Minutes:
APPENDIX B
BUDGET SPEECH 2010/11:
HOUSING CAPITAL PROGRAMME AND
HOUSING REVENUE ACCOUNT BUDGET
Lord Provost and Members of Aberdeen City Council, I am delighted to present the Administration’s proposals for the 2010/11 Housing Revenue Account (HRA) and the Housing Capital Programme.
We are proud to state that we have continued to make housing investment a priority for this Administration by achieving and sustaining a sound financial foundation for delivering our housing landlord responsibilities and objectives.
This firm foundation has enabled us to continue to move forward with confidence in developing the Housing Revenue Account and Housing Capital Budget for financial year 20010/11 and the indicative programmes for financial years 2011/12 and 2012/13.
It therefore gives me great pleasure to present the following budget and housing investment programme.
I now propose the following Housing Revenue Account budget
For the last seven years we have maintained our goal to achieve a sustainable financial plan which will deliver the council’s commitment to improve services and improve homes.
We have achieved this by balancing a sustainable rent policy with significant
improvements in service performance and the biggest investment in our housing that we have ever seen. This has enabled us to provide tenants with warm modern homes and has created and sustained employment in the construction and manufacturing industry both in Aberdeen and in the rest of Scotland.
We have worked hard with officers to ensure that we deliver better services and better homes to our tenants and service users. We have achieved a huge amount during the last seven years but we believe more still needs to be done. We therefore aim to get better at what we do, and in the process help to mitigate against the affects which the current economic climate has had on our tenants and citizens.
Despite recent announcements that we are out of a recession, we remain aware and vigilant about the challenges we continue to face both as a social landlord and as a local authority with duties towards tackling homelessness and meeting housing need.
We recognise that tackling Health, Education and Crime remain the big 3 issues for both the City and the nation, in terms of our economic recovery. However, for this Administration, we believe that the fourth fundamental element that affects every aspect of our lives is Housing.
We believe that housing already makes a significant contribution to saving precious cash in the big 3 budgets and is also doing its bit to slow the spiraling national economic deficit in the process – that is why we strongly believe that we need to keep up our high levels of housing investment..
In setting the rent level for the financial year 2010/11 as well as the provisional
levels for 2011/12 and 2012/13 - it is important that we continually review the way we deliver our services to ensure we are as efficient and effective in everything we do. Only by maintaining services and the stock at an appropriate standard will we deliver best value for our tenants.
First of all I shall outline the determination of rent
As part of our commitment to tenant participation, we annually consult with tenants in relation to the setting of rent levels.
A questionnaire was sent to all tenants last October to gain their views of
maintaining the rent policy at inflation plus 1%, which is necessary for the continued programme of investment in our housing stock and for service improvement.
The majority of tenants – 78%, or nearly four-fifths of those who responded - agreed with the rent proposal.
The council is required to determine the average weekly un-rebated rents for
council houses to take effect from Monday 5 April 2009. This will in turn allow
decisions to be taken of the level of housing capital investment.
The Administration therefore proposes to raise rents by 2.3% for 2010/11 and thereafter to set rents in the next two years based on the inflation rate (RPIX) as at November - plus 1%.
This proposal equates to a below inflation rent increase of just £1.40 per week, reflecting a 2.3% increase, taking the average rent to £62.38 per week on a 48 week basis. This assumes rent increase of 1.5% for 2011/12 and 1.3% for 2012/13 based on current projections of the likely level of inflation.
This compares well with other sizeable local authorities. Edinburgh City Council, for instance, set an average rent of £70.94 last year.
In setting a three-year rent strategy, the council must consider the level of capital investment we need in-order to maintain and improve the overall housing conditions available and to sustain a new build housing programme. We also need to ensure that there is sufficient contribution to support the housing capital programme over the long term, which the Housing Business Plan clearly demonstrates.
In order to increase these levels of revenue funding whilst minimising the rental charges we tasked officers during 2009/10, to scrutinise carefully all of our controllable spending (pg 39 of appendix 3 refers) and they have identified a 5% efficiency savings on last years (Management & Admin) budget totaling £711,000.
Furthermore as a result of improved linkages between revenue and capital expenditure, officers are bringing forward over £1.5 M savings on revenue repairs expenditure this year. I have also asked officers to ensure tenants are receiving value for money from our housing modernisation programme and thus ensure we are continually improving.
These savings are part of the continuing drive to ensure we are using rental income effectively, reducing costs and increasing efficiency whilst at the same time improving services. These savings represent considerable sums of money over the life of our 30 year business plan and ensure that rental income from Tenants is used to deliver services that our Tenants want rather than supporting management and operating arrangements.
The full impact of approved savings on the 30 year business plan will be remodelled and presented to members in the May committee cycle in line with plans to review General Fund medium term plans at this time.
It is anticipated that this report will clearly identify the additional funding available to the HRA over the life of the plan and will present options and recommendations on how this funding could be invested effectively to meet our obligations to achieve the SHQS by 2015, sustain and maintain good wider environment standards and add to the declining stock to meet the growing need for affordable housing.
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 report be approved on the basis that I have tasked officers to review and bring back proposals on how we set Heat with Rent charges in future years. Included within the Housing Revenue Account Budget are indicative outlines for 2011/12 and 2012/13.
