Agenda item
Budget Speech 2011/2012 / Housing Capital Programme and HRA Budget
Minutes:
Introduction
Lord Provost and Members of Aberdeen City Council, I am pleased to present the Administration’s proposals for the 2011/12 Housing Revenue Account (HRA) and the Housing Capital Account.
Housing investment and service remains a priority for this administration and sustaining a sound financial basis for delivering our Housing Landlord responsibilities and objectives remains a priority. Efficient Management of our housing assets and other resources allows us to continue with confidence to develop the Housing Revenue Account and Housing Capital budgets for financial years 2011/12 indicative programme for years 2012/13 and 2013/14.
For eight years now we have maintained our goal to achieve a sustainable financial plan and deliver the Council’s commitments to improving Service and quality of our homes. This investment has allowed us to provide our tenants with warm modern homes and has created and sustained employment in the construction and manufacturing industry both in Aberdeen and throughout the country.
We continue to work closely with officers to identify ways of delivering better services, and houses for our tenants. A great deal has been achieved over the last eight years although much more still requires to be done both in terms of financial investment and service improvement. Prudent financial management together with the modernisation of our housing service will remain a key priority for this Administration. Housing plays a key role in providing stability for families and is fundamental to the economic success of this city. As such therefore it is right that we give housing investment within the city significant priority.
In setting the rent level for the financial year 2011/12, as well as the provisional levels for 2012/13 and 2013/14 we have carefully balanced the need for continuing financial investment in the houses as well as ensuring we deliver our services in an efficient and effective way as possible. High quality service delivery as well as warm and well maintained houses will deliver best value for our tenants.
In line with previous years of practice by this Administration, we sought the views of our tenants as to whether maintaining the Rent Policy at inflation plus 1% was still appropriate. The majority of responders agreed with maintaining this policy
This would mean a rent increase of 5.7% for 2011/2012.
This increase would still compare favorably with other local authorities and with the City’s RSL’s.
The Administration is aware that during this economic climate many families would find a rent increase of 5.7% difficult.
We therefore suggest that the Rent Policy of inflation + 1% is not appropriate for this year and propose a inflation only increase of 4.7%
These are difficult times and I ask the Director to find the 1% loss through a reduction in cost base within the management and administration budget. To report to Housing & Environment on the 10th May with detailed proposals on these savings. I also instruct the Director to provide a detailed report to committee on the 10th May on the price deferential on car parking charges between customers.
This Administration is committed to ensuring that our staff will offer every assistance to ensure that where appropriate full housing benefit take-up is both encouraged and achieved.
We are aware that there are a number of our tenants over 50% are not in receipt of Housing Benefit. This was a major factor when deciding on an inflation only increase.
In setting a three year rent strategy the Council must consider the level of capital investment we need in order to continue to improve the overall housing conditions in the city and to sustain the New Build Programme. We also need to ensure that there is sufficient contribution to support the housing capital programme over the long term. Officers are presently developing a new 30 year business plan which will provide key information for the council, to give greater certainty for future investment requirements and provide the basis for investment options to be developed. This new 30 year business plan will provide not only a basis for future investment decisions but will allow the Council to model different options around new build potential and regeneration programs, taking account of Housing Needs Analysis work currently underway. The business plan will be considered by the Housing and Environment committee in the summer.
During 2010/11 the Council delivered 5% efficiency savings on the management and administration budget as part of an ongoing drive by the council to ensure tenants are receiving value for money for the rent that they pay. These savings will continue to give value to our tenants. Also prudent management of vacancies, increasing performance on rent arrears and void houses, together with other efficiencies identified will produce further savings in real terms and value for our tenants.
I am also proposing that the miscellaneous rents and other service charges as outlined on pages 22 to 24 and page 25 of Appendix 1 to the Council be approved. The proposed heating charge increase represents good value for the residents who benefit from our heat with rent scheme. As members will be aware for the general population over the past few years, electricity and gas prices have typically shown a real increase in excess of 30%
The proposal put before you today for the Council’s Heat with Rent propertiesequates to a 16% increase this would still represent good value for money, and helps to relieve fuel poverty.
However, this administration is aware that the proposed 16% increase across the board is not a fair distribution. We therefore propose that we increase our Heat with Rent properties with a phased increase.
We propose the phased increase of 40p per week for bedsits, 50p per week for 1 bedroomed dwellings, 60p per week for 2 bedroomed dwellings and 70p per week for 3 bedroomed dwellings across all the Council’s Heat with Rent properties in 2011/2012.
A similar increase would be required for the next three years to cover costs.
However it should be noted that a review of consumption costs will be required each year as only the electric contract is fixed for four years.
To ensure that the Council can deliver the priorities for it’s housing stock and tenants we are proposing that the budget includes a revenue contribution to the Housing Capital programme for 2011/12 of £13.561 million and indicative levels of £15.234 million for 2012/13 and £13.926 million for 2013/14.
This combined with additional borrowing means that the level of capital investment I recommend will be £56.812 million for 2011/12 and an indicative level of £44.694 million for 2012/13 and £49.295 million for 2013/14. In addition we would propose that working balances should be maintained at 5% of gross expenditure with a minimum balance of £3.77 million for 2011/12.
