Agenda item

Fire Authority Service Planning processes for 2021/22 and beyond - Revenue Budget 2021/22 and Capital Asset Strategy 2021/22 to 2025/26

Report of the Assistant Director Resources/Treasurer

Minutes:

The Panel received a report from the ADR/T which presented the Fire Authority’s draft Revenue Budget for 2021/22, the Capital Strategy 2021/22 – 2025/26 and the Medium Term Finance Plan (MTFP) for 2021/22 – 2025/26 for initial consideration prior to its formal consideration by the Fire Authority at its meeting on 11 February 2021.  The draft budget proposals were subject to the finalisation of the local government finance settlement grant and Council Tax and Business Rate figures from the billing authorities. 

 

The ADR/T explained that the report set out a base case for a 1.99% increase in Council Tax rates as well as a 0% increase alternative.  He highlighted that a decision to freeze Council Tax for 1 year would impact permanently on the level of Council tax income that the Fire Authority could raise.  A 0% increase would result in a reduction in annual income of £0.551 million in 2021/22 rising to £0.617 million per year by 2025/26 and additional savings would need to be identified in order to balance the budget.  The total loss of income over the 5 year period of the MTFP would be just over £2.9 million.  It was recognised that the public had been impacted as result of the pandemic, however, questions on Council Tax increases were asked as part of the IRMP public consultation and 80% of respondents supported an increase in council tax to fund fire and rescue services.  Apart from Wealden District Council, other local authorities in the area were planning on taking the maximum basic Council Tax increase.  The ADR/T added that there was significant uncertainty surrounding the budget beyond 2021/2 and a number of pressures had been identified in what was a challenging Star Chamber budget setting process.  Further information on the risks were set out in paragraph 4.9 of the report.

 

The ADR/T highlighted some key budget proposals including investment in new People Strategy, the revenue impact of the IT Strategy, the extension of the interim control service until the end of September 2021, the need to progress regular wholetime firefighter recruitment and training and the top up of general balances to a 5% policy minimum.  It was noted that savings of £0.5m had been identified for 2021/22 which included IRMP savings.  The ADR/T added that the Authority faced a range of risks and significant financial uncertainty over the forthcoming years with a further Comprehensive Spending Review expected in 2021/22 and a review of the Business rate and funding formula.  The MFTP set out a best case scenario based on settlement funding assessment (a combination of income from core grant and business rates) remaining the same in cash terms and a worst case scenario where it reduced by 5% each year.  Under these scenarios the Authority would need to plan for further savings of up to £2.7m by 2025/26. Key assumptions made as part of the MTFP were set out in paragraph 4.2 of the report. 

 

There would be a continued focus on efficiency in the areas of estates and transport, shared services and operational collaboration and investment in IT (CRM and Firewatch) and a planned reduction in overall reserves from £18 million to £3 million as Capital investment continued.  From 2022/23 it would be necessary to start borrowing to continue to invest and there were plans to borrow in the region of £10 million over the 5 year period of the current Medium Term Financial Plan.  The ADR/T confirmed that he was broadly satisfied that the proposed Revenue and Capital budget was based on robust and transparent estimates.

 

The Panel questioned whether it was right to ask the public for additional funding given the financial pressure that many would be feeling as a result of the pandemic and whether the budget had been ‘over modelled’ given it allowed for future pay increases when it was likely that there would be a public pay freeze and if there was some flexibility in the budget with regards to income from Business Rates.  However, the Panel also recognised that a 1.99% Council Tax increase was relatively minor in terms of the impact on individual households and that not implementing the increase would cause a long term budgetary impact for the Service.  The Panel was minded to not make a specific recommendation but that both a 1.99% and a 0% Council Tax increase budget options should be presented in the report to the Fire Authority so that all information was available to make a decision on the matter.

 

With regards to the points raised by the Panel on the validity and strength of the modelling, the CFO advised against suggesting reducing the budget for pay increases as decisions on pay agreements were not within the remit of the Fire Authority but were decided nationally.  She added that the income from Business Rates was relatively small and reminded Members of the lack of additional funding for the implementation of the new fire safety legislation requirements which had not been included in the budget estimates.  The recommendation to increase general balance reserves to 5% was to allow some flexibility to deal with risks associated with the pandemic and new regulation obligations. 

 

The ADR/T clarified that the budget did not included any income from the Business Rates pool.  The original income projection for the Pool for the Authority for 2020/21 was £400k, however, at the end of quarter 2 this had reduced to £200k.  Actually income from the pool would not be received until after the billing authorities accounts for 2020/21 had been audited and closed.  The ADR/T advised caution on over reliance on the Business Rates pool income.  Although it may provide some additional flexibility, there was also specific criteria on what Business Rates pool income could be spent on.  ADRT added that in order to present 0% increase budget option to the Fire Authority it would be necessary to identify savings in order to achieve a balanced budget and asked the Panel for direction. 

 

Members acknowledged that not increasing the Council Tax would affect the baseline budget for a number years and would be at odds with the lobbying of government for additional council tax flexibility.  There was concern that if the 0% increase was not presented it would be put forward as a late proposal and the Fire Authority would not have access to the full information and consequences of the decision.  The CFO commented that in terms of savings which would need to be made in order to achieve a 0% increase budget, these would need to include the IRMP proposals that the Authority chose not to vote for as these had already risk assessed and costed as well as other cost cutting measures.

 

Councillor Pragnell moved an amendment to recommendation 2 to change the wording from ‘consider whether’ to ‘instructs officers’.  This was seconded by Councillor Peltzer Dunn. 

 

The Panel voted in favour of the amended recommendations, as set out below, 6 -1 (with Councillor Evans voting against).

 

RESOLVED: That the Panel:

 

1.         Noted that:

 

a)    the one year settlement as set out in the Local Government Finance Settlement was only provisional at this stage and may be subject to change;

 

b)    the proposed increase in council tax of 1.99% was based on the threshold in the Provisional LGFS;

 

c)    the East Sussex Business Rate Pool, of which the Authority was a member, had been approved as part of the LGFS, and that any income would be transferred into the Business Rates Pool Reserve; and

 

d)    the final council tax and business rate bases and the collection fund positions were still awaited and that final budget proposals may change once this information was received.

 

2.   Instructs officers to model an alternative council tax increase of 0% for 2021/22, how the current budget proposals can be reduced by £0.551m to compensate for the loss of income and include this as an option in the budget proposals for the Fire Authority.

 

Supporting documents: