Housing Revenue Account (HRA) Business Plan 2025 to 2055

1.1 The Housing Revenue Account (HRA) is the financial account used to manage the council's activities as a landlord. It is a ring-fenced account and can only be used to provide services to council housing tenants through the collection of rent and other service charges.

1.2 The HRA Business Plan is a key strategic document which sets out the council's income and expenditure plans for delivering Council Housing Services in Gateshead.

1.3 This refresh of the plan is set against a backdrop of an extremely challenging financial situation. Increased pressures arising from new regulatory requirements, prioritisation of the decarbonisation of social housing and the expectation of more new development from councils.

1.4 In this context, in September 2024, over 100 local authorities, including Gateshead Council, joined together to publish the Securing the Future of Council Housing report calling for urgent action to bring council housing budgets back from the brink and enable them to deliver new and better homes.

1.5 As this is a 30-year plan, assumptions become more uncertain with each year of the plan. The primary risks are in relation to future inflation and interest rates, however, the most up-to-date forecast information has been used in the preparation of the plan.

1.6 Overall, the revised HRA Business Plan is a fully costed, sustainable plan and does not breach the minimum £3 million reserve balance during the life of the plan (30 years).

1.7 Whilst the borrowing is affordable within this plan, debt needs to be managed in the overall context of affordability for the council. The risks associated with borrowing will therefore need to be kept under review.

1.8 However, to accommodate the stock investments and associated cost implications, based on current assumptions, borrowing would increase by £115.539 million to £461.044 million by year 30. Additional borrowing will start to accrue in year two of the plan.

1.9 This plan should be read in conjunction with the other key housing strategies and policies which set out how the above ambition can be achieved.

2.1 The HRA operates within a political environment and therefore any changes in national housing policy can have a significant impact on the HRA Business Plan.

2.2 National Social Rent Policy

2.2.1 The Welfare Reform and Work Act 2016 included a statutory obligation for registered providers of social housing to reduce their rents by 1% per year, irrespective of inflation, from April 2016 to March 2020.

2.2.2 From April 2020, the Regulator of Social Housing's (RSH) Rent Standard made provision for a maximum annual increase in social housing rents of CPI plus 1% with effect from April 2020 for a period of five years.

2.2.3 In the Autumn Statement 2022 the then Chancellor announced a cap on rent increases of 7% for 2023/24. Whilst this applied to current tenancies it did not apply to the calculation of the maximum initial rent when properties are first let or subsequently re-let. In particular, the restriction does not apply to the calculation of formula rent that apply to social rent properties; these continue to increase by CPI plus an additional 1%.

2.2.4 In January 2024 the regulator confirmed the limit on annual rent increases for 2024/25 to be CPI plus an additional 1% and in April 2024 it was confirmed this formula will continue to apply to rent increases in 2025/26.

2.2.5 To provide much-needed stability in the sector and greater long-term certainty, in June 2025 the Government confirmed a ten-year social housing rent settlement from April 2026 of CPI+1%, plus the commitment to consult on how to implement social rent convergence.

2.2.6 In July 2025 the Government issued the consultation on how to implement social rent convergence, which proposed either £1 or £2 maximum additional weekly amount and requested view on the timing (meaning, should it fall in line with the new rent policy). Currently the outcome of the consultation is unknown.

2.2.7 Any increase in rent will mean an impact on tenants' household budgets, but the additional income is vital to maintain and improve the services we provide to tenants, invest in our existing housing stock in accordance with the stock condition surveys and develop new social housing to address the needs of local people.

2.2.8 Future rent increases will not mitigate against the reductions during 2016-2020 or the rent cap in 2023/24 as it means that rents are set against a lower baseline than they would have been. However, the introduction of a convergence mechanism will ensure rents can recover and assist in the sustainability of Housing Revenue Accounts.

2.3 Welfare reform and benefit take-up

2.3.1 To provide much-needed stability in the sector and greater long-term certainty, in June 2025 the Government confirmed a ten-year social housing rent settlement from April 2026 of CPI+1%, plus the commitment to consult on how to implement social rent convergence.

