Board Tuesday 9 July 2013 at 5.00pm Meeting to be held at YHN House, Benton Park Road, Newcastle upon Tyne. Contact: Joanne Noble-Nesbitt (telephone: 0191 278 8624 email: joanne.noble-nesbitt@yhn.org.uk)

AGENDA

1 Reminder to switch off mobile phones

2 Apologies for absence

3 Declarations of Interest

4 Items which Board Members wish to raise, not elsewhere on the agenda

Items for approval Page No

Minutes

5 To approve the Minutes of the Meeting held 28 May 2013 1

Assistant Chief Executive/Director of Corporate Services

6 Rent Strategy (Presentation and interactive session) 17

7 HRA Outturn 2012/13 44

Chair

8 Appointment of Vice Chair and Board Member and Chair appointments

55

Company Secretary

9 Board Training Plan 59

10 Feedback from Board Collective Self-Assessments 66

Director of Tenancy Services

11 Welfare Reform Update 97

Items for Information

12i Chief Executive’s Report 109

12ii Board and Committee Dates 2013/2014 114

12iii Petition Monitoring 116

12iv Officer Delegated Decisions: 15 May 2013 to 25 June 2013 118

12v Board Forward Plan 120

12vi Minutes for Information 121

Exclusion of press and public

To exclude the press and public during discussion of agenda item 12 because of the likely disclosure of confidential information. The definitions of what is considered confidential are contained within Section 16 of the Company’s Standing Orders.

Protect – not for publication

Items for approval

13 To approve the Minutes of the Meeting held on 28 May 2013 139

Date of next meeting: 20 August 2013

Board 28 May 2013 (5.00pm to 6.50pm) Present: S Murphy, J Common, L Doherty, D Down, P Dutton, V Dunn, A Mirza, T Moore, M Myers, J Purvis, J J Reid, N Shukla, E Snaith, L Stephenson, J Yugire. In attendance:

John Lee Chief Executive

N Scott Director of Tenancy Services

S Breslin Assistant Chief Executive and Director of Corporate Services

D Langhorne Director of Property Services

J Noble-Nesbitt Company Administrator and Board Support Officer

D Creighton Welfare Reform Project Manager

D Slesenger Councillor and ex YHN Board Member (until 5.05pm).

M Burn Head of Support & Care

I Gallagher Head of Property Maintenance

D Gallagher Senior Advice and Support Worker

A Allison Head of Housing Management

W Keilty Head of HR & OD

J Vinton Head of Investment Delivery

J Urwin Manager – Housing Needs/Your Choice Homes

L Horsefield Business Strategy Manager

J Johnson Leasehold Services Manager

V Schollar Newcastle Tenants and Residents Federation (until 6.45pm)

J Cavanagh Newcastle Tenants and Residents Federation (until 6.45pm)

E Whitby Tyneside Bedroom (until 6.25pm)

M Jenkins Newbiggin Hall Action Group (until 6.25pm)

B Cranney Worker (until 6.25pm)

R Ruddy Scotswood, Newcastle (until 6.25pm)

E Atkins Tenant (until 6.25pm)

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148 WELCOME

The Chair welcomed representatives from the Tyneside No Bedroom Tax campaign to the meeting. The campaigners were informed that the Board were interested to listen to what they had to say.

149 APOLOGIES

Apologies were received from D Huddart, P Dibbs, R Higgins, S Pearson. The Chair noted that S Pearson was recovering from an operation and wished her all the best for a speedy recovery.

The Chair informed the Board that following the Council’s AGM on 22 May 2013 D Slesenger had resigned as a YHN board member. D Slesenger had been a very committed board member serving since June 2006. The Chair acknowledged that the Board would be sad to see his departure and that a formal goodbye would be given at the AGM in September 2013.

D Slesenger thanked YHN for all the satisfaction and happiness the organisation had brought to him over the past seven years. He noted that YHN was a democratic organisation with well written board reports and good board debates. YHN was, in D Slesenger’s opinion, the best housing organisation in the UK and thanks were also given to the Chair and Chief Executive. D Slesenger also wished his successor well for the future.

The Chair noted that D Down had been appointed as D Slesenger’s replacement at the Council’s AGM on 22 May 2013, welcomed him to the Board and thanked him for attending at short notice.

150 DECLARATIONS OF INTERESTS

There were no declarations of interest arising.

151 WELFARE REFORM UPDATE

Submitted: Report by the Director of Tenancy Services (previously circulated, copy attached to Official Minutes)

The Chair informed Board members that representatives from the Tyneside No Bedroom Tax campaign (‘the Campaign’) had met with the Executive Team, the Chair and the Vice Chair at the Board pre-meet. The meeting had enabled a discussion about today’s proceedings to take place.

The Chair outlined proceedings noting that N Scott would firstly be invited to present the report. Four representatives from the Campaign would then be invited to address the meeting for 15 minutes before Board members would have the opportunity to ask questions. Before the recommendations were considered the Campaign would have the opportunity to offer final comments.

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N Scott informed the Board that the report continued the series of reports presented to them on Welfare Reform. The report presented an update of key national milestones, the impact on rent arrears following the introduction of the ‘bedroom tax’ and progress against key project milestones.

A pilot introduction of Universal Credit had been scaled back to just one Local Authority area, Tameside, and further delays were expected in the roll-out. Direct payment pilots had been extended by another six months.

It was reported that the number of tenants who were under occupying and in rent arrears had risen by almost 2,000 since 1 April. YHN’s level of debt due to arrears of tenants who are under-occupying had also increased from £650k at year end to £819k. YHN had deployed additional resource to support tenants and staff would concentrate efforts on reducing arrears and providing specialist advice to tenants.

An update on the Welfare Reform project work streams was given. N Scott reported that reclassification of some properties was recommended where there had been adaptions such as the installation of an Easibathe unit. A barrister’s opinion had been sought to clarify the position regarding reclassifications in general and it was noted that a reclassification could occur if there were sound housing management reasons for the reclassification on grounds other than Welfare Reform.

The initial and potential impacts of Welfare Reform had resulted in YHN conducting a review of its tenancy services. In recognition of the need for a change of service delivery and the introduction of more specialist services a review of the service and how it was resourced began in February 2013. It was noted that the review was likely to conclude in September 2013 and that a report would be brought to Board in due course.

E Whitby from the Campaign thanked the Chair for the opportunity to address the Board and noted that the Campaign welcomed the report and its recommendations. The Campaign felt however that the recommendations did not go far enough and called for:

1) No evictions for anyone who is under-occupying a property; 2) YHN to go further with its re-classifications; and 3) No victimisation.

E Whitby queried how tenants could pay more when they did not have the money? It was noted that local authorities in Dundee, Darlington and Brighton & Hove had given no eviction pledges and it was suggested YHN should take the lead and announce that if tenants were unable to pay the under occupancy charge that they would not be evicted. As a result of having to pay the under occupancy charge people would go without food and electricity or turn to loan sharks.

It was suggested that a future report should contain a proposal not to evict people. Although 2,000 tenants were already in rent arrears questions were asked about the other 4,000 tenants and what they were not paying in order

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to pay the under occupancy charge.

Whilst the reclassification of adapted properties was welcomed by the Campaign it was felt to not go far enough. The Campaign called for all properties to be reclassified. Questions were asked about the implications for parents who looked after children for part of the week, tenants who had requested a 1 or 2 bedroom property and been given a 2 or 3 bedroom property instead and the implications of taking in a lodger.

Finally E Whitby also called for YHN not to victimise any tenant who wished to protest against the Bedroom Tax or any other local or national policy. He acknowledged the support and help being given by YHN to its tenants but asked for the organisation to acknowledge the stress and anxiety that letters for £30 arrears were causing tenants, and how such letters could result in tenants going without food and/or electric or seek to borrow money from loan sharks.

E Atkins informed the Board that she had bid for and received a YHN property when she was pregnant and had spent over £3k decorating the property. She had requested a two bedroom property but had been given a three bedroom property which was near to her family. Her daughter was now three years old and she was struggling to buy food, electric and pay the Bedroom Tax and felt like she was being punished despite simply trying to provide for her daughter.

