Agenda item

Report of the Chief Fire Officer

Tracey Stevenson, Assistant Head of Finance, presented the report detailing the provisional financial performance of the Service for 2023/24, analysing significant variances against the original revenue and capital budgets, and the outturn position provides an overview of the financial position following the completion of the unaudited Statement of Accounts for 2023/24, and highlighted the following points:

 

(a)  The 2023/24 revenue budget of £49.965m was approved by the Fire Authority in February 2023. The approved budget included a £404k use of the budget pressure support reserve to address the budgeted funding deficit. During the year, additional use of other specific earmarked reserves were approved, increasing the budget to £50.258m. Total expenditure for 2023/24 was £48.931m, representing an underspend by £1.327m (2.64%). 

 

(b)  From this underspend, £327k carry forward requests have been received, where the Service has not been able to complete a specific piece of work in-year and the work and costs will be completed in 2024/25, this reduces the underspend to £1.000m (1.99%). In addition to the carry forwards, £475k is being requested to be moved into earmarked reserves, £300k for future anticipated costs regarding the existing mobilisation system whilst the replacement system is being implemented, and a new reserve of £175k is to be established to support the revenue costs of capital schemes. The £404k use of the budget pressure reserve is not required, and £121k is to be moved to the general fund reserve.

 

(c)  Expenditure and funding can be summarised as follows:

 

	Original Budget 2023/24	Revised Budget 2023/24	Actual 2023/24	Variance 2023/24
	£’000	£’000	£’000	£’000
Employees	39,939	40,128	39,393	(735)
Premises	4,111	4,318	4,078	(240)
Transport	2,219	2,225	2,420	195
Supplies and Services	4,394	4,573	4,571	(2)
Third Party Payments	950	951	1,024	73
Support Services	172	171	127	(44)
Capital Financing	2,692	3,093	2,979	(114)
Sales Fees and Charges	(425)	(519)	(495)	24
Other Income	(4,087)	(4,682)	(5,166)	(484)
Net Revenue Expenditure	49,965	50,258	48,931	(1,327)
Funding
Net Expenditure
Pension Grant	(2,340)	(2,340)	(2,340)	0
Revenue Support Grant	(6,189)	(6,189)	(6,189)	0
Non-Domestic Rates	(11,286)	(11,286)	(11,286)	0
Council Tax	(29,746)	(29,746)	(29,746)	0
Budget Pressure Reserve	(404)	(404)	0	404
Net Contributions to/-from Other Earmarked Reserves		(293)	509	802
Total Funding	(49,965)	(50,258)	(49,052)	1,206
Net General Fund Surplus	0	0	(121)	(121)

 

(d)  Wholetime pay is underspent by £379k in total as at March 2024, due to vacancies in the establishment.  At the end of March 2024, the number of posts was 16 Full Time Equivalent below the approved establishment. There were 11 transferees from other fire and rescue services in year and 20 apprentice firefighters commenced their training in April 2024. Overtime has been used to cover the ridership in the short term, resulting in a £85k overspend against the pre-planned overtime budget.

 

(e)  The On-call pay budget is underspent by £219k. The largest variances relate to retaining fees (£62k) and training (£55k). On-call pay can vary significantly from month to month depending on levels of activity. The number of mobilisations can be highly variable and activity levels have generally been lower than expected in 2023/24, notwithstanding spikes of activity relating to flood events.  Expenditure on training has been lower than budgeted, due to lower levels of recruits requiring training as a result of having dual contract firefighters. Therefore, this budget has been reduced for 2024/25.

 

(f)  Non-uniformed pay is underspent by £206k overall, due to vacancies in the establishment.

 

(g)  Premises costs are underspent by £240k. Significant variances include:

 

·  A £151k underspend relating electricity and a £51k overspend relating to gas. Energy costs have fluctuated significantly since the invasion of Ukraine in February 2022, making budget predictions difficult.

·  Business rates are underspent by £89k, due to a revaluation of West Bridgford station.

·  A £148k underspend on planned building maintenance is mainly due to completion of works slipping into 2024/25. Offsetting this is a £90k overspend relating to reactive building repairs and maintenance. The overspend has been driven by a number of activities, including the removal of asbestos from Eastwood station.

