Agenda item

F Jump presented the provisional outturn report for 2018/19 and invited questions.

Cllr England enquired about the HRA operating underspend of £235k and what percentage.  F Jump confirmed this was a small percentage of HRA expenditure budgets (approximately 0.4%).

Cllr England asked about the premises £307k overachievement for the maintenance for £250k, that we are awaiting a stock condition survey for garages.  In the past there was high occupancy and there has been two large price increase for rentals, which would be spent on maintenance.  F Williamson confirmed that the investment programme was based on investing in areas where the condition of garages was poor, there is also the garage disposals strategy, which identified blocks where low demand or high density of garages in small geographical area.  Before we make any future investment decision, we need to collate and codify that with the disposals strategy to make sure we are investing in the right areas.  We undertook some market research which found that the rents were considerably lower than surrounding geographical areas and we looked at rental increases to bring it in line with neighbouring authorities.

The Chairman confirmed that Members had agreed to the rental increases as it had presented to Committee as we were significantly lower than neighbouring authorities.  F Williamson confirmed this was correct and we are about the second highest now and we believe there has been an equalising in the market for rental charges.  Now we need to ensure we invest in those areas where we have got low demand.

Cllr England said that he felt we was not spending on garages.  FW confirmed that some of the money had been used for the stock condition survey as this will provide us with the necessary information to develop an investment strategy that’s aligned to the condition instead of the demand.  At the moment we are spending on responsive repairs and we’ve had two blocks recently refurbished and there is one more block agreed for the refurbishment programme, although this is a very light touch as we want to ensure we are investing in the right areas.

Cllr England asked if Cllrs who have garages in their wards that are in poor condition should we tell officers about it.  F Williamson advised they would be picked up in the stock condition survey, the aim is to have that concluded by second quarter and there will be a report to Scrutiny later in the year in terms of the Garage Strategy.

Cllr Adeleke enquired about Universal Credit where we have factored in £400k provision for bad debt and he understood that Government was providing funding to help with Universal Credit problems.  F Jump said that we did have some funding about £78k available to the Revenues and Benefits service but she was not aware of any additional funding.  L Warden advised that money doesn’t go to the Housing Revenue Account, that it was to support residents in their claims.

Cllr Freedman mentioned the over-recovery on service charge and whether we had plans to spend that money.  F Williamson confirmed that all the money goes into the Housing Revenue account and forms part of the overall Business Plan which looks at the level of investment in existing stock alongside the delivery of new homes.  In respect of service charges a lot of work has been undertaken to identify actual costs of services because we want to obtain the best deals for tenants and leaseholders.  When we look at service charges we are only recovering the actual costs, but it is also about investing in items such as lifts.

Cllr Freedman said he noticed that we are in the process of making a service charges policy, but in short the money that we charge to pay for services later down the line, which may include capital replacement as a provision for future service charges.  F Williamson advised that none of it is ringfenced for a specific purpose, once it goes into the Housing Revenue Account, often we are recovering monies that we’ve already paid out, so we are actually using the service charges just to recover payments that have already been made out.  In terms of how that’s accounted for there is detail of that within the accounts, but within the Housing Revenue Account, we look at revenue items or expenditure and capital items for investment.  This is all based on the stock condition survey and the ongoing investment plans that we have.

Cllr Freedman said that we obviously have some provisos on what we can do with tenants rent and are we looking to have similar provisos on what we can do for tenants service charges, which are going to a general fund that doesn’t have any covenants on how we can charge, those people are seeing charges going up and going into a general fund which may be spent in future years.  That would be a hard message to give.  F Williamson advised that the overall Housing Revenue Account and the way the money is spent, everything goes back to the tenants in terms of service delivery.  How that is split between particular items, whether it comes from rental income or service charges, it all forms part of that overall Housing Revenue Account. 

Cllr Freedman asked if when we look at the service charge policy, we will be looking at a covenant that confirms increases year on year. 

Cllr Griffiths advised this would be a budgeting decision that this Council will make, not the Officers.  The rents have been set by Government directive, the service charge there is no restriction, no Government policy.  We have to bear in mind that we have to fund those services, there is no profit, all the money taken in, obviously pays for staff etc, but there is no profit taken.

F Williamson said that there is a list of services that are eligible for service charges and that includes things that potentially there is no provision for in an existing block. For instance, if we are rolling out CCTV to improve security in blocks that would be a new charge that would be eligible for service charge recovery, but it’s based on the premise that they are then receiving that new service, so it has some benefit.

The Chairman suggested that Cllr Freedman was trying to establish if we are increasing charges and not delivering the service.  The chairman commented that she would challenge this, especially as this department delivers fantastic value for money and they are always open to scrutiny, specifically from this Committee and wider areas of the Council, it’s come up time and time again and she thought our offer is competitive and that we can show where money is being spent.

F Williamson confirmed we are able to justify the basis for the charging for the service charge element, there is the rent formula which determines the rent level we can charge, are for service charges there is a set criteria and there are only certain services we can charge for.

The Chairman asked if service charges for social tenants was very competitive.  F Williamson confirmed they are competitive, they are on a cost recovery basis, so in order for us to maintain that we need to ensure that we get the best value for any services that we’re delivering.

Cllr England enquired about the £141k under budget on dwelling rents due to the void rate being expected to be 0.8% and is actually 1%, which looks as if it’s a small change, but if the void rate was expected to be 0.8 and is now 1%, that’s a 25% increase in voids.  So is a small or a significant shift in voids.  F Williamson confirmed that she can advise a bit more detail in the Performance Report, but as a percentage yes it’s an increase but in terms of the overall budget position, at the beginning of the year and the voids element, there was also some slippage in terms of the delivery of the new build, which had been accounted for at the beginning of the year, which again had an impact. 

Cllr England wanted clarification on the balances and reserves, where the management of change reserve has a net £125k contribution which is net of £470k in technical adjustments and then minus £345k to cover the cost of the Sportspace transition and asked why the money is coming from the management of change reserve and how will we track that money, because the idea is that we get money back from Everyone Active deal.  Shouldn’t that money go into a particular reserve so that we can see where it’s gone and when it comes out again.  F Jump confirmed that movement on the reserves is a decision for Members and this was the proposal that was put to Cabinet, we can investigate the potential to have an earmarked reserve for those movements but actually in terms of accounting records it’s very easy to see what’s gone in and out, because it has to come before members for approval.

The Chairman highlighted the recommendation that the report is noted and the Committee agreed.