Agenda and minutes

Apologies were received from County Councillors Lorraine Beavers, Stuart Morris and Ron Woollam.

Members are asked to consider any pecuniary and non-pecuniary interests they may have to disclose to the meeting in relation to matters under consideration on the agenda.

None received.

RESOLVED: - That the Minutes of the last meeting held on 24 March 2021 be confirmed as a correct record and signed by the Chairman.

The Director of People and Development updated Members on the proposed changes to the Service’s Maternity Policy following a review of the arrangements as part of Equality, Diversity and Inclusion (EDI) considerations.

Members noted that the Maternity and Childcare policy set out the entitlements and benefits for pregnant employees, adoptive parents and fathers. The aim of the policy was: to set out a consistent and supportive approach across the Service; to increase awareness about the provisions available for employees; to ensure the protection of the health and well-being of the mother and their child/unborn child and to ensure compliance with legislative requirements.  It set out the contractual and statutory maternity rights to which all pregnant employees were entitled both before and after the birth of a child. The policy dovetailed with the Service’s Flexible Working policy.

The Service wanted to be an employer of choice and for the role of a firefighter to be appealing as a role of preference to a diversity of applicants.  With this in mind, policies had been reviewed and consultation with staff and our Trade Union colleagues undertaken in relation to improving maternity and paternity provision.

It was proposed to increase maternity pay provisions available to women on maternity leave to 26 weeks full pay.  This meant that in future, women commencing their maternity leave would receive full pay for the first 6 months of their maternity leave period. 

It was noted that the Service’s adoption leave arrangements had always mirrored maternity arrangements and this would continue. This supported the Service’s diversity objectives in terms of supporting those employees who wish to become adoptive parents.  Those accessing paternity pay would be entitled to 2 weeks full pay following the birth of the baby.

Subject to Member approval, the new policy would be subject to final consultation with staff and would be supported by a comprehensive update on the Service’s flexible working policy which was also being updated in light of new hybrid working arrangements going forward.

It was proposed to make the changes with effect from any utilisation of these provisions from August.

In response to questions raised by County Councillor Pattison, the Director of People and development confirmed that shared parental leave was a legal requirement and that consultation on the policy had already taken place with Trade Unions, Focus Groups and the Equality, Diversity and Inclusion Forum.

RESOLVED: - That the report be noted and endorsed.

The report set out the Authority’s borrowing and lending activities during 2020/21. All borrowing and investment activities undertaken throughout the year were in accordance with the Treasury Management Strategy 2020/21.

Economic Overview

The coronavirus pandemic dominated 2020/21.  The start of the financial year saw lockdowns which caused economic activity to grind to a halt in many countries including the UK. The Bank of England cut Bank Rate from 0.75% to 0.10% in March 2020 and it remained at this level throughout the 2020/21 financial year. The UK government also provided a range of fiscal stimulus measures, the size of which had not been seen in peacetime.  GDP figures for the financial year were detailed in the report.  In its March 2021 interest rate announcement, the Bank of England noted that while GDP would remain low in the near-term due to Covid-19 lockdown restrictions, the easing of these measures meant growth was expected to recover strongly later in the year.  The UK government's response included the furlough scheme which had protected many jobs. Despite this unemployment still rose. Labour market data showed that in the three months to January 2021 the unemployment rate was 5.0%, in contrast to 3.9% recorded for the same period 12 months ago.

The year also saw an agreement on a Brexit trade deal.

Inflation remained low over the 12-month period. Latest figures showed the annual headline rate of UK Consumer Price Inflation (CPI) fell to 0.4% year/year in February, below expectations (0.8%) and still well below the Bank of England’s 2% target. A similar economic picture had occurred in various economies. The gilt yields (which were a key determinant of borrowing costs for local authorities) fluctuated in line with the economic conditions.

