Agenda item

With regard to both the draft capital and revenue budgets, the Director of Corporate Services / Treasurer advised that when the Fire Service had been initially set up there was an Authority meeting held each December to notify the constituent Authorities of the levy however, when the Authority became a precepting Authority, although not necessary, this principle had continued particularly given the financial information had been provided by the Government each year in November.  However, over the past couple of years that position had changed significantly with the financial statement being issued later and later in the year.  This had made the production of meaningful reports to this meeting increasingly more difficult.  The Director of Corporate Services advised that he would bring a report to a future meeting for Member consideration of whether to continue the practice of providing draft reports in December or to consider an alternative.

The Director of Corporate Services/Treasurer presented the draft capital programme 2018/19 – 2022/23.

Capital Budget Strategy

The Authority’s capital strategy was designed to ensure that the Authority’s capital investment:-

·        Assisted in delivering the corporate objectives;

·        Supported priorities identified in asset management plans;

·        Ensured statutory requirements were met, i.e. Health and Safety issues;

·        Supported the Medium Term Financial Strategy by ensuring all capital investment decisions considered the future impact on revenue budgets;

·        Represented value for money.

Capital Requirements

Capital expenditure was expenditure on major assets such as new buildings, significant building modifications and major pieces of equipment/vehicles.

The Service had developed asset management plans which assisted in identifying the long-term capital requirements. These plans, together with the operational equipment register had been used to assist in identifying total requirements and the relevant priorities. The report set out the detailed capital programme as summarised in the table below: -

No allowance had been included for the potential relocation of SHQ, as this project was currently on hold however this would be revisited in 2018/19 in line with the Authority’s previous decision.

Capital Funding

The Director of Corporate Services advised that the Local Government finance settlement was not currently available but he felt it was likely to include any capital grant allocation for the Fire Service nationally hence no allowance was included.

The report set out the level of capital funding available as summarised in the table below: -

Summary Programme

The summary of the programme, in terms of requirements and available funding, are set out below:

Over the next five years the capital programme was currently balanced without a need for any new borrowing.  However it was noted that any significant additional items would potentially result in a need to borrow in the future.  It was also noted that the following assumptions could change as follows:-

• Operational Communications replacements (ESMCP) were subject to a great deal of uncertainty;
• Capital grant may be made available in future years, in order to assist service transformation and greater collaboration;
• The further introduction of Water Towers was subject to a review and vehicle requirements could be amended;
• New Dimensions vehicle replacements were expected to be carried out by CLG, however this position may change;
• All operational equipment item replacements were at estimated costs and would be subject to proper costings nearer the time;
• ICT software replacements were based largely on the ICT asset management plan, and were subject to review prior to replacement, which has led in the past to significant slippage.

The programme was balanced, and as such was considered prudent, sustainable and affordable. However, should any of the funding assumptions or expenditure items within the programme change; this would have an impact on the overall affordability of the programme.

Impact on the Revenue budget

It was noted that the capital programme and its funding directly impacted on the revenue budget in terms of capital financing charges and in terms of the revenue contribution to capital outlay. Based on the provisional 4 year settlement and the assumptions included within it, the position in respect of the revenue budget appeared sustainable until at least March 2020. Dependent upon future funding the revenue contribution to capital may come under increasing pressure, or alternatively if the Authority needed to borrow to meet future capital requirements this would impact the revenue budget as capital financing charges, the scale of which would depend upon the type of asset the borrowing was charged against, as it was linked to the life of assets.

Prudential Indicators

The Authority was required to calculate various prudential indicators to demonstrate that the proposed capital programme was affordable, prudent and sustainable.   These had not yet been calculated, but would be included in the Authority report in February.

In response to CC O’Toole who stated that he had supported the early relocation of Service Headquarters to Service Training Centre to remove the duplication of effort and provide a better working environment for staff, the Chairman advised that the decision to relocate had been postponed at the time due to uncertainty surrounding funding and the national direction for Fire & Rescue Authorities / Services both in terms of collaboration and the potential for different governance changes, such as the involvement of the Police & Crime Commissioner.  The Chief Fire Officer advised that detailed a report would be presented to Members next year.

RESOLVED:-

(i)    That the draft Capital Programme 2018/19 - 2022/23 be noted;

(ii)   That the Authority authorised consultation with representatives of non-domestic ratepayers and Trade Unions on the budget proposals;

(iii) That the Authority would give further consideration to the capital budget at their next meeting on 19 February 2018, in light of the consultation process;

(iv) That the Authority approved the removal of £1.25m in respect of training assets from the 2017/18 capital budget, having noted that this was now incorporated into the 5-year programme as presented.