 

(h)  There is an overspend of £195k in transport related costs. Significant variances include:

 

·  A £359k underspend relating to fuel. Fuel prices have reduced during the year, in addition stock levels at year end are adequate.

·  A £371k overspend on unplanned fleet maintenance. This is due to extending the useful life of the fleet, and due to unscheduled repairs to water and foam tanks.

·  A £83k overspend on outsourced vehicle maintenance. This relates to specific repairs that cannot be carried out by the main contracted company.

·  A £18k overspend relating to mileage claims and public transport costs. There are a number of reasons for this, including an increase in detachments resulting from wholetime vacancies, and mileage allowances/public transport costs paid to staff compulsorily transferred to the Joint Headquarters.

·  A £39k overspend on tyres which has arisen due to extending the useful lives of some vehicles.

 

(i)  There is a surplus of £484k in other income. Significant variances include:

 

·  £87k relating to secondment income not provided for in the budget.

·  £262k relates to a surplus on interest receivable due to increased interest rates and higher than expected level of funds being available for investment, due to slippage in the capital programme.

 

(j)  As a part of the outturn position it is proposed that £802k be transferred to earmarked reserves:

 

Earmarked Reserve	Amount £’000
External Audit Fees – carry forward	144
Training Tower Remedial Work – carry forward	130
Fire Cover Review – carry forward	53
Disagregation of Tri-Service/Existing Mobilisation System	300
Capital Funding Equalisation	175
Total	802

 

(k)  Including the above earmarked reserve movements, a net total of £509k has been transferred to earmarked reserves during the year, the total earmarked reserve balance as at 31 March 2024 is £5.846m.

 

(l)  After the proposed contribution of £121k to the general fund reserves for 2023/24, the general fund reserves stand at £5.082m as of 31 March 2024. 

 

(m)  Total general fund and earmarked reserves as at 31 March 2024 are £10.928m.  Movement in reserves during 2023/24 are summarised as follows:

 

Reserves	Balance 01/04/23 £’000	Net Movement 2023/24 £’000	Balance 31/03/24 £’000
Earmarked	5,337	509	5,846
General Fund	4,961	121	5,082
Total	10,298	630	10,928

 

(n)  Provisional expenditure for the capital programme for 2023/24 is £7.271m, funded by £6.626m borrowing, £513k revenue contribution to capital outlay (RCCO) and £132k from capital grants. This is an underspend within the year of £1.952m against the revised budget of £9.223m.

 

(o)  The Service Development Centre and the appliances project have exceeded the budget for 2023/24 by £479k and £433k respectively, due to timing of the certification of the projects work crossing over the two financial years.

 

(p)  Adjusting for the additional £912k budget allocations, increases the in-year underspend to £2.864m. Total slippage on the programme requiring budgets to be transferred into 2024/25 is £2.678m, resulting in an actual underspend of £186k. £41k of this underspend was to be funded by Emergency Services Mobile Communication Programme grant held in earmarked reserve, the grant will remain in earmarked reserves until needed. 

 

(q)  The summary of variances is as follows:

 

	Revised Budget 2023/24	Actual 2023/24	Variance 2023/24	2024/25 Budget to be Moved into 2023/24	Slippage to 2024/25	(Under)/Over Spend
	£’000	£’000	£’000	£’000	£’000	£’000
Transport	4,782	4,070	(712)	(433)	1,145	0
Operational Equipment	277	108	(169)	0	169	0
Property	1,917	1,927	10	(479)	436	(33)
IT and Communications	2,247	1,166	(1,081)	0	928	(153)
Total	9,223	7,271	(1,952)	(912)	2,678	(186)
Funded by:
Borrowing	8,554	6,626	(1,928)	(912)	2,578	(145)
Revenue Contribution to Capital and Earmarked Reserves	654	513	(141)	0	100	(41)
Capital Receipts	3	0	(3)	0	0	0
Capital Grants	12	132	120	0	0	0
Total	9,223	7,271	(1,952)	(912)	2,678	(186)

 

(r)  In relation to appliances (£2.981m in 2023/24, £2.416m in 2024/25), Angloco Ltd issued a revised build programme for the 17 new pumping appliances which resulted in quicker delivery time of the chassis from Scania, therefore there is a need to bring forward capital expenditure from 2024/25 of £433k now the final outturn position is known.

