Archived decisions

Financial Planning - Budget strategy

Commentary on progress

The budget strategy will be clearly related to the priorities set out in the Service's Corporate Plan and Integrated Risk Management Plan.

The medium-term financial strategy both informed and responded to the Authority's determination of its corporate aims and objectives as set out in the Integrated Risk Management Plan (IRMP) 2007/8 to 2009/10. The IRMP and the Budget were approved at the same meeting of the Authority on 14 February 2007.

Growth and savings proposals to be presented in a transparent manner to members as part of the annual budget cycle, identifying planned outcomes and performance improvements for budget growth and mechanisms for achieving any significant savings.

The preparation of the Budget for 2007/08 included clear information about the impact of inflation, other budget pressures and new (growth) items. The same basic presentation of the budget that was given to stakeholders during formal consultation, was also given to explain reports made to both the Finance and General Purposes Committee (January 2007) and Authority (February 2007). This included a statement that cashable savings of up to £200,000 may be required in the year to stay within budget.

Ensure that the long-term level of revenue commitments does not exceed long-term funding likely to be available including reasonable expected levels of future grant settlement and council tax.

The Authority has been preparing its annual revenue budget within a three-year financial strategy for the last ten years. It has taken fully into account the likely impact of the Government's Comprehensive Spending Reviews when planning for the three years ahead. The Authority also wanted to achieve its previously stated aim to keep Council Tax increases at or below the average increase in state pensions for 2005/06 to 2007/08.

Maintain three-year budget projections based where necessary on alternative scenarios to reflect uncertainty of spending and resource assumptions in order to set the likely context for making final resource allocation decisions on an annual basis.

Taking into the above planning context, and the Authority's determination to implement corporate aims and objectives that will achieve continual improvement delivering services; the Authority prepared a range of risk-based options for increasing Council Tax and consulted with stakeholders' representatives one these. It would be fair to say that the representatives were very complimentary about the clear way we presented the possible options.

Seek to achieve Government targets for efficiency gains.

Achieved. Full details were presented in the `backward-looking' Annual Efficiency Statement (AES).

Divert 2% of current resources to prevention and protection activities by 2008.

Achieved ahead of time (in 2007).

Set a prudent minimum level of reserves based on a strategic-level risk assessment and reassessed annually as part of the budget process.

Risk assessment was thoroughly reviewed. Members preference to increase reserves back to £2m was achieved.

Minimise fluctuations in spending levels and council tax by absorbing the impact of different levels of pension outturn costs.

Impact significantly reduced following the introduction in 2006/07 of new financing arrangements (i.e. pensions account shortfall now topped-up through direct central government funding).

Operate within firm cash limits, allocating provision for pay and other inflation at the start of the financial year.

Achieved (minor underspend) through active monitoring and virement processes exercised by HFRS Directors.

Contain spending within the approved cash limit for the year with no supplementary allocations being made from reserves other than in exceptional circumstances.

A relatively small - and less than originally expected - contribution from the modernisation reserve was required.

Seek Best Value in services which should always include considerations for quality, risk to achieve sustainability, environmental impact, local economic development and equalities as well as price.

The findings and recommendations of two best value reviews (one on Partnership Arrangements and one on Service Level Agreements with Hampshire County Council) were progressively implemented. In collaboration with a group of nine other fire and rescue authorities, Hampshire played a leading role in establishing and insurance mutual - Fire and Rescue Authorities Mutual Limited (FRAML) - which has reduced insurance premiums by and average of 15%.

Aim to achieve a level of council tax that is in the lower quartile of the taxes of Combined Fire Authorities.

Although this was not achieved in 2007/08, the Authority did nevertheless achieve its aim of keeping Council Tax increases at or below the average increase in state pensions for 2005/06 to 2007/08.

Capital programming

Review capital strategy on an annual basis and prepare a three-year programme in the light of needs identified in the Integrated Risk Management Plan, vehicle replacement programme and built estate condition survey, and prepare a three year capital programme in accordance with the strategy.

