Agenda item

To receive the 2024/25 Housing Revenue Account Revenue and Capital Budget Monitoring Report for Qtr 1.

The Head of Housing Income and Tenancy Management, Simon Lewis, gave a report on the on the projected outturn financial position of the Council’s Housing Revenue Account (HRA) for the financial year 2024/25 (as at 30 June 2024).

It was noted that the HRA has two operating models: an in-house service in the west of the county and an arms-length management organisation (ALMO) in the north of the county delivered by Homes in Sedgemoor. This report summarised the overall projected outturn financial position of the two operating models collectively.

The report noted that the headline estimates for revenue costs are:

• Revenue Budget – £2.359m forecast overspend
• General Reserves - £11.823m forecast balance which is favourable compared to the £3.722m minimum requirement
• Earmarked Reserves – £209k opening balance

Further items of note within the report included the following:

• The Housing Senior Management Team will be undertaking preventative action to minimise further overspends and to aim to bring the forecast position back to budget.
• The HRA is a ring-fenced account which must abide by the accounting regulations and ensure that cross subsidy does not occur.
• The HRA has set a balanced budget for 2024/25 however areas of risk for the year will relate to regulatory and compliance requirements.
• From an operational perspective, the challenge relates to the levels of demand from tenants for support and service, for example for debt and benefit advice, repairs and maintenance on their properties, and the number and condition of void properties.
• There are risks associated with the economic operating environment and the positive or negative impact this may have on any variation from the forecasts assumed when setting the budget.
• The Housing Revenue Account (HRA) Capital Programme for 2024/25 onwards is £92.896m. This consists of £35.579m of new schemes approved for 2024/25 in addition to £57.317m approved budget carry forward.
• The budget has been profiled to reflect the estimated timing of costs for the approved schemes, with £60.189m profiled to be spent in 2024/25 with the balance of £32.707m projected forward into future years.

The Committee were taken through the significant reasons for the variance. Simon also added that repairs and maintenance and voids were key areas of concern. There had been underspend on supervision and management with some current vacancies including the Service Director for Housing. There had been an overspend of £312k on insurance premiums. There was a plan in place to look closely at the lettings and voids process for the year ahead and acknowledged that there was room for improvement to get costs under control. This would be done by bringing in more finance support to focus on this area and other parts of the improvement plan.

Members of the Committee discussed the presentation and comments made included the following:

• The length of voids time has been benchmarked and Somerset Council fall between the medium and top quartile. There are over 10k people awaiting council houses.
• There are 415 voids a year which represents about 8 per week. More resources are needed for pre-void inspections as the current voids team is very stretched.
• Advanced provisioning of raw materials such as bathrooms and kitchens needs to be improved. However, it was noted that since the pandemic it has been hard to source the right trades and materials, an example being fire doors. Also, with competition from other large projects within Somerset, prices have soared.
• Properties are being handed back in a much worse condition than in previous years.
• It has been extremely hard to recruit to the vacant positions, with a lack of applicants of the right calibre or experience. There has been competition from other large employers, such as Hinckley.
• A majority of the void properties are located in the former Sedgemoor and Somerset West and Taunton District Council areas.
• A mid-term survey during the tenancy was not a feasible idea due to the number of properties that would need to be surveyed each year. There is an inspection programme based upon intelligence on problem properties.

At the conclusion of the discussion the Chair summed up and requested more detail on how deliverable the capital programme and also more information regarding insurance premium costs. Members noted the report.