Agenda item

a.    Budget Report 2021/22 including MTFS

b.    Treasury Management Strategy 2021/22

c.     Reserves Strategy Update

d.    Capital Strategy and Capital Programme

The Commissioner introduced his report which set out the proposed budget and precept proposals for the Fire and Rescue Authority for 2021/22.

The Panel received a presentation from the Chief Finance Officer, which was considered along with the Fire Revenue Budget Report (including the MTFS and Precept).

It was reported that the Settlement Funding for 2021/22 was £14.571million made up of; Revenue Support Grant (RSG) which had been set at £4.777million; Local Business Rates revenue of £3.735million andBusiness Top up of £6.059million.  It was noted that the RSG had reduced by £9million since 2012. 

The total budget requirement for the service was £42,404million.  The Commissioner was proposing to part fund the balance from Council Tax funding of £27.406 million and proposed an increase of 1.99% per annum (£1.54 pa per Band D property). The Commissioner informed the Panel that this figure was below the permitted limit of 2%.

Referring to Appendix 1 of the report, it was explained that the Pay costs had reduced, mainly due to the Joint Emergency Transport (JET) staff transferring from the Fire Service to Police employment which had reduced the budget by £600,000.   The Supplies and services cost had increased due to proposed investment into IT (Office 365 and ‘Fire watch’).

The Medium-Term Financial Strategy (MTFS) showed a gap of £1.7 million identified for 2022/23 which would increase to £2.9million by 2025/26.  The gap was based on the assumption that the level of RSG would continue to reduce beyond 2021/22 pre-empting the outcome of the Comprehensive Spending Review and the impact of the results of the Fair Funding Review.  The MTFS also assumed additional pension costs resulting from the Sargeant/McCloud pension remedy and the impact of the 2020 Firefighters Pension Scheme valuation.  A 5% increase in employment contributions had therefore been included in the MTFS form 2022/23.

The Panel also considered the following documents:

·               The Treasury Management Strategy for 2021/22 which set out proposals for the management of the Fire Authorities cash flows, borrowing and investments and the risks of a changing interest rate on borrowings and investments and the risks of a potential loss of invested funds.

·               The Reserves Strategy update paper considered the overall level of reserves held by the Authority at 31 March 2020.  The paper focused on two key areas of reserves that impacted on the future financial strategy.  These were the General Reserve balance forecast as at 31 March was £1.9million and Earmarked (specific) Reserves, to meet future or predicted requirements balance at 31 March 2021 was forecast to be £6.8million.  Overall, the level of Earmarked reserves had reduced by over £2million during the last four years and was forecast to reduce to approximately £4.1million by 2025/26.

·               The Fire Authorities Capital Strategy and Capital Programme 2021/22 to 2023/24 (Including Minimum Revenue Provision Policy.

Following a question on the collection funds and Appendix 4 and 5 of the main Budget and Precept report, it was explained that the Council Tax surplus /deficit Appendix would normally show a surplus but due to the pandemic, there was a deficit of £602,258 due to the impact of collection fund.  Appendix 5, the tax base by authority table, would normally showed an increase in tax base but again due to the pandemic and more people receiving Council Tax support during the year, this had reduced by 1.17%.   The Chief Finance Officer felt that the Local Tax Support Grant would support the reduction at the moment but there was concern over future years.

Members of the Panel asked for more detail on the Sargeant and McCloud case which had been mentioned in the report and presentation, and the impact on the pension fund.  It was explained that the Public Sector Pension reform in 2014/15 had led to age discrimination in some cases.  These had been reviewed and some were now being transferred back to their legacy scheme.  This had a financial impact on the service and potentially meant that employees could retire earlier, which was leading to workforce planning problems.  The Panel were concerned that this would have long term implications and challenges for the service.

The Panel were informed that utilities and special service charges, which included additional services which could be purchased from the Fire Authority e.g. fire investigation interviews, were reviewed annually.

Work to the Abbots Bromley Community Fire Station was due to start soon.  This was to provide facilities for female staff and ensure the station was fit for purpose.

The Panel noted that the Settlement was for one year only in view of Government’s Spending Review and felt that this was a challenging financial position which made future planning difficult.  The current Covid-19 pandemic had had a significant impact on the tax base and deficits on collection funds from 2020/21. 

The Panel adjourned to consider their response to the Commissioners budget and precept proposals.  Upon reconvening, the Panel unanimously:

RESOLVED:

a.    That the report be noted.

b.    The total 2021/22 net revenue budget requirement of £41.977million and funding based on the Final Local Government Financial Settlement, including business rates information, be noted.

c.     That the proposed budget and Precept increase of 1.99% (£1.54 per annum, per household (Band D)) be supported and the Commissioner be notified accordingly.

d.    That the Council Tax base decrease to 348,733 properties, equivalent to a decrease of 1.2% and the Council Tax collection fund delivering a deficit of £67,100 and the option to spread the £102,000 per annum deficit attributable to Covid-19 over 3 years be noted.

e.    The MTFS summary financials and MTFS assumptions as detailed in the report, be noted.

f.      That the budget gap of £2.9million by 2025/26, driven by the assumptions around reduced levels of Revenue Support Grant, in addition to cost pressures which includes ongoing pay pressure and increased Firefighters Pension costs be noted.

g.    That the proposed three-year Capital Investment Programme and the Capital Strategy and Capital Programme Paper be noted.

h.    That the outcome of the Staffordshire Commissioner’s budget consultation document which included a survey to ascertain the opinion of the residents of Staffordshire and Stoke on Trent with regard to the local precept be noted.

i.      That the proposed fees and charges for 2021/22 be noted.

j.      That the Statement from the Director of Finance / S151 Officer on the robustness of the Budget and adequacy of the proposed financial reserves be noted.