Agenda item

The Panel received a covering report with a number of appendices, that set out the Council’s draft budget and 5 Year Medium Term Financial Strategy (MTFS) 2023/2028 proposals relating to the Panel’s remit. The report was introduced by John O’Keefe, Head of Finance (Capital, Place & Economy) a set out in the agenda pack at pages 17 to 92. Cllr Carlin, Cabinet Member for Housing Services, Private Renters and Planning was present, along with Cllr Gordon, Cabinet Member for Council House Building, Placemaking and Development. A number of officers from the Housing and Placemaking Directorate were also present.

By way on introduction, the Panel was advised that the report contained a summary of the draft budget proposals that were submitted to Cabinet the previous week. The proposals related to the revenue and capital General Fund budget as well as the HRA revenue and capital budgets and the HRA business plan. The report noted that at present there was a £3.1m budget gap and that this was after circa £5m of additional one off funding (reserves) had been utilised. An updated report would be presented to Cabinet In February, which would reflect the updated financial position, having taken in to account the latest government funding settlement and other sources of income, such as grants. The Panel noted that the Council continued to maintain a wide ranging capital programme, however rising interest rates had affected the ability of the Council to self-finance some of these schemes. 

The following arose during the discussion of this item:

a.    The Panel sought clarification about the barriers to moving on from Temporary Accommodation (TA). The Panel also enquired whether this related to people who had been in Temporary Accommodation so long that the Council could not discharge its housing duty to them by placing them in the private rented sector. In response, the Cabinet Member for Housing Services, Private Renters and Planning advised that there was around 500 families who had been in TA for a very long time, some as long as 20 years. Many of these families were settled and had little desire to move elsewhere. The problem was that there was a cost to the Council in making up the 10% difference between the London Housing Allowance Rate and the rate for the Temporary Accommodation, and that this put additional pressure on an already very stretched budget. Saving AHC_SAV_009 related to a piece of work that was being done to work with some of these families to find permanent accommodation that they would be willing to move into. This would save the Council money as the rates for permanent Council owned accommodation were cheaper. The Cabinet Member assured Panel members that this was not about discharging families into the private sector and that for many of the families in question they would not be allowed to do so due to the fact that they had been there before the regulation change came into effect.

b.    Members asked whether, in making them a direct offer, the families in question would be jumping up the priority list. In response, the Cabinet Member advised that these families were already very high up on the allocations list, due to the length of time they had spent in Temporary Accommodation, the issue was that they were not bidding on permanent accommodation.

c.    In response to a questions around what happened when offers were refused, the Cabinet Member advised that the administration needed to develop a proper policy that set out how many offers a person or family was allowed to decline. Ultimately, the Council needed to reduce the temporary accommodation bill as it ran into millions of pounds, which came out of the housing budget. The Director of Placemaking and Housing added that the situation was not helped by the government’s repeated failure to offer local government a longer term grant settlement rather than the yearly grant that it had received for several years. This made medium term financial planning very difficult.

d.    In relation to the £800k saving identified, the Panel sought clarification as to how this figure was arrived at, given it seemed quite ambitious. In response, the Cabinet Member emphasised that this was not a lot of money in the context of the circa £10m the authority spent on Temporary Accommodation each year. The Cabinet Member highlighted serious concerns with the fact the government was expected to reduce the amount of homelessness discretionary grant that the authority received and the impact this would have on the housing budget. Finance officers advised that the saving was based on a modest assumption of 180 families being relocated a year, multiplied by the average spend on TA.

e.    The Panel requested a written breakdown of the £10m spend on Temporary Accommodation and how many families were expected to be moved on as part of the £800k saving. (Action: Kaycee/David Joyce).

f.     The Panel sought assurances about how robust the financial assumptions made about P&H_SAV_001 were, and in particular, whether the £100k increase in planning fee income was achievable. In response, officers advised that Covid had seen a significant increase in applications given that a lot of people were  home-based. This demand had not tailed off as yet. The projection was based on an expected national increase in fees by the government and based on current application levels.

g.    In relation to additional income from the Proceeds of Crime Act (POCA) and a questions about proactive work in this area, officers advised that they worked proactively with fraud colleagues on this to see where additional income could be raised. The Planning Enforcement team had recently been active during a recent Week of Action in Wood Green. The Cabinet Member assured the Panel that she was looking to be very robust on Planning Enforcement.

h.    In relation to A&H_SAV_007, the Panel sought assurances around proposals to use more one bed social housing properties for temporary accommodation and how the Council would prevent overcrowding given the propensity for families to grow over time. In response, the Cabinet Member advised that the authority was re-designing its allocations policy to allow it to map individual need and to fine tune the process of prioritising households who need to move. It was commented that officers were look at undertaking loft extensions and extensions to the rear of properties to increase the size of the housing stock. The Cabinet Member also identified that the Council was looking at an offer to provide accommodation to adult children living with their family in Council accommodation, as well as building more family sized Council homes. The Cabinet Member acknowdged that Haringey has historically had an oversupply of one-bed properties and that there were also problems with overcrowding and associated damp problems as a result.

