Item 11 - Appendix 2
West Dunbartonshire Council · 1 May 2024
Back to Housing & Communities Committee — 1 May 2024 and its agenda
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WEST DUNBARTONSHIRE COUNCIL HRA REVENUE BUDGETARY CONTROL 2023/24 ANALYSIS FOR VARIANCES OVER £50,000 MONTH END DATE 31 January 2024 PERIOD 10 Budget Forecast Spend RAG Status £000 £000 £000 % Employee Costs 7,669 7,986 317 4% Main Issues Mitigating Action Anticipated Outcome Budget Forecast Spend RAG Status £000 £000 £000 % Property Costs 2,377 2,608 231 10% Main Issues Mitigating Action Anticipated Outcome Budget Forecast Spend RAG Status £000 £000 £000 % Other Expenditure 534 676 272 51% Main Issues Mitigating Action Anticipated Outcome This budget covers rent abatements, payments to the Womens Aid service, legal expenses and other sundry costs. Variance Narrative The overspend is due to higher rent abatement payments this year due to challenges in Building Services addressing the backlog of voids and repairs alongside complex meter related issues preventing tenants being able to return to their homes. The abatement overspend is partly offset by underspends in legal and banking costs. Work is underway with Housing Operations and Building Service to review existing processes and enhance staff guidance, alongside improved monitoring reports to reduce the abatement spend going forward. Help to move and support workers continuing to support work to resolve meter related issues. A year end overspend. Budget Details Variance Analysis Subjective Analysis forecast Variance Subjective Description Budget Details Variance Analysis Subjective Analysis forecast Variance Subjective Description Subjective Analysis forecast Variance Subjective Description This budget covers electricity, gas, rates, rents, cleaning and insurance costs. Variance Narrative This budget covers all employees charged directly to the HRA including caretakers. Variance Narrative The employee cost overspend reflects the impact of the 2023/24 local government pay award that was greater than the budgeted pay increase. Managers continue to consider ways to keep staffing costs down including considering each vacancy as it arises and the need / urgency to fill. A year end overspend. Budget Details Variance Analysis Property costs overspend mainly due to increased electricity costs advised through the electricity national framework agreement after the budget was set. In addition, insurance costs are forecast to be exceed budget reflecting the high rate of inflation and cost pressures across the insurance market. A year end overspend. Managers are reviewing electricity usage to identify action that can be taken to reduce energy consumption and cost. ITEM 11 - APPENDIX 2
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HRA REVENUE BUDGETARY CONTROL 2023/24 ANALYSIS FOR VARIANCES OVER £50,000 MONTH END DATE 31 January 2024 PERIOD 10 Budget Forecast Spend RAG Status £000 £000 £000 % Repairs & Maintenance 16,257 16,068 (189) -1% Main Issues Mitigating Action Anticipated Outcome Budget Forecast Spend RAG Status £000 £000 £000 % Bad Debt Provision 1,089 959 (130) -12% Main Issues Mitigating Action No mitigating action is required. Anticipated Outcome Variance Narrative A higher volume of repair orders, partly due to the clearance of a COVID related backlog, and inflationary pressures with pay and construction materials has driven up both in-house repairs team ( Building Services) and external contractor costs. These costs pressures have led to overspends on responsive repair and void repair budgets. These overspends have been offset by an underspend against the electrical installation inspection reports ( EICR) budget where some of the planned programme has slipped into the next financial year, an underspend against the WDTRO budget and by additional rechargeable repair income. Tight controls are in place to minimise external contractor spend across repair and void work categories. Building Services continues to implement its improvement programme with its focus on the smart use of technology to improve logistics and support productivity improvement and a continued focus on improved attendance and improved productivity to reduce cost. A year end underspend. Budget Details Variance Analysis The bad debt provision is forecast to less than estimate. This is based on the current year provision being at a similar level to 2022/23. A year end underspend. Subjective Analysis forecast Variance Service Description This budget allows for the provision for bad and doubtful debts to be maintained at an appropriate level Variance Narrative Budget Details Variance Analysis Subjective Analysis forecast Variance Service Description This budget covers all repair and maintenance expenditure to houses and lockups
