Meeting Details

Councillors Rippingale and Smith declared an ‘other registerable interest’, in regard to Item 11 (Housing Revenue Account [HRA] Business Plan 2025-2055). This interest related to their being members of the Board of Colchester Borough Homes. It was confirmed that the Monitoring Officer’s advice had been sought, and that the Monitoring Officer had judged that Councillors Rippingale and Smith would not need to leave the meeting for the item in question.

Councillor Young, Deputy Leader of the Council and Portfolio Holder for Housing, thanked the Scrutiny Panel for its scrutiny of the draft HRA Business Plan and emphasised its role in asking searching questions. The Deputy Leader laid out her background, including time spent previously as Portfolio Holder for Housing. Her remit now also included health matters. The Deputy Leader had also served as a non-executive director of the Colchester Primary Care Trust and of Anglian Community Enterprise, and had experience as Chair of a charity providing grant funding for city projects aimed at improving health and wellbeing.

The Deputy Leader informed the Panel that she had been in her current post for 48 days and had been working to take on the breadth of its remit, including a visit to Wheeler Close, where six new flats had been built on the site of former garages, to a high standard of sustainability and security. Homes had been acquired for affordable rent via the Mersea Homes Chesterwell development. It was expected that, due to Local Government Reorganisation [LGR], the Council would have to work in different ways. With the NHS’s ten-year plan, more action would be required on prevention of illness, and there would also be compliance work related to Awaab’s Law, focussing on benefiting tenants.

Data protocols had been improved so the Council could plan better for future housing needs. Detailed work was being done to liaise with others, including preparation for a deal with Adult Social Care. Presentations had been given at the LGA [Local Government Association] conference on how to use data to inform the Council’s future housing profile. The use of AI and digital services would need to be considered. The Supported People Budget was being used to feed into the Housing Revenue Support Fund. A number of sensitive cases of people in temporary accommodation were described, with the outcomes when they moved to more secure accommodation. The Panel was informed that domestic violence rates had increased, leading to an increase in people needing health support from the Council.

The Deputy Leader was asked if changes in lifestyle had led to an increase in mould and damp issues, and whether she could use her position to educate people on subjects such as preventing condensation. The Deputy Leader was also asked if increasing life expectancy and accommodation of émigrés had put pressure on stock, and how she could influence government to secure infrastructure spending in the area, following the recent cancellation of A12 widening, and the dualling of the A120 not going ahead.

The Deputy Leader agreed that some mould came from living conditions, but added that some housing was more problematic than others. Attempts had been made to develop appropriate homes for single occupants. Some success had been achieved but further ideas were needed. A new Homelessness Strategy would be needed by 2026. Innovation would be needed, especially when taking on adult social care. The Council had some excellent sheltered accommodation, but one option was to look at the Cannock Mill setup for independent living with shared areas. Care villages was one possibility, including accommodation for couples with a mix of care and independent living units. The Deputy Leader described the Alms Houses at Winsley Square and said that LGR gave opportunities for Councils to do things in different ways. The situation in London was outlined, with London boroughs collectively spending £4m per day on temporary accommodation, and one in fifty people in the capital being homeless.

Population pressures and cancellation of improvements to the A12 and A120 were disappointing. The Secretary of State for Housing had put forward the expectation of 1.5m new homes and the infrastructure needed to support that target.

The Chief Executive of CBH informed the Panel that damp and mould was especially problematic in non-conventional and single-skinned properties. Fuel poverty was a serious issue, where moisture and no heating led to condensation and mould. The Financial Inclusion Team worked to address this issue. Awaab’s Law would come into effect on 26 October, regulating requirements on the Council and its properties. CBH was working with health services, sharing data to better address issues.

A Panel member urged more emphasis on providing forecasts for future housing needs, with better long-term forecasts and related to KPI [key performance indicator] performance. The Deputy Leader was asked if work would be done to produce forecasts, and how it was proposed that this be done. The Deputy Leader described the Housing Strategy Group, with expert officers in Colchester and competent staff. A new Homelessness Strategy would be developed over Autumn and Winter and would come for Portfolio Holder approval in early 2026. Ongoing work included the Local Plan, with the Council in a tough position due to a drop in private rental supply and a fall in first time buyers due to higher interest rates. There had been a 42% increase in occupancy of temporary accommodation.

