Agenda item

Report of the Director of Finance

This report provides an update on Housing Revenue Account (HRA) 2025/26 Budget Setting progress ahead of the January Joint DMC meeting at which DMC representatives will be asked to provide feedback on proposals.

Emma Cardoso (Strategic Finance Lead – Housing) introduced the report which updated residents on the Housing Revenue Account (HRA) 2025/26 budget setting progress which covered the following areas: 2024/25 budget pressures, rents, service charges, savings, heating pool, and the formal consultation in the Joint DMC meeting in January 2025.

The Chair thanked officer for the update and invited questions and comments from residents. The following was discussed:

·       In response to residents, officers agreed to speak to the Director of Housing about whether it was possible to install sensory lighting units onto estates as a savings measure.

ACTION BY: Strategic Finance Lead – Housing

·       A resident queried the £300,000 increase in the leaseholder income budget and requested clarification on what it was paying for, citing concerns about leaseholder dissatisfaction with current service delivery. The officer explained that the increase aimed to align budget estimates with actual costs, rightsizing the budget, correcting previous underestimations and this was part of an annual budgeting process and not about finding new costs. Divided across approximately 30,000 leaseholders, the increase equated to around £30 per leaseholder. Leaseholders were charged based on service costs, regardless of quality, and should contact the Leaseholder Team to address specific concerns about service delivery. Councillors raised that the Leaseholder Forum on 4 November 2024 was a good opportunity to discuss leaseholder concerns.

·       A resident raised concerns about insufficient funding for basic maintenance, noting that only emergency fixes were being prioritised and other works were postponed. Residents attributed a recent fire on an estate to maintenance negligence.

·       A resident asked about the discrepancy between projected and actual costs for the current year and whether this had been accounted for. The officer explained that the report highlighted key pressures, primarily related to repairs driven by high demand, disrepair claims, and inflation in repair costs for 2025/26. Ongoing pressures included rising insurance costs and borrowing expenses, with rates currently at 4.9% compared to under 1% in previous years. The officer said they hoped interest rates would reduce in the coming year to improve the financial position.

·       A resident questioned the sufficiency of the reserve fund, expressing concerns about sustainability if budgets were not managed and the Council faced another major issue. The officer acknowledged the need to curtail spending by £3.5 million and explained that efforts had been made to build reserves to approximately £4 million annually. They reassured residents that overspending had been carefully offset to maintain reserve levels but noted that the current financial model was challenging. It was confirmed that repairs were the primary factor depleting finances.

·       A resident raised concerns about the condition of Council-owned buildings and questioned whether funds were being allocated appropriately. In response, the Cabinet Resident explained that £1 billion would be needed to bring properties up to a good standard, noting the pressures on local authorities, the Decent Homes Standard, and investigations by regulators into Camden’s performance. It was highlighted that Camden’s income from rents totalled £300 million, leaving a £600 million shortfall. When broken down per unit, this equated to £30,000 per unit, whereas Camden only received £9,000 per home, reflecting a decade of underinvestment from the government. The resident said that the lack of funding and rising costs had been a long-standing issue, but responsibility for the situation lay with Camden, as some residents were having to carry out their own repairs. Officers said that discussions with other local authorities across London revealed that tenants and leaseholders were dissatisfied everywhere, not just in Camden. It was emphasised that building safety must remain a priority.

·       A resident raised concerns about the Decent Homes Standard, highlighting that tenants on estates were expecting improvements, and questioned how the required standards could be met by 2025 if there was no funding available. The officer responded that retrofitting was factored into the budget and that the timeline for meeting the standards would need to be confirmed.

·       Residents raised concerns about the low quality of repairs and the need for quality control. A resident suggested that the Council should implement a system where someone inspected the work before payment was made to contractors, which could potentially save money by preventing the need for rework and repeated payments for subpar repairs.

·       Residents expressed concerns about the lack of communication to residents about repairs and stated that officers often failed to follow up with residents and emphasised the need for a tracking system to address this issue.

·       A resident said that the heating contract was up for renewal and expressed concerns about one contractor notorious for not showing up and failing to provide adequate notice was bidding for the tender again. The resident, along with other leaseholders, advocated for the introduction of a penalty clause and compensation for residents who stayed home for appointments that are missed. They suggested that Camden's system of leaving a card when no one was at home should be applied to contractors as well. If Camden declined this proposal, the resident argued, compensation should be provided to residents, and costs should not be passed onto them.

·       A resident said the same issues recurred each year and asked what it would take to introduce more radical recommendations and when these could be expected, suggesting options such as a one-off levy to improve stock or selling off money-losing properties. The Cabinet Member responded that radical changes were already in progress, including the Asset Management Strategy, with more details to be shared in the coming months, followed by the Housing Transformation Programme. Over the past two years, the previous Cabinet Member had worked to improve this situation, alongside Corporate Services, to better capture data and manage larger projects. The intention was to improve the model, though the issue was larger than the Council and involved lobbying the government. Progress on these initiatives had been shared with the DMC.

·       A resident shared an example where they used WhatsApp to report a repair and an engineer arrived to service the boiler. However, the engineer stated that they had not received a photo, despite Camden having the photo on WhatsApp, which was not forwarded to the company. The resident acknowledged that while WhatsApp was a good idea, the system did not currently work effectively.

·       in response to a resident asking if Camden’s pension fund could be moved into the HRA reserve fund, a councillor stated that pension funds needed to be invested to guarantee a percentage increase in the medium/long-term, but the volatility of markets made this uncertain. Therefore, funds were directed into large companies and investments and a considerable amount of work had been done to assess the ethical soundness of these investments. The councillor added that a London conglomerate of pension funds was investing in social housing, with a certain amount of money already allocated for this purpose. However, it was considered that better investment opportunities might exist outside of London. They also mentioned that Chancellor of the Exchequer was proposing that local authorities no longer control their own pensions, suggesting that larger conglomerates could manage them for more lucrative returns.

·       A resident asked if interest was being paid on the reserves. Officers confirmed that interest was paid both on the reserves and on borrowing, with borrowing exceeding the savings. They emphasised the importance of maintaining a reserve for emergencies, such as events like the Chalcots Estate emergency. The officer also noted that the Section 151 officer required sufficient reserves for both emergency situations and future planning.