24 of 7% be approved which adhered to the Department for Levelling Up, Housing and Communities (DLUHC) amended Policy statement on rents for social housing for both the Corby Neighbourhood Account and the Kettering Neighbourhood Account.

c)       The Housing Revenue Account Medium Term Financial Plan consisting of the Corby Neighbourhood Account and the Kettering Neighbourhood Account, for 2024/25 to 2027/28 as set out in Appendix B be approved.

d)       the forecast reserves for the Corby Neighbourhood Account and the Kettering Neighbourhood Account up to 2027/28 as set out in Appendix C be noted.