Borrowing

The borrowing of the Fire Authority had remained unchanged at £2m in 2020/21. The current capital programme had no requirement to be financed from borrowing until 2025/26 and the debt related to earlier years' capital programmes.  While the borrowing was above its Capital Financing Requirement (CFR), the underlying need to borrow for capital purposes, this was because the Fire Authority had a policy of setting aside monies in the form of statutory and voluntary minimum revenue provision (MRP) in order to repay debt as it matured or to make an early repayment.  Consideration had been given to repaying the £2m but the penalties incurred on repaying the loans early would incur significant costs currently estimated at £0.967m.  Also, any early repayment meant that cash balances available for investment would be reduced and hence interest receivable would also be reduced.  It was estimated that if interest rates on investments were at 1.4% over the remaining period of the loan, then repaying the loans during 2020/21 would be broadly neutral.  It was concluded that the repayment was not considered to be financially beneficial at the time. However, the situation was periodically reviewed by the Director of Corporate Services. 

Investments

Both the Chartered Institute of Public Finance and Accountancy (CIPFA) Code and the  Ministry of Housing,  ...  view the full minutes text for item 5-20/21

The report presented the year end position for the Authority’s capital programme including how this had been financed and the impact of slippage from the 2020/21 capital programme into the 2021/22 programme. 

At the March meeting the revised capital budget was approved at £2.0m following a re-assessment of potential slippage from the approved 2020/21 programme into the next financial year; reflecting forecast timing of spend.  It was noted that since then 2 areas of work had progressed further in 2020/21 than originally expected, these were:

·         The STC workshop building works - progress was valued on 31 March at £1.7m, £0.6m more than the earlier forecast had predicted – therefore £0.6m had been moved back from 2021/22 budget into 2020/21.  The overall contract sum remained the same, this was purely a timing issue which demonstrated the difficulties in accurately forecasting the phasing of large capital projects which spanned financial years;

·         £15k of reserve appliance equipment was received in March which had been anticipated in April 2021.

As a result of these £0.6m of the slippage had been reversed, increasing the 2020/21 capital programme with a corresponding reduction in the 2021/22 programme.  This change left the final capital programme for 2020/21 at £2.665m. Total capital expenditure for the year was £2.654m, reflecting £21k of slippage and an overspend of £10k, as set out in the report as now considered, and in appendix 1.

Prudential Indicators 2020/21

Under the prudential framework the Authority was required to identify various indicators to determine whether the capital programme was affordable, prudent and sustainable.

The revised indicators, after allowing for the various changes to the capital programme, were set out in the report alongside the actual outturn figures which confirmed that performance had been within approved limits.

The Impact of Slippage from the 2020/21 Capital Programme into the 2021/22 Programme

The original approved capital programme for 2021/22 was £11.3m. In addition to the timing adjustments for the STC workshop and reserve appliances the budget for North West Ambulance Service (NWAS) co-location works at Morecambe Fire station had been removed, following the mutual decision by NWAS and Lancashire Fire and Rescue Service not to proceed with the project.  As a result, the final proposed capital programme for 2021/22 was £10.5m, which was funded from capital grant, revenue contributions, and capital reserves. The revised programme and its funding were considered by Members as set out in appendix 2.  It was clear that due to the Covid-19 pandemic more slippage would occur during 2021/22 and the potential effect of this would be reviewed.  An updated position would be provided to Members at the next meeting.

The report set out revised prudential indicators for 2021/22-2023/24, showing that the revised programme remained affordable, prudent and sustainable.

Capital Reserves

The capital programme over the next 5 financial years would use all the capital reserves and receipts.

County Councillor Mirfin queried the life span, depreciation, and replacement planning for fire appliances.  In response, the Director of Corporate Services advised that the vehicle life span  ...  view the full minutes text for item 6-20/21

This report presented the revenue outturn position and the impact of this on usable reserves.  The annual budget for the year was set at £57.339m.  The final outturn position showed net expenditure of £56.976m, giving a total underspend for the financial year of £363k which was broadly in line with previous forecasts. 

As set out in the Year End Usable Reserves and Provisions Outturn report (reported elsewhere on the agenda) it was proposed to transfer £15k to the DFM earmarked reserves and given the Authority’s current general fund balance stood at £6.0m and the scale of the capital programme, it was proposed the remaining balance of £348k be transferred into the capital funding reserve, reducing future borrowing requirement.