2.3.2. In July 2025 the Government issued the consultation on how to implement social rent convergence, which proposed either £1 or £2 maximum additional weekly amount and requested view on the timing (meaning, should it fall in line with the new rent policy). Currently the outcome of the consultation is unknown.

2.3.3. Any increase in rent will mean an impact on tenants' household budgets, but the additional income is vital to maintain and improve the services we provide to tenants, invest in our existing housing stock in accordance with the stock condition surveys and develop new social housing to address the needs of local people.

2.3.4. Future rent increases will not mitigate against the reductions during 2016-2020 or the rent cap in 2023/24 as it means that rents are set against a lower baseline than they would have been. However, the introduction of a convergence mechanism will ensure rents can recover and assist in the sustainability of Housing Revenue Accounts.

2.4 The Social Housing (Regulation) Act 2023

2.4.1 The Social Housing (Regulation) Act 2023 was introduced in response to serious failures in the social housing sector including the Grenfell Tower fire (2017) and the death of Awaab Ishak (2020).

2.4.2 The Regulator of Social Housing (RSH) now has powers to regularly inspect larger landlords (including local authorities) to ensure compliance with a new set of consumer standards:

• Safety and Quality
• Transparency and Accountability
• Neighbourhood and Community
• Allocations and Lettings

2.4.3 The RSH has the power to impose unlimited fines for non-compliance with these consumer standards.

2.4.4 From 1 April 2023, it is a regulatory requirement that all social-housing landlords in England must collect data on Tenant Satisfaction Measures (TSMs). Annually we are required to submit performance results to the Regulator of Social Housing as well as publishing on our website.

2.4.5 TSMs are designed to show tenants how well their landlord is performing in areas such as maintaining homes, ensuring homes are safe, respectful and helpful engagement, effective complaint handling, and responsible neighbourhood management.

2.4.6 A key provision of the Act was the introduction of Awaab's Law in response to the death of Awaab Ishak, who died due to mould exposure. This new law has placed legal obligations on social landlords to

• investigate and fix health hazards - especially damp and mould - within strict timeframes
• provide written reports to tenants outlining findings and repair plans
• take emergency action within 24 hours if a hazard poses serious risk
• to raise professional standards across the sector it also introduced new qualification requirements for certain posts and grades within Housing Management

2.4.7 The Act also strengthened the relationship between the Housing Ombudsman Service (HOS) and the RSH, formally recognising the key role that the HOS has in the regulation of social housing. The Act empowered the HOS to introduce a Statutory Complaint Handling Code that social landlords must follow. The Act promotes a coordinated approach; the HOS may identify patterns of poor complaint handling and the RSH may act on systematic failures in service delivery. They share data, coordinate on cases, and exchange intelligence on sector risks.

2.4.8 The Act also provides for the RSH, HO and the Building Safety Executive to share information on failing landlords.

2.4.9 During 2024/25 the council was inspected by the Regulator of Social Housing (RSH) under the new regulatory framework and our housing service has been awarded a C2 grading. This result indicates the council is delivering services that meet the consumer standards set out by the regulator, while also recognising that some areas offer room for further improvement. The rating was informed by an intensive onsite inspection process where tenants, officers, councillors - including the Leader of the council and the Cabinet Member for Housing - contributed through meetings, observations, and a wide-ranging document review.

2.4.10  While the council welcomed the positive findings, it acknowledged the areas highlighted by the regulator that required further improvement. Plans are already underway with some actions already being implemented to address the recommendations.

2.5 Housing growth

2.5.1   Addressing the housing shortage is a priority issue for the new Government and one that carries clear expectations on how housing supply is increased to meet local housing needs. The Government has committed to restoring mandatory housebuilding targets, building 1.5m homes by the end of this parliament, including affordable and council homes and prioritising brownfield and grey-belt land for development to meet housing targets.

2.5.2  In July 2025 the Government announced the Social and Affordable Homes Programme, which will make £39 billion available between 2026 and 2036. It is anticipated that there will be significant emphasis on social rent, marking a significant shift in tenure priorities from previous programmes. The grant funding prospectus is expected to be made available in October 2025.

