Agenda item

Housing Revenue Account - Review of 5 Year Plan

Report of the Chamberlain.

Minutes:

The Committee received a joint Report of the Chamberlain and the Director of Community and Children’s Services concerning the Review of the 5-year Finance Plan for the Housing Revenue Account (HRA).

 

In response to a query, the Chamberlain confirmed that the depreciation figure of circa £3m illustrated in table 1 under paragraph 4 is a non-cash transaction which, in effect, ringfences monies for future improvement works. Depreciation must be provided for as per accounting policies, but in reality, the properties are unlikely to be going down in value.

 

In response to a query concerning the risks from inflation, the Chamberlain confirmed that individual projects included a costed risk provision for capital inflation and the Chamberlain’s Department managed a central provision for revenue inflation costs. in terms of building costs, the City Surveyor informed Members that the most recent BCIS (Building Cost Information Service) forecast indicated a 4% rise over the coming period, however, as of the previous Monday (17/01/22) prices had risen by 16% with immediate effect.

 

The Chamberlain provided a brief update concerning the cladding issues at Great Arthur House. The City is waiting on leave to appeal, and it was hoped that a case could be heard before the end of the calendar year. If the City were to lose the case (or indeed be denied the right to appeal) it would result in, in the first instance, a potential cost of circa £4.7m, and across the longer term, it would likely have serious knock-on implications for the City and other local authorities as the recovery of monies from leaseholders would potentially become difficult.

 

In response to a query concerning the ability of the HRA to borrow, the Chamberlain emphasised that it was the affordability of what the HRA could borrow that was the critical factor; she pointed out that Section 106 receipts fund some of the capital work which in turn reduced the need for borrowing. The Housing Management and Almshouses Sub (Community and Children's Services) Committee was looking at the issue of borrowing at the behest of the Policy & Resources Committee and an update would be provided to Members in due course.

 

Highlighting paragraph 7, a Member queried whether the circa £30m borrowing figure was a realistic provision given the risks of further major repairs being required and construction cost inflation over the short-medium term. The Chamberlain pointed out that whilst the finances will be tight, particularly in the first two years, risk would be mitigated, to an extent, by the likelihood that repairs would take time and be completed at the tail end of five-year plan (when the finances were likely to be in a better shape) given the works required would need to be done whilst residents are in situ. It was also stressed that the money coming in from new units in York Way and Sydenham Hill was vital to fund the repair works. A Member added that, in the event that costs increase further, he accepted that re-phasing projects may be a useful solution; however, fire safety should not be re-phased, and work in this area was needed to completed at pace.

 

Lastly, the Chairman informed Members that a route forward was agreed on the Water Charges issue at the previous week’s meeting of the Policy & Resources Committee.  

 

RESOLVED – That the Committee noted the Report.

 

 

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