i.      The Panel raised concerns about placing a family with a young child or children in a one bed property as those children would grow up and it would inevitably be overcrowded. The Cabinet Member advised that the properties being referred to where proper one bedroom units, rather than bed-sits. The Cabinet Member also set out that the Council had a legal duty to provide suitable accommodation and not place people in an overcrowded home, there was also recent case-law to back this up. The reality, it was suggested, was that the Council could not place people in overcrowded accommodation, however it was difficult due to the critical shortage of housing in the borough. The Council needed to secure as much property that it controlled as possible to ensure that people were being housed within the borough and because of the shortage of private rented sector accommodation. The Cabinet Member relayed an example of a family being place in emergency accommodation in a hotel in Ilford due to the shortage of available housing stock in the borough.

j.      Panel Members sought clarification about the circumstances that families would be placed in hotels and whether this was only on an emergency basis and pre-assessment.  In response, the Cabinet Member advised that this related to emergency accommodation. However, due to the shortage of housing stock even the in-borough emergency accommodation was full and some people were being placed out of borough. It was noted that this was a London-wide issue. It was stated that using 1 bed housing stock for temporary accommodation would free up emergency accommodation the borough and that all elements of the housing portfolio were linked. In that sense it was not possible to compartmentalise emergency accommodation from other properties.

k.    The Panel reiterated its point about the fact that, given people were staying in Temporary Accommodation for a long time, families with young children would inevitably grow and that ideally there should be a dedicated bedroom for the child, with the obvious caveat that it depended on the age of the child. The Panel put forward a recommendation that that the suitability of accommodation used for Temporary Accommodation should be reviewed annually on family by family basis. In response the Cabinet Member advised that placing families in Council housing stock with one bedroom, was no different to what would happen when placing people in TA into say the private sector. The Cabinet Member agreed to ask homelessness officers to feedback on whether a review of TA suitability was done annually and that if it wasn’t then this should be the case. (Action: Cllr Carlin/Jill Taylor).

l.      The Panel also sought clarity about whether the proposal related to one child or two babies or even two children. In response, the Cabinet Member clarified that it was not limited to one child families and that it was intended for small households with small children and that it would only be offered if it was considered suitable and it did not meet the statutory definition of overcrowding. The Panel requested a written clarification on the maximum number of adults and the maximum number of children, and the ages of the children, that would be placed in a one bedroom property. (Action: Cllr Carlin/Jill Taylor).

m.  The Panel agreed to a recommendation around conducting an annual review on the suitability of all temporary accommodation for the families that live there. The Panel also agreed to make a recommendation to Cabinet that the suitability of placing families in one bedroom temporary accommodation should be limited to one child. (Action: Philip).

n.    The Panel sought clarification in relation to saving AHC_SAV_008 and a seeming discrepancy in the figures of the 103 people in TA who required one-bedroom properties, the breakdown of the figures only added up to 100. Written clarification requested from officers. (Action: Finance/Adults).

o.    In relation to new capital proposals the Chair noted a discrepancy in the figures for the schemes at Wards Corner, Gourlay Triangle, and Selby Urban Village in Appendix 2 compared to Appendix 5 of the pack. In response, officers advised that this was a profiling issue, as items in the capital programme were presented over a five year period and the higher figures represented anticipated spend in 2028/2029 and beyond.

p.    The Panel sought clarification about school streets and whether this would be impacted by PCN income. In response, officers advised that PCN income came into the Environment & Neighbourhoods revenue budget and was entirely separate from the School Streets capital budget.

q.    In response to a query around Wards Corner, Gourlay Triangle, and Selby Urban Village, officers advised that these schemes contained a number of different developments within the revenue budget and that any houses built on these sites would subsequently be transferred to the HRA, subject to the relevant business case for that scheme. 

r.     The Panel sought clarification about some of the points raised during the deputation in relation to London Affordable Rent (LAR) being withdrawn as a model. In response, the Cabinet Member for Council House Building, Placemaking and Development advised that LAR was only available until March and so it could only be used for houses in the 2016-2023 Programme. Once it was withdrawn the Council would use formula rents or whatever future model might be brought in to replace LAR.

s.    In response to a question about why the Council was using LAR if there was a lower grant level attached to it, the Panel was advised that the homes in questions were always in the initial programme and the Council needed to get the spend for those homes out of the door or the funding would have to be returned to the GLA. It was also crucial to ensure that the GLA continue to invest in future programmes. The Cabinet Member advised that the grant funding for the 2016-2023 programme was £120.2m and £127.5m for the 2021-2026 round of funding. This grant funding was essential to the viability of these schemes.