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HRA REVENUE BUDGETARY CONTROL 2023/24 ANALYSIS FOR VARIANCES OVER £50,000 MONTH END DATE 31 January 2024 PERIOD 10 Budget Forecast Spend RAG Status £000 £000 £000 % Void Loss (Council Tax/Lost Rents) 1,261 1,500 239 19% Main Issues Mitigating Action Anticipated Outcome Budget Forecast Spend RAG Status £000 £000 £000 % Loan Charges 15,476 18,829 3,353 22% Main Issues Mitigating Action Anticipated Outcome Budget Forecast Spend RAG Status £000 £000 £000 % CFCR 1,729 0 (1,729) -100% Main Issues Mitigating Action Anticipated Outcome Budget Details Variance Analysis Subjective Analysis forecast Variance A year end overspend. Budget Details Variance Analysis Subjective Analysis forecast Variance Service Description This budget covers the rents lost on void houses and lockups and the cost of council tax on void properties. Variance Narrative The adverse variance relates to void numbers being higher than expected at time of budget setting. The increased void numbers have an adverse impact on void rent loss and void house council tax payments. Void turnaround times were longer than anticipated as result of the high number of voids at the start of the financial year. We also continue to experience challenges with utility companies resolving debt on meters and meter reconnections which adversely impacts on the length of time properties are void. There is an improving trend with voids, with void numbers reducing considerably during the year. A void working group continues to meet to identify and address issues and senior Housing Operations and Building services staff continue to work well in partnership to improve the speed and throughput of void house repairs. Budget Details Variance Analysis Subjective Analysis forecast Variance Service Description Service Description Loan Charges is made up of the repayments of principal sums and the payment of interest and expenses Variance Narrative The adverse variance is the due to loan interest payments being higher than anticipated at time of budget setting. Local authority borrowing costs have increased considerably over the last 12 - 18 months and this has driven up our debt financing costs. The Council continues to actively manage its external / internal borrowing to ensure that borrowing costs are minimised. A year end overspend. This budget covers the contribution from revenue to capital Variance Narrative The cost pressures across the HRA revenue budget means that there is no scope to make a revenue contribution to capital spend in 2023/24. None available A year end underspend.
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HRA REVENUE BUDGETARY CONTROL 2023/24 ANALYSIS FOR VARIANCES OVER £50,000 MONTH END DATE 31 January 2024 PERIOD 10 Budget Forecast Spend RAG Status £000 £000 £000 % Factoring/Insurance Charges (1,434) (1,494) (60) 4% Main Issues Mitigating Action Anticipated Outcome Budget Forecast Spend RAG Status £000 £000 £000 % Interest on Revenue Balance (30) (146) (116) 387% Main Issues Mitigating Action Anticipated Outcome Budget Forecast Spend RAG Status £000 £000 £000 % Transfer from / to Reserves 0 (2,134) (2,134) 0% Main Issues Mitigating Action Anticipated Outcome Service Description Interest receivable on HRA balances Variance Narrative The favourable variance issue to the recent increase in interest rates. This will result in higher interest earned on cash balances. A year end income over-recovery. Service Description Income received from insurance and factoring Variance Narrative The increased income reflects a 10% increase in fees in 2023/24 in line with the council's sales fees charges increase approved in March 2023. The budget only assumed a 4% increase None required Budget Details Variance Analysis Subjective Analysis forecast Variance A year end income over-recovery. Budget Details Variance Analysis Subjective Analysis forecast Variance Transfer of year end under/overspend to HRA reserves. Variance Narrative The recent sharp increase in local government borrowing costs and the inflationary pressures across budgets mean that it is now necessary to drawdown £2.134m from HRA reserves to deliver a break even position. The current reserve balance is £2.634M. The drawdown will reduce HRA reserves to circa £0.500M at March 24 which is below the 2023/24 prudential target of £0.984M. Management will look to identify and deliver general efficiencies across all areas of the housing budget in the remainder of financial year 23/24 and in financial year 24/25 to allow reserves to be replenished in line with the prudential target. Reduction in HRA reserves at 31 March 2024 Budget Details Variance Analysis Subjective Analysis forecast Variance Service Description