Hampshire Fire and Rescue Authority Item 12

Finance and General Purposes Committee

26 15/03/2005October 2006

Cessation of day-crewing duty system: transitional allowances to staff

Report by the Chief Officer

Contact: David Howells, Director of Corporate Services Tel: 02380 626833

1

Summary

1.1

At its meeting on 15 February 2006, the Authority approved a revised policy for the disposal of properties associated with the day-crewing duty system. This included the opportunity to allow existing tenants to purchase (Authority-owned) houses at a discount of 5% or £10,000 (whichever is the lesser sum). At the meeting, Members asked that a consultation exercise be conducted with staff. During consultation some staff expressed concern that it was inequitable because, while it provided a potential benefit to those occupying Authority-owned houses, no comparable assistance was being offered to those staff who were living in their own properties or those occupying Authority-rented accommodation.

1.2

The Human Resources Committee will be considering the merits of paying such allowances at its next meeting on 1 December 2006. Members of this Committee are asked to consider only the potential financial implications of the proposals.

2

Recommendation

2.1

That in the event that the Human Resources Committee agrees, at its meeting on 1 December 2006, to recommend to the Authority the payment of transitional allowances arising from the cessation of the day-crewing duty system, it be a recommendation to the Authority by this Committee:

That the financial implications of the proposed allowances be acknowledged and that the costs of implementation be included in the draft budget proposals for 2007/08 and 2008/09.

3

Introduction Error! Bookmark not defined.and background

3.1

With the aim of improving response times and increasing the capacity for fire protection and prevention activities, the Authority's IRMP 2006-09 includes plans to end the existing day-crewing duty system and implement the continuous shift-crewing system at Andover from April 2007, at Winchester from October 2007, and at Havant from April 2008.

3.2

This will mean that the wholetime firefighters at these stations will no longer be required to live (or respond) within 4 minutes travelling time of their respective stations. It therefore follows that the Authority no longer needs to provide accommodation to support the crewing arrangements at these stations or give financial assistance to those providing their own accommodation.

3.3

In preparation for implementing these changes, the Authority (at its meeting on 15 February 2006) reviewed and revised its housing disposal policy such that existing tenants may purchase (Authority-owned) houses at a discount of 5% or £10,000 (whichever is the lesser sum). It should be noted that existing service-tenants occupy provided accommodation rent-free.

3.4

During consultation on the revision to the disposal policy, day-crewing personnel providing their own accommodation (for which they receive allowances) felt that the policy would create an inequitable situation, as they would not receive any financial assistance. This group of employees also cited previous payments made by the Authority to staff that were affected by similar changes to shift systems at Fareham in 1990, and at Lyndhurst and Hardley in 1999.

3.5

The `Duty Systems Project Board' considered this issue and agreed that there was inequity in the financial support being offered and developed proposals to address the inconsistency. In essence, the proposals comprise a one-off payment of £10,000 plus up to £2,500 (provided that there evidence of expenditure) to assist with the costs of relocation.

4

Proposed allowances

4.1

The table below sets out the detail of the proposed allowances and for completeness, includes the benefits of the already approved housing disposal policy.

Policy

Options

Benefit

Housing disposal policy

Opportunity for service-tenants to purchase Authority-owned housing that becomes surplus to operational requirements.

A discount of 5% or £10,000 (whichever is the lesser sum) off the market value of the property; plus an allowance of up to £2,500 (subject to receipts being produced) towards the cost of legal fees incurred.

Max total : £12,500

Proposed day-crewing transitional allowance

Remains in or relocates from own property and changes shift system with loss of allowances (between £7,000 - £ 9,000 per annum).

A one-off payment of £10,000 plus - if the person has to re-locate for financial reasons - an allowance of up to £2,500 (subject to receipts being produced) towards the cost of legal fees incurred

Max Total : £12,500

Existing relocation policy

(Although it is recognised that this is an accommodation and not job location move it is recommended that the existing policy should apply)

Required to move by the Service for operational reasons

Up to £12,500 (payable on production of receipts) to assist with the cost of relocation.

Max Total : £12,500

5

Contribution to corporate aims and objectives

5.1

The Authority's Integrated Risk Management Plan (IRMP) includes the objective to change the existing duty system at Andover, Havant and Winchester Fire Stations in order to improve response times to emergencies and to increase the capacity for community safety initiatives. The approved housing disposal policy, together with the payment of allowances recommended in this report, are both designed to ensure the smooth transition from the day-crewing duty system to the shift-crewing duty system in a way that is fair to all staff. It is important to acknowledge that the staff at day-crewing stations will receive a reduction in their total remuneration package when they transfer to the shift system. Current allowances paid to day-crewing personnel and the benefit of rent-free accommodation are regarded as a significant and regular part of the total remuneration package they receive. Payment of these allowances will continue, but in a more equitable way, the Authority's previous practices of easing the impact on staff affected by reductions in their income. It will also enable the Authority to achieve its previously stated aim to release itself from the burden of providing accommodation for staff and enable the Authority to invest the capital receipts from the disposal of houses towards improving facilities at fire stations.

6

Risk analysis

6.1

Achievement of the Authority's corporate aims and objectives can only be successfully achieved with the full engagement and cooperation of all staff. In managing this particular objective, it is therefore important that the Authority has in place appropriate transitional arrangements so that the change can be delivered smoothly, cost-effectively and on time.

