Contact: Paul Carey-Kent, Deputy Treasurer, tel: 01962 847525 and
David Howells, Director of Corporate Services tel: 023 8062 6834

1. Introduction

1.1 As a precepting Authority from 2004/05 onwards, the Fire and Rescue Authority has the ability for the first time at the end of 2004/05 to decide independently of constituent authorities how to treat any under or overspends. In this context, the essential decision, for 2004/05, to be made is that between transferring any underspends to the Authority's general reserve or carrying them forward for specific purposes in the following year's budget.

2. Procedure for carrying forward underspends or addressing overspends.

2.1 Financial Regulations state that "The Authority is responsible for agreeing procedures for carrying forward under and overspendings on budget headings on the advice of the Treasurer".

2.2 It is good practice to:

· identify potential under or overspendings spends as early as possible and plan for their use or the corrective action required (the likelihood of a potential underspend in 2004/05 has been flagged in budget monitoring reports and £0.8m is to be put aside to enable repayment of transitional funding when required)

· at the same time, the budgetary framework should not encourage budget holders to "spend-up" at the year end simply in order to use their budgets, as this can lead to inefficient spending.

2.3 All overspends and requests for underspends to be carried forward should be firstly considered by the Service Management Team who will then present those they support to be considered by Members as part of the final accounts approval process. As a general principle requests to carry forward underspends should only be considered if the Authority has underspent by at least the aggregate sum of carry forward requests put forward.

3. 2004/05 underspendings

3.1 As stated above, decisions on the use of underspendings would normally be made at the time of the final accounts report. However, earlier consideration is possible for 2004/05 because it is already clear that there will be a substantial overall underspend, expected to be more than £2m, some of which arises from holding back spending where budget managers have judged that projects can be more efficiently advanced in 2005/06. It is sensible to carry forward underspendings in those areas to avoid any additional pressure on budgets in 2006/07, and taking a decision early will allow budget managers to plan with more certainty.

3.2 The Service Management Team has considered carry forward requests from budget managers, and support the requests detailed the table below, which total £0.5m.

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

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

Recommendation

That it be recommended to the Authority that it approves the procedures set out in 2.3 above in relation to under and overspends and also the carry forward of the underspends shown totalling £0.5m and their being added to the relevant budget holders' 2005/06 cash limits.

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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