The Deputy Leader was asked if wider conversations had been held with other local authorities to get more information on the drivers for homelessness and housing need. Geoff Beales, Strategic Housing and Assurance Manager, gave some statistics relating to Colchester housing. There were 2.5k households on the housing waiting list, with 438 households currently in temporary accommodation. There had been 444 vacancies occur in the most recent year and an example was given of a three-bedroom house becoming available in the previous month and attracting 770 bids, with the highest-scored applicant being a homeless applicant in band B who had been waiting four years for a three-bedroom house. The Gateway to Homechoice bidding and allocation system was explained, connecting housing associations and other housing providers in the area covered.

The Chief Executive of CBH described the three main causes of people seeking Council accommodation as being private sector Section 21 evictions, domestic abuse, and family breakdowns. It was hard to predict the levels of the latter two causes, but changing government guidance would remove the requirement for applicants to show vulnerability. It was shown how numbers of those in need had increased more than the rates shown when budgets were being set. Housing Associations had moved to invest their capital in their existing stock and had not been seeking to increase stock levels. This sometimes meant that they were not taking up potential properties provided via Section 106 agreements on new developments.

A request was made by a Panel member to have sight of the new Housing Needs Assessment, once this was ready.

The Deputy Leader tackled the possibility of using modular housing. A modular build option had been examined in Romford and costs compared to traditional options. Consultants had advised that economies of scale would be needed for the option to be feasible, involving a large site to get a good deal and space for any infrastructure. The potential site looked at could not provide the scale needed, but it was likely that other sites would be examined in the future. The quality of modular units examined had been high. The Panel discussed the potential for modular housing, including a past business case produced on the options, and members being impressed with the modular units seen.

The Deputy Leader concluded by saying that the biggest item in her future work was LGR and the process to get through to a conclusion.

The Chairman read out a statement on behalf of Councillor Sara Naylor. Councillor Naylor informed the Panel that she had told the Leader of the Council that the workshop held on this Business Plan, in March 2025, had not been adequate at addressing concerns regarding the HRA, and had requested that this be run again so as to allow time for questions to be asked and answered. Councillor Naylor alleged that the draft Business Plan was not supported by adequate information and that some questions posed had not been answered until the afternoon just before this meeting. Councillor Naylor suggested that the Cabinet decision be postponed until queries had been resolved.

A Panel member ventured that this was an issue of the timing of this meeting of Scrutiny Panel, on the evening prior to the day on which Cabinet would be taking its decision on the draft Business Plan, and that future meetings to conduct pre-decision scrutiny should be scheduled to allow time for further information to be requested and considered by the Panel and Cabinet, between recommendations being made and the decision being taken. The Panel member suggested that a note should be written to Cabinet to state this, and to request that Cabinet looks at setting meeting dates that would allow more time between Scrutiny Panel meetings and Cabinet meetings. The responses to members’ questions were described as being complex, and had only been circulated on the day of this meeting. Adequate time was needed for Panel members to consider answers given and to formulate potential recommendations arising from them. It was emphasised that the Panel was empowered to decide what items it scrutinised and when this work should take place.

Councillor Young, Deputy Leader of the Council and Portfolio Holder for Planning, gave an overview of the consultation work carried out with councillors, senior leadership of the Council and with stakeholders such as Colchester Borough Homes [CBH] tenants. More consultations would be held going forward, including avenues for input from Scrutiny Panel and Governance and Audit Committee. Councillor Young noted that the complex questions which had been submitted from a councillor, in relation to this item, had only been submitted on Thursday the previous week, and had received answers on the day of this meeting [Tuesday], so the turnaround time had been short.

The Chairman voiced his disappointment that the Daily Gazette had reported a quote from Councillor Young which stated that this matter had received scrutiny by councillors, prior to formal scrutiny which was being carried out at this meeting. The Chairman urged for care to be taken in use of wording by members of Cabinet. The Deputy Leader of the Council emphasised her respect for the role of Scrutiny Panel and apologised if her words had caused any offence, as her meaning had been that the draft business plan had received wider scrutiny by councillors, rather than referring to the formal scrutiny work being done by the Panel at this meeting.

