Agenda item

Financial Monitoring

Minutes:

The Director of Corporate Services presented the report which set out the current budget position in respect of the 2022/23 revenue and capital budgets.

 

The overall position at the end of January was an overspend of £1.3m, largely as a result of unfunded pay awards and inflationary pressures.

 

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

 

£’000

 

Fleet & Technical Services

174

As reported in November, fuel had continued to overspend to £124k to date due to the sharp increase in fuel costs early this year. A slight reduction was now being seen as fuel prices started to decrease. An increase in mileage post pandemic had also been attributed to increased costs. Repair costs were overspent to date by £70k due to inflationary pressures. It was projected both these areas would continue to overspend.

Information Technology

44

The overspend had reduced since November mainly due to timing of expenditure. Several software licences were prepaid earlier in the year levelling out in the latter part. There had been a general increase in costs, again reflecting inflationary pressures.

Property

583

Increased energy costs continued to cause significant overspend totalling £407k to date, however costs were not as severe as initially anticipated following the introduction of the business support scheme. Inflationary pressures continued to cause the maintenance costs to overspend, accounting for the balance of the overspend.

Pensions

(73)

The underspend on pensions was due to fewer individuals retiring on ill health than budgeted. To date there was just one retirement due to ill health.

Non DFM

(585)

The underspend was due to an increase in interest rates resulting in receiving an additional £400k interest to date. Also £102k VAT had been awarded back from the purchase of operational vehicles, having successfully challenged HMRC.

Wholetime Pay

857

Pay had significantly increased by £1m since November reporting due to the agreed 7% pay award for grey book, considerably higher than the budgeted 2%.

Retirements and leavers were higher than anticipated, with this and a slight shortfall in recruit numbers being offset by increased overtime.

On Call Pay

5

This was broadly in line with budget having reflected the pay award.

Support staff (less agency staff)

110

The current position reflected the green book pay award, which was £1,925 per full time equivalent. This was significantly higher than the budgeted allowance of 2% and had increased costs over and above budget by approx. £400k by year end (please note at the time of writing the previous report it had been assumed that the pay award would equate to approx. 5%, however based on actual staff mix in year the actual costs were significantly higher at approx. 6.5%).

This was partly offset by vacancies within the year, where recruitment had continued to be challenging, reflecting the employment market. And where use of temporary / agency staff had continued to cover some key posts.   

 

Inflationary pressures and pay awards would continue to impact the budget for the remainder of the year, resulting in a year end overspend which was anticipated being approx. £1.5m to £1.75m. (This had not yet been finalised with the move onto a new finance system, provided by Lancashire County Council, which had resulted in some downtime and some challenges in extracting information from the system.)

 

As such reserves would be needed to offset this. The current general reserves held was £6.0m, having agreed a minimum level of £3.75m, and as such had sufficient reserves to meet this.

 

Capital Budget

 

Following the slippage previously agreed at the last Resources Committees the capital budget now stood at £3.3m. Spend to date was just £1.3m as set out below, with further details considered by Members in Appendix 2: -

 

 

Revised Programme

Spend to 31 January

 

 

£m

£m

 

Operational vehicles

0.9

-

As reported previously whilst a significant number of operational vehicles had been ordered: (13 pumping appliances, 2 Command Units and an ALP) lead times were such that there had been no expenditure occurred in the year to date.  Whilst a staged payment profile had been agreed for these vehicles it appeared increasingly unlikely that any such costs would be incurred in year

Support vehicles

0.4

0.3

This budget allowed for the replacement of various operational support vehicles, whilst some of these had already been delivered, the shortage of raw materials had affected both the timeframe for delivery and the cost of vehicles. Again, it appeared increasingly unlikely that all of the allocated funding would be spent in year.

Operational Equipment

0.3

0.1

Spend to date was attributable to the replacement of light portable pumps. An additional £0.2m spend on CCTV for pumping appliances was anticipated in-year.

Building Modifications

0.8

0.6

Spend to date was associated with:-

  • Enhanced facilities at Hyndburn fire stations, where works had been completed, at a cost of £0.2m
  • The replacement of drill towers, where  Blackpool, Tarleton and Bolton le Sands had all been completed, at a cost of £0.4m

IT systems

0.9

0.3

Expenditure to date related to a combination of replacement Vehicle Mounted Data Systems on appliances, the purchase of  new Coverage Software, to aid with dynamic mobilizing, and the purchase of Incident Command Software.

Total

3.3

1.3

 

 

It was clear that the 2022/23 capital programme would not be fully utilised and hence would need to slip funding into 2023/24 to meet future costs, the extent of this would be reported as part of the year end capital outturn.

 

The costs to date would be met by revenue contributions, as reflect in the revenue budget year end forecast.

 

It was highlighted that there remained significant cost increases across various supply chains, and in particular in construction projects which would affect some of the capital projects as they progressed through the procurement stage. 

 

In response to a comment from CC Rigby, the Director of Corporate Services advised that there had been some difficulties with the introduction of a new financial system run by Lancashire County Council (LCC) which had resulted in this report being circulated late and normally it would have been possible to produce a year end forecast.  The Service was however, working with LCC to resolve the issues which may have some impact on the year end processes.

 

Resolved: That the Committee:

i)     noted and endorsed the current financial position; and

ii)    noted the anticipated year end forecast overspend of between £1.5m and £1.75m.

Supporting documents: