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1 |
Summary |
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1.1 |
The first quarter's analysis of actual expenditure and that currently committed identifies a potential overspend of £1,143,000 (1.7%). This takes into account the need to make a significant and unexpected pension transfer payment and the need to reinstate the general reserve to £1.6m. Assuming that the pension payment is met from general reserves, savings - yet to be identified - of £693,000 need to be made. However, some potential reductions in spend have been identified which, while they cannot be fully relied on at this stage, are likely to ease the situation. |
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2 |
RecommendationError! Bookmark not defined.s |
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2.1 |
That the unexpected pension transfer payment of £450,000 be met from the general reserve in the first instance; and that the Treasurer be asked to raise this as an issue with the Department of Communities and Local Government (CLG) on the grounds that it does not fit logically with the Government's model for meeting local pension deficits from central funds. |
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2.2 |
That the Chief Officer takes action as set out in the report to ensure that, with the potential exception of the cost of the pension transfer sum, a balanced budget position is achieved. |
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2.3 |
That the Chairman, in conjunction with the Chief Officer and Treasurer, authorises further phases of IT development to take place as and when offsetting funding can be identified within the overall cash limit for 2009/10. |
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2.4 |
That the virements over £100,000 listed at appendix A be approved. |
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3 |
Revenue expenditure |
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3.1 |
The latest position is summarised in Appendix A. As recommended by the Audit Commission in their Use of Resources report a traffic light system for highlighting significant variances has been introduced. Green indicates minimal impact on the budget, amber indicates an increasing impact on the budget requiring corrective action, and red indicates a serious impact on the budget requiring urgent corrective action. Feedback from members of the Committee on this system is welcomed. |
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3.2 |
Details of the main variances are as follows: |
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Wholetime firefighters pay and allowances (-£200,000, -0.6%) |
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3.3 |
At the beginning of the year there were 15 firefighter posts vacant. A trainees' course of 12 firefighters began in mid April and a second course is planned for December. The projected underspend (equivalent to 5.5 full time equivalent posts at £36,000 each) is due to the vacancies at the start of the year and turnover savings during the year. |
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Retained firefighters pay and allowances (+£400,000, +6.4%) |
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3.4 |
This budget continues to be under pressure with a forecast overspend of £400,000 if operational activity continues at current levels. |
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3.5 |
The costs of home safety visits and attendance at co-responder incidents are now fully funded by specific funding from group managers' budgets and the South Central Ambulance Service respectively. |
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3.6 |
The cost of running the incident support team estimated at £130,000 was historically funded from expected retained firefighter vacancies. £100,000 of unspent government grant from previous years for the enhanced command support vehicle has been allocated to part fund this team. In future years further grant income is expected to support the vehicle which can be used to part fund the team. |
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3.7 |
Some of the factors contributing to the pressure on this budget have been dealt with as described above. This leaves a number of other factors remaining to be resolved such as: the impact of dealing with high volume pumping incidents and animal rescues; increased training and development, and the shortfall in funding for the unit at St Mary's fire station estimated at £80,000. It is difficult to predict what the impact will be on this year but based on activity to date (actual expenditure for the first three months of the year is £250,000 more than the same period last year) a £400,000 overspend is estimated. The activities carried out by retained firefighters are currently being reviewed with the aim of keeping wholetime and retained firefighters pay within budget. |
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Support staff |
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3.8 |
Following a recent job evaluation of Control room posts for `rank to role' changes, back pay of £130,000 is to be paid in July which can be met from within existing support staff budgets through savings from vacancies. The on-going costs will be met by reducing the number of control room posts by one. |
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Green book pay awards |
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3.9 |
The pay award for support staff from April 2008 was settled at the end of last financial year at 2.75%. The excess cost in 2009/10 (£20,000) has been met from within existing resources. |
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3.10 |
An offer of 0.5% for the April 2009 pay award has been rejected. The 2009/10 budget includes 2.5% pay increase. A settlement that is 1% less than that assumed in the budget will save £86,000 in this year's budget. |
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Grey book pay award |
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3.11 |
