Agenda item

To receive a report from the Deputy Chief Executive (S151 Officer) on the Housing Rents.

The Committee had before it and NOTED a *report from the Deputy Chief Executive (S151).

The following was highlighted in the report:

·         The report before Members was a replica of the report that was presented to Cabinet as a progress update on what the Council had been doing since identifying the error.

·         The Council were working with third parties such as Churches Housing Action Team, Involve, Citizens’ Advice Bureau etc. as they worked with a lot of the Council’s housing tenants.

·         The Council was keen to ensure that they looked after their tenants throughout the whole process.

·         The correction would take months or potentially longer to sort out.

·         The actions that had been taken to correct the error were listed in the report.

·         Other Housing Associations had made similar errors previously and the Council were talking to them to learn from their experience.

·         The Council in dealing with the correction were liaising with the Benefit Service and specifically with the Department for Work and Pensions (DWP). So far the Council had received a lot of generic advice from the DWP Office but were awaiting technical advice on, for instance, how far back the Council had to go back in the benefits system and how they were expected to collect it. The Council was issuing joint communications with the DWP wherever possible.

·         The operational tracker system owned by the Leadership Team where all actions were monitored and progress was reported. This was additional to the weekly officer and team meetings.

·         Meetings had been taking place with the Regulator for Social Housing.

·         The Council had consulted its external auditors and because the error spanned the period from 2023 to 2024 the Council had entered a provisional figure of £1,500,000 for the six years’ worth of backdated payments. Advice had been received from King’s Counsel that the Council should go back as far as six years for the correction.

·         Weekly meetings were held to update the Cabinet Members for Housing and Finance.

·         It was a large administrative task that was important to get right and was complicated by the need to net down any refunds to take into account any rent write offs, service charges or anything else that may have happened in the past.

·         It was likely that the repayments were structured to be made in tranches based upon complexity and liaising with the DWP.

·         There were some vulnerable tenants who would need assistance with how to deal with what may be a large refund.

Discussion took place with regard to:

·         How did the error continue for six years? The setting of housing rents was quite a complicated process and a manual error had been made in a spreadsheet about a decade ago that had gone unnoticed and just rolled over. All annual updates that had been checked by finance and housing teams had been done correctly but the teams had been updating an incorrect base that had not been picked up. Eighteen months ago new external auditors (Bishop Fleming) were appointed and the Council had a change of Finance staff and a new housing accountant. Both of them had a look at the system and went right back and when the error became apparent flagged up the problem.

·         As soon as the Council became aware of the error they referred themselves to the Regulator for Social Housing (RSH).

·         The Housing Tenants had initially been split into two categories, those that had overpaid their rent and those that had underpaid their rent.

·         Did everyone on the current rate know that if their tenancy changed that they would go onto a new rate?

·         Those that had underpaid their rent would not be charged for the underpayment and they had been told that they would remain on that charge until their tenancy changed.

·         Those that had been overcharged had been told that some money would be due back to them but that it was now a question of how much that was and netting off whether there were adjustments that needed to be made. Those that had been historically overcharged were now on the correct rent to avoid compounding issues.

·         The Council was taking care with how and when they communicated with those residents to make sure that they were not left worrying.

·         The RSH very much welcomed the fact that the Council had taken the proactive step of referring themselves.

·         How were vulnerable tenants being treated and had the Council identified all the tenants that should be treated as vulnerable? The Council had their own record of tenants that they believed were vulnerable. The Council were working closely with their Neighbourhood Officers who knew the estates and their tenants.

·         The Neighbourhood Officers either had formal or anecdotal information around vulnerabilities. In that context, the Council were particularly interested in those with an addiction where a sudden influx of money could be problematic. So it was about identifying those individuals but also comparing the Council’s records with DWP records because they had their own information around vulnerability. In some cases it would be worth the Council suggesting to the tenant that they used the refund for something like making payments for them or offsetting the refund against another bill. The Council was trying to do something constructive that would prevent a large sum of money suddenly becoming something of an attraction.

·         Once the Council had the output figures in terms of who was owed what, a threshold would be set and those vulnerable tenants above the threshold would be engaged with including offering a face to face conversation.

·         How did the sum of money to be refunded affect the Housing Revenue Account (HRA)? A provision of £1,500,000 had been made in the 2023/24 accounts which would significantly reduce the HRA general balance which was effectively their cash reserve, normally set at £2million. The effect would be that the reserve would be reduced to £500,000. Over the next three or four years the Council would budget to replenish those reserves back to £2million. If it became necessary the HRA contained other reserves which could be borrowed from. The financial health of the HRA was still strong.

·         In order to avoid a similar error happening in the future, the officers had now agreed a process where at least three officers were involved in test checking any of the data that went into the calculation of housing rents.

The Chair thanked the staff and Officers for the work that had gone on to correct this error and the work that was still to be done.

Note: *report previously circulated.