HRA Revenue Monitoring Report
North Lanarkshire Council · 16 November 2022
Back to Housing Committee — 16 November 2022 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 16/11/22 Revenue Monitoring Report – Housing Revenue Account From Stephen Llewellyn, Head of Housing Solutions 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 such a deviation, and where relevant, must also highlight the impact this has on other budget headings. Executive Summary This report provides a summary of the Housing Revenue Account financial performance for the period 1 April 2022 to 16 September 2022 (Period 6). 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 a breakeven position for the financial year. 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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2. Report 2.1 Summary of Financial Position 2.1.1 The service is currently projecting a breakeven position in the financial year. 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. 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 (£2.5m) this will be reduced to £2.000m. Other overspends include utilities (£0.337m), void rent loss (£0.150m), grounds maintenance (£0.070m) and rents (0.050m). 2.2.3 An underspend of £0.300m is projected within Administration Costs as a result of reduced legal (£0.150m) and sheriff officer fees (£0.150m) associated with the restrictions placed on evictions. 2.2.4 An anticipated underspend of £1.107m is anticipated within ambition funding. 2.2.5 An under-recovery of £0.200m in Fees and Charges due to the freeze in charges for laundry facilities (£0.100m) since Covid and a reduction in court activity (£0.100m). 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. 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 6, 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 Head of Housing Solutions
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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
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Appendix 1 FINANCIAL MONITORING REPORT DIVISION : HRA SUMMARY 01 April 2021 to 16 SEPTEMBER 2021 (Period 6) 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 11,686,540 11,020,217 666,323 FAV 29,312,183 27,912,183 1,400,000 FAV Underspend due to increased turnover savings PROPERTY COSTS 21,928,150 23,267,348 (1,339,198) 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 421,133 412,569 8,564 FAV 1,182,400 1,182,400 0 - Balanced Budget TRANSPORT & PLANT 142,128 136,837 5,291 FAV 367,140 367,140 0 - Balanced Budget ADMINISTRATION COSTS 828,911 604,400 224,511 FAV 5,490,900 5,190,900 300,000 FAV Underspends due to decreased legal and sheriff officer fees PAYMENTS TO OTHER BODIES 78,952 55,074 23,878 FAV 231,120 231,120 0 - Balanced Budget APPORTIONED EXPENSES 937,022 963,016 (25,994) ADV 6,229,960 6,229,960 0 - Balanced Budget CAPITAL FINANCING COSTS 0 0 0 - 22,408,280 22,408,280 0 - Balanced budget C.F.C.R. 0 0 0 - 27,146,260 27,146,260 0 - Balanced budget OTHER COSTS 0 0 0 - 4,994,497 3,887,497 1,107,000 FAV Ambition TOTAL EXPENDITURE 36,022,836 36,459,461 (436,625) ADV 154,186,430 153,986,430 200,000 FAV OTHER GRANTS 0 0 0 - 0 0 0 - Balanced budget FEES AND CHARGES 260,539 193,227 (67,312) ADV 7,887,859 7,687,859 (200,000) ADV Under recoveries within laundry charges and court dues / fines RENTS 52,732,196 52,723,738 (8,458) ADV 143,783,481 143,783,481 0 - Balanced Budget INTEREST 0 0 0 - 15,000 15,000 0 - Balanced Budget DEPARTMENTAL CHARGES 0 0 0 - 90 90 0 - Balanced Budget SURPLUS 0 0 0 - 2,500,000 2,500,000 0 - Utilisation of prior years Housing Repairs surplus INCOME 52,992,735 52,916,965 (75,770) ADV 154,186,430 153,986,430 (200,000) ADV NET EXPENDITURE (16,969,899) (16,457,504) (512,395) ADV 0 0 0 - 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 972,633 363,232 62.7% 609,401 Balance required in future years Hardship Fund 347,660 94,084 72.9% 253,576 Balance required in future years 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 To fund future programme SUB TOTAL 12,870,907 4,747,992 63.1% 8,122,915 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 2021/22 TOTAL 19,495,619 4,747,992 75.6% 14,747,627 PROJECTED OUTTURN Housing Revenue Account - Earmarked Reserves 01 April 2021 to 16 SEPTEMBER 2021 (Period 6)