Part 1 (Open to the public)
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REPORT OF THE STRATEGIC DIRECTOR OF HOUSING AND PLANNING
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TO THE LEAD MEMBER FOR HOUSING
ON 5th October 2006
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TITLE: Housing Revenue Account - Budget-monitoring report to 31st August 2006
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RECOMMENDATIONS: That the lead member for Housing notes the position of the
Housing Revenue Account as at the 31st August 2006.
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EXECUTIVE SUMMARY: This report details the current position for the 2006/07
Housing Revenue Account Budget.
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BACKGROUND DOCUMENTS: (Available for public inspection)
Budget Control File
Financial Information from SAP
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ASSESSMENT OF RISK: Failure to monitor the Budget and instigate appropriate
actions based on findings can lead to significant over/underspends in 2006/07 that
will affect the financial health of the City Council.
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SOURCE OF FUNDING: Not applicable as the report is commenting on the financial
position of the Housing Revenue Account.
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LEGAL IMPLICATIONS: Not required for this report.
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COMMUNICATION IMPLICATIONS: Not required for this report.
PROPERTY: Not required for this report.
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HUMAN RESOURCES: Not required for this report.
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CONTACT OFFICER: Joanne Hardman (0161 922 8792)
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WARD(S) TO WHICH REPORT RELATE(S): All
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KEY COUNCIL POLICIES: City Council Revenue Budget 2006/07
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DETAILS: (Continued Overleaf)
1
Housing Revenue Account Budget 2006/07
1.1 This report identifies the position of the Housing Revenue Account
(HRA) for the year to the 31st August; a summary of the income
and expenditure for each cost centre is listed in Appendix 1.
a) Stock Options - This budget has been increased to reflect the
anticipated costs of the Stock Options process in 2006/07. The
budget covers staff costs along with the costs of on-going
consultancy work and consultation. Following submission of bids
to the DCLG there is now a need to review the costs already
incurred on consultancy and the requirements for the remainder of
the process. A separate monitoring report on Stock Options
Implementation costs is included elsewhere on the agenda
b) NPHL Management Fee – The regular monitoring meetings with
NPHL suggest that there will not be an adverse variation in the
management fee for 2006/07. However, as part of the stock
options process, NPHL have identified a number of costs
associated with Change Management. NPHL have been requested
to meet these costs from within the existing budget provision,
however, if this is not possible, an additional charge would be made
to the stock options implementation budget
c) Housing Repairs – As reported previously there is a significant
underspend against the Housing Repairs Account to date. This is
in line with the spending profile in previous years.
However, NPHL, through their internal arrangements, have
identified a potentially significant overspend could occur during the
year. Current forecasts suggest an over-commitment level on
responsive repairs of £2.7m. This is extremely high in comparison
to the overall budgeted commitment for repairs of £1.2m.
Measures have been put in place to try and mitigate the
overcommitment. These include:-using the planned revenue contribution to the capital
programme of £300,000 to support the revenue repairs
programme
- increasing the standard on some void works in line with the
Decent Homes standard and re-classifying the expenditure.
- investigating any orders outstanding from 2005/6 and
assessing the impact on 2006/7.
Following these actions, which have been discussed with the
Council at monitoring meetings, there is a remaining overcommitment of £1.7m.
d) Provision for Bad Debts – A contribution has been made to the
bad debt provision based upon: I. 95% of former and non-tenant arrears
II. 35% of current tenant arrears
Current estimates suggest an underspend to date, however, this
budget requires close monitoring for the remainder of the financial
year.
e) Other Costs – The adverse variation mainly relates to the payment
of council tax on service tenancies and void properties.
Investigations are continuing with Customer and Support Services
to establish whether there are any outstanding refunds which would
reduce this overspend.
f) Dwelling Rents – As previously reported, there is a favourable
variation in respect of dwellings rents. This is due to lower numbers
of RTBs than anticipated when the budget was set.
g) Other income – The adverse variation relates mainly to the two
service charges which were depooled in 2006/7 – Janitorial
Services and Shared areas. There have been a small number of
issues relating to the introduction of these service charges which
have impacted upon income levels. For example,
- it was assumed that charges could be made for janitorial
services at Canterbury Gardens, however, on further
investigation there was some duplication with an existing
service charge made to tenants in these blocks
- the closure of Wrotham Close has reduced the level of
service charge income
- there are a number of voids in properties subject to these
service charges which has impacted upon income levels.
The adverse variation can be offset by the favourable variation on
dwellings rents. Further work will be undertaken to provide a better
estimate of the income associated with these new service charges
in order to refine budget estimates.
2
Conclusion
2.1 It is anticipated that, with ongoing monitoring, Housing Revenue
Account expenditure will remain within the agreed budget.
3
Recommendations
3.1 That the Lead Member for Housing notes the position of the Housing
Revenue Account as at the 31st August 2006.
APPENDIX 1
HRA BUDGET POSITION TO
31st AUGUST 2006
2006/7 Budget
£
Budget to date
£
Spend to date
£
Variation
£
Strategy General
Stock options
Central Internal Recharges
NPHL Management Fee
NPHL Management Fee Repairs
Housing Repairs
Major Repairs Allowance
Provision for bad debts
Other costs including SLAs
Loan Charges Interest
Revenue Contribution to Capital
1,200,000
4,820,270
2,300,000
18,199,760
2,881,670
21,000,000
16,270,300
1,800,000
3,018,600
17,641,070
300,000
500,000
1,606,757
40,000
7,583,233
1,200,696
7,000,000
6,779,292
750,000
784,068
7,350,446
0
500,000
1,465,626
40,826
7,632,782
1,151,147
6,271,550
6,779,292
646,488
820,856
7,350,446
0
0
-141,131
826
49,549
-49,549
-728,450
0
-103,512
36,788
0
0
Expenditure
89,431,670
33,594,491
32,659,013
-935,479
Dwellings Rents
Other income
Housing Subsidy
Interest Receivable
Recovery of transfer costs
Contribution from balances
-67,795,924
-8,157,560
-10,500,700
-172,240
-1,611,900
-1,193,346
-29,874,813
-3,522,286
-4,200,280
-71,767
-30,037,948
-3,468,389
-4,200,305
-71,767
-163,135
53,897
-25
0
Income
-89,431,670
-37,669,146
-37,778,409
-109,263
NET POSITION
0
-4,074,654
-5,119,396
-1,044,742