To consider Report CFO/011/14 of the Deputy Chief Executive, concerning the setting of a medium term financial plan – both capital and revenue – that allocates resources in line with the Authority’s strategic aims; and ensures that the Authority delivers and efficient, value for money service.

 

The Chair of the Authority Councillor Dave Hanratty moved a budget resolution on behalf of Labour Group, details of which had been circulated to all Members.

 

Vice Chair Councillor Les Byrom seconded the motion.

 

It was noted that no other proposed resolutions had been submitted by any other group.

 

Members considered report CFO/020/14 of the Deputy Chief Executive Officer regarding the Merseyside Fire and Rescue Authority Budget and Financial Plan 2014/2015 – 2018/2019, to allow Members to set a medium term financial plan, both capital and revenue, that allocates resources in line with the Authority’s strategic aims and ensures that the Authority delivers an efficient, value for money service. The detailed report also allows the Authority to determine a budget for 2014/2015 and a precept level in line with statutory requirements.

 

Debate took place regarding the difficult decisions the Authority are faced with due to the financial burden placed upon them by central government, who have cut the amount of government grant to the Authority year upon year.

Members expressed thanks to staff for their continued support and to officers for their work towards plans to meet the budget deficit and for all the consultation events which have taken place across Merseyside. Members also thanked Union representative for their continued constructive discussions and opened invited to all Union representatives of the Authority’s employees, to meet with him in future. 

 

Union Representatives were invited to address the Authority.

Fire Brigades Union representative Mark Rowe, followed by the Fire Officers Association representative Chris Case, addressed the Authority to express their disappointment on behalf employee and the public, for the difficult decision the Authority are faced with making, and confirmed that it was through no fault of Members of this Authority but the cause of financial burdens placed upon the Authority by Central Government. Union Representatives advised that they continue to support the Authority and continue to work to protect the public of Merseyside. 

 

 

Resolved that:

The full resolution as circulated by Chair needs to go here and replace the report recommendationsNB THE RESAOLUTION HAS TWO APPENDICES

 

Vice Chair Councillor Les Byrom seconder to the Labour Group motion, spoke in support of the motion.

 

The Chair of the Authority Councillor Dave Hanratty mover of the Labour Group Budget Resolution spoke in support of the motion.

 

A vote to the motion took place.

 

15 Members voted in favour of the motion

0 Members voted against

0 Members abstained

 

Unanimous decision to approve the Labour Budget Resolution 2014/15

 

LABOUR BUDGET RESOLUTION 2014/15

 

 

Merseyside Fire and Rescue Authority Budget and Medium Term Financial Plan Resolution 2014/2015- 2018/19

 

1.    Merseyside Fire and Rescue Authority has suffered the largest grant cut in the country – over 35% since 2010.

 

2.    The Authority has planned prudently to minimise the impact on frontline services. The Authority has addressed inefficiency, cut management costs and reduced support services

 

3.    However with the scale of funding cuts there has been an inevitable impact on frontline services and despite a saving of £7m being achieved from the back office and support functions the Authority has seen the number of fire appliances in Merseyside reduce from 42 to only 28 across its 26 fire stations.

 

4.    The Government has now increased the level of grant cut for 2014/15 beyond that originally announced and applied a further 10% real terms cut to grant funding for 2015/16.  This has left the Authority in a challenging position since it cannot set a balanced budget without yet further reducing its services to the communities of Merseyside.  

 

5.    The Authority wishes to plan prudently to deal with the cuts and has therefore decided to prepare a comprehensive two year financial plan based solely upon those government announcements that have already been made - adopting this strategy alone still requires savings of £6.3m. The Authority, however, recognises that the current government and any subsequent successor are likely to apply further cuts to the Fire and Rescue Service beyond 2015/16. Whilst the Authority will lobby against such a position it is recognised further cuts to funding will mean further cuts to services.

 

 

The Financial Plan

 

6.    The Authority approves the financial plan as outlined in CFO/011/14 (summarised in the attached Appendix A to this resolution) and endorse the recommendations a. to j. in that report.

 

Minimising the impact on the Frontline

7.    The Authority notes that officers have identified all the possible options available to the Authority that do not impact on the front line operational response and will adopt all those savings identified in report CFO/011/14 Appendix C.

 

8.    In particular the Authority will:-

 

a)    Assume a saving of £0.9m from a technical review of the cost of debt repayments. Noting that this approach relies heavily on the assumptions in the capital programme and the treasury strategy - requiring the DCE to report regularly on progress through the financial review reports.

