(Public Pack)Agenda Document For

Public Document Pack

To: All Members of the Authority

J. Henshaw LLB (Hons) Clerk to the Authority

Tel: 0151 296 4000 Extn: 4112 Helen Peek

Your ref: Our ref HP/DM Date: 19 February 2014

Dear Sir/Madam,

You are invited to attend the MERSEYSIDE FIRE AND RESCUE AUTHORITY

BUDGET MEETING to be held at 1.00 pm on THURSDAY, 27TH FEBRUARY,

2014 in the Wirral Suite at Service Headquarters, Bridle Road, Bootle, L30 4YD.

Yours faithfully,

Clerk to the Authority

Encl.

Merseyside Fire & Rescue Service Headquarters, Bridle Road, Bootle, Merseyside L30 4YD Fax: 0151 296 4144 Legal Services 0151 296 4122, Democratic Services: 0151 296 4112

MERSEYSIDE FIRE AND RESCUE AUTHORITY

AUTHORITY BUDGET MEETING

27 FEBRUARY 2014

AGENDA

Members

Dave Hanratty (Chair) Les Byrom (Vice-Chair) Linda Maloney (Vice-Chair) Robbie Ayres Vi Bebb Andrew Blackburn Roy Gladden Ted Grannell John Kelly Jimmy Mahon Pat Moloney Barbara Murray Tony Newman Steve Niblock Lesley Rennie Denise Roberts Jean Stapleton Sharon Sullivan

1. Preliminary Matters The Authority is requested to consider the identification of:

a) declarations of interest by individual Members in relation to any item of business on the Agenda

b) any additional items of business which the Chair has determined should be considered as matters of urgency; and

c) items of business which may require the exclusion of the press and public during consideration thereof because of the possibility of the disclosure of exempt information.

2. Minutes of the Previous Meeting (Pages 1 - 4) The Minutes of the previous meeting of the Authority, held on 11 th February 2014; are submitted for approval as a correct record and for signature by the Chair.

3. FINANCIAL REVIEW 2013/14 – Apr il to December (Pages 5 - 40)

(CFO/010/14) To consider Report CFO/010/14 of the Deputy Chief Executive, concerning the financial position, both revenue and capital, for the Authority for the period April to December 2013.

4. Outcomes fro m Station Mergers Engagement (Pages 41 - 102) (CFO/011/14) To consider Report CFO/020/14 of the Deputy Chief Fire Officer, concerning the outcomes from the stakeholders/ public engagement related to station mergers (and other operational response) options.

5. Merseyside Fire and Rescue Authority Budget and Financial Plan 2014/2015 - 2018/2019 (Pages 103 - 196) (CFO/020/14) 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.

6. Consultation from DCLG: Openness of Local Government Bodi es Draft Regulations 2014 (Pages 197 - 212) (CFO/021/14) To consider Report CFO/021/14 of the Clerk to the Authority, concerning a response to DCLG in respect of Draft Regulations on openness in Local Government.

------If any Members have queries, comments or require additional information relating to any item on the agenda please contact Committee Services and we will endeavour to provide the information you require for the meeting. Of course this does not affect the right of any Member to raise questions in the meeting itself but it may assist Members in their consideration of an item if additional information is available.

Refreshments

Any Members attending on Authority business straight from work or for long periods of time, and require a sandwich, please contact Democratic Services, prior to your arrival, for arrangements to be made.

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Page 4 Agenda Item 2

MERSEYSIDE FIRE AND RESCUE AUTHORITY

11 FEBRUARY 2014

MINUTES

Present: Cllr Dave Hanratty (Chair) Councillors Les Byrom, Linda Maloney, Robbie Ayres, Vi Bebb, Andrew Blackburn, Ted Grannell, John Kelly, Jimmy Mahon, Pat Moloney, Barbara Murray, Tony Newman, Steve Niblock, Lesley Rennie and Denise Roberts

Also Present : Anthony Boyle (Independent Person)

Apologies of absence were received from: Cllr Roy Gladden, Cllr Jean Stapleton and Cllr Sharon Sullivan

1. Preliminary Matters

The Authority considered the identification of any declarations of interest, matters of urgency or items that would require the exclusion of the press and public due to the disclosure of exempt information.

Resolved that:

There were;

a) no declarations of interest were made by individual Members in relation to any item of business on the Agenda

b) no additional items of business were determined by the Chair to be considered as matters of urgency; and

c) no items of business required the exclusion of the press and public during consideration thereof because of the possibility of the disclosure of exempt information.

