To consider report CFO/048/18 of the Treasurer, reporting upon the Authority’s year-end financial position for 2017/18.

Members considered report CFO/048/18 of the Treasurer, reporting upon the Authority’s year-end financial position for 2017/18.

Members were given a brief overview of the report describing how the Authority has underspent on its revenue services budget by £2.4million. The remaining net underspend of £1.961m is approximately a 3% variance on the budget and reflects the continuing drive to maximise savings in the year in light of the financial challenge ahead.

The Authority receives grants and external funding during the year to deliver specific projects.  Because these sometimes span more than one financial year this necessitates the carrying forward of the funding through creation of earmarked reserves.  Any potential liabilities arising in the year or previous years for which the Authority is required to set aside a contingency will also require the creation of a reserve.  At the end of 2017/18 £0.442m of earmarked reserves were established to cover timing issues between funds and spend for projects and grant funded schemes. 

It is proposed that the Authority use the £1.961m underspend (£2.403m saving less the £0.442m used for new earmarked year-end reserves) to;

•           Increase the capital investment reserve by £1.017m to fund the expected increase in costs associated with the new St Helens community fire station, and

•           Increase the inflation reserve by £0.200m in light of the risk around the 2017/18 to 2019/20 annual firefighter pay increase. The budget assumes a 2% increase but this offer for 2017/18 has been rejected by the FBU. Each additional 1% would require £0.400m of permanent savings to be identified. By increasing the inflation reserve it is hoped that this will provide the one-off funds for any backdated increase above the 2% assumed, and

•           Increase the recruit reserve by £0.744m to enable new firefighter recruits to be taken on in advance of firefighter retirements over the next 5 to 8 years – removing any reliance on staff undertaking voluntary additional shifts.

The Authority’s final capital budget for 2017/18 was £17.857m. Actual spend in the year was £10.160m resulting in a variance of £7.697m.

Members were informed that we should avoid borrowing money, as there is money set aside for various requirements.  With regards to the recruits reserve, if we wait for firefighters to retire we would not have the staff, so there is £3m to resource that. 

Members stated that a good job is being done by our finance team and that we are doing right by keeping our capital for what it is meant.  The revenue used for recruits is good as it will increase our establishment and more money for firefighters means more bodies to keep people safe.  That we have no free capital.  Staff were thanked for their hard work and it was added that in the next 5 years we will lose up to 50% of firefighters due to retirement.  It was added that we had another recruit course last year and a reminder that it takes time for new firefighters to gain skills over time.  The recruits that have been on the last couple of courses are enthusiastic and dedicated.  Members are happy for the future of MFRS.  Although firefighter numbers are increasing now, they will some go down, so the recruits reserve is very worthwhile.