COUNCIL MEETING, 25 FEBRUARY 2004

REPORT OF THE

Hampshire Fire and Rescue Authority

PART II

BUDGET 2004/05

1. 2004/05 will be the first year in which Hampshire Fire and Rescue Authority sets its own Council Tax. Instead of making a levy on constituent authorities, it will precept for a council tax of £51.30 at Band D, as set at the Authority's meeting on 11 February. This will fund an increase of 13.75% over the Authority's budget for 2003/04.

2. This high level of increase is common across fire authorities, and reflects particular pressures in 2004/05: the high costs of pay award to firefighters following the settlement of the industrial dispute, additional pensions costs which have to be paid for from the revenue budget, the upfront costs of modernisation which will not at this stage generate savings, and the need to set up working balances for the Authority now that it is wholly financially independent. Indeed, the budget increase could have been higher as the Authority consulted with unions, the public and businesses on the possibility of a 15% increase and found that there was considerable understanding of the reasons for this. However, in response to the Government's threat to cap fire authorities it was decided that the balance of risk was in favour of reducing the level of reserves from the £2m which the Authority considered optimal to £1.4m in 2004/05 with a planned increase to £1.6m in 2005/06. The Authority also had to accept that, although it would have liked to buy replacement vehicles direct from revenue as this is cost effective in the long-term, it would be necessary to borrow for this purpose in 2004/05. This in itself is progress, however, as it had previously been necessary to lease vehicles, which is more expensive and less flexible than purchasing by either route.

3. Among the challenges facing the Authority from 2004/05 onwards are modernisation, linked to local risk assessment, and the Government's agenda for regionalising aspects of the service. The financial consequences of these issues should begin to emerge during the coming year.

M.F. CARTWRIGHT

Chairman

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