Report of the Assitant Director Resources/Treasurer

The Fire Authority received the report of the Assistant Director Resources/Treasurer (ADR/T) presenting Members with the findings of the Month 4 monitoring undertaken on the Revenue and Capital Budget 2022/23 and Capital Programme 2022/23 to 2026/27.  It was agreed by the Fire Authority, in consultation with the Monitoring Officer, that this item could be discussed simultaneously with item 180 – Strategic Service Planning & Medium Term Financial Plan 2023/24 as there were many overlaps that would affect this report. 

The ADR/T explained that the current year forecast was for a Revenue overspend of £446,000 due to pressures including being over establishment with Firefighters and costs of overtime in the Safer Communities Directorate and Training.  There was an underspend/slippage of 40% regarding the Capital Programme, this affected both fleet/engineering and estates.  There were worldwide supply chain disruptions affecting both programmes, both in terms of availability of vehicles and the cost of materials for estates projects.  Officers described work taking place to prioritise projects and Members supported an approach that committed to a smaller number of projects, delivered them in full and then moved on to the next tranche rather than trying to deliver more than was possible at once.

The ADR/T highlighted several risks affecting the organisation these included additional pay awards and inflationary pressures on non-pay spend above the 2% budgeted.  There were national pay negotiations ongoing for all staff.  The offer to Green book had been £1,925 per person, currently in consultation, and the 2% offer made to Grey/Gold book staff had been rejected.  Recent public sector pay awards more generally, for example to police and NHS staff had been around 5-6%.  It was expected that risks resulting from both pay and non-pay inflation may be in the region of £1,300,000 to £2,000.000 on top of the forecast Revenue overspend.

Members were deeply concerned by the inflation figures and that these were predicted to rise further.  There was no indication of when the rises would end, and that the Authority were clearly not in times of “business as usual” in terms of budget setting.  Members were keen that the Service continue to seek additional funding from central Government. 

The ADR/T explained that this year the Finance team were working closely with other departments to get more accurate budget forecasts.  The Senior Leadership Team (SLT) had agreed some actions including management of vacancies and oversight of overtime claims.  They would also be reviewing options to manage non-pay related spending including expenses, travel, hire of external venues and printing costs.  The ADR/T reminded Members that the Authority had some contingency within the Revenue budget and reserves which it could use to fund unplanned spend in the current financial year.

The ADR/T explained that the Authority has been well managed financially and this put it in a good position when compared to some other Fire Authorities, to tackle the financial challenges ahead.  Because of the uncertainty surrounding both funding and costs a full update of the Medium Term Financial Plan (MTFP) was not possible this year.  Instead, the paper provided an illustration of the potential funding gap the Authority faced in 2023/24.  This was the third year in a row that a one year settlement had been received from Government.  It was unclear what this year’s settlement would look like, figures were not due until late December 2022, but the messaging from Government indicated that Local Authorities would not get any additional help on either pay or price inflation.  The funding scenarios had been reviewed and were based on cash +2% (for Settlement Funding Assessment) and the spending assumptions included the full year impact of forecast pay awards for 2022/23.  There was also an assumption that a pay increase of 4% for all staff for would be necessary in 2023/24.  The “illustrative scenario” for next year was a potential funding gap of £3,000,000.  Members were reminded that ¾ of the Authority’s expenditure was staffing with the majority of that being frontline.  The ADR/T stated that if the funding gap was of the scale that had been modelled then efficiencies alone would not be sufficient to deliver a balanced budget and that the Authority would need to revisit its IRMP and consider reductions in the service it provided.  For the purposes of illustration the cost of running a full-time pumping appliance was around £0.9m - £1.0m. 

The Star Chamber process for this year was requiring department heads to identify unavoidable pressures, new bids and potential savings.  The messaging was stark, the Authority must prioritise and be clear about where to invest, officers would be bringing back proposals to the Fire Authority at their meeting in December 2022.

The ADR/T confirmed that they were continuing, through several channels, to lobby Government regarding funding.  Officers held regular meetings with the local MPs and had been very clear with them about the situation that the Authority faced.  They Chairman had written to the Fire Minister and the NFCC had made submissions to Government.  Officers were doing all they could but were aware too of the wider context and that all Fire Authorities were in the same position. 

Members supported the suggestion that, it might be wise to reduce the number of Capital projects underway at one time, instead to seek to initiate fewer but ensure completion of those underway.  The ADR/T confirmed that there was progress being made on the Capital Programme with work commenced on site.  Works at Seaford to accommodate the HVP had been completed and builders were onsite at Hove and would then be starting Bohemia Road and the first of the multipurpose training hubs.  Planning was progressing at Preston Circus; contractors had been appointed and they were working on updated costings. 

The Authority were grateful to the ADR/T for the information and clarity and were understanding of the likely need for them to re-visit the Integrated Risk Management Plan.  Support was expressed for continued lobbying for a fair and equitable funding settlement including increased council tax flexibility.  The Authority recognized that it was possible that they may have to consider the “core Service offer” at this challenging time. 

RESOLVED – The Fire Authority agreed to note:

       i.         the risks to Revenue Budget and the projected overspend;

     ii.         the risks to the Capital Programme;

    iii.         the reduced net forecast drawdown from reserves;

    iv.         the grants available and spending plans;

     v.         the monitoring of savings taken in 2022/23; and

    vi.         the current year investments and borrowing.