M Jenkins asked the Board a series of questions:

1) What was classified as an adequate sized bedroom for tenants? It was suggested that if a household was under occupying that they could take in a lodger. How could a room be rented out to an adult when a child’s bed could not even be fitted in?

2) How many 1 bedroomed properties were there in Newcastle? Due to a shortage of suitable properties if a tenant had indicated they were willing to move could their property be reclassified?

3) Tenants were worried about the cost of removals and many could not afford relocation costs. If tenants were unemployed or on low incomes would there be any assistance with the cost of removals?

4) How many notices of possession had been issued for Newcastle since the introduction of the Bedroom Tax? It was noted that tenants felt increasing pressure and dread when receiving letters from YHN and the Council.

5) It was noted that some tenants have court orders in place for rent arrears. If such tenants were in default due to the Bedroom Tax would they be threatened with a return to court? Would any additional arrears be added to the existing debt or treated as a separate arrear?

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B Cranney informed that she was a YHN tenant and although not personally affected by the Bedroom Tax was a member of the Campaign. She was standing as a bi-election candidate in Walkergate and considered the Welfare Reform Act an appalling piece of legislation and that any person of conscience would not want to implement the Bedroom Tax.

The Board were informed that people were struggling financially and the Campaign would like a commitment from YHN that they would not evict people. It was also noted that a large percentage of YHN’s workforce was a member of a trade union and the Board were asked what was the attitude of such union members to the implementation of the Bedroom Tax?

The Chair thanked the Campaign for their clearly presented thoughts noting that they had given the Board and YHN a lot to consider.

N Scott answered the questions raised by the Campaign. It was noted that whilst other Local Authorities (such as Edinburgh and Brighton & Hove) had given a no eviction pledge such offers were dependent on all other means available to recover the arrears having been exhausted. This included all steps being taken by tenants to stop an increase in arrears. It was noted that Darlington had stated in the press that they would introduce a no-eviction policy, however this was not the case.

N Scott reported that all YHN officers and Board members supported the Campaign’s call for no victimisations. Any tenant who campaigned against the Bedroom Tax or any aspect of Welfare Reform would not face victimisation from any YHN employee.

It was reiterated that a barrister’s opinion had been received which clarified that it was not possible to reclassify certain properties in a multi-storey block of flats where tenants were under occupying. All properties would have to be reclassified. This applied to property types and estates.

N Scott recognised that some tenants would find it almost impossible to pay the under occupancy charge. YHN would continue to support such tenants by offering them financial advice and training, helping them to apply for discretionary housing payments (‘DHPs’) and support with identifying and moving to alternative properties.

N Scott informed that he did not have information about the number of one bed properties in the City to hand but would be happy to provide this information to the Campaign in due course. He also recognised that removal costs could be prohibitive and reported that YHN was looking into ways of supporting tenants with such costs as well as providing support via the Furniture Service.

Again, information about the number of notices of possession issued since the end of March 2013 was not to hand and N Scott agreed to supply the information. Those people who had recently received a notice would have had arrears prior to the introduction of Welfare Reform as it took a number of

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weeks for the arrears process to lead to the issue of a notice.

The Campaign was informed that the under occupation charge would not be separated from existing arrears and that those tenants who already had arrears would have any new arrears added onto their existing debt. This meant that there was the potential for a return to court due to a default on the order.

YHN’s advice on lodgers clearly stated that any tenant wishing to take in a lodger had to be happy with the person moving into their property. It was not recommended that tenants take in strangers.

N Scott informed that YHN regularly met with union representatives. Unison was aware of the impacts of Welfare Reform both for YHN and its tenants and also received copies of YHN Board reports about Welfare Reform issues. It was also reported that no YHN staff member took any pleasure in implementing the Welfare Reform legislation or changes.

Reclassifications had been the subject a previous Board report and it was important that the impact on all YHN’s tenants was considered. A reduction in rental income would mean less income to deliver services or improve homes.

J Lee reports that there was approximately 5,000 one bed units across the City but that the vast majority of them were one bed bungalows or age designated sheltered properties. YHN would be happy to provide a more accurate figure to the Campaign.

N Scott noted that there were a number of references in the report to DHP. DHPs for Newcastle were being administered by the City Council and YHN was constantly monitoring how DHPs were being administered to help tenants. The Department for Communities and Local Government had suggested that HRA money could be used to top up DHPs but this had implications for future HRA spend priorities.

Comments/Questions

A Board Member commented that if rent arrears were occurring just because of the Bedroom Tax it was important YHN was making efforts to help tenants. Tenants had to be willing though to accept alternative accommodation if it was made available and was a suitable offer. This lead to a question though of what ‘was a suitable offer?’ The Board Member commented that he was in favour of offering alternative accommodation before steps were taken to evict a tenant.

It was noted that the report recommended reclassifications were adaptions had been made. The issue of wide scale reclassifications would have implications for the HRA which needed to be carefully considered.

N Scott noted that Welfare Reform did have implications for the HRA and it was important for YHN to consider the implications both in terms of

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accommodation and property bidding patterns. Initial assessments had shown it would take up to six years for all affected YHN tenants to move out of under occupation. 1,200 tenants had expressed an interest in moving properties by way of a transfer or mutual exchange.

N Scott also reported that YHN had held two meetings with County Court judges and had been reassured that the judges knew a lot about the Welfare Reform changes. The judges had been clear with YHN that they would not issue an eviction warrant unless all avenues had been explored. There was however an expectation that tenants would have to move properties to avoid eviction. Evidence showed however that many tenants were not prepared to move.

The Board Member also supported the Campaign’s proposal of no victimisation for tenants.

A Board Member raised a query about the projection for overall financial losses and whether YHN’s bad debt provision was sufficient? Concerns were also raised about the long term effects of Welfare Reform on matters such as community cohesion?

N Scott reported that £2m had been set aside to cover a bad debt provision for 2013/14. This was anticipated to be a sufficient amount to cover the level of arrears. The Board were asked to note though that money allocated to cover the bad debt provision meant that such money could not be spent elsewhere.

A Board Member remarked that the Welfare Reform Act had not been introduced by either YHN or NCC and that both organisations found themselves having to react to its implementation. It was also noted if a policy of no evictions was to be introduced it would have to apply to all tenants not just those affected by Welfare Reform. A no-eviction policy just for tenants affected by the Bedroom Tax was not a workable solution.

It was important to recognise that it was not just those who were on benefits who were affected by the Bedroom Tax and that many tenants could be described as ‘working poor’ and received no help. It was important that YHN did not just focus on tenants affected by the Bedroom Tax.

A Board Member questioned if couples using separate bedrooms would be affected and the implications for fosterers who were waiting for a child?

N Scott remarked that a family’s circumstances would change as children became older and families could find themselves affected by the Bedroom Tax at different times. In circumstances were children were nearing an age when they would soon not be affected by the Bedroom Tax it was possible that DHP could help the affected family for a short period of time.

Foster carers would not be expected to pay an under occupancy charge if they had fostered a child in the last 12 months. This protection would only extend for one bedroom though. The need for a second bedroom due to

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grounds of ill health was currently the subject of court of appeal challenge and the expectation was that this would be determined unlawful. Judges had however failed to make a judgement and the judgement had been delayed until a later date.

A Board Member informed that she and fellow Board Members shared many of the same sentiments as expressed at the meeting by the Campaign. The Welfare Reform Act was an evil piece of legislation. The Board also supported the proposal for no victimisations and further information would be required before any decision could be made about further reclassifications of properties. The Board Member welcomed the suggestion of top up payments and asked that this opportunity be further explored.

N Scott repeated the no-eviction pledge made by Edinburgh City Council’s Corporate Policy & Strategy Committee which stated that ‘tenants subject to the under-occupancy charge had done all they reasonably could to avoid falling in to arrears, then all legitimate means to collect rent arrears should be utilised, except eviction’.

The Executive were asked whether any cost benefit analysis had been undertaken to explore the cost of reclassifying multi-storey blocks verses loss of rental income. It was important that the legality of such reclassifications was borne in mind.

N Scott informed that the cost of reclassifying multi-storey properties (excluding properties for older people) would be about £250k p.a. As rental income exceeded this amount the loss to the organisation through reclassification would be greater than retaining the status quo.

A Board member queried whether there was any possibility of YHN acquiring one bed properties.

John Lee reported that YHN had considered the acquisition of one bedroom properties but that it did not work for YHN from an affordability perspective. It was noted that the private sector want to move away from renting to people on benefits and that it was difficult to quickly acquire one bedroom properties. Another option being considered was the removal of interior walls to create one bedroom property. The conversion of a three bedroom property into two one bedroom properties was also being considered. YHN would build some one bedroom properties but the challenges of Welfare Reform meant that the organisation would not be able to build or buy itself out of the problems.

A Board member thanked the Campaign for attending the meeting and the comprehensive way in which their points had been addressed. The Campaign was informed that Council Board members had found themselves in an intolerable position. It was noted that the reclassification of properties for any tenants affected by the Bedroom Tax was unfeasible.

The Board had a duty to serve all tenants and the implications for the service offer to all tenants had to be considered. No-one wanted to see a tenant

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evicted and it was certainly the last thing the Board wanted to do. They wished to help tenants as much as possible. The Board hated having to implement the Welfare Reform Act but as a company and a Board they had a duty to comply with English law.

A Board Member agreed with the proposal for no victimisations. It was acknowledged that benefit claimants and the unemployed are demonised in the press and that many tenants simply could not afford to pay the under occupancy charge. It was suggested that the campaign needed to take the concept of this issue further.

N Scott agreed that the media did often portray people on benefits negatively and that many people on benefits were often in receipt of them due to no fault of their own.

A Board Member remarked that many tenants did want to move properties because of the Bedroom Tax and queried whether those who had indicated a willingness to move would still incur arrears as a result of over occupying whilst waiting for suitable alternative accommodation? Would such tenants continue to receive rent arrear letters from YHN?

N Scott commented that when tenants were willing to move and had made every effort to move steps would be taken not to progress evictions through the courts. Tenants would be expected to continue to express an interest in moving.

A Board Member acknowledged the wide range of support available to tenants but queried whether tenants were making the best use of the support available?

N Scott remarked that the appendices to the report showed the level of recent engagement YHN had had with tenants. Many tenants had expressed an initial willingness to take up a variety of services but were failing to now take up support made available to them.

J Lee asked the Campaign to encourage any tenant who was not engaging with YHN to do so as engagement was the best way to avoid eviction. YHN wanted tenants to know the organisation was here to help. YHN also had a record of evicting the lowest number of tenants compared to Newcastle’s core city peers and in order to continue to prevent evictions everyone needed to work together.

J Lee asked that any examples of YHN not assisting tenants or complaints be referred to senior management for action or through YHN’s complaints procedures.

E Whitby asked the Board to recognise that members of the Campaign wanted to respond today to comments made by the Board and YHN’s Management Team. He commented that he was pleased clarity had been sought around the position statement from Edinburgh City Council and it would be pleasing if a similar position could be adopted in Newcastle. It was

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agreed that it would be interesting to compare the cost of empty properties verses the cost of reclassifying properties.

It was noted that DHPs were only a temporary solution to the problem and that the chances of many tenants gaining employment, to financially help cover occupation charges, were low.

The Campaign asked for more information about what a ‘property transfer’ actually meant and the effects moving families would have on school catchment areas and family groups. It was also important not to forget about vulnerable people and how Welfare Reform could potentially lead to mental health issues and domestic violence. Concern was also raised about the effect death and divorce could have for families and how changes in family structures could result in people through no fault of their own under occupying properties.

The Chair thanked E Whitby for his comments and thanked the Campaign and Board members for their contribution. It was noted that the debate had taken up a significant part of the meeting and the Campaign were thanked for attending and enriching the Welfare Reform debate.

J Lee agreed that questions raised at the meeting would be answered at the earliest opportunity.

A few members of the Campaign upon exiting the meeting expressed their dissatisfaction with the outcome of the discussion, believing that their recommendations had not been addressed and that YHN and NCC were not doing enough to stop the implementation of under occupancy charges.

RESOLVED:

i) That the Board received the report; and

ii) That the Board agreed to reclassify properties where a bedroom had been decommissioned because of a temporary bathroom adaption and noted that whilst those under occupying would benefit from the decision the majority of tenants that the policy would apply to were unaffected by the bedroom tax.

Representatives from the Tyneside No Bedroom Tax campaign left the meeting at 6.25pm.

152 MINUTES

The minutes of the meeting held on 16 April 2013 were approved as an accurate record and signed by the Chair.

D Langhorne thanked all Board members who had expressed an interest in assisting with buy-back approvals. It was noted that eight Board members had expressed an interest in assisting but that a pool of only four members was required. Lots had been drawn before the meeting and the elected Board members were M Myers, A Mirza, T Moore and L Stephenson.

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The four members elected would be invited to attend a meeting to understand and test the buy-back process. Thanks were also given to J Common, D Huddart, S Pearson and L Doherty who had volunteered their services.

J Noble-Nesbitt reported that following a recruitment campaign to identify a new Chair, four candidates would be interviewed for the position on 5 June 2013. An update would be provided to Board in due course.

153 ITEMS RAISED, NOT ON AGENDA

J Lee informed the Board that he had received a letter today from the Secretary of the Battlefield Residents Association. The Secretary had asked for the letter to be circulated to the Board as part of the concierge service review which they had thought would be discussed at the meeting. A report about the installation of capital works would instead be considered at the meeting and it was felt not appropriate to circulate the letter as it concerned a different issue.

J Lee reported that he would prefer to arrange a meeting with the Secretary to discuss the issue in person and if necessary would like to update the Board at the next meeting.

J Noble-Nesbitt confirmed that dates had been set for Board appraisals and that the appropriate paperwork would be issued to Board members in due course.

154 CONCIERGE REVIEW – IMPACT ON LEASEHOLDERS

Submitted: Report by the Director of Property Services (previously circulated, copy attached to Official Minutes)

D Langhorne reminded members that a review of the Concierge Service had been approved in September 2009. Leaseholders had raised a number of concerns about work being undertaken in blocks as a consequence of the review. Leaseholders were primarily objecting to works, which they viewed as un-necessary, being carried out and the likely cost implications. 145 leaseholders were affected and the cost of completing the works was calculated at £290k.

The Board was informed that there was a great deal of ambiguity around whether the cost of the work was fully recoverable under the lease. The ambiguity could result in a challenge at a Leaseholder Valuation Tribunal (‘LVT’) which was both timely and costly.

Feedback from leaseholders had been captured at clause three of the report. If a leaseholder challenge was successful at a LVT then there was the possibility that 12 years’ worth of major works could also be challenged which potentially had a financial value to YHN of £2m.

It was hoped that by enforcing the work but not charging leaseholders that

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access to leaseholder properties would be granted. It was important that the work was undertaken as residents’ safety would be preserved and that the work could commence promptly without any additional cost delays.

J Lee reported that YHN had written to the Housing Minister and the LVT about the proposals and although replies had been received they had been fairly non-committal. The Board were presented with three options and advantages and disadvantages of each option for consideration. Option Two was recommended as the preferred option

Comments/Questions

A Board member queried, that whilst it would be difficult to change the terms of the leases, had consideration been given to a) a partial recharge or b) agreeing with leaseholders that the works would be undertaken for free in return for them signing up to a new lease which was less ambiguous?

It was noted that the Board member was not in favour of the preferred recommendation as leaseholders had chosen to purchase their properties, which could be viewed as a form of investment, and that by waiving the charge it appeared that a subsidy was being given to those who had elected to purchase rather than rent. The recommendation to waive the charge was also unfair when compared against the many tenants who now faced having to pay an under occupancy charge.

A Board member remarked that option two was the only sensible option.

D Langhorne reiterated that YHN had consulted with the Leasehold Advisory Service (‘LAS’) about the issue. YHN had regular dealings with the LAS. It was agreed that the suggestion to ask leaseholders to sign up to a new lease could be explored but it was expected that leaseholders would be resistant to this. The loss of income had to be considered against the potential impacts of delaying the programme and LVT challenges.

