The report provided the Committee with information on actual performance against the approved Revenue and Capital budgets for 2020/21, including known variances agreed or identified through budgetary control activity. Members were also updated on other key areas of financial performance that may impact on the Council’s Medium Term Financial Strategy, Medium Term Financial Plan, Housing Revenue Account (HRA) Business Plan or Financial Statements.

The Principal Accountant (HRA) explained that at the end of quarter 2 the HRA was expected to draw some £1.57m from the HRA general reserve at year-end instead of £1.4m as was expected at the time of setting the budget in February.  However, this was a slightly improved position to quarter 1. Members noted that the report was to the end of September and so did not take into account any potential further loss of income, additional expenditure etc that may result from the current lockdown. However, officers would be working closely with Housing to identify any further variances in the coming weeks.

Aside from the Vacancy Management variance which was reported as being £331k in quarter 2, it had previously been noted that the majority of other movements had arisen as a result of the Covid-19 pandemic.  It was also anticipated in the quarter 1 budget monitoring report that rental income would be down around £300k along with a further void loss of £35k due to the Covid-19 pandemic and this forecast had remained unchanged during quarter 2.

The officer highlighted a number of further variances contained in the report. Members were advised that despite the additional draw on the HRA general reserve the Council expected to maintain the £3m minimum working balance on the HRA as at the end of the financial year. 

In addition, the officer explained that the Covid-19 pandemic had a significant affect on all areas of the capital programme during quarter 1 which has continued into quarter 2, both within the capital maintenance and new build programmes.  The effect of the current lockdown on the programme would be closely monitored in the coming weeks.  Whilst contractors remained on site of the new build schemes, work was scaled back and issues regarding power disconnections had had a significant impact.  The programme was being monitored closely to assess the impact on the use of retained right to buy receipts.

The HRA business plan continued to be reviewed on an ongoing basis to reflect the results of the recent stock condition survey and the latest version of the business plan was set out in Appendices 2 and 3 of the report.

Following a question on the net decrease in the General HRA Reserves of £1.5m and the existence of a strategy to show direction of travel, the Committee was advised that some of the HRA General Reserve had been used to support the Capital Programme New Build Scheme and officers were working closely with the Director (Housing & Operations) and the Assistant Director (Housing) on setting a balanced budget in future years. It was noted that the HRA General Reserve had been built up over the last 3 to 4 years for this purpose. The Director (Corporate Services) advised that in 2012 the Council had been obliged to take out a loan to buy back housing stock from the Government on the basis of a long term business plan.  Since this time there had been a period of rent reductions applied to social housing rather than the expected rental growth. In addition, changes to the Right to Buy Scheme had seen a bigger discount applied to the sale of council houses which had seen an increase in units sold which, in turn, had reduced the Council’s rental income. The Director stated that she did not want to borrow to run the day to day housing services of the Council. However, borrowing to bring forward the new build programme could be considered if financial viability was confirmed as this would generate income enabling the Council to repay any associated loan.

Resolved that the report be noted.