Agenda item

Purpose of report

 

1.1         The law requires that all income and expenditure relating to Council Housing is accounted for separately in the Housing Revenue Account (HRA).  All other Council income and expenditure is accounted for together in a separate account called the General Fund.  This report deals solely with the HRA.

 

1.2         The City Council has delegated the function of setting rents, charges and revenue budgets for Council Housing to the Cabinet Member for Housing and Preventing Homelessness.  Following consultation with residents and leaseholders, this report seeks to address all HRA budget issues. 

 

1.3         The purpose of this report is to seek the Cabinet Member’s decisions on the City Council Housing budgets, rents and other charges and to give authority for managers to incur expenditure in 2023/24.

 

1.4         The report also seeks to:

 

o   Note the Forecast Revenue Outturn for 2022/23 and give authority to the Director of Housing, Neighbourhood and Building Services & the Director of Finance and Resources to amend the budgets to reflect the latest available information prior to finalising budgets for 2023/24.

 

o   Note the Forecast Revenue Budgets for 2024/25 to 2026/27 arising from the proposals set out in this report.

 

o   Set rents with an average increase of 7%, which is in line with the maximum increase allowed by Central Government's Social Rent Setting Policy.

 

Recommendations

 

It is recommended that the Cabinet Member for Housing and Preventing Homelessness approves the following:

 

(i)           The Forecast Revenue Outturn for 2022/23 arising from monitoring discussions with Managers, as set out at Appendix 3, be noted.        

(ii)          All rents and charges to be effective from Monday 03 April 2023 or such other date as determined by the Director of Housing, Neighbourhood and Building Services, in consultation with the Director of Finance and Resources.

 

(iii)       Dwelling Rents for 2023/24 to be set with an average increase of 7%, which is in line with the maximum allowable under Central Government's Social Rent Setting Policy.

 

(iv)      General Service Charges for 2023/24 to be set at this meeting, as set out in this report, and in accordance with Appendix 5.

 

(v)       Sheltered Housing Service Charges for 2023/24 to be set at this meeting, as set out in this report, and in accordance with Appendix 6.

 

(vi)      Laundry Charges for 2023/24 to be set at this meeting, as set out in this report, and in accordance with Appendix 7.

 

(vii)     Heating Charges for 2023/24 to be set in accordance with Appendix 8.

 

(viii)    Garages and Parking Site Rents for 2023/24, as shown in Appendix 9, be approved and authority to let garages at reduced rents where demand is low be delegated to the Director of Housing, Neighbourhood and Building Services, in consultation with the Director of Finance and Resources.

 

(ix)      The Revenue Budget for 2023/24, as set out in Appendix 3, be approved and authority given to the Director of Housing, Neighbourhood and Building Services, in consultation with the Director of Finance and Resources, to amend the budgets to reflect the latest available information prior to finalising budgets for 2023/24.

 

(x)       The relevant Managers be authorised to incur expenditure in 2023/24.

 

(xi)      The Forecast Revenue Budgets for 2024/25 to 2026/27 arising from the proposals contained in this report, as set out in Appendix 3, be noted.

 

The Cabinet Member:

1. Noted the Forecast Revenue Outturn for 2022/23 arising from monitoring discussions with Managers, as set out at Appendix 3.
2. Agreed all rents and charges to be effective from Monday 3 April 2023 or such other date as determined by the Director of Housing, Neighbourhood and Building Services, in consultation with the Director of Finance and Resources.
3. Approved dwelling rents for 2023/24 to be set with an average increase of 7%, which is in line with the maximum allowable under Central Government's Social Rent Setting policy.
4. Approved General Service Charges for 2023/24 to be set as set out in the report and in accordance with Appendix 5.
5. Approved Sheltered Housing Service Charges for 2023/24 to be set as set out in the report, and in accordance with Appendix 6.
6. Approved laundry charges for 2023/24 to be set, as set out in the report, and in accordance with Appendix 7.
7. Approved heating charges for 2023/24 to be capped at a 50% rise in 2023/2024 with any remaining heating charges to be recouped in subsequent years.
8. Approved Garages and Parking Site rents for 2023/24, as shown in Appendix 9 and approved authority to let garages at reduced rents where demand is low to be delegated to the Director of Housing, Neighbourhood and Building Services, in consultation with the Director of Finance and Resources.
9. Approved the Revenue Budget for 2023/24, as set out in Appendix 3 and approved authority to be given to the Director of Housing, Neighbourhood and Building Services, in consultation with the Director of Finance and Resources, to amend the budgets to reflect the latest available information prior to finalising budgets for 2023/24.
10. Authorised the relevant managers to incur expenditure in 2023/24
11. Noted the Forecast Revenue Budgets for 2024/25 to 2026/27 arising from proposals contained in the report as set out in Appendix 3.

