Agenda Document Pack - Housing and Technical Resources Committee - 22/01/2025
South Lanarkshire Council · 22 January 2025
Back to Housing and Technical Resources Committee — 22 January 2025 and its agenda
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Council Offices, Almada Street Hamilton, ML3 0AA Tuesday, 14 January 2025 Dear Councillor Housing and Technical Resources Committee The Members listed below are requested to attend a special meeting of the above Committee to be held as follows:- Date: Wednesday, 22 January 2025 Time: 10:00 Venue: Hybrid - Committee Room 1, Council Offices, Almada Street, Hamilton, ML3 0AA The business to be considered at the meeting is listed overleaf. Yours sincerely Paul Manning Chief Executive Members Davie McLachlan (Chair), Margaret Cowie (Depute Chair), Joe Fagan (ex officio), Walter Brogan, Archie Buchanan, Mathew Buchanan, Janine Calikes, Gerry Convery, Margaret Cooper, Andrea Cowan, Maureen Devlin, Colin Dewar, Allan Falconer, Grant Ferguson, Alistair Fulton, Ross Gowland, Geri Gray, Ross Lambie, Martin Lennon, Richard Lockhart, Julia Marrs, Ian McAllan, Kenny McCreary, Norman Rae, David Shearer, Kirsty Williams Substitutes Robert Brown, Poppy Corbett, Monique Equi, Gladys Ferguson-Miller, Elise Frame, Martin Hose, Cal Johnston-Dempsey, Susan Kerr, Eileen Logan, Richard Nelson, Helen Toner, Margaret B Walker, David Watson 1
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BUSINESS 1 Declaration of Interests Item(s) for Decision 2 Housing Revenue and Capital Account Budget 2025-2026 Joint report dated 24 December 2024 by the Executive Directors (Housing and Technical Resources) and (Finance and Corporate Resources). (Copy attached) 3 - 10 Urgent Business 3 Urgent Business Any other items of business which the Chair decides are urgent. For further information, please contact:- Clerk Name: Laura Cunningham Clerk Telephone: 07385 370044 Clerk Email: laura.cunningham2@southlanarkshire.gov.uk 2
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Report Agenda Item Report to: Housing and Technical Resources Committee Date of Meeting: 22 January 2025 Report by: Executive Director (Housing and Technical Resources) Executive Director (Finance and Corporate Resources) Subject: Housing Revenue and Capital Account Budget 2025/2026 1. Purpose of Report 1.1. The purpose of the report is to:- outline the revenue estimate proposals for the Housing Revenue Account (HRA) for 2025/2026 request approval for the 2025/2026 Housing Capital Programme totalling £85.948 million [1purpose] 2. Recommendation(s) 2.1. The Committee is asked to approve the following recommendation(s):- (1) that the proposed rent increase of 6.50% to be applied in 2025/2026 with a further 6.50% increase in 2026/2027 (reviewed annually), to all Council houses, Gypsy/Traveller sites, lock-ups and garage sites and the revenue estimate proposals for the HRA, as detailed in Appendix 1 to the report, be endorsed; (2) that, based on the rent increase of 6.50%, the 2025/2026 Housing Capital Programme of £85.948 million, as detailed in Appendix 2 to the report, be endorsed; and (3) that the recommendations be referred to Executive Committee for endorsement, then to Council for approval. [1recs] 3. Proposals for Housing Revenue Account Budget 2025/2026 3.1. The HRA revenue budget for 2025/2026 has been prepared in line with the thirty-year HRA Business Plan. This has been developed to reflect the investment priority to maintain and improve the housing stock to meet national housing quality and energy efficiency standards. The programme also includes projects to increase the supply of Council housing as well as environmental works and legislative compliance programmes to ensure that all safety requirement standards are met. 3.2. The movement from the original 2024/2025 revenue budget, is outlined in Appendix 1 to the report. The main expenditure movements are:- Supervision and Management Costs, increased costs for pay award, employers national insurance and other inflationary pressures offset by a reduction in the provision for bad debt 2 3
