Agenda item
Minutes:
The Director of Corporate Services (DoCS) advised that this report set out the current budget position in respect of the 2024/25 revenue and capital budgets.
Revenue Budget
In February 2024 the Combined Fire Authority (CFA) agreed the Service’s 2024/25 revenue budget at £75.155m. This Financial Monitoring report was for the six-month period to the end of September 2024. The forecast outturn was £75.051m, which was a small underspend of (£0.103m). Of the forecast underspend, (£0.135m) related to non-pay costs, and £0.032m to pay costs.
The year-to-date and forecast positions within all departmental budgets were set out in Appendix 1, with the major variances of note shown separately in the table below.
|
Area |
Year to Date Variance
£m |
Reason |
Forecast Outturn Variance £m |
Reason |
|
Service Delivery - Pay |
0.181 |
The grey book pay award of 4% had been agreed and was effective from July 2024. This was 1% higher than the services budgeted assumptions and accounted for majority of the overspend. |
0.653 |
The effect of higher than budgeted pay award resulted in a forecast cost pressure of £0.400m. Additional overtime costs had been incurred over the summer which had increased the forecast by £0.194m. |
|
Prevention and Protection - Pay |
(0.248) |
The year-to-date underspend was due to vacancies within the department. |
(0.415) |
Several vacant posts existed in the current staffing establishment for which recruitment and reorganisation was planned. It was anticipated that three posts would be recruited to in year, with a number of vacancies to persist for the duration of the financial year. |
|
Bank Interest |
(0.100) |
More interest had been earned on balances invested because of higher balances invested, due to slippage on the capital programme, and higher than budgeted interest rates. Interest earned on the Home Office pension grant received ahead of Matthews two and McCloud remedy had been assumed to be transferred to a reserve if required to be repaid. |
(0.200) |
The forecast reflects the full year effect of higher than budgeted interest rates and higher balances invested due to slippage in the capital programme. |
|
Fleet |
(0.086) |
Vehicle Repair and Maintenance (R&M) costs in the year to date were lower than budget to date. |
0.107 |
There was a small overspend forecast on R&M costs based on historic spending patterns. |
|
Occupational Health – Medical fees |
0.043 |
Staff medical fees were higher than budgeted due to the requirement for mandatory three-year screenings, recruitment screenings and referrals. The cost of providers remained high with few options between providers. |
0.114 |
Costs were anticipated to increase in the latter part of the year due to both On Call and Wholetime recruitment courses planned. |
|
(0.428) |
Programmed revenue maintenance costs had been delayed and was expected to fall in the latter half of the financial year. Utilities expenditure had also been less than budgeted in the year to date. |
(0.331) |
The current outturn forecast currently assumed that property works would be undertaken as planned later in the year. Utility costs were currently forecast to underspend by (£0.400m) due to lower than budgeted usage and rates. |
Future Pressures
Green book pay award negotiations concluded in late October. The national employers and trade unions agreed a pay award of £1,290 per annum (pro-rata for part-timers) on pay points 2 to 43, and an increase of 2.5% on locally determined pay points above 43. This would be paid in November and backdated to 1 April 2024. Current pay projections used the 3% budgeted rate. The revised forecast to include the new pay rate was not expected to change significantly.
The employer’s contribution rate to the 2015 Firefighters’ pension scheme as determined by the scheme actuary had been increased from 28.8% to 37.6%. Additional £2.5m grant funding had been received and added to the budget to offset this pressure, however, funding for 2025/26 was unknown at this stage.
Savings Targets
A reduction in the Contribution to Capital of £1.5m was agreed in the medium-term Financial Strategy resulting in a revenue contribution in 2024/25 of £2.5m. The budget had been reduced to this effect.
General Fund
The year end forecasted general fund position is summarised below:
|
|
£'m |
|
Opening balance of LFRS general fund |
(4.987) |
|
Forecast revenue underspend |
(0.103) |
|
Forecast closing balance of general fund |
(5.090) |
Following the final outturn and audit of the financial statements, the opening general fund balance was updated from £4.918m to £4.987m.
Capital Budget
The revised Capital Programme for 2024/25 approved by the Resources Committee was £12m. To date £1.652m had been spent predominantly on fleet and operational equipment. A summary of the programme is set out in the table below and in more detail in Appendix 2 of the report.
|
Area |
Budgeted Items |
Budget (£m) |
Year to Date (£m) |
Slippage 2025/26 (£m) |
|
Operational Vehicles
|
The budget included costs of two water towers, two climate change vehicles, three pumping appliances, a prime mover and an aerial ladder appliance. All vehicles were on target to be delivered in 2024/25 with the exception of:
|
2.943 |
0.446 |
1.501 |
|
Other vehicles
|
This budget allowed for the replacement of various operational support vehicles including several cars, vans and a beavertail lorry. A few vehicles had been delayed to 2025/26:
|
0.948 |
0.176 |
0.407 |
|
Operational Equipment
|
This budget allowed for operational equipment purchases including CCTV cameras for appliances, body armour, and road traffic collision equipment. To date the following slippage included:
|
1.846 |
0.812 |
0.470 |
|
Building Modifications
|
This budget included the continued programme of Drill Tower Replacements, Blackpool facilities upgrade and budget for the initial works to support the upgrade to Preston station. Slippage to date had been identified as follows:
|
3.639 |
0.125 |
2.573 |
|
IT systems
|
This budget included various projects including upgraded Firewalls, network upgrades and replacement of pooled PPE and stock management systems. Several IT system projects had been identified as likely to slip into 2025/26; the replacement systems for the management of stock, assets and pooled PPE and public switched telephone network. Existing contracts had been extended. The incident ground radios project had also slipped to next year due to other interdependencies with the breathing apparatus project. |
2.593 |
0.093 |
0.974 |
Potential Financial Risks
There were several potential scenarios that had not been reflected in this monitoring report that, if they materialised, may give rise to an increase in revenue and capital expenditure. To provide some information about potential significant financial risks these had been quantified to provide an estimated worst case scenario, these were set out in Appendix 3 of the report. Taking all these risks overall and adjusted for the remainder of the year, a potential worst-case scenario would impact the Revenue Budget and Capital Budget accordingly:
|
£m |
Worst Case |
|
Revenue Budget - unbudgeted costs |
3.25 |
|
Capital Budget – Additional Expenditure |
0.65 |
The potential worst-case scenario could be funded from available budgets but would reduce the general fund balance to below the minimum acceptable level agreed by the CFA.
In response to a question from Councillor D Smith in relation to the unsuccessful drill tower tender process, the DoCS advised that the contract would be going back out to tender.
County Councillor D O’Toole remarked that it was pleasing to see a good level of reserves and it was important to consider the increasing cost of living when reviewing the precept.
Resolved: That the Committee;
- Noted and endorsed the financial position; and
- Approved slippage in the capital programme of £2.53m to 2025/26.
Supporting documents:
PDF 258 KB