Appendix B
Statement On Annual Governance Arrangements by The Chairman of The Combined Fire Authority, The Treasurer To The Combined Fire Authority And The Chief Fire Officer
Scope of Responsibility
Lancashire Combined Fire Authority (the Authority) is responsible for ensuring that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded and properly accounted for, and used economically, efficiently and effectively. The Authority also has a duty under the Local Government Act 1999 to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.
In discharging this overall responsibility, the Authority is responsible for putting in place proper arrangements for the governance of its affairs facilitating the effective exercise of its functions, and which includes arrangements for the management of risk.
The Authority approved and adopted an updated Local Code of Corporate Governance in 2018 and this was reviewed by the Audit Committee in July 2024. It aligns with the principles of the CIPFA/SOLACE Framework Delivering Good Governance in Local Government Framework 2016. Included within the Code are the following core principles:-
1. Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law
2. Ensuring openness and comprehensive stakeholder engagement
3. Defining outcomes in terms of sustainable economic, social, and environmental benefits
4. Determining the interventions necessary to optimise the achievement of the intended outcomes
5. Developing the entity’s capacity, including the capability of its leadership and the individuals within it
6. Managing risks and performance through robust internal control and strong 0public financial management
7. Implementing good practices in transparency, reporting, and audit to deliver effective accountability
(A copy of the code, setting out the core and supporting principles, what the Authority commits itself to do and how it will do this can be found on our website at [To be added].
This statement explains how the Authority has complied with the code and also meets the requirements of regulation 6(2) of the Accounts and Audit Regulations 2015 in relation to the publication of a statement on internal control.
The Purpose of the Governance Framework
The governance framework comprises the systems and processes, and culture and values, by which the Authority is directed and controlled and its activities through which it accounts to, engages with and leads the community. It enables the Authority to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate, cost-effective services.
The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. It cannot eliminate all risk of failure to achieve policies, aims and objectives and can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an on-going process designed to identify and prioritise the risks to the achievement of the Authority’s policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically.
The governance framework has been in place at the Authority for the year ended 31 March 2024 and up to the date of approval of the 2023/24 Statement of Accounts.
The Governance Framework
The Authority’s Local Code of Corporate Governance set out its framework for corporate governance. The key elements of the systems and processes that comprise the Authority’s governance arrangements in accordance with the seven principles of the Local Code of Corporate Governance include:-
· The Community Risk Management Plan (CRMP) sets out the direction of the Service and how we will make Lancashire safer. It is informed by the greatest risks to the people and communities of Lancashire which are identified in our strategic assessment of risk (opens in a new tab). The plan describes our aim, priorities, equality objectives and values, alongside how we will prevent, protect and respond to the risks in Lancashire. The current plan covering 2022-2027 can be found on our website at Community Risk Management Plan 2022-2027 | Lancashire Fire and Rescue Service (lancsfirerescue.org.uk).
· Lancashire Fire and Rescue Service has six core strategies: our People, Prevention, Protection, Response, Financial and Digital Strategies. Our prevention, protection and response activities address the fire and rescue related risks that are identified in those strategies and outline the measures in place and actions we take to make Lancashire safer. Each strategy is periodically reviewed and evaluated to ensure we are delivering against our outlined objectives and are doing so in the most efficient and effective way. Wherever necessary, changes will be made within each strategy to ensure we operate in line with our aim, priorities and values.
· The Strategic Assessment of Risk’ (SAoR) seeks to underpin our Community Risk Management Plan (CRMP) by ensuring that risk management drives decision-making within Lancashire. This document can be found on our website at Strategic Assessment of Risk 2023-2024 | Lancashire Fire and Rescue Service (lancsfirerescue.org.uk);
· The Annual Service Plan details the activities we will undertake to deliver the strategy set out in our CRMP. The current plan was approved this year and can be found on our website at Annual Service Plan 2024-2025 | Lancashire Fire and Rescue Service (lancsfirerescue.org.uk);
· A Communication Strategy and the Consultation Strategy;
· A comprehensive performance management framework, with the Performance Committee and Service Management Team receiving regular reports on performance against targets and any corrective action taken to address any variances. On an annual basis the Authority publishes an Annual Service Report;
· A Corporate Programme Board provides oversight across 5 areas:-
o Business Process Improvement Programme
o Service Delivery Change Programme
o Capital Projects Programme.
o People Strategy
o Risk Management
All major projects and reviews follow similar format and report to the Corporate Programme Board;
· The Authority operates a Committee Structure aligned to strategic objectives, within agreed Terms of Reference, as follows:-
o The Audit Committee - To advise on the adequacy and effectiveness of the Authority's Internal and External Audit Service and risk management arrangements, which operates in line with the core functions identified in CIPFAs Audit Committees – Practical Guidance for Local Authorities.
o The Resources Committee - To consider reports and make decisions relating to financial, human resources and property related issues.
o The Planning Committee - To consider reports and make decisions relating to all aspect of planning arrangements, including consultation and communication arrangements.
o The Performance Committee - To consider reports and make recommendations on all aspects of performance management.
o The Appeals Committee -To hear relevant appeals, grievances and complaints.
