Item 12 - Housing Revenue Account Budgetary Control Report to 30 June 2025 (Period 03)
West Dunbartonshire Council · 27 August 2025
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WEST DUNBARTONSHIRE COUNCIL Report by the Chief Officer – Resources Council – 27 August 2025 ___________________________________________________________________ Subject: Housing Revenue Account Budgetary Control Report to 30 June 2025 (Period 03) 1. Purpose 1.1 The purpose of this report is to advise Council on the 2025/2026 HRA revenue budget position on 30 June 2025 and the forecast position for HRA reserves on 31 March 2026. 2. Recommendations 2.1 Council is to: i. note the HRA revenue account is forecasting a deficit of £0.282m. If required, HRA reserves will be used to fund the adverse variance. ii. note that the forecast deficit would reduce HRA reserves to £0.329m on 31 March 2026. iii. note that forecast HRA revenue reserves are less than the HRA revenue prudential target for 31 March 2026 of £1.160m. iv. note that work will continue to explore opportunities to remove the in-year deficit and to rebuild reserves, including the targeting of efficiencies across all areas of the HRA revenue account budget. 3. Background Revenue 3.1 The Council approved a 2025/2026 HRA revenue budget of £58.105m on the 5th of March 2025. A prudential reserve target of £1.16m was also set (2% of the revenue budget). HRA prudential reserves were £0.611m on 31st March 2025. 4. Main Issues 4.1 This report advises committee of the key issues contributing to the Housing Revenue Account (HRA) forecasting a 2025/26 deficit of £0.282m. The forecast deficit would require a call on HRA reserves and leave forecast HRA reserves of £0.329m on 31 March 2026. Using existing reserves to address the funding deficit adds risk to the wider financial position of the HRA with reduced capacity to absorb any unforeseen future costs until the HRA rebuilds its reserves. ITEM 12
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4.2 There are a range of unfavourable / favourable variance contributing to the forecast deficit and the main variances are detailed below. Adverse Variances > £50,000 Employee Costs - £0.257m Adverse 4.3 The main employee cost pressures relate to employers’ national insurance contribution costs and a higher than budgeted pay settlement for 2025/26. 4.4 The HRA did not budget for the increase in employers’ national insurance costs in 2025/2026. When the decision was made not to provide for additional national insurance costs in the HRA estimates, it assumed that the Scottish Government would provide the council with additional financial grant that would allow the council to compensate the HRA for this cost burden. However, the council did not receive full Scottish Government funding for the additional employer national insurance costs. Employer national insurance costs are forecast to be £170,000 more than estimate. 4.5 The HRA estimates assume a 3% pay award for 2025/26. On the 13th of June 2025, COSLA wrote to trade unions with a two-year pay offer, a 4% increase in 2025/25 and a 3.5% increase in 2026/27. The forecast is based on a 4% pay award with the higher award creating an £80,000 HRA cost pressure. Repair and Maintenance - £0.044m Adverse 4.6 The HRA repair and maintenance budget of £13.081m is forecasting a slight overspend against budget. There continues to a high responsive repair demand service delivery costs forecast to be circa £890,000 more than budget. A range of mitigations are in place to address the cost pressure, including tighter controls on contractor use, the capitalisation of EICR spend that complements the environmental sensor programme, and close working with Greenspace colleagues to deliver a minimum £0.150m saving against environmental budgets by revising work specifications and streamlining processes. Bad Debt Provision - £0.150m Adverse 4.7 The HRA needs to make prudent financial provision for uncollected income across a range of HRA debts, including rent arrears, rechargeable repairs, factoring services, capital works. 4.8 HRA income levels have increased over the past few years because of council house rent increases, the 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). 4.9 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.
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Void Loss / Council Tax - £0.269m Adverse 4.10 Council tax payments for longer term void houses are forecast to reduce by £60,000 in 2025/26 compared to 2024/25 as more longer-term voids are let, however forecast council tax payments for 2025/26 are £150,000 compared to a target of £50,000. As previously advised, the main factor behind HRA properties incurring a council tax liability are delays resolving issues with debt on meters and with meter reconnections with the poor performance of the utility companies adversely impacting on the length of time properties are void and leading to more empty properties incurring a council tax liability. Officers have made progress and continue to work with utility companies to drive sustainable improvement in this challenging area and to minimise the number of longer-term voids and the attendant council tax liability. 4.11 Regarding void losses, there has been considerable progress in reducing void numbers and void rent loss. The void rent loss is forecast to reduce by £150,000 in 2025/26 compared to 2024/25 as void numbers reduce, however forecast void loss for 2025/26 is £850,000 compared to a target of £700,000. Reducing the void loss remains an operational priority area and the Council’s Void Working Group and Building Services Improvement Plan will support further improvement in this key area. Favourable Variance > £50,000 Loan Charges - £0.585m Favourable. 4.12 The favourable variance is attributable to forecast HRA capital debt repayment and HRA interest payments being less than the amount budgeted for within the HRA revenue estimates. The 2025/26 HRA loan charge estimates were based on 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. The lower debt level will attract lower debt servicing costs. 4.13 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. The favourable variance of £585,000 is predicated on reduced local authority borrowing costs during the current financial year. There is a risk that HRA debt interest payments are more than forecast. 5. People Implications 5.1 There are no people implications.
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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: 27 August 2025 ___________________________________________________________________ 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