A Board member queried whether agreeing option two would set a precedent that the cost of future works not also not be passed onto leaseholders.

A Board member thanked D Langhorne for a comprehensive report which provided a lot of detail. It was noted that YHN had a duty of care to all its tenants and that not all those living in multi’s were leaseholders. Whilst the preferred option was costly the safety and well-being of tenants was crucial. For this reason option two was the only viable option.

A Board member noted that a letter from the Department of Communities and Local Government stated that up to £250 could be recovered from each leaseholder without the need for consultation and queried whether each leaseholder could be asked to contribute £250.

J Johnson commented that a lot of thought had been given to charging leaseholders £250 but it was felt that if the charge was to be levied leaseholders would not grant access to their properties. As a consequence

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the programme could be substantially delayed given the strength of feeling amongst leaseholders about this issue. Concerns around safety had therefore led to the conclusion that no charge be levied so that the works could be completed.

A Board member queried whether in not agreeing to the work being undertaken, leaseholders were exposing themselves to any liabilities? In the event a disaster occurred due to the failure of a leaseholder granting access to their property, there must be a liability and it was important this issue was brought to the attention of all leaseholders.

RESOLVED:

i) That the Board approved option two (enforcing the work but not recharging it to leaseholders) on the basis that the other options were likely to encounter difficulties that would not be cost effective to resolve and also in the interest of good leaseholder relations.

155 STRATEGIC RISK REGISTER

Submitted: Report by the Assistant Chief Executive and Director of Corporate Services (previously circulated, copy attached to Official Minutes)

S Breslin presented an annual update of YHN’s Strategic Risk Register 2013/14. The Register had previously been considered by the Audit Committee who had proposed no changes. Two new risks had been added being a) that staff skills and experience do not meet future service delivery requirements and b) that the organisation it brought into disrepute. The risk priority score for two risks had also been increased.

Changes had also been made to a number of definitions used to describe the effectiveness of controls to provide a more accurate picture.

The Chair commented that the risk assessment and audit procedures appeared to be robust. No amendments were proposed.

RESOLVED:

i) That the Board approved the 2013/14 Strategic Risk Register.

156 EQUALITY AND DIVERSITY UPDATE

Submitted: Report by the Chief Executive (previously circulated, copy attached to Official Minutes)

J Lee informed that the report had been considered by members of the TLC in advance of the meeting noting that the Board had raised concerns about how equality and diversity (‘E&D’) was managed at Board level within YHN in September 2012. A TLC had been created to look at how E&D matters were reported to the Board and to also consider the future of the SIAG.

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Attached to the report was a draft SHEF template. It was proposed that a full report outlining YHN’s E&D activities would be considered on an annual basis. In addition three times a year a shorter document outlining recent updates and E&D activity over the previous quarter would be considered.

It was noted that an E&D event had been held in Newcastle in April 2013. A guest speaker had been invited to the event and delegates has had also been invited to participate in a break out session focusing on Welfare Reform issues. The event had been well attended and a report detailing actions and outcomes from the event would be considered in due course.

The TLC had considered a report concerning the future of the SIAG and following a lively debate agreed that an E&D event should continue to be held every two years. This would provide an opportunity for tenants and partners to get together to consider YHN’s E&D activities and objectives.

It was also agreed that an E&D focus group should be established.

Comments/Questions

A Board Member noted that following changes to YHN’s Scheme of Delegation the role and remit of YHN’s Committee had changed and queried where the dividing line was between E&D matters being considered by the Finance and Resources Committee and Board.

J Lee requested that for the remainder of this financial year SHEF reports would be considered by the Board before then being considered quarterly the Finance and Resources Committee and annually by the Board

A member of the TLC asked for clarification concerning the future of SIAG. It was agreed that SIAG would not continue in its current form. Members of SIAG would be invited to participate in focus group events where appropriate.

A Board Member queried how the collection of demographic information was a strategic priority. J Lee replied that YHN would continue to collect data but try to improve how data was collected and used within the organisation.

It was noted that the Chair and representatives of SIAG would be invited to attend the AGM in September 2013 so that formal thanks could be given to them at that meeting.

RESOLVED:

i) That the Board considered the content of the report;

ii) That the Board approved the recommended approach for reporting E&D matters to Board as set out at clause 3.3 of the report; and

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iii) That the Board approved the recommendation from the TLC as set out in clause 5.4 of the report for future engagement on E&D activity.

157 CHANGE OF COMPANY SECRETARY AND GOVERNANCE DOCUMENTS UPDATE

Submitted: Report by the Chief Executive (previously circulated, copy attached to Official Minutes)

J Lee reported that a number of changes had been made to the Scheme of Delegation and Financial Regulations to reflect the recent changes to YHN’s Executive Management Team.

It was also noted that the interim Company Secretary arrangements would come to an end and that a new Company Secretary would be appointed.

RESOLVED:

i) That the Board noted the resignation of Ms L Forrest as Company Secretary with effect from 28 May 2013;

ii) That the Board in accordance with Article 36 approved the appointment of Mrs J Noble-Nesbitt as Company Secretary with effect from 28 May 2013

iii) That the Board approved the changed to the Scheme of Delegations as set out in clause three of the report; and

iv) That the Board approved the changes to the Financial Regulation as set out at clause four of the report

158 ITEMS FOR INFORMATION

RESOLVED – That the following items be received for information:

i) Chief Executive’s Report

ii) Health & Safety Update – Quarter Four

iii) Fire Safety Update

iv) Developing a Strategic Approach to Fuel Poverty – Progress Update report

iii) Officers Delegated Decisions: 3 April 2013 to 14 May 2013

iv) Board Forward Plan

v) Minutes of the Finance and Resources Committee dated 16 January 2013

5

Page 15 of 139

vi) Minutes of the Customer & Service Delivery Committee dated 11 March 2013

EXCLUSION OF PRESS AND PUBLIC

RESOLVED – That in accordance with the organisation’s Access to Information provisions, the press and public were excluded from the meeting during the consideration of all further agenda items.

…………………………………………….. Mr S Murphy Chairman 9 July 2013

Page 16 of 139

Ren

t S

trate

gy S

cen

ari

os

YH

N B

oa

rd

9 J

uly

201

3

6

Page 17 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Conte

xt

•C

urr

en

t G

overn

me

nt

polic

y for

socia

l re

nts

is r

ent

restr

uctu

rin

g:

–B

ring

Lo

ca

l A

uth

ority

(L

A)

and

Reg

iste

red

Pro

vid

er

(RP

) re

nts

clo

se

r to

ge

the

r –

Form

ula

applie

d t

o m

ove o

r converg

e r

ents

tow

ard

‘ta

rge

t re

nt’

–F

orm

ula

= R

PI

+ 0

.5%

+ £

2.0

0 p

er

wee

k

•O

ption

to let som

e p

rop

ert

ies a

t affo

rda

ble

re

nt:

–L

inke

d t

o g

ran

t fu

nd

ing

fo

r n

ew

bu

ild

–A

ffo

rda

ble

re

nt is

up

to

80%

of

ma

rke

t re

nt

Page 18 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Conte

xt

•D

ea

dlin

e f

or

co

nverg

ence 2

015

/16

•

All

HR

A p

rop

ert

ies w

on’t c

onverg

e b

y 2

015

/16

•

Gove

rnm

en

t a

nn

ou

ncem

ent

CP

I +

1%

for

10

ye

ars

afte

r 2

01

5

•S

elf fin

an

cin

g g

ive

s u

s t

he

op

tio

n t

o r

evie

w o

ur

ap

pro

ach

•

But fin

ancia

l se

ttle

ment fo

r se

lf fin

an

cin

g a

ssum

es

we c

on

tin

ue

to

follo

w c

onverg

ence

6

Page 19 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Ou

r cu

rre

nt a

pp

roa

ch

•H

RA

ap

pro

ach

– a

gre

e r

en

t in

cre

ases a

nnu

ally

•

Have

follo

wed

govern

ment

form

ula

ren

t in

cre

ases

•E

xplo

red

altern

ative S

cen

ari

os in

Boa

rd p

ap

er

Dece

mber

201

2

•B

oard

reco

mm

end

s a

ppro

ach

to N

CC

•

NC

C d

ecis

ion

ab

ou

t a

pp

roach t

o r

en

t sett

ing

Page 20 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Wh

at

are

oth

ers

do

ing

?