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Housing Repairs and Maintenance reflecting a prudent allocation for expected costs and demands for these services and efficiency saving targets (as detailed further in Paragraph 3.6) Financing Costs Loan Charges reflects the costs associated with the planned investment requirements House Rents are inclusive of additional new stock and the proposed rent increase a planned transfer from reserves reflects requirement within the 2025/2026 budget for the long term investments included in the thirty-year HRA Business Plan 3.3. The 2025/2026 budget proposal also includes a provision of £2.273 million for bad debt. This is a decrease from 2024/2025 and is required to continue to provide for the potential impact of arrears and non-payment of rent. This includes contingency for the ongoing uncertainty on rental collections in the coming year due to cost-of- living pressures, continued managed migration to Universal Credit and an allocation of £0.300 million for tenancy sustainment mitigation. 3.4. In previous rounds of budget engagement, tenants have favoured multi-year agreements on the basis that they provided some clarity regarding rent levels over the medium term. A rent increase of 6.5% is proposed from 2025/2026 with a further 6.50% increase in 2026/2027. This is year two of a three-year multi-year agreement and in accordance with statutory requirements, this commitment will be subject to annual review and customer engagement. This approach will allow the Council and tenants to plan and budget on a longer-term basis. 3.5. It should be noted that, based on the latest Scottish Social Housing Charter returns, the average rent charges for South Lanarkshire Council tenants are currently the 7th lowest of local authority landlords in Scotland. In addition, South Lanarkshire Council tenants’ rent charges are the lowest of all the social landlords operating in South Lanarkshire. 3.6. In line with the HRA Business Plan, a reduction of £0.300 million for efficiencies has been included within the housing repairs service. Savings have been achieved following a tender for a new contractor for void clear outs (£0.088 million per annum). This has also decreased void timescales resulting in a saving to void rent loss. The remaining efficiencies (£0.212 million) will be achieved through the reduced used of external contractors for housing repairs. 4. Proposal for Housing Revenue Account – Capital Programme 2025/2026 4.1. The 2025/2026 capital programme is compiled in line with the thirty-year HRA Business Plan. As well as continuing to plan and undertake the works needed to maintain and improve the housing stock to meet national housing quality and energy efficiency standards, a significant work stream in this year’s Housing Investment Programme will be to continue our investment to increase the overall supply of Council housing across South Lanarkshire. The full HRA capital programme for 2025/2026 is detailed in Appendix 2 to the report. 4.2. Further key investment activities in relation to these priorities include kitchens and bathrooms, heating replacements and insulation, external fabric upgrading, windows and doors replacement, legislative compliance works and other external environmental improvements. 4
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4.3. One of the headlines from the recently published Scottish Government draft budget for 2025/2026 is that the funding available for the Affordable Housing Supply Programme will increase by 44% when compared to the original published budget for 2024/2025. It remains unclear how this increase will translate locally, however, the Council continue to engage with the Scottish Government to understand when clarity on this will be provided. It is currently anticipated that this will not be until after the Scottish Parliament agree the national budget in February 2025. In the interim, a programme has been developed based on the grant allocation for 2023/2024, prior to the funding reduction in 2024/2025, which can be increased or reduced as necessary when the grant funding for 2025/2026 is confirmed. Further reports will be provided to Executive Committee once confirmation is received, including any required amendments to future year capital programmes. 4.4. The funding for this programme is detailed in Table 1 below: Table 1: Capital Programme Funding £ m Revenue Contribution to 2025/2026 Capital Programme 35.633 Borrowing 25.380 Scottish Government Grant – Additional Council Houses 24.815 Scottish Government Grant – Mortgage to Rent 0.120 Total Capital Programme Funding 85.948 4.5. As per Section 4.3, the Scottish Government grant anticipated in Table 1 above will be impacted by the funding available to the Council for Affordable Housing Supply Programme. The grant and borrowing assumptions are based on an anticipated 181 units and 60 acquisitions that could be completed during 2025/2026 should that level of grant funding be made available. Once grant levels for 2025/2026 have been confirmed, any impact to future capital programmes will be reported to the Executive Committee. 