The three year approved capital programme addressed these needs. The identified vehicle replacement programme needs were addressed in full. Some additional provision was made to deal with the backlog of buildings repairs and maintenance.

Continue to reduce the proportion of vehicles leased and aim for full ownership of the fleet.

No new operational leases were taken out in 2007/08 - all vehicle purchases were made through loan or revenue contributions. Certain extensions were taken out where it was more economical so to do.

Reinvest income from disposal of capital assets where possible in order to fund new developments and initiatives identified in the IRMP.

Capital receipts from sales in 2007/08 all applied to finance capital expenditure and therefore minimize borrowing.

Make full use of Government-supported borrowing.

Full use of supported borrowing made in financing 2007/08 capital payments.

Make use of unsupported borrowing within the framework of the Prudential Code where there is a sound business case approved by the Authority.

Unsupported borrowing used for the first time (as planned) in 2007/08.

Provision of Financial Services - Effective management of budgets

Maintain rigorous annual budgeting and budget monitoring processes.

Quarterly monitoring reports are presented to meetings of the Finance and General Purposes Committee (NB except in July 2007 when with the Chairman's approval the meeting was cancelled owing to there being no other business at the time). Service managers and budget holders receive regular monthly monitoring statements.

Maintain integrated accounting, budgetary and human resources systems.

The Authority uses `SAP' (via Hampshire County Council's contract with the supplier) as its strategic software application (i.e. for financial systems including payroll). It is intended to exploit further the use of SAP to provide improved management information for the Human Resources (including training), and some aspects of the procurement and property management function.

Ensuring good practice and probity

Apply sound financial regulations and associated financial procedures in support of good practice in financial administration and corporate governance.

Financial regulations are reviewed on a regular basis with the last review being implemented during 2005/06. Part of the annual audit report and assurance statement refers specifically to the compliance with financial regulations and other procedures which comprise the control framework. The Scheme of Delegation to Officers is also kept under review with the last update having been made in February 2008 regarding minor estates matters.

Provide an effective and efficient internal audit function which works co-operatively with the service's external auditors.

The Audit Commission continues to rely on the work of internal audit and has commented favourably, in the annual management letter and governance report, on quality and professional standards achieved.

Recognise the statutory role of the Treasurer in ensuring lawful and financially prudent decision making.

No breaches of compliance occurred or reported on.

Report the internal audit strategy to the Governance Committee.

Reviewed and updated annually in advance of the financial year.

Present an annual internal audit assessment for the Service to the Governance Committee.

Annual internal audit report includes an assurance opinion to support the Annual Governance Statement.

Operate and develop ICT systems with enhanced provision of financial management information to users.

`SAP' software operates on the basis of local data entry and access to financial management reports for all budget holders and managers.

Comply with the Cipfa Code of Practice for Treasury Management.

Code complied with.

Comply with accounting and audit standards contained in the relevant codes of practice and Cipfa guidance.

All standards complied with.

Efficient and accessible processing of transactions

Operate best practices in relationships with local contractors and suppliers, including payment of bills in line with the Government's prompt payment target.

The Government's target of 100% is probably not realistic, but at 96% for the year, the Authority considers that it performs well.

Seek continuous improvement through "customer focus" in the delivering of financial services and support.

Regular reports and ad hoc support is given to budget holders. Members of finance team frequently involved at an early stage in providing advice in major projects.

Improve and extend the use of ICT in delivering financial support services to users.

Network now far more resilient. Station administrators given support from HQ finance team.

Ensure that financial systems are set up in a way which facilitates use of e-government and e-procurement.

E-focus user group considers and allocates pump-priming funds for new ICT developments.

Review the balance of in-house and contracted-out provision of financial services with the aim of achieving Best Value.

Best value review of Service level Agreements with Hampshire County Council undertaken. Conclusion was that generally good value being obtained - more of a partnership arrangement. More benchmarking of costs has been undertaken (e.g. ICT services SOCITIM results).

Maintain a separate bank account for the Fire and Rescue Service irrespective of any contracted-out arrangements for financial administration.

Account maintained.