2. Minutes of the Previous Meeting

Members considered the Minutes of the previous meeting.

Resolved that:

The Minutes of the previous meeting of the Authority, held on 3 rd December 2013, were approved as a correct record and signed accordingly by the Chair.

3. Minutes of the Member Development Group

The Authority considered the Minutes of the Member Development Group meeting held on 10 th January 2014.

Page 1

Resolved that:

The Minutes of the Member Development Group meeting held on 10 th January 2014 be noted.

4. Local Government Subscription for 2014/15

Members considered report CFO/013/14 of the Deputy Chief Executive, relating to the continued membership of the Local Government Association.

Discussion took place regarding the value of the Authority’s affiliation with the Local Government Association.

Resolved that:

a) Continued membership of the Local Government Association be approved;

b) The 2.5% loyalty discount offered by the Local Government Association for Members who are not on notice, alongside the existing 2.5% prompt payment discount to Authorities who pay the annual subscription in full by 30 th June 2014 be noted, and;

c) The offer of the discounted subscription, for 2014/15, of £10,460 plus VAT be accepted, and the Democratic Services Manager be instructed to raise purchase order and make subscription payment, before 30 th June 2014.

5. Revised Local Government Pension Scheme 2014

Members considered report CFO/014/14 of the Deputy Chief Executive, advising the Authority of significant changes to the revised Local Government Pension Scheme and proposals to implement the new scheme.

Resolved that:

a) The changes to the Local Government Pension Scheme (LGPS) brought about by recent legislation be noted, and;

b) The proposals to ensure the scheme is implemented by 1 st April 2014 be approved.

Page 2 6. Feedback From Members Following Attendance At Events

Members considered report CFO/015/14 of the Clerk to the Authority, regarding the benefits of Members providing feedback following their attendance at conferences and events; and request to endorse the continued use of the feedback form devised for such use.

Resolved that:

a) The value to the Authority of Members providing feedback following their attendance at conference and events be noted.

b) Members be encouraged to complete and submit the feedback form to the Democratic Services Manager, as soon as possible following attendance at events to enable complete records to be captured, and the form to be made available for Members to complete ‘on line’, to speed up the process, and;

c) The recommendation of the Member Development Group to the submission of a report to the Authority on an annual basis, providing an overview of feedback received from Members throughout the preceding year (as contained within section 2 of the minutes at Item 3 on this Agenda), be approved.

7. Outcome of Members Scrutiny Training and Forward Work Plan

Members considered report CFO/015/14 of the Clerk to the Authority, detailing the outcomes of the three workshop groups during the Members post regulation scrutiny training held on 14 th January 2014, with regard to setting a forward work plan for Performance and Scrutiny Committee for the Municipal year 2014/15.

Resolved that:

a) The contents of the report be noted;

b) The topics identified within the feedback from the 3 working groups during Members Scrutiny Training be included in to a forward work plan for scrutiny during the municipal year of 2014/15;

c) Members consider areas of reform in line with the Strategic Direction of the Authority, and advise the Democratic Services Manager of any additional topics they wish to be included in the Authority’s Scrutiny forward work plan; and,

d) The forward work plan be submitted to the next meeting of the Performance and Scrutiny Committee, to enable the prioritisation of the Plan to be considered for Scrutiny work to be conducted during the municipal year of 2014/15.

Page 3

Date of next meeting Tuesday, 6 May 2014

Signed:______Date:______

Page 4 Agenda Item 3

MERSEYSIDE FIRE AND RESCUE AUTHORITY

MEETING OF THE: AUTHORITY BUDGET MEE TING

DATE: 27 FEBRUARY 2014 REPORT CFO/010/14 NO: PRESENTING DEPUTY CHIEF EXECUTI VE OFFICER RESPONSIBLE KIERAN TIMMINS REPORT IAN CUMMINS OFFICER: AUTHOR: OFFICERS SMG CONSULTED: TITLE OF REPORT: FINANCIAL REVIEW 201 3/14 – APRIL TO DECEMBER

APPENDICES: APPENDIX A 1: 2013/14 Revenue Budget Movements Summary APPENDIX A2: Budget Movement on Reserves 2013/2014 APPENDIX A3: 2013/14 Fire Service Revenue Budget Movements Summary APPENDIX A4 2013/14 Corporate Service Revenue Budget Movements Summary APPENDIX B: Capital Programme 2013/2014 APPENDIX C: Updated 2013/2014 – 2017/2018 Capital Programme APPENDIX D: Qtr 3 Write-Offs

Purpose of Report

1. To review the financial position, revenue and capital, for the Authority for 2013/14. The Authority receives regular comprehensive financial reviews during the year which provide a full health check on the Authority’s finances. This report covers the period April to December 2013.