4.6. Borrowing for the £25.380 million noted in Table 1 includes previously approved borrowing of £4.136 million forecast to be carried forward from 2024/2025. The additional £21.244 million of new borrowing for additional housing supply will result in an increase to the annual Loan Charges of circa £1.100 million per annum starting in 2026/2027. These costs are included within the HRA Business Plan. 5. Consultation Arrangements 5.1. The Budget Scrutiny Group (BSG) provides the main vehicle for discussion between the Council and tenant representatives on the housing budgetary process and the financial challenges and opportunities facing Housing Services. Each year, the Council and the BSG work together to develop and co-ordinate the consultation programme on setting council rent levels for the year ahead. 5.2. This year’s consultation programme followed a similar approach to previous years, with the main focus an on-line survey, open to all Council tenants and widely promoted via the South Lanarkshire View, the Housing news digital newsletter and through the Council’s social media channels. In addition, other engagement opportunities were held including, focus group meetings with homelessness service users, engagement with tenants living in sheltered housing developments and contact with tenants via email and text, seeking views and encouraging completion of the survey. A ‘Conversation Café’ event, facilitated by the South Lanarkshire Tenant Development Support Project, was also held in the Town House, Hamilton on 10 5
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December 2024, providing the opportunity for tenants to discuss the rent proposal and investment priorities in more detail. 5.3. During the consultation, the BSG and Tenant Participation Co-ordination Group (TPCG) participated in open discussions with senior Council Officers on key issues and challenges facing the Council, including the ongoing economic uncertainty and impact of the cost-of-living-crisis, increased costs associated with delivering front line services and the Council’s commitment to ensuring rents remain affordable. 5.4. A summary of the feedback received from the TPCG/BSG is provided below:- the range of challenges facing the Council in delivering services was recognised it was recognised that the continuing economic uncertainty presents challenges for the Council in relation to delivering investment and new build programmes the group were supportive of the proposed 6.5% rent increase being applied for the second year and of the Council’s commitment to rents remaining affordable the group welcomed the ongoing range of supports available from the Council to tenants experiencing financial difficulties 5.5. Feedback received from the engagement that took place with tenants and the on-line survey is set out below:- 1,275 surveys were completed during the consultation there was strong agreement from respondents that the proposed investment priorities are the right ones the BSG and those who took part in focus groups and other engagement opportunities were broadly supportive of a 6.5% rent increase for the second year 51% of respondents to the on-line survey supported the rent level to be increased by 6.5%, in line with the commitment made last year to apply a three- year agreement 6. Employee Implications 6.1. There are no employee implications as a result of this report. 7. Financial Implications 7.1. The financial implications are as detailed in the report. 8. Climate Change, Sustainability and Environmental Implications 8.1. The impact which capital investment will have upon climate change and sustainability is appropriately considered through the Resource’s approach to project design, procurement, project management and delivery. Works will be progressed in such a way to support a positive impact on the environment. Appropriate mitigation actions will be put in place where any potential negative impact is identified. 9. Other Implications 9.1. The risks associated with this report are in relation to the Council’s ability to collect rents and charges following the increases. These risks have been assessed and added to the Resource Risk Register. 9.2. Social landlords, such as the Council, are required to submit an Annual Assurance Statement to the Scottish Housing Regulator. This provides assurance that the organisation is compliant with the relevant requirements of Chapter 3 of the 6