2.5.3  The Government is also providing £950 million of capital investment for the fourth round of Local Authority Housing Fund between 2026/27 and 2029/30 to support local authorities to increase the supply of good-quality temporary accommodation.

2.5.4  At the same time the Government announced further reforms to Right to Buy which build on the reduction in maximum cash discounts and the ability for councils to retain 100% of receipts:

• increasing the length of time someone needs to have been a public-sector tenant to qualify for Right to Buy from 3 to 10 years
• reforming discounts so they start at 5% of the property value, rising by 1% for every extra year an individual is a secure tenant up to the maximum of 15% of the property value or the cash discount cap (whichever is lower)

and

• exempting newly built social homes from Right to Buy for 35 years, ensuring councils are not losing homes before they have recovered the costs of building them.

2.5.5 The Government also confirmed that there would be further reform of the receipts regime and the extension indefinitely of the current flexibilities on spending of Right to Buy receipts:

• the maximum permitted contribution being up to 100%
• RTB receipts will be permitted to be used with section 106 contributions
• the cap on the percentage of replacements delivered as acquisitions is removed

2.5.6 The Government also confirmed that from 2026/27 councils would be permitted to combine receipts with grant funding for affordable housing to accelerate council delivery of new homes.

2.6 Climate change and the low-carbon future

2.6.1 The Government has committed to reviewing the Decent Homes Standard and launched a consultation on changes to the standard that concluded in September 2025. Reform to the standard is broadly welcomed. The standard has not been updated for almost two decades. The changes that are proposed to the standard and the energy efficiency requirements in it do come with new and unfunded financial burdens. In recent years the sector has needed to respond to an increasing number of necessary new standards and regulations which come with no additional support. Collectively this additionality adds significant pressure to the Housing Revenue Account. While the Government considers changes to the standard, the RSH expects social landlords to be working to the existing standard to understand the potential costs of making carbon reduction improvements to our assets. The HRA stock currently has an average SAP rating of EPC C. An interim Net Carbon Zero Strategy is in place to supplement the HRA Asset Strategy. The strategy lays out the steps that will be needed to introduce a full Retrofit Strategy in 2024, to support the prioritisation and delivery of Net Zero work packages.

2.7 Building Safety Act 2022

2.7.1 The Building Safety Act was passed in April 2022 and is in effect its response to the Grenfell Tower fire tragedy in 2017.

2.7.2 The Act requires the council to register its in-occupation, high-rise buildings with a newly established Building Safety Regulator (BSR). All buildings over 18m in height or with seven or more storeys are captured in the scope of the Act. The council's Principal Accountable Person must register each high-rise building, and provide each building's key information and a building safety case report. The building safety case report will show how building risks are being proactively managed and residents kept safe.

2.8 Fire Safety Act 2021

2.8.1 The Fire Safety Act 2021 makes amendments to the Regulatory Reform (Fire Safety) Order 2005 ("the FSO") and extends the provisions of the FSO to the following parts of a multi-occupied residential buildings:

• the building's structure, external walls and any common parts. The external walls include doors or windows in those walls, and anything attached to the exterior of those walls, for example balconies and cladding
• all doors between the domestic premises and common parts

2.8.2 Under Article 3 of the FSO, the "responsible person" of a premise (either a building or any part of it) is the person who has control of the premises ("the Responsible Person"), which may include building owners, leaseholders or managers.

2.8.3 The council will take a pro-active approach to ensure compliance with the provisions. This has included a full and intrusive survey of the construction of the external wall system of each building, and an ongoing fire door inspection programme.

2.9 Securing the future of council housing

2.9.1 In September 2024 over 100 local authorities, including Gateshead Council, joined together to publish the Securing the Future of Council Housing report calling for urgent action to bring council housing budgets back from the brink and enable them to deliver new and better homes. The key recommendations were:

• Establish a new fair and sustainable HRA model: including a long-term and certain rent-settlement, an adjustment of HRA debts and more favourable conditions for council investment.
• Reform unsustainable Right to Buy policies: by reducing discount levels and eligibility, as well as protecting newly built council homes from sale.
• Remove red tape on the Affordable Homes Programme and other funds, including extending the strategic partnership model to councils. Funding should be streamlined, allocated simply, reflect recent cost inflation, and allowed to be used flexibly to meet local housing need.
• Announce a Green and Decent Homes Programme: a long-term, capital funded programme to bring all council housing up to the new standard of safety, decency and energy efficiency by 2030 - and a road map for achieving net zero by 2050.
• Fund the completion of new council homes: limit the short-term loss of housing supply and construction sector capacity caused by the unfolding market downturn, by funding councils to rescue and complete stalled development projects.

2.9.2 As part of the spending review 2025, the Government announced several measures and intentions to consult on certain areas (which have since been issued and are discussed within this plan) that contribute to delivering the recommendations in the report.

3.1 The HRA Business Plan is set within a wider strategic context of the overall ambitions of the council and those of the Housing Service.

3.2 Strategic approach

3.2.1 The council's strategic approach, Making Gateshead a Place Where Everyone Thrives provides a framework to demonstrate how the council will work and make decisions.

3.2.2 Thrive is underpinned by five key pledges:

• putting people and families at the heart of everything we do
• tackling inequality
• supporting our communities to support themselves and each other
• investing in our economy to provide sustainable opportunities for employment, innovation and growth
• work together and for a better future for Gateshead Council

3.2.3 The HRA Business Plan supports the delivery of these pledges.

3.3 Health and Wellbeing Strategy

3.3.1 The Health and Wellbeing Strategy identifies clear outcomes to support the delivery of "Gateshead Thrive". Housing is identified as one of the wider determinants of health and can play a vital role in the long-term health and wellbeing of an individual.

3.4 Housing Strategy

3.4.1 The Housing Strategy identifies clear housing objectives and priorities, puts forward a vision for housing in Gateshead, and sets a framework for how the council will deliver services and interventions, and work in partnership with others, in a way that will help achieve those objectives. It includes three overarching strategic objectives:

• sustainable housing and economic growth
• sustainable neighbourhoods
• improved health and wellbeing

Read the HRA Asset Management privacy notice

3.5 HRA Asset Management Strategy

3.5.1 The HRA Asset Management Strategy sets out the council's approach to managing the housing related assets held in the Housing Revenue Account. It covers a range of activities that will ensure that the housing stock meets the needs of residents and the standards required, both now and in the future. Its key aims are:

• delivering decent homes
• maximising energy efficiency
• ensuring compliance
• regeneration of estates and assets
• investment in it infrastructure
• developing new homes

3.6 Homelessness and Rough Sleeping Strategy

3.6.1 The council's Homelessness and Rough Sleeping Strategy aims to eradicate rough sleeping in Gateshead, make homelessness a rare and one-off occurrence, and achieve positive outcomes for anyone who is homeless. The HRA will help to support delivery of this strategy through the provision of much needed new affordable homes, and in contributing to the delivery services to support and realise sustainable tenancy solutions for those who may be at risk of homelessness.

3.7 Housing Development Programme

3.7.1 The Housing Development Programme confirms priority actions to be undertaken over the next five years to maximise housing supply on existing and new sites. This strategy also aligns with the council's medium-term position and investment plan.

3.8 Tenancy Management Policy and Allocations Policy

3.8.1 The Tenancy Management Policy, together with the Allocations Policy will help to deliver on the strategic aims of the Housing Strategy. It will ensure statutory and regulatory compliance by ensuring our properties are let in a fair, transparent and efficient way, make best use of our stock, reduce the amount of time properties are empty, address under occupation and overcrowding and to meet our strategic housing needs, including homelessness.

3.9 Resident Influence Strategy

3.9.1 The Resident Influence Strategy has been developed within the context of a national regulatory framework. The Regulator of Social Housing sets four Consumer Standards that apply to all registered social landlords including local authorities. The Transparency Influence and Accountability standard is one of the four Consumer Standards. It sets out clearly the requirement that registered providers are open with tenants and treat them with fairness and respect so that they can access services, raise complaints, influence decision-making and hold their landlord to account.

3.10 Rent and Service Charge Policy

3.10.1 The Rent and Service Charge Policy brings together in one place the process followed in setting the rent and service charges and compliance with the regulatory requirements. Whilst the annual Cabinet report to agree the rent and service charges sets out the process in summary, the policy provides more detailed information and clarification.

