Agenda item

For the reasons set out in the report, the Scrutiny Homes Sub-Committee is recommended: 

 

1.     to note the Housing Revenue Account P7 outturn position  

2.     to note the Housing Revenue Account Budget 2024-25 

3.     to note the Housing Revenue Account Business Plan key headlines 

4.     to note the Housing General Fund P7 outturn position 

5.     to note the Housing General Fund Budget 2024-25

 

 

The Homes Sub-Committee is also asked to review the information provided on the identified budget proposals and reach a conclusion on the following:

1.     Are the savings deliverable, sustainable and not an unacceptable risk?

2.     Is the impact on service users and the wider community understood?

3.     Have all reasonable alternative options been explored and do no better options exist?

The Sub-Committed considered a report set out on pages 17 to 33 of the agenda, which provided the Housing Revenue Account and Housing General Fund budgets for the years 2024-25.

 

The item was introduced by Cllr Lynne Hale, the Cabinet Member for Housing, and the officers. It was highlighted that the Cabinet would be requested to approve a 7.7% increase to social tenant rent and tenant service charges. Reassurance was given that the proposed increase had been discussed at the Tenant and Leaseholder Panel, and while its members understood the rationale behind the request, they had stressed that they would like to see the improvements as soon as possible.

 

·       Councillor Lynne Hale – Cabinet Member for Housing

·       Susmita Sen – Corporate Director of Housing

·       Sue Hanlon – Director of Assets

·       Orlagh Guarnori – Finance Manager

·       Sarah Attwood – Finance Manager

 

During the introduction, it was noted that: -

·       It was highlighted that the forecasted overspend in the 2023-24 budget had been well managed and was necessary to address the repair backlog.

·       The 2024-25 budget would be informed by the four priorities identified in the survey responses from November 2023.

·       It was highlighted that the budget would be reviewed in July when there would be more information arising from the stock condition survey.

·       The stock condition survey findings would also be used to inform Croydon’s Asset Management Strategy that was due to go to Cabinet this summer.

 

Following the introduction the Sub-Committee proceeded to question the information provided in the report, initially focusing on the Period 7 update. the first question asked for further information on the number of voids existing in Croydon and the number of completions. The officer explained that the Council expected to complete 700 voids during this financial year, and by the end of December, had completed 641. It was also added that the high number of voids was caused by the considerable backlog.

 

The following question asked about the £3.4m overspending on disrepair, legal and settlement costs, and how the Council planned to mitigate these costs in the future. It was explained that this was an overspend against the budgeted figure. It was stressed that the focus going forward would be on prevention, including ensuring repairs were completed correctly which was closely connected with the cultural change workstreams. Regarding compensation and disrepair costs, it was explained that the data was being validated, but there were around 5550 disrepair cases, which had been taken account of in the budget setting process.

 

In response to a question about the timeframe for clearing the backlog of legacy repairs and voids, it was advised that the Council was committed to completing the legacy repairs and voids within 18 months.

 

The Sub-Committee asked a question about the savings included in last year’s budget across the directorate, particularly what the savings targets were and what savings were achieved. It was explained by the officers that the HRA had not had savings targets for the last couple of years, due to the rent increases and general fund savings targets. It was added that the main savings achieved were from the service restructure and vacancy factor within the general fund budget. In addition to that, there were various savings aimed at reducing the number of households in expensive emergency accommodation through occupancy checks and eligibility checks. Progress had been made was this work, and it was anticipated that savings would be delivered by period 12.

 

A supplementary question was asked about the proportion of savings resulting from members of staff not being in post and the proportion achieved as a result of better and more efficient ways of working. The officers explained that the Housing directorate was close to being fully staffed, and many agency workers had been replaced by permanent staff. It was estimated by the officers that around one-third of the savings achieved were due to vacancies, and around two-thirds were due to efficiencies and better methods of working.

 

The Sub-Committee moved onto questions about the HRA budget, with the first question asking whether the officers felt the budget was correct in terms of meeting current need and future pressures arising from recent legislation relating to damp and mould. The officers explained that the next year’s budget was based on the data from this year. It was added that the department would be provided with more damp and mould-related training. This should allow officers to have a more proactive approach towards the early detection of damp and mould.

 

The next question asked what the Council had been doing to prevent disrepair costs, legal fees, and settlements. The officers explained that as the damp and mould team played a considerable role in this area, it had been decided that the team would remain in Croydon on a permanent basis. It was highlighted again the importance of the damp and mould training.

 

Subsequently, the Sub-Committee asked for an update on the private sector housing team moving to the Housing directorate. The officers explained that before that happened, the Housing directorate had needed to fill some vacancies and increase the capacity. However, the team would be managed using a joined-up approach.