An offer of 1.25% for the grey book July 2009 pay award is being considered by the unions. The 2009/10 budget includes 2.5% pay increase. If the pay award is settled at 1.25% it will save £384,000 in this year's budget and £512,000 in 2010/11. |
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Utilities, rents, rates,etc. (+£35,000, +2.1%) |
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3.12 |
Business rates increased by 5% from April, which is 2.5% more than budgeted, resulting in a £27,000 overspend. Also the business rate assessment at the headquarters site has been increased as a result of the buildings development on the site.. |
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IT and Communications (ITC) (+£253,000, +8.5%) |
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3.13 |
"Failure to collect, maintain, store and provide relevant, timely and accurate site specific risk information to adequately inform the risk assessment at an incident" has been identified in the strategic risk register. To manage this risk before the regional control project delivers mobile data terminals (MDT) to the Service, an interim solution is being developed to provide critical risk information to the incident ground. The project is estimated to cost up to £300,000. |
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3.14 |
Last year the ITC budget was overspent and a contribution of £100,000 was made from the improvement and sustainability reserve. A review of the ITC budget is continuing to be undertaken to identify opportunities to reduce expenditure and to try and reinstate this reserve. |
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3.15 |
Every effort will be made to achieve the £100,000 savings but it is possible - due to increased demand on disk storage space, and other ICT unavoidable growth pressures - that the savings will not be made. So, it would be prudent at this stage to assume that the projected £253,000 overspend might still occur. |
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3.16 |
The workforce strategic management information system (WSMI) and retained management system (RMS) projects are continuing to progress. The WSMI is estimated to cost £368,000 this year incorporating the `training and events' and `time management' modules. The RMS is estimated to cost £75,000 in 2009/10 and up to £50,000 in 2010/11 and thereafter depending on the operational requirements of the Service. |
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3.17 |
There are three significant new systems developments currently in progress which are not yet fully funded. They may be summarised as follows: WSMI: £86,000 committed in 2009/10, up to £282,000 further development phases in 2009/10 and £30,000 in 2010/11 may be needed depending on the assessment of the costs and benefits involved. MDT: £92,000 committed in 2009/10, up to £208,000 further expenditure may be needed depending on the assessment of the costs and benefits involved. RMS: £75,000 committed in 2009/10 and up to £50,000 in 2010/11 depending on an assessment of the costs and benefits involved. |
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3.18 |
This report assumes that only £253,000 is committed and will be spent in 2009/10. Further phases of development will be proceed only if there is a clear balance of benefits over costs in doing so, and provided that offsetting savings can be identified. |
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Savings to be identified (-£693,000) |
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3.19 |
Opportunities to identify efficiency savings are progressing as can be seen in paragraph 6 below. Further opportunities will continue to be reviewed and will be reported as they are identified. |
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3.20 |
Possible favourable changes in the budget could total some £1.4 million. They include: Pay awards settled below budget provision £470,000 Reduction in retained pay and allowances projected overspend £200,000 Unallocated inflation contingency balance £154,000 LPSA reward grant income £504,000 Training and development savings £69,000 |
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Revenue contributions to capital (+£69,000, 9.5%) |
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3.21 |
The compartment fire behaviour training complex project was not completed in 2008/09 as originally planned and £69,000 of budgeted revenue contributions were therefore saved. The project is however due to be completed this financial year requiring the contribution to capital of £69,000. |
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Income (-£152,000, 11.0%) |
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3.22 |
Unspent government grants brought forward from the previous year of £152,000 are available to use this year. |
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3.23 |
A Local Public Services Agreement (LPSA) reward grant of £438,000 is expected to be received this year (plus £438,000 in 2010/11). This arises from the success of the co-responder scheme in contributing to improved response times to emergencies by the South Central Ambulance Service. A further reward grant of £50,000 (plus £50,000 in 2010/11) is anticipated for achieving arson reduction targets; and, £16,000 (plus £16,000 in 2010/11) as part of the overall payment for being a `level 3 partner' under the LPSA. These grants have not been added to the budget at this stage as they are still subject to audit and a final decision from the CLG is not expected until March 2010. |
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3.24 |
The FireControl implementation grant has been received, of which £160,000 has been added to the budget to fund the implementation team. The Urban Search and Rescue crewing and canine grant income budgets have been increased to £915,000 in line with government plans to fund these teams. |
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4 |
Pensions (+£450,000, +60.9%) |
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4.1 |
