To consider Item 7
The Director of Finance and Assets advised Members that the Financial Strategy was a new document and was the link between the organisation’s long-term service objectives and its financial capacity. The Strategy also helped the organisation to consider the feasibility of different options in terms of affordability and financial sustainability. The Strategy outlined three key areas; where the organisation was now; where it would like to be and how it plans to get there. The Strategy drew information from a number of sources, including HMICFRS reports, internal and external audit reports, financial analysis and also the self-assessment which had been carried out and was in Appendix A to Annex 1. One of the key elements of this Strategy was a consideration of the potential scenarios the Authority may face, especially in relation to Covid and funding reductions.
One of the scenarios was a ‘no change’ scenario. This was the base point of where the Authority would be if nothing changed from last year’s MTFP. A ‘reasonable worse case’ scenario would be if the Authority was to lose some specific funding, and there was a possible ‘optimistic’ scenario if the Authority achieved additional precept flexibility and council tax could be increased by £5, rather than the 2% current limit. Against each scenario there were some possible actions. These showed the consultation process the Authority undertook when considering the current Public Safety Plan.
Also, within the document was the Reserves Strategy. The key point to note was the Authority had potentially around £1.75m of earmarked reserves that could be repurposed should there be a funding reduction and the need to mitigate the impact of it over the short term, whilst considering the longer term solutions to meet the challenge going forward.
In summary, this document addressed some of the concerns raised by HMICFRS. Namely to ensure that the Authority had the capacity and capability to support the activity in its Public Safety Plan and that the Service used sound financial management to ensure all additional costs such as pensions liability were accounted for and that there was a contingency plan in place for these eventualities.
A Member asked regarding the action plan and what in the current year did the review of value for money by an external provider actually involve and was advised that the Authority was working with a company called Proving. Proving were working with Surrey Fire Service to provide a benchmarking tool, specifically for the fire service. To date, there were nine fire services who had opted into the toolkit, and to producing a more comprehensive tool kit. In terms of plans moving forward, the Authority was looking to bring in Proving early next year to look at the model in a lot more detail and to ensure that there were consistent benchmarks across the fire sector.
A Member asked in 2021/22 the review of budget monitoring and performance reporting arrangements covered a large number of sections within the self-assessment and how would this develop and was advised that when completing the self-assessment, there was a very comprehensive budget monitoring report, and there was also other statistics and performance monitoring around operational standards, attendance times, availability etc. The balanced scorecard was presented annually, and it would be good to bring the performance and financial data together to give a better overall picture.
A Member asked a question about the insurance excesses set at £5k and assuming 10 claims a year over £5k, had it been based on the last five years’ experience, and was that the average number of claims and was advised it was based on the worst case, and was probably slightly over prudent, but it was better to have slightly too much put aside than not enough in terms of insurance excess.
A Member asked that for 2024/25 there was a zero-based budget in preparation for the Public Safety Plan to reset any budgets that may have drifted over time. If the Authority was already doing a zero-based budget, should there be any drifting over time and was advised that the zero-based budget prepared for this year was a big exercise, stripping everything back and then building it up again. It was not something officers would do every single year because of the amount of work involved, but it may be something to look at in five years’ time to make sure nothing was overlooked. Over five years it might change significantly, it was trying to get the right balance between incremental and zero-based budgeting.
A Member asked about interest rates being less than before how was the Authority going to be sure it was not over inflating what interest may be on any balances it holds and was advised that the Authority regularly presented the Treasury Management Strategy and over the last few years had been achieving really good returns. The base rate had reduced down to 0.1%, and having spoken to its investment specialist, realistically the Authority would only achieve around £30k, so the investment budget had been reduced down to £30k from £150k.
Subject to certain typographical errors being corrected it was:
That the Financial Strategy 2020-21 to 2024-25 be recommended to the Fire Authority for approval.
- ITEM 7_Financial Strategy Cover Paper [Exec Pre-Brief], item 7. PDF 155 KB
- ITEM 7a_Financial Strategy Document - Annex 1, item 7. PDF 1 MB
- ITEM 7b_Financial Strategy Document - Annex 1 Appendix A, item 7. PDF 676 KB