Agenda item

The Homes Sub-Committee is with an overview of the Housing Revenue Account and General Fund budgets and is recommended to: -

1.  to note the Housing Revenue Account P7 outturn position.

2.  to note the Housing Revenue Account Business Plan key headlines.

3.  to note the Housing General Fund budget.

4.  to note the Housing General Fund P7 outturn position.

5.  to consider its conclusions on the budget information provided, which will be submitted to the Scrutiny & Overview Committee meeting on 16 February 2023 as part of the wider Budget Scrutiny process.

The Sub-Committee considered a report set out on pages 39 to 44 of the agenda, which provided an update on Housing Revenue Account (HRA), the current in-year budget position for the Housing General Fund and proposals for 2023-2024 budget. The report had been included on the agenda as part of the Budget Scrutiny process to allow the Sub-Committee to reach a conclusion on the deliverability of the budget which would be reported to the next meeting of the Scrutiny & Overview Committee on 16 February 2023.

The Cabinet Member for Homes, Councillor Lynne Hale, Corporate Director for Housing, Susmita Sen, Finance Manager, Sarah Attwood, Finance Manager, Orlagh Guarnori, Head of Temporary Accommodation, Beatrice Cingtho-Taylor and Head of Homelessness & Assessments, Hamid Khan all attended the meeting for this item.

Ahead of the Sub-Committee questioning on the information provided, a presentation on the budget was provided by Sarah Attwood and Orlagh Guarnori, Finance Managers supporting the Housing service. A copy of the presentation delivered can be found at the following link: -

https://democracy.croydon.gov.uk/documents/s43385/HRA%20Housing%20Budget%20Presentation.pdf

The first comment from the Sub-Committee highlighted concern about the lack of information available in the report on the HRA Business Plan and a further briefing to provide this detail was requested. In response it was highlighted that the Business Plan was still going through the process of being finalised which was why it had not been included in the report. It was confirmed that the capital programme for the HRA was based on a 5% stock survey, which was not ideal. However, as work had started on a full stock condition survey, it would allow the Business Plan for 2024-25 to be much more developed.

Given the Business Plan for 2023-24 was based on a 5% stock survey, it was questioned how robustly the assumptions made in the report had been tested, particularly given the financial challenges of the Council. It was advised that external expertise of Savills had been engaged to support officers with the preparation of the Business Plan. Some of the key assumptions made in the Business Plan included: -

·         Core inflation being set at 8.4% for 2023-24 before dropping in subsequent years to 3%.

·         Rent increases being set at 7% in the coming year and 3% in subsequent years.

·         Reduced assumptions on income from other areas such as garages due to the level of repair needed.

As a follow-up, it was questioned how the budget for stock replacement had been calculated in the Business Plan. It was advised that the budget had been based upon information provided from the 5% sample stock condition surveys. As this was a small percentage of the total stock, additional growth had been costed into the budget to account for a degree of uncertainty. Given that a full stock condition survey was in the process of starting, it should provide a greater level of certainty in future years on the exact work required.

As it was noted that the Capital Programme for 2023-24 had been set at £31m, it was questioned how this compared to previous years. It was advised that the budget had been increased by £9.4m from the previous year to provide for the delivery of fire safety and other statutory compliance work. The budget also included £15m for property improvement and £6m for communal improvement.

Key pressures for the capital programme included work to ensure stock met fire safety standards, work to treat damp and mould and other work to meet legislative safety requirements. It was acknowledged that there had not been sufficient investment in the Council’s housing stock and as such some of it was reaching the end of its life. It was likely that within the next 2 to 3 years the Council would need to look at borrowing to invest in its stock.

As it had previously been noted that an error had been identified concerning the recharging of expenditure to the HRA from the Council’s general fund account, an update was requested. It was confirmed that significant progress had been made in understanding the scale of the issue and adjustments had started to be made, which would ensure the in-year HRA budget was balanced. Without the recharge the budget would have been overspent due in part to the increased cost of utilities. The Sub-Committee agreed that it wanted to be kept informed of the outcomes from the work on the HRA recharge issue.

Regarding the overspend on the in-year budget for temporary accommodation, it was highlighted that every London borough was projecting an overspend of a similar percentage. As demand was increasing across London, it was frequently the case that boroughs were paying above the agreed rate for temporary accommodation to meet this demand. There had been pressure placed on the budget following the fire at Sycamore House, but many of these costs had been absorbed by insurance.

It was confirmed that the Chief Executive had written to neighbouring boroughs to raise concern about the number of placements made in Croydon and to highlight that they should not be paying above the agreed rate. However, it was difficult to address the issue as the reality was Croydon was seen to be the cheaper option to place people seeking temporary accomodation. The issue of out of borough placements was also being picked up at the sub-regional group of South West London boroughs and the Mayor had escalated the issue through London Councils to his political counterparts across London.

In response to a question about whether the winter top-up from the Government for homelessness prevention was likely to be repeated next year, it was advised that it had been provided as a one-off. At this stage the Government’s future intentions on this were not known. It was highlighted that £1.4m of Public Health funding had been provided to support work on substance misuse linked to homelessness over the next two years.

At the conclusion of this item, the Sub-Committee agreed that further information was needed on both the HRA or Housing General Fund budgets to enable it to reach its conclusions on their deliverability. As such a further briefing would be arranged before the budget meeting of the Scrutiny & Overview Committee on 16 February 2023, to allow the Sub-Committee to seek further reassurance.

Actions arising from the meeting

Following the discussion of the Budget item at the meeting, the Sub-Committee agreed the following actions that would be followed up after the meeting.

1. That a further briefing would be arranged for the Sub-Committee prior to the Scrutiny & Overview Committee meeting on 16 February 2023, to seek further reassurance on the Housing Revenue Account and the Housing General Fund budgets.

Conclusions

Following its discussion of the report, the Homes Sub-Committee reached the following conclusions: -

1.    From the meeting on 6 February, the Sub-Committee concluded that there was insufficient budgetary detail provided in the report to enable it to reach a decision on whether it was reassured on the deliverability of the budget. 

2.    As such, it was agreed that a briefing would be arranged for the Sub-Committee to seek further assurance on the budget. The outcome from this session would be reported to the Scrutiny & Overview Committee on 16 February 2023, to inform its consideration of the wider Council budget. 

(Note: the conclusions reached by the Sub-Committee following the briefing are appended to these minutes).