Revenue Monitoring Report - Housing Revenue Account
North Lanarkshire Council · 10 May 2023
Back to Housing Committee — 10 May 2023 and its agenda
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North Lanarkshire Council Report Housing Committee Does this report require to be approved? ☐ Yes ☒ No Ref SL/GT/AN Date 10/05/23 Revenue Monitoring Report – Housing Revenue Account From Stephen Llewellyn, Chief Officer (Housing Management) E-mail telferg@northlan.gov.uk Telephone Greg Telfer, Business Finance Manager, 07586 010692 1. Background 1.1 The Council approved its Housing Revenue Account Budget of £149m on 17 December 2021. This has increased to £154m with the utilisation of the £2.5m reserve set aside for use within housing repairs, currently under pressure as a result of higher than anticipated contract inflation (see 2.2.2) and Ambition related virements. 1.2 The Financial Regulations require Services to remain within their approved budgetary provision, and to report all significant deviations – defined as the higher of £100,000 or 5% - within their budget monitoring reports. Where significant deviations are identified, Services must provide explanatory commentary, outline the action required to rectify Executive Summary This report provides a summary of the Housing Revenue Account financial performance for the period 1 April 2022 to 3 March 2023 (Period 12). The report illustrates the projected outturn as at 31 March 2023, with major outturn variances highlighted and explained in accordance with the Council’s approved Financial Regulations. The service is currently projecting an underspend of £1.067m for the financial year. This projected year end surplus will be allocated to the Rent Assistance Fund in line with the Council’s HRA budget decision on 23 February 2023. It is currently anticipated that £1.849m of savings (100%) will be delivered by the financial year-end. Recommendations It is recommended that Committee: 1) Acknowledges the financial position of the HRA revenue budget 2022/23. The Plan for North Lanarkshire Priority Improve North Lanarkshire's resource base Ambition statement (25) Ensure intelligent use of data and information to support fully evidence based decision making and future planning
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such a deviation, and where relevant, must also highlight the impact this has on other budget headings. 2. Report 2.1 Summary of Financial Position 2.1.1 The service is currently projecting an underspend of £1.067m for the financial year. This projected year end surplus will be allocated to the Rent Assistance Fund in line with the Council’s HRA budget decision on 23 February 2023. 2.2 Analysis of Significant Variances 2.2.1 The Housing Revenue Account currently anticipates an underspend of £1.400m within Employee Costs due to increased turnover / vacancy savings. This also includes an additional saving of £0.055m due to the UK Government’s decision to reverse the increase in National Insurance Contributions. 2.2.2 In addition, an overspend of £2.607m is anticipated within Property Costs mainly as a result of increased repair costs (£4.500m) due to the current economic climate and contract inflation, however with the drawdown of the repairs earmarked reserve of (£2.500m) this will be reduced to (£2.000m). Other overspends include utilities (£0.306m), void rent loss (£0.120m), grounds maintenance (£0.215m) and rents (0.050m). These are partially offset by savings within Council Tax (£0.140m) and other minor savings (£0.070m). 2.2.3 An underspend of £0.300m is projected within Administration Costs as a result of reduced legal fees (£0.100m), sheriff officer fees (£0.140m) associated with the restrictions placed on evictions partially offset by a combination of minor variances (£0.030m). 2.2.4 An overspend of £0.120m is projected within Apportioned Expenses due to additional ICT related costs partially offset by savings within First Stop Shops (£0.275m) and Customer Contact Centre (£0.020m). 2.2.5 The service projects an underspend of £1.634m on borrowing costs as a result of both proactive treasury management activity reducing average loans funds interest rates and lower than anticipated capital expenditure during the previous financial year. In addition, Members should be aware that consideration is currently being given to the implementation of the option of a loan debt holiday, which is one of the fiscal flexibilities introduced by the Scottish Government, initially to support the cost of COVID. If implemented this will generate a further one-off saving in 2022/23. However, it should be noted that this does not change the overall debt to be repaid and any benefit generated will need to be repaid within the shorter of either the remaining period of the loans fund advance or twenty years. The decision on this will be reviewed by the Chief Officer (Finance) as part of the year end closedown. 2.2.6 An anticipated underspend of £1.107m is anticipated within Ambition funding. Ambition funding represents budget increases from previous rent rises not yet applied to service spending linked to increased capital investment. 2.2.7 An under-recovery of £0.670m is being projected within rental income. This is mainly due to the number of properties brought back into use through the Open Market Purchase Scheme being lower than budgeted due to increased demand on the open market and a reduced number of HRA properties being utilised for homelessness.
