Contact: Paul Carey-Kent, Deputy Treasurer, tel: 01962 847525;
[email protected]

David Howells, Director of Corporate Services tel: 023 8064 6834;

[email protected]

1 Introduction

1.1 This report sets out for members the latest budget predictions for the year. Overall an underspending of £625,000 is predicted against the original budget plus approved carry forward of 2004/05 underspends, the reasons for which are set out in the following paragraphs. However, the level of underspend is likely to increase, given that:

· The carry forward of £0.5m in respect of spending originally planned for 2004/05 may have a knock-on effect leading to a similar position at the end of 2005/06

· There are initial indications that a pensions underspending is possible

· The Authority has been able to reduce projected spending in-year during 2003/04 and 2004/05, and this may well continue

1.2 As indicated in the final accounts report, also on this agenda, this underspend will be used in the first instance to supplement spending on modernisation initiatives.

1 Revenue

1.1 The latest position is given in Appendix A.

Wholetime firefighters pay and allowances (-£600,000)

1.2 The turnover of wholetime firefighters is significantly below average, however there are currently a number of vacancies and it is anticipated that a further 20 firefighters will leave between now and the end of the financial year. The service is resourced to anticipate up to 60 vacancies and with 13 trainees on the current course and two further courses planned for November 2005 and February 2006 with just 15 trainees each this will result in further savings.

1.3 The impact of any changes resulting from the senior and middle management reviews are not reflected in the projected outturn.

Retained firefighters pay and allowances (-£100,000)

1.4 The number of incidents for the first three months of the year is 5,914 compared with the 6,186 on which the budget is set. The number of incidents for the same period last year was 6,027. The projected underspend reflects this drop in incidents.

Uniformed staff pay award

1.5 The July 2005 pay award for uniformed staff has been agreed at 3.4%, which is 0.4% more than planned for in the budget. The additional cost this year is estimated at £90,000 (£120,000 in 2006/07) and has been allowed for in the projected underspendings in wholetime and retained firefighters pay above.

Support staff pay (£nil)

1.6 The support staff budget is projected to stay within budget. The additional cost of the new Equalities Team has been offset by savings from other vacant support staff posts

1.7 The April 2005 pay award was agreed last year as part of a three year deal. The increase is 2.95% - the level assumed in the budget.

Business rates (+£67,000)

1.8 Business rates are projected to overspend as a result of the revaluation of premises for business rate purposes from April 2005.

Other supplies (+£112,000)

1.9 There are two budget heads which make up this projected overspend -mapping licences and legal expenses.

1.10 The Authority paid HCC £16,000 as part of a service level agreement with the Ordnance Survey to supply mapping services which expired at the end of March 2005. That arrangement has been replaced (for both the County Council and this Authority) by a new four year Mapping Services Agreement (MSA) arranged by the Improvement and Development Agency (I&DEA) on behalf of all local authorities including fire authorities. The estimated annual cost is £88,000 including an £11,000 I&DEA management fee. Under the new agreement all fire authorities will now be treated as separate authorities and will enter into an MSA in their own right and be responsible for paying their own fees. It has been advised that if the Authority opts out of the MSA and buys its mapping products direct from the Ordnance Survey the costs would be substantially greater.

1.11 The increase in legal expenses of £66,000 reflects the trend in expenditure over the last two years and the significant increase in the use of external legal advice providers. This is offset by a reduction of £26,000 in bought in support services as a result of reduced usage of Hampshire County Council's (HCC) legal services.

Interest payable and receivable (-£111,000)

1.12 As a result of higher balances being held and a projected underspend £85,000 more interest is expected to be received than is currently assumed in the budget. This is in addition to the reduction in interest payable of £26,000 referred to in section 4 of this report.

Partnership initiatives - council tax from second homes (+£2,000)

1.13 The additional £2,000 of council tax raised over the existing level on second homes will be used to continue funding-partnerships initiatives with other local authorities and agencies. This will be added to the £88,000 already in the budget raised from this source.

2 Pensions

2.1 In the first three months there have been just three retirements all of which were age related. This compares with the budget of 31 retirements (21 age related and 10 ill health) for the whole year.

2.2 Given the volatile nature of this budget it is however too early to predict any variances on this budget head.

3 Capital

3.1 Appendix B details the latest costs of the approved Capital Programme.

2004/05 vehicles

3.2 Some changes have been made to the support vehicles element of the 2005/06 vehicles programme which overall increases the capital cost by £3,000. These are however more than offset by revenue contributions as an additional vehicles is to be purchased using revenue (£13,000) received from the ODPM.

2005/06 vehicles

3.3 The starts value of this programme has reduced by £27,000 mainly as a result of opting to extend some support vehicles leases for two years rather than purchase replacements as originally planned. This was seen as the best way of acquiring vehicles to be used for Home Fire Safety checks work and the need to replace these vehicles can then be reviewed at a later date. The operating leases revenue budget has been increased by £7,000 to accommodate these costs.

Headquarters reception refurbishment

3.4 The starts value of this project has increased from £60,000 to £130,000. This increase is primarily due to the need to acquire temporary accommodation for staff whilst the building works are undertaken.

Headquarters redevelopment - phase 1

3.5 This project has now been put out to tender. The costs have been updated for inflation and have increased by £100,000 to £3.4m.

Changes in financing and prudential indicators

3.6 As recommended in the Final Accounts report a capital fund has been established from the 2004/05 underspending. No borrowing is now required for the vehicle payments in the current year as originally planned. This will reduce interest payable by £26,000 in 2005/06 (full year effect of £52,000 pa from 2006/07). The revised financing of the capital programme is also set out in Appendix 3.

3.7 The changes throughout this report will not have a significant impact on the approved prudential indicators.

4 Modernisation and Gershon savings

4.1 Members will be aware that as part of the modernisation agenda the Authority has to switch 2% of its budget from operational responses to prevention over a three year period. In addition it is thought to be good practice to follow the principles required by most Authorities as a result of the Gershon review.

4.2 It is therefore proposed that that the progress towards these targets will be included in the budget monitoring report from the next quarter onwards.

5 Equality impact assessment

5.1 An impact assessment has been made on the proposals in the paper and shown that they are not discriminatory. They 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).

Recommendations

That it be recommended to the Authority that:

1. the latest budget position be noted and the intention to use the underspending towards the modernisation costs as set out in the Final Accounts report also on this agenda be approved.

2. the latest capital starts values in Appendix B be approved.

Section 100 D - Local Government Act 1972 - background documents

The following documents discuss facts or matters on which this report, or an important part of it, is based and have been relied upon to a material extent in the preparation of this report.

NB the list excludes:

1. Published works.

2. Documents which disclose exempt or confidential information as defined in the Act.

Fire Budget Monitoring PP 3.33 (d)