Item 17 - Housing Revenue Account Budgetary Control Report to 31 October 2025 (Period 7)
West Dunbartonshire Council · 17 December 2025
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WEST DUNBARTONSHIRE COUNCIL Report by the Chief Officer – Resources Council – 17 December 2025 ___________________________________________________________________ Subject: Housing Revenue Account Budgetary Control Report to 31 October 2025 (Period 07) 1. Purpose 1.1 The purpose of this report is to advise Council of the 2025/26 Housing Revenue Account (HRA) revenue budget position on 31 October 2025 and the forecast position for HRA reserves on 31 March 2026. 2. Recommendations 2.1 Council is asked to: i. note the HRA is forecasting a 2025/26 surplus of £1.087m, a projected favourable variance (underspend) of £1.052m. ii. note the forecast 31 March 2026 HRA reserve position of £1.698m which is £0.538m above the HRA prudential target of £1.160m. 3. Background 3.1 The Council approved the 2025/26 HRA revenue budget on the 5 March 2025 with a prudential reserve target of £1.160m. HRA prudential reserves were £0.611m on 31 March 2025. 4. Main Issues 4.1 The HRA is forecasting a 2025/26 surplus of £1.087m, a reduction of £0.063m on the period 5 forecast of a £1.150m surplus. The movement between the BCR07 and BCR05 is summarised in Exhibit 1. The variance between BCR07 forecast and the 2025/26 budget is summarised in Exhibit 2. The key changes in the cost forecast are: • termination of the block building insurance policy as agreed by Council on 29 October 2025. • increased demand for repairs. • reduction in ad-hoc greenspace works. • reduced debt interest payments following the use of £1.992m of suspense account balances to reduce HRA capital debt. ITEM 17
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Exhibit 1 – Movement between Forecast at BCR07 and BCR05 Budget Heading Forecast BCR07 £m Forecast BCR05 £m Change £m Key Driver Employees 8.102 8.102 - Property 1.582 1.386 0.196 £187k for block building insurance termination payment. Transport 0.177 0.177 - Supplies & Services 0.422 0.409 0.013 Central Support 2.586 2.586 - Other Expenditure 0.384 0.397 -0.013 Repairs & Maintenance 12.545 12.469 0.076 Increased repair demand Greenspace 0.664 0.772 -0.108 Reduced spend on ad-hoc works Bad Debt Provision 1.269 1.269 - Void Loss / Council Tax 1.120 1.120 - Loan Charges 27.228 27.332 -0.104 Reduced debt interest cost HRA Expenditure 56.079 56.001 0.078 HRA Income -57.166 -57.151 -0.015 HRA Surplus -1.087 -1.150 0.063 Exhibit 2 - Forecast BCR05 compared to Budget 25/26 Budget Heading Forecast BCR07 £m Budget 2025/26 £m Variance £m Employees 8.102 7.855 0.247 Property 1.582 1.349 0.233 Transport 0.177 0.154 0.023 Supplies & Services 0.422 0.418 0.004 Central Support 2.586 2.584 0.002 Other Expenditure 0.384 0.420 -0.036 Repairs & Maintenance 12.545 12.173 0.372 Greenspace 0.664 0.908 -0.244 Bad Debt Provision 1.269 1.119 0.150 Void Loss / Council Tax 1.120 0.831 0.289 Loan Charges 27.228 29.055 -1.827 HRA Expenditure 56.079 56.866 -0.787 HRA Income -57.166 -56.901 -0.265 HRA Surplus -1.087 -0.035 -1.052 4.2 The variances between forecast and budget are detailed below. Employee Costs - £0.247m Adverse. 4.3 The main employee cost pressures relate to employers’ national insurance contribution costs and a higher than budgeted 2025/26 pay settlement.
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4.4 The HRA did not budget for the increase in employers’ national insurance costs in 2025/26. When the decision was made not to provide for additional national insurance costs in the HRA estimates, it assumed the Scottish Government would provide sufficient additional funding to enable the Council to compensate the HRA for this cost pressure. However, the increase was not fully funded and therefore national insurance costs are forecast to be £170,000 more than estimate. 4.5 The HRA estimates assumed a 3% pay award for 2025/26. On the 13 June 2025, COSLA wrote to trade unions with a two-year pay offer, a 4% increase in 2025/26 and a 3.5% increase in 2026/27. The forecast reflects the 4% pay award with the higher award creating a £0.080m HRA cost pressure in 2025/26. Property Costs - £0.233m Adverse. 4.6 On 29 October 2025 Council agreed to terminate the ‘Right to Buy’ Block Building Insurance Scheme which provides building insurance cover to owners of former council houses purchased under the terms of the Right to Buy legislation. The termination of the scheme will take effect on 31 March 2026 and the insurance provider has confirmed there will be a cancellation penalty of £166,904 plus Insurance Premium Tax at 12% making a total penalty of £186,933. 4.7 The property insurance spend will overspend by £170,000 against budget this year because of an unplanned increase in the 25/26 premium. This additional cost has been partly offset by underspend against the budgets for electricity, gas, and rates. Repair and Maintenance - £0.372m Adverse. 4.8 The £12.173m HRA repair and maintenance budget is forecasting an overspend against budget. There continues to a high responsive repair demand with delivery costs forecast to be £1.090m over budget. A range of mitigations totalling approximately £0.700m are in place to address the cost pressure including tighter controls on contractor use and the capitalisation of Electrical Installation Condition Report (EICR) spend that complements the environmental sensor programme. Open Space Maintenance - £0.244m Favourable. 4.9 The favourable variance against the open space maintenance budget reflects the close working with between housing and greenspace staff to deliver a saving against environmental budgets relating to revised work specifications and streamlined processes in relation to void and temporary accommodation properties. There is also joint work progressing between Housing and Greenspace to undertake a review of HRA areas maintained across the general open space maintenance programme with the findings due to be reported to December Council.
