Agenda item
Minutes:
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 pensions made forecasting early retirements extremely difficult, hence at the time of setting the budget it was highlighted that “actual retirements may vary from this due to the impact of either the transitional pension arrangements or making allowances pensionable, which may increase early leavers leading to a higher vacancy factor”. This had proven to be the case, with a large number of wholetime retirements in the first two months of the year, largely due to the anniversary of the Day Crewing Plus (DCP) allowances being made pensionable (the Firefighters pension scheme rules stated that after 12 months contributions, retirement benefits for 1992 scheme members were calculated based on final salary including the DCP allowances). Within this period there were 9 early leavers, this being in addition to higher leavers in quarter 4 last year compared to the budgeted allowance. Overall, this meant that at the end of May there were 13 fewer wholetime members of staff than budgeted, resulting in an underspend of circa £50k against budgeted establishment levels. It was too early to determine whether this trend would continue thought the year. It was noted that 13 vacancies throughout the year equated approximately to a £500k underspend.
It was also noted that the wholetime budget anticipated two recruits cohorts during the year, with 48 recruits in total, however current numbers only allowed for 38 recruits in-year, with a subsequent increase in recruit numbers in 2022/23 to compensate. This in-year shortfall resulted in an underspend of approx. £200k. As such the anticipated underspend would more than offset the unfunded pay award in year.
Revenue Budget
The overall position as at the end of May showed an underspend of £0.2m, largely as a result of the wholetime early leavers along with underspends reflecting continued vacant support posts and reduced activity levels. It was too early in the financial year to produce a forecast of the outturn position however, this would be carried out prior to the next meeting and included in the next financial monitoring report.
The year-to-date positions within individual departments were set out in the report with major variances relating to non-pay spends and variances on the pay budget being shown separately in the table below: -
|
Area |
Overspend/ (Under spend) |
Reason |
|
|
£’000 |
|
|
Service Delivery |
(20) |
The underspend for both the first two months largely related to the reduced activity levels, in particular for car allowances and smoke detector purchases, as was the case last financial year. |
|
Covid-19 |
- |
We have now received total funding of £1.6m since March 2020, having received an additional £0.2m during May 2021. We have spent £1.4m to date, with the balance being held in an earmarked reserve. The spend to date was as follows: · Additional staff costs £375k; · Additional cleaning £55k; · Consumable items (e.g. sanitiser) £174k; · Remote working and video conferencing equipment £181k; · PPE £663k. It was expected that any further costs associated with the ongoing pandemic, such as enhanced cleaning, additional staff costs etc. would be met from this fund. In addition, it was proposed to transfer £10k per month from travel budgets into the Covid-19 reserve in relation to the reduced use of vehicles during the pandemic, in line with the previous year’s treatment. This would be reviewed as the year progressed and activities returned to normal. |
|
Property |
(19) |
Whilst non-essential maintenance was re-instated prior to the end of the last financial year, departmental capacity due to a vacant surveyor post, and the ongoing situation meant that there was an underspend to date. This situation was expected to rectify once the department was fully staffed. |
|
Non DFM |
42 |
The majority of the overspend reflected the £0.3m funding gap identified at the time of setting the budget in February. |
|
Wholetime Pay |
(111) |
As reported above, there had been several early leavers during the first two months, in excess of the number expected in the budget which caused an underspend. In addition to this, there were some timing issues in terms of claims for overtime etc., which were particularly relevant in April, where we fully accrued for outstanding claims as part of the year end process but where there can be a delay in personnel submitting claims for these. |
|
On Call Pay |
20 |
This overspend related to slightly higher activity related payments in the first two months than expected. |
|
Associate Trainers pay |
12 |
Associate trainers were used during wholetime recruitment to provide greater flexibility to match resource to demand. As the budget was currently phased evenly over the year, this created timing differences, which in this case had resulted in a marginal overspend. |
|
Support staff (less agency staff) |
(70) |
The underspend related to several vacant posts across various departments, which were in excess of the vacancy factor built into the budget. This was partly offset by spend on agency staff, which amounted to £8k in the period. Although recruitment activity had now recommenced, due to the backlog caused by the cessation, it was unknown when some of these posts might be filled. Members would be provided with an update in the next report, which would include forecasts for the rest of the financial year. No allowance for the potential additional costs associated with the support service pay offer had been included at this stage, as the offer had not been accepted. |
|
Apprentice Levy |
(4) |
The apprentice levy was payable at 0.5% of each months’ payroll costs, the budget for this was set at anticipated establishment levels, hence the underspend against this budget reflected the various pay budget underspends reported above. |
Spend would continue to be closely monitored against the 2021/22 budget to identify any vacancy trends that developed to ensure that they were reflected in future years budgets as well as reported to Members.
Capital Budget
The Capital budget for 2021/22 stood at £10.5m. There had been very little spend against the resultant 2020/21 programme, just £0.7m mainly against Property projects. Given the amount of the budget and the spend to date it was clear there would be significant slippage (due to the timing of spend between financial years). This would be discussed with the relevant budget holders and the next report would identify the amount to be moved into 2022/23 including the reasons for the proposals. The current position against the programme as set out below:
|
Pumping Appliances |
The budget allowed for 7 replacement pumping appliances spread across the 2019/20 to 2021/22 capital programmes, for which the specification was being reviewed following delivery of the previous 7 vehicles in the latter part of the previous financial year. It was currently anticipated starting a procurement exercise in the second half of the financial year. |
|
Other vehicles |
This budget allowed for the replacement of various operational support vehicles, the most significant of which were: - · Two Command Support Units (CSU); · Two Water Towers; · One Turn Table Ladder (TTL); · One all-terrain vehicle. Differing procurement routes were being considered for each of these, and it was planned to use national frameworks where appropriate. In addition to these, the budget allowed for various support vehicles which were reviewed prior to replacement but were being progressed with several on order. |
|
Operational Equipment / Future Firefighting |
This budget allowed for: -
Again, where appropriate, it was intended to make use of existing procurement frameworks to progress these once specifications were completed. |
|
Building Modifications |
This budget allowed for:
As with the revenue budget, current departmental capacity to progress these was limited, but was expected to improve in the next few months. |
|
IT systems |
The majority of the capital budget related to the national Emergency Services Mobile Communications Project (ESMCP), to replace the Airwave wide area radio system and the replacement of the station end mobilising system. The ESMCP project budget, £1.0m, was offset by anticipated grant, however the timing of both expenditure and grant was dependent on progress against the national project. This national project had suffered lengthy delays to date, hence was included within slippage into the next financial year. The balance of the budget related to the replacement of various systems and ICT hardware, in line with the ICT asset management plan. Whilst initial scoping work was ongoing to facilitate the replacement of some of these systems in the current year, the need to replace others was still being reviewed. |
The committed costs to date would be met by revenue contributions.
Delivery against savings targets
The performance to date was already ahead of the annual target, largely due to staffing vacancies and procurement savings. It was anticipated that the savings target for the financial year would be met.
RESOLVED: - That the Committee:
· Noted the uncertainties surrounding the Business Rates relief and Local Tax Income Guarantee grants;
· Noted the effect of the 1.5% pay award for grey book (operational) personnel;
· Noted the potential effect of the 1.5% pay award offered to support staff; and
· Noted and endorsed the financial position.
Supporting documents:
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