7

Resource implications

7.1

Human Resources

Processing these allowances will impact upon the Human Resource Department and this has been identified within the Department's work plan and can be undertaken within existing resources.

7.2

Physical Resources

There are no physical resource implications as a result of this proposal.

7.3

Information and Communications Technology (ICT) Resources

There are no ICT implications as a result of this proposal.

7.4

Financial Implications

If all Service tenants currently occupying Authority-owned houses exercised the option to purchase them at a discount, it is estimated that this would reduce eventual capital receipts by a maximum of £230,000. However, it is unlikely that all tenants would pursue this option. It is also important to emphasise that the estimated reduction is based on assumed values - these may vary by more than 5% when current market values are determined during disposal.

The estimated total cost of making payments under the proposed transitional allowances, including the costs of implementing the existing relocation policy to all eligible staff, is put at £340,000.

The financial implications of this proposal would add to the costs of implementing the approved IRMP objectives. This would therefore need to be addressed as growth within the budget strategy for 2007/08 & 2008/09. However, it is appropriate to emphasise that, in overall terms, the various IRMP objectives will deliver both service delivery and cash efficiency improvements.

8

Equality Impact Assessment

8.1

The proposals for allowances set out in this report have been developed on the need to achieve transitional arrangements that are fair and equitable to all the staff affected by the cessation of the day-crewing system.

8.2

The proposals within this report are considered compatible with the provisions of the European Convention on Human Rights, the Human Rights Act 1998, and the Race Relations (Amendment) Act 2000.

9

Consultation

9.1

During consultation on the housing disposal policy the inequity of the overall financial support for staff currently providing their own accommodation, was raised.

9.2

The transitional allowances proposed in this report were then subject to a consultation exercise undertaken from 15 May to 13 July. This included a face to face meeting with all staff affected and representatives of the Fire Brigades Union (FBU). The FBU requested a further meeting as part of the consultation process and the consultation period was extended to facilitate this. The six key points raised during the consultation are set out in Appendix 1.

9.3

During the consultation process, the Fire Brigades Union offered an alternative proposal based on a formula, which calculated the total value of housing stock divided by number of houses with all Day Crewing staff then being paid 10% of the total sum. This alternative was rejected by the Project Board on the basis that it would increase the financial implications by approximately £212,000. The Board was also advised by the Service's Equality Adviser that treating everyone in the same way, as this proposal would do, is not treating everyone equitably. In contrast, the Project Board's proposal aims to recognise the differing circumstances of individuals and seek to achieve an equitable outcome.

10

Conclusion

10.1

The proposed allowances being presented to the Human Resources Committee summarised in this report seek to provide equitable treatment for all staff currently appointed to the day crewing duty system that should help to ensure that the transition to shift crewing at Andover, Havant and Winchester can be implemented smoothly.

Background Information (Section 100D of Local Government Act 1972)

The following documents disclose the facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of the report:

Note: The list excludes: (1) published works; and (2) documents that disclose exempt or confidential information defined in the Act.

laj/C/HFRA/FGP 26 10 06 Transitional Allowance DH/JMW/18/10/06

Appendix 1

Hampshire Fire and Rescue Service

Day Crew Transitional Allowance - Consultation

1. Challenge over Consultation Process

Both staff and the FBU have challenged the consultation process of the Housing Disposal Policy which was based on previous Day Crew changes and claim that as this consultation was conducted in isolation, it has restricted the consultation on the Transitional Allowance. The Project Board has considered this challenge but feel that the process and the decisions made in developing the Housing Disposal Policy and then the Transitional Allowance has created a fair and equitable arrangement for all Day Crew employees.

2. Fire Brigades Union Proposal

The Fire Brigades Union provided an alternative proposal based on value of Service housing and number of employees with a percentage payment however, this was not regarded as equitable with reference to the Housing or Relocation Policies. The FBU proposal was a more expensive option than the Project Boards proposal. The rationale for the Project Board proposal is to ensure an equitable arrangement for all categories of Day Crewed employees taking account of individual needs using the Relocation and Housing policy as a benchmark

3. Pay Protection

Pay protection was requested over a period of time, with the removal of housing and allowances received whilst on the Day Crew system. Employees were reminded that these payments are not pension-able payments and as such do not constitute pay and hence there is no facility to protect this allowance. Furthermore HFRS has no legal obligation to provide any pay protection. Rather a more equitable arrangement is the preferred option with the proposal of a Day Crew Financial Adjustment, which will have to be justified to the HR and Finance & General Purposes Committees.

4. Tax Implications

Employees were concerned that they would be liable to income tax on any allowance paid. All allowances are subject to section 62 of the Income Tax (Earnings and Pensions) Act 2003. This has implications for both the employer and employee. For more information they have been advised to seek advice from the Inland Revenue.

5. Graduated Payments

A request was made for graduated payments over a period of two or more years to reduce or remove the tax implications. HFRS will consider graduated payments on the Day Crew Financial Adjustment i.e. 2 payments of £5000 over an agreed period based on an individuals financial need. Graduated payments will not be provided to reduce tax payments as we are required to comply with legislation.

6. Relocation Expenses

Concerns were raised over the cost of moving, these were considered and the Project Board agreed that the current Relocation Policy was deemed to be suitable. The Relocation Policy does qualify for up to £8,000 tax exemption, when the location of the job changes. Service Order 1/2/11 provides further guidance, although in these cases it would not be tax free.

laj/C/HFRA/FGP 26 10 06 Transitional Allowance DH/JMW/18/10/06