Meeting Details

The Committee considered a report which demonstrated (in the City Council’s capacity as landlord of social housing) compliance and delivery of the Regulator of Social Housing’s Consumer and Rent Standards.

Amy St Ledger, Director of Operations Colchester Borough Homes, attended the meeting and addressed the Committee. She advised the Committee that Colchester Borough Homes (CBH) found itself in a positive position with regard to performance, and areas which were showing in the Management Performance Summary which was before the Committee were heavily scrutinised with clear oversight and monitoring in place. In terms of void re-letting time, CBH remained within its target of 50 days at 41.74 days, which was a combination of both major works and standard voids, with standard voids being re-let after, on average, 25 days.

In terms of homelessness performance, the number of households in bed and breakfast accommodation had reduced to 53 at the end of Q2, with no families in bed and breakfast accommodation for over 6 weeks, which complied with a national target.

During Q2 a 100% response time to complaints had been achieved, however, communication did remain a consistent issue and was a leading cause of complaints. At the end of September, CBH had 7 complaints open with the Housing Ombudsman and none with the Local Government Ombudsman.

Philip Sullivan, Chief Executive, Colchester Borough Homes, attended the meeting and addressed the Committee. It was a regulatory requirement to undertake annual tenant satisfaction surveys, with the questions to be asked and the manner of collection prescribed by the Regulator of Social Housing (RSH). The ratings of all 12 tenant satisfaction measures had improved from the previous year, continuing the trend for year-on-year improvement which was positive for the City Council. Recently approved changes in investment strategy in existing homes would no doubt put downward pressure on tenant satisfaction over the coming years, however, steps would be taken to counter this.

The attention of the Committee was drawn to the update on the action plan which had arisen from the preceding year’s mock inspection, and the assurance provided by the Board of CBH that the plan had been satisfactorily implemented.

Esme Cole, Chair of the Board Colchester Borough Homes, attended the meeting and addressed the Committee. The annual self-assessment against the Housing Ombudsman Complaint Handling Code had been completed, and the Board wished to provide assurance to the City Council that it was compliant with the code.  It was a requirement of the RSH that CBH had an in-depth view of its tenants, and the Board was confident in the steps being taken to improve data held in this regard.

A Committee member was pleased to note the improvements in the homelessness situation, however, sought to understand the reason for a fall in complaints but an increase in maladministration. The Chief Executive, CBH, confirmed that the general theme in findings of maladministration had been communicating in a timely manner. The Housing Ombudsman had prepared a national report on this issue, and 3 separate training sessions had been held for CBH staff specifically to address it. Based on feedback which had been received, it was hoped that findings of maladministration would fall over the coming years and the position was being carefully monitored.

In terms of the percentage of properties which did not meet the Decent Homes standards, the Committee sought to understand whether it was generally a wide range of smaller issues which prevented the standards being met, or single, more significant issues? Had the upcoming changes to the HRA been communicated to tenants in a bid to manage expectations around changes in repair handling, and was CBH aware of tenants being approached to make complaints by specialist firms of solicitors? The Chief Executive, CBH, confirmed that a wide range of issues generally prevented properties from reaching the Decent Homes Standard, including kitchen, bathroom and window replacements. In terms of changes to the HR and the potential impact on tenant satisfaction, tenants had been consulted as part of the recent HRA review, and additional information would be circulated to tenants in respect of the changes to the investment strategy. No win no fee solicitors still provided a challenge in making disrepair claims, and a national consultation was expected which may lead to some government action in this area. CBH would contribute to the consultation when it came out.

A Committee member wished to gain a greater understanding of those households which may be in temporary accommodation, and in particular how many of these had experienced domestic abuse. What was the Council’s policy in respect of making exceptions where an individual had been the victim of domestic abuse and had rightly left the home which they owned to escape this; would they be entitled to council housing? The Director of Operations CBH, confirmed to the Committee that CBH had recently updated its policies in line with accreditation which it was hoping to receive through the Domestic Abuse Housing Alliance which supported victims and survivors of domestic abuse. Each case was treated on an individual basis, and CBH was responsive based on individual circumstances. The Chief Executive, CBH, believed that being a homeowner would disbar a victim of domestic abuse from social housing, however CBH would offer whatever support and guidance it could to assist victims finding accommodation in the private rental sector. The Committee requested that this specific issue was revisited in the future, as some discomfort had been expressed that a homeowner may never have access to social housing.