 

Paul Godier, Jason Halfpenny, Jamie Foy and Councillor Cal Corkery gave deputations opposing this agenda item.

 

Deputations are not minuted but can be viewed here:

 

Cabinet Member for Housing and Preventing Homelessness, 2 February 2023 on Livestream

 

Alan Denford, Group Accountant, introduced the report and each recommendation in turn.

 

The purpose of the report was to seek the Cabinet Member's decision on the City Council Housing budgets, rents and other charges and to give authority for managers to incur expenditure in 2023/2024.

 

Members' Questions

In response to members' questions, officers clarified:

 

·         In relation to any support available, the following were noted:

 

-       The energy price cap guarantee will be increasing from £2,500 per year to £3,000 per year from 1^st April 2023.

-       The energy rebate is coming to an end at the end of March.

-       From 1^st April the Government will be introducing a number of initiatives for residents eligible for various benefits including;

 

1.    £900 cost of living payment based on means tested benefits to be paid in 3 equal instalments in Spring 2023, Autumn 2023 and Spring 2024.

 

2.    A £300 one off pension payment for those claiming pension credit.

 

3.    An automatic one-off payment of £150 for households in the UK claiming disability benefits.

 

4.    A Warm Homes scheme giving a one-off discount on electricity bills over the winter which is directly applied to bills.

 

5.    Cold weather payments and winter fuel payments.

 

6.    Fuel pre-payment vouchers are issued automatically but need to be manually redeemed before they expire.  The service was heavily promoting all these through their housing officers but also through the Switched-on Portsmouth website to ensure residents were aware of what they can claim for in terms of the vouchers but also to make sure they redeem them for credit on their bills.

 

·         In certain housing blocks, electricity is generated by Solar PV cells on the roofs and in calculating the energy price increases officers worked out the amount of energy that the energy centre consumed and then deducted from that any income generated through the surplus electricity sales and then a net figure was produced. For the Charles Dickens district heating network the net figure is then divided by the residents on the estate receiving communal heating and everybody  pays a proportionate share.

 

·         The Charles Dickens heating system is an on-demand heating and hot water system and runs 24/7 and 365 days a year so that residents always have access to heating and hot water.  There are controls within each property to turn down radiators.

 

·         The building services team are investigating how best to upgrade and modernise the district heating system to allow more flexibility and more control for residents, and to allow residents to only pay for the energy and hot water that they use.  A similar feasibility will be undertaken on the communal heating system at Tipton & Edgbaston Houses.  Residents will be consulted over the summer on the pros and cons.

 

 

·         Heating charges are purely for the supply of gas or electricity and includes all service charges. The amount paid by the council is an all-inclusive cost.

 

The service continually works with energy brokers who act on our behalf to purchase energy.  As the wholesale energy prices had come down since Christmas the opportunity was taken to purchase 50% of the gas and electricity for next year allowing for cost certainty.  Energy ceiling caps had also been put in place within the contracts to ensure price increases can not go past a particular point.  This allowed flexibility purchasing.

 

·         These heating charges only apply to residents in receipt of communal heating charges. The vast majority of residents are purely subject to the energy price cap as they are not part of a communal energy system.

 

·         If rents were frozen, the money lost would not be able to be recouped as the rent standards limit increases to CPI plus 1%.

 

·         Capping the heating charges to 50% and recouping in subsequent years was doable.  The officer referred to paragraph 4.14 of the report and noted that the 50% cap, in this illustration, would mean a reduction in the heating account of £250,000 for the year.  This could be recovered from the reserve but would mean tenants in future years paying more than they would otherwise have done so because of the decision taken.

 

·         None of the proposals would affect the Council applying for any future government funding.

 

·         In terms of communications to residents on what benefits or help they can apply for, there are money advisors based at the housing offices working closely with residents.  There is Switched on Portsmouth offer with a high profile on social media and in written format as posters in housing blocks.  There is ongoing training for front line housing officers and tenants can be referred to Leap - a gateway for help in different ways.

 

Members' comments

Councillor Sanders noted the following:

• All benefits are going up by the September CPI of 10.1%

 

• The national living wage is going up by 9.42%

 

• Pensioners benefits are increasing along with child benefit and universal credit payments.

 

• The benefits cap is increasing by 10.1% for the first time in a number of years.