The detailed final revenue position was set out in Appendix 1, with major variances being summarised in the report.

The Director of Corporate Services highlighted:

Covid-19

Funding of £1.6m had been received of which £1.3m had been spent to date, with the balance being held in an earmarked reserve.  It was expected that any further costs associated with the ongoing pandemic would be met from this fund.  £0.1m of underspends would be transferred from savings against the Fleet & Technical Services budget in relation to the reduced use of vehicles during the pandemic.

Non DFM

The £792k variance reflected the £440k funding gap identified at the time of setting the budget in February 2020 and the additional £341k revenue contribution to capital outlay approved during the year.

Wholetime Pay

The underspend was attributed to reduced staffing costs, with early retirements and resignations resulting in average of 18 vacant wholetime posts throughout the course of the year.

Delivery against savings targets

It was noted that performance exceeded the efficiency target for the year largely due to savings in respect of staffing costs and procurement savings. 

Councillor Williams commented that £189k had been put back into reserves in relation to back log maintenance programmes.  He was concerned that there had been in some cases a 30% increase in basic raw materials used in the construction industry which could impact on forward work plans for maintenance.  The Director of Corporate Services advised that one of the risks presented to the Audit Committee was the risk of increasing prices.  He confirmed that prices of raw materials had started to increase, and delays had started to be seen. Given the ability to drawdown against this earmarked reserve, the 2021/22 revenue budget should be able to cope with the increase, but this may be challenging going forwards.  In addition, contracts let on construction projects were coming through over budget which would need to be considered in the future, particularly in relation to the capital programme.

RESOLVED: - That the Committee noted and endorsed the outturn position on the 2020/21 revenue budget, the associated transfer of £15k to the DFM earmarked reserve and a contribution of £348k to the capital funding reserve.

The report presented the year end outturn position in respect of usable reserves and provisions based on the information reported in the Revenue Outturn, Capital Outturn and Treasury Management Outturn reports.

The Authority approved the reserves and balances policy as part of its budget setting process in February, with the year-end outturn position being reported to Resources committee and included in the statement of accounts.  The previously reported Revenue Outturn, Capital Outturn and Treasury Management Outturn all fed the Authority’s overall reserves position, which was considered by Members as summarised in the report.

General Reserve

These were non-specific reserves kept to meet short/medium term unforeseeable expenditure and to enable significant changes in resources or expenditure to be properly managed in the medium term.

The Authority needed to hold an adequate level of general reserves in order to provide:-

·         A working balance to help cushion the impact of uneven cash flows and avoid unnecessary temporary borrowing;

·         A contingency to cushion the impact of unexpected events;

·         A means of smoothing out large fluctuations in spending requirements and/or funding available.

As a precepting Authority any surpluses or deficits were transferred into/out of reserves in order to meet future potential commitments.  Given the Authority’s current general fund balance stood at £6.0m and the scale of the capital programme was proposed that the revenue underspend, £348k was transferred into the capital funding reserve, reducing future borrowing requirement, hence the year-end General fund balance would remain at £6.0m compared with the target range agreed by the Authority at its February meeting, £3.5m to £10.0m. 

Earmarked Reserves

The reserve covered all funds, which had been identified for a specific purpose. The overall reserves level had increased significantly from £7.8m to £10.6m, with the detailed position in respect of the various earmarked reserves considered by Members as set out in the report.

The Director of Corporate Services highlighted:

PFI Equalisation Reserve – This reserve was to smooth out the annual net cost to the Authority of both PFI schemes and would be required to meet future contract payments.  The level of reserve required to meet future contract payments had been updated to reflect current and forecast inflation levels. 

Covid-19 Ringfenced Funding – The Government had provided £1.4m of total funding to meet costs associated with the Covid pandemic.  This balance represented the unused funding held by the Authority at the year end which was available to support activities in 2021/22.