Pensions expenditure for which the Authority is directly responsible is expected to be £450,000 higher than budgeted. This large increase is due to an unforeseen transfer value being paid out for a firefighter who left the Authority before April 2006 but has only just decided to transfer his pension from HFRS to a private pension. This leads to an immediate charge on the Authority, whereas had he left his deferred pension until his retirement date then the lump sum and associated pension costs would have fallen to the pension fund account and have been met by the CLG. There is a recommendation that the department for Communities and Local Government be asked to consider meeting these, difficult to plan for, costs from the pensions account. |
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4.3 |
The Authority's first ill-health retirement (under the new pension fund arrangements) has recently been agreed. However the associated costs are not yet known. At this stage in the financial year no adjustment has been made and the £264,000 budget has been retained. |
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5 |
Reserves |
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Improvement and sustainability reserve (+£173,000) |
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5.1 |
The balance on the Improvement and sustainability reserve currently stands at £530,000. At present there are no plans to use the reserve this year. A contribution of £173,000 is required if the reserve is to be reinstated to the revised 2008/09 balance of £703,000, which is members' declared aim . A further contribution of £223,000 is already included in the 2009/10 budget which would increase the balance to £926,000. |
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General reserve (-£336,000) |
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5.2 |
The general balance currently stands at £1,486,000. A contribution of £114,000 is required to reinstate the reserve back to £1,600,000. |
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5.3 |
At this stage it has been assumed that the unexpected pension costs of £450,000 will have to be met from the general balance which will have a serious knock-on impact on the 2010/11 budget. However, it is hoped that if other factors prove favourable (as discussed in paragraphs 3.20 and 4.1) this will not be necessary. |
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Equal pay reserve |
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5.4 |
It is expected that this will be settled in the current financial year and the costs contained within the £600,000 balance. |
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Summary |
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5.5 |
The following table summarises movements in reserves and the general balance: Budgeted level 1/4/09 Actual level 1/4/09 Shortfall to be added Budgeted addition in year Used in year Estimated balance 31/3/10 £000 £000 £000 £000 £000 £000 I&S reserve 703 530 +173 +223 926 Equal pay 600 600 0 0 600 0 Capital Payments 750 750 0 0 750 0 General Balance 1,600 1,486 +114 0 -450 1,150 Total reserves and general balance 31 March 2010 2,076 |
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6 |
Cashable efficiency gains |
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6.1 |
The Government's Comprehensive Spending Review (CSR07) requires the Authority to identify cashable efficiency gains of £1,055,000 in each year from 2008/09 to 2010/11. Efficiency gains achieved in 2008/09 were £2.2 million. Efficiency gains implemented to date and reflected in the latest budget are as follows: |
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2009/10 2010/11 |
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£ £ |
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Previously reported increases in efficiency gains (F&GP Committee 15/1/09) -961,000 -961,000 including the full year effect of the closure of Copnor fire station |
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Reduction in medical referrals to the Occupation Health physician -33,000 -33,000 |
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Hampshire County Council liaison post redesignated as a green book post -63,000 -63,000 |
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Savings in co-responder uniform, MOD Telecoms, and water bottle contract -25,000 -25,000 |
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Insurance consortium arrangements -24,000 - 32,000 |
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New Forest service delivery group restructure -71,000 -68,000 |
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Cycle scheme savings -5,000 0 |
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Total -1,182,000 -1,202,000 |
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6.2 |
The cashable efficiency gains identified to date are £1,182,000, of which £1,181,000 has been reinvested leaving a balance of £1,000. Reinvestments to date are: |
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2009/10 2010/11 |
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Previously reported reinvestments including The full year effect of shift crewing at Havant fire station and relocations to Southsea fire 929,000 929,000 Station. |
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Increase in provision of in-house nurse-led occupational health services 33,000 33,000 |
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New Head of Human Resources Manager post and HR regradings 57,000 57,000 |
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Hampshire County Council liaison post redesignated as a green book post 36,000 36,000 |
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New Forest service delivery group and Community safety restructure 80,000 95,000 |
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Performance review restructure 24,000 33,000 |
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Voice over IP (VOIP) project 18,000 18,000 |