 

The Sub-Committee moved on to the budget challenge part of the report. The first question asked about using funds raised through the right to buy scheme to acquire twenty properties. The officers explained that this proposal was at an early stage of development, with other funding options also being explored, including grants. Reassurance was given that the Council would carefully consider how any new housing would meet residents' needs in the best way possible. It was also added that the Council was in a fortunate position as there were many homes, including former Council homes, available on the market. The officers also reassured the Sub-Committee that they could acquire at least 20 homes in the current financial year. The officers also added that there was a Greater London Authority (GLA) funding opportunity which would potentially allow the Council to acquire more properties.

 

The Sub-Committee questioned whether there was a clear link between the Housing Strategy and both General Fund and HRA budgets. The officers explained that there had been a much greater focus on using data to inform decision making, with putting the building blocks in place for this being a priority. This could be evidenced through the stock condition surveys, which would allow the Council to identify where it needed to invest in its stock, resulting in a more accurate budget. It was advised that once the HRA budget had been reprofiled, it would be shared with the Sub-Committee. It was also added by the officers that another driver in the budget development was regulatory changes and requirements. It was highlighted that when the budget had been developed, it had been informed by feedback from residents, and the budget was built according to the identified priorities.  A supplementary question asked about the budget for tackling anti-social behaviour. The officers explained that the Council had increased the budget for estates and caretaking.

 

The next question asked whether the budget was sufficient to support work on tackling domestic violence and abuse. The officers explained that this budget was managed by the Violence Reduction Network through a service-level agreement. It was highlighted by the officers that they wanted to focus on increasing efficiency, and officers stressed that they had confidence in this budget.

 

Concern was raised by the Sub-Committee that many residents were reluctant to contact the housing officers and as a result a question was asked about the possibility of having community safety officers directly serving Council tenants. Officers advised that this was one of the priorities that residents had highlighted. It was explained that there were plans to review officers’ remits to clearly define the role of housing officers in tackling domestic violence and anti-social behaviour. Currently, the community safety team would only work on the most challenging and complex cases. Thus, it was essential to determine where accountability laid and what were the appropriate thresholds.

 

The next question asked when the Council was anticipating the level of housing repair costs would start to reduce. The officers explained that there had been a considerable spike in repair cases following the change to new contractors and bringing the contact centre in-house. Therefore, the budget was built based on the worst-case scenario. However, it would be very hard to determine at the present time when these costs would plateau.

 

Further information was requested on the architectural changes to Regina Road development and the associated costs, including any inflationary increases. The officers acknowledged that accounting for inflation had been challenging. However, the HRA budget had been stress tested with external support provided by Savills. The inflationary allowance for the forthcoming financial year had been increased with the worst-case scenario assumed for the current and the following years. It was highlighted by the officers that the budget for Regina Road had been increased accordingly. It was added by the officers that prudent assumptions had been made about potential funding for the project from the Greater London Authority, as they were awaiting the outcome of the bid. The officers explained that the procurement process for the project was ongoing and until it was completed, it would be challenging to provide an accurate timeline for the regeneration.

 

An explanation was request on the building safety work budgetary increase from £8.6 million in 2024-25 to £42 million in 2025-26. Officers explained that this increase was related to the anticipated completion of the stock survey data. The results of the survey could lead to very costly changes, for example the refurbishment or even complete rebuilding of large panel blocks. Thus, a significant budgetary increase was necessary to allow for that. The allocation was further challenged by the Sub-Committee with it explained that the budget had been based on the number of large panel blocks that had not been refurbished in recent years and the number of properties over a certain age. The officers stressed that these assumptions were high-level ones and could change significantly once the results from the stock condition surveys had been received.

 

Then the Sub-Committee moved on to the General Fund side of the Budget. The first question asked about the Housing Association Coordination role and transferring it to the Housing Directorate. The officers confirmed that the role was being transferred to housing, with discussions in progress. It was highlighted that the Housing Strategy committed the Council to improving its work with housing associations, and officers had already held a first meeting with stakeholders.

 

As a follow-up, it was questioned where the Council was in terms of its work with housing associations and whether a truly collaborative approach could be implemented. The officers highlighted that the Council was in the early stages of developing a project involving several of the Council’s largest social housing suppliers.

 

In response to a question about transformation, it was explained that the transformational items included in the capital budget were still being developed and only high-level information was available at this stage. The officers added that most of the transformation budget was spread over 2023-24 and 2024-25. Hence, the figures were reflected in both years.