3.11 Home maintenance and safety

3.11.1 As a landlord, Gateshead Council is responsible for the maintenance and repairs to homes, communal blocks, and other properties we own and manage. This includes domestic and non-domestic properties to ensure they remain safe for tenants and building users. There are several policies in place that set out the services customers can expect from the council, including the responsibilities of both the council and its customers:

• Repairs and Maintenance Policy
• Damp, Mould and Condensation Policy
• Gas and Heating Policy
• Electrical Safety Policy
• Asbestos Safety Policy
• Water Safety Policy
• Lift Safety Policy
• Fire Safety Policy
• Building Safety Resident Engagement Strategy
• Decant Policy
• No Access Policy

4.1 Dwelling stock profile

4.1.1 Profile of the HRA dwelling stock within Gateshead:

Stock by archetype

• bungalow 16.63%
• flat 26.72%
• house 55.57%
• maisonette 1.07%

Stock by neighbourhood

• central 16%
• east 23%
• west 18%
• inner west 16%
• south 27%

Number of bedrooms

• no bed 1.13%
• 1 bed 21.52%
• 2 bed 45.38%
• 3 bed 30.17%
• 4 bed 1.77%
• 5 bed 0.03%

We own approximately 18,000 homes and provide leasehold services to over 900 properties.

There are over 130 estates managed across five neighbourhood areas.

Our homes are predominantly older style, traditionally built properties.

Homes with three or more bedrooms are in high demand and short supply.

There is low demand for multi-storey flats and larger 2+ bed medium-rise flats.

4.1.2 Accounting for the predicted sales of properties through Right to Buy, the potential impact of stock options and predicted development opportunities, housing stock is predicted to be 15,726 by year 30 of the plan.

4.2 Other HRA assets

4.2.2 The HRA also owns a number of non-domestic assets, which are predominantly made up of garages, lounges, shops, land and play equipment. Reviews of the status of non-domestic assets has commenced. These are exploring how these assets are used and whether disposal, demolition or a change of use would bring more value to the HRA to better help, support and sustain neighbourhoods and communities.

4.3 Investment priorities

4.3.1 The capital investment included in the plan is based on the stock condition surveys of the current stock, and also includes the following:

• progress towards net zero and the mitigation of damp, mould and condensation
• ensuring compliance with building safety measures
• investment in garage sites and the HRA public realm
• investment in IT Infrastructure and digitally enabled blocks
• investment in the commercial stock
• investment in communal areas and the wider environment
• continued investment in disabled adaptations
• support to increase the opportunities for Fostering within the social housing portfolio

4.4 General stock investment

4.4.1 Since the end of the Decent Homes Programme the balance of responsive repairs verses planned works have shifted and excessive responsive repair interventions are being delivered. As part of the Construction Services Review, work has commenced to address the split between responsive and planned so that more work is delivered in a planned way, ensuring value for money and the efficiencies associated with programmed works.

4.4.2 A tool has been developed that will analyse estate-based repairs to gain insight into the numbers of repairs and the type of work being delivered, then assessing it against stock condition data. This tool will be embedded and used to identify trends and drivers for expenditure to aid planning and deliver an appropriate balance of reactive repairs and planned investment and ensure this is aligned with our understanding of stock condition and asset sustainability.

4.5 Net zero carbon

4.5.1 The HRA will need to invest c.£265 million into insulation measures, ventilation and new heating technologies. Investment costs average around £16,000 property and in some cases are as much as £37,000. The HRA business plan includes some allowances for costs for energy efficiency measures and improvements but support from public funding will be required to meet our obligations around energy improvements and net zero carbon. A Retrofit Strategy is being developed to steer how, where, and when works are delivered, maximising the impact of work and prioritising the interventions that will have the most impact for residents. An energy modelling software package has also been procured. Sitting alongside existing core systems, it will support the development of robust investment and scenario planning for energy and net zero.

