Appendix 1

Calculation of the base budget

1 Summary of changes in the base budget

2 Full year cost of inflation to November 2005 prices

2.1 The original budget has been increased by the actual costs of inflation to November 2005. Total inflation is £538,000 for pay and prices.

3 Increments

3.1 These are the gross costs of increments less savings on turnover. The net cost for firefighters is nil and for support staff is £23,000.

4 Asset management costs

4.1 This reflects the change in the level of revenue contributions and continues the policy of funding from revenue the support vehicles need to be replaced as a result of leases ending prior to the age at which replacement would have been automatic had they been purchased. It also reflects the capital costs of the finance lease arrangements that will be entered into for the operational vehicles that will ending their operational leases during the year.

5 Full year effect of previous years growth

5.1 These reduce the budget by £1,195,000. This unusual position arises mainly as a result of the deletion of growth items from previous years (mainly 2004/05) including £600,000 contribution to balances, trainee firefighters establishment £166,000 and regionalisation costs £150,000. There were no new growth items started in 2005/06 and therefore no knock on full year effects in 2006/07.

6 Retained pay - number of incidents

6.1 The budget is currently based on 24,743 incidents. This was calculated using the agreed formula which takes the average of the last five years excluding the highest and lowest years to avoid any distortion of exceptional years.

6.2 The formula has been reviewed for 2006/07 and the average number of incidents remains at 24,743. This is due to the fact that 2004/05 is now the lowest year in the calculation and replaces 1999/00 which was previously the lowest year. No cash adjustment is therefore required.

7 Provision for future inflation

7.1 The provision for inflation from November 2005 to March 2007 has been calculated based on 3.4% for firefighters, 2.95% for support staff, 2.7% for pension payments and 2.5% for all other costs. An increase in local government employers pension contributions from 250% to 275% of employees' contributions has also been assumed.