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1 |
Summary |
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1.1 |
A combination of lower than anticipated pay awards and a favourable position on pension costs means that expenditure is now back on target. There may be scope to increase general reserves from next year by carrying forward any underspendings achieved in the current year. |
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2 |
RecommendationError! Bookmark not defined.s |
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2.1 |
That the latest forecast of budget outturn for 2009/10 be noted. |
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2.2 |
That the proposal to increase general reserves from 2010/11 by carrying forward underspendings achieved in 2009/10 be endorsed. |
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3 |
Revenue expenditure |
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3.1 |
The last monitoring report (for quarter 1, 2009/10) anticipated that there might be a major overspend in 2009/10. This was forecast mainly because of the need to make a significant and unexpected pension transfer payment, and the need to reinstate the general reserves. Since then there has been some good news on several fronts which results in a much more positive forecast. The latest monitoring report is set out in Appendix A. The main variations from the original budget are set out in the following table with explanations in the following paragraphs: |
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£000 Projected budget underspendings: Wholetime pay -382 Retained pay -110 Support pay -143 Pensions -743 Interest payable -30 -1,408 Inflation provision used to offset previously identified savings required -112 Savings no longer required to offset previously identified overspends (mainly IT - £253,000 and retained pay £400,000) +693 Contribution from general reserve no longer required to cover pensions overspend +450 Projected underspend -377 |
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Wholetime firefighters pay and allowances (-£382,000, -1.1%) |
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3.2 |
The July 2009 pay award for staff on `Grey Book' conditions of service - this includes all firefighters - was settled at 1.25%. An award of up to 2.5% had been included in the budget, so a saving of £312,000 will be made. A further saving of £70,000 is expected from staff turnover, and by delaying the start of the next trainees' course from December 2009 to January 2010. |
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Retained firefighters pay and allowances (-£110,000, -1.7%) |
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3.3 |
The lower than anticipated pay award will also produce a saving in the budget for retained firefighters of £58,000. A further saving of £52,000 arises from a reduction in payments for course attendances and lower levels of operational activity over the summer months. |
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3.4 |
Work has commenced on reviewing the formula that helps us to budget for retained pay. Currently the formula is based on the average number of all incidents that we attend (whether by wholetime or retained staff). While this has been a useful proxy for budgeting in the past, the growth and variety of payments to retained staff means that the formula is no longer fit for purpose. The new formula will be based on reviewing actual costs incurred by retained firefighters. We expect to use this in further monitoring and forecasting of the current year's budget and in preparing the 2010/11 budget. |
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Support staff pay (-£143,000, -1.4%) |
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3.5 |
The April 2009 pay award for staff on `Green Book' conditions of service - this includes all support staff - was settled at 1.00%. An award of up to 2.5% had been included in the budget, so a saving of £123,000 will be made. Savings of £14,000 on the budget for control room staff - who are `Grey Book' employees - will also be made. The balance of anticipated savings is from staff turnover. |
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Pensions (-£743,000, -62%) |
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3.6 |
We were facing a potential overspend of £450,000 on elements of pension costs that have to be met from the revenue budget - rather than the pension account. This arose from an unexpected pension transfer which, at the time, we were advised could not be charged to the pension account. However, after some lobbying, pension advisers at the department for Communities and Local Government have clarified the position in our favour. Such transfers can now be met from the pensions account. This is important because any deficit in the pensions account is topped-up from central government funds. A review of previous payments made from the revenue budget for such transfer values has found that a number of other (significantly smaller) charges to the pension fund can be made. As a result, the budget for pensions costs for which the Authority is directly responsible is expected to be £628,000 lower than last reported. This is made up of £450,000 from this year and £178,00 from 2008/09. |
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3.7 |
There has been one ill-health retirement this year. There were none last year - which would have generated payments this year. As a result the budget provision can be reduced by £137,000. |
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Information and communications technology (ICT) |
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3.8 |
The last monitoring report showed that expenditure on ICT might be overspent by up to £253,000 to fund only the highest priority application developments. It had been assumed that this excess cost would be underwritten by the `improvement and sustainability' reserve. As a general underspend is now forecast, it is likely that developments can be funded with virement from other budgets. |
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3.9 |
