Agenda item

The Director of Corporate Services advised that this report presented the financial outturn position for 2024/25, and the impact of this on usable reserves. The revenue outturn position showed an underspend of £0.569m after proposed transfers to earmarked reserves. The Capital outturn expenditure for the year was £4.091m which was also in line with the previous forecast.

Revenue Provisional Outturn

The annual budget for the year was set at £75.155m. The provisional outturn position showed net expenditure of £74.586m, giving a total overspend for the financial year of £0.569m. The total underspend was made up of a (£0.774m) underspend relating to non-pay costs, and a £0.205m overspend relating to pay costs. The detailed provisional revenue outturn was considered by members as set out in appendix A of the report with more significant variances of note shown separately in the table below: -

Future Pressures

Emerging pressures to report to the Resources Committee included inflation forecasts. As reported to the CFA in February, government grants were increased by the September rate of inflation (1.7%) whereas the latest rate of inflation was now 3.5%, which would put pressure on budgets in 2025/26.

The grey book pay award had also been agreed at 3.2% effective from July, this compared to the budgeted assumption of 3%, at the time of writing the green book pay award had not been agreed.

Finally, the Spending Review was announced on 11 June which set out the future departmental spending plans. All fire functions and associated budgets had transferred from the Home Office to the Ministry of Housing, Communities and Local Government (MHCLG) as of 1 April 2025 which meant fire funding was now embedded within MHCLG’s departmental totals which had increased by 1.2% in real terms over the period of the Spending Review. The impact on the fire service would emerge later in the year and with certainty for Lancashire in the Provisional Settlement that was traditionally announced in December.

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 Reserve

The General Reserve existed to cover unforeseen risks and expenditure that may be incurred outside of planned budgets. In February the Authority approved the minimum level of General Reserve as advised by the Treasurer at £3.85m. Following the provisional outturn the level of the General Reserve at 31 March 2025 was £5.556m, this was above the minimum level of General Reserve set by the Authority.

Earmarked Reserves

Earmarked reserves were all funds that have been identified for a specific purpose. Appendix B of the report set out the proposed transfers to earmarked reserves not previously approved of £1.677m. The balance of all the earmarked reserves was £28.926m as at the 31 March 2025; this included the Capital Reserve of £18.501m and Private Finance Initiative (PFI) reserves of £5.036m.

Capital Budget Provisional Outturn

The revised Capital Budget for 2025/26 was £5.213m. Total capital expenditure for the year was £4.091m, with slippage of (£1.123m) proposed to be transferred to the 2025/26 Capital Budget and a net over spend of £0.070m. Members considered the provisional outturn for the main programmes and projects set out in appendix C of the report.

The original approved capital programme for 2025/26 was £12.761m. This was updated for £1.123m of slippage outlined previously giving a revised Capital Budget for 2025/26 of £13.884m. The revised 2025/26 Capital Budget and funding was set out in appendix D of the report.

In response to a question from the Chair in relation to the large Climate Change Vehicle, the Deputy Chief Fire Officer (DCFO) explained that it was agreed in the Emergency Cover Review (ECR) in 2022 that a Climate Change Vehicle would be procured in place of a fire engine for use during flooding and wildfire incidents to allow the vehicle to go off road. The tendering process had concluded with the vehicle overbudget, the service was therefore revising its requirement for a smaller vehicle.

In response to a question from Councillor S Sidat in relation to the services 5 year plan for its capital growth programme, the DoCS confirmed he would share this after the meeting.

In response to a question from County Councillor A Riggott in relation to the most challenging aspect of managing the budget, the DoCS explained that pay made up 75% of the services budget and was the more difficult to forecast due to retirements, pay awards and overtime for large scale incidents.

County Councillor J Tetlow asked if the recent national insurance and tax changes had had an impact on the services budget, the DoCS confirmed that the national insurance changes had come in to effect from 1 April 2025 meaning the service had had time to budget for the change. He explained that the changes had equated to £1.2m, the service had received some funding taking the cost to £0.7m which had been factored into the budget. County Councillor J Tetlow asked if this funding would continue, the DoCS confirmed it would and the £0.7m pressure would continue.

In response to a question from Councillor S Sidat in relation to replacement of firefighters following retirement, the DCFO explained that it was difficult to predict retirements due to a number of different pensions schemes being in operation. The service tried to plan ahead with recruitment and ran new recruit courses throughout the year. The service had tried to hold some posts vacant due to forecasted funding pressures and currently had 10 firefighter vacancies across the service.

In response to a question from the Chair in relation to vacancies across the service, the DCFO explained that it was challenging to recruit to green book roles and had been since the covid pandemic with many employers now offering working from home and other benefits. He confirmed that most grey book positions were filled with only 10 vacancies across the service. The DCFO explained that there were additional challenges within the Prevention and Protection Teams, although it was important to note that grey book staff delivered prevention activities as part of their role. Green book staff were trained and upskilled in Protection Team roles but then often left for the private sector with greater financial benefits. The Service was working to utilise operational staff in the best way to keep fire engines available.

Councillor D Smith noted that the service had an underspend of £0.569m with a budget of over £75m, he praised the service for keeping the budget within 1% variance. The DCFO explained that this was largely due to increased interest rates and underspend and overspend in staffing areas balancing each other out.

Resolved: That the Committee: -

i)     Noted the Revenue Budget provisional revenue outturn.

ii)    Noted the Capital Budget provisional outturn.

iii)   Noted and endorsed the revised Capital Budget for 2025/26.

iv)   Approved the transfer of 2024/25 slippage to the 2025/26 capital budget.

v)    Noted and endorsed the transfer to earmarked reserves and year end reserve levels.