 

(s)  Due to the process of securing the finance for the access and inclusion project, the construction programme was delayed until January 2024. Works have commenced at Bingham, Harworth, Ashfield, Misterton and Blidworth fire stations. The project is progressing well against the revised programme, however £322k needs to be slipped into 2024/25.

 

(t)  In relation to the Service Development Centre (SDC) (£660k) 2023/24, (£1m) 2024/25, work is underway to improve and refurbish welfare and training facilities, fire house control system and enhancement of on-site training provision. The budget in 2023/24 is £660k, which includes an additional £160k allocated to install BA wash facilities at SDC and Mansfield fire station for firefighter safety. The work has been completed requiring budget allocated for 2024/25 to be brought forward into 2023/24 (£479k).

 

(u)  For the replacement mobilising system £567k has been paid in 2023/24.  This project spans multiple years in the capital programme and the £403k remaining budget needs to be slipped into 2024/25. Procurement for the numerous elements of this project is progressing, enabling a revised schedule of project expenditure to be established, this will inform the profiling of the scheme budget. Members will be updated on the profile of the scheme budget in the 2024/25 capital programme budget monitoring.

 

(v)  There is a need to repurpose the underspend funded by borrowing of £145k in 2024/25:

 

·  £60k to enable further electrical charging points to be allocated throughout the estate;

·  £68k for remedial works to bring the towers up to the required standard for safe working at height training to be undertaken;

·  £17k for an increase to the light vehicle budgets to allow an MTA vehicle to purchased. 

 

The repurposing of the underspend means there is no increase to the existing overall approved capital programme.

 

(w)  The following increases to the 2024/25 capital programme are required:

 

·  £100k increase to the Access and Inclusion scheme. The increase is required due to additional costs being incurred and only a small contingency being built into the original budget. This will be funded from the efficiency programme reserve, as the cost includes improvements to Ashfield Fire Station to make it suitable as a wholetime station which is part of the efficiency programme.

·  £367k increase to the Energy Reduction and Decarbonisation scheme for works at Highfields to be funded by the grant from the Public Sector Decarbonisation Scheme as reported to Finance and Policy committee in March 2024.

·  £894k increase to the fire appliances scheme, £367k of this relates to aligning the budget to original approved scheme budget and £527k is due to the increase in the contract pricing linked to CPI. It is anticipated the additional capital funding requirements will be managed in year from slippage in other projects and the funding will be finalised at year end.

 

During the discussion that followed the following comments were made:

 

(x)  All underspend has been allocated to reserves, which has strengthened them.

 

(y)  It would be beneficial for reports to include percentages alongside the figures to make the impact of amounts clearer.

 

(z)  The delivery of the capital programme is dependent on capacity plus external issues such as delivery of products, etc, but work is being done to bring in more specialised additional capacity for capital programme delivery.

 

Resolved to approve

 

(1)  The transfer of £802k of underspends to Earmarked Reserves:

 

Earmarked Reserve	Amount £’000
External Audit Fees – carry forward	144
Training Tower Remedial Work – carry forward	130
Fire Cover Review – carry forward	53
Disagregation of Tri-Service/Existing Mobilisation System	300
Capital Funding Equalisation	175
Total	802

 

(2)  The slippage of £2.678m on the capital programme.

 

(3)  The 2024/25 budget for the appliances (£433k) and Service Development Centre (£479k) to be accelerated into 2023/24.

 

(4)  The slippage of £28k on light vehicles to be repurposed for rural firefighting and equipment.

 

(5)  The repurposing of the capital budget underspend that is funded by borrowing of £145k:

 

·  £60k to enable further electrical charging points to be allocated throughout the estate;

·  £68k for remedial work to bring the towers up to the required standard for safe working at height training to be undertaken;

·  £17k to be utilised to fund any overspends on existing schemes. 

 

(6)  The following increases to the 2024/25 capital programme:

 

·  £100k increase to the Access and Inclusion scheme;

·  £367k increase to the Energy Reduction and Decarbonisation scheme;

·  £894k increase to the fire appliances scheme.