Agenda item

Joint Report of the Chief Fire Officer and the Treasurer to the Fire Authority

Mark Kimberly, Interim Treasurer, and Tracy Stevenson, Temporary Head of Finance, presented the report which provides an update on the predicted budget position for 2024/25 and to request that the Fire Authority set general guidelines within which the Finance and Resources Committee will develop a detailed budget proposal for 2024/25.

The following points were highlighted and member’s questions responded to:

a)  Whilst the settlement will not be announced until 19 December, the Service is unlikely to be allowed to increase on Council Tax by £5, as it did last year, which will result in a budget deficit, meaning that the Authority will need to review the budget and find further efficiencies. However, as that work has already been very thorough, the only option will be to cut services;

b)  There is some scope to help balance the budget with use of reserves but this is a limited capability and reserves would be best used towards initiatives that deliver future efficiencies;

c)  A lot of financial uncertainties remain such as inflation, pensions and international events, including those which impact on supply chain issues, mainly around vehicles and parts;

d)  This coming year is likely the be the toughest budget year that the Public Sector, including this Service, will have ever experienced. There are options for this Service to investigate, but they are limited and as finances are very tight, and so difficult decisions will need to be made;

e)  Once the Service produces a balanced budget, there will need to be an on-going focus for future years efficiencies and reductions;

f)  Pay awards for firefighters are set nationally and are currently gauged in the budget at an estimated maximum of at 5% for 2024/25, 3% for 2025/26 and 2% for 2026/27. As Central Government did not cover the full value of the pay increase this year, to address the risk of the same happening next year, the estimated maximum increase has been budgeted for this year by the Service. Any pay increase above the estimated values will cost the Service an £350k per additional 1%, with Authorities bound by the National Joint Council determination;

g)  The report sets out the potential income to the Service from a 1.95% increase in Council Tax precept, a 2.95% increase and no increase. Without the £5 increase, the Service will need to consider the 2.95% increase, but will still need to apply efficiency savings;

h)  Reserves currently total £9.4m, as set out in the report, and it is proposed that reserves and strategies are reviewed. Some earmarked reserves are proposed to be re-prioritised following discussions with budget holders, including £485k to the mobilising system as an area of risk for the organisation, plus a £10k efficiency programme;

i)  The Capital programme looks at the affordability of the Service, including where stations and appliances are sited. 17 new appliances were due to be purchased, but this has been delayed into 2029/30 to ensure affordability. The purchase may be brought forward if interest rates reduce;

j)  Risks to the Service will continued to be monitored and responded to.

Members of the Authority commented as follows:

k)  The Fire and Rescue Service cannot be compared to the Police Force which doesn’t pay bargain on a national scale. The Police do not have the available funds to budget for a 5% pay increase and so have budgeted for a 2.5% pay increase and expect that if it the figure is greater than this, Central Government will cover the difference, although this may not be the case;

l)  There has been an indication that whilst the ability of a £5 Council Tax increase will not be granted, there are other, positive arrangements to be proposed by Central Government, the details of which are yet to be made public;

m)  The Authority is tasking the Finance and Resources Committee to consider and debate the options and make a recommendation to the Authority for the Authority to further debate and determine. It would be highly surprising if the recommendation to the Authority wasn’t for the highest possible level available, but that is a decision for the members of that Committee;

n)  If Central Government don’t provide additional flexibility with the option of a £5 precept rise, Authority members will need to review front line services and possibly discontinue some services. It is vital that a consistent opinion is expressed by all members of the Authority, cross-party and across all forums, including persistent lobbying MPs and Central Government.

Resolved to

1)  approve the Medium Term Financial Strategy (MTFS) as set out in Appendix A to the report;

2)  approve the Capital Strategy and Flexible Use of Capital Receipts Strategy contained within the MTFS;

3)  approve the Reserves Strategy contained within the MTFS;

4)  approve the proposed minimum level of general fund reserves of £4.1m as set out in the Reserves Strategy;

5)  approve the re-allocation of Earmarked Reserve as detailed in the Reserves Strategy and set out in the table below:

  Re-allocation of Earmarked Reserve

6)  task the Finance and Resources Committee with providing guidance to the Fire Authority in February in respect of:

  i.  the options for council tax limited to either a council tax freeze or an increase in Council Tax within the referendum limit;

  ii.  The options for addressing any budget deficit to enable the Fire Authority to approve a balanced budget, as required by law.