CARDIFF Council plans to borrow more than £100m in order to fund council house building and making improvements to homes.
The local authority’s communities and adult services scrutiny committee met on Monday, March 17, to discuss its long term business plan for housing and how much it plans to spend on building and maintaining homes in 2025/26.
Money to finance £188m worth of capital spend on council housing will mainly come from additional borrowing (128m).
A council document published recently also shows that £49.7m to finance capital spend on housing will come from external grants and contributions.
However, due to the annual nature of Welsh Government funding this figure has been given as an estimate by the council.
Scrutiny committee member, Cllr Mary McGarry, said at Monday’s meeting: “It must be a nightmare doing a business plan based on so many assumptions and so many risks particularly the funding.
“Welsh Government external funding is a huge amount that we are relying on.”
A council’s housing revenue account (HRA) records income and expenditure in relation to council housing.
Cardiff Council, along with other local authorities in Wales, has to present a HRA business plan (including a 30-year financial model) to the Welsh Government every year.
Cllr McGarry went on to ask the local authority’s operational manager for capital, corporate and treasury, Anil Hirani, how comfortable he was with the council’s business plan given the risks.
Mr Hirani said: “In terms of the revenue elements, yes I am comfortable with the business case.”
Revenue expenditure in terms of housing for Cardiff Council is expected to be £128.97m for 2025/26.
This is to maintain and manage the council’s housing stock, fund capital financing and pay for historic interest and debt repayments.
The largest chunk of the council’s capital spending (£148.1m) will go on building and acquiring new homes.
It currently has a housing development programme which plans to deliver more than 4,000 new homes over the next 10 years.
To date, the local authority has delivered 1,819 homes. This figure is made up of 1,461 council homes and 358 homes for sale. A further 422 homes are being built across 12 sites in the city.
Mr Hirani added: “I know the vision sometimes is we have to spend, or we should spend, otherwise there is lost opportunity for potential grants, so there is a balance.
“Certainty of grant funding is something that we may never achieve, but I think… maybe we can do more if we had that.”
Data presented to scrutiny committee members showed an increasing trend in borrowing by the council to finance capital spending up until 2032.
The council’s data also showed that the HRA general balance is forecast to decrease over the next five years, but then increase by tens of millions of pounds over the next 17 years.
Cardiff Council’s corporate director of people and communities, Sarah McGill, said: “It is absolutely critical that we have got an understanding of the environment in which we are operating.
“There are some opportunity costs that if we were too cautious we would then lose out in terms of those opportunities.
“We see that every year. On the other hand it is important to be prudent as well in the way that we are planning.
“Those levels of variables mean… the governance that we have around the management of this business plan is crucial.
“I think it is probably difficult to overstate the level of conversation that happens, the level of challenge.
“The level of discussions about those decisions is absolutely essential.”