Revie

w o

f 1

3 h

ousin

g p

rovid

ers

:

•M

ost set o

ut a

n a

pp

roach o

ver

a n

um

be

r o

f ye

ars

•

Many u

tilis

ing

op

tio

n fo

r a

fford

ab

le r

en

t to

fun

d n

ew

bu

ild

•M

ost sett

ing r

en

t o

n e

mpty

ho

mes to

ta

rget re

nt

•R

Ps r

estr

icte

d b

y r

egu

lato

ry f

ram

ew

ork

(d

oe

s n

ot

ap

ply

to

LA

s)

•S

om

e L

As s

ettin

g h

igher

rents

on

po

pula

r

pro

pert

ies o

r by e

xpe

cte

d in

co

me o

f te

nan

ts

6

Page 21 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Ho

w a

re o

ur

ren

ts c

om

pa

re t

o o

the

r

pro

vid

ers

in N

ew

castle

On a

ve

rage

:

•14%

chea

per

co

mpare

d w

ith r

ents

charg

ed

by

Hom

e G

rou

p,

ISO

S a

nd R

ive

rsid

e in N

ew

ca

stle

•

44

% c

hea

pe

r th

an p

rivate

se

cto

r re

nts

cha

rged

in

New

ca

stle

•

35

% lo

we

r th

an L

ocal H

ou

sin

g A

llow

ance r

ate

s f

or

New

castle

•

But som

e v

ari

atio

ns b

y p

rop

ert

y type

Page 22 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Curr

ent re

nt

6

Page 23 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Issues

•R

en

t str

ate

gy w

ould

ne

ed

to s

trik

e a

bala

nce

betw

een

–A

ffo

rda

bili

ty f

or

ten

an

ts

–V

iab

ility

of

HR

A

–P

erc

eptions o

f fa

irness

•F

lexib

ility

lim

ited

•

Lin

k to 3

0 y

ear

busin

ess m

ode

l •

Impa

ct on

op

tio

ns a

ppra

isa

l fo

r N

CC

sto

ck

Page 24 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Scenarios

6

Page 25 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Cu

rre

nt a

pp

roa

ch

- c

on

ve

rge

nce

Wha

t is

th

is?

•R

ent in

cre

ased f

or

all

ten

ancie

s e

ach

April

•In

cre

ases a

pplie

d a

re in lin

e w

ith f

orm

ula

re

nt

•N

o r

equir

em

ent

to s

ee

k a

ppro

val ann

ually

•

No c

ha

ng

es to

re

nt

leve

ls w

hen

pro

pert

ies b

eco

me

va

ca

nt

Page 26 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Cu

rre

nt A

pp

roa

ch

- c

on

ve

rge

nce

•

What doe

s t

his

mean

?

6

Page 27 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Scenario o

ne –

long term

low

er

rent

leve

ls

Wh

at is

th

is?

•R

en

t in

cre

ase

d f

or

all

ten

an

cie

s e

ach

Ap

ril

•In

cre

ase

s a

pp

lied a

re lo

wer

tha

n fo

rmula

ren

t •

No r

eq

uir

em

en

t to

se

ek a

ppro

val an

nu

ally

•

No c

hang

es to r

en

t le

ve

ls w

hen p

ropert

ies b

ecom

e

va

ca

nt

•N

ever

con

ve

rge

•

Implic

atio

ns for

NC

C o

ptio

ns a

ppra

isa

l

Page 28 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Sce

na

rio

on

e –

lo

we

r re

nt

leve

ls

Neve

r co

nverg

e:

6

Page 29 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Co

st o

f sce

na

rio

on

e

2015

/16

5 yr

30 y

r

Gro

ss

Rent

loss

£000

Av

Rent

incr

ease %

Av

Rent

incr

ease %

Gro

ss

Rent

loss

£000

Gro

ss

Rent

loss

£000

STA

ND

ARD

REN

T IN

CREA

SE M

OD

EL (R

PI +

0.5

% +

CO

NV

)0

4.9%

4.9%

00

Rent

incr

ease

of R

PI o

nly,

no

conv

erge

nce

2,37

72.

5%5.

6%5,

952

27,3

90

Rent

incr

ease

of R

PI le

ss 0

.5%

onl

y, n

o co

nver

genc

e2,

864

2.0%

5.6%

8,59

651

,417

Rent

incr

ease

of R

PI le

ss 1

% o

nly,

no

conv

erge

nce

3,35

11.

5%5.

6%11

,240

75,4

45

Rent

incr

ease

of R

PI le

ss 1

.5%

onl

y, n

o co

nver

genc

e3,

838

1.0%

5.6%

13,8

8599

,472

Rent

incr

ease

of 2

.5%

2,37

72.

5%5.

6%5,

952

27,3

90

Rent

incr

ease

of 3

%1,

889

3.0%

5.6%

3,30

73,

363

2014

/15

Page 30 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Sce

na

rio

tw

o -

sh

ort

te

rm lo

we

r re

nts

D

ela

y c

on

verg

en

ce

bu

t th

en

ca

tch

up

:

6

Page 31 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Co

st o

f S

ce

na

rio

tw

o

2015

/16

5 yr

30 y

r

Gro

ss

Rent

loss

£000

Av

Rent

incr

ease %

Av

Rent

incr

ease %

Gro

ss

Rent

loss

£000

Gro

ss

Rent

loss

£000

Del

ay c

onve

rgen

ce b

y 1y

r60

64.

3%4.

3%1,

848

1,84

8

Del

ay c

onve

rgen

ce b

y 2y

r92

24.

0%4.

0%3,

819

3,81

9

Del

ay c

onve

rgen

ce b

y 3y

r1,

114

3.8%

3.8%

5,85

05,

850

2014

/15

Page 32 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Scenario thre

e: fa

ste

r

co

nve

rge

nce

•

Wha

t is

th

is?

•

All

rents

incre

ased

to t

arg

et re

nt in

Ap

ril 2

01

4/1

5

•A

nnu

al in

cre

ase

s b

ased

on

ag

reed

am

ou

nt

the

rea

fter

e.g

. R

PI +

x%

6

Page 33 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Co

st o

f sce

na

rio

th

ree

Page 34 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Scenario four

- diffe

rential re

nt

se

ttin

g

•R

en

t in

cre

ase

s a

nd r

en

t sett

ing a

re n

ot

the s

am

e:

•R

ent sett

ing

is w

here

the

ren

t charg

ed

is c

ha

nge

d

whe

n a

pro

pert

y b

eco

mes e

mp

ty

•R

ent in

cre

ases h

appe

n w

hen a

pro

pert

y is

occu

pie

d a

nd a

te

na

ncy is r

unn

ing

•W

e n

ee

d t

o c

on

sid

er

the

ap

pro

ach

to b

oth

of th

ese

in d

evelo

pin

g a

str

ate

gy

6

Page 35 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Re

nt

se

ttin

g –

‘vo

id to

ta

rge

t’

Wh

at d

oes t

his

me

an

?

•C

ha

ngin

g t

he

re

nt

on e

mp

ty p

rop

ert

ies t

o t

arg

et re

nt

•B

ased o

n 1

2/1

3 a

ctivity r

e v

oid

s, th

e a

dditio

nal in

com

e

wou

ld b

e:

–2013-1

4:

£121k

–2014-1

5:

£62k

–T

ota

l:

£183k

•A

dd

itio

na

l in

co

me

de

cre

ase

s t

o v

irtu

ally

ze

ro t

he

rea

fte

r •

Diffe

rent re

nt payable

for

neig

hbours

in s

am

e p

ropert

y type

Page 36 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Re

nt se

ttin

g –

‘d

em

an

d le

d’

Wha

t is

th

is?