Recommendation

2. That Members: a) Approve the 2013/14 budget amendments as set out in this report; and b) Approve the utilisation of the £1.500m favourable revenue position to increase in the smoothing reserve in light of the future financial challenge facing the Authority; and c) Instruct the Deputy Chief Executive to continue to work with budget managers to maximise savings in 2013/14.

Page 5 Executive Summary

Executive Summary

Revenue : The Authority has a detailed medium-term financial plan. The key elements of this are :- - To control Council Tax - Continue with its modernisation programme and deliver the Authority’s mission of achieving Safer Stronger Communities – Safe Effective Firefighters - To deliver the required savings through efficiencies of which most are employee related.

The Authority is on target to deliver the 2013/14 budget savings in cash terms and is progressing well with the required structural changes in its workforce to maintain the required savings on a permanent basis.

The total budget requirement remains at the original budget level of £66.721m, (appendix A1 – A4 outlines in detail all the revenue budget and reserve movements).

The Authority has a strategy of maximising savings and delivering its savings plan as early as possible in order to increase reserves as a hedge against the future financial challenges. Overall this report has identified that the Authority is £1.5m “ahead of target” with its saving plan. Members are asked to approve utilising this saving to fund an increase in the smoothing reserve in light of the future financial challenge facing the Service. The Deputy Chief Executive is continuing to work with budget holders to maximise savings in 2013/14.

Capital : The capital programme planned spend has increased by £0.842m as a result of amendments to schemes approved by members. As most of the change is funded by specific grant or other non-borrowing funding the level of borrowing required has actually fallen by £0.081m. The revised Capital Programme is outlined in Appendix B and C.

Reserves & Balances : The general balance remains unchanged at £2.894m. All movements in earmarked reserves are outlined in Appendix A2.

Treasury Management : Short-term interest rates have remained at 0.50% as expected. No new long term borrowing has been arranged and the Authority has continued its policy of reducing investments and only taking short term borrowing to cover cash flow requirements.

Financial Processes : Performance in Financial processes remains strong.

Page 6 Introduction and Background

Introduction & Background

3. The purpose of this report is to enable the Authority to monitor its income and expenditure levels against its budget on a regular basis throughout the year to ensure effective financial management.

4. This report is the review of the Authority’s position up to the end of the December of the financial year 2013/14 (April – December 2013).

5. In order to ensure that the financial reviews provide a regular and effective financial health check on all aspects of the Authority’s finances the following structure has been adopted.

Financial Review Structure

Section Content

A Current Financial Year Review (Revenue Budget, Capital Programme and Movement on Reserves)

B Treasury Management Review

C Internal Audit

D Financial Process Monitoring/Performance Indicators

(A) Current Financial Year Review – 2013/14

6. The purpose of the financial review report is to provide members with an assurance that the approved budget remains robust and that the current forecast of expenditure can be contained within the available resources. If actual expenditure or income for the year is inconsistent with the current budget then the report will, if necessary, identify the appropriate corrective action.

Revenue Position:

Revenue Budget Movements: 7. The attached Appendix A to this report summarises the revenue budget movements since the last financial review report. The net budget requirement remains at £66.721m which is consistent with the original budget.

8. There have been a number of budget adjustments with no net impact because they are either self-balancing virements within department budgets or budget increases financed by reserves. The net drawdown from reserves for the period was £0.716m, of which; • £0.327m was the planned allocation from the capital investment reserve to fund approved capital programme changes. In particular variations to the

Page 7 Joint Command and Control Centre (JCC) £0.166m and the new Time & Resource Management System £0.161m; and • £0.351m was from the ill health penalty reserve to fund the payment of the penalties arising from firefighter ill health retirements.