Section 31 – Business Rate Relief Grant – The Government provided Section 31 rate relief grant to individual billing authorities in order to cover the additional in year reliefs provided as a result of the pandemic.  Business rates were split between the Government, billing authorities, Lancashire County Council and the Authority with the Authority receiving 1% of the total.  As such this grant should be split in line with business rates.  However, the Government allocated all of this to billing authorities to aid cash flow, with the correct distribution anticipated in the new year once the outturn business  ...  view the full minutes text for item 8-20/21

This report presented the Core Financial Statements, which formed part of the Statement of Accounts for the Combined Fire Authority for the financial year ended 31 March 2021. 

The Statements took account of the information presented in the Year End Revenue Outturn, Year End Capital Outturn, Year End Treasury Management Outturn and Year End Usable Reserves and Provisions Outturn reports and were prepared in line with recommended accounting practice which was not accounted for on the same basis as for council tax.  As such this meant they did not match the details in the Outturn reports, and hence the sections provided an overview of each statement and a reconciliation between Outturn reports and the Core Financial statements where appropriate.

The Statement of Accounts contained estimated figures that were based on assumptions about the future or that were otherwise uncertain, relating to areas such as pension liabilities, property asset valuations etc.  Estimates were made taking into account historical experience, current trends or other relevant factors.  

It was noted that the 2020/21 core statements presented did not include the adjustments required for recognising the Authority’s share of the collection fund income position for both Council Tax and Business rates, as the information had not yet been received from all billing authorities (this would be updated for the final version of the accounts).

It was noted that the Authority’s 25% share of North West Fire Control Ltd accounts ended 31 March 2021 had been included.

Narrative Report

This set out the financial context in which the Combined Fire Authority operated and provided an overview of the financial year 2020/21 as well as details of future plans. 

Comprehensive income and expenditure account

This statement showed the accounting cost in the year of providing services. It was a summary of the resources that had been generated and consumed in providing services and managing the Authority during the last year. It included all day-to-day expenses and related income on an accruals basis, as well as transactions measuring the value of fixed assets actually consumed and the real projected value of retirement benefits earned by employees in the year.  

The Director of Corporate Services highlighted:

Revenue Support Grant – the Authority did not receive any Revenue Support Grant during 2019/20 due to the Lancashire business rates pool pilot for part of that year.  Instead, the national non?domestic rates increased to compensate for this.

Non-Domestic Rates Redistribution – Amounts raised through non?domestic rates, including the Authority’s element of business rates collection fund surplus accumulated during the preceding year by the billing authorities, in addition to top up grant receivable from the Government as part of the localisation of business rates.  The change between years reflected the reduction for the business rates pool applicable during 2019/20 only.

Business rates S31 grant – This grant was allocated to the Authority by the Government and related to small business rates reliefs allowed by the Government as part of the localisation of business rates.

Business Rates Reliefs S31 grant  ...  view the full minutes text for item 9-20/21

The Director of Corporate Services advised that this report provided an update on several matters which may affect the outturn position for the 2021/22 revenue budget, and it set out the current budget position in respect of the 2020/21 revenue and capital budgets and performance against savings targets.

Section 31 Grant in respect of Business Rates Relief

Part of the Authority’s funding came from business rates in the form of a locally retained share and a top-up grant. As reported elsewhere on the agenda, the 2021/22 revenue budget assumed the receipt of £1.9m S31 grant to offset the shortfall carried forwards on the business rate collection fund.  This grant was anticipated to be received later in the financial year after the completion of the Business Rates 2020/21 year-end returns were submitted by billing authorities and reconciled by central government, most likely in Q4 2021/22.  As the grant directly related to the year-end returns the amount was still not certain.

