To consider Report CFO/046/21 of the Director of Finance, concerning the Authority’s year-end financial position for 2020/21. 

Members considered report CFO/046/21 of the Director of Finance and Procurement, concerning the Authority’s year-end financial position for 2020/21.

Members were given a brief overview of the report highlighting that the key assumptions around future costings, that were approved by Members in the Budget and Medium Term Financial Plan at the Budget Authority Meeting on 27^th February 2020, have remained robust throughout the year.

It was added that budget movements and actual performance is monitored closely throughout the year and reported to Members via the quarterly financial review updates with the last report, CFO/005/21, covering the period up to the end of December 2020. The report provides a summary of the budget movements for the year and specifically those budget adjustments made in the last quarter of 2020/21for Revenue, Capital and Reserves.  The revenue budget remained unchanged at £61.961m, with the most significant self-balancing movements relating to the use of and contribution to planned reserves.  The 2020/21 capital budget was reduced by £6.8m as schemes were re-phased into future years, in particular the planned investment in the Training & Development Academy (TDA), NRAT asset refresh, and specialist appliance.  At the start of the 2020/21 year the General Reserve stood at £3m and committed reserves at £18.766m. 

Before year-end reserve adjustments, the net revenue outturn spend was £60.339m, resulting in a £1.622m net underspend. After taking account of year-end reserve requests of £0.210m, the underspend reduced to £1.412m. Members had previously approved the use of any revenue savings in the year to fund an increase in the new TDA reserve in order to keep borrowing costs down for this scheme. Therefore, an additional £1.412m contribution to the TDA/Capital reserve was made at the year-end, leaving the overall revenue outturn position consistent with the approved budget.

Members were provided with an explanation on the major revenue variances for 2020/21, and Appendix A1 – A3 provide Members with a detailed analysis of the revenue outturn position.

The financial impact of covid-19 on the Authority’s finances shows that overall the Government grant support and other savings arising as a result of Covid-19 have covered the full financial impact of the pandemic on the Authority in 2020/21.

With regards to the Movement on Reserves, committed reserves increased by £7.316m over the year, mainly as a result of increasing the new TDA / capital reserve by a net £5.2m and the creation of a new collection fund deficit reserve of £3.8m. Appendix A4 provides a detail breakdown of the committed reserve movements in the year.

Looking at the Capital Outturn Position, £3.702m of planned 2020/21 spend has now been re-phased into 2021/22 and the table on page 20 of the report provides an explanation for the re-phasing.  Appendix B provides a detailed analysis of the capital outturn position.

Members asked about the £91k planned spend on the Fire Service Museum within the capital programme and asked what that entailed.  Members were advised that it is the intension to give the museum a refresh and a report will come back to Members on the proposals for approval. 

Members questioned how the 2.5% annual pay award was decided and what the 2% general inflation refers to.  Members were advised that the annual pay award was discussed at the Budget Strategy Day in February 2020 and it was agreed to assume a 2.5% award for all staff.  The general inflation refers to all other non-employee spend such as equipment, utilities and clothing etc, and reflects the forecast average inflation rate expected for the year 

Members resolved that:

a.         actual revenue spends compared to the approved budget delivered a net underspend of £1.622m before the creation of year-end reserves, as outlined in Appendix A1 to A3, be noted;

b.         this underspend be used for the required year-end reserves of £0.210m to fund projects that have been rescheduled from 2020/21 into 2021/22 and the increase in the capital reserve by £1.412m in order to contribute towards the funding of the proposed new Training & Development Academy (TDA), be approved.

c.         the re-phasing of planned capital spend from 2020/21 into future years of £3.702m, as outlined in Appendix B, be approved.

d.         committed reserves of £26.082m and a general reserve of £3.0m as outlined in Appendix A4, be approved.