 

The Sub-Committee challenged the pace of savings, to which officers explained that delivery was planned over several years. Therefore, there was still an expectation that savings would be realised. It was further explained by the officers that the current focuses were on demand management and supporting residents in temporary accommodation. For instance, there was a focus on working with residents at an earlier stage to try to avoid eviction, hence reducing the need for emergency and temporary accommodation. Although this work was starting to deliver improvement, officers acknowledged that some of the work had not been delivered at the expected pace. For instance, the Council had a target of seeing 90% of residents at high risk of homelessness within seven to 14 days, and at present this was not being achieved with the current waiting time being approximately one to two months.

 

The Council was in the process of acquiring a dynamic purchasing system for emergency and temporary accommodation that would hopefully deliver cost savings, with discussions underway with existing suppliers about moving to this system. It was explained by officers that the dynamic purchasing system provided two main functions: (i) the framework for procurement; and (ii) contract management.

 

It was highlighted by officers that the temporary accommodation transformation was not only about reducing the cost to the Council but also about improving engagement with residents. Hence, the Council had been scheduling surgeries in temporary accommodation where residents were placed. However, at the same time, the officers acknowledged that budgetary challenges arising from wider economic conditions nationally had increased costs considerably. Although it was likely the cost pressures would remain for the foreseeable future, there were some initial signs of improvement in the economy and increased support from the central government following the Autumn Statement. For instance, increasing the local housing allowance to the 30th percentile was anticipated to increase the amount of affordable housing.

 

It was questioned whether there could be any confidence in the achievability of the saving of £653,000 for 2024-25, and whether the pressures would carry on into 2025-26. It was explained by officers that the saving was based on the assumption of reducing around 250 temporary accommodations, with assurance given that this was achievable. It was highlighted that 100 temporary accommodations had already been reduced. It was stressed by the officers that savings were very much aligned with the cultural transformation that needed to happen in the Housing Directorate and developing different ways of working.

 

It was questioned whether occupancy checks were being prioritised, including the possibility of bringing in external resources to complete this work. Officers explained that transformation funding had been allocated to provide for additional resource, with significant progress made leading to 60% of the occupancy checks being completed. It was confirmed that around 70% of the checks had verified the occupancy.

 

Further information was requested on the length of time people spent in temporary accommodation. The officers explained that the average temporary accommodation placement was predominantly driven by the supply and availability of affordable accommodation. The average stay varied from year to year; for example, for one bedroom accommodation, it could be from one year to seven years. It was further explained that the term temporary accommodation refers to statutory legislation and set criteria rather than the length of time. As a follow-up, it was questioned whether there was any guarantee that a person in temporary accommodation would eventually be moved to permanent accommodation. The officers explained that this was not guaranteed, and it was highlighted that the application process and criteria for temporary accommodation was separate to the process for social housing.

 

It was questioned what the occupancy check process included. Officers explained that occupancy checks included not only checking whether the property was occupied by the renters but also the housing conditions and any amendments made to the property. This information was then updated in the Council’s housing system accordingly. The next step was to collect the data about the number of people placed in temporary accommodation where the living conditions were not suitable. This would then inform the development of a plan for how these residents could be moved to more suitable alternative temporary accommodation. The officers explained that it was also a matter of sustainability and moving families out of commercial hotels.

 

A supplementary question asked by the Sub-Committee considered whether the budgeted amount would be sufficient to cover the cost of moving residents out of inappropriate conditions. Reassurance was given by officers that the budget has been based on an assumption of increased demand, which would be reviewed once the more detailed work had been completed.

 

It was questioned whether the Council had any plans to acquire new property to use for temporary accommodation. Officers explained that currently, the government had introduced a cap on the number of properties that could be bought using right-to-buy receipts, which was capped at 20. However, the Council had been looking into other opportunities, for instance, using GLA funding.

 

There was concern raised by the Sub-Committee about the use of hotel placements and particularly the problems residents experienced when the Council did not pay or extend the rental. It was questioned whether the Council could obtain a corporate account allowing to book stays longer than seven days. Officers advised that the Council had been trying to set-up a corporate account with Travelodge who was their largest supplier. Although the Council had initially been refused a corporate account based on the due diligence performed by the supplier, the conversation was ongoing about how the Council could meet the minimum criteria for an account. Officers also advised that they were looking to minimise the use of commercial hotels. There was a dedicated procurement team set up to work with landlords, but it was acknowledged that using purchase cards to pay for the accommodation could be problematic, as it would only allow for paying for short stays. However, the payment process had improved as the number of residents placed in the commercial hotels decreased.

 

As a follow-up, it was questioned why the Council had been refused a corporate account. Officers explained that it was not uncommon for local authorities to be refused a corporate account, but this option would continue to be explored. It was also stressed by the officers that using commercial hotels was not desired and would be minimised.

