Item 12 - Housing Revenue Account Budgetary Control Report to 31 January 2026 (Period 10)
West Dunbartonshire Council · 25 March 2026
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WEST DUNBARTONSHIRE COUNCIL Report by the Chief Officer – Resources Council – 25 March 2026 ___________________________________________________________________ Subject: Housing Revenue Account Budgetary Control Report to 31 January 2026 (Period 10) 1. Purpose 1.1 The purpose of this report is to advise members of the 2025/26 Housing Revenue Account (HRA) revenue budget position on 31 January 2026 and the forecast position for HRA reserves on 31 March 2026. 2. Recommendations 2.1 Members are asked to: i. note the HRA is forecasting a 2025/26 surplus of £1.079m, a projected favourable variance (underspend) of £1.044m. ii. note the forecast 31 March 2026 HRA reserve position of £1.690m which is £0.530m 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 £1.079m, a reduction of £0.008m on the period 7 forecast surplus of £1.087m. The movement between BCR10 and BCR07 is summarised in Exhibit 1. The variance between BCR10 forecast and the 2025/26 budget is summarised in Exhibit 2. The key changes in the forecast over the last period are: Reduction in forecast employee costs due to tight controls on recruitment Increase in forecast income through the stringent application of the rechargeable repairs policy. A downward revision to forecast rental income following the latest review of income. ITEM 12
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Exhibit 1 – Movement between Forecast at BCR10 and BCR07 Budget Heading Forecast BCR10 £m Forecast BCR07 £m Change £m Key Driver Employees 8.043 8.102 (0.059) Recruitment controls Property 1.523 1.533 (0.010) Transport 0.201 0.177 0.024 Increase in vehicle hire and employee related travel cost Supplies & Services 0.467 0.422 0.045 Increase in tenant participation cost and increase across general supplies and services Central Support 2.586 2.586 - Other Expenditure 0.371 0.384 (0.013) Repairs & Maintenance 12.477 12.545 (0.068) Increased rechargeable repair income Open Space Maintenance 0.664 0.664 - Bad Debt Provision 1.269 1.269 - Void Loss / Council Tax 1.125 1.120 0.005 Loan Charges 27.227 27.228 (0.001) HRA Expenditure 55.953 56.030 (0.077) HRA Income (57.032) (57.117) 0.085 Revision to forecast rental income HRA Surplus (1.079) (1.087) 0.008 Exhibit 2 - Forecast BCR07 compared to Budget 25/26 Budget Heading Forecast BCR10 £m Budget 2025/26 £m Variance £m Employees 8.043 7.855 0.188 Property 1.523 1.264 0.259 Transport 0.201 0.154 0.047 Supplies & Services 0.467 0.418 0.049 Central Support 2.586 2.584 0.002 Other Expenditure 0.371 0.420 (0.049) Repairs & Maintenance 12.477 12.173 0.304 Open Space Maintenance 0.664 0.908 (0.244) Bad Debt Provision 1.269 1.119 0.150 Void Loss / Council Tax 1.125 0.831 0.294 Loan Charges 27.227 29.055 (1.828) HRA Expenditure 55.953 56.781 (0.828) HRA Income (57.032) (56.816) (0.216) HRA Surplus (1.079) (0.035) (1.044)
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4.2 The variances between forecast and budget are detailed below. Employee Costs - £0.188m Adverse. 4.3 The main employee cost pressures relate to employers’ national insurance contribution costs and a higher than budgeted 2025/26 pay settlement. 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 more than estimated. 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 cost pressure in 2025/26. Property Costs - £0.259m 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 2025/26 premium. This additional cost has been partly offset by underspends on electricity, gas, and rates. Repair and Maintenance - £0.304m Adverse. 4.8 The £12.173m HRA repair and maintenance budget is forecasting an overspend against budget. There continues to a high responsive and void repair demand with delivery costs forecast to be £1.142m over budget. A range of mitigations are in place to address the cost pressure including tighter controls on contractor use, the capitalisation of Electrical Installation Condition Report (EICR) spend that complements the environmental sensor programme, and the stringent application of the rechargeable repairs policy. Open Space Maintenance - £0.244m Favourable. 4.9 The favourable variance against the open space maintenance budget reflects the close working 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.
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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 - £0.294m 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 - £1.828m 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 Homes (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 - £0.216m 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: 25 March 2026
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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