 

b)    Assume that £0.125m can be identified from within non-employee inflation lines and £0.275 from specific reduction in non-employee budgets.  The DCE to report back through the financial review on the specific application of these cuts and their impact on service

 

c)    Assume a saving of £0.200m from vacancy management / staff not all being at the top of grade.

 

9.    The Authority values its employee’s and recognises the commitment they have to make Merseyside Safer and Stronger. The Authority also recognises that there has been a significant period of pay restraint for all employee’s combined with pension changes, tax changes, benefit reform and relatively high inflation resulting in an actual reduction in their living standards. However if pay awards keep pace just with inflation for the next two years it will still mean that a higher level of savings would have to be made. Therefore, in order to minimise service impacts and staff reductions the Authority will assume for its financial plan pay bill restraint for the next two years at only 1%p.a for all staff. The Authority recognises there is a degree of risk around this approach both in the fact that pay awards may be higher and there is the potential for employer pension contributions to rise – If either of these risks are realised it will require further savings to be made. In order to hedge against these risks and give time for any required additional cuts to be identified and implemented the Authority will keep an inflation reserve of £1.5m.

 

10.The Authority is committed to addressing low pay amongst its workforce and is keen to apply the living wage in a practical and affordable way. It requests a report be brought back once the full impact of implementation has been fully assessed.

 

11. The Authority will assume that it will be possible to achieve a reduction in 10% of the remaining non-uniform staffing costs (£0.900m) noting in doing so that:-

 

·         Many non-uniformed staff provide front line services

·         Such further large-scale reductions will put large numbers of staff at risk of redundancy

·         There will be an impact on organisational capacity which will need to be managed effectively in light of the need to deliver other savings which require major projects or structural change

 

12. The Authority requires the CFO to report back on detailed proposals in relation to these savings by December 2014. The Authority will maintain a reserve of £0.9m in order to fund the costs of any voluntary severance or voluntary early retirement that as far as practicable can be used to try and avoid compulsory redundancy. The CFO to be granted delegated powers to manage and operate the scheme of VER/VS  as previously agreed by the Authority as effectively as possible and to report back on progress.

 

13. The Authority is fully committed to reducing its own costs as the organisation faces up to the government cuts and what that means for local services.  The Authority has already made reductions in its allowances of £9,800 as part of a four year target of reducing costs by 10%.  Whilst that review is ongoing the Authority will in any case freeze all  member allowances for the sixth consecutive year

 

14. The Authority notes that these savings total £2.9m from back office and support functions. This still means that £3.4m of the government cuts will be required from the frontline operational service.

 

Operational Response Savings

15.  The Authority notes that the Chief Fire Officer has examined the options for delivering the operational savings required and mergers of stations are considered to be the “least worst option.” This approach has been endorsed through the initial deliberative public consultation.

 

16. The Authority therefore assumes that it will be possible to save £3.4m from operational response through at least 4 station mergers including those already considered by the Authority in principle :-

 

·         Huyton/Whiston at Prescot

·         Upton/West Kirby at Greasby

·         Eccleston/St Helens at St Helens town centre

 

17. The Authority requests that the CFO bring back individual reports, including equality impact assessment, as soon as possible on specific business cases for mergers as detailed information and costs become available.

 

18. The Authority requests that the CFO prepare bids for any Government capital resources that might be available in support of mergers.

 

19. The Authority notes that to deliver any savings in firefighter posts requires a reduction in the number of staff. The Authority is committed to seeking to try and avoid compulsory redundancy. It notes that to deliver   the required reduction in firefighter posts will take until 2016/17 based on natural retirement rates. The Authority will therefore commit £6.8m to a cost smoothing reserve of which at least £3.6m is expected to be used to avoid redundancy based on current forecasts.

 

20. The Authority notes that the capital programme does not currently include provision for the net costs of any station mergers. Whilst it is hoped that the availability of capital receipts, the possibility of government grant funding and the potential availability of reserves may assist in funding any building schemes it recognises that if this is not sufficient there may be a need to borrow to build which will impact on capital financing costs.

 

21. The Authority recognises that the exact timing of both new station delivery and firefighter retirements is difficult to forecast and recognises that the Chief Fire Officer will need to continue to manage appliance availability on a dynamic basis under his delegated powers as the financial plan proceeds to delivery.

 

22. The Authority recognises that if suitable sites cannot be identified for mergers that station closures would be the next ‘least worst’ option.

 

IRMP

 

23.The Authority agrees to reflect this financial plan in its future IRMP and will consult with the local community on the IRMP and the impact these cuts will have upon them.

