Agenda item

The Director of Corporate Services (DoCS) advised that this report set out the current budget position in respect of the 2026-27 revenue and capital budgets.

Revenue Budget

Lancashire Fire and Rescue Service’s 2026-27 revenue budget was set at £80.525 million. The budget profiled to the end of July 2025 was £25.616 million against a profiled budget of £26.070 million, giving a year-to-date underspend of £0.454 million. The forecast outturn was an underspend of £0.524 million, which was just less than 1% of the net budget. This was a controlled position, and the main variances were set out in Appendix 1 with the major variances of note shown separately in table 1.

Table 1 – major variances of note

Future Developments

The previous financial monitoring report included a detailed assessment of potential inflationary pressures arising from geopolitical uncertainty. Pay awards were the most significant risk at that stage. The 2026-27 budget and Medium-Term Financial Strategy included prudent allowances for pay and price inflation, including 4% for pay in 2026-27 and 3.8% general inflation in 2026-27, reducing to 2% thereafter. Since the June Resources Committee meeting, both the 2026 Grey Book and Green Book pay awards had been agreed within the approved budget position. This had significantly reduced the year pay-related inflation risk in 2026-27.

Wider geopolitical uncertainty did however continue and remained a risk to inflation, particularly in relation to energy costs, fuel, contract indexation and supply-chain dependent goods and services. However, the position had not materially deteriorated since the June report and there was no specific budget adjustment proposed at this stage. Utility costs continued to be monitored closely against the planning assumptions, and the Authority retained its £0.600 million utility volatility reserve to help manage short-term movements above budget if required.

Table 2 summarises the main inflation assumptions included in the 2026-27 budget and the latest position reflected in this monitoring report. Overall, settlement of the Grey and Green Book awards had reduced pay-related risk, while utilities and fuel remained the main areas of volatility to be monitored:

Table 2 – inflationary pressures

Savings Targets

The 2026-27 budget approved by the CFA included a £1.800 million saving from optimising crewing arrangements, including reducing wholetime crewing levels from 13 to 12 on relevant two-pump wholetime, flexible day-crewed and day-crewing stations. The saving target had been delivered.

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 forecast year-end General Reserve position is set out below. The forecast balance remained above the Authority’s approved minimum level.

Table 3 - year end forecasted general fund position

Capital Budget

The revised Capital Programme for 2026-27 was approved by the Authority at £10.145 million, to date £1.351 million had been spent to the end of July. A summary of the programme is set out in the table below and in more detail in Appendix 2 of the report.

Table 4 - revised capital programme

Reprofiling of £0.480 million relating to ICT was requested to be transferred to the 2027-28 capital programme resulting in a revised capital programme of £9.664 million.

Potential Financial Risks

The Authority monitors a number of financial risks that were not included in the current forecast because they had not materialised. For assurance, these risks had been modelled as stress scenarios and were set out in Appendix 3 of the report. Table 5 shows the estimated impact if these scenarios were to arise during the remainder of the year.

Table 5 – potential worst-case scenario revenue budget and capital budget

These were stress scenarios for assurance purposes and were not forecast pressures. If all modelled risks materialised in full, the impact could be managed in the short term but would require further reporting to members because the General Reserve could fall below the Authority’s approved minimum level.

The Chair suggested that opportunities could be explored for partnership working in relation to prevention, protection and youth engagement, he explained that at a recent Health and Wellbeing Board meeting, the Assistant Chief Fire Officer (ACFO) had taken an action to explore the possibility of establishing a charitable trust for the services cadet programme which could allow support from local businesses. The DoCS confirmed that he would raise this at an upcoming National Fire Chiefs Council (NFCC) Finance conference, to understand how other services operated. The Chair also explained that support from the Better care Fund would be explored which could assist in strengthening prevention work.

In response to a question from the Chair in relation to the impact that potential power outages could have on the service in relation to budget and service delivery, the DoCS explained that mechanisms were in place to support frontline service delivery as part of business continuity planning. He suggested that an overview of the business continuity arrangements could be provided at the next meeting if required.

The Chair also asked if the service had a list of all statutory and non-statutory functions, the DoCS confirmed that the service does have some information but he would ensure it was brought together in one list.

The Director of People and Development (DoPD) explained that along with exploring opportunities for partnership working, the service was also reviewing its services and identifying opportunities for efficiencies internally. The Chair added that the service could also look to commercialise areas of the service in line with best practice.

County Councillor G Mirfin commented that inflation could be much higher than forecasted within the report due to the current period of uncertainty and that there could be the potential for industrial action. He also commented that the risk of power outages was encouraging people to increase their usage of candles which could increase the potential risk of fire. The DoCS acknowledged the period of uncertainty and confirmed that the service would continue monitoring risks and balance those risks within the monitoring statements produced.

The report was moved by the Chair and seconded by County Councillor G Mirfin with all members voting in favour.

Resolved:  That the Committee;

• Noted the financial position.
• Approved slippage of £0.480 million in the capital programme to 2027-28.