The Panel discussed the consultation and information provision for councillors. A comment was made that councillors needed to be mindful of officers’ time and workloads. Another member noted that the issues raised thus far had not been raised at the Chairman’s briefing prior to this meeting. A complaint was made that the agenda had been published on the Monday of the week prior to this meeting, and that this might not have given councillors enough time to consider the material and generate relevant questions.

Philip Sullivan, Chief Executive of CBH, gave a slideshow presentation on the drafting of the new HRA Business Plan, and the factors which had made this a necessity. The current Business Plan was described as being unviable, which had necessitated the drafting of a new Plan. The Chief Executive showed the projected financial positions of the HRA in the event of the new Plan being approved, in comparison to the expected positions should the current Plan be maintained.

The Chief Executive was asked to give insight into the effects, should interest rates not fall as expected.

Members noted that the draft Business Plan included £3m for reducing carbon emissions, and the report stating that more was not possible unless additional Government support was received. Examples were requested as to work that would not be possible without this extra support, such as full replacement of gas boilers.

The Chief Executive highlighted the Business Plan factoring in the achieving of EPC grade C or above for all residential properties by 2030. This had now been announced by Government as being a requirement. 85% of CBH stock already met this requirement; the Plan contained funding to bring 100% of stock up to at least the minimum EPC grade C. The Council could not budget to achieve net zero carbon emissions by 2030. There might be some Council properties which were already EPC rated C or higher, but might still require a heat pump, insulation or photovoltaic [PV] panels to be installed.

Steve Partridge, Head of Housing Consultancy at Savills, stated that it was very unusual to find any social housing providers budgeting for carbon neutrality by 2030. Many providers had scaled back plans for moving to net zero emissions. Forecasts were projected based upon the Council’s treasury advisors. The gilt rate impacted on the Council’s ability to borrow from the Public Works Loans Board [PWLB], so this needed to be kept under review.

A member of Governance and Audit Committee asked for details on the consultation of tenants, the satisfaction rates recorded and the differences between newer and longer tenants’ views Details were requested about how the process was managed. The Chief Executive of CBH picked out that 99% of CBH stock met the Decent Homes Standard. Stock was in good condition, and the proposed move from ‘just in time’ maintenance to the Decent Homes Plus Standard was a trade-off in order to continue to be able to provide new housing. It was hoped that tenants would be understanding of this.

Another member of Governance and Audit Committee stated that the proposed plan would double the Council’s debt, that inadequate opportunity had been given for scrutiny and that many of the issues raised had not been addressed. The Committee member stated that they believed the accounting being practiced by officers was incorrect, including around repairs, and that it was not believable that depreciation would only be at around £1m per year. Further to this, the Committee member claimed that the Council’s housing management costs were much higher than other organisations, even though Savills stated that they were low, and that the 4% projected interest rate on borrowing was not believable, and should be set at the gilt rate plus 4%. The suggestion was made that Cabinet should defer approving the Plan until councillors had been provided with the financial modelling.

The Portfolio Holder countered that Savills had provided external support to the review process, in the same manner as it had supported forty other local authorities. Savills had said that it was unprecedented for its modelling to be requested, but offered to hold a workshop to go through them with councillors. The Plan needed to be adopted, as the current version was unaffordable. Regular reviews of the Plan would be conducted throughout its lifespan.

The Chief Executive of CBH noted that the development assumptions were included in the report, as were the costs of CBH. Audited accounts from the previous year for all stock-retaining local authorities had been examined, with the Council’s housing management costs being lower than the average rates for Essex and the East of England, and lower than the national average. With the current HRA Business Plan unviable, the recommended course of action was to approve the new plan, which would be brought to Scrutiny Panel for review more regularly than its predecessor.

The Head of Housing Consultancy at Savills explained that management and maintenance costs tended to be examined together in order to make comparisons easier, as local authorities tended to differ as to how costs were allocated. It was confirmed that the Council’s costs were rated as being lower than the national average and of local authority peers. Income received was accounted for, in order to offset costs. This was explained, alongside how net positions were assessed. There was no evidence that the Council’s housing service was expensive.