t.     The Chair queried whether in order to receive this funding, the various schemes needed to start on site by March. The Cabinet Member confirmed that this was the case and there were different categorisations of what starting on site meant, including having received Planning Permission.

u.    Officers agreed to provide a written response to whether any of the 840 homes in question had not yet received Planning Permission. (Action: David Joyce).

v.    The Panel questioned why the rent levels for a bedsit and a one bedroom flat were the same, as suggested in the report. In response, the Cabinet Member advised that the Council was not building any bedsits as part of its housebuilding programme and this was just how the rent rates were broken down in the report. Officers advised that there may be some historical bedsit properties in the borough but not many.

w.   The Panel sought assurances about a proposed reduction in funding available for the bad debt for tenants provision and how sustainable that was given the cost of living crisis. In response the Cabinet Member for Council House Building, Placemaking and Development advised that the London Affordable Rent rates were below the London Housing Allowance rates, so anyone on benefits would be fine. It was estimated that there might be a very small number of tenants who may be subject to the benefit cap and this provision could be utilised to support them. The Cabinet Member for Member for Housing Services, Private Renters and Planning emphasised that the LAR rate was lower than the LHA rate, which itself was sitting at one third of market rates.

x.    The Cabinet Member for Council House Building, Placemaking and Development set out that, given the interest rate spike and the increased construction costs, the Council has looked at all other means of delivering its housing programme and could, for example, increase the number of properties for private sale. The Cabinet Member advised that using London Affordable Rent was seen as the best option as it offered secure tenancies at council rents and those homes were going to people on the housing register.

y.    The Panel sought clarification about the extent to which the administration was planning on undertaking consultation with tenants, given the Council was committed to co-production. In response, the Cabinet Member for Housing Services, Private Renters and Planning set out that the 7% rent increase would be part of the statutory consultation that was carried out as part of the wider budget. The Housing service would be looking at ways to add in additional ways to engage with residents going forwards.

z.    The Cabinet Member for Council House Building, Placemaking and Development set out that LAR was a council rent by any meaningful definition as it involved building homes with a secure council tenancy for those on the housing register. Most other boroughs did not differentiate council rents and LAR was considered a council rent in planning policy terms and was included in the definition of a council rent within the London Plan. Both LAR and formula rents were considered to be low rent housing products.

aa. In response to the assertion by the deputation party that the decision to remove LAR was done on the grounds of affordability, officers commented that they did not believe this to be the case as they were both considered to be low cost affordable rent products in the London Plan. The LAR was being withdrawn as part of the negotiations between the GLA and government about the new iteration of its Affordable Homes Programme and the rent model calculations therein.

bb.The Panel suggested that there need to be clarity about what the administration had taken this change of approach, given the manifesto commitment. In response, the Cabinet Member for Council House Building, Placemaking and Development advised that in an ideal scenario her political preference would have been to continue using formula rents. However, in light of the economic crisis and the increase in costs of construction, the Council had no other option. Charging London Affordable Rent was seen as the least worst option in the circumstances.

cc.  The Chair advised that he would like to make a recommendation around the Council being clear when it talked about rent levels about exactly what it was referring to. The term formula rent should be used when formula rents were meant and similarly London Affordable Rent should be used when that was meant. The Council should also be clear that if a proposal was slightly more vague on what would be model should be used then it should be clear on this. Rather than using  terms like social rents or council rents seemingly interchangeably.  

dd.The Chair also suggested that the gap in affordability to the cap from LAR to formula rent seemed to be slightly larger than was presented in the report. The Chair requested some more clarity and reassurance of the relative affordability of LAR against formula rent, based on the actual formula rather than their relative proximity to the cap. (Action: David Joyce).

ee.The Chair also commented that there seemed to be an implication that everyone in social housing was in receipt of benefits. The Chair requested clarity on the number of people in Council accommodation who were working and not in receipt of benefits. (Action: David Joyce).

ff.    The Panel sought assurances about the borrowing costs involved in the capital programme and how sustainable these were. In response, officers advised that these were higher than they would like them to be and that by February the Council would have finalised the MTFS and should have a HRA business plan that was balanced and generated enough revenue to pay off the debts in the HRA.

gg. In relation to heating service charges, the Cabinet Member advised that there were no plans increase energy costs through service charges in the budget. The four week consultation period was a statutory notice period used for all sorts of changes to housing management and was considered appropriate in that context.

hh.The Panel put forward a recommendation that it be kept informed of which schemes used London Affordable Rent and Formula rent going forwards and that this came back to the panel as a regular update.

ii.    The Panel commented that the above comments and recommendations notwithstanding, they were generally happy with the budget proposals as set out.

RESOLVED

That the Panel considered and provided recommendations to Overview & Scrutiny Committee, on the Council’s 2023/24 Draft Budget and 5 Year Medium Term Financial Strategy 2023/2028 proposals relating to the Panel’s remit.