 

 

 

 

Implementation

 

24. The Authority recognises to fully deliver the saving will take over two years if it wishes to minimise the likelihood of compulsory redundancy. It will reflect this phased approach in its Reserve strategy

 

25. It therefore instructs the Chief Fire Officer to adopt a phased multi-year approach to delivery of the model.

 

26. In relation to Support Services the Authority expects the CFO to manage reductions within the previously agreed framework including identifying:-

 

§  Roles deemed non-essential for statutory delivery through fundamental review

 

§  Roles which can be subsumed within other roles - lesser organisational impact

 

§  Those roles where duplication is identified

 

§  Those roles that can be removed through internal shared services

 

§  Those roles that will subsumed aligned to an organisational restructure

 

§  Those roles for which external funding may be possible

 

§  Those roles that will be subsumed following technological investment

 

27. The Authority wishes the CFO to use every available measure and management tool to avoid compulsory redundancy and therefore it grants delegated power to reopen and utilise the Voluntary Severance / Voluntary Early Retirement programme in line with the broad framework agreed by the Authority previously. In addition it would wish the CFO to consider if it is appropriate to make a similar offer to staff in the firefighting pension’s schemes in order to deliver these savings.

 

28. In relation to firefighter post reductions the Authority will seek to use natural turnover rates recognising this will take until 2016/17 requiring the use of reserves in the intervening period if compulsory redundancies are to be avoided.

 

29. The Authority will enter into consultation with the Representative Bodies where any member of staff is placed at risk of redundancy.

 

30. The Authority will adopt a full 90 days consultation period for all staff irrespective of numbers put at risk and any statutory requirements. This is in excess of the statutory minimum.

 

31. The Authority will also:-

 

§  Maintain an at risk register in order to seek redeployment options where appropriate

 

§  Establish and manage outplacement support at the Training & Development Academy

 

§  Use “bumping” and grouping between roles where staff wish to take advantage of severance to deliver overall savings

 

Council Tax

 

§  In identifying a financial deficit of £6.3m the Authority had already assumed a council tax increase at the maximum level allowed by the government before a referendum of just below 2%.

 

§  Because of the scale of the financial challenge likely in future the Authority has agreed, with a heavy heart,  to stick to this plan and increase council  tax in 2014/15 by just below 2% to minimise the impact on the services to Merseyside in the future

 

§  The impact of the budget on council tax will be a Band D Council Tax of £70.07, an increase of less than 3p per week to a total of £1.35 per week towards the fire and rescue service

 

§  Most people in Merseyside will pay Band A Council Tax of £46.71 or 90p per week towards their fire and rescue service.

 

Recruitment

 

32.Despite the need to reduce Firefighter numbers in the short term  as part of the budget plan this Authority recognises that over the next decade almost two thirds of its firefighters are expected to retire. The loss of that experience and knowledge will bring major challenges for the Authority and the need to recruit 300-400 firefighters by about 2020.  In addition it takes almost a year to train a firefighter across the full range of competencies. 

 

33.In order to meet this challenge in a prudent and structured fashion the Authority has set aside a strategic reserve of £1m to support limited firefighter recruitment to manage effectively succession planning.

 

34.It requests the CFO to explore the opportunities for delivering this including apprenticeship models and more flexible recruitment contracts and to report back to the Authority with proposals for strategic recruitment

 

Planning for beyond the Election

 

35. The Authority is seriously concerned that this phase of cuts is likely to be followed by further cuts in 2016/17 and beyond. If any future Government follows through with proposals for public spending cuts (based upon how poorly local government, Fire and Rescue Service’s and the Authority have done in the current CSR) then future years would see further cuts in fire cover across Merseyside unless council tax payers in Merseyside are willing to pay more for their Fire and Rescue Service.

 

36. The Authority, whilst continuing with its strong and direct approach to lobbying, recognises that it needs to plan prudently for what it would do if that approach is not successful.

 

Reserves

 

37.The Authority has prudently planned to meet its financial challenges over the medium term. The plan the Authority proposes is based upon the key assumptions around changes to grant, pay, tax and pension costs.

 

38.The Authority recognises that there are substantial risks associated with these assumptions and that, particularly in light of the current economic climate; it is not unreasonable to expect a significant degree of financial uncertainty and risk which will vary across the life of the financial plan. The Authority will therefore set a medium term financial plan based upon these key assumptions recognising that it may need to vary that plan to cope with changes arising.

 

39.In light of the risks within the financial plan the Authority therefore agrees to maintain the reserves as set out in Appendix B to this resolution and in particular maintain a general revenue reserve of £2.9million.