Members were informed that there was no comparative data to examine regarding the capitalisation of repairs. Some authorities capitalised void repairs whilst others did not. There was no evidence that the Council did this more than other local authorities. All local authority clients would be kept up to date with comparisons following production of 2024-25 accounts.

The Council was bound by the Prudential Code [for Capital Finance in Local Authorities], which set out how depreciation should be accounted for. The HRA differed from General Fund and private sector accounting for depreciation, in line with the rules set out for this. Spending in investment meant that the value of the Council’s stock would not necessarily decline. The system was designed to allow rental income to be reserved for capital expenditure on stock. The main issue with taking on debt was whether any debt could be serviced. Savills’ view was that it was up to the Council as to what it shared with elected members. Savills had met with residents, tenants and stakeholders to show how the figures fitted together and could do the same for councillors.

A member of Governance and Audit Committee claimed that Savills were wrong, that there was no difference between how private and Council accounting should be carried out, and that the Council was trying to use IFRS [International Financial Reporting Standards] and was causing problems for its auditors. It was noted that the Council’s last four years of accounts had been disclaimed by its auditors.

A Panel member asked about potential consequences to the housing register, should house building decrease over time. The Chief Executive of CBH picked out work done to enable greater house building and acquisition over time, with the expectation that more than 400 properties would be added to the Council’s stock over the next five years. It was a hard choice to build at present, but this would benefit the Plan in the long term, balancing investment between new and existing stock.

The Panel discussed the scrutiny of the draft Plan carried out by CBH Board Members, including Independent and Tenant Board Members, and the Chief Executive was asked whether increased government funding would make the Plan more resilient and affect forecast borrowing.

The potential risk of not adopting the draft Plan, with regard to Awaab’s Law [the ‘Hazards in Social Housing (Prescribed Requirements) (England) Regulations 2025’] was raised by a Panel member, along with questions about property disposals in the first five years of the draft Plan and potential increased enforcement costs stemming from the Renters’ Rights Bill. The Chief Executive of CBH confirmed that government funding levels were being tracked carefully, including talk of rent convergence. The draft Plan factored in an expected rental increase of CPI [Consumer Price Index] plus 1% per year for the next ten years. Rent convergence was not factored into the Plan, but the effect of what this would mean for the Plan was known. A reduction in disposals via ‘Right to Buy’ was expected in coming years but was not factored into the disposal of existing stock. The Asset Management Strategy would be updated as necessary. The Council had held around 700 properties judged to be of negative value. It was expected that this number would decrease as a result of reducing expenditure and increases to rental rates. If the Council was not to build any new properties, it was expected that there would be an increase in enforcement actions on private rental accommodation as tougher regulation came in.

Government and other sources had provided decarbonisation funding, but it was not assumed that this would be the answer to reaching net zero emissions.

Regarding risks around not meeting the Decent Homes Plus Standard, the Plan factored in flexibility, so that if and when a new Decent Homes Standard was introduced, there would be capacity in the Plan to accommodate this. It was thought that there might be eight to ten years before a new Standard might be introduced, so working to meet Decent Homes Plus Standard was a mitigation of the risk.

The Chief Executive outlined the plan to move to a reserve level equating to 10% of turnover, or around £4m, plus a £2m flexible reserve.

Regarding questions on benchmarking, the Chief Executive explained that Savills had looked at why it might appear that housing management costs may have appeared to be high for the Council.  The stock included a relatively high number of flats with communal areas and servicing costs. Income was generated to counterbalance these costs. Compared to housing associations, CBH provided homelessness services, enforcement action and housing options services in addition to managing stock.

In answer to doubts having been expressed about Savills’ figures, the Head of Housing Consultancy explained Savills’ work and significant experience in the work it did for local authorities. Savills had access to the audited accounts of CBH, which had been signed off every year by the company’s external auditors. The rent assumptions within the draft Plan matched the assumptions made by government, and an explanation was given of the consultancy work done by Savills for its clients in the areas of surveying and assessing, treasury management, development and regeneration work. Savills was supporting around 40 local authorities to develop their business plans and to give strategic advice. Savills provided full modelling and strategic financial advice. The Head of Housing Consultancy detailed his experience, including as the lead advisor on housing networks for CIPFA [Chartered Institute of Public Finance and Accountancy]. Savills held six years of all HRA information across the local government sector to help benchmarking for clients across the UK.

