Contact: Paul Carey-Kent, Deputy Treasurer, 01962 848525

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

1. Introduction

1.1 This report sets out for Members the latest budget predictions for the year. Overall an underspending of £768,000 against the original budget is predicted the reasons for which are set out in the following paragraphs. This is an increase of £410,000 over the last reported projected underspend of £358,000. It would be an ideal position if, by the end of the year, the underspend was sufficient to cover the repayment of the £787,000 Transitional Grant in 2005/06 and add the £600,000 necessary to meet the £2m general reserve preferred by Members without it impacting on next year's budget.

2. Revenue

2.1 Details of the latest position are given in Appendix A. The main variations compared with the previous monitoring report are as follows:

Whole-time firefighters pay and allowances (-£370,000)

2.2 Assuming the only trainee course run this year is in January savings of £250,000 will occur. Further savings are predicted, mainly as a result of turnover which has been significantly higher than that used when the budget was compiled, totalling £120,000. As the number of firefighters in post had previously been over establishment this turnover brings the number of firefighters in post closer to the approved establishment.

Retained firefighters pay and allowances

2.3 The number of incidents as at 31 August 2004 was 10,057, compared to 9,820 assumed in the budget, which represents 2% more. However, the number of incidents for the same period last year was 12,117.

2.4 Overall expenditure is in-line with the budget.

Firefighters' pay award

2.5 The firefighters pay dispute has been settled which means the outstanding 3.5% pay award backdated to November 2003 and 4.2% pay award from July 2004 can be paid. The pay award was fully budgeted for and is included in the above forecasts.

Support staff (+£100,000)

2.6 An increase in the use of agency and temporary staff has reduced the underspending from the £300,000 predicted in July to £200,000. The pay award was settled at 2.75%, 0.25% higher than budgeted, which has had a marginal effect on the projected underspend.

Other employee expenses (met from virement)

2.7 In-line with the proposal agreed at the last meeting of the Personnel Committee, £19,000 has been identified to meet the training and development costs towards re-training the Control Room staff who face the possibility of redundancy. This cost is being met from within existing resources by reprioritising operational equipment, training and other supplies expenditure.

Premises costs (-£140,000)

2.8 Four more properties, St Mary's, Totton, Southsea and Copnor Fire Stations have had their property valuations successfully challenged resulting in backdated refunds of business rates including and on-going savings of £22,000.

Members' allowances

2.9 All member basic allowances and all special responsibility allowances have been increased by 2.75% with effect from 1 April 2004, in-line with the green book pay award

3. Pensions

3.1 In the first five months there have been just 11 retirements (7 age related and 4 ill-health). This compares with the budget of 32 retirements (22 age related and 10 ill-health) for the whole year.

3.2 It is looking probable that there will be an underspend that could be as significant as last year (ie £400,000). However given the volatile nature of pensions it is too early to commit to any variances on this budget head. If this situation does occur then it is possible that lump sum payments may be higher next year and strengthens the case for increasing the general reserve.

4. Capital

4.1 Work is continuing on the feasibility and design work in connection with the HQ redevelopment scheme. The capital budget for this phase of the work was set at £25,000 last year. A total of £30,000 was spent last year, £11,000 to date this year and it is anticipated a further £39,000 is needed. It is therefore recommended that the starts value needs to be increased to £80,000. This is a timing issue only, as it is still anticipated that the total cost of the HQ redevelopment will be kept within the estimates previously identified.

4.2 As stated in the vehicle replacement report also on this agenda, it is recommended that the starts value for 2003/04 vehicles be reduced by £84,000 and for 2004/05 increased by £54,000.

4.3 There are no other changes to report against the updated programme presented in July.

5. European Convention on Human Rights and the Human Rights Act 1998

5.1 The proposals within this report are considered compatible with the provisions of the European Convention on Human Rights, the Human Rights Act 1998 and the Race Relations (Amendment) Act 2000.

Recommendation

1. That it be recommended to the Authority that the starts value for the feasibility and design work in connection with the HQ development scheme be increased to £80,000.

2. That is be recommended to the Authority that the starts value for 2003/04 vehicles be reduced by £84,000 and increased by £54,000 for 2004/05.

3. That the revenue position be noted.