Becky Smeathers, Head of Finance, delivered a presentation to accompany the report which requests approval for an update to the medium Term Financial Strategy mainly as a result of COVID-19 impact.

The report outlines how COVID-19 has impacted financially on the economy and the Service funding streams to date and how proposed amendments to the reserves strategy will assist with future budgeting, along with presenting scenarios for setting of the Council Tax.

Points highlighted included:

a)  the report was issued last week whilst the Government’s Comprehensive Spending Review was announced earlier this week and as a result, the Service needs to respond by updating the Medium Term Financial Strategy;

b)  with a 11.3% contraction in the economy expected for 2020 which it is hoped will recover by the end of 2021 (calendar years, not financial), Central Government agreed to fund 75% of irrecoverable Council Tax and Business Rate losses so the Service is likely to recover £375,000 by the end of the year;

c)  the Central Government imposed a Public Sector pay freeze which will affect green book staff but not firefighter pay which is set by the National Joint Council;

d)  a marginal Fire and Rescue Sector funding increase of 4.5% is predicted next year but this includes the grants previously mentioned and the pension grant is expected to be built into the base line grant, so in effect the increase is minimal;

e)  reserves have been reviewed and amendments are purposed to the strategy including utilising reserves to help pick up activity during the recovery stage;

f)  the national economic impact of COVID-19 includes a drop by 20% of GDP;

g)  interest rates are predicted to remain at stable at 0.1% which is beneficial for the funds borrowed, but not loaned;

h)  there is uncertainty regarding the period after March 2021 as currently there is a cliff-edge for when the business rate holiday and furlough schemes ends and no details any further support measures have been announced;

i)  there are significant financial risks related to Brexit, but it is not yet known to what extent and how large an impact there will be;

j)  although the worst case scenario of a 5% cut in base grant is not now expected, there is however a budget deficit this year of £1,227,00 which is likely to decrease in future years as council tax collection improves;

k)  a more detailed report will be submitted to the Finance and Resources Committee in January, including actual grant figures, whereas it is currently only possible predict government grants at this point in the year;

l)   the revenue budget is predicted to be tight for several years to come.

The Chair of the Authority, Councillor Michael Payne, was joined by the Lead Opposition Member, Councillor Andrew Brown, in thanking Becky Smeathers and the Finance Team for their thorough work and comprehensive explanation, along with the members of the Finance and Resources Committee and a good cross-party relationship for helping steer the Service through a very difficult period and ensuring that the Service was in a good position last year, prior to the current pressures.

Resolved