The Chair of the Board CBH, sought to provide assurance to the Committee, and she had attended a panel recently which had been instigated by Pam Cox, MP to consider accessibility from a legal perspective as well as charitable support. This work was being brought into the actions that CBH took to assist victims of domestic abuse.

Turning to staffing levels, a Committee member was pleased to note the successes of CBH which were detailed in the report, however, sought assurance on the impact which future changes in staffing levels may have on the various key performance indictors (KPIs) which were monitored? The Chief Executive, CBH, confirmed that in reality staff were very busy but were also performing very well. Potential financial pressures on the HRA were acknowledged, however, staffing was at an appropriate level to deliver services.

Noting with pleasure the success of the Beyond the Box scheme, a Committee member wondered whether there was an opportunity to acquire vacant student accommodation in the area given the planned reduction in student numbers at the University. Purchasing such accommodation through the HRA at a fraction of the cost of building new housing  would relieve pressure on the General Fund which was required to meet the cost of temporary accommodation which was rented. The Chief Executive, CBH confirmed that the reality was that temporary accommodation was needed, with the main reason for this the fact that there were not enough permanent homes for people to move into. More social housing was needed, and the Council’s strategy was to build and acquire more social housing to move tenants out of temporary accommodation, while making use of the private sector when needed as demand for housing changed. Unfortunately student housing was not suitable for permanent social housing. The new HRA Business Plan made provision for building and acquiring social housing and this was actively pursued to provide good long term permanent accommodation while reducing reliance on temporary accommodation. As demand for social housing changed over time, it was important not to over-commit to very long-term arrangements in relation to temporary accommodation.

In relation to the development of Council assets on sites such as Military Road and garage sites, and as part of the Heart of Greenstead project, was it possible to receive a detailed update on the progress of this work and the building which was taking place? the Chief Executive CBH was happy to bring such an update to the Committee in the future, provided that it was distinct from the regular landlord performance reviews.

Following questioning from the Committee, the Chair of the Board CBH clarified that seeking to obtain a more detailed understanding of tenant customer diversity would ensure that CBH was aware of tenant vulnerabilities and be in a position to provide the right service for everybody.

RESOLVED that:

• The 2025/26 Q2 performance updates contained in the report and Appendix 1 and Appendix 2 be noted, and that;
• The Q2 complaints update, service improvement examples and Ombudsman cases detailed at Appendix 3 be noted, and that;
• The assurance provided by the Colchester Borough Homes Board that the mock inspection action plan had been satisfactorily implemented be accepted, and that;
• The Tenant Satisfaction Survey results, tenant scrutiny update and additional regulatory assurance being provided by Colchester Borough Home’s Board for Q2 be noted.

The Committee considered a report which invited it to consider and note the Draft External Auditor’s Annual Report, provided by the Council’s external auditors, KPMG, which provided a summary of findings and key issues which had arisen from the 2024/25 external audit.

Emma Larcombe, Partner, KPMG, attended the meeting to present the report and assist the Committee with its enquiries. The report before the Committee was the draft Auditors Annual Report which contained a summary of the status of the audit to date, and which focused on the ‘value for money’ (VFM) conclusions. The report contained details of the areas which were considered in respect of VFM, and it was important that the Committee noted that the report dealt with the 2024/2025 financial year, and not the current financial year. Key findings were not significantly different from those at the 2023/2024 year end, which was not unexpected. This did not, however, detract from the significant amount of work which had been carried out by the Council’s finance team during the year, which should be reflected in the 2025/2026 VFM report. Key areas of findings were detailed in the report, including risk management, fraud risk management, governance in relation to financial reporting, oversight of Council assets such as the Northern Gateway project, and the capacity and capability of the Council’s finance team. Improvements had been seen in these areas, and these improvements were expected to continue in the future.

Anna D’Alessandro, Interim S151 Officer, attended the meeting and addressed the Committee to offer assurance that although there were a number of interim staff on the Council’s finance team, the Council’s Senior Leadership Board (SLB) had approved recruiting staff on a permanent basis, including senior roles, and this process was now under way. In response to questioning from the Committee in relation to the potential difficulties of recruiting staff in light of imminent local government reorganisation (LGR), the Interim S151 Officer considered that the move to a unitary authority would present opportunities for staff development, and the Council’s ambition and continuing development was attractive to potential employees.

Richard Block, Chief Operating Officer, attended the meeting and reminded the Committee that the Council’s internal auditors had been commissioned to carry out a detailed review of the Northern Gateway development, and that the scope and brief for this review had been shared with KPMG to support the external audit. The review had commenced, and Members and Officers who had been involved in previous decision making would be spoken to, prior to a final report being presented to the Committee. No timeline was available for the conclusion of the review which spanned a significant period of time and multiple Council administrations and Officers.

In discussion, the Committee questioned the valuation of the Northern Gateway development which had been £0. The Chief Operating Officer confirmed that this valuation would not be the subject of the internal audit review, as it was related to finance and not governance. Hussein Alanezi, Interim Chief Accountant, attended the meeting remotely and advised the Committee that the valuation had been challenged by the finance team, however, the publication deadline had meant that the accounts had been published with the valuation which the team had. The opinion of KPMG had been sought with regard to the valuation, and a second valuation was currently being prepared.

The Committee was pleased to note the improvements which had been made, and expressed its confidence in the finance team and the hard work which had been undertaken. The Chief Operating Officer assured the Committee that although significant work had already been undertaken, more improvements were planned to develop even great confidence and assurance from the Council’s external auditors.

RESOLVED that: the draft External Auditor’s Annual Report be noted.

The Committee considered a report which set out the financial performance of General Fund Revenue and Capital, and the Housing Revenue Account (HRA) as at Q2 (30 September) 2025/26.

Caroline Parker, Senior Finance Business Partner, attended the meeting remotely to present the report and assist the Committee with its enquires. The Committee heard that at Q1 there was a forecast gross service overspend on General Fund revenue of approximately £6.8m, however, after application of reserves the forecast Council overspend for the financial year was £2.4m. The Committee was advised that since the publication of the report, the Council’s capital programme had undergone a major refresh, and the data in the report therefore represented a point in time, but was no longer current. Further details on the new capital programme would be provided to the Committee as part of Q3 budget monitoring reporting.

The Committee considered the significant forecast overspend of £6.8m, and although this was not unexpected and would be offset through the use of reserves, this was still worrying. A Committee member noted the overspend on temporary accommodation, and that this figure had been greater than had been budgeted for in previous years, how confident were Officers that this figure would be correctly estimated in the 20236/2027 budget? With regard to the Turnstone development, it appeared that at the current rate of spend, the allocated reserve would be depleted leading to a deficit, how would this be accounted for? It was disappointing to see reduced income in sport and leisure as this had been an area of focus for the Council over the preceding years, what actions could be taken to address this position? Given that the anticipated shortfalls, had the Council been realistic in what savings could be delivered by Heads of Service?

Anna D’Alessandro, Interim S151 Officer, attended the meeting and confirmed to the Committee that in terms of budgeting for anticipated required spend on temporary accommodation, the finance team could only rely on the information the relevant service provided. This area had been very carefully considered as part of the current budget setting process and work was underway to contain these costs. With regard to Turnstone, the position was reviewed every month, and it was necessary to mitigate this, and other, financial risks as fully as possible with a limited amount of money. Money would be allocated in the budget in respect of the Colchester Northern Gateway development, and modelling indicated that its finances would turn around in a couple of years’ time. Allowance had also been made for an ongoing 10% contingency reserve to cover voids in the development.

In terms of income budgeting, the Interim S151 Officer, assured the Committee that a huge amount of work had been carried out in respect of fees and charges. Although interim finance staff was an area of overspend, steps were being taken to correct this for future budgets.

Richard Block, Chief Operating Officer, attended the meeting and advised the Committee that a very detailed improvement plan had been put together in respect of sports and leisure, and the budget would contain some proposed capital investment into Leisure World. With regard to homelessness, demand for housing outstripped Council budgets across the country where demand for services was high. The Interim S151 Officer confirmed to the Committee that significant capital receipts were projected to be received in month 7, which it would see in Q3 reporting, and anticipated capital receipts would have a significant positive impact on the Council’s borrowing costs.

