To consider the Financial Review 2025/26 Quarter 3 October – December report (DFP/17/2526).

Director of Finance and Procurement, Mike Rea introduced the report and highlighted to Members that the financial review report covered the period from October to December 2025, which provided assurance that the approved budget remained robust and that the forecast position would be contained within available resources. It was explained that the report addressed revenue, capital, reserves, and treasury management.

Members were advised that the net revenue budget of £77.9 million remained unchanged and that Officers had identified a number of favourable variances. These included £250,000 savings within the non?uniform employee budget due to vacancies, a £300,000 favourable variance on the radio communications contract, and £150,000 additional income from services to strategic partners. It was highlighted that the contingency for pay, and prices had not been required, resulting in a one?off saving of £250,000. Members were advised that investment income was also forecasted to exceed the target by £300,000, bringing total one?off savings to £1.25 million.

In relation to the capital programme, Members noted that Officers had reviewed scheme timelines and identified several realignments and savings. The programme had been updated for £3.6 million of changes, including additional funding for the National Resilience Uplift Programme and savings across equipment, building and IT schemes.

Members were advised that the reserves position, set out on page 25, outlined no drawdowns or adjustments during the quarter.

Regarding treasury management, it was highlighted that the Authority continued to receive services from Liverpool City Council. Members noted the Bank of England’s decision in December 2025 to reduce the bank rate to 3.75% and that inflation had fallen to 3.2%. It was highlighted that the Authority anticipated new long?term borrowing in 2025–26 and held £62 million in investments and £33.7 million in outstanding debt at the end of December 2025.

The Chair, Councillor James Roberts, noted that at the previous budget strategy day he had anticipated a reduction in the Bank of England base rate. He stated that subsequent events had altered the outlook and that the future direction of interest rates had become uncertain. Mike Rea informed members that the Bank of England had met earlier that day and had held the base rate at 3.75%. He reported that earlier expectations of inflation falling toward 2% had shifted, with forecasts now indicating a rise to 3.5%–4% within the year.

Councillor Andrew Makinson referred to the £191,000 allocation for the Museum within the capital programme. He noted that the scheme had repeatedly been deferred, He asked whether any of the proposed works were safety related or whether they were general refurbishment that could continue to be postponed. Mike Rea confirmed that the works were not safety related. He stated that the proposal concerned a potential expansion of the museum’s footprint to accommodate additional vehicles. He advised that the scheme was likely to be deferred again, particularly in light of the prevailing uncertainty around interest rates.

Councillor McManus noted that diesel prices had risen by 20 pence and referred to BLD031 – diesel tanks on page 32, asking whether this represented storage costs. Mike Rea reported that the Authority was contracted with a fuel supplier, but prices followed the market. It was highlighted that diesel costs were included within transport and premises budgets and were not separately itemised. Members noted that a £1.8 million pay and prices reserve had been created to help manage inflationary pressures, including fuel.

The Chair queried whether diesel was treated as a revenue or capital cost. Mike Rea confirmed that diesel was a revenue cost, while replacement tanks were a capital cost.

Councillor Hanratty asked whether the Authority remained on track approaching year end and whether any issues required highlighting. He also asked for any indication of the forthcoming pay award, noting that last year’s budgeted 2.5% increase had resulted in a 3.2% award for both firefighters and staff. Mike Rea stated that no issues were forecast for the year end budget position and confirmed that the medium term financial plan included a 3% provision for the next financial year. He reported that the LGPS had submitted an initial pay request of 10% or £3,000, with no employer response yet, and invited Nick Mernock to comment on the Fire Brigades Union (FBU) position.

Director of People and Organisational Development, Nick Mernock reported that the Green book pay claim was high and might allow some flexibility. He confirmed that the FBU Grey book claim had not yet been submitted, as further work was underway on proposals to broaden the firefighter role. He stated that the FBU was expected to seek a cost of living increase, with the scale dependent on progress with the role broadening work and Treasury funding. He noted that cost of living pressures would continue to fluctuate in the coming months.

The Chief Fire Officer reported that discussions at the Local Government Association (LGA) conference indicated that pay negotiations were closely linked to the ongoing work on broadening the firefighter role. He stated that conversations between parties were currently positive. He confirmed that the National Fire Chiefs Council (NFCC) had advised services to budget for a 3% pay increase, which had been reflected in the Authority’s budget.

Councillor Byrom reported that the LGA fire conference had also recommended a 3% planning assumption, which the Authority had adopted. He noted that a contingency fund was available should the final award exceed this. It was suggested that the Authority revisit the wider implications of the current fuel situation after the elections and into the next municipal year.

 RESOLVED that;

a)         the contents of the report be noted;

b)         the use of the forecast £1.250m savings to fund capital expenditure

and reduce the level of borrowing be approved;

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

d)         Continue instruct the Director of Finance and Procurement to continue to work with budget managers to maximise savings in 2025/26 and use any savings to reduce the level of capital borrowing.