Agenda item
Minutes:
The Director of Corporate Services presented the report which set out the current budget position in respect of the 2021/22 revenue and capital budgets and performance against savings targets.
Section 31 Grant in respect of Business Rates Relief - update
Members were aware that 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 previously, the 2021/22 revenue budget assumed the receipt of £1.9m S31 grant for additional reliefs in respect of items such as retail, nursery and newspapers, announced prior to the 2021/22 budget setting exercise, to offset the shortfall carried forwards on the business rate collection fund. The grant amount had been confirmed and was anticipated to be received later in the financial year, most likely in Q4 2021/22, however it was likely to be paid over as part of the reconciliation carried out by central government after the completion of the Business Rates 2020/21 year-end returns submitted by billing authorities, which may affect the actual amount eventually received dependent on the overall reconciliation. This would be reported to Members in due course.
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 to the Authority, therefore this sum was excluded from the budget setting process, as reported to the Authority.
The shortfalls were calculated as part of the billing authority collection fund outturn reporting, and £132k was accrued in relation to this. In early June Ministry for Housing, Communities & Local Government (MHCLG) confirmed that we would receive an ‘on account’ payment of the sum of £74k for Business Rates, being 50% of their estimate of our entitlement under this guarantee scheme. The corresponding estimate for Council tax was nil. The final calculated grant was expected to be £160k (£28k higher than accrued) and the outstanding grant sum of £86k would be paid after a reconciliation of the submitted 2020/21 year-end returns. This was expected to result in an additional £28k income in 2021/22.
Pay awards 2021/22
Wholetime Staffing
Forecasting early retirements was extremely difficult, due to the uncertainty surrounding changes to pensions. 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 leavers in the first four months of the year (33), which included 12 early leavers. Overall, this meant that at the end of July there were 10 fewer wholetime members of staff than budgeted, resulting in an underspend of circa £150k against budgeted establishment levels. If this position was maintained throughout the rest of the year this would result in an underspend of £425k. 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, with a subsequent increase in 2022/23 to compensate. This in-year shortfall resulted in an underspend of approx. £200k. If there were no further early leavers for the rest of the year (which seemed unlikely), there would have been an average of 13 vacant wholetime posts, equating to an underspend circa £625k. As such the anticipated underspend would more than offset the unfunded pay award in year.
Revenue Budget
The overall position at the end of July was an underspend of £0.1m, largely as a result of staffing vacancies.
The year to date and forecast 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 |
|
|
|
30 July 2021 |
Forecast |
|
|
|
£’000 |
|
|
|
Service Delivery |
(65) |
(196) |
The underspend for both the first four months, and the year-end forecast, largely related to the reduced activity levels, in particular for smoke detector purchases, as was the case last financial year. It is worth noting that difficulties were currently being experienced in the supply chain for smoke alarms, and this may impact final spend in year. |
|
Covid-19 |
- |
- |
Total funding of £1.6m had been received since March 2020. In addition, as previously reported, £0.2m of travel/mileage budgets had been transferred into this reserve to reflect savings in respect of differing working practices during the pandemic, resulting in total funding of £1.8m. Spend to the end of July was £1.6m, as follows:
With effect from 1 September, LFRS reduced the level of support offered to the large vaccination centres, handing over control back to the NHS. It was anticipated that the staffing costs in July and August would fully utilise the funding. |
|
Property |
(103) |
(110) |
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. Whilst we had recruited to this post the new starter did not commence until November, and hence this situation was expected to continue for the short term, resulting in an underspend by year end. |
|
Non DFM |
117 |
345 |
The year to date and outturn overspend reflected the £0.3m funding gap identified at the time of setting the budget in February. |
|
Wholetime Pay (including associate trainer costs) |
34 |
240 |
As reported above, there had been several early leavers during the first four months, in excess of the number expected in the budget which caused an underspend. This was more than offset by: -
The net of all the above factors was the forecast overspend of £240k, however it should be noted that should we continue to experience higher than expected early leavers this overspend may reduce. |
|
On Call Pay |
9 |
(31) |
The position within On-call staffing was broadly breakeven, with the unbudgeted pay award being broadly offset by slightly higher staff vacancies than budgeted. |
|
Support staff (less agency staff) |
(159) |
(197) |
The underspend related to vacant posts across various departments, in excess of the 3.75% vacancy factor built into the budget. This was partly offset by spend on agency staff, which amounted to £24k in the period. Although recruitment activity had now recommenced the labour market had become more challenging and we were experiencing difficulties in filling posts. As such a high level of vacancies was anticipated to remain throughout the year. This would be partly offset by the eventual pay award for green book staff. This had not yet been agreed, but the pay offer had been increased to 1.75%, which had been reflected in the forecast outturn position which would be updated throughout the year. |
|
Apprentice Levy |
(5) |
(20) |
The apprentice levy was payable at 0.5% of each month’s 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. |
It was noted that significant cost increases were being seen across various supply chains, and in particular in construction projects and this may affect the final outturn expenditure levels. This would continue to be monitored alongside other trends, to ensure that they were reflected in future year’s budgets, as well as being reported to the Committee.