· Clear management structure within the Service. The Executive Board, comprising the Chief Fire Officer (head of paid service), and 4 Executive Directors, is responsible for determining policy, monitoring performance and developing service plans in line with the Authority’s overall strategic objectives and is assisted in this process by the Service Management Team;
· The Combination Scheme Order, Standing Orders, Terms of Reference of individual Committees, Scheme of Delegation and Financial Regulations establish overall arrangements for policy setting and decision making and the delegation of powers to members and officers;
· Comprehensive suite of strategies and policies in place and regularly reviewed;
· Codes of Conduct for members and officers, and member/officer protocol, which set out clear expectations for standards of behaviour;
· Both the Monitoring Officer and Treasurer are involved in the Authority’s decision-making process, and ensure compliance with established policies, procedures, laws and regulations; All Authority reports are considered for human resource, financial, business risk, environmental and equality and diversity implications in order to identify key issues;
· The Treasurer’s role and financial management arrangements align with requirements set out in CIPFAs Statement on the Role of the Chief Financial Officer in Local Government and CIPFAs Financial Management Code;
· Well publicised arrangements for dealing with complaints and whistleblowing, and for combating fraud and corruption;
· A Risk Management Strategy and framework which ensures that risks to the Service’s objectives are identified and appropriately managed;
· Comprehensive Business Continuity arrangements in place, and tested on a regular basis;
· A framework to review potential partnership arrangements utilising set criteria prior to entering into such arrangements;
· Compliance with data transparency requirements, including publication of all key documents, committee agenda and minutes, pay policy and publication scheme on the internet;
· Regular assessment of training & development needs of both members and officers, including appropriate appraisal system. Sufficient budget to meet relevant training requirements; and
· Comprehensive service review process in place, comprising external views in the form of HMICFRS Inspection review, External Audit reviews, Internal Audit reviews and internal reviews undertaken by our own staff. Ultimately these culminate in the production, and publication, of an Annual Assurance Statement.
Review of effectiveness
The Authority has responsibility for conducting, at least annually, a review of the effectiveness of its governance framework including the system of internal control. The review of effectiveness is informed by the work of the executive managers within the Authority who have responsibility for the development and maintenance of the governance environment, the Internal Auditors annual report, and also by comments made by the external auditors and other review agencies and inspectorates.
A statement of assurance was approved by the Authority in April 2024, it sets out the effectiveness of the governance arrangements for which it is responsible, including the system of internal control. The statement of assurance covers all the principles set out in the Authority’s Code of Corporate Governance. The statement of assurance reveals no areas of weakness in the Authority’s corporate governance arrangements; the arrangements are in all cases at least adequate and in the majority of areas good.
In maintaining and reviewing the effectiveness of the Authority’s governance arrangements the following have been considered:-
· A review of minutes of the Executive Board, Audit Committee and Authority to ensure that periodic monitoring and reviews are being reported appropriately and governance issues are addressed.
· We updated our Strategic Assessment of Risk that underpins our Community Risk Management Plan (CRMP) by ensuring that risk management drives decision-making within Lancashire. We undertook an Emergency Cover Review (ECR) in 2022 to ensure that its emergency response remains effective and efficient, and that the Service is well equipped to respond to future challenges.
· Her Majesty’s Inspectorate of Constabulary and Fire & Rescue Services (HMICFRS) reported the outcome of their second full inspection in July 2022; the focus was on the service they provide to the public, and the way they use the resources available. The HMICFRS reported that the Service is performing exceptionally well and has been recognised as ‘outstanding’ for promoting values and culture. As well as being rated ‘outstanding’ for culture and values, the service was rated as ‘good’ in the other 10 categories and there were no areas that ‘require improvement.’ The results mirror those of the service’s first full inspection in 2018, with the new report highlighting that the service has improved in almost all areas since then. The next inspection is due in 2025.
· A new Annual Service Plan has been published, providing clarity, both internally and externally, on our priorities set out in the CRMP and describes what our ambitions are for each priority, as well as setting out the projects and actions that will be delivered, developed or reviewed during the coming year against each of our priorities. This is supported by Local Delivery Plans.
· Statement of Intent: Enhanced Collaboration agreed between LFRS, Lancashire Constabulary and Northwest Ambulance Services. Collaboration group established with regular reports to Members.
· Performance appraisal incorporating values is undertaken throughout the Service.
· Internal Audit services were provided by Lancashire County Council, who comply with CIPFA’s Code of Internal Audit Practice. The Head of Internal Audit is required by professional standards to provide an opinion addressing governance, risk management and control and thereby to provide assurance that the risks to the objectives of Lancashire Combined Fire Authority are being adequately and effectively controlled. As part of the 2023/24 internal audit plan the auditors undertook various reviews and gave the overall opinion that they can “provide substantial assurance regarding the adequacy of design and effectiveness in operation of the organisation's frameworks of governance, risk management and control.”
· The Authority’s external auditors are Grant Thornton, they are required to consider whether the service has put in place proper arrangements to secure economy, efficiency and effectiveness in is use of resources. Their conclusions are set out below:
o Financial Sustainability – “Significant weakness in arrangements identified in relation to the Authority’s level and use of reserves to manage its financial position”. Note that this has now been addressed as part of setting the 2024/25 MTFS; the general reserve remains at c£1m above the minimum level of reserves for the duration of the five-year period of the MTFS.
o Governance – “No significant weaknesses in arrangements identified”.
o Improving economy, efficiency and effectiveness - “No significant weaknesses in arrangements identified”.
· On 3 April 2024 Grant Thornton gave an unqualified opinion on the Authority’s finance statements ended 31 March 2023.
Last year’s Annual Governance Statement identified a number of areas for improvement, and progress against these are set out below:
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Action to date |
Complete/ On-going |
Owner |
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A project to replace the existing Performance Management System will commence. |
Work has progressed on developing the KPI suite for Service level performance reporting and user acceptance testing is well underway. Two service level KPIs remain in development, and relevant communications and training delivery plans are being drafted ahead of rollout. Regarding the development of internal (front-end) PowerBi dashboards, the first dashboard for Finance Dept. is due to be released by the end of quarter one. Two further dashboards, one for service delivery and one for on call performance, are also in development.
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Ongoing |
Head of Service Improvement |
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An upgraded Finance system will be implemented in April 2022, as part of that we will review and implement improvements to the monthly budget monitoring process, making greater use of additional functionality provided.
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Improvements to the monthly budget monitoring process have been developed and tested and are being rolled out over the summer of 2024. |
Ongoing |
Head of Finance |
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Identify a mechanism to report to Members of the CFA our response to national recommendations made by the HMICFRS during the year. |
Regular HMICFRS updates are provided to CFA members via a specific HMICFRS update paper to every planning committee. Members are also provided with a HMICFRS update on Strategy day via a presentation, this includes an overview of the annual ‘State of fire’ report and any recommendations. Regarding the HMICFRS values and culture recommendations, progress is reported alongside LFRS equality action plan which is provided to CFA members. |
Completed |
Head of Service Improvement |
Significant governance issues
On the basis of the review of the sources of assurance set out in this statement, we are satisfied that Lancashire Combined Fire Authority and Lancashire Fire and Rescue Service has in place a satisfactory system of internal control which facilitates the effective exercise of its functions and which includes arrangements for the management of risk.
A number of improvement recommendations and one significant governance issue was identified as part of the external audit. The significant government issue relating to the Authority’s level and use of reserves to manage its financial position was addressed in February 2024 as part of setting the Budget and Medium Term Financial Strategy for 2024/25; the general reserve remains at c£1m above the minimum level of reserves for the duration of the five-year period of the MTFS. The detail of this issue, improvement recommendations and management comments are included in the ‘Auditors Annual Report template - Fire and rescue - 21-22 (lancsfirerescue.org.uk). We are satisfied that the steps set out in the management comments will address the improvements identified in our governance arrangements.
Approved:
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David O’Toole
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Justin Johnston
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Steven Brown
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County Councillor D O’Toole, Chairman, Lancashire Combined Fire Authority [DATE] |
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J Johnston, Chief Fire Officer, Lancashire Fire and Rescue Service [DATE] |
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S Brown, Treasurer, Lancashire Combined Fire Authority [DATE] |