Agenda item

The Director of Corporate Services (DoCS) advised members that this report set out the current budget position in respect of the 2025/26 revenue and capital budgets.

Revenue Budget

Lancashire Fire and Rescue Service’s 2025/26 revenue budget had been set at £77.511 million. The budget profiled to the end of January 2026 was £61.604 million and expenditure for the same period was £61.403 million which was essentially breaking even.

The budget included £0.5 million of savings to be delivered through effective deployment of resources and effective management of overtime, management information showed that overtime had been avoided and therefore the service was forecasting that these savings would be met.

Overall, a small underspend was forecast of £0.184 million, which was just 0.2% of the services net budget. The year to date and forecast positions within all departmental budgets were set out in Appendix 1 of the report, with the major variances of note shown separately in table 1.

Table 1 – Major variances of note

Future Pressures

Although not reflected in the 2026/27 budget set in February, the escalating conflict in the Middle East presented a growing financial risk. Geopolitical instability had already contributed to higher than assumed inflation, particularly in energy markets, with utility costs tracking above 6% compared to the 2% inflation assumption underpinning the budget. This sustained volatility could increase pressures on fuel, utilities, supply chain dependent non?pay budgets, and capital project costs throughout the year. Given the continued uncertainty in global markets, these factors had the potential to create additional in year pressures and would require close monitoring and potential adjustment within future financial planning cycles.

The 2026/27 budget included a 4% increase for both green and grey book pay awards. National negotiations for the 2026 pay awards were underway. For Green Book staff (effective April 2026), the recognised National Joint Council (NJC) unions had submitted a formal pay claim seeking a minimum increase of £3,000 or 10%, alongside a £15 minimum hourly rate and improvements to working time and leave. Employers had not yet tabled a counter?offer, with a response expected later in March. For Grey Book staff (effective July 2026), the Fire Brigades Union (FBU) had initiated discussions and was pressing for a substantial above?inflation increase, although no specific figures or employer proposals had yet been published. The service would continue to monitor national negotiations and update Members once formal offers were issued.

Savings Targets

To deliver the £0.5 million savings required for 2025/26 the Dynamic Resource Management (DRM) policy came into effect on 1 July which provided steps which could be taken prior to using overtime to fill shortfalls, including using the fifth crew member from the Urban Search and Rescue (USAR) stations and redistributing the crew from second pumps at two pump wholetime stations where there was adequate fire cover in the area. The saving target had been delivered.

The Productivity and Efficiency Plan for 2025/26 included £0.572 million of savings to be delivered in 2025/26; the delivery of £0.5 million had been explained above. The balance of £0.072 million was a balance of some smaller initiatives such as procurement savings, this would be reported through the update of progress against the plan later in the year.

General Reserve

The General Reserve existed to cover unforeseen risks and expenditure that may be incurred outside of planned budgets. In February 2026 the Authority approved the minimum level of General Reserve as advised by the Treasurer at £4 million.

The year end forecasted general fund position is summarised below which was above the minimum level of General Reserve approved by the Authority:

Table 2 - year end forecasted general fund position

Capital Budget

The revised Capital Programme for 2025/26 was approved by the Authority at £7.190 million, to date £4.371 million had been spent to the end of January. A summary of the programme was set out in the table below and in more detail in Appendix 2 of the report.

Table 3 - revised capital programme

In addition, further slippage of £0.019 million relating to ICT was requested to be transferred to the 2026/27 capital programme.

Potential Financial Risks

There were several potential scenarios that had not been reflected in this monitoring report that, if they materialise, 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:

Table 4 – potential worst-case scenario revenue budget and capital budget

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.

Councillor D Smith praised officers for keeping within 0.2% of the budget.

In response to a question from the Chair in relation to protections for emergency services should the conflict in the Middle East lead to fuel rationing, the Deputy Chief Fire Officer (DCFO) explained that arrangements were in place through the Lancashire Resilience Forum (LRF) to ensure that emergency services had access to fuel before the general public. He added that during previous fuel rationing, emergency services staff had been able to show their ID badges to be given priority access to fuel. He assured members that the issue was high on both internal and LRF risk registers.

In response to a question from County Councillor A Blake in relation to the service holding stores of fuel, the DCFO explained that the service had bulk fuel supplies at some stations and did carry reserves however it was important to note that fuel did expire. He added that access to fuel was not a great concern for the service at the minute however this would continue to be assessed. The Assistant Chief Fire Officer (ACFO) added that the UK National Emergency Plan for fuel ensured that emergency services were prioritised, and the service would ensure its voice was heard by government through the LRF.

In response to a question from Councillor D Smith in relation to electric fire engines, the ACFO confirmed that electric fire engines were used in London but were very expensive and were better for shorter distances, she suggested that hydrogen vehicles could be better options for the future. The DCFO added that the service had begun to introduce electric vehicles for its flexi duty officers which afforded significant savings for the service. Electric vehicles would continue to be introduced with the view to all flexi duty officer vehicles being electric within the next five years.

The DCFO confirmed that a briefing note would be circulated to members in relation to the services’ access to fuel.

The report was proposed by the chair and seconded by County Councillor J Fox.

Resolved: That the Committee;

1. Noted and endorsed the financial position; and
2. Approved additional slippage in the capital programme of £0.019 million to 2026/27.