Agenda item

Report of the Treasurer to the Authority (RC/16/6) attached.

The Committee considered a report of the Treasurer to the Authority (RC/16/6) that set out details of the Authority’s financial performance during 2015/16 as compared with the approved financial targets. The report also provided a draft outturn spending position against the 2015-16 revenue budget with explanations of the major variations. 

The Treasurer highlighted that net spending was £72.833m at the year-end in 2015/16 which was £1.878m less than the approved revenue budget of £74.710m. The saving of £1.878m was equivalent to 2.51% of the total budget. It was proposed that this underspend be utilised to fund the following transfer of funds to Earmarked Reserves:

·        A transfer of £0.557m to an Earmarked Reserves to be utilised to fund Essential Spending Pressures not included within the 2016-17 base budget;

·        The transfer of the remaining £1.321m to the Capital Funding reserve.

The Treasurer reported that the underspend figure of £1.878m was after:

·        The transfer of £0.420m to the Grants Unapplied Reserve, as required under the International Financial reporting Standards relating to grants received during the financial year but not utilised (paragraph 12.5(a) of the report circulated);

·        A transfer of £0.091m to Earmarked Reserves for 2015-16 budget carry forward to fund planned projects not completed by 31 March 2016 (paragraph 12.5(c) of the report circulated);

·        A transfer of £1.677m to the Reserve for Capital Funding (paragraph 12.5(e) of the report circulated); and,

·        Additional provision relating to pension liabilities of £0.066m (paragraph 12.5(g) of the report circulated).

Reference was made to the Prudential Indicators and the point that external borrowing was £25.817m in Quarter 4 of 2015/16 which was well within the £29.477m set by the Authority (as the absolute maximum that was agreed as being affordable). This figure was lower than the previous quarter (£26.864m) due to further principal repayments during the quarter.  No further external borrowing was planned in the immediate future and the proposals above made provision for the transfer of some of the underspend into the Capital Funding Reserve. It was noted that the debt ratio was 3.76% of the revenue budget which was well within the 5% limit set by the Authority.

The Treasurer advised the Committee that spending against the 2015-16 capital programme was £6.171m against a revised programme of £8.202m.  The slippage of £1.627m was attributable largely to several projects, including a delay in delivery of six Light Rescue Pumps.

Reference was made at this point to the amount of £1.6m that had previously been set aside in a ring-fenced provision to fund future pension liabilities, including the liability from the Part Time Workers (Prevention of Less Favourable Treatment) Employment Tribunal. All employees eligible for the backdated pension were notified and – if they submitted an expression of interest – were supplied with an estimate of their pension. In terms of funding, the Treasurer advised that it was anticipated that the Department for Communities and Local Government would make provision for any future liabilities through increased employer’s pension contributions to be recovered over a longer period rather than being repaid as a lump sum. 

The Committee expressed thanks to both operational officers and budget holders for the laudable position that had been achieved on the outturn at the year end, whereupon it was:

RESOLVED

(a)         That the Fire and Rescue Authority, at its meeting on the 26 May 2016, be recommended to approve:

                                      (i)    That the provisional underspend against the 2015-16 revenue budget of £1.878m be utilised to fund the following transfers to Earmarked Reserves, as outlined in paragraph 12.5 of report RC/16/6:

                                      A.    the transfer of £0.557m to an Earmarked Reserve to be utilised to fund Essential Spending Pressures not included in the 2016-17 base budget (Para 12.5(b));

                                      B.    the transfer of the remaining £1.321m to the Capital Funding Reserve (Para 12.5(f) of report rc/16/6);

                                     (ii)    That following a review of Earmarked Reserve requirements, an amount of £0.011m be transferred from Earmarked Reserves to General Reserve (Para. 12.5(d))

(b)     That, subject to (a) above, the following be noted:

                                  (i)        The draft position in respect of the 2015-16 Revenue and Capital Outturn position, as indicated in this report.

                                 (ii)        That the underspend figure of £1.878m was after;

                                  A.        A transfer of £0.420m to the Grants Unapplied Reserve, as required under International Financial Reporting Standards (IFRS) relating to grants received during the financial year but not utilised (Para.12.5(a) of report RC/16/6);

                                  B.        A transfer of £0.091m to Earmarked Reserves for 2015-16 Budget Carry Forwards to fund planned projects not completed by 31 March 2016 (Para. 12.5(c) of report RC/16/6));

                                  C.        A transfer of £1.677m to the Reserve for Capital funding (para 12.5(e) of report RC/16/6);

                                  D.        Additional provisions relating to pension liabilities of £0.066m. (Para. 12.5(g) of report RC/16/6).