A Panel member noted that some authorities were assuming rental increases of CPI plus 1% for the next 30 years, asking if the Council was being more conservative in its approach. The Head of Housing Consultancy confirmed that government policy was for rental increases of CPI plus 1% to run for the next ten years and was consulting on further convergence options to follow that. The great majority of local authorities held assumptions of CPI plus 1% increases for the coming ten years, with just a few assuming this for the next thirty years. Investment costs for Council stock were explained, with work done to benchmark these that shoed that the Council’s costs were in line with other authorities.

A Panel member asked why it had taken years to develop the draft Plan, then urged caution as to not approving it hurriedly. A request to see the modelling was repeated, along with answers to questions about interest rates and debt levels. The offer of a briefing on the modelling was acknowledged, but concern was raised that this could not be carried out prior to Cabinet making a decision on the proposed Plan when it met on the evening following this meeting of the Panel. The Panel member suggested that an alternative would be for a task and finish group to be set up to investigate points and issues raised.

Another member of the Panel referred to the Council’s declaration of a Climate Emergency, then ventured that the Council did not seem willing to put money towards addressing this. The Chairman noted that Scrutiny Panel had recommended that Cabinet reevaluate whether it should ask Full Council if it still considered there to be a Climate Emergency. The Portfolio Holder for Housing stated that the Council required government funding to achieve further action. More than 88% of the Council’s housing stock was rated at EPC C or better, with the Council’s stock performing better than many other authorities’ stock. Savills had provided high-level expert advice on the modelling used, and the Portfolio Holder cautioned that elected members were laypeople, and many would find granular detail of the modelling to be inaccessible, which was why Savills had offered a briefing to explain it. Model data had not been provided to other local authority clients of Savills, and the assurances given at this meeting came from sector experts.

Agreement was given by a Panel member, who concurred that the mechanism and modelling behind the draft Plan were complex, and that this made it essential for councillors to understand and scrutinise the complete model. The Panel’s role was described as being to question experts and ensure that the right information was being used. Officers were asked to explain why there was an expectation that the Council’s stock would increase by between 426 and 439 over coming years. The view was given that the Panel needed to scrutinise the interface between the Council and Savills, including how key variables and profiles were presented to Savills. The Panel member raised concern that no profile had been produced to show the likely need for temporary accommodation and housing in coming years. A further view was given that many issues around income proposals were not fully reflected in the modelling, and questions were asked as to how variance in the interest rates would affect the planned increase in housing and whether the correct rate was being assumed. Further questions were posed regarding possible changes to the Decent Homes Standard, and whether it would be more sensible to wait for the current consultation on this subject to be completed before a decision made. Praise was given to the analysis on assumptions, but more justifications were called for.

A recommendation to Cabinet was moved by Councillor Willetts, seconded by Councillor Rowe, to state that; -

The SCRUTINY PANEL was unable to fully scrutinise the draft HRA Business Plan, especially regarding financial modelling, and that the Panel required more time to carry out its role.

A named vote was conducted, having been requested pursuant to Meetings Procedure Rule 9(2) by Councillor Laws, supported by Councillors Rowe and Willetts, with the voting as follows: -

FOR: Councillors Laws, Rowe and Willetts

AGAINST: Councillors Moffat, Osbourne, Rippingale and Smith

On being put to the vote the recommendation was lost (THREE voted FOR, FOUR voted AGAINST, NONE ABSTAINED)

A recommendation was moved by Councillor Smith, seconded by Councillor Rippingale, commending the draft HRA Business Plan to Cabinet, as it would restore the HRA to a sustainable position and provide 235 additional homes.

A named vote was conducted, having been requested pursuant to Meetings Procedure Rule 9(2) by Councillor Willets, supported by Councillors Laws and Rowe, with the voting as follows: -

FOR: Councillors Moffat, Osbourne, Rippingale and Smith

AGAINST: Councillors Laws, Rowe and Willetts

On being put to the vote the recommendation was carried (FOUR voted FOR, THREE voted AGAINST, NONE ABSTAINED)

Councillor Willetts explained that named votes had been called for so as to show expressly who had supported each proposal put forward for recommendations or resolutions on this item.