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Bad Debt Provision - £0.150m Adverse. 4.10 The HRA needs to make prudent financial provision for uncollected income across a range of HRA debts, including rent arrears, rechargeable repairs, factoring services, and capital works. 4.11 HRA income levels have increased over the past few years because of council house rent increases, a more stringent application of the rechargeable repairs policy for repairs caused by tenant neglect / abuse, and the increased amounts invoiced to owners residing within former HRA properties (factoring / common repairs / capital works). 4.12 Performance recovering this debt and outstanding debt levels is kept under constant review. Debt levels have increased alongside the increase in the amount billed to tenants / owners. The forecast adverse variance assumes an increase in the bad debt provision to take account of the increased debt. Void Loss / Council Tax - £0.289m Adverse. 4.13 Council tax payments for longer term void houses are forecast to reduce by £0.060m in 2025/26 compared to 2024/25 as more longer-term voids are let. However forecast council tax payments for 2025/26 are £0.150m compared to a target of £0.050m. Although there has been an overall reduction in voids being delayed due to meter issues, there remains a smaller number of longer- term properties with complex meter issues that are causing delays with the utility companies. Officers will continue to work with utility companies, to find solutions for these complex meter issues. 4.14 There has been considerable progress in reducing void numbers and void rent loss. The void rent loss is forecast to reduce by £0.125m in 2025/26 compared to 2024/25 as void numbers reduce, however forecast void loss for 2025/26 is £0.876m compared to a target of £0.700m. Reducing void loss is an operational priority and the Council’s Void Working Group and Building Services Improvement Plan will support further improvement in this key area. Loan Charges - £1.827m Favourable. 4.15 The 2025/26 HRA loan charge estimates were based on anticipated HRA capital debt of £356m on 31 March 2025. However, lower HRA capital borrowing in 2024/25 across the More Home (new build) capital programme led to HRA debt being £348m on 31 March 2025, £8m less than anticipated. HRA capital borrowing in 2025/26 is forecast to be £15m less than planned. Lower borrowing reduces HRA capital debt and lowers debt servicing costs. 4.16 There are further favourable variances due to one off benefits to the HRA that were reported to Council in October. The early termination of long-term fixed rate loans delivered a benefit to the HRA of £0.818m. This benefit will be used to reduce HRA interest payments. Council also approved the allocation of £1.992m of funds held in a General Fund suspense account to the HRA. These funds will be used to repay HRA capital debt, further reducing HRA capital debt and lowering debt servicing costs.
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4.17 Members will be aware of the significant risk and uncertainty around forecasting local authority borrowing costs. The HRA has paid a much higher interest rate on its outstanding capital debt over the last two years because of the sharp increase in the interest rates payable on new temporary and new Public Work Loans Board (PWLB) borrowing. There is a risk that HRA debt interest payments are more than forecast. Income - £0.250m Favourable. 4.18 The favourable variance against the HRA income budget relates to house rental income exceeding budget. A prudent approach was taken when setting the rental income budget from 2025/26 given the uncertainty over the timing of new build and buy back properties being available for rent. A mid-year review has forecast rental income to exceed budget. 5. People Implications 5.1 There are no people implications. 6. Financial and Procurement Implications 6.1 Other than the financial position noted above, there are no financial implications of the budgetary control report. There are no procurement implications arising from this report. 7. Risk Analysis 7.1 The main financial risks to the ongoing financial position relate to unforeseen cost being identified between now and the end of the financial year. This can affect all service areas. 8. Equalities Impact Assessment (EIA) 8.1 The report is for noting and therefore no Equalities Impact Assessment was completed for this report. 9. Consultation 9.1 All services involved in delivering the HRA revenue budget have been consulted during the compilation of this report. 10. Strategic Assessment 10.1 Proper budgetary control and sound financial practice are cornerstones of good governance and support Council and officers to pursue the five strategic priorities of the Council’s Strategic Plan. This report forms part of the financial governance of the Council. This report is for noting and, therefore, does not directly affect any of the strategic priorities. Laurence Slavin Chief Officer – Resources Date: 17 December 2025 ___________________________________________________________________
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Person to Contact: Jim McCarron - Business Unit Finance Partner Telephone: 07772 322055 e-mail james.mccarron@west-dunbarton.gov.uk Appendices: Appendix 1 - Budgetary Position (Revenue) Appendix 2 - Variance analysis (Revenue) Background Papers: None Wards Affected: All