 

• PCC is distributing a Household Support Fund which includes £120 for those missing out on government support, £70 for children of parents who are eligible for free prescriptions or healthy start vouchers; £150 for disabled people struggling with their heating bills and help with basics such as food, living costs, energy, and white goods.

 

Councillor Madgwick noted that a rent freeze would not be recoverable but proposed an increase in 7% whilst also putting in place a hardship fund of £5 million from the reserve, solely ring fenced for tenants genuine affordability issues of the increase in rent.  However, officers noted that this would leave a £5 million hole in the budget which would need to be resolved as it would increase the deficit position and would mean a consequence on the overall financial position of the HRA going into future years.

 

Councillor Wemyss suggested raising the rent by 5% instead of 7% which would help tenants this year.

 

Residents Consortium

 

The residents noted they were aware that things would go up but were hoping it wouldn’t go up too much.

 

Trevor noted the Government cut to PCC funding of £22 million and asked if this had affected the proposed increase in charges.

 

Councillor Sanders explained that the Council operates two separate budgets, one of which was the main budget agreed by all 42 councillors called the General Fund and this is affected by funding from Government and will impact on the level of Council Tax set.

The budget being discussed at the meeting was a completely separate budget with three quarters of the money coming from rent and other charges.

 

 

 

 

The Chair's summing up

 

 Councillor Sanders thanked everyone for their frank discussions on the report and issues.  He stated he was very aware of the cost-of-living crisis and observed that last year rents were increased by less that suggested to help.  This did not lead to a deficit position and officers had embarked on a significant programme to cut waste and to build and buy new council homes.  However, the expansion of the Ukraine conflict and the damage to the economy in the autumn had led to the surplus becoming a £2.3 million loss.  This was not dissimilar to other local authorities who have all raised rents by 7%. 

 

Having considered all the proposals put forward during the meeting, Councillor Sanders considered that a rent freeze would damage the budget in future years resulting in an unsustainable level of reserves in two years.  He noted that no rent increase will be more than the local housing allowance which had been frozen for 3 years.

 

With regard to the suggested hardship fund, Councillor Sanders noted the Household support fund that was already in place providing nearly £4million of support for the most vulnerable people in the city.

 

In relation to the heating charges, Councillor Sanders took a balanced view having heard all the evidence and deputations during the meeting and made the decision to change the proposal. Instead of being in accordance with appendix 7 of the report, the rise would be capped for 2023/2024 at 50% increase with the money to be recovered in future years.  This would still leave a £1.3 million deficit for the financial year, and he noted he had asked officers to work on a plan to rectify that position.  Officers had also been asked to produce an Asset Management Strategy to tackle maintaining the housing stock.

 

Councillor Sanders approved the rent rises, service charge rises, and the heating charge, as amended, at a 50% cap with the money to come back in future years.  He agreed all other recommendations.

 

 

Decision

The Cabinet Member:

 

1.    Noted the Forecast Revenue Outturn for 2022/23 arising from monitoring discussions with Managers, as set out at Appendix 3.

 

2.    Agreed all rents and charges to be effective from Monday 3 April 2023 or such other date as determined by the Director of Housing, Neighbourhood and Building Services, in consultation with the Director of Finance and Resources.

 

3.    Approved dwelling rents for 2023/24 to be set with an average increase of 7%, which is in line with the maximum allowable under Central Government's Social Rent Setting policy.

 

4.    Approved General Service Charges for 2023/24 to be set as set out in the report and in accordance with Appendix 5.

 

5.    Approved Sheltered Housing Service Charges for 2023/24 to be set as set out in the report, and in accordance with Appendix 6.

 

6.    Approved laundry charges for 2023/24 to be set, as set out in the report, and in accordance with Appendix 7.

 

7.    Approved heating charges for 2023/24 to be capped at a 50% rise in 2023/2024 with any remaining heating charges to be recouped in subsequent years.

 

8.    Approved Garages and Parking Site rents for 2023/24, as shown in Appendix 9 and approved authority to let garages at reduced rents where demand is low to be delegated to the Director of Housing, Neighbourhood and Building Services, in consultation with the Director of Finance and Resources.

 

9.    Approved the Revenue Budget for 2023/24, as set out in Appendix 3 and approved authority to be given to the Director of Housing, Neighbourhood and Building Services, in consultation with the Director of Finance and Resources, to amend the budgets to reflect the latest available information prior to finalising budgets for 2023/24.

 

10.Authorised the relevant managers to incur expenditure in 2023/24

 

11.Noted the Forecast Revenue Budgets for 2024/25 to 2026/27 arising from proposals contained in the report as set out in Appendix 3.