Contact: Paul Carey-Kent, Deputy Treasurer, 01962 847525

David Howells, Director of Corporate Services, 02380 644000 ext 203

1 Summary

1.1 Since the budget was set, a number of additional funding pressures have arisen including the pay settlement for firefighters (and other modernisation issues), and preparation for the introduction of precepting arrangements. There is still some uncertainty about the details of implementing the pay award and its consequential cost. At this stage, the cost of the additional pressures amount to £1,207,000. Of these:

· £557,000 was flagged up as likely to be the subject of a supplementary levy. An updated estimate increases the costs which might be subject to such an approach to £689,000. A more accurate assessment will be given at the December meeting of the Fire Authority.

· £168,000 relates to increases in the number of operational incidents, and would be covered by the formula in place for variations of this type.

As a result of these two factors, Appendix A shows an expected overspend of £857,000 at this stage, leaving savings to be found of £350,000

1.2 This £350,000 relates to other pressures; the single biggest item of which (£250,000) results from more firefighters being recruited than have left the Service during the year to date. Savings need to be sought to offset this.

1.3 At this stage, it is recommended that a fuller review of the budget position, in conjunction with agreeing what level of supplementary levy would be appropriate, should be carried out at the December meeting of the Authority.

2 Firefighters' Pay Award

2.1 Latest advice from negotiators suggests that a 7% increase in whole time firefighters' pay and allowances should cover this year's cost of the proposed pay settlement for wholetime firefighters - except for the cost of any special responsibility payments which will be required. The projected outturn includes the 7% increase with effect from November 2003 but with no allowance for special responsibility payments at this stage.

2.2 Parity costs for retained firefighters are estimated to be at least an extra 10% of pay and allowances with effect from November 2003 and could be as much as 13%. An extra 10%, included in the projected outturn, is estimated to cost £170,000 (part year) and £428,000 (full year). In addition, due to higher than budgeted levels of operational activity it is estimated costs will increase by a further £168,000, assuming activity returns to the current average for the remaining months of the year (contingency arrangements, if applied, will cover the impact of this overspend on the HRFA budget).

2.3 Control operators' pay is expected to increase from the equivalent of 92% of wholetime firefighters' pay to 95% - backdated to November 2002. This is estimated to cost an additional £50,000 (£36,000 full year) plus £13,000 for the balance of the 7% not previously budgeted for.

2.4 The incident support and emergency catering teams are entitled to backdated holiday pay and offered the opportunity to join the local government pension scheme. Potential costs are estimated at £60,000.

2.5 Provision was made in the final accounts 2002/03 for the estimated cost of accelerated pay for wholetime firefighters at £190,000. The latest estimate reduces this to £130,000 - a saving of £60,000.

3 Number of wholetime firefighters

3.1 Notwithstanding pay award issues, the latest projected outturn of the wholetime firefighters' pay and allowances continues to show an overspend of £250,000. This equates to approximately 14 firefighters over establishment for the year. The main reason for the overprovision is that fewer firefighters had retired than had originally been anticipated. It is still possible that around a dozen firefighters will retire in the remainder of this year, and for that reason it would be risky to cancel the January course in case this happens and further retirements occur early in 2004/05 before additional firefighters can be trained. It may be that the first course in 2004/05 should be cancelled - by January the position should be clearer on which to base such a decision. However, the consequence of such an approach is such that there will be an overspend this year, albeit this may be compensated for by an underspend next year. The change in arrangements to precepting between the two years complicates the position. It is therefore proposed that:

· the January course should run for an additional 12 firefighters

· a decision should be taken at the February meeting of the Authority as to the number of courses required in 2004/05 and

· the first £250,000 of any overspend at the end of 2003/04 should be deducted from the balance transfer due from constituent authorities in recognition of the Fire Authority's desire to spend in advance in order to better position itself for 2004/05. This would, of course, add to the proportion of the new balances requiring to be met from the precept.

4 Other pressures

4.1 Based on expenditure to date legal fees are estimated to increase by £80,000. In addition further provision may be required for uninsured claims depending on the outcome of disputes, tribunals, etc.

4.2 Vehicle fuel costs are estimated to increase by £40,000 due to the higher than budgeted level of operational activity. £20,000 has been met by virement leaving a balance of £20,000 to be found.

4.3 As a precepting authority a Council Tax leaflet will need to be prepared during this financial year at an estimated cost of £25,000.

4.4 Based on the recommendation of the Independent Remuneration Panel, it is estimated that the new scheme for members' allowances could cost £69,000 if backdated to May 2003.

4.5 The costs of the integrated risk management plan, including public consultation, are estimated at £50,000.

4.6 Increased costs can be summarised as follows:

5 Pensions

5.1 To date there have been eight retirements compared with the 29 allowed for the full year in the budget.

5.2 There is currently a projected underspend of around £500,000 on lump sum payments. However transfer values received look likely to fall short of the budget and retirements may have been simply deferred within the year. Therefore at this stage no large variance for pensions is predicted overall.

6Capital

6.1 There is just one change to report on the estimated starts values of capital projects to those reported in July. The repairs to Copnor Fire Station are now predicted to total £116,000 an additional £12,000 to that last reported, but this still below the original estimate of £135,000 for the urgent remedial works.

6.2 There is some slippage (£50,000) to the 2003/04 vehicles relating to the water carrier that will now not be purchased until next year.

6.3 The works at B and C Division which were due to be financed from Supplementary Credit Approval (SCA) will have to be financed from Basic Credit Approval (BCA). Requests were made to the ODPM to see if this approval could be extended into 2003/04 and were refused. Subject to the effects of the prudential code and related transition arrangements, this will reduce future capital spending power by £66,000 compared with that previously expected.

Recommendations

1. That the increased starts value of the repairs to Copnor Fire Station and the change in financing of works at B and C division be approved.

2. That the Authority considers the revenue position further at its December meeting.

Section 100 D - Local Government Act 1972 - background papers

The following documents disclose 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 this report.

NB the list excludes:

Published works.

Documents which disclose exempt or confidential information as defined in the Act.

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Fire - Budget Monitoring 2003/04 pp3.33d