PURPOSE OF REPORT

To present to Members the updated revenue and capital budgets for 2021/22.

EXECUTIVE SUMMARY

The Fire and Rescue Authority (the Authority) is required to set a balanced budget each financial year and confirm contribution figures with each constituent local authority. The budget for 2021/22 of £37.074m, was approved at the Authority meeting on 9 November 2020. Further work has been completed which confirms the overall budget requirement although the allocation across the budget headings has been revised.

The key assumptions, risks and uncertainties which have been identified during the budget planning process has not changed.

RECOMMENDATIONS

Members are asked to approve the updated capital and revenue budget allocations for the 2021/22 financial year.

OBSERVATIONS FROM EXECUTIVE PANEL

Not applicable.

BACKGROUND

The revenue budget for 2021/22 of £37.074m, was agreed at the Authority meeting on 9 November 2020.

The capital programme was approved for £3.083m.

INFORMATION

Since the approval of the revenue budget and capital programme, work has continued to ensure the 2021/22 revenue budget reflects the uncertain environment within which we are currently operating due to Covid-19. This has resulted in the need to revise budget allocations between budget headings to address changing priorities.

The capital programme has also been reviewed, to ensure continued affordability.

REVISED REVENUE BUDGET ALLOCATIONS 2021/22

The budget for 2021/22 of £37.074m, was agreed at the Authority meeting on 9 November 2020. Since then further work has been completed which confirms the overall budget requirement across the following budget headings.

Detailed budget planning work has been undertaken including a review of the key planning assumptions, risks and uncertainties, as detailed in the report present on 9 November 2020. The Welsh Government has confirmed the grant support for 2021/22 but all other risks and uncertainties remain unchanged.

Although the spending review in November 2020 announced a public sector pay freeze, this is not binding for Fire and Rescue Service staff. As national pay awards have not yet been finalised this remains a significant planning risk. Work continues to ensure the careful management of employee costs including the continued management of variable pay.

Employee costs account for 72% of net expenditure and the draft budget for 2021/22 is £26.9.m. The budget was set assuming a pay award of 2% for all staff. This pay award will not be distributed as part of the Service’s budget, but will be retained centrally, until the result of pay negotiations are known.

The revised budget takes account of known changes to the establishment for 2021/22, including the recruitment of 18 apprentice firefighters and 8 firefighters.

A review of the specific risks within each budget heading have been further considered resulting in a further increase of £0.16m to £8.66m, for supplies, services and third party payments. This reflects the unavoidable cost pressures that are being experienced in relation to utility costs, backlog maintenance, fuel costs and ICT costs including software licences and maintenance contracts. Significant work has been undertaken to manage non pay costs including using all Wales procurement options.

Capital financing costs include the costs of borrowing and revenue charges for using capital assets. A rise in Bank of England base rates is not anticipated during 2021/22 and this has been factored into the budget. The capital financing budget for 2021/22 has been reduced to reflect the reductions in the capital programme for 2019/20, 2020/21 and 2021/22. Capital financing costs have been amended in line with the reduction in the capital plan and the continued reduction in borrowing costs.

UPDATED CAPITAL PLAN 2021/22

The updated capital plan is detailed below:

The capital plan confirms a capital requirement of £2.98m for 2021/22. The main element of the plan relates to the essential investment in new fire appliances.

All schemes included within the plan have been reviewed in light of the impact of Covid 19. A capital requirement of £0.8m has been included for building schemes and due to the continuing situation and the expected changes to building occupancy, all building works will undergo a further review before any funding is released. An Estates Strategy will be developed in 2021/22 which will cover the current and future development/management of the estate.

The development of the training facility on the Dolgellau site is currently being considered following receipt of the condition survey in 2019. The scope of the works and the anticipated costs are currently unknown and unlikely to progress during 2021/22. Therefore, this scheme has not been included in the capital plan for 2021/22.

The capital expenditure will have a consequential impact on the capital financing charges in future financial years which have been included within the revenue budget.

IMPLICATIONS

Wellbeing Objectives The budget enables the Authority to achieve its long-term well-being objectives.
Budget The year on year increase in local authority contributions for 2021/22 is £1.13m.
Legal The Fire and Rescue Authority has a legal duty to set a balanced revenue budget.
Staffing None
Equalities/Human Rights/Welsh Language None
Risks and Uncertainties The budget has been risk assessed and the following key risks noted:
The budget is based on an assumption that pay awards will be 2%. National agreements have not yet been reached;
The Authority plans to continue to develop an Environmental Strategy during 2021/22. An assessment of costs has not yet been made; and
The uncertainty over the EU Exit remains and no additional costs have been factored into the 2021/22 budget.