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In developing the LHS assumptions have been made regarding the likely level of resources that will be available to deliver the Strategy. It is hoped that additional resources will be available to accelerate certain priorities although it is also recognised that if resources reduce then the timescale for achieving some priorities will have to be revised. To help rank the relative order of all the priorities listed in the LHS they have been identified, in order of priority, as either 'key, 'high' or 'medium'. This therefore indicates which priorities would be accelerated or revised, depending on the actual level of resources available.
Table 3 identifies the main sources of public sector investment that have been identified as contributing to the delivery of the Strategy. These can be summarised as follows:
Housing Revenue Account (HRA) – Revenue
Although the LHS focuses mainly on new build provision and stock improvement the Council spends in excess of £97M each year on the management and maintenance of its housing stock. The majority of the funding to run the housing service comes from rental income, with an average weekly rent for 2004/05 being set at £42. North Lanarkshire Council's rents are consistently below the national average local authority rent in Scotland. As part of its Business Plan the Council will keep its management and maintenance costs under review to ensure they are in line with its thirty year financial projections.
Housing Revenue Account (HRA) - Capital
Through the prudential borrowing regime the Council will invest an average of £39M per annum over the next five years in upgrading its housing stock in line with the stock condition survey findings. The Council's five year investment programme is set out in Appendix 6.
As part of its thirty year financial projections, in line with the Prudential Borrowing Framework, the Council has made assumptions about future rental income and expenditure, taking into account Council house sales, outstanding debt, management and maintenance costs, and void levels. These projections are used to calculate the Council's ability to finance new borrowing to support the capital investment programme, while maintaining rents at an affordable level. Assumptions have also been made about the likely increase in construction costs reflecting recent and projected trends. The Council has projected that it can fully meet the investment requirements of its housing stock while maintaining rents at an affordable level, with rent increases pegged at 4% in 2004/05 and 3.5% thereafter.
As with any long term financial plan, including those of RSLs, there is a need to keep the projections and assumptions used under constant review to ensure that the level of investment that has been assumed can actually be delivered. The main risks, or variables, that have to be managed include:
Construction costs increasing beyond projected levels
In order to minimise this risk the Council is reviewing its procurement methods for its capital programme and is entering into longer term measured term contracts and partnering arrangements with contractors that will help avoid uncertainty over contract values, while providing efficiencies in delivering the programme, and hopefully employment and training opportunities for local people.
Voids increasing beyond projected levels
Realistic assumptions have been made about future void levels taking into account the current position and past trends. The Council is committed about tackling areas of low demand and assumptions have also been made about potential future demolition where the stock is not considered to have a long term future. The effective management of voids continues to be a high priority for the Council and will be kept under constant review as part of the Business Plan process.
Significant variations in stock levels and/or receipts from council house sales
Assumptions have been made about the likely level of future demolitions and Council house sales, which clearly affect both income and expenditure projections. Approximately half of the capital programme will be financed from capital receipts, mainly from council house sales, therefore any significant variation in the level and value of house sales could have a significant impact on the programme. This will also be kept under close review but recent evidence appears to show that house sales values have been increasing, in line with the general upward trend in house prices, which if sustained, would have a very positive effect on the financial projections.
Investment requirements increase
The Council has based its investment requirements on the 2000 Stock Condition Survey, adjusted to reflect more recent tender costs. In addition the investment proposals also include for work not included in the stock condition survey but which the Council and tenants have prioritised as part of the North Lanarkshire Standard. This includes environmental and back court improvement work and allowances for asbestos removal and lead pipe renewal. The Scottish Housing Quality Standard also has to be taken into consideration.
Although baseline information is not available on all the factors of the Standard, the Council is confident that its investment plans as they stand will be sufficient to ensure that it can meet the Standard for its own stock at least by the target date of 2015. However the investment requirements of the stock will be kept under review and a further stock condition survey is planned to commence in 2006. It should also be noted that one of the main impediments to the Council, and indeed other RSLs, being able to meet the investment needs of its stock is the non-participation of owners in communal work. This has been identified through the Council's bid for Private Sector Housing Grant to Communities Scotland.
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