HRAS elf Financing Consultation

							  HRA Self-Financing Update
What it means & what we’ve done

       Housing Briefing 19 January 2012
                     Content
•   What is HRA Self-Financing?
•   Benefits of HRA Self-Financing (CLG)
•   What the council has done about it
•   Asset Management Planning
•   HRA Business Planning
•   Treasury Management
•   Tenant Engagement
•   Future governance arrangements
•   Timetable for transition to Self-Financing
•   Any questions?
       What is HRA Self-Financing?
• Affects Housing Revenue Account, which keeps
  all income & expenditure on landlord affairs
• Introduced through Localism Act 2011
• The end of negative Housing Subsidy (annual
  payment to government of £9m, increasing)
• Take on additional debt of £150m, so increased
  interest payments
• Keep proceeds of future rent increases in
  Norwich
• Additional resources in medium to long term for
  investment in stock
  Benefits of HRA Self-Financing (CLG)
• Tenants will benefit because self-financing provides the opportunity
  for business planning to be guided by local priorities, rather than
  central government rules.
• Tenants will benefit because councils will have more money to spend
  on council houses.
• Tenants will also be able to trace a clear connection between the
  rents charged locally and the service provided.
• Councils will publish annual, transparent information on charges and
  costs.
• Tenants’ rights – such as right to repair, and right to buy - will not
  change
• Tenants’ landlord will not change – self-financing does not change
  the council’s position as a housing provider in any way
• Tenants’ rents – the level of rent tenants pay will continue to be a
  decision for the council, though could be covered by standards set by
  the regulator as directed by the government
           What the council has done
• Responded to CLG consultation welcoming the
  principle of HRA Self-Financing
• Formed a project team to work on planning &
  implementation
• Coordinated 5 workstreams:
   –   Asset Management Planning
   –   HRA Business Planning
   –   Treasury Management
   –   Tenant Engagement
   –   Future governance arrangements
• Submitted data to CLG for calculation of new debt
        Asset Management Planning
  An Asset Management Plan (AMP) is necessary to
  know what our future costs will be for maintenance,
  improvement, and replacement of the housing stock.
  We have:
• Continued work on Stock Condition Survey to identify
  need for works
• Developed options for increased investment in repair
  & improvement of housing stock
• Developed “whole home” approach
• Consulted tenants on preferred option
• Programmed works to match availability of funding
             HRA Business Planning
  A Business Plan looks at all costs (including debt
  repayment, negative subsidy, investment needs, services
  and management) and income (rent and service charges)
  over a 30 year period.
• Identified current & future expenditure and income, and
  impact of internal & external factors which affect them
• Identified impact of ending Subsidy payments and
  increased interest payments on new debt
• Calculated affordability of investment and availability of
  funding
• Identified sensitivities in plan (contract costs, rent income,
  RTB sales, inflation & interest rates)
               Treasury Management
 Treasury Management deals with the borrowing needs, interest
 costs, and repayment of borrowing – including existing loans
 and new borrowing for HRA Self-Financing. We have:
• Identified existing council borrowing and allocated it
  between HRA and General Fund
• Assessed costs and risks of options for new borrowing
  (Public Works Loan Board, private sector loans, issuing
  of bonds)
• Identified preferred borrowing route (PWLB)
• Analysed Business Plan to identify optimum borrowing
  package, balancing costs against flexibility
                  Tenant Engagement
    We have consulted tenants (focus group and Finance &
    Repairs Sub-Groups of CWB) since the last government’s
    proposals were “opt in” and required the council’s consent. We
    have:
•   Explained the relationship between rents, subsidy, and
    investment capacity, and demonstrated the impact of Self-
    Financing through the Business Plan.
•   Consulted tenants on options for investment in housing stock
    to identify their preferences
•   Kept tenants informed on the council’s work on planning and
    implementing HRA Self-Financing
•   Consulted (today) on the key issues – investment in stock &
    rent increase,
        Future governance arrangements
    The government (through the Tenant Standards
    Authority/Homes & Communities Agency) will issue
    directions requiring increased transparency and tenant
    involvement in monitoring and making decisions. We have:
•   Reviewed our involvement structure to take account of
    government directions
•   Looked to build on existing involvement and increase
    stakeholder input and scrutiny
•   Involved tenants and leaseholders in the review through
    focus groups and a constitution group
•   Developed final proposals to go to cabinet in March 2012
 Timetable for transition to Self-Financing
 August 2010     Council supplies details of stock to CLG
September 2010   CLG requests non-binding borrowing plans
 October 2010    Auditor certifies stock data for CLG
 January 2012    CLG announces final payment required
February 2012    Council sets “self-financing” budget and
                 approves Treasury Management Strategy
28 March 2012    Council makes payment to CLG
  1 April 2012   Self-Financing goes live
          Any Questions?




Responses to any questions regarding HRA
Self-Financing and the process of transition