Agenda item

The Leader of the Council presented the report.

The report outlined ongoing financial pressure on the HRA maintenance and repairs budgets, which was first highlighted in September 2025. Since then, an additional revenue budget of £2.7m had been put in place by Full Council in November 2025.

The pressures were continuing and being closely monitored. A number of actions had been taken in order to bring the situation back under control, the actions were set out within the report.

The actions have enabled previously projected overspend to be brought back in line with a reduced projected overspend of £91,000, forecast for the revenue repairs and maintenance budgets.

There were some variances across the HRA revenue budgets which were leading to an overall forecast overspend of £162,000, which included reduced investment income as a result of having to draw on the HRA reserves in year.

With regard to the Capital programme, the refurbishment and improvement programme, there were a number of slight variances as priorities for expenditure had been moved around. This has resulted in movements between schemes where works had been reprioritised, which could be seen in Appendix A.

Overall, there was a projected underspend of £1.1m which was being requested as a budget carry forward.

The other significant variance was on the new-build programme where the underspend of £8.5m would be carried over into 2026-27 as works progress on the new schemes for development.

One Member queried how much the Council received on the sale of Lumby’s Terrace, Stamford and how this compared with the cost of the replacement houses proposed in Stamford.

The information on Lumby’s Terrace, Stamford was commercially confidential as the transactions were still going through a process with Solicitors.

It was noted that projections for the HRA based on the current profile was reducing the reserves down to around £8m by 2028, this was an area of concern as without dealing with the financial challenge there would be no finances available to fund the capital programme after that point.

The Leader of the Council highlighted quarterly monitoring reports were brought to the Committee, four times a year. Cabinet was aware of the concern and would report back to the Committee in due course.

One Member thanked the Officers on works that had been undertaken on the much needed investment on the Earlesfield estate, Grantham.

It was hoped that clarity around the allocation on resources would be forthcoming prior to budget setting. The Deputy Chief Executive and S151 Officers main concern was the Capital Programme, it was felt prioritising certain works would be required as the HRA expenditure would not be sustainable in the near future.

It was highlighted that Councils who become part of a reorganised local government structure would still have their own HRA in the short-term following reorganisation.  

One Member felt the HRA was not sustainable and an action plan should be put into place to determine financial prioritisation from Cabinet.

The Leader of the Council confirmed Cabinet would review the situation on a regular basis. They would consider which measures would need to be applied in order to slow down the spending of the HRA. The Council could not cross-subsidise the HRA account from the General Fund, it could only be funded via rents received from tenants and investment income.

The Deputy Chief Executive and S151 Officer highlighted £2.7m had been spent on kitchens this year and £1.7m on bathrooms. It was emphasised that the Council could not afford to spend at these levels and the investment programme would require reprioritisation.

Officers would revisit the stock condition survey in conjunction with what the Council can afford to do in line with priorities and HRA projection.

Members were extremely concerned around the urgency around HRA projection.

The Leader of the Council outlined that heavy spending at a fast pace was due to a previous backlog of maintenance in the housing stock. This was following a breach of social housing regulations.

Members accepted the Council had a form of social responsibility and growing need. It was noted that choices may be the increase of rent utilising the rent convergence or reprofiling maintenance spend.

The Chairman highlighted that Housing Overview and Scrutiny Committee had been discussing the possibility of kitchen and bathroom refurbishments being pushed slightly back in the future.

The Deputy Chief Executive and S151 Officer confirmed the HRA had a 30-year plan.

It was confirmed a meeting would take place with Cabinet and the Cabinet Member for Housing to meet and determine a way forward. This would be considered after year-end.

ACTION: For a Housing Revenue Account (HRA) financial scoping plan to be brought to the Committee in May 2026.

It was clarified that levels of spend were showing no signs of reduction and therefore, this would be addressed via a proposal for future years.

One Member emphasised the positives which had come from the HRA in terms of voids and getting on top of maintenance and the backlog.

The Committee reviewed and noted the forecast 2025/26 outturn position for the HRA Revenue and Capital budgets as at the end of December 2025.