Contact: Paul Carey-Kent, Deputy Treasurer (01962) 84 7518;

[email protected]

David Howells, Director of Corporate Services 023 8064 6834

1 Summary

1.1 This report summarises the spending of the Authority for the last financial year. Overall there was an underspending of £190,000 against the revised budget.

1.2 In line with the proposals put to this Committee in January it is proposed to add this to the Modernisation Reserve.

1 Revenue expenditure

1.1 Although the overall position was very close to the revised budget, there were some significant variances which are set out in full in Appendix 1 and summarised in the following paragraphs.

Wholetime firefighters' pay and allowances (+£262,000)

1.2 The back pay resulting from job evaluation appeals was not known at the time of the third quarter forecast. This budget overspent by £262,000 as a result.

Retained firefighters' pay and allowances (-£196,000)

1.3 This underspend has occurred as a result of a combination of a lower number of incidents than budgeted for and fewer claims for work with young firefighters, firesetters' intervention scheme and other activities.

Fuel (+£116,000)

1.4 This overspend has occurred mainly as a result of an increased number of Urban Search and Rescue exercises, Home Fire Safety Check visits and increased use of other vehicles and to a small extent inflation.

Hired and contracted services (-£169,000)

1.5 This underspend occurred as a result of a combination of less consultancy time required for the job evaluation/Middle Managers Review and occupational health work and resulting from delays in setting up the systems and training required for the operation of the new Group Managers' budgets.

IT and Communications (+£127,000)

1.6 This budget includes the significant investment being made over three years to improve the resilience and capacity of the Authority's Information and Communications Technology \Infrastructure (ICT network). The cost of the project - which it was originally planned to finance through a contribution from the modernisation reserve - has resulted in an overall marginal overspend of the ICT budget due mainly to the need to accommodate some urgent development and rectification work on critical applications (including the need to provide a simulation model to represent HFRS responses to incidents).

Legal expenses (-£117,000)

1.7 Most legal expenses incurred during the year related to the cases charged to the uninsured losses provision. It is hoped that the remaining legal costs for areas such as general advice will not be significant in future years.

2 Pensions

Pensions - old scheme (-£48,000)

2.1 Overall pensions underspent by £48,000. There were several variances that contributed to this underspend but the overall result is the closest to budget for many years. The largest of the variances were: lump sums £185,000 lower due to fewer retirements; transfer values paid £375,000 over; but with transfer values received nearly offsetting this by receiving £313,000 more than budgeted.

Changes in pensions - new arrangements (-£149,000)

2.2 A sum of £250,000 was provided for any costs of the new pension arrangements that related to 2005/06 or earlier. This was to cover two costs: the backdated employer's pension contributions for retained firefighters; and the payment that is made into the new pensions account for ill-health retirements which occurred during 2005/06. The final regulations do not allow for any backdating of contributions and therefore this element was not required however the ill-health charges totalled £101,000.

3 Capital

3.1 Capital payments during the year totalled £2.8m compared with the £2.5m forecast in December 2005. Full details are given on a scheme by scheme basis in Appendix 2. It can be seen that most schemes are in line with the payments estimate, except the HQ Scheme where the payments profile has accelerated and the 2005/06 vehicles where the payments have slipped as the seven frontline fire appliances were not delivered by 31 March 2006 only the initial stage payment has been made. The capital payments can be financed as follows:

3.2 The Authority received an allocation of £1,500,000 for supported borrowing for 2005/06. At the start of the year the balance of unused supported borrowing was £2,442,000. The excess of supported borrowing over payments for the year leaves a balance at the end of the year of £3,356,000. The forward capital programme assumes that a significant proportion of this will be used during 2006/07.

4 Treasury Management

4.1 The debt management strategy approved by the Authority in February 2005 was followed throughout the year.

4.2 No new long-term loans were taken out.

4.3 Daily surpluses and deficits on the bank balance were lent to or borrowed by the County Council at the local authority seven-day rate which averaged 4.56% over the year.

4.4 The final prudential indicators for 2005/06 are set out in Appendix 3.

5 Financial Management Strategy

5.1 The Authority managed its financial affairs in accordance with it's agreed Financial Management Strategy. Appendix 4 sets out the details.

6 Reserves and provisions

Provision for uninsured losses

6.1 Payments made from this provision totalled £30,000 during the year. A re-assessment of the risks has resulted in the balance being reduced by a further £48,000 to the balance of £225,000 as at 31 March 2006.

Earmarked reserves

6.2 The movements in these reserves, including the proposed £190,000 addition to the modernisation reserve can be summarised as follows:

Unearmarked balance

6.3 The Authority originally budgeted £600,000 to increase the level of the unearmarked balance to £2m. As reported to this Committee in January the Government's published Amending Report resulted in a reduction in grant of £184,000. As this was a significant unforeseen item it was agreed that it was not appropriate to require corresponding savings to be made. As a result the unearmarked balance has been increased by £416,000. This leaves the balance as at 31 March 2006 at £1,816,000. Members will recall that the 2006/07 budget includes £184,000 to bring the balance to Members' preferred level of £2m.

7 Equality impact assessment

7.1 An impact assessment has been made on the proposals within this 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 1988 and the Race Relations (Amendment Act 2000).

Recommendations

1 That the accounts for 2005/06 be approved together with the proposed £190,000 addition to the Modernisation Reserve.

2 That capital payments for the year be financed as set out in paragraph 4.2.

3 That the Treasury Management Activities set out in paragraph 5 and prudential indicators on appendix 3 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 - Final Accounts 2005/06