MEETING
Policy and Strategy
MEETING DATE
17 March 2010
AGENDA ITEM
5
REPORT NUMBER
EFA/032/10
SUBJECT
Review of Forecast Outturn 2009/10
REPORT BY
The Chief Fire Officer, David Johnson
PRESENTED BY
The Finance Director & Treasurer, Mike Clayton
SUMMARY
This paper reports on the management accounts for the ten months to 31 January 2010 and the outturn position for the year.
RECOMMENDATIONS
It is recommended that:
1. Members note the report;
2. Members agree carry forward £60k of expenditure on Breathing Apparatus into
2010/11; and
3. Members agree to increase the capital expenditure budget to £14,060k.
INTRODUCTION
To ensure that the annual budget of the Authority is effectively utilised and provides value for money, it is necessary to monitor expenditure against budget, explain the main variations and conduct regular reviews of forecast expenditure. This report provides the management accounts for the first ten months of 2009/10 and provides explanation of the key budget variations.
The report also reviews the forecast outturn position for the year for both capital and revenue expenditure and makes recommendations as a result of these reviews.
EXPENDITURE
A summary of the net revenue expenditure during the first ten months of 2009/10 is shown in the Table below.

Description
Firefighters
Firefighters - Retained Duty System
Control
Support Staff
Total Employment Costs
Support Costs
Premises & Equipment
Other Costs & Services
Firefighters' Pension Scheme
Financing Items
Operational income
Contribution to/(from) Reserves
Total Other Costs
Total Budget
Actual to
Date
£'000
32,330
3,778
1,344
7,424
44,877
Variance
(Under)/
Overspent
£'000
58
(154)
(8)
(110)
(214)
Variance
(Under)/
Overspent
%
0
(4)
(1)
(1)
(0)
1,872
6,685
2,384
361
1,928
(2,732)
0
10,498
(129)
(895)
189
(73)
(77)
(579)
0
(1,565)
(6)
(12)
9
(17)
(4)
27
-
(13)
Agenda Item 5
EFA/032/10
Page 2
Updated
Budget
2008/09
£'000
38,842
5,136
1,629
9,103
54,710
2,460
8,732
3,114
770
4,991
(2,808)
1,127
18,386
55,375 (1,779) (3) 73,096
Total Funding (62,438) 0 (0) (73,096)
BUDGET AND RESERVES
The updated budget reflects the decision made by the Committee in September to reduce the firefighter payroll budget by £570k, and allocate an additional £224k to retained firefighter training and £346k as a contribution to reserves. In addition it reflects the impact of the decision to utilise further savings to create a £1,000k “spend to save reserve”. The updated budget now includes a planned contribution of £1,127k to reserves.
Further changes resulting from the most recent review of the forecast outturn are covered later in this paper.
STAFFING
The staffing position at the end of January is summarised below:
2009/10
Wholetime Firefighters
Retained Firefighters
Control
Support Staff
31-Dec 31-Jan
Actual Actual
891.0
484.0
43.0
255.5
886.0
483.0
42.5
250.0
YTD Budget Variance
Average Average
906.8
501.9
45.3
253.4
928.7
540.0
42.0
266.0
-21.9
-38.1
3.3
-12.6
The approach to staff numbers during the year has been to manage vacancies across all groups of staff.
WHOLETIME FIREFIGHTERS
The numbers of wholetime firefighters is the primary driver in the level of expenditure.
Wholetime firefighter numbers have fallen faster than provided for in the 2009/10 budget.
The budget for the year assumed an average of 1.6 firefighters leaving the Service each month. This cautious view was taken because of the unknown impact of the recession on staff turnover. During 2009/10, in comparison with the budget and previous years, higher than usual levels of retirements have occurred, with over 50 firefighters leaving the Service

Agenda Item 5
EFA/032/10
Page 3 over the past year. The trend in firefighter numbers is shown in the forecast section of the report.
The downward movement in firefighter numbers led to the introduction of a recruit’s squad in October 2009 and these passed out into service at the end of February.
RETAINED FIREFIGHTERS
The downward trend in retained firefighters has been apparent in the first half of the year, but this has now stabilised following the closure of Rayleigh. Recruitment activity has continued through the year, but the attrition rate during the recruitment process remains high.
Retained Firefighter Numbers and Appliance Availability
530
520
510
500
490
480
470
460
450
98%
96%
94%
92%
90%
88%
86%
84%
82%
80%
Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09
Retained Firefighter No.
% Retained Appliance Availability
Expenditure on retained firefighters is £154k below budget in the first ten months. One factor in this is that there has not yet been a significant increase in training activity following the increase in the budget provision agreed by Members in September 2009.
OTHER STAFF COSTS
The expenditure on control and support staff 1 per cent below budget at the end of
January. The saving was achieved through managed vacancies with the recruitment of replacement support staff only being approved where there is a clear business need.
NON-STAFF EXPENDITURE
In total the expenditure across the remaining expenditure heads was a net £1,565k (13%) below budget at the end of January. Committed expenditure was £1,847k at that time.
This reflects both liabilities for work completed in January but not invoiced, and orders placed for completion in future periods. The outturn position across all expenditure heads has been reviewed and an initial assessment of the outturn position made – further comments on this are reported below.
CAPITAL EXPENDITURE
The total capital spend at 31 January was
£9,415k.

