Report of the Assistant Director Resources/Treasurer

The Panel considered a report of the ADR/T which presented the Fire Authority’s draft Revenue Budget 2022/23, Capital Strategy 2022/23 – 2026/27 and Medium Term Finance Plan (MTFP) for 2022/23 – 2026/27 for initial consideration prior to its formal consideration by the Fire Authority at its meeting on 10 February 2022.

The ADR/T introduced the report highlighting that final Council Tax and Business Rate collection fund figures were still awaited from billing authorities, as was confirmation of fire specific grant allocations from the Home Office.  The ADR/T outlined the key headlines of the proposals:

-       Although the Comprehensive Spending Review covered a three year period, the Government had announced a one year provisional settlement for 2022/23 only.  This was understood to be due to the Department for Levelling Up, Housing & Communities plans to implement a change to the funding formula as part of the Fairer Funding Review and make changes to Business Rates for 2023/24.

-       The settlement included a one-off un-ringfenced Services grant of £0.535m to cover costs such as pay, inflation, increase in National Insurance contributions and other pressures.  It was expected that the pension grant would continue at the same cash level as in 2021/22 

-       The Council Tax referendum threshold remained at 2%, except for eight fire services in the lowest quartile of Council Tax that had been granted flexibility to increase their precept by up to £5.  The Revenue Budget and MTFP had been prepared on the basis of a 1.99% increase for 2022/23 and beyond.

The Panel noted that the budget reflected the outcome of the Star Chamber process during which cost pressures, investment bids and savings had been discussed and agreed with Assistant Directors.  A balanced budget had been achieved through the use of reserves, however, the ADR/T stressed that the ongoing use of reserves to achieve a balanced budget was not a sustainable approach. 

The Capital Asset Strategy proposals included the refurbishment of the five Whole Time Stations and new investment in Live Fire Training facilities and Multipurpose Training Hubs.  As reserves were used to invest in capital projects, borrowing was set to increase.  The Revenue impact of new borrowing was reflected in the MTFP from 2022/23 onwards.  There were three scenarios outlined in the MTFP with the mid-case scenario showing a need to deliver savings of £1.533m in the revenue budget by 2026/27.  The ADR/T added that if it was not possible to generate savings through efficiencies in the areas identified in the budget report there may be a need to revisit the Integrated Risk Management Plan proposals as a way of generating savings given the majority of spending was on operational provision.

The Panel asked whether the cost of utilities had been included as a risk factor.  The ADR/T agreed that inflation, set at 2%, was a risk and that areas which may be subject to excess inflation (utilities, timber and food costs) had been identified and built into budget.

Members also asked for further information on the Tax Income Guarantee Scheme (TIG) grant, specifically how secure the provision was and whether it would be needed into 2023/24.  The ADR/T explained that Government had made provision for the impact of covid on the Business Rate and Council Tax collection rate through the TIG.  This was being paid in 2 tranches, however there was still currently a degree of uncertainty over the exact amount the Service would receive as some billing authorities had revised their business rate returns to Government and revised TIG grants had yet to be confirmed. 

The Panel queried whether income from Business Rates Pool had been included in the budget proposals.  The ADR/T clarified that it was practice not to build the Business Rate Pool income into the base budget given the uncertainty over the amount to be received.  Any actual income received was transferred into an earmarked reserve to be spent in line with the Pool Memorandum of Understanding.  Income from the Pool had enabled the Service to make significant investment supporting its Protection services including in the Customer Relationship Management software and the recruitment of 6 protection trainees.  It was noted that it was likely that 2022/23 would be last year of the Pool if the Business Rates was subject to a reset in 2023/24.

The Panel thanked officers for a comprehensive report.

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;

(d)  that the Home Office was still to announce the quantum and allocation of fire specific grants for 2022/23; and

(e)  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.    Recommended that the Fire Authority, subject to any changes as a result of recommendation 1, approves:

(a)  an increase in council tax of 1.99% and thus approves:

(i)    the budget proposals set out in this Report and the net budget requirement of £41.718m for 2022/23;

(ii)  the council tax requirement of £29.240m; and

(iii)the council tax and precepts as set out in Appendix F

(b)  the capital programme for the next five years and the capital budget of £7.250m for 2022/23 including the plans to use CIL, capital receipts, revenue contributions and new borrowing to finance capital expenditure;

(c)  that the General Balance remains below the Authority’s policy minimum of 5% of the net revenue budget until 2024/25;

(d)  the fees and charges set out in Appendix C;

(e)  the use of reserves as follows to balance the revenue budget in 2022/23:

·     0.2m from Sprinkler reserve

·     £0.2m from BR Pool reserve (to fund investment in protection services)

·     £0.032m from Financial Stability reserve

(f)    that the Treasurer, in consultation with the Chairman and the Chief Fire Officer, be authorised to make any adjustments to the presentation of the budget to reflect the final Local Government Finance Settlement.