•

Cha

ngin

g t

he

re

nt

on

em

pty

pro

pert

ies b

ase

d o

n

de

man

d f

or

the p

rope

rty

•T

arg

et

rent fo

r po

pu

lar

pro

pert

ies a

nd low

er

rents

for

less p

opu

lar

6

Page 37 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Rent settin

g –

‘dem

and led’

Wha

t d

oes th

is m

ea

n?

•

May r

edu

ce

re

nt lo

ss o

n le

ss p

opula

r pro

pert

ies b

y

incre

asin

g d

em

an

d

•B

idd

ing t

ren

ds a

re c

han

ge

ab

le s

o w

ou

ld n

eed

to

be

mon

ito

red r

eg

ula

rly t

o e

nsu

re a

ppro

pria

te r

ents

se

t •

Base

d o

n 1

2/1

3 b

idd

ing a

ctivity fin

an

cia

l im

pa

ct

would

be

lim

ited

•

Ris

k o

f ne

ga

tive im

pa

ct

on

de

man

d

Page 38 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Activity –

hig

he

r o

r lo

we

r?

•In

fou

r g

roup

s

•E

ach

gro

up w

ill g

et

a s

cen

ari

o:

–D

escrip

tio

n

–S

up

port

ing

fin

ancia

l in

form

atio

n

•G

rou

ps s

hou

ld:

Con

sid

er

imp

act

in t

hre

e k

ey a

rea

s:

–A

ffo

rda

bili

ty f

or

ten

an

ts

–V

iab

ility

of

HR

A

–P

erc

ep

tio

ns o

f fa

irn

ess

6

Page 39 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Activity -

hig

he

r o

r lo

we

r?

R

en

t in

cre

ase

sce

na

rio

s

•S

cen

ari

o o

ne:

long

term

lo

wer

rent

leve

ls “

ne

ver

co

nve

rge

” •

Scen

ari

o tw

o:

sh

ort

te

rm low

er

rent

leve

ls “

dela

y

co

nve

rge

” •

Scen

ari

o thre

e: a

ll to

targ

et in

14

/15

“fa

ste

r

co

nve

rge

nce”

•O

r stick w

ith c

urr

ent

ap

pro

ach

Page 40 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Fe

ed

back r

eq

uire

d fro

m G

rou

ps

Scen

ari

o:

Imp

act:

Hig

h,

med

ium

, o

r lo

w

Co

mm

en

tary

Affo

rdabili

ty f

or

tenants

Via

bili

ty o

f H

RA

Perc

eptions o

f fa

irness

Overa

ll vie

w o

n s

cenario

6

Page 41 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Fe

ed

back

Page 42 of 139

YH

N B

oard

– r

en

t str

ate

gy S

cen

ari

os

9 J

uly

2013

Ne

xt ste

ps

•C

onsultation w

ith N

CC

abo

ut a

ppro

ach

•

Agre

e s

co

pe

an

d t

imin

g f

or

co

nsultatio

n w

ith

ten

an

ts

•N

CC

decis

ion

•

30

ye

ar

mo

del w

ill b

e r

efr

esh

ed

follo

win

g d

ecis

ion

6

Page 43 of 139

Board 9 July 2013

HRA 2012-13 Outturn Report

Report by Head of Finance

For Decision

1. Background information

1.1 The purpose of this report is to set out the Housing Revenue Account (‘HRA’) actual revenue and capital results for the financial year ended 31 March 2013. It will also show the impact of the ‘in year’ activity on the HRA reserves.

1.2 It should be noted that these results are subject to audit and are therefore potentially subject to change.

1.3 The paper is structured as follows:

The summary revenue position for 2012-13 and how it compares to:

Our last forecast set out and reported to Board in January 2013; and

The actual results for the previous financial year 2011-12.

The revised budget for 2013-14.

The reserves position as at March 2013.

The 2012-13 Capital outturn position for the HRA and major variations.

HRA borrowing in relation to the limit on indebtedness.

1.4 In the tables in this report illustrating variances, a negative or credit amount relates to a reduction in costs or increase in income.

7

Page 44 of 139

2. Summary HRA Revenue Outturn Position for 2012-13

2.1 Table 1 - Actual results for 2012-13 compared to our in January 2013 estimate

Budget

Provisional Actual

2012-13

Revised budget

2012-13

Variation from

Revised budget

£m's £m's £m's %

HRA Income (118.3)

(118.1) (0.2)

0.2

HRA Expenditure 113.7

116.5 (2.8)

(2.4)

HRA (Surplus) (4.6)

(1.6) (3.0)

Capital projects funded from HRA 3.0

1.1 1.9

172.7

NET HRA (Surplus) (1.6)

(0.5) (1.1)

HRA expenditure includes:

YHN Management Fee 27.6

27.9 (0.3)

(1.1)

2.2 Table 1 shows that the HRA made an in year surplus in 2012-13 which is £1.1m better than the projected in year surplus. This is largely due to expenditure variances including an under-spend on the YHN Management Fee of £0.3m. This outturn has allowed additional capital financing requirements to be met from earmarked reserves and revenue resources whilst adding £1.6m to contingent reserves. We have reassessed the HRA reserves balances and are able to satisfy the minimum contingent balance agreed by Board. Full details of closing reserves are set out in section 4.

The detailed analysis of the £1.1m variance is set out in table 2.

2.3 Analysis of variations against the provisional actual results for 2012-13

The following table gives a breakdown of the variation of actual 2012-13 versus our projected results for 2012-13 as reported to the Board in January 2013 based on results to date:

Page 45 of 139

Table 2

£000's Notes

YHN Management Fee (274) 1

Electricity(£266K 2004 Backdating refund) (423) 2

Gas (131) 2

Council Tax - Backdated refund (500) 3 Environmental Services / Grounds Maintenance (163)

Supporting People Income (156) 4 Investment Programme Revenue costs (410) 5 Leasing (136)

Debt Management costs (119) Interest & Investment income (394) Miscellaneous variations (199)

(2,905)

Net Income (88) Capital projects funded from HRA 1,953 6

(1,040)

2.4 Notes to Table 2:

Numbers in brackets represent good news i.e. reduced expenditure or increased income. Numbers without brackets represent increased expenditure or reduced income

1. The reduction in the Management Fee of £274k is mainly due to a re-phasing of £301k on ICT. Most of this expenditure is being carried forward to 2013/14.

2. Electricity consumption was lower than expected which led to a reduction in costs and there was a backdated refund on electricity bills of £266k. There was also a backdated refund of gas costs relating to old Asylum Seekers Unit properties. This was a significant achievement following two years of negotiation with British Gas by our payments team.

3. A Council Tax refund of over £500k was secured on backdated credits on demolitions.

4. There was a late agreement by Newcastle City Council (‘NCC’) to pay supporting people for the mobile warden service to our sheltered accommodation for 2012/13.

5. In 2012/13 there was a change in accounting policy relating to the cost of the decant and relocation service we provide to tenants. These are now shown separately in the revenue account rather than as capital. The underspend above relates in part to the rephasing of demolitions and housing investment (section 5) and also due to the very prudent estimate for costs due to considerable uncertainty.

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6. The predominantly one off surpluses allowed a further modern homes traditional external project to be funded (£1,953k) from revenue and therefore reduce the borrowing required at the year end.

