Agenda item

To review the Housing Revenue Account (HRA) Budget Setting 2025/26 including Dwelling Rent Setting 2025/26 and 30-Year Business Plan Review. This report was considered by Cabinet on 4 February 2025.

The Chairman noted that within the agenda pack was a report proposing the Housing Revenue Account (HRA) Business Plan, Budget and associated housing funding decisions.

Leader of the Council, Richard Clewer introduced the report and noted the importance of council housing provision and that if the Council wasn’t to build it would need to find other ways to provide affordable housing. Reference was made to the challenges faced from inflation and government decisions and how it was important for Wiltshire to keep leaning into work taking place, for example the Leader had signed the Council up to a report being produced by Suffolk Council, which promoted council house building. Reference was made to the funding that was available to boost the programme and that the Council had a coherent long-term plan including retrofitting which would mean that the Council would not drift into areas of unaffordability like other councils.

James Barrah, Director for Assets, provided the Committee with a presentation on the HRA 30-year Business Plan, HRA Budget and Rent setting. The presentation covered, but was not limited to the following points:

• It was noted that last year’s report focused mainly on rent setting with inflation however this year’s report had a focus on the Business Plan with a priority to set a rent, revenue and capital budget for the coming year.
• Detail was provided in relation to assumptions and changes to the current Business Plan, which covered areas including rents, right to buy, management and maintenance costs, depreciation and the move from a repayment model to greater refinancing in earlier years.
• Detail was provided of the debt profile in comparison to the previous base in December 2023. With it noted that the level of debt and peak borrowing had increased however, reduced depreciation would mean that more revenue balances were available to support higher borrowing throughout the plan.
• An explanation of the repayment of debt over a 30-year period was provided, with it noted that the Council had a commitment to assessing how the financing could be reduced.
• Conclusions of the current Business Plan were outlined as well as next steps.

The following comments were received by Committee Members with clarity sought on where delivery would stop and whether there was an aspiration for over a thousand homes, to which it was noted that the plan would change in an effective and intelligence manner over time. It was also stated that 1,000 homes would be a challenging target given local site availability, the potential acquisition of additional sites which could require additional costs and grant funding. Clarity was also provided that council house building had started before the 1,000 target, with circa 200 homes build outside of the target with more either having been built or in the pipeline, therefore suggesting that positive progress was being made.

A discussion took place regarding the funding for housing associations and local government authorities with it noted that there had been some shifts in government to acknowledge local experiences however the core grant remained the same for both parties involved. It was also noted that Wiltshire Council was well placed due to having a build programme when other authorities did not.

The notion of shared ownership was discussed with it questioned whether there was assistance in place for tenants of modest wages to move into shared ownership, to which it was clarified that there was no financial support available with shared ownership already being an affordable product, there was however wider support offered for hardship such as advice for benefit and mental health support.

Clarity was sought on borrowings and the cost of debt servicing, to which it was noted that this was a difficult space following the pandemic and cost of living crisis with the Council having to consider forecast modelling when borrowing and doing HRA on a worst-case scenario of known figures. It was also noted that the Council sought advice from treasury managers and would be considering short term borrowings over 12-24 months until there was more stability in the market. The profile of debt was also considered in order to not burden the Council with repaying all in one space in order to have a good debt portfolio in place.

Risk mitigation measures were discussed as well as whether this might affect the general finances of the Council, to which assurance was provided that the development programme could be switched on or off. It was also noted that the Council was making sure not to be overly committed on too many sites or contracts at one time in order to ensure that action could be taken. Furthermore, the HRA was a ring-fenced fund within the general budget, therefore if the finances of the HRA was not managed this could have an impact on the general finances, however modelling was constantly taking place so there would be an awareness if action would need to be taken. It was therefore deemed not to be a current risk.

At the conclusion of discussion, it was,

Resolved:

The Overview and Scrutiny Management Committee agreed:

1.    To note the HRA Annual Revenue Budget for 2025/26 as described in the report and Appendix 1, subject to an in-year review.