Housing (HRA) Capital Programme 2006-07 Mid Year Review (5 Months)

Housing (HRA) Capital Programme 2006-07 Mid Year Review (5 Months)

CLACKMANNANSHIRE COUNCIL

Report to Council of 19th October 2006

Subject: Housing (HRA) Capital Programme 2006/07: Mid Year Review, (5 months)

Prepared by: Lawrence Hunter – Service Manager Policy Planning and Performance, Sheelagh Norris – Policy Planning Manager

1. 0 SUMMARY

1.1 This report considers the current year’s Housing (HRA) Capital Programme and its likely outturn up to the year-end. It proposes mid year adjustments to the programme in order to ensure effective delivery.

2.0 RECOMMENDATIONS

2.1 It is recommended that Council: -

2.1.1Note the 2006/07 projected outturns and the reasons for variances from the current approved budgets;

2.1.2Approve the proposed adjustments to the 2006/07 Housing (HRA) Capital Programme, including transfers between budget heads as set out in the paragraphs belowand Appendix 1.

3.0 2006/07 FUNDING PROJECTIONS

3.1 As in previous years the main variable in the current year is the number and value of Right to Buy sales likely to be concluded by the year-end. The updated projection now suggests that there will be 110 sales at an average value of £34,750 (after discount), bringing in total income of £3.825m. This assumption is based largely upon applications already in the pipeline. With an allowance made for withdrawals, the remaining variables are largely within the Council’s control provided the buyers and their legal agents progress matters without undue delay.

3.2The other significant capital receipt issues relate to the sale of land/property assets held on the HRA. At this mid year review point, there is £239k of income from this source; this is made up of £150k attributed to the sale of land to Ochilview Housing Association, and £89k in respect of sale of a mortgage rescue property. This additional income will have the effect of reducing the amount of our borrowing.

4.0 2006/07 MID YEAR & OUTTURN EXPENDITURE PROJECTIONS

4.1 This year’s Capital Programme budget of £9.37m is a significant 30% increase on the previous year’s budget. Despite ongoing resource challenges within both Housing and Property Services significant inroads have been made into the delivery of this enhanced Capital programme.

4.2 Appendix 1 sets out the current approved budgets, expenditure up to the end of August 2006, the projected year-end expenditure by programme head, and the proposed changes to the approved budget.

4.3 As is usual in the first five months of the Capital Programme there has been a relatively low expenditure with a spend to 31 August of £2.3m. This reflects the fact that this period was dominated by preparations for programming tendering works.

Based on information available at the end of August, the best available projection points us to year outturn expenditure of £9.59m. This is made up of £9.37m budget for 2006/07 and £225k of approved budgeted expenditure brought forward from 2005/06. This is slightly changed from the figures in the previous Performance and Audit Report of 21st September 2006 reflecting the moving picture on expenditure.

4.4 This projection is subject to a number of important qualifications and explanations that are set out below.

4.5 General: All the programme elements, which are delivered through works contracts, are subject to a variety of risks including:

  • availability of the resources (including information) needed to set up and manage the contracts;
  • failure of materials and supplies beyond the control of the contractor or the Council;
  • on-site delivery by contractors, particularly those involved on the kitchen replacement programme;
  • adverse effects of inclement weather, especially in winter time;
  • unforeseen works which can delay progress and/or increase costs;
  • estimated costs being exceeded by actual tender costs.

Of all the various techniques used to manage these risks to achieving budgeted expenditure, the ability to switch expenditure to alternative works is key.

As always, both Housing and Property Services have adopted a prudent approach to projecting outturns, taking due account of the type of risks outlined above. However, if unforeseeable adverse events occur during the remainder of this year, the possibility of clawing back any resultant slippage will be very low.

5.0 SHQS ELEMENTS

Tackling Serious Disrepair

5.1Primary Building Elements

5.1.1 Structural Works (Budget £150K)

This category includes elemental and structural works that are identified during the course of the financial year. Expenditure to the end of August is £85K and it is anticipated that this budget will be fully utilised by the end of the financial year

5. 2 Secondary Building Elements

5.2.1 Damp Proof Course (D.P.C.) and Rot Works (Budget £30K)

As above, this category depends on issues being identified during the financial year and is largely reactive depending on the findings of our specialised contractors. It is envisaged that the budget will be on target for the year.

5.2.3 Roofs, Rainwater and External Walls (Budget £450K)

At this stage it is anticipated, weather and access availability permitting, that this budget will be on target.

5.2.3 External Doors (Budget £1.28 million + £225k b/f from 2005/06)

The external door programme continues to be a success and could potentially be completed within this financial year. Innovative procurement methods adopted in the previous year have continued to provide for a more efficient service. To enable us to complete the programme fully within the current financial year we intend to transfer £92k from other budgets on which we project an under spend this financial year.

5.3 ENERGY EFFICIENCY

5.3.1 Provision of modern full central heating for our tenants is an established Council priority. It is also a key component of the SHQS which we require to achieve in all of our properties by 2015.