2.5 Comparison of 2012-13 results against 2011-12

The following table gives a detailed breakdown of the variation of actual 2012-13 versus our actual results for last year 2011-12

Table 3

Budget Actual

2011-12

Provisional Actual

2012-13 Variation

£m's £m's £m's %

HRA Income

(127.3) (118.3)

9.0 7.1

HRA Expenditure

122.0 113.7

(8.3) (6.8)

HRA (Surplus)

(5.4) (4.6)

0.8

Capital projects funded from HRA

7.3 3.0

(4.3) (58.8)

Net (Surplus) 2.0 (1.6)

(3.6) HRA expenditure includes:

YHN Management Fee

28.7 27.6

(1.1) (3.8)

2.6

The following table gives a breakdown of the variation of actual 2012-13 against the 2011-12 actual based on results to date

Table 4

£000's Notes

YHN Management fee (1,106) 1

Net Transfer of Byker to Byker Trust 2,526 1

Rent Increase (2,464)

Reduced Service Charges 3,002 1

Interest Receivable 281

Increased Debt Write off 844 1

Reduction in Contribution to Repairs account (1,731) 1

HRA Subsidy loss 8,544 2

Interest payable (13,569) 2

Non Dwelling Depreciation 4,994 2 Contributions to Reserves (632) 3

Capital Projects funded from HRA (4,317) 3

Miscellaneous Variations 102

(3,526)

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Notes to Table 4:

Numbers in brackets represent good news i.e. reduced expenditure or increased income. Numbers without brackets represent increased expenditure or reduced income

1. The transfer of Byker properties to the Byker Community Trust in July 2012 has had a significant impact on the 2012-13 financial results compared to 2011-12. Whilst the transfer does not account for all of these variations in their entirety it is a key factor in each item noted above and also has an impact in other variations such as interest payable.

2. 2012-13 was the first year of self-financing and this had a significant impact in certain budget areas. There was no subsidy received in respect of 2012-13 and the reduction in debt by ~40% resulted in a significant reduction in interest payable

3. At the beginning of 2012-13 there were significant levels of earmarked reserves. The 2012-13 results reflect our managed use of and therefore reduction of those reserves.

3. HRA 2013-14 Revised Budget as at May 2013

3.1

Table 5

Base Budget 2013-14

Revised budget

2013-14

Variation from Base

budget

£m's £m's £m's

HRA Income (120.0) (120.0) -

HRA Expenditure 116.2 116.4 0.2

HRA (Surplus) (3.8) (3.6) 0.2

Capital projects funded from HRA 3.5 3.5 -

NET HRA (Surplus) (0.3) (0.1) 0.2

HRA expenditure includes:

YHN Management Fee 27.0 26.6 (0.4)

Table 5 shows a slight variation on the closing HRA balance due mainly to commitments of £337k carried forward from 2012-13.

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4. Reserves

4.1 Table 6 – Reserves Outturn 2012/13

Reserve Opening Balance £m Closing Balance £m

Contingent Reserve 10.56 12.12

Earmarked Reserves

Furniture Investment Reserve 2.90 1.96

Capital Programme Reserve 1.66 0.00

Renewals Fund 0.41 0.49

Concierge Projects 1.96 0.68

Lifecycle Reserve 0.06 0.06

Revenue Projects 1.00 0.00

Demolitions Projects 2.22 1.14

Welfare Reform Reserve 0.00 1.00

Total Earmarked Reserves 10.21 5.33

Total Reserves 20.77 17.45

4.2 The reserves are for the following purposes;

Furniture Investment – Purchase of furniture for furnished tenancies and furniture contracts

Capital Programme Reserve – to finance sundry capital works outside the Decent Homes Programme

Renewals Fund - To replace IT hardware and software

Concierge – Investment in infrastructure related to the concierge review

Lifecycle Reserve – Major Repairs Reserve for lifecycle replacement of kitchen’s, bathroom’s, roof’s etc. at the end of their useful life.

Revenue Projects – to fund new revenue projects arising where there was a funding shortfall

Demolitions Projects – to finance demolitions including demolition of the five empty tower blocks at Riverside Dene and Fawdon Park House.

4.3 The reserve balances at the year end reflect:

The use of reserves to finance £6.5m of the investment programme in 2012-2013.

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A reprioritisation of reserves with the creation of £1m Welfare Reform reserve to reflect potential pressures arising from adapting to the impacts of Welfare Reform and the removal of Revenue Projects reserve and Capital Programme reserve.

The schemes which would have been met from the Revenue Projects reserve and Capital Programme reserve such as unfunded capital projects will be met from existing resources.

The balance on the contingent reserve is £1m above the recommended minimum balance of £11.1m previously agreed by the Board.

4.4 The Board is asked to approve the assessment of this allocation of reserves.

5. HRA Capital Outturn

5.1 The HRA Capital Programme invested £47.3m during 2012-13 is set out in table 7 below:

Table 7

2012-13 REVISED ESTIMATE

2012-13 ACTUAL SPEND

Budget to Actual Variance

£m £m £m

Existing Obligations (Lifecycle) 46.6 37.4 (9.2)

Existing Obligations (non Lifecycle) 7.0 4.1 (2.9)

YHN Improving Customer Services:

Concierge Review Implementation 2.4 1.8

Newcastle Furniture Service 3.6 3.7

Other miscellaneous schemes 0.5 0.3

Total YHN Improving Customer Services 6.5 5.8 (0.7)

Grand Total 60.1 47.3 (12.8)

This outturn programme is £12.8m less than the revised estimate. The £47.3m represented significant benefits to tenants including the completion of the modern homes programme. The major variances are set out in section 5.3 below. No funding was lost and no tenant promises were broken.

5.2 Expenditure in 2012-13

Existing obligations (Lifecycle)

This equates to 3,243 internal and external packages. 100% of our stock is now decent, this reflects 48,225 internal and external packages delivered throughout the programme.

During 2012/13, £4.3m was spent on non-modern homes programmes including adaptations (£1.7m), lift refurbishment programme (£1.0m) and boiler replacements (£0.7m).

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Existing obligations (Non - Lifecycle)

During 2012/13 we have demolished the five blocks at Riverside Dene and Fawdon Park House. £1.2m has been spent meeting our landlord obligations including communal areas and £1.3m on insulation programmes.

YHN Improving Customer Services

As part of our programme to improve the concierge service we have invested £1.8m as part of our programme to connect properties to the enquiry centre. £3.7m has been spent on new furniture packs for new furniture service agreements.

5.3 Variances

At the end of 2012/13 the HRA carried forward £12.8m of spend for a range of practical programming reasons.

YHN’s investment programme is made up of a variety of complex and mainstream projects which don’t fall naturally on an annual cycle. All of these are influenced by the external environment including weather, contractor capacity, planning constraints and external match funding. Whilst there appears to be a large carry forward all tenants promises have been met.

Through a continued drive down of construction costs we have been able to deliver more improvements for the same cost over the programme period.

Existing Obligations: Lifecycle

The slippage on the modern homes programme (£4.0m) is predominantly the result of a change in planned programming to gradually reduce levels of work to sustainable levels going forward following the completion of the modern homes backlog. Tenants had not been promised this work would be done in 12/13.

Omits were £1.3m higher than expected and arise where tenants opt out of having work done as part of the modern homes programme. At the least this work will be done as tenancies turn over but YHN is actively encouraging earlier take up.

Around £4m of the carry forward was earmarked for energy efficiency projects which are reliant upon external funding. This carry forward will remain as a call off budget for which we have large scale high impact schemes for 2013/14 that will help us reduce fuel poverty and maximize external funding (for example Ewart, Shaftoe and Westgate multi storey external wall insulation measures). With this money set aside we will be able to respond to funding opportunities requiring matched funding when they emerge.

The prolonged period of cold weather has restricted progress on certain key measures.

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Existing Obligations: Non Lifecycle

Variances were experienced in two key areas: landlord obligations and redevelopment and demolitions. Although significant amounts of landlord obligation expenditure (including fire safety) was delivered during 12/13, some amounts (£425k) were held until the Coroner’s report from the Lakanal House fire was released, to ensure optimum use of the funds.

The demolitions and redevelopments largely occurred as a result of Teasdale House, Riverside Dene and 17 St Oswald's Green schemes. Teasdale House demolition is underway currently and new build is expected on site in June 2013 ahead of original plans. Riverside Dene is complete apart from a utility substation which requires NEDL approval before final landscaping. 17 St Oswald's Green redevelopment is on site now and is completing now.

YHN Improving Customer Services

Outside of the core programme significant investment is being made. The year-end carry forward represents only a two week contractor programme which is programmed to catch up in 2013/14.