CAPITAL EXPENDITURE SUMMARY
Land & Buildings
Vehicles
Equipment & IT
Updated
Budget
£000s
6,050
5,751
1,580
Virements
£000s
0
0
0
Expenditure to Date
£000s
3,111
5,267
1,037
Agenda Item 5
EFA/032/10
Page 4
Forecast
Outturn
£000s
5,346
5,916
2,798
Totals for Full Programme 13,381 0 9,415 14,060
As was reported to Members in September 2009, expenditure on a number of projects is forecast to exceed budget. This includes the animal rescue unit, foam units, pumping appliances, cutting equipment and software. Because in recent years we have had experience of significant shortfalls in capital expenditure through the slippage of projects, late delivery by suppliers and other commercial factors no adjustment to the budget has previously been sought.
In 2009/10 we have a combination of factors affecting the position. This includes the carry forward of expenditure from 2008/09 following delivery delays of appliances in that year, and the early commitment for chassis for future year appliance builds to secure economies of scale. The increase in the IT expenditure reflects the ICT Strategy which was agreed after the budget process completed and the approval within this of the development of the
SAP HR system agreed by Members in November.
Approval is now sought for a £779k increase in the capital budget to £14,060k
FORECAST OUTTURN
The forecast position needs to be considered in the light of the expectation that government is unlikely to continue the same level of funding for the Authority in 2011/12.
This means that reductions in the base level of budgeted expenditure are being sought to reduce the impact of the forecast funding gap in 2011/12. This is a continuation of the prudent approach to expenditure that budget holders have exercised in previous years to deliver underspending against their budgets. In summary the forecast position is shown below
Description
Firefighters
Firefighters - Retained Duty System
Control
Support Staff
Total Employment Costs
Updated
Budget
2008/09
£'000
38,842
5,136
1,629
9,103
54,710
Forecast
2009/10
£'000
38,761
4,968
1,600
9,021
54,350
Variance (under) /
Overspent
£'000
(81)
(168)
(29)
(82)
(360)
Support Costs
Premises & Equipment
Other Costs & Services
Firefighters' Pension Scheme
Financing Items
Operational income
Contribution to/(from) Reserves
Total Other Costs
Total Budget
Total Funding
2,460
8,732
3,114
770
4,991
(2,808)
1,127
18,386
73,096
(73,096)
2,413
8,653
3,104
770
4,846
(2,931)
1,890
18,746
73,096
(73,096)
(47)
(79)
(10)
0
(145)
(122)
763
360
0
0

Agenda Item 5
EFA/032/10
Page 5
This review suggest that there will be a further forecast underspending of £763k in
2009/10. Just under half of this underspend (£360k) arises from lower staff costs the reasons for which have already been commented on. The balance arises across a range of budget headings with a small number of offsetting increases in expenditure.
Most of the forecast variances do not impact on 2010/11. This is because the staffing budget (75% of spend) for 2010/11 is drawn up from a zero base reflecting the numbers of staff planned to be employed. Other favourable variances on financing items and operational income reflect one-off gains in the current year.
PAY COSTS
Firefighter pay has been impacted by two factors, firstly the fact that there are fewer firefighters, secondly the impact of the dispute with the FBU. The trend in staff numbers is shown in the chart below:
Firefighter Numbers 2009/10
960
940
920
900
880
860
840
820
800
Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10
Actual
Budget
The impact of the current dispute is forecast to continue until the end of the financial year.
The lowers levels of staff overtime are reflected in the forecast. Members should note that if the dispute continues into 2010/11 there will continue to be an underspend against the agreed budget because of the fact that firefighters will not work outside of their existing rota pattern. For other staff groups some degree of savings is also expected. The saving in 2009/10 on retained firefighters arises from lower activity levels and a delay in increasing the level of training commitment to the increase agreed in September.
NON STAFF COSTS
The most significant chang e is a reduction of £100k in gas costs following agreement of a new supply contract in the autumn of 2009. One offsetting factors is an increase in insurance costs of £67k. This has arisen because of a delay in the winding up of FRAML which has deferred the distribution of surplus into 2010/11 and reduced the surplus because of the costs of the winding up through the courts. Despite this delay, the overall insurance costs of the authority are now lower than before the mutual arrangements were put in place.
RISK ANALYSIS
The review of expenditure against the profiled budget is part of the overall financial control process of the Authority. In exceptional circumstances it allows for budget virements to ensure that underspending against budget heads can be utilised to fund expenditure