 

A question was asked about what proportion of the emergency accommodation budget was spent on commercial hotel costs and on different types of emergency accommodation. The officers explained that in the Council’s portfolio, there were longer-term leases and spot purchase accommodations. The Council had agreements with about 50 to 60 local landlords who provided a spot purchase accommodation. It this type of accommodation was not available then the Council usually looked at the commercial housing sector. The officers added that to avoid using the commercial housing accommodation, they had been working on introducing the previously mentioned dynamic purchasing system. This framework provided information on the availability of all agents and landlords that the Council worked with.

 

It was suggested by the Sub-Committee that there may be some residents who could afford private housing, but to do so they would require a guarantor and as such had the Council considered becoming a guarantor. Officers explained that councils tended to be guarantors for care leavers. Therefore, there had been discussions about expanding this role. However, taking on the role of guarantor for a large number of residents would become unaffordable very quickly. The officers explained that they actively continued to work with private landlords on potential options such as paying rent in advance and rent deposits.

 

The Sub-Committee challenged whether the Council acting as guarantor could be used for a specific group of residents, as supporting them to access private sector housing would generate considerable savings for the Council. Officers explained that this option could be considered, but it would be unlikely for the Council to sustain such a scheme.

 

It was asked whether the Council offered top-ups for residents who could almost meet a private landlord’s criteria. The officers explained that the Council offered this kind of support, for instance, when lack of support would result in eviction residents could discuss these types of opportunities with the housing officers. It was acknowledged by officers that the communication around these opportunities required more work.

 

The final question asked whether capital investment could be used to ensure more effective use of properties, for instance, through building an extension. The officers explained that there was a Regeneration Board in the Council. The Board worked within the assigned regeneration budget, and one of its objectives was to maximise the efficiency of available properties. It was explained that this could involve building extensions and loft conversions.

 

At the conclusions of this item, the Chair thanked the officers for all their hard work in developing the budget and their engagement with the questions of the Sub-Committee.

 

Actions

Following the discussion of this item, the Sub-Committee agreed the following actions to follow-up after the meeting.

1. It was agreed that an updated staffing structure for the Housing service to be circulated to the Sub-Committee, as requested at the previous meeting.
2. It was agreed that confirmation of the ‘go live’ date for the dynamic purchasing system for emergency and temporary accommodation would be confirmed to the Sub-Committee once known. 
3. The Sub-Committee requested a written update on the progress made with Sycamore House.
4. The Sub-Committee requested clarification of the number of families placed in commercial hotels and hostel for both emergency and temporary accommodation. 
5. In relation to the service transformation agenda to move towards a more proactive, prevention-based service, further information about how the Housing Service promoted its ‘open-door’ policy for people in housing need, was requested.

 

Conclusions

Following its discussion of this item, the Sub-Committee reached the following conclusions on the information provided: -

1. The Sub-Committee recognised that a lot of different work streams were being managed simultaneously within the Housing service and that it was a credit to the team that noticeable improvement towards stabilising the service and building solid governance processes had been established.
2. The Sub-Committee was concerned that much of the data gathered had still to be analysed and concluded that this represented a key risk to the delivery of the budget, particularly the results from the stock condition surveys which could have a major impact on both the level of repairs needed and the longer-term capital investment required. 
3. However, the Sub-Committee was reasonably reassured that the Housing service had worked as well as it could with the data already available, which had resulted in the budget for repairs and maintenance being rightsized.
4. The Sub-Committee concluded that Housing Revenue Account (HRA) Capital Programme was well thought through based upon the information available at this stage, but the real test would come in the summer once further stock condition data was analysed leading to an updated HRA Business Plan, which the Sub-Committee looked forward to reviewing later in the year.
5. The Sub-Committee was also reassured that many of their concerns raised at the meeting were already known to the Housing service and work was underway to address these.
6. While it remained a work in progress, the Sub-Committee welcomed the savings delivered through transformation of the Homelessness service in 2023-24 and was reassured that these were not solely reliant on staff vacancy savings. However, further evidence was required to demonstrate that this transformation work would result in a transformed service focussed on reducing homelessness through prevention and early intervention.
7. The Sub-Committee noted concern about the potential risks to the General Fund budget associated with the increased demand for the homelessness services and looked forward to reviewing the demand management transformation within the service later in the year.
8. Overall, the Sub-Committee was unable to provide total reassurance on the 2024-25 budget, given the data that would normally be expected to inform the setting of a budget was still being collated and validated. However, it did agree that the Housing Service had a good understanding of the pressures on the service and seemed to have the right priorities in place to drive forward improvement.