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Efficient and flexible crewing project- Increase in resilience 4,000 0 |
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Total 1,181,000 1,201,000 |
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7 |
Capital |
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7.1 |
Full details if the capital payments monitoring are set out on Appendix B with the highlights set out in the following paragraphs. |
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2007/08 vehicles (-£257,000) |
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7.2 |
As reported as part of the Final Accounts for 2008/09 significant discounts were received from manufacturers when the economy was still growing and dealers were encouraged to meet high targets. Also after reviewing future needs it has been possible to downsize some vehicles and modify the specification of others. This has resulted in some considerable savings being made. |
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2008/09 vehicles (+£363,000) |
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7.3 |
The cost of the 2008/09 vehicle replacement programme has increased by a total of £363,000: · The nine frontline appliances have increased by £272,000. £161,000 of this is attributable to `accounting changes' - a combination of a change in the rate charged by workshops (£25,000) and better accounting through charging equipment that has traditionally been charged to revenue to the new vehicles in capital (provisional estimate £136,000). These costs are matched by increased revenue contributions. The balance of £111,000 represents the increased costs resulting from the rising euro costs and also the decision to have the vehicles kitted out by the supplier rather than in-house. This can be met from the reduction in the 2007/08 vehicle costs. · Four vans for transporting dogs have been added to the capital programme under delegated powers at a cost of £20,000 each. One is for use by HFRS and will be financed by a USAR grant. The other three are to be used by other brigades who will give the authority a capital contribution. · Other small variations result in a net reduction of £11,000. The most significant of these is a £16,000 reduction in the cost of the fire experience unit.
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Winchester Fire Station |
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7.4 |
The payments profile has been reviewed with the bulk of the cost now estimated to occur next year. |
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7.5 |
It is anticipated that the Authority will go out to tender at end of September with an anticipated start on site in January 2010 and work is expected to be finished on site by the end of December 2010. The station should be operational before end of March 2011 - in line with the original plan. The demolition will be carried out as a separate contract and is anticipated to be completed by the 4th quarter 2009/10. |
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2009/10 vehicles (+£48,000) |
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7.6 |
There are just two cost variations to report in connection with the 2009/10 replacement programme: · The animal rescue unit that was originally included in the programme at a `nil cost' as it had been agreed that it could be financed through sponsorship but the cost and specification was not known at the time the programme was compiled. The specification has now been drawn up and the cost is £38,000 which will be met by a capital contribution from a sponsor. · The cost of the first response vehicle has increased by £10,000. This can be financed from the 2007/08 underspend.
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7.7 |
The eight frontline appliances have not yet been ordered as would normally be the case. Discussions are underway as to whether or not the current specification is still the most appropriate. Any changes to the approved programme will be reported to the Authority in due course. |
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Capital Receipts |
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7.8 |
A review of capital receipts has been undertaken. All housing receipts have been reduced in value and some further slippage has been built in. The slippage is roughly matched by slippage in the assumed payments profile of Winchester Fire Station. |
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8 |
Conclusion |
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This report shows £693,000 of savings are required to balance the budget assuming that an unexpected pension transfer value of £450,000 is met from the general reserve. If all the possible favourable factors (in paragraph 3.20) occur and £100,000 ICT savings can be achieved, then £1,497,000 of savings will be available which would: balance the budget, fund the £450,000 pension transfer and leave £354,000 for further IT developments. If ICT expenditure cannot be reduced by £100,000 and the LPSA reward grant is not received, then only £893,000 of savings will be available requiring a contribution of £250,000 from the general reserve or from the improvement and sustainability reserve and no funding available for further IT developments. |
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10 |
People Impact Assessment |
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10.1 |
The proposals in this paper are not assessed to be discriminatory and considered compatible with the provisions of the European Convention on Human Rights, the Human Rights Act 1988 and the Race Relations (Amendment) Act 2000. |
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11 |
Background papers |
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11.1 |
The following documents disclose the 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 the report: None identified Note: The list excludes: (1) published works; and (2) documents that disclose exempt or confidential information defined in the Act. |
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