(Due to the time constraint, the Chair moved this item up on the agenda.)
The report was presented by Mike Jones.
Councillor Redsell mentioned that some of the properties in her ward were being charged for services that were not there. She noted that there were no works to be undertaken for garages and raised concerns over what the garage charges were being used for. Ewelina Sorbjan asked that the addresses be emailed over to her in regards to the charges. Mike Jones referred to table 6 and said that half a million had been allocated to garages per year.
Councillor Pearce was concerned that the rent was increasing but repairs and services were being cut. The Chair agreed and referred to table 1 on the repairs and maintenance budget of £12.2 million. She asked if this was in and out of contract and what the split was for this. Mike Jones replied that the budget was split across various revenues that included void repairs, day to day repairs, planned and preventative maintenance and grounds maintenance. He explained that the charges were increased to meet inflation rates and pressures from external companies and that the budget considered these.
The Chair stated that residents did not feel services were getting better and that the service needed to inform the Committee on what services were being cut. She asked that a briefing note be provided on this. Mike Jones explained that there were no proposals to cut the services that was being provided this year in the next year’s budget. The increases were to maintain the level of current services.
Councillor Pearce pointed out that tenants were being asked to undertake their own repairs as some repairs were no longer available. The Chair questioned what repairs had changed. Ewelina Sorbjan said that she would circulate the Council’s repairs policy.
The Chair asked what efficiencies had been made in the HRA. Mike Jones explained that it was difficult to give a finalised picture of the efficiencies as there were certain issues such as staffing. There were mostly repairs in the HRA with no external funding coming into the HRA and the staffing was not funded in the same way as other general revenues. He went on to say that the only source of income to the HRA was the rent and for the HRA to make efficiencies, there would need to be cuts to repairs, anti-social behaviour workers or any non-frontline staff which could have dire consequences.
Referring to table 6, the Chair sought further detail on the ‘Carbon Reduction Requirements (Tower Blocks)’ and ‘Carbon Reduction Requirements External’. She also asked if other departments had a budget for carbon reduction. Mike Jones explained that the carbon reduction in tower blocks included the use of heat pumps and that a budget was allocated to reduce carbon and what was affordable. He said that the costs were more tangible in the Housing department due to the works needed on the tower blocks. He was uncertain about the costs across other departments under the general fund.
Noting that there was budget for ‘Highways and Lighting’ in table 6, the Chair asked why this was included in the HRA and thought that this was under the general fund. Mike Jones replied that an asset that was deemed as HRA land would become the responsibility of the HRA to maintain it. He gave the example of Seabrooke Rise and said that the street area was the responsibility of the HRA so any costs associated with the street area such as lighting was for the HRA. This was on the budget due to the Capital Programme priorities which required targeted investment into lighting.
The Chair questioned how many homes could be bought with the 4% rent increase. She commented that 4% was a big increase and questioned why the increase could not be 2% instead as it had been in previous years. Mike Jones explained that a lower increase in rent would require cuts and efficiencies to be made across other services to meet inflationary costs. This would not be beneficial for residents as there would be reduced levels of service. He said that borrowing on the HRA to purchase new homes worked on a side by side basis. He explained that the purchase of a new home which was then leased on affordable rent and the level of income was enough to cover the cost of the borrowing. In effect, this was self-financing.
The Chair pointed out that this information was complex and had requested that a table be provided to explain this to the Committee. She said that the detail provided in the report was little and that the Committee needed a report on the full structure of the purchase of the new homes in regards to the leasing, Right To Buy receipts and who owned the new homes. She asked that a full report be brought to the first meeting of the new municipal year to help Members understand how the RTB receipts were spent and how PHI scheme worked. Ewelina Sorbjan explained that the report outlined the Capital Works Programme and the work that was undertaken to maintain these works.
The Chair commented that the purchase of properties should increase the funds in the HRA and queried this. Mike Jones explained that social rent charges were not enough to cover the cost of the borrowing, acquisition or the lease. The service’s strategy was to set the rent at the LHA level plus the £1000 which was the benefit cap. The affordable rent was set with these in mind and following affordable housing rules, the Council would identify what rent could be charged to ensure it was self-financing. With the benefit cap, it was enough to ensure that the properties were not subsidised by the HRA.
Councillor Pearce sought more detail on heat pumps and whether these were cost effective. Alastair Wood replied that the cost modelling had been undertaken which showed that heats would be significantly cheaper in terms of savings per household. This would help to lift some households out of fuel poverty. He highlighted that the technology was new and had proven to be successful in other areas. He said that heat pump project would commence in the Chadwell flats in March.
The Chair queried whether the service charge costs could be reconsidered and raised concerns over bad debt, increase in fuel prices and the cost of living. She asked if there was a solution to decrease the cost of rent. Mike Jones explained that the cost of services increased the costs of rent. He said that it was prudent to consider bad debt in accounting when costs were increased. There were also the effects of the pandemic to consider and inflation.
1.1 That the Committee consider and comment on the proposed base budget for 2022/23 (Table 1)
1.2 That the Committee consider and comment on a proposed increase in domestic rent of 4.1%, in line with the 30-year HRA business plan, to be implemented from 4 April 2022
1.3 That the Committee consider and comment on the proposed increase in service charges to reflect the costs of running each service in line with the budget estimate from 4 April 2022 (detailed in Table 5)
1.4 That the Committee consider and comment on proposed charges for garage rents (para 3.9), to be implemented from 4 April 2022
1.5 That the Committee consider and comment on proposed charges for rents on Travellers sites (para 3.10) to be implemented from 4 April 2022