4.6 Building safety measures

4.6.1 The council is committed to ensuring tenant safety and the intention is to ensure that assets meet all applicable health and safety requirements so that all residents and visitors are confident that they are in a safe and secure environment. There has been significant investment into strengthening the safety of our assets over the last three years, and the necessary investment will be maintained to continue to ensure all assets are compliant.

4.6.2 As part of the consolidation of housing services into the council, new and strengthened governance and scrutiny processes have been introduced to protect customers and the sustainability of the HRA.

4.6.3  A robust and resourced Building Safety Team continues to be developed to manage the council's approach to this critical area of safety-based work and assurance. Strong condition data, process drive IT systems, robust building assessments and maintenance information will help protect the HRA from unplanned high cost and non-compliance.

4.6.4  As a building owner of higher risk residential buildings, such as high-rise buildings, we will compile and maintain safety case files and have appointed a building safety manager to support the management of our assets.

4.7 Garage sites

4.7.1 Garages make up the largest proportion of non-domestic assets. These are assets that are formed of blocks or individual units that are not tied to or let as part of a domestic tenancy.

4.7.2 There are just over 3,600 garages currently in the HRA making up 510 garage block sites. All garage blocks have been stock condition surveyed and sites have also been appraised to assess their potential future use. Almost £1 million has been allocated in the business plan to start delivering on the garage review over the next five years. The first phase of non-viable sites have been decommissioned and demolished. Work on phase two is underway. Work is also progressing with an external partner to explore the prospect of changing the use of some sites to provide domestic accommodation.

4.8 Investment in IT infrastructure

4.8.1 The current IT systems are structurally fit for purpose; however, there is insufficient interfacing or linkages to ensure a 360 view of all business intelligence. To strengthen the approach to data and ensure a robust and resilient approach a systems a review has been undertaken. It has assessed the existing IT strategy and future organisational need. The recommendations from the review are now being worked through to ensure the HRA is supported by a robust IT infrastructure.

4.9 Investment in commercial stock and the wider environment

4.9.1 There are also a small number of fixed play equipment sites that fall within the management of the HRA. These sites carry with them inspection and compliance requirements as well as ongoing maintenance costs. In partnership with communities these sites will be reviewed.

4.9.2 It is recognised that there is a need to review the status of non-domestic assets to explore how they are used and whether a change of use would bring more value to the HRA and better help support and sustain neighbourhoods and communities.

4.10 Disabled adaptations

4.10.1 The council recognises its social responsibility to support vulnerable and disabled residents to remain independent in their home. There is an annual budget for the provision of minor works, like handrails, through to major work such as adapted bathrooms or property alterations.

4.10.2 Demand for adaptations in council homes remains high, with a large proportion of residents defining themselves as having a disability. The approach to adaptations must remain sustainable and viable, make the 'best use' of our stock by ensuring that properties are allocated appropriately, that investment is only made into sustainable adaptations, and that value for money is achieved.

4.11 Stock options

4.11.1 High-rise blocks

1. The analysis of the future pressures on the HRA highlights high-rise blocks as a key area of concern. The high-rise stock is commonly characterised as a liability to the HRA, resulting from high investment cost, lower demand for the 2 and 3 bed flats and high management requirements.
2. Redheugh and Eslington Courts were deemed unviable and are currently being decommissioned, with residents being decanted. The properties will be demolished when they are empty, and the services and utilities have been decommissioned.
3. Warwick Court is undergoing a decommissioning process, and a review of potential alternative uses for the block is being established. This review will be concluded in 2025/26.
4. Decommissioning work in Sir Godfrey Thomson Court and Crowhall Towers is progressing well. Demolition work should begin during 2025/26.
5. The strategic roadmap, subject to the decision-making process and consultation, is to undertake further options appraisals in line with the priorities laid out in the HRA Asset Strategy 2022-27.
6. Following a detailed options appraisal on investment and sustainability, East Street Flats were deemed unviable and will be decommissioned as part of a scheme to develop 100 new council homes in the area around the town centre.