9. Update on 2013/14 Elements of Financial plan yet to be Achieved: The Authority approved total savings of £19.3m (Phase 1 & 2) as part of the 2011/12 - 2017/18 financial plans. Of these £14.3m was expected to be fully implemented by 2013/14. This has largely been achieved with just £0.329m yet to be formally implemented. Plans are well advanced to deliver these remaining savings (and in cash terms the total value of savings will be delivered in the year). The outstanding options are;

Phase 1: • Estates £0.154m; restructuring the outsourcing of facilities management work was anticipated to save £0.250m p.a. The project was deferred for a number of reasons but has now re-commenced and is expected to be finalised in the next 12 months. In the mean-time the Service has reviewed the cleaning function in-house and has now implemented a revised staffing structure saving £0.1m. This leaves £0.150m to be found from the restructuring of contracts for facilities management function. Phase 2: • Cuts in Support Costs £0.175; the balance reflects some outstanding Service business re-engineering work that is required before the remaining savings can be formally implemented. It was always anticipated that the full implementation would take two years

Table A below summarises the position in terms of the implementation of the approved savings at the time of writing this report:

Progress in allocating out Phase 1 & 2 Approved Saving Options 2013/14 2014/15 2015/16 2016/17 £'000 £'000 £'000 £'000

Phase 1: 2011/12-2012/13 Approved Savings: -9,200 -9,200 -9,200 -9,200 Approved Saving Options yet to be formally implemented: Outsource Estates function -154 -154 -154 -154 Value of Saving Optons yet to be formally implemented -154 -154 -154 -154

Phase 2 2013/14 - 2014/15 Approved Savings: -5,125 -10,060 -10,002 -10,077 Approved Saving Options yet to be formally implemented: Phase 2 Cuts in Support Savings -175 -405 -405 -405 Income Generation 0 0 -100 -100 Value of Saving Options yet to be formally implemented -175 -405 -505 -505

Total Value of Approved Savings Options -14,325 -19,260 -19,202 -19,277

2011/ 12 - 2014/15 Approved Savings yet to be formally implemented: -329 -559 -659 -659

Page 8 Actual staff numbers are continually monitored to ensure the Service continues to deliver in “cash” terms the required saving target.

Revenue Forecast Position: 10. The Authority is expecting to receive further grant cuts in 2014/15 and 2015/16 based on the provisional local government finance settlement. Therefore, as part of its approved strategy, the Authority has directed Officers to maximise savings in the year to contribute towards the building up of reserves. Such reserves can then be used as part of an implementation and risk management strategy to deliver savings. The paragraphs above discuss how options have been formally finalised and incorporated into the Authority budgets. The Authority then monitors actual expenditure against these budgets. The paragraphs below discuss actual expenditure against budget and identify additional one-off savings of £1.500m;

Employee Costs Employee costs make-up nearly 80% of the Authority’s revenue budget and is the most risk critical area of the financial plan. This is therefore monitored extremely closely.

A number of variations have been identified:- • Firefighter retirements are slightly ahead of schedule compared to the forecast profile adopted for the financial strategy. • Staff turnover within some green book posts has resulted in short term vacancies • Not all post-holders are at the top of their budgeted grade.

Therefore the employee forecast now anticipates a small favourable variance, and direct staff costs are expected to be below budget by approximately £0.655m or -1%.

A small favourable variance on indirect employee costs (including the 2013/14 ill health penalty provision and training allowances) delivers a saving of approximately £0.100m.

Members will also wish to note that in particular the revised staffing model has been fully implemented including the move to 28 appliances and a restructured shift systems and work routine for all firefighters. This will increase productivity which offsets to some degree the impact of government funding cuts.

The Deputy Chief Executive will continue to monitor actual staff numbers during the year to ensure the Service continues to deliver in “cash” terms the required saving target and report back in more detail on savings that are ahead of target as the year progresses.

Other Non-Employee Revenue Costs The Deputy Chief Executive is continuing to work with budget holders to maximise savings in 2013/14. The latest indications are that some additional savings may be delivered through careful management through the year; specifically;

Page 9 • Supplies and services – the budget for professional services is forecast to save £0.200m. Other minor supply budget variances in lines such as administrative costs, training, cleaning supplies, travel subsistence, and subscriptions; have contributed £0.030k increasing the overall forecast saving to £0.230m. • Central support services – External Audit have reduced the audit fee in light of the revised audit schedule in recent years resulting in a £0.025m saving. Small one-off savings on contracts have increased the overall forecast saving to £0.040m. • The Authority funds most of its capital expenditure through borrowing and the resulting debt repayments, (Minimum Revenue Provision, MRP), and interest costs are charged to the revenue account. As a result of the re-phasing of £3.5m of capital schemes from 2012/13 into later years and treasury management policies which seek to delay borrowing by minimising investments, have resulted in a forecast saving on debt and interest payments of £0.500m. • Income- a small increase in secondment income of £0.025m is expected this year. • Interest on Balances - as members may be aware current interest rates on investments is extremely low, often less than 0.5%, and in line with the approved treasury management strategy the Authority seeks to delay borrowing by keeping investment holdings as low as possible. Whilst this has contributed to the reduced borrowing costs above it means that there is likely to be a reduced investment income that may be below that assumed in the budget of £0.100m. • Contingency provision for pay and prices – 2013/14 pay awards have been consistent with that assumed in the financial plan of 1%. In addition an attempt has been made to absorb, at least in the first instance, any non-employee inflation from within the relevant budget line. As a consequence the estimated saving on the contingency for prices provision in 2013/14 is £0.050m

