To review the report relating to the Financial Review 2024/25 – April – June (CFO/56/24).

The Director of Finance and Procurement, Mike Rea, introduced the Financial Review 2024/25 April – June report. Mike Rea explained the Revenue & Capital budgets, Reserves, and the Treasury Management updates, which covered the period up to the 30th June 2024.

Members attention was drawn to the revenue position contained on pages 139 to 141 paragraph 7, which outlined the Authorities budgetary movements within the first quarter, including the use of reserves for Home Fire Safety, a drawdown from the inflation provision for rising subscription fees and adjustments to reflect the availability of external funds to deliver specific projects, along with otherinternal budget virements. It was explained that all the adjustments were self-balancing and did not impact the approved net budget requirement, which remained at £74.191m.

Paragraphs 9 through 15 outlined the robustness of the key revenue budget assumptions and the forecast spend for the financial year. The 2024/25 pay award assumption was set at 3% for all staff. It was advised that the finalised firefighter pay award was settled at 4%, which would require an increase in the current year of £340,000, and an increase of £450,000 for 2025/26 onwards.

Members were advised that the pay award for Local Government staff was still yet to be settled, noting that the employer had proposed £1,290 or 2.5%, whichever was greater. Mike Rea highlighted that this would exceed the current budget by approximately £40,000 per annum. It was acknowledged that there were no other significant growth pressures beyond those already included in the Medium-Term Financial Plan (MTFP).

Attention was drawn to the table on page 141, which summarised the anticipated year-end revenue position, the overall forecast was also explained as consistent with the approved budget.

The Capital movement within the first quarter was outlined on pages 141 to 142. It was noted that paragraph 17 explained the changes to the capital programme in the first quarter. It was advised that the rephasing of capital schemes at the end of 2023/24 had resulted in a net increase in the current planned spend of £8.6 million.

It was noted that the Capital Programme had been increased by £2.5 million to support the planned asset refresh on behalf of Home Office's for National Resilience. It was explained that this included £1.4million on the Enhanced Logistics Support programme and £1.1 million on the Marauding Terrorist Attack (MTA) Programme. Mike Rea directed Members to the table on page 142 which summarised the capital programme movements in the first quarter.

The reserve movements in the first quarter were detailed on page 143. It was noted that there had been minimal movement in reserves during this period, with a minor drawdown of £12,000 from the Community Risk Management Reserve. Members were advised that the general reserve had remained unchanged at £3.7 million.

The Treasury Management performance was detailed on pages 143 to 146, with Members noting the performance of Treasury Management was consistent with the approved Treasury Management Strategy for 2024/25.

It was noted that at the end of June the Authority held £27.3million of investments. Members were advised that all the Authorities investments were consistent with the approved Investment Strategy and within the approved strategy limits. It was observed that no new loans were acquired, and that borrowing remained at £33.7 million.

Councillor Grace expressed her gratitude to Mike Rea for the insights provided in the report, she enquired about the reserves allocated for pay awards and questioned their robustness.

Mike Rea explained the Authority's year-end actions, emphasising the significant allocation to inflation reserves to mitigate potential inflationary pressures, especially if pay increases exceed 3% or if non-pay expenses require extra funding. It was noted that the plan included seeking Member approval to use the inflation reserve if needed. It was highlighted that if growth could be maintained within the current budget, the Authority would do so this year and propose an additional increase of half a million pounds for next year's employee budget.

Councillor Byrom discussed firefighter pay increases and the development that had occurred in recent years, along with salary adjustments for other staff members. It was noted that Members had lobbied at the Local Government Association (LGA), emphasising that it was more equitable for all employees to receive the same level of pay rise.

Councillor Byrom expressed his uncertainty about the outcome of the negotiation, stating that the NJC (National Joint Council) handled negotiations for the three staff groups. He noted that the proposed 5% increase aligned with current inflation, but that it would require significant budget cuts for the Authority. He explained that in that eventuality the Authority would seek to lobby central government for financial support.

Mike Rea advised Members that the budget had incorporated an allocation for a 3% increase for all non-uniform staff. Noting that the uniformed category was set at 4%, while Green Book exceeded 5%, consequently, noting that an additional 2% would need to be sourced. Mike Rea advised Members of the plan to engage with ministers during the upcoming months regarding the overall budget-setting process, noting that if the pay increases were approved at this rate or higher, they would be included in lobbying efforts.

Councillor Byrom observed that within the LGA, there was a network comprising of Treasurers and Finance Officers from various regions across the country. He asked if this joint initiative was still in progress, Mike Rea confirmed that the work was continuing and that a meeting had been arranged for October 2024 to discuss the issue.

Councillor Rennie drew Member's attention to page 145, expressing her satisfaction with Wirral Council's investments, she requested clarification on the criteria that a council must meet before being considered.

Mike Rea stated that the investments in local councils were crucial for the overall total Investment Strategy and Treasury Management, within the Authority, ensuring that they met a robust criteria. It was noted that there remained a strong assurance that, despite potential section 114 notices, insolvency was unlikely due to consistent central government support.

Councillor Finneran asked for clarity as to why other local authorities in Merseyside were not included in the report. Mike Rea clarified that it was a matter of timing; specifically, occurring when the Authority had been actively seeking to lend money and other Authorities were simultaneously looking to borrow funds.

Mike Rea stated that the Investment Strategies were managed by Liverpool City Council (LCC), where the most secure and profitable returns would be identified. It was added that Local authorities represent one of the most stable investment options as it aligned with the Authorities cash flow, the duration of the investment, and the anticipated need for funds to cover future staff salaries or pension obligations.

RESOLVED that;

a)    the contents of the report be noted,

b)    the proposed revenue and capital budget alignments be approved,

c)    the use of the Inflation Reserve where required to cover pay awards above the 3% MTFP assumption be approved; and

d)    the Director of Finance and Procurement be instructed to continue to work with budget managers to maximise savings in 2024/25 and use any savings to reduce the level of capital borrowing.