5.3.2 Full/efficient Central Heating (Budget £1.14 million)

Issues that have impacted on this budget have been:

  • Higher than expected prices on gas and electrical tenders
  • High cost of gas supply to houses
  • Delays with gas networks providing new supplies to no-gas properties

It is envisaged that due to the above factors there may an under spend in this year’s budget of £182k. The service is currently reviewing this aspect of the Capital Programme with a view to presenting a report to Council on the options available. As detailed above, it is intended to transfer part of this underspend to the door programme.

5.3.3 Thermal Efficiency (£600K)

Architects within Property Services are confident that there will be a full budget spend on this area of work.

5.4 MODERN FACILITIES AND SERVICES

5.4.1 Kitchen Renewal and Related Capital Enhancements (£3.45 m)

The kitchen replacement programme has been a success story for the Housing Services in partnership with Property Services. At this point in time four contracts are in place which will deliver 850 new kitchens to our tenants. In order to meet the costs of this we intend to transfer underspends from other budget heads.

5.4.2 Bathroom Programme (£218K)

Tenders received are over budget despite our Architects reviewing the components and achieving some savings. It is now intended to go ahead with the lowest tender, which would result in an overspend of 50K on the original budget. The shortfall will be made up from the under spend in the re-wiring budget. In doing so we will be starting to meet the expressed priorities of both elected members and our tenants.

5.5HEALTHY SAFE AND SECURE

5.5.1 Internal Lead Pipe Work (Budget £0K)

Following on from last year’s findings that all properties were compliant, financial provision was removed from this area of work. However, should properties be identified money will be vired to accommodate the requirements.

5.5.2 Safe Electrical Systems – Rewiring (£450K)

It is expected that this budget will be under spent at the year-end. Recent tenders have been unexpectedly high and these are being analysed to identify the reasons for this. As a result, there will be a delay in commencing work which will result in a reduced spend during the year. Additionally, achieving access to properties is proving increasingly problematic and is adversely affecting our ability to spend in this area. We intend that the underpsend be transferred to cover the cost of works in other areas.

5.5.3Communal Area Environmentals, including Craigview phase 2 (£357k)

At this time, staff within Housing Operations are confident that they will achieve full spend on this budget.

6.0 NON SHQS ELEMENTS

6.1Particular Needs Housing

6.1.1 Conversions and Upgradings (Budget £200K)

Contractors are currently on site at Curlers Court, Dollar and completion of this project is expected by the end of the financial year. This successful project will mark the completion of upgrades to all of our “amenity” properties

6.1.2 Disabled Adaptations and Conversions (Budget £200K)

£125k of this budget has been spent in the first 5 months of this financial year with further committed spend to the full budget amount. We propose to transfer £100k underspend from other budget heads to provide for urgent priority cases which may emerge during the remainder of the year.

Due to the high level of spend within the first five months of the year a separate report at a later date will be put forward by the Service Manager (Housing Strategy).

6.1.3 Area Improvements (Budget £200K)

At this point in time the Housing Operations Team expects to use the whole budget by the end of the financial year.

6.1.4 External lead pipe replacement (Budget £300K)

The project is on track with the three Alloa contracts now completed and work in place to commence the fourth contract in Sauchie.

We expect, as in previous years, that we will receive grant income to fund part of this work. As a result we anticipate an underspend on this budget which will be utilised for the door programme.

We are nearing completion of replacement of work to identify lead pipes. However, we are now experiencing maintenance and repair issues with non-lead water supply pipes. We have capacity to fund this work from the above, non-SHQS, budget and propose the budget be re-titled “Upgrading of water supplies”.

Chapelle Crescent, Tillicoultry is an area where we would propose to carry out work under this re-titled budget.

6.1.5 Demolitions (Budget £100K)

We are anticipating full expenditure on this budget.

6.1.6 Feasibility Work (Budget £50K)

This budget is for feasibility studies as required. At this point in time there appears to be no reason to adjust the budget provision.

6.1.7 Other Costs (Budget £200K)

£40K of this budget is committed to the “Bowmar Master Plan” and the remainder earmarked for identified work in other budget headings. This budget will also cover costs associated with delivery of the Scottish Housing Quality Standard and the Service’s Business Plan. It is proposed to transfer £100k for Disabled Adaptations as the current budget is projected to overspend.

7.0 ILM(£0k)

7.1 Current financial reports identify expenditure of £108K on this zero based budget. However, it is anticipated that this amount will be offset by grants due from the ERDF and the ESF.

8.0 CONCLUSIONS

8.1.1The proposals set out in this report address the issues needed to deliver the 2006/07 Housing Capital Programme in line with established, investment priorities. These priorities are consistent with expressed tenants priorities, elected members’ priorities, the professional advice of staff in Housing and Property Services, and many of the requirements of the SHQS.

9.0 IMPLICATIONS FOR THE COUNCIL

Financial implications:As set out in the report

Staff implications:As being pursued in the Housing Service Restructuring

Strategic aims:

Create strong, active, safe and caring communities / 
Achieve local economic prosperity and stability / 
Make the most of Clackmannanshire's unique built and natural environment / 
Develop a culture of personal achievement where everyone isvalued / 
Improve the health of the people of Clackmannanshire / 
Represent and promote the interests of all of the people of Clackmannanshire / 
Ensure that the people of Clackmannanshire receive the highest quality services for the public pound / 

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DirectorHead of Housing, Property & Benefit Advice

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