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2.2.8 An under-recovery of £0.304m in Fees and Charges due to the temporary removal of charges for laundry facilities as the service seeks to introduce new payment technology (£0.105m), a reduction in court activity (£0.115m) and a reduced charge to HRA Capital Programme (£0.092m). 2.2.9 An over-recovery of £0.117m within Department Charges is due to recharges of HRA staff costs to HEEPS/ABS programme. 2.3 Earmarked and One-off Resources 2.3.1 An update of the earmarked reserves is detailed in Appendix 2. When account is taken of the £1.470m core reserve, and other previously earmarked reserves totalling £12.871m, the remaining unallocated resources total to £5.155m. In line with the 2023/24 HRA budget decision, £3.088m of reserves will be utilised to support cost pressures on a one-off basis during 2023/24. 2.4 2022/23 Budget Savings 2.4.1 The service uses a variety of information, records and processes to monitor achievement of its approved budget savings of £1.849m. As at Period 12, it anticipates 100% of its approved savings will be delivered by the financial year-end. 3. Measures of success 3.1 Service is currently operating within approved budgeted constraints and meeting required savings targets. 4. Supporting documentation 4.1 Appendix 1 HRA Summary Appendix 2 Earmarked Reserves / Balance Sheet Provisions Stephen Llewellyn Chief Officer (Housing Management)
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5. Impacts ( http://connect/report-template-guidance ) 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality-and-fairer- scotland-duty-impact-assessments Yes ☐ No ☐ 5.2 Financial impact Does the report contain any financial impacts? Yes ☒ No ☐ If Yes, have all relevant financial impacts have been discussed and agreed with Financial Solutions? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? The financial impacts are contained within the report and supporting appendices. 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts have been discussed and agreed with People and Organisational Development? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ If Yes, have all relevant legal impacts have been discussed and agreed with Legal and Democratic Solutions? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒
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If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for technology, has an assessment been carried out (or scheduled) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☒ No ☐ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? All activities undertaken by the council are subject to risk, and in acknowledging the Council’s approved Risk Management Strategy (September 2012), Services manage these as part of their overall corporate and service planning process. The current economic climate, in particular, has the potential to impact upon the Council’s ability to provide quality services within approved budget levels. Reflecting the risk analysis matrix included within the Risk Management Strategy, the Service considers the impact of inflation on key service contracts and the cost of living crisis presents an ongoing risk to the financial outturn for 2022/23 and this is an ongoing focus of discussion within the Service and with Financial Solutions. To minimise risk, this report has been prepared by service-based Financial Solutions personnel in consultation with budget managers, in accordance with the Financial Regulations 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services.