The Committee recognised the position with the Turnstone development, and considered that there was now a far greater understanding of the financial position, which appeared likely to improve in the future. Capital investment in the Council’s sport and leisure sector was supported if this improved services which were on offer, and the unpredictability of the demands for temporary accommodation was accepted.

The Committee discussed the projected £6.8m budget shortfall and the potential difficulties of producing a balanced budget in the future. The Interim S151 Officer acknowledged that there would likely be a gap at year end which would need to be met from General Fund reserves, however, she was certain that this would not be as high as £2.4m. Structural deficits in Corporate Landlord, Turnstone and the finance team would be addressed for the forthcoming year as part of the budget setting process to the extent that this was possible.

Considering the Housing Revenue Account (HRA) capital expenditure which was detailed in the report, the Committee sought to understand the overspend of £1.2m in relation to council house new build. It was important for the Committee to understand whether schemes such as those at Military Road, the Heart of Greenstead and garage developments were delivering houses at a cheaper rate than could be acquired from the market, including the opportunity cost of the land which was used.

The Committee offered its reassurance to the Interim S151 Officer that although significant costs had been associated with the interim finance team, it was aware that these had been essential to address long standing issues. Councillor Cory, Portfolio Holder for Resources, attended the meeting and, with the permission of the Chair, addressed the Committee. He echoed the support of the Committee, praising the work of both the finance and corporate landlord teams, and providing assurance that although the Council was facing a budget deficit it now had a far greater understanding of its financial commitments, pressures as well as its assets.

RESOLVED that: The revenue, capital and Housing Revenue Account forecasts as at Q2 2025/26 be noted.

The Committee considered a report which asked that it note the Treasury Management Mid-Year review 2025/26.

Anna D’Alessandro, Interim S151 Officer, attended the meeting and advised the Committee that the report before it sought to provide greater information than had bene provided in the past, including an indication of when it was likely that the Council would need to borrow. Officers would meet with the Council’s treasury advisors more frequently and would take a longer-term view of the cash flows.

In response to questioning from the Committee in relation to the interest rates which were contained in the report, Zoey Latham, Finance Assistant, attended the meeting and advised that the published table had been provided by the Council’s treasury management advisors, MUFG and the rate was gilt plus 0.8%. The Interim S151 Officer confirmed that the £43m which had been borrowed at the very start of her tenure had been required Housing Revenue Account (HRA) financing.

In discussion, a member of the Committee considered that in the future it would be helpful to be presented with information which allowed the Committee to determine what the Council’s borrowing would be, and whether it could be afforded. The Interim S151 Officer confirmed that work to provide this information in the future was underway, and the Committee see the effects of the Council’s revised capital programme in Q3 reporting.

RESOLVED that:

• The Treasury Management Mid-Year review 2025/26 (Appendix A) be noted, and that;
• The increase in external borrowing requirement of £35m for the General Fund, to be taken in tranches throughout Q4 of the 2025/26 financial year be noted, and that;
• The re-financing of an existing PWLB loan for the HRA of £43m in February 2026 and the re-financing of a £1.5m long-term loan at its call date of 26 January 2026 be noted.

The Committee considered a report which provided answers to questions which had been raised by a member of the Committee in relation to the Housing Revenue Account (HRA) Business Plan (the Plan).

The Chair of the Committee explained that this item was being considered by the Committee out of the published agenda order, due to Officer availability.

A Committee member had heard that the Council’s auditors had yet to determine whether the accounts were correct, and during a presentation on the HRA Business Plan earlier in the year, it had become apparent that the cost of major repairs had not been accounted for. This was a significant cost, which he considered made the Plan unaffordable and would lead to HRA debt increasing to £465m. He had written to Savills, who were the Council’s consultants in this matter, expressing his concerns, but had yet to receive a response. He believed that Savills were advising the Council that it could afford something which it simply could not, and the most practical solution to the issue was to review the capital programme down to a sensible scale.

Richard Block, Chief Operating Officer, clarified to the Committee that the letter which had been sent to Savills had not been sent on behalf of the authority, and did not express the views of the authority.

