Decision details

The Cabinet had before it a report * from the Deputy Chief Executive (S151) presenting the Housing Rents Report.

The Cabinet Member for Governance, Finance and Risk outlined the contents of the report with particular reference to the following:

• The report related to a historical issue that affected the calculation of social rents within the Council’s Housing Revenue Account (HRA). This error related to the original valuations used in the nationally prescribed formula for setting social rents.
• While annual increases had been correctly applied over the years, the historic valuation figures needed adjustments to bring them in line with the requirements.
• It was clear that, as an administration, the Council had no control over the historical issues.
• However, the Council’s priority was to resolve it swiftly and effectively. The Cabinet Member for Finance, Governance and Risk reassured the Cabinet, and importantly the tenants, that they were secure in relation to their tenancies. The HRA remained financially sound, with sufficient reserves to address this matter responsibly and without jeopardising its long-term viability.
• It was highlighted in the report the steps that had already been taken, including a self-referral to the Regulator for Social Housing (RSH) and engagement with the Department for Work & Pensions (DWP), the Council’s auditors, and the Valuation Office Agency (VOA). To ensure the actions were legally robust, external legal advice had been sought from a King’s Counsel.
• Internally, a dedicated working group had been established to manage the actions required, and internal processes for setting rents had already been strengthened to prevent similar issues in the future. Based on initial calculations, the correction was estimated at approximately £1.8 million, which was within the HRA reserve balance. A strategy to replenish this reserve would be developed as part of the longer-term financial planning.
• The corrective actions prioritised current tenants, followed by former tenants, and refunds would likely be issued in tranches to ensure a controlled and efficient process. The Council were working closely with partner organisations to address any associated impacts on Housing Benefits, Universal Credit, and Council Tax liabilities.

The Cabinet Member for Finance, Governance and Risk wanted to emphasise that the Council’s tenants were absolutely at the forefront of every decision made. Their interests would guide the approach, and the Council were committed to resolving this issue with urgency and transparency. Regular updates on progress would be brought back to Cabinet.

Discussion took place with regards to:

• The feedback from residents was low in some wards.
• The communication about the Housing rents and had it been delivered correctly?
• How many residents had come forward after receiving the communication?
• The legal position and that the Council cannot increase the rent in relation to a live tenancy other than the usual process.
• What methodology would be used when a property became vacant?
• Changes of tenancy if a family chose to pass it on to another family member within the same household and was there provision in place.

RESOLVED that:

1. All of the tasks that had already been progressed in order to correct this situation were NOTED.
2. The future proposed actions and solutions required to fully resolve the housing rents error identified in Table 1 para 2.2 were AGREED.
3. To request a further report be brought back for consideration once the proposed actions had been completed and the Regulator for Social Housing (RSH) had clarified their opinion, in order that any lessons identified could be sufficiently mitigated through the Council’s Risk Register in future.

(Proposed by Cllr J Buczkowski and seconded by Cllr S Clist)

Reason for Decision:

External Kings Counsel’s advice had been secured which had been used to underpin the recommendations made within this report.

Note: * Report previously circulated.