Based on this, we are proposing that the budget includes a revenue contribution to the housing capital programme for 20010/11 of £12.753 million and an indicative level of £10.4 million for 2011/12 and £8.6 million for 2012/13.
This combined with additional borrowing means that the level of capital investment I recommend will be £63.043 million for 2010/11 and an indicative level of £57 million for 2011/12 and £45 million for 2012/13 including slippage. In addition we would propose that working balances should be maintained at 5% of gross expenditure with minimum balances of £5.135 million for 2010/11.
I will now outline the following developments and service improvements we propose to bring forward in this budget
Overall there has been a steady performance improvement during 2009/10 which has had a positive impact on the services we deliver to our tenants and is reflected in our relatively healthy financial situation. We want to build on these successful outcomes by bringing forward new initiatives and new services to help all our current and future tenants.
In 2010/11 we have proposed to set aside funding to deliver:
· A new modernised housing management service developed around the principle of a mobile working generic Housing Officer whose aim is to make more direct contact with tenants to provide a more proactive customer focused service;
· An improved security service, to all tenants of multi-storey flats and an
Improved communal cleaning service;
· Improved business performance and productivity, better management of rent arrears and improved focus on sustaining tenancies;
· A new web based tenant mutual exchange scheme to make it easier for tenants to find other tenants who wish to swap homes;
· A new financial incentive to encourage tenants who are under-occupying high demand homes to down size to more suitable homes – enabling these homes to be let to families who need large accommodation;
· A new direct debit incentive scheme to encourage more tenants than ever to use this facility, and
· A new furniture service for new council tenant homemakers who are on a low income.
.
I will now move onto our proposed Housing Capital Budget which will help us deliver:
Our first aim is to achieve compliance for all our tenants’ homes with the Scottish Housing Quality Standard by 2015.
Our second aim, which is to make a significant contribution to the supply of new affordable quality homes through the commencement of the first Council Housing New Build programme in the City within a generation.
SHQS Programme
We continue to make steady progress towards SHQS compliance with 45% of our stock now meeting the standard (as at Jan 2010 – interim target by 1 April 2010 is 48%). Our compliance position is slightly above the Scottish average of 36%. During 2010/11 we will see continued major investment in tenants’ homes to make sure that the homes meet tenants’ needs and expectations as well as the requirements of the Scottish Housing Quality Standard (SHQS).
During 2010/11 we will also make provision in the budget for the commencement of a five year programme in providing high efficiency – low carbon emission - gas fired Combined Heat and Power and District Heating schemes to over 20 High Rise Buildings across the City. A number of these buildings are located in the most deprived areas of the city and will provide much welcomed affordable warmth to our customers in a time of ever increasing energy prices.
This is in addition to restarting our normal heating replacement work following the protracted delays caused by the legal challenge to the award of the heating framework tender.
2010/11 will therefore see another step change in the average National Home Energy Rating (NHER) of the council housing stock. The current average is 7.18 (as at 2008/09), which is well above the current SHQS energy efficiency minimum of 5.0.
We will also start to plan work on a major programme of over cladding for up to four High Rise buildings in 2010. This will not only protect the structure of these buildings for many years to come but will also introduce much needed insulation into the walls, thereby driving down energy use and fuel costs to the occupiers.
This is an ambitious capital programme that will see a far greater focus on contractor performance and a drive to secure short and longer term programme and procurement efficiencies. This will provide better Value for Money to the Housing Revenue Account as well as increased satisfaction to the end user, our council house tenants.
With this in mind, a 10% efficiency saving has been built into the proposed Housing Investment Budgets for each of the next three years.
Housing New Build Programme
In 2010/11 we will see the Council commence on the construction of Phase 1 and Phase 2 of the first council housing in a generation. These are to be located at the following sites:
|
Location |
Houses |
Flats |
Total |
|
Phase 1 |
|
|
|
|
Byron Park, Northfield |
16 |
12 |
28 |
|
Hayton Road, Tillydrone |
18 |
12 |
30 |
|
Rorie Hall, Cults |
|
27 |
27 |
|
Phase 2 |
|
|
|
|
Marchburn, Northfield |
19 |
16 |
35 |
85 units are projected to be completed during 2010/11 with a further 35 to be completed in 2011/12.
The Council was successful in obtaining grant assistance from the Scottish Government for the construction of 85 units in Phase 1 amounting to £25,000 per unit. This will reduce our borrowing requirements by a total of £2.125 Million.
The Council has been awarded £0.875 million by the Scottish Government to help build 35 new council homes in phase 2. The money will be used to build 35 new homes in a family-friendly “Homezone” on the site of the former Marchburn School in Northfield, comprising 19 three-bedroom houses and 16 two-bedroom flats. The Homezone concept ensures that residential streets are designed for people, not traffic, to improve the quality of life.
I therefore look forward to a successful outcome for proposals to come forward for Phase 3 to build a further 50 homes.
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 our tenants’ homes, and it will increase the provision of new affordable housing in Aberdeen and I believe in turn will make a significant contribution to saving precious cash in the big 3 budgets of Health, Education and Crime.