Explanatory Foreword_________________________________________________________

1. Introduction

1.1 This foreword gives:

* a summary of the various statements which make up the 2003/04 accounts

* a broad picture of where the money comes from and what it is spent on

* a summary of the revenue expenditure on services and capital expenditure on new assets over the course of the year.

2. Summary of Statement of Accounts

2.1 The accounts for 2003/04 are set out on pages 5 - 7 and 17 - 36. They consist of:

* statement of accounting policies

* summary revenue account - this covers income and expenditure on the service

* balance sheet - this sets out the financial position on 31 March 2004

* cash flow statement - this summarises cash coming in or going out from

transactions with others for revenue and capital purposes

* statement of total movements in reserves - this sets out how reserves have changed and been used during the year.

3. Where the money comes from

3.1 The expenditure of Hampshire Fire and Rescue Authority was financed in 2003/04 by means of a levy on Hampshire County Council, Portsmouth City Council and Southampton City Council. It is shared between the councils in proportion to their respective council tax bases. From 1 April 2004 the Authority moves to a precepting status and will receive its funding directly from the Government and Council Taxpayers.

3.2 The Authority did not have its own Formula Spending Share (FSS), which was the basis for government grant distribution to local authorities in 2003/04. The FSS for fire services forms part of the FSS of the three constituent authorities and therefore any variance in the actual level of spending has a direct impact on other local authority services.

3.3 The Authority has its own basic credit approval (BCA) from the Government to enable borrowing to finance capital expenditure. In order to finance the level of capital programme approved by the Authority, this BCA had to be supplemented by contributions from the revenue budget and receipts from selling surplus assets.

Explanatory Foreword________________________________________________________

3.4 The proportion of the Authority's income obtained from each of the constituent authorities in 2003/04 was as follows:

4. What the money is spent on

5. Overview of the year - revenue account

5.1 The Fire Authority set its levy for 2003/04 on 5 February 2003 requiring £51,311,000

from the constituent authorities. A supplementary levy totalling £784,000 was raised during the year to cover the costs of the firefighters' pay award.

5.2 This was financed by the constituent authorities as follows:

£'000

Hampshire County Council 41,525

Portsmouth City Council 5,026

Southampton City Council 5,544

Explanatory Foreword________________________________________________________

5.3 The main components of the 2003/04 revised budget and supplementary levy against the actual income and expenditure are set out below.

* the budget figures have been adjusted to reflect the FRS 17 actual figures so that the variations are not distorted by the introduction of this new accounting standard.

5.4 At the end of the year net expenditure totalled £51,694,000 which was £401,000 lower then the original budget.

5.5 Expenditure other than pensions was £286,000 overspent. The main reasons for this was a £865,000 increase in the provision for uninsured losses which was partly offset by additional income of £299,000 and lower interest payments of £183,000.

5.6 Pensions expenditure was £694,000 underspent. This was primarily due to fewer firefighters retiring than anticipated on ill-health grounds.

Explanatory Foreword__________________________________________________________

6. Overview of the year - capital expenditure

6.1 In 2003/04 the Authority spent £1,539,000 on capital projects:

£'000

Scheme:

Command and control system 367

Breathing Apparatus 346

Vehicles 716

Other schemes 110

6.2 Vehicles to the value of £1,481,000 were obtained through operational leasing during the year.

7. Debt

7.1 The Authority currently has nine loans totalling £3,250,000.

On a day to day basis the Authority is able to lend to and borrow from Hampshire County Council.

8. Further information

8.1 Further information can be obtained about the accounts from the Treasurer to the Fire and Rescue Authority at the County Treasurer's Department, Hampshire County Council, The Castle, Winchester, Hampshire, SO23 8UB, telephone (01962) 847518, or e-mail [email protected].