During the current financial year significant progress has been made in redesigning the Housing Service, to make it fit for the 21st century. The Housing Management Service Modernisation program will continue through the coming year and beyond and will deliver real benefits for tenants, the council, and our staff through:-
- Improved rent arrears performance
- Better management of voids
- An increase in support for tenants to help them sustain their tenancy
- A revised allocations policy, including a more effective selection process
- Increased support for tenants applying with medical issues
- A more rigorous and transparent anti-social behaviour policy
Increased performance in responding to tenant complaints
Whilst not specifically the responsibility of the HRA service, I would like to make a comment about the homeless service being provided by Aberdeen City.
This Administration has made a significant commitment to improving the operations and delivery of our homeless service. Specifically the Council has made the commitment for a significant investment in the quality and number of temporary accommodation available for homeless persons, the level of support and advice which is offered to them, and most significantly a major initiative to support a strategy of prevention of homelessness.
I anticipate that this commitment will be recognised by the Scottish Housing Regulator during their regulatory visit to the Council in November 2010.
I will now move onto our proposed Housing Capital programme.
Our primary concern is to ensure that all of our tenant’s homes meet the Scottish Housing Quality Standard by 2015. I am pleased to be able to say that we have achieved our target of 48% during 2010 and by the end of the next financial year we are confident we will achieve our milestone of 59% of the Council’s housing stock meeting the Scottish Housing Quality Standard. During 2011/12 we will continue to make provision to provide high efficiency low carbon emission gas fired combined heat and power schemes for 7 high rise blocks in the Seaton area. These buildings are located in one of the most deprived areas of the city and will provide much welcomed affordable warmth to our tenants in a time of ever increasing energy prices. This work will be in addition to restarting our normal heating work following protracted delays caused by the legal challenge to the award of the heating framework tender in 2009. We anticipate that nearly 1000 homes will be provided with better heating systems through this programme in the coming financial year. All of the above will therefore see another step change in the average national home energy rating of the Council Housing Stock. The current average is 7.2 which is well above the current SHQS minimum of 5.0.
We intend also to start work on a major programme of over cladding for up to three high rise blocks in 2011. This will not only help to eradicate water penetration in these blocks but will have the added benefit of increasing insulation to the external walls, thereby driving down energy use and fuel costs to the residents. During 2011/12 we intend to improve our SHQS compliance during the year by –
- Modernising the kitchens and / or bathrooms in 2650 homes
- Replacing windows in 250 homes
- Rewiring 1400 homes
- Improving security in up to 1000 homes through the installation of crime check doors.
This is an ambitious and challenging capital programme that will produce great benefits for residents in our housing estates.
Housing New Build Programme
During the next financial year the Council will complete the construction of phase 1 of its new build programme and will continue phases 2 & 3.
The Council was successful in obtaining grant assistance from the Scottish Government for the construction of 66 units for phases 2 & 3 amounting to £1.805 million. The money obtained from Scottish Government grant has enabled us to proceed with the building of 31 new council homes on the site of the former Croft House in Stockethill comprising 11 x 3 bedroom homes and 20 x 2 bed roomed flats.
This development will also use the home zone concept encouraging a more flexible approach to the design of new residential streets.
These new houses will add significantly to the choices for tenants within these areas. To ensure the Council gets the most benefit for these properties I have asked officials to bring forward proposals with regard to whether exceptional allocation policies should be introduced for their first tenant.
The availability of the first new council houses for over 30 years within Aberdeen City should be welcome by everyone within the Council.
Lord Provost and Members, this is a budget, which will continue to raise the standards across the city. It will accelerate our housing service modernisation and our housing investment programme.
It will bring about the improvement of the way we provide the service to our Tenants.
I would also like to take this opportunity to thank all staff whose hard work throughout the year have enabled us to continue to raise the standards across the city for our tenants.
They have worked extremely hard to accelerate our modernisation and improvement programme, and increase the provision of new affordable housing in Aberdeen
I also wish to congratulate a large number of staff who have been involved in receiving national accreditation and winning several awards throughout the year.
· The Aberdeen Sheltered Housing Network was awarded a TPAS (Tenant Participation Advisory Service) Accreditation award for best practice in tenant participation.
· The Building Services team has been short listed as finalists for the award for “Best Service team” in the Association of Public Service Excellence (APSE) awards which are being held on 17th February.
· Four Building Services apprentices have been nominated for 2010/11 APSE Apprentice Awards
· Every two years hundreds of young skilled people, accompanied by their teachers and trainers, gather together from around the world to compete before the public in their various trades – testing themselves against demanding international standards.
· Doug Gibb excelled in the new role of “Apprentice Mentor” and has been responsible for the support scheme for all 61 apprentices being trained through Building Services.
Next month we are taking on a further 9 apprentices, bringing the total to 72
In the summer we intend to take on a further 12 apprentices across a range of trades.
As the abilities of the trainees improve so does the standard of our performance, which in turn raises the service delivery to our customers and improves the standing of the Council.
Most of all they have helped us improve the quality of life of our tenants.