To consider Report CFO/042/20 of the Director of Finance, concerning the Authority’s year-end financial position for 2019/20.

Members considered Report CFO/042/20 of the Director of Finance, concerning the Authority’s year-end financial position for 2019/20.

Members were informed that the report provides a summary of the budget and actual outturn position in relation to the approved 2019/20 Revenue, Capital, and Reserve budgets.

Some background information on the 2019/20 budget plan and budget assumptions, was highlighted to Members, and they were informed that those key assumptions remained robust throughout the year.

Members were advised that changes to the original budget and the Medium Term Financial Plan, were monitored closely throughout the year and that quarterly financial review updates are provided to Members, with the last report covering the period up to the end of December 2019.

The budget adjustments in the last quarter of 2019/20, and a summary of the movements for the year, were highlighted to Members, which in summary, are as follows:

·         The Medium Term Financial Plan and 2019/20 key budget assumptions, remained robust throughout the year.

·         The revenue budget stood at £60.282m throughout the year.

·         The original £17.7m capital budget was adjusted throughout the year, mainly to reflect the rephrasing of schemes from 2018/19 into 2019/20; and the rephrasing of schemes from 2019/20 into future years.

·         Members approved an increase in the General Reserve from £2m to £3m during the year, with £23m of committed reserves at the start of the year.

Members were informed that the revenue outturn position was £58.131m, with a £2.151m net underspend. They were advised that after taking account of year-end reserve requests of £0.650m, the underspend was £1.501m. At the 2019/20 Budget Authority meeting, Members approved a strategy of utilising any savings to fund an increase in debt payments, the minimum revenue provision (MRP), in order to free up future years’ budget, to potentially increase spend on frontline services. Therefore, Members were advised that an additional £1.501m MRP payment has been made, leaving the overall revenue outturn position as consistent with the approved budget.

An explanation of the major revenue variances for 2019/20, was provided to Members, and they were informed that Appendix A provides a detailed analysis of the revenue outturn position.

Members attention was drawn to paragraphs 16 to 18 within the report, which summarised the committed reserves opening and closing position. They were advised that committed reserves have reduced by £4.297m in the year, mainly due to a call-down on the capital reserve to fund the new St. Helens station build.

Members were advised that paragraphs 19 to 21, outlined the capital outturn position and that £3.762m of the planned 2019/20 spend, had now been re-phased into 2020/21; and that Appendix B provides a detailed analysis of the capital outturn position.

Members commented that this has been a most unusual year; and that they were very grateful to all staff for what they have done; and to staff working remotely, doing their best in very difficult circumstances.

Members also commented that through the LGA and the Fire Services Management Committee, lobbying was continuing under the Comprehensive Spending Review, around the amount of funding that FRS’s get as a sector; and around what FRS’s are now doing in the new environment.

Questions were raised by Members around the costs associated with Covid-19 and potential costs moving forward, in terms of ensuring that we keep our staff safe.

Members were advised that a report was submitted to the last Authority Meeting, around the implications of Covid-19, which highlighted that the Authority had received a Government Grant of £1.4m. Members were informed that so far, spend associated with Covid-19 was below the grant amount; and that it was anticipated that the grant would cover the impact of Covid-19 for 2020/21.

Members were advised that the main areas of spend were to cover a loss in income and the purchase of additional PPE, with some spend also associated with additional resilience payments and ICT. Members were advised that Officers are comfortable that the grant will be sufficient to cover associated costs for this year.

Members were advised however, that beyond this year, there may be an impact with regards to council tax collection rates. At present, the collection rate for Council Tax within the local authorities, is around 96/ 97%. However, it is anticipated that given the financial hardship for some people, they may not pay their Council Tax, resulting in the collection rate being lower and the collection fund going into deficit. Members were informed that any such deficit would be dealt with when preparing for the 2021/22 budget.

They were also informed that the government has indicated that it will bring in legislation to allow local authorities (including Fire Authorities), to spread any such deficit over a 3-year period.

It was highlighted to Members that  any reduction in the  Council Tax collection rate  may result in a reduction in the size of the council tax base. The current MTFP assumes that the council tax base will increase by 1% each year, with each 1% increase equating to an additional £300k.

Members were assured that the fire sector and Authority will continue to lobby the Government for maintaining financial support for fire  and the fire sector have made submissions to the Treasury around additional funding requirements for increased protection activity following Grenfell. They were advised that it is hoped that those submissions would be  successful; and MFRA receive at least the current MTFP assumption of a  1% year on year grant increase.

Further comments were made by Members concerning business rates, for which MFRA receives 2% of the local Merseyside total. It was commented that business rates are in turmoil at the moment; and it is also unknown what the impact of that may be on MFRA’s financial position.

During consideration of this item, Officers became aware that connection to the YouTube live broadcast had been lost.

The meeting was therefore adjourned whilst connection was re-established.

Once connection was re-established, the meeting re-commenced.

The Acting Monitoring Officer advised that the meeting had been suspended as we had been notified that the YouTube connection had been lost. They explained that a link had been re-issued to Members; and for public access via the published agenda.

It was confirmed that prior to the loss of connection, Agenda Item 3 – “Revenue & Capital Outturn 2019/20” had been presented by the Treasurer. Therefore, the meeting resumed at this point and Members were asked to approve the recommendations of this report.

Members Resolved that:

a)    The actual revenue performance against the against the approved budget, after taking into account year-end reserve adjustments, be noted as being a net underspend of £1.501m.

b)    The use of this underspend to increase the actual 2019/20 minimum revenue provision (debt repayment), with the aim of freeing up future debt servicing budget to allow reinvestment back into front line services, be noted.

c)    Capital re-phasing from 2019/20 into future years of £3.762m, be noted as being necessary.

d)    The establishment of year-end reserves of £0.650m, be noted.