 

Capital Programme

 

40.The Authority approves the Capital Programme as set out in CFO/011/14 which includes a total investment of over £26.102million over 2014/15 – 2018/19 period. The programme for 2014/15 shall be approved as £10.038million;

 

41.The Authority notes the prudential indicators that this programme produces and recognises that the proposed capital investment programme is prudent, sustainable and the borrowing affordable. This programme makes use of the freedoms available to the Authority under the prudential regime and proposes ‘prudential’ borrowing of £5.856million in 2014/15 as part of a total borrowing of £18.525million across the life of the plan.

 

42.The Authority notes that it has been successful in bidding for capital grant to support the development of a new fire station at Prescot and therefore this proposal be included within the plan and consulted upon appropriately.

 

43.In the light of the capital programme and the prudential indicators agree the Treasury Management Strategy and the indicators set out in that strategy for:

 

(i)    External Debt

(ii)  Operational Boundary for Debt

(iii)Upper limits on fixed interest rate exposure

(iv)Upper limits on variable rate exposure

(v)  Limits on the maturity structure of debt

(vi)Limits on investments for more than 364 days

 

 

 

Basic calculations

 

44.Following consideration of the report of the Deputy Chief Executive  (CFO/010/14 & CFO/011/14) and having taken into account views expressed in consultations, and all other relevant matters, pursuant to the Local Government Finance Act 1992, as amended, (the “Act”), the Authority determines its budget requirement for the financial year 2014/15 as follows.

 

45.Approves the capital expenditure programme for the financial year 2014/15 for the total of £10.038m as set out in report CFO/011/14 and the five year programme totalling investment of £26.102m, and in this respect notes the advice of the Deputy Chief Executive that the programme is prudent, sustainable and the borrowing affordable.

 

46.The Authority is recommended to resolve as follows:

 

(a)  It be noted that on 27 February, 2014 the Authority calculated the Council Tax Base 2014/15 for the whole Authority area as 334,385.70 [Item T in the formula in Section 42B of the Local Government Finance Act 1992, as amended (the “Act)].

 

(b)  That the following amounts be calculated for the year 2014/15 in accordance with sections 40 to 47 of the Act:

 

The Authority calculates the aggregate of: (A)

 

o   calculates the expenditure which it estimates it will incur in the financial year 2014/15 in performing its functions and will charge to the revenue account for the year in accordance with proper practices under S42A (2) (a) of the Act as £71.548m,

 

o   calculates the allowance as the Authority estimates will be appropriate for contingencies in relation to amounts to be charges or credited to the revenue account for the year 2014/15 in accordance with proper practices under S42A (2) (b) of the Act as £0.000m,

 

o   calculates the financial reserves which the Authority estimates it will be appropriate to raise in the year for meeting its estimated future expenditure for 2014/15 under S42A (2) (c) of the Act as £0.074m,

 

o   calculates the financial reserves as are sufficient to meet so much of the amount estimated by the Authority to be a revenue account deficit for any earlier financial year as has not been already provided for under S42A (2) (d) of the Act as £0.000m.

 

The Authority must also calculate the aggregate of: (B)

 

o   the income which it estimates will accrue to it in the year 2014/15 and which it will credit to a revenue account for the year in accordance with proper practices, other than income which it estimates will accrue to it in respect of any precept issued by it under S42A (3) (a) of the Act as £48.192m,

 

o   the amount of the financial reserves which the Authority estimates that it will use in order to provide for the items mentioned in S42 (2) (a and b) under S42A (3) (a) of the Act as £1.301m.

 

If the aggregate calculated under A above exceeds that calculated under B above, the Authority must calculate the amount equal to the difference; and the amount so calculated is to be its council tax requirement for the year under S42A (4) (Item R in the formula in S42B of the Act)

 

The Authority calculates the basic amount of its council tax by dividing the aggregate amount of S42A (4) (item R) divided by the council tax base (item T) above. The council tax requirement for 2014/15 is £23,430,405 and the council tax base is 334,385.70, which is equal to £70.07 precept for a Band D property. This calculation meets the requirements under S42B of the Act.

 

47. The Authority calculates the council tax sums pursuant to s 47 of the Act as follows:

 

 

 

 

48.The Authority calculates the precept amounts payable by each constituent district council pursuant to s48 of the Act as follows:-

 

 

49.The Authority requests the Deputy Chief Executive to arrange for precepts to be issued to the constituent district councils  pursuant to s 40 of the Act before 1^st March 2014, such sums to be payable by 10 equal instalments  on or before the following dates:

 

17th April 2014

29th May 2014

4th July 2014

11th August 2014

17th September 2014

23rd October 2014

28th November 2014

8th January 2015

13th February 2015

17th March 2015

 

50.The Authority notes that The Deputy Chief Executive has advised that the 2014/15 budget is based upon robust estimates.

Appendix B- Reserves