Capital Budget
The capital budget for 2021/22 currently stood at £10.5m.
Since the last meeting work had been undertaken with budget holders to review spend to date and anticipated timing of future spend. The current position against the programme being set out below: -
|
Pumping Appliances |
The budget allowed for 7 replacement pumping appliances. Starting a procurement exercise in the second half of the financial year was anticipated, however due to lead times it was not anticipated incurring any costs in the current year and hence had moved the budget out of 2021/22. |
|
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); Differing procurement routes were being considered for each of these, and the use of national frameworks where appropriate was planned, however due to departmental capacity to progress several projects and associated lead times, anticipated spend had been moved out of 2021/22. The budget also allowed for various other operational support vehicles which were being progressed with several already received. |
|
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, hence removing £0.475m of budget. |
|
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 upon progress against the national project. This national project had suffered lengthy delays to date, hence had been slipped 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 on-going to facilitate the replacement of some of these systems, the need to replace others was still being reviewed, hence the slippage of £0.755m into future financial years. |
The committed costs to date would be met by revenue contributions.
The following table set out the anticipated slippage, outlined above, into 2022/23. These assumptions were estimates based on the current position, and similarly to the previous year, may be subject to change. The slippage represented a timing issue between financial years rather than incorrect budget requirements. In almost all cases, the slippage was caused by the ongoing effects of the pandemic, as departments were struggling with capacity issues when trying to catch up with delayed projects whilst continuing with business-as-usual activities, combined with lead times on procurement.
|
Item |
Budget £m |
|
Pumping appliances x 7 |
1.490 |
|
Command support units x 2 |
0.580 |
|
Turn table ladder (TTL) x 1 |
0.675 |
|
Water Tower x 2 |
1.000 |
|
Prime mover x 1 |
0.215 |
|
Pod x 1 |
0.028 |
|
CCTV on appliances |
0.100 |
|
Enhanced station facilities at Blackpool |
0.200 |
|
Drill tower replacements |
0.150 |
|
ESMCP |
1.000 |
|
Various ICT systems/hardware under review prior to replacement |
0.755 |
|
Total |
6.193 |
Offsetting this was £55k of contract variations outlined above in respect of BA Recovery and Trainer facility at STC and South Shore Station refurbishment and extension. These changes brought the revised capital programme for 2021/22 to £4.383m.
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.
In response to a question from County Councillor Mein regarding the shortfall in wholetime recruits (as detailed on page 88 of the agenda pack) the Director of People and Development confirmed there was an extensive process to ensure the recruitment of appropriate people to be firefighters. At the end of the process the best people were appointed. Because of a gap before starting some people had subsequently dropped out or got a job elsewhere. To recruit more people, it would be necessary to re-run the whole process. Due to the shortfall in numbers this year, near misses were considered and extra numbers required would be added into the next campaign (which had now started) to hopefully address the balance. Early leavers through changes to the pension scheme had disrupted plans considerably.
County Councillor Mein queried whether, based on experience the Service could have anticipated the number of early leavers and taken account of an additional proportion of recruits to compensate for those expected to drop out. In response, the Director of People and Development advised that some firefighters had retired early due to current uncertainty around changes to pensions; hence it was difficult to predict the scale of this. It was acknowledged that the number of early leavers could continue until the pension situation was resolved. This was therefore, being monitored very carefully and factored into future requirements.
In response to a query from County Councillor Mein regarding the difficulties recruiting to support staff vacancies the Director of People and Development advised that currently a number of people were making career choices that before the covid-19 pandemic they would not have done. For example, people were looking at flexibility which was one of the reasons the Service had made significant changes to its flexible working processes.
RESOLVED: - That the Committee: -
i) note the updates on the Business Rates relief and Local Tax Income Guarantee grants;
ii) note the effect of the 1.5% pay award for grey book personnel;
iii) note the potential effect of the 1.75% pay award offered to support staff;
iv) approve the amendment to the capital programme to remove expected slippage;
v) to make an additional revenue contribution of £55k into the capital programme to reflect the contract variations agreed on BA Recovery and Trainer facility at Service Training Centre and South Shore Station refurbishment and extension, and note the corresponding increase in the capital programme; and
vi) note and endorse the financial position.
Supporting documents:
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