Archived decisions

Appendix 1

Calculation of the base budget

1. Summary of changes in the base budget

	£'000	£'000	%
Original budget 2003/04		51,311
Add full year costs of inflation to November 2003 prices - pay and prices		2,173	4.23
		53,484
Add growth items allowed in the base budget:
Net cost of increments		20	0.04
Operational leasing		90	0.18
Retained pay formula - number of incidents		38	0.07
Asset management costs		8	0.02
Full year effect of previous years' growth		148	0.29
Provision for inflation (pay and prices) from November 2003 to outturn 2004/05		1,355	2.64
Cash limited expenditure budget 2004/05		55,143	7.47
Pensions:
Full year cost of inflation to November 2003 prices	-4
Increase in lump sums	251
Increase in ordinary and ill-health pension payments	588
Other	-95
Provision for inflation November 2003 to outturn 2004/05	223	963	1.87
Base Budget 2004/05		56,106	9.34

2. Full year cost of inflation to November 2003 prices

The original budget has been increased by the actual costs of inflation to November 2003. Total inflation is £2,173,000 for pay and prices and -£4,000 for pensions.

3. Increments

These are the gross cost of increments less savings on turnover. The net cost for firefighters is nil and for support staff is £20,000.

4. Operational leasing and capital financing costs

The operational leasing budget has been calculated based on indicative quotes for vehicles to be leased by 31 March 2005. This increases the operational leasing budget by £90,000 and is for existing commitments only. It has been assumed that all vehicle starts from 2004/05 will be financed from loan. Should the vehicles be purchased from revenue then the capital financing costs in later years will reduce.

The latest estimate of the cost of making the statutory debt repayments and interest on loans taken out adds £8,000 to the base budget.

5. Previous year's growth

When the growth was approved in February 2002, implementation of several items was either phased in or delayed until 2004/05. These are added at a cost of £148,000. This net figure assumes catering savings of £140,000 in line with the targets set by the Best Value Review Committee.

6. Retained pay - number of incidents.

The budget is currently based on paying for 23,253 incidents. This was calculated using the agreed formula which takes the average of the last five years excluding the highest and lowest years to avoid any distortion of exceptional years.

The formula has been reviewed for 2004/05. The average number of incidents now stands at 23,570 and adds £38,000 to the base budget.

7. Pensions

The overall pensions budget for 2004/05 consists of:

	£m
Pensions payroll	7.9
Lump sum payments	2.6
Transfer values paid	0.3
Transfer values received	-0.5
Employee contributions	-2.3
	8.0

The trends in pensions since 1999/00 are:

	Budget £m	Outturn £m
1999/00	5.3	5.6
2000/01	5.8	5.1
2001/02	7.1	7.0
2002/03	7.5	7.2
2003/04	7.2	7.2 (estimated)

8. Provision for future inflation

The provision for inflation from November 2003 to March 2005 has been calculated based on 4.2% for firefighters from 1 July, 2.5% for support staff, 2.8% for pension payments and 2.5% for all other costs. The increase in local government employers pension contributions from 215% to 225% of employees' contributions has also been included.

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