Local Tax Income Guarantee scheme

The government had announced proposals to support billing authorities by providing an additional grant equivalent to 75% of the shortfall in collection rates, for both Council Tax and Business Rates, during 2020/21.  When the 2021/22 budget was set, billing authorities were unable to reliably estimate the grant due therefore this sum was excluded from the budget setting process.   As the shortfalls could only be calculated as part of the billing authority collection fund outturn reporting, the results were currently expected to be available during July 2021.  In early June the Ministry for Housing, Communities & Local Government (MHCLG) confirmed that an ‘on account’ payment of the sum of £0.074m for Business Rates would be received, being 50% of their estimate of our entitlement under this guarantee scheme.  The corresponding estimate for Council tax was nil.   Once information was received from billing authorities Members would be updated.

Pay awards 2021/22

In line with the Government stance in November 2020 on future public sector pay restraint, a pay freeze across all groups of staff was assumed for the 2021/22 budget for anyone earning over £24,000 per year.  Subsequently pay offers of 1.5% had been made to all staff groups (support staff effective from 1 April, and operational staff [grey book] effective from 1 July), the operational staff offer was agreed on 28 June, resulting in an increase in cost of £436k across wholetime and on-call pay budget.  It would be prudent to assume that the support staff (green book) offer would be the minimum increase applied in the year, a further £104k budgetary increase. 

Wholetime Staffing

In setting the wholetime pay budget a number of assumptions were made around the timing of retirements and how many staff would retire ahead of their forecast retirement date.  Forecasts for the 2021/22 budget were updated, which assumed that all personnel would retire once accruing full benefits, and that there would be 6 ‘early leavers’ during the year (this included retirements from future years forecasts, resignations and dismissals).  The uncertainty surrounding changes to  ...  view the full minutes text for item 10-20/21

The next scheduled meeting of the Committee has been agreed for 10:00 hours on 29 September 2021 in Washington Hall, at Lancashire Fire & Rescue Service Training Centre, Euxton.

Further meetings are:          scheduled for 1 December 2021 and 30 March 2022

                                                proposed for 6 July 2022

The next meeting of the Committee would be held on Wednesday, 29 September 2021 at 1000 hours in Washington Hall, at Lancashire Fire and Rescue Service Training Centre, Euxton.

Further meeting dates were noted for 1 December 2021 and 30 March 2022 and agreed for 6 July 2022.

The Committee is asked to consider whether, under Section 100A(4) of the Local Government Act 1972, they consider that the public should be excluded from the meeting during consideration of the following items of business on the grounds that there would be a likely disclosure of exempt information as defined in the appropriate paragraph of Part 1 of Schedule 12A to the Local Government Act 1972, indicated under the heading to the item.

RESOLVED: - That the press and members of the public be excluded from the meeting during consideration of the following items of business on the grounds that there would be a likely disclosure of exempt information as defined in the appropriate paragraph of Part 1 of Schedule 12A to the Local Government Act 1972, indicated under the heading to the item.

(Paragraphs 1 and 2)

The Director of People and Development presented the report which included a comprehensive and confidential appendix. 

ISO 45001 and ISO 14001 were international best practice standards for how organisations managed Health and Safety and the Environment.  The specifications gave requirements for occupational health and safety and environmental management systems to enable an organisation to control its risks and improve performance.  Each year the Service was externally audited to ensure both these systems continually improved and met the needs of the Service.

Commencing 13 April 2021 LFRS was audited for 9½ days for re-certification to the ISO 14001:2015 standard and year two surveillance for continuation for ISO 45001:2018.  The British Assessment Bureau carried out the audit against the 2 standards.  The Service received no major or minor non-conformances with 5 opportunities for improvement identified.  It was noted that as part of the audit, where areas for improvement had been identified by LFRS staff, it was intended these be developed into an internal, improvement action plan which would be taken forward by the Health, Safety and Environment Advisory Group.

RESOLVED: - That the report be noted and endorsed.

(Paragraphs 1, 3 and 4)

The Director of People and Development updated Members on the current position in respect of fire service pension scheme issues. 

RESOLVED: - That the Committee noted the recommendations as outlined in the report.

(Paragraph 3)

Members considered a report that provided an update on all contracts for one-off purchases valued in excess of £100,000 and high value procurement projects in excess of £100,000 including: new contract awards, progress of ongoing projects and details of new projects.

RESOLVED:  That the Committee noted the report.