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

1. HRA Self-Financing UpdateWhat it means & what we’ve done Housing Briefing 19 January 2012

2. 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?

3. 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

4. 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

5. 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

6. 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

7. 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)

8. 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

9. 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,

10. 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

11. Timetable for transition to Self-Financing

12. Any Questions? • Responses to any questions regarding HRA • Self-Financing and the process of transition