Item 18 - Housing Revenue Account Budgetary Control Report to 31 August 2025 (Period 5)
West Dunbartonshire Council · 29 October 2025
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WEST DUNBARTONSHIRE COUNCIL Report by the Chief Officer – Resources Council – 29 October 2025 ___________________________________________________________________ Subject: Housing Revenue Account Budgetary Control Report to 31 August 25 (Period 05) 1. Purpose 1.1 The purpose of this report is to advise Council of the 2025/26 HRA revenue budget position at 31 August 2025 and the forecast position for HRA reserves on 31 March 2026. 2. Recommendations 2.1 Council is asked to: i. note a projected favourable variance (underspend) on the HRA Revenue Account of £1.150m, a significant improvement on the period 3 forecast. ii. note the forecast 31 March 2026 HRA reserve position of £1.761m which is £0.601m above the HRA prudential target of £1.160m. iii. note further opportunities to deliver an increased HRA surplus, including the targeting of efficiencies across all areas of the HRA revenue account budget, will be explored. 3. Background 3.1 The Council approved the 2025/26 Housing Revenue Account (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 This report advises committee of the key issues contributing to the HRA forecasting a 2025/26 surplus of £1.150m, an improvement of £1.431m on the period 3 forecast of a £0.281m deficit. The movement between the period 3 forecast and the current forecast is summarised in Exhibit 1 and the variance between the period 5 forecast and the 2025/26 budget is summarised in Exhibit 2. The improved financial position is primarily due to a reduced loan charge forecast. There are two key drivers for lower debt servicing costs: a forecast reduction in 2025/26 HRA borrowing resulting in lower interest payments a one off HRA credit following early repayment of four long term loans. ITEM 18
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Exhibit 1 – Movement between Forecast at BCR03 and BCR05 Budget Heading Forecast BCR03 £m Forecast BCR05 £m Change £m Key Driver Employee Costs 8.111 8.102 -0.009 Property Costs 1.381 1.386 0.005 Transport Costs 0.177 0.177 - Supplies, Services and Admin 0.409 0.409 - Support Services 2.584 2.586 0.002 Other Expenditure 0.437 0.397 -0.040 Reduced abatement spend Repairs & Maintenance 12.353 12.469 0.116 Increased repair demand Open Space Maintenance 0.772 0.772 - Bad Debt Provision 1.269 1.269 - Void Loss / Council Tax 1.100 1.120 0.020 Slightly higher void loss forecast Loan Charges 28.571 27.332 -1.239 Reduced 2025/26 HRA capital borrowing One off credit from loan repayment HRA Expenditure 57.164 56.001 -1.063 HRA Income -56.883 -57.151 -0.268 Additional house rent income HRA Surplus 0.281 -1.150 -1.431 Exhibit 2 - Forecast BCR05 compared to Budget 25/26 Budget Heading Forecast BCR05 £m Budget 2025/26 £m Variance £m Employee Costs 8.102 7.855 0.347 Property Costs 1.386 1.349 0.037 Transport Costs 0.177 0.154 0.023 Supplies, Services and Admin 0.409 0.418 -0.009 Support Services 2.586 2.584 0.002 Other Expenditure 0.397 0.420 -0.023 Repairs & Maintenance 12.469 12.173 0.296 Open Space Maintenance 0.772 0.908 -0.136 Bad Debt Provision 1.269 1.119 0.150 Void Loss / Council Tax 1.120 0.831 0.289 Loan Charges 27.332 29.055 -1.723 HRA Expenditure 56.101 56.866 -0.765 HRA Income -57.151 -56.901 -0.250 HRA Surplus -1.150 -0.035 -1.115
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4.2 The variances between forecast and budget are detailed below. Employee Costs - £0.347m 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 £170,000 more than estimate. 4.5 The HRA estimates assume 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 2025/25 and a 3.5% increase in 2026/27. The forecast is based on the 4% pay award with the higher award creating an £80,000 HRA cost pressure. Repair and Maintenance - £0.296m Adverse. 4.6 The £12.173m HRA repair and maintenance budget is forecasting a slight overspend against budget. There continues to a high responsive repair demand with delivery costs forecast to be £990,000 over budget. A range of mitigations 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 - £0.136m Favourable. 4.7 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 March Council. Bad Debt Provision - £0.150m Adverse. 4.8 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. 4.9 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).
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4.10 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. 4.11 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. Although there has been an overall reduction in voids being delayed due to meter issues, there still 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. 4.12 There has been considerable progress in reducing void numbers and void rent loss. The void rent loss is forecast to reduce by £125,000 in 2025/26 compared to 2024/25 as void numbers reduce, however forecast void loss for 2025/26 is £876,000 compared to a target of £700,000. 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 - £1.723m Favourable. 4.13 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. The lower opening debt level will attract lower debt servicing costs. 4.14 HRA capital borrowing in 2025/26 is forecast to be £15m less than planned. Approximately £6m of the reduced borrowing was advised to Council at BCR03 and primarily related to revised cashflows across the More Homes programme. Given the significant financial pressures on the HRA and the impact of elevated borrowing costs on HRA revenue budgets, and consequently rent, officers have reviewed the 2025/26 HRA capital programme to identify opportunities to reduce 2025/26 borrowing through more efficient commissioning of capital works and through some reprofiling of programmed spend into future years. The HRA capital BCR report to this same Council meeting provides a full explanation of the planned borrowing reductions. 4.15 There is a further favourable variance because the Council’s Finance Team, in conjunction with our Treasury Advisers (MUFG), identified an opportunity to terminate £33.1m of long-term fixed rate loans in return for a discounted repayment amount. The four loans were due to mature between 2064 and 2078. More information on the one-off financial benefit this has delivered is detailed in the Finance Update presented to this same Council meeting. The benefit to the HRA in 2025/26 is £818,000.
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4.16 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. 4.17 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.
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Laurence Slavin Chief Officer – Resources Date: 29 October 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