5.4 The HRA Capital Programme of £47.3m was financed during 2012-13 as set out in table 8 below:

Funding 2012-13

£'m

Lifecycle Reserve 29.4

HRA Loan Financing 4.3

Capital Receipts 0.4

Other funding 2.1

Use of in year surplus 4.6

Use of earmarked reserves 6.5

47.3

6. HRA Borrowing Position

As part of HRA Self-Financing there is a requirement for HRA borrowing to not exceed the limit on indebtedness (debt cap) at the end of each financial year. Board set a target of keeping borrowing £10m below this level during 2012-13 to reduce the risk of exceeding the cap and leave room for future opportunities.

6.1 Table 9 below shows the movements on the HRA borrowing position to March 2013.

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Table 9

HRA Borrowing

Estimate Actual Variance

£m £m £m

Opening Debt April 2012 387.4 387.4

Byker Transfer (23.9) (23.9) 0.0

Borrowing 19.5 4.3 15.2

Repayment (4.3) (4.2) (0.1)

Closing Debt March 2013 378.7 363.6 15.1

Borrowing Limit 393.3

The closing level of HRA debt at March 2013 was lower than the revised estimate by £15.2m as a result of re phased capital expenditure of £12.8m as set out in section 5 and £2m more capital financing from revenue than originally planned.

7. The Business Implications

7.1 YHN Mission and Strategic Objectives: A healthy HRA and YHN financial position supports the achievement of all YHN’s strategic objectives.

7.2 Value for money/efficiencies: Detailed, timely and accurate financial information allows YHN to identify areas of concern with regards to Value for Money, the need to generate efficiency savings and the ability to monitor progress in achieving those savings.

7.3 Impact on services/performance: In 2012-13 all core services were sustained.

7.4 Outcomes for tenants/leaseholders: In 2012-13 we were able to manage finances to provide a range of services and to deliver our original promise to tenants around decent homes.

7.5 Risk (reputation, relationship): Regular review of our financial position by board members is key to YHN’s ability to pre-empt issues arising from inadequate funding.

7.6 Environmental: During 2012-13 some major capital projects were delivered which will contribute to environmental sustainability and in the reduction in fuel poverty.

7.7 Legal: The legally required statutory financial statements relating to the HRA and YHN outturn will be published separately at the year end.

7.8 Stakeholder Involvement/Consultation: None.

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8. Conclusion and recommendations

8.1 The Board is asked to:

8.1.1 Receive for comment the variations on the 2012-13 actual expenditure to the 2012-13 revised budgets for the HRA;

8.1.2 Receive for comment the outturn position on the HRA Capital programme; and

8.1.3 Approve the assessment of the allocation of reserves as described in section 4.1.

9. Implementation

9.1 The HRA expenditure will be included in NCC’s published financial statements.

9.2 The audit of NCC accounts, including the HRA, is still to be externally audited. There may therefore be changes to the statements resulting from audit queries.

Background Papers

Report to F&R Committee July 2013

Budget working papers held in Finance Section

YHN Management Agreement

YHN Delegations – Report to Board 1st April 2004

Contact Officer: If you have any questions about this report that you would like clarifying before the meeting, you can contact:

Lisa Forrest (Head of Finance) by telephone on 0191 2788616 or email lisa.forrest@yhn.org.uk

Keith Embleton (Finance Manager – Revenue) by telephone on 0191 2788635 or email keith.embleton@yhn.org.uk

Andrew Lister (Finance Manager – Finance Business Support) by telephone on 0191 2788630 or email Andrew.lister@yhn.org.uk

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Board 9 July 2013

Appointment of Vice Chair and Board Member and Chair appointments Report by Chair

For Decision

1 Introduction

1.1 It has been our practice to seek nominations for the position of Vice Chair on an annual basis and this report sets out the process for the appointment of Vice Chair.

1.2 The report also updated the Board on the outcome of recent interviews for Board members and the Chair.

2 Background

2.1 Since 2010 the Board has operated with one Vice Chair. This practice has worked well and the present Vice Chair had provided support to me as required and in addition carried out a number of other duties which have been required of him as Vice Chair.

2.2 The appointment of one Vice Chair also represented a financial saving in board member payments.

3 Vice Chair

3.1 The responsibilities of the Vice Chair are:

3.1.1 to assist and support the Chair in fulfilling his/her duties and responsibilities;

3.1.2 to deputise for the Chair in his/her absence;

3.1.3 to assume responsibility for a particular area of responsibility or interest as may be agreed by the Board, such as chairing committees;

3.1.4 to meet with the Chair and Chief Executive as required in between Board meetings; and

3.1.5 to undertake such other duties as may be delegated to them by Board.

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3.2 As operating with one Vice Chair has worked it is proposed that YHN continues this practice. In the event that the responsibilities of the Vice Chair increase as the organisation grows and develops, then the appointment of a second Vice Chair would be considered.

4 Process for appointing Vice Chairs

4.1 Board members interested in putting themselves forward for the position of Vice Chair are asked to let Joanne Noble-Nesbitt, Company Secretary, know in writing by Friday 9 August 2013. In the event that there is more than one nomination for the position then a ballot will be held.

5. Committee Chairs and Vice Chairs

5.1 Every September I set out my proposals for Committee membership in a Board report. Within the report I also nominate Committee Chairs for the forthcoming year. In September 2013, having taken into consideration feedback from individual Board member appraisals, the results of the Board self-assessment questionnaires (which will be discussed later on the agenda), the future needs of YHN and Board member development opportunities, I would also like to propose the appointment of Committee Vice Chairs. Previously Committee Vice Chairs have been self-nominated and appointments agreed by the members of the Committee.

5.2 I believe that appointing Chairs and Vice Chairs in September 2013 with strengthen YHN’s committees and help address issues raised in the self-assessment questionnaire that members skills are not always best utilised.

5.3 Board members are invited to discuss this proposal.

6 Board membership

6.1 On 5 March 2013 the Board received a report which set out that the following Board members are due to stand down at the Annual General Meeting (‘AGM’) on 24 September 2013:

Tenant members: John Reid and Julie Purvis; and

Independent members: Judith Common and Elaine Snaith.

6.2 All four members put themselves forward for re-appointment. Interviews for tenant and independent Board members were held on 3 and 4 June 2013 and a total of twelve candidates were interviewed. The interview panel consisted of myself, J Noble-Nesbitt, L Doherty and J Lee (for the independent interviews only)

6.3 Mindful of the need to have the right skills and experience to meet present and future challenges combined with the quality of candidates, it was agreed by the interview panel that all four of the retiring Board members should be re-appointed for a second or third term of office. The appointments will be confirmed at the AGM.

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7 Chair interviews

7.1 Four candidates were interviewed for the position of Chair on 5 June 2013. The interview panel consisted of Pat Ritchie (Chief Executive of NCC), Michael Burke (NCC Councillor with responsibility for the Housing Portfolio), Nitin Shukla, Paul Dutton and John Lee as an observer.

7.2 Unfortunately the interview panel was unable to appoint a new chair, as there was no clear cut conclusion following the interviews. Following discussion with J Lee and P Ritchie, I have agreed to remain as Chair of YHN for an additional three months until December 2013. Discussions will continue with NCC on next steps.

8 Business Implications

8.1 Mission and Strategic Objectives: The work of the Board contributes to all of our strategic objectives

8.2 Value for money/efficiencies: The decision to continue to have one Vice Chair achieves a financial saving.

8.3 Resources (financial, property, technological or human): There is a budget allocation to meet Board member payments and the requirements for equipment, training and induction.

8.4 Impact on services/performance: The decision to re-appoint serving board members will result in there being no impact on the performance of the Board and that the Board will have the right skills, knowledge and experience to meet future changes and challenges. Having already identified two candidates to be the future Chair of YHN, when the decision is made as to which candidate to appoint a full induction will be undertaken with the new Chair to ensure that they are able to fulfil the role.

8.5 Outcomes for tenants/leaseholders: Board Members, the Chair and Vice Chair contribute to decision making to make sure that tenants and leaseholders receive the services they need.

8.6 Risk (reputation, relationship): The decision to delay the appointment of a new Chair shows that YHN has considered the implications of making the wrong decision instead preferring to await the decision of the NCC’s review before making an appo