Summary of Revenue Forecast Position : The Authority has made good progress in implementing the approved budget saving options and required organisational structure changes with only a small number yet to be formally implemented. Firefighter retirements are slightly ahead of that assumed in the financial plan and therefore the Service continues to deliver in “cash” terms it’s required saving target.

Overall the latest forecast has identified a revenue saving of £1.500m. The Deputy Chief Executive is continuing to work with budget holders to maximise savings in 2013/14. Table B overleaf summarise the revenue year-end forecast position based on spend to the end of December 2013:

Page 10 Table B: Anticipated Year-End Revenue Position FIRE ACTUAL CORP MGT TOTAL FORE- VARI- SERVICE as at BUDGET BUDGET CAST ANCE BUDGET 31.12.13 £'000 £'000 £'000 £'000 £'000 £'000 Expenditure Employee Costs 52.423 0.394 52.817 36.681 52.062 -0.755 Premises Costs 3.176 0.000 3.176 1.793 3.176 0.000 Transport Costs 1.735 0.000 1.735 1.233 1.735 0.000 Supplies and Services 4.472 0.069 4.541 2.379 4.311 -0.230 Agency Services 4.557 0.000 4.557 3.739 4.557 0.000 Central Support Services 0.277 0.129 0.406 0.272 0.366 -0.040 Capital Financing 8.787 0.000 8.787 0.000 8.287 -0.500 Income -5.933 0.000 -5.933 -3.794 -5.958 -0.025 Net Expenditure 69.494 0.592 70.086 42.303 68.536 -1.550 Contingency Pay&Prices 0.230 0.230 0.000 0.180 -0.050 Cost of Services 69.724 0.592 70.316 42.303 68.716 -1.600

Interest on Balances -0.367 -0.367 0.014 -0.267 0.100 Movement on Reserves -3.228 -3.228 0.000 -3.228 0.000

Total Operating Cost 66.129 0.592 66.721 42.317 65.221 -1.500

Capital Forecast Position:

11. The last financial review report (CFO/129/13) approved a 5 year capital programme worth £37.934m. This has now been updated for approved scheme additions and changes during the third quarter of the year of £0.842m. Although the level of planned expenditure has increased as most of it is funded by specific resources the required level of borrowing has actually reduced by £0.081m. The variations in the programme are: • “New Breathing Apparatus Sets (CFO/140/13)”, The Authority approved the purchase of new breathing apparatus sets including telemetry at a gross cost of £0.352m of which £0.133m is being funded by a Government grant. • “Fire Risk Management in Residential Blocks (CFO/135/13)”, The Authority approved a £0.200m capital fund to support the installation of fire suppression and engineered solutions to enhance the safety of firefighters and residents in purpose built blocks of flats. The scheme will be funded from a drawdown from the capital investment reserve. • “Purchase of a Time Resource Management Application (CFO/132/13)”, The Authority approved the purchase of a replacement time resource management system to assist with operational workforce planning. The potential capital cost was estimated at £0.200m of which £0.161m has been funded from the capital reserve and the rest from savings within the overall ICT capital programme. • “Analytical Computer Tool for Prevention work”, £0.090m was earmarked in the Capital Reserve to fund this project that would assist officers in managing in monitoring performance in delivering the IRMP, local IRMPS and other service and functional projects. £0.040m had already been drawn down and in this quarter the balance, £0.050m, has now been drawn down.

Page 11 • “Joint Command and Control Centre(CFO/004/14)”, Members approved additional investments in the JCC scheme. Overall costs increased by £0.329m, of which the Police would fund £0.163m. The Authority investment in a relocated reception which will deliver revenue savings will be financed by the capital reserve. • Re-phasing of £1.468m of schemes from 2013/14 into future years to reflect the latest scheme deliver times particularly for building schemes such as Formby LLAR replacement accommodation which has slipped due to alternative options being identified and requiring appraisal and the procurement of special vehicles such as the prime movers as officers are currently appraising the replacement options available to the Service. • The service now targets those households most at risk for free smoke alarm installations. In addition the Service offers other more affluent and lower fire risk households a charged fire alarm installation service. The latest estimated spend