To consider a report relating to Merseyside Fire and Rescue Services, Financial Review 2024/25 July to September update (Report CFO/69/24).

Director of Finance and Procurement, Mike Rea, presented the Financial Review 2024-25 July to September report to Members. It was highlighted that the approved budget remained robust and that the current forecast of expenditure was contained within the report.

Members were directed to paragraphs 7 to 17, pages 31 to 34 of the agenda where the Members were advised that the revenue position displayed a net budget requirement of £74.191 million, which remained consistent with the original budget.

It was noted that £800,000 in one-off savings had been identified, detailed on page 33, including £150,000 from the firefighter employee budget and £350,000 from non-firefighter employee budgets. Mike Rea explained that an additional £300,000 savings had been identified within the Local Government pension scheme due to MFRS Pensions fund being in surplus with Merseyside Pension Fund.

In regard to the Capital Programme, Members noted that it had been revised to include an additional £7.174 million, with a summary contained on page 35. Additions included £7.1 million for National Resilience assets to refresh the Urban Search and Rescue (USAR) team, alongside £86,000 for ICT hardware and additional security measures at the Training Department Academy, as agreed within the Revenue and Capital Out turn report.

Members noted the £2.2 million rephasing of capital schemes, which was noted as consistent of ICT hardware and Networks, Operational Equipment and Vehicle replacement schemes.

It was explained that the £7.174 million increase was funded from specific resources (Home Office grant, revenue, and reserves). Members were informed that the level of required capital borrowing had reduced by £1.1million due to the increase in capital receipts from the sales of the old Training and Development Academy (TDA) and Croxteth Fire Station. It was highlighted that the 5-year Capital Programme borrowing requirement was £37.1million.

Member's attention was drawn to the table on page 47, which outlined the reserve movements within the quarter. It was noted that there was a drawdown from reserves of £95,000.

Concerning movement reserves, there was an allocation of £71,000 designated for the enhancement of security measures at the TDA. Additionally, £13,000 had been allocated for development work related to the Community Fire Risk Management Information System (CFRMIS). Furthermore, Members noted the £11,000 allocation for ICT consultancy and research pertaining to ICT outsourcing and in-sourcing.

It was highlighted that £974,000 was identified during the 2024/25 budget setting process as an additional contribution to the Capital Programme investment reserve to fund the Capital Programme inflationary pressures. Additionally, £1.809 million was identified in the 2023/24 outturn process to alleviate capital cost pressures and reduce planned borrowing, freeing up revenue for debt servicing costs. Mike Rea advised Members that £2.783 million would be used to fund capital expenditure and reduce borrowing within the year.

It was reported that the Authority would continue to obtain Treasury Management services from Liverpool City Council.

Members noted that on 1st August 2024, the BoE reduced the interest rate by 0.25% to 5%, which was explained as the first cut in interest rates after rates had been held at a 16-year high of 5.25% for twelve months. It was noted that the BoE has since cut the interest rate further to 4.75%.

Members considered the Consumer Price Index (CPI) inflation, which rose by 2.2% over the year leading to August 2024, unchanged from July. Noting that whilst the CPI was slightly above the BoE's target, inflationary pressures were affecting the economy, with expectations of a decline below the target in late 2024/25.

Mike Rea explained that the Authority planned to borrow £8 million long-term in 2024/25 if required, with no new long-term borrowing arranged in the first half of 2024/25.

As of 30th September 2024, the Authority’s investments totalled £54 million, which included a £36 million firefighters pension grant. It was acknowledged that the Authority’s total outstanding debt was £33.7 million, and Mike Rea advised that the current market conditions continued to be unfavourable for any debt rescheduling.

Councillor Makinson queried the rephasing of the Breathing Apparatus (BA) equipment and wanted to seek assurances that postponing this process did not pose any risk to firefighters.

The Chief Fire Officer assured Members that the BA equipment would be replacing those nearing the end of their lifespan and confirmed that there was sufficient life left on the existing BA equipment.

The Chief Fire Officer stated that updating equipment and rephasing aimed to meet operational needs and preparation for technological advancements.

Councillor Byrom expressed his gratitude for the report, noting its retrospective nature. Councillor Byrom noted that the government were offering Fire and Rescue Services £5 Band D precept flexibility which would add an additional 6% to the funding raised through the precept.

Councillor Byrom addressed the topic of pay settlements, highlighting the necessity of achieving a fair agreement for staff, while also underscoring the importance of maintaining financial stability for the organisation.

The Chief Fire Officer reiterated the significance of the £5 council tax flexibility, highlighting it as a positive outcome of active lobbying this year. The financial pressures related to pay in light of the September Consumer Price Index (CPI) figures were also discussed. Member's attention was drawn to the upcoming Budget Strategy day, where budget planning processes and financial considerations for a predicated two-year comprehensive spending review would be discussed.

RESOLVED that;

a)        the proposed revenue and capital budget alignments be approved;

b)        the use of the forecast £0.800million savings to fund capital expenditure and reduce the level of borrowing be approved;

c)      the use of the £2.783million Capital Investment Reserve to fund capital expenditure and reduce the level of borrowing 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.