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Regulatory Framework, all relevant standards and outcomes in the Scottish Social Housing Charter and all relevant legislative duties. The content of this report will contribute to the evidence to support this Statement. 10. Integrated Impact Assessment and Consultation Requirements 10.1. An Integrated Impact Assessment has been completed for the Housing Revenue and Capital Account Budget 2025/2026 which included assessing potential impact to the proposed rent levels for 2025/2026. 10.2 In addition, an Integrated Impact Assessment has also been completed as part of the development of the South Lanarkshire Strategic Housing Investment Plan 2025-2030. It identified that increasing the provision of additional affordable homes (including those built and funded by the council) will:- have a positive or neutral impact in relation to protected characteristics have a positive socio-economic impact have a positive impact on child poverty have a neutral environmental impact through the increase in number of homes with increased energy efficiency and zero direct emission heating systems 10.3 Details of the consultation arrangements are set out in section 5. Stephen Gibson Executive Director (Housing and Technical Resources) Jackie Taylor Executive Director (Finance and Corporate Resources) 24 December 2024 Link(s) to Council Values/Priorities/Outcomes Good quality, suitable and sustainable places to live Accountable, effective, efficient and transparent Previous References Housing and Technical Resources Committee, 7 February 2024, Housing Revenue and Capital Account Budget 2024/2025 Housing and Technical Resources Committee, 27 November 2024, Strategic Housing Investment Plan 2025-2030. List of Background Papers Revenue Budget Working Papers 2025/2026 Contact for Further Information If you would like to inspect the background papers or want further information, please contact:- Lorraine O’Hagan, Head of Finance (Strategy) Ext: 5637 (Tel: 01698 455637) Email: lorraine.o’hagan@southlanarkshire.gov.uk 7
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Appendix 1 SOUTH LANARKSHIRE COUNCIL HOUSING REVENUE ACCOUNT REVENUE ESTIMATES YEAR 2025/2026 2024/2025 2025/2026 Movement Estimate Estimate £m £m £m £m Expenditure 33.677 Supervision and Management 32.486 (1.191) 47.600 Housing Repairs and Maintenance 48.022 0.422 2.588 Void Rents 2.950 0.362 10.729 Financing Costs Loan Charges 16.620 5.891 33.506 Contribution to Capital Programme 35.633 2.127 0.000 Reserves to C/F 0.000 0.000 128.100 Total Expenditure 135.711 7.611 Income 111.801 House Rents 120.174 8.373 2.802 Other Rents 2.980 0.178 0.067 Interest 0.825 0.758 9.201 Other Income 7.730 (1.471) 4.229 Use of B/F Reserves 4.002 (0.227) 128.100 Total Income 135.711 7.611 8
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Appendix 2 SOUTH LANARKSHIRE COUNCIL HOUSING REVENUE ACCOUNT CAPITAL ESTIMATES YEAR 2025/2026 Area Project Title Budget £m Budget £m Provision of Council Housing SLC Wide Provision of Council Housing 49.915 SLC Wide Mortgage To Rent 0.400 Provision of Council Housing Sub Total 50.315 Refurbishment works Kitchen & Bathrooms SLC Wide Kitchens & Bathrooms 18.218 Kitchen & Bathrooms Sub Total 18.218 Heating Replacements SLC Wide Central Heating Upgrades/ Installations 3.500 Heating Replacements Sub Total 3.500 External Fabric Upgrading Works SLC Wide External Fabric Upgrading - Various Blocks 6.985 External Fabric Upgrading Works Sub Total 6.985 Environmental Works SLC Wide Environmental Improvements 0.400 Environmental Works Sub Total 0.400 Energy Efficiency Works SLC Wide External Wall Insulation 1.000 Energy Efficiency Works Sub Total 1.000 Miscellaneous Projects SLC Wide Legislative Compliance Works 2.640 SLC Wide Window and Door Replacement Programme 2.000 SLC Wide Sheltered Housing Schemes Refurbishment Works 0.400 SLC Wide Services Upgrades 0.240 SLC Wide Area Regeneration 0.050 SLC Wide Council House Adaptations 0.150 SLC Wide Alterations including DDA 0.050 Miscellaneous Projects Sub Total 5.530 Refurbishment Works Sub Total 35.633 Total Capital Programme 2025/2026 85.948 9
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