Julia Hovells, Associate Director, Savills, attended the meeting remotely and advised the Committee that from the point of view of affordability, the proposed level of borrowing through the Plan was not without risk, in common with all borrowing. The level of borrowing was high, and it was therefore proposed that a quarterly review be carried out of the financial performance income and expenditure, with a twice-yearly review of the Business Plan to keep it under check. In the early years of the Plan in particular, the borrowing taken out needed to be carefully managed. The Committee heard that HRA accounting was very different to other private and public sector accounting, and the Plan as presented had a fully funded capital programme and a balanced revenue position where a minimum reserve could be maintained throughout the life of the Plan. The position was demonstrably affordable but not without risk. Borrowing needed to be managed through the Plan, but revenue resources had been deemed to be sufficient to maintain this level of borrowing.

In response to a question from the Committee about the treatment of the depreciation of, for example, a new bathroom, the Associate Director, Savills, confirmed that under HRA accounting rules, depreciation was calculated annually and based on the valuation of housing stock and the remaining useful life of those assets. The depreciation was then transferred from the revenue account so that it became a cost in the revenue account, which was a transfer of depreciation into the Major Repairs Reserve until it was used to fund expenditure in the Capital Programme. Revenue and capital were budgeted for separately with areas which transferred legitimately between the two. There were different methodologies which could be legitimately adopted by an HRA to calculate and charge depreciation, and one method was based upon the value of the asset split between land and building elements with the building element being depreciated over the remaining useful life of the asset. An alternative method of calculating depreciation was to break down the value of the asset into its component parts, each of which would be depreciated with a different useful life and with different cost elements. Adrian Gilham, HRA Finance Business Partner, attended the meeting remotely and confirmed that the Council used the value-based depreciation model, which meant that depreciation was calculated on the whole value of the asset.

A Committee member was concerned with the methodology which was being used to calculate depreciation on a valuation basis, as when money was spent on a property it was capitalised which increased the cost of the asset, however, this cost was dealt with via reserves and not the income account. The HRA was therefore writing off a major part of expenditure through reserves instead of the income account, which would not be an issue if this had not been used to justify capital expenditure.

In response, the Associate Director, Savills, confirmed to the Committee that HRA accounting rules differed from private sector accounting in this area, and major repairs were legitimately being funded from the capital budget, and expenditure was being incurred through capital and was being appropriately financed via a variety of legitimate means. There was, therefore, no accounting step missing from a local authority perspective.

In spite of the assurance which had been offered, concerns were voiced in relation to the escalating debt which was shown in the Plan, and the potential that insufficient money was being set aside to replace all the assets, which would be required under public sector rules. There was a need to get to grips with the cost of depreciation and repairs, and to start putting together a more realistic plan.

The Associate Director, Savills, confirmed that it was correct that the Council depreciation calculated was lower than the level of investment which was deemed necessary in the existing housing stock, however, the Business Plan also included £145m across 30 years of additional revenue contributions into the capital programme to ensure that there was the maximum amount of resource available to carry out required works. Although there was a significant amount of borrowing through the Plan, a large proportion of this related to the acquisition and development of new homes, and a smaller amount for investment in the  existing stock. Both revenue and capital budgets were included in the Plan with expenditure and income and with all of the expenditure fully financed either through existing or anticipated resources or through borrowing, which was supportable but not without risk.

In response to a question from the Committee which sought assurance that the quality of property maintenance would not be allowed to decline, the Associate Director, Savills, confirmed that the level of investment identified in the Plan was sufficient to ensure Decent Homes Plus standards were maintained, and that all components were replaced like for like within the same timescale.

Philip Sullivan, Chief Executive, Colchester Borough Homes, attended the meeting and addressed the Committee. One of the areas which the Committee had considered had been in relation to risk mitigation and appropriate financial management, and assurances were given that the Business Plan would be the subject of a review every six months, and accordingly was scheduled to be presented to Cabinet in January 2026 with a comprehensive annual update.

RESOLVED that: the contents of the report be noted.

The Committee considered a report which set out its work programme for the current municipal year.

The Committee requested that a report be presented to it providing an update on the development of Council owned sites, and whether this development represented better value for money than sourcing social housing properties from the market, including the opportunity cost of the land being developed.

The Committee further requested that consideration be given to providing it with a report which allowed it to consider the corporate landlord model as a whole, potentially by way of an annual review.

RESOLVED that:

• A report providing an update on the development of Council sites be provided to the Committee, and that;
• Consideration be given to providing the Committee with an annual review of the corporate landlord model.