To consider report CFO/004/20 of the Treasurer concerning the financial position, revenue and capital, for the Authority for 2019/20. The Authority receives regular comprehensive financial reviews during the year which provide a full health check on the Authority’s finances. This report covers the period April to December 2019.

Members considered report number CFO/004/20 of the Director of Finance, concerning the revenue, capital and reserves financial position for the period April to December 2019. 

Members were advised that the Revenue net budget requirement of £60.282m remains consistent with the original budget, with any budget movements in the 3^rd quarter being self-balancing adjustments from either the inflation provision or reserves. Budget savings are being delivered as expected.

After reviewing the year-end income and expenditure forecasts officers have identified some revenue savings:

• £200,000 saving from the non-firefighter employee budget, which is a result of staff vacancies arising from staff turnover in the year.
• £50,000 saving from the non-employee budget, which has been identified on the supplies and services budget and is a result of savings on professional fees.
• £50,000 saving on the non-employee inflation provision, as  price increases can be contained within the base budget in a small number of areas.
• The total identified saving is £300,000.

The current strategy is to use any additional savings identified in the year to pay debt off earlier in an attempt to free-up future Minimum Revenue Provision (MRP) budget for investment in frontline services. It is recommended that the £300k saving be used to fund an additional MRP payment in the year.

In relation to the Capital position, Members were advised that a number of small new schemes funded by reserves and revenue have been added to the programme during quarter 3 totalling £44,000.  Also, £9.470m has been re-phased from 2019/20 into future years to reflect the expected actual yearly spend. The report outlines the reasons for this re-phasing and an analysis of the relevant schemes.  

As a result of the re-phasing of the new St Helens fire station the planned £1.8m drawdown from the capital reserve in 2019/20 has been reversed, resulting in an increase of £1.8m in the capital reserve balance for 2019/20. The reserve drawdown will now take place in 2020/2021.

Treasury Management activities are consistent with the approved Treasury Management strategy.  Members were advised that no new loans have been taken out so far this year and none are planned to be taken out before 31.03.2020.  Investments have been made within the limits set for the various institutions, and stood at £31.8m as at the end of December.

Members questioned the increase in borrowing in quarter 1 outlined in Appendix C, the five year capital programme,  and were informed that this was due to the re-phasing of capital schemes at the end of 2018/19. 

It was also asked by Members why the Training and Development Academy refurbishment is not now taking place until next year.  Members were informed that this scheme is being delayed while officers look at the option of building a new TDA on a different site.. 

A further question raised by Members was if Merseyside Fire and Rescue Authority (MFRA) compare its reserves with other Fire and Rescue Authorities (FRA). The Director of Finance advised that the the National Fire Chiefs Council do produce an analysis of all FRA reserves but each FRA is responsible for determining the level of reserves it requires to meet specific risks. As part of the Medium Term Financial Plan, the reserves section outlines the Authority’s reserve strategy to support and justify the level and different reserves that the Authority requires.

Members resovled that:

a)    an increase in the Minimum Revenue Provision (MRP) payment of £0.300m funded from the forecast revenue savings identified in this report, be approved.

b)    the proposed revenue and capital budget changes outlined in the report, be approved; and

c)    the Director of Finance be instructed to continue to work with budget managers to maximise savings in 2019/20.