4.11.2 Older persons' housing

1. Gateshead has seven older persons' purpose-built housing blocks. They include over 200 sheltered 1-bedroomed and 2-bedroomed flats. Angel Court is the only modern purpose-built scheme.
2. There is also a disproportionate spread of blocks across the borough. The East, Central and West Neighbourhoods have one block each, while in the South there are six schemes. It is proposed to undertake a specific older persons' purpose-built block review starting in 2025/26.
3. Analysis of stock performance has also highlighted challenges with some flats and smaller bungalows reserved for older persons. Further analysis will be carried out to assess the opportunities for change of use or conversion to higher-demand markets.

4.12 New development

4.12.1 The plan includes the continued development and acquisition of new social/affordable housing units to deliver over 500 new homes by 2033, and it is assumed that there will be an opportunity to bid for Homes England grant funding to support the delivery of the schemes in conjunction with the use of Right to Buy receipts.

4.12.2 The proposals for new development include the development/acquisition of a range of homes to include one-bed apartments through to four-bed family homes, across a range of sites within the borough.

5.1 The Financial Plan shows how both the Council Housing Investment Programme and the day-to-day council housing services will be funded.

5.2 Overall, the revised HRA plan is fully costed and does not breach a minimum £3 million balance during the life of the plan (30 years). However, to incorporate the cost pressures and anticipated capital investment, including new social housing stock, borrowing will need to rise significantly above the current levels.

5.3 A copy of the HRA Operating Account 2025/26 to 2054/55 is attached at Appendix 1.

5.4 The plan requires, as a minimum, savings of £1.5 million, delivery of the current planned 2025/26 budget, and savings which will be expected to accrue from the link to the reduction in stock numbers.

5.5 The capital investment included in the 30-year plan is £1.448 billion, the split of which is detailed in the following graph:

5.6 A summary of the planned five-year 2024/25-2028/29 capital programme is shown in Appendix 2.

5.7 Borrowing requirement

5.7.1  The proposed plan shows that by year 30 borrowing will increase to £461.044 million, which is £115.539 million higher than the current underlying loan debt. Additional borrowing will be required in 2026/27.

5.7.2  Whilst the borrowing is affordable within the context of maintaining a balanced HRA with a minimum reserve balance, debt needs to be managed in the overall context of affordability for the council. The risks associated with borrowing, including the interest cover, will therefore need to be kept under review.

5.8 HRA reserve balances

5.8.1 The HRA can budget for a deficit in a particular year, but the HRA total reserve balance must not be negative. The business plan is set to assume that if the assumptions resulted in the reserve balance falling below the minimum required of £3 million in any year, then borrowing will be required. Borrowing can only be for capital purposes. Where revenue reserves are exhausted due to revenue expenditure exceeding income, then mitigating action is required.

5.8.2 The plan shows that over 30 years, the surplus carried forwards stays above the minimum balance.

5.8.3 The plan also shows that there are years where reserves will be used to fund predicted peaks in the capital programme due to lifecycle replacements. This minimises borrowing and reduces the level of interest charges that would be incurred.

5.9 Key assumptions

5.9.1  The financial plan is based on several key assumptions to mitigate against risks or changes that may occur over the life of the Business Plan.

5.9.2  The assumptions used for the next five years over the medium-term period 2026/27 to 2030/31 are outlined in the table below. As the HRA plan is over 30 years, future assumptions have been made in respect of the key items listed.

6.1 A comprehensive financial risk assessment has been undertaken to ensure that all risks and uncertainties affecting the council's HRA financial position are identified. These will be reviewed each year as part of the refresh of the HRA Business Plan. The key strategic financial risks to be considered are as follows:

7.1 The revised HRA Business Plan together with the HRA Asset Management Strategy ensure that the HRA investment plans are sustainable over the medium and longer term. This plan confirms the priority given to ensuring the council's homes are safe and fully compliant with building legislation and regulation and will make a significant contribution to the Housing Development Programme with a planned HRA funded development programme of 400 new homes by 2033.

7.2 Despite this there are still challenges within this plan and assumptions made regarding future costs that will need to be kept under constant review. Savings outlined in the plan will need to be delivered to ensure the sustainability of the HRA and therefore robust savings plans will be developed to underpin their delivery.

Appendix 1

HRA operating account 30 years

Appendix 2

HRA Capital Programme 2025/26 - 2030/31