Contact: Paul Carey-Kent, Deputy Treasurer 01962 847525

David Howells, Director of Corporate Services, 023 8064 4000, ext 203

1. Introduction

1.1 As reported in the Budget Monitoring report considered by the meeting of the Finance and General Purposes Committee on the 5 November 2003, it is clear that considerable budget pressures have arisen this year due to issues which either arose subsequent to setting the budget or were not quantifiable at that time. In those circumstances, a supplementary levy is appropriate.

2. Level of levy

2.1 In considering what supplementary levy to make, the following should be taken into account:

· there was an underspending of £655,000 against the Fire and Rescue Authority budget for 2002/03. This has been repaid to the constituent authorities, as requested by them and in accordance with the relevant accounting requirements. This Authority and the constituent authority final accounts have been finalised for 2002/03 on this basis. Nonetheless, this underspend is a background factor in that it should make it easier for constituent authorities to provide for any supplementary levy. Constituent authorities were also warned when the budget was set in February 2003 that a supplementary levy for any pay award in excess of 4% would be required. The budget monitoring report to the Finance & General Purposes Committee on 5 November set out details of the new budget pressures. This paper updates those figures, including to show the cost of the new scheme for members' allowances at the level recommended by the Authority's Standards Committee (but subject to a decision earlier on this agenda).

· there are some pressures for which a supplementary levy would not be appropriate, ie those arising from budget management decisions rather than due to arising during the year and subsequent to setting the budget. Primary among these, as explained in the 5 November report, is the running of staffing numbers at above establishment levels. In recognition of this, which better places the Fire and Rescue Authority for 2004/05, the Finance and General Purposes Committee recommended that the first £250,000 on the overspend in 2003/04 should be deducted from the balance transfers otherwise due from constituent authorities as agreed following the consultation processes in October.

· the timing of the full payment of the 7% pay increase due from November 2003 is a further complication, once the Audit Commission has certified that appropriate modernisation has taken place. 3.5% has been paid already with 3.5% looking unlikely at present to be paid before the end of the financial year.

· the financial implications of the level of operational incidents will not be known before the end of the financial year.

2.2 The result is to propose a supplementary levy, payable on 12 March 2004 (being the day on which the last levy payment is due for 2003/04), currently expected to total £784,000. The constituent authorities should be notified now of the amount likely to be required but with the figure being revised by the Treasurer if substantial change occurs.

2.3 In addition there will be a final year-end adjustment required between the Authority and the constituent authorities in particular for the level of operational activity which will not be known until then.

2.4 This leaves other pressures of £350,000 to either be managed down, dealt with by deduction from the balances otherwise to be transferred or dealt with at the year end. Constituent authorities would, in line with established arrangements, receive any underspend or meet any remaining overspend at the year end (unless there is agreement to the contrary). That said, constituent authorities would require evidence of serious efforts to minimise expenditure, and might otherwise be expected to argue that any overspend beyond the £250,000 should also be deducted from balances.

3 European Convention on Human Rights and the Human Rights Act 1998

3.1 The proposals within this report are compatible with the provision of the European Convention on Human Rights and the Human Rights Act 1998.

Recommendations

It is recommended that:

1. the constitutent authorities be informed that there will be a supplementary levy of £784,000 relating to 2003/04, but subject to amendment by the Treasurer if necessary, and payable on 12 March 2004.

2. the constituent authorities be informed, by copy of this report, of the likely level of year-end adjustments.

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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