Agenda Item 5
EFA/032/10
Page 6 against other priorities. If virements are not made there is a risk that the authority will miss out on opportunities to improve performance and meet key objectives during the year.
The Authority ’s reserves are towards the upper end of their target range and the Authority is able to fund short term fluctuations in activity from them when necessary.
LEGAL IMPLICATIONS
There are no direct legal implications from this report.
FINANCIAL IMPLICATIONS
The financial implications are set out in the report.
USE OF RESOURCES
Further reviews of the forecast are carried out on a regular basis to enable the opportunity to fund priorities. The lower forecast reflects the continued down ward pressure on expenditure and on the delivery of ef ficiencies in all aspect of the Authority’s expenditure base. Officers have implemented a requirement to review and justify all posts prior to the recruitment of replacement staff when individuals leave or are promoted. Monthly reviews with budget holders are carried out by finance staff to support this.
.
LOCAL GOVERNMENT (ACCESS TO INFORMATION) ACT 1985
List of background documents
Proper Officer:
Contact Officer:
Finance Director & Treasurer
Mike Clayton, Essex Fire Authority, Kelvedon Park, Witham, CM8 3HB
01376 576000
E-mail: mike.clayton@essex-fire.gov.uk

Appendix 1 to EFA/032/09
Page 7
SUMMARY MANAGEMENT ACCOUNTS – JANUARY2010
Essex County Fire & Rescue Service
Description
Firefighters
Firefighters - Retained Duty System
Control
Support Staff
Total Employment Costs
Training
Employee Support Costs
Travel & Subsistence
Support Costs
Property Maintenance
Utilities
Rent & Rates
Equipment & Supplies
Communications
Information Systems
Transport
Premises & Equipment
Establishment Expenses
Insurance
Professional Fees & Services
Democratic Representation
Agency Services
Other Costs & Services
Firefighters' Pension Scheme
Lease & Interest Charges
Depreciation
Asset management revenue account
Minimum Revenue Provision
Financing Items
Operational income
Contributions to/ (from) General Balances
Total Net Financing Requirement
Revenue Support Grant
National Non-Domestic Rates
Council Tax Collection Account
Council Tax
Total Funding
1,928
545
(545)
0
1,928
(2,732)
0
55,375
(3,698)
(23,715)
(216)
(34,808)
(62,438)
Actual to
Date
£'000
32,330
3,778
1,344
7,424
44,877
Variance
(Under)/
Overspent
£'000
58
(154)
(8)
(110)
(214)
Variance
(Under)/
Overspent
%
0
(4)
(1)
(1)
(0)
294
977
602
1,872
1,220
161
1,316
1,282
1,053
797
857
6,685
(167)
95
(57)
(129)
(232)
(266)
(3)
(153)
85
(117)
(208)
(895)
(36)
11
(9)
(6)
(16)
(62)
(0)
(11)
9
(13)
(20)
(12)
656
687
865
119
57
2,384
361
(125)
427
(123)
16
(6)
189
(73)
(16)
++
(12)
16
(9)
9
(17)
(77)
545
(545)
0
(77)
(579)
0
(1,779)
0
0
6
(6)
0
(4)
++
++
-
(4)
27
-
(3)
-
-
(3)
0
(0)
2,909
3,178
(3,178)
2,082
4,991
(2,808)
1,127
73,096
(5,918)
(25,638)
(255)
(41,285)
(73,096)
Updated
Budget
2009/10
£'000
38,842
5,136
1,629
9,103
54,710
553
1,046
861
2,460
1,776
616
1,352
1,715
1,128
956
1,189
8,732
1,100
417
1,295
137
166
3,114
770
Forecast
2009/10
£'000
38,761
4,968
1,600
9,021
54,350
498
1,110
805
2,413
1,782
516
1,337
1,764
1,140
972
1,143
8,653
1,013
483
1,285
157
166
3,104
770
2,764
3,178
(3,178)
2,082
4,846
(2,931)
1,890
73,096
(5,918)
(25,638)
(255)
(41,285)
(73,096)