It was agreed that the Committee would be kept informed on progress of the major developments. This following summarises the current position. Major reviews of the requirements for the workforce strategic management information system (WSMI) and retained management system (RMS) are being undertaken in order to minimise the costs and maximise the benefits. · A quote for the remaining phases of the Training and Events module has been requested. The estimated cost of £200,000 - £300,000 may be spread over 2010/11 and 2011/12. · A quote for the Time Management module at £290,000 was considered unaffordable so a separate business case is being made for the `efficient and flexible crewing system' which is key to managing our operational personnel. · Health & Safety and Occupational Health & Welfare are working on a business case for a combined solution to meet their needs. This is likely to be a stand alone solution costing approximately £30,000 excluding ongoing support and maintenance, plus about £20,000 if an interface to SAP was required. · Retained Management System (RMS): The `Gartan' solution was intended to be an interim system whilst a SAP module was developed. But due to the significant costs involved consideration is being given to developing the full functionality of the Gartan payroll module and then interfacing with SAP Development of an interim solution to provide information at incidents using vehicle-based mobile data terminals (MDTs) is progressing. The South East Regional Control project will now deliver MDTs for fitting into the fire engines from November 2009 and the cost of the project will be contained within the original estimate of £300,000 for which funding has been set aside. |
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Inflation contingency (-£112,000, -73%) |
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3.10 |
Virtually all the inflation contingency has now been allocated leaving a balance of just £8,000 for the rest of the year. The contingency has been used to fund additional costs identified in the last monitoring report. These are for business rates (£35,000), a contribution to compartment fire behaviour training facility (£49,000), and the cost of employing the Workforce Strategic Management Information Project Manager (£28,000). |
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Interest payable (-£30,000, -50%) |
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3.11 |
Owing to the reduction in interest rates, a reduction in the cost of interest payments of £30,000 is predicted. |
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4 |
Reserves |
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Improvement and sustainability reserve |
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4.1 |
The balance on the improvement and sustainability reserve currently stands at £530,000. A contribution of £173,000 is required if the reserve is to be reinstated to last year's level of £703,000. This is this Committee's declared preference. A further contribution of £223,000 is already available in the 2009/10 budget which would increase the balance to £926,000. |
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4.2 |
It had been previously assumed that the following ICT-related projects could be financed from the reserve. However, given the overall budget position it may be that reliance on the reserve can be avoided. The position will be kept under review. |
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2009/10 2010/11 £ £ Retained management system 75,000 - Workforce strategic management information system 52,600 - Consultancy costs for fleet management 19,200 - Total 146,800 - |
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General reserve (+£450,000) |
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4.3 |
In the first quarter it had been assumed that the unexpected pension costs of £450,000 would have to be met from the general balance. However, as reported in paragraph 3.6, this will no longer be necessary. This will significantly reduce the impact on the 2010/11 budget. |
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Equal pay reserve |
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4.4 |
It is expected that the equal pay review will be settled in the current financial year and the costs contained within the £600,000 balance. |
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Potential to carry-forward projected underspends (+£377,000) |
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4.5 |
Given the likely financial pressures that the Authority will face from 2011/12 - arising from the squeeze on public sector funding - it is considered prudent to take the opportunity to increase the Authority's general level of reserves. The fortuitous turnaround on the pensions position, together with the other potential underspendings highlighted in this report - such as the savings from the provision for pay inflation - makes this possible. It is currently estimated that £377,000 could be carried forward to increase general reserves from 2010/11. |
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4.6 |
This 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 Estimated use 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 0 1,600 Underspendings carried forward 0 0 0 0 +377 377 Total reserves and general balance 31 March 2010 2,903 |
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5 |
Cashable efficiency gains |
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5.1 |
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. The increase in efficiency gains implemented to date are reflected in the latest budget position, and can be summarised as follows: |
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2009/10 2010/11 £ £ Efficiency savings brought forward from quarter 1 -1,182,000 -1,202,000 Net savings from re-designating fire safety officer from Green to Grey book -16,000 -16,000 Net savings from re-designating crew manager in schools team from Grey to Green book -23,000 -40,000 Removal of home phone allowances -6,000 -6,000 Voice over IP maintenance savings -45,000 -45,000 Total -1,272,000 -1,309,000 |
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5.2 |
The increase in cashable efficiency gains identified to date total £1,272,000, of which £1,229,000 has been reinvested leaving a balance of £43,000. Reinvestments to date are: |
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2009/10 2010/11 £ £ Reinvestments brought forward from quarter 1 1,181,000 1,201,000 Additional investment in redesignating fire safety officer from Green book to Grey book 16,000 16,000 Schools team restructuring 13,000 22,000 Regrade three Group Managers A to B 9,000 11,000 Balance of workforce strategic management information system costs 5,000 1,000 Additional cost of efficient and flexible crewing regrade of a firefighter to crew manager 5,000 8,000 Total 1,229,000 1,259,000 |
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5.3 |
The Annual Efficiency Statements: `Backward look' for 2008/09 and `Forward look' for 2009/10 are attached as Appendices B and C. |
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6 |
Capital |
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6.1 |
The only changes to report are for the 2009/10 vehicle replacement programme. The details are set out in the vehicle replacement report also on this agenda. |
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7 |
People Impact Assessment |
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7.1 |
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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8 |
Background papers |
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8.1 |
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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