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Appendix 1 FINANCIAL MONITORING REPORT DIVISION : HRA SUMMARY 01 April 2021 to 3 FEBRUARY 2022 (Period 11) Cost Centre: HRA [H] COMMITTEE: HOUSING CATEGORY BUDGET ACTUAL YEAR TO DATE ANNUAL PROJECTED ANALYSIS TO DATE TO DATE VARIANCE BUDGET OUTTURN (1) (2) (3) (4) (5) (6) (10) £ £ £ £ £ EMPLOYEE COSTS 23,528,123 22,603,489 924,634 FAV 29,312,183 27,912,183 1,400,000 FAV Underspend due to increased turnover savings and National Insurance Contributions threshold changes PROPERTY COSTS 44,441,017 44,941,119 (500,102) ADV 56,823,690 59,430,690 (2,607,000) ADV Overspend mainly due to increased repair, grounds maintenance, utility, rental costs and void rent loss. These overspends are slightly offset by underspends in the garden assistance scheme. SUPPLIES & SERVICES 575,554 580,548 (4,994) ADV 782,400 782,400 0 - Balanced Budget TRANSPORT & PLANT 301,340 307,177 (5,837) ADV 367,140 367,140 0 - Balanced Budget ADMINISTRATION COSTS 1,758,866 1,497,697 261,169 FAV 5,490,900 5,190,900 300,000 FAV Underspends due to decreased legal and sheriff officer fees PAYMENTS TO OTHER BODIES 101,876 100,112 1,764 FAV 231,120 231,120 0 - Balanced Budget APPORTIONED EXPENSES 2,295,265 2,324,822 (29,557) ADV 7,279,960 7,399,960 (120,000) ADV Increased IT Support Costs CAPITAL FINANCING COSTS 0 0 0 - 22,408,280 20,774,280 1,634,000 FAV Underspend due to proactive treasury management activity C.F.C.R. 0 0 0 - 27,146,260 27,146,260 0 - Balanced budget OTHER COSTS 0 17,787 (17,787) ADV 4,994,497 3,887,497 1,107,000 FAV Ambition TOTAL EXPENDITURE 73,002,041 72,372,751 629,290 FAV 154,836,430 153,122,430 1,714,000 FAV OTHER GRANTS 0 0 0 - 0 0 0 - Balanced budget FEES AND CHARGES 452,587 299,624 (152,963) ADV 7,887,859 7,687,859 (200,000) ADV Under recoveries within laundry charges and court dues / fines RENTS 105,666,201 105,441,345 (224,856) ADV 143,783,481 143,336,481 (447,000) ADV Under-recovery in Rental Income due to lower OMPS activity INTEREST 0 0 0 - 15,000 15,000 0 - Balanced Budget DEPARTMENTAL CHARGES 0 (4,633) (4,633) ADV 90 90 0 - Balanced Budget SURPLUS 0 0 0 - 3,150,000 3,150,000 0 - Utilisation of Housing Repairs reserve INCOME 106,118,788 105,736,336 (382,452) ADV 154,836,430 154,189,430 (647,000) ADV NET EXPENDITURE (33,116,747) (33,363,585) 246,838 FAV 0 (1,067,000) 1,067,000 FAV FAV = Favourable variation, underspend etc 362,119 ADV = Adverse variation, overspend, income under-recovery etc PROJECTED OUTTURN VARIANCE (7)
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Appendix 2 DESCRIPTION OF EARMARKED RESERVES VALUE OF EARMARKED RESERVE CARRY FORWARD ANALYSIS VALUE % (1) (2) (3) (4) (5) (6) £ £ £ Ambition 5,054,483 889,000 82.4% 4,165,483 Balance required in future years Welfare Reform 259,869 0 100.0% 259,869 Utilisation of balance to be considered UCAF 739,880 381,179 48.5% 358,701 Balance of funding required in future years Hardship Fund 82,423 82,423 0.0% 0 Fund fully utilised in 22/23 Rent Assistance Fund 497,990 497,990 0.0% 0 Additional funding approved for 23/24 Enterprise Contract 670,793 670,793 0.0% 0 Budget fully utilised Rent Restructure 565,469 230,883 59.2% 334,586 Balance required in future years Housing Repairs 2,500,000 2,500,000 0.0% 0 To fund 2022/23 repairs programme HRA Capital Programme 2,500,000 0 100.0% 2,500,000 Allocated as part of the 23/24 HRA Revenue Estimates SUB TOTAL 12,870,907 5,252,268 59.2% 7,618,639 Change Management/Risks & Uncertainty 5,154,712 0 0.0% 5,154,712 Available for future allocation Core Reserve 1,470,000 0 100.0% 1,470,000 No call anticipated in 2022/23 TOTAL 19,495,619 5,252,268 73.1% 14,243,351 PROJECTED OUTTURN North Lanarkshire Council Housing Revenue Account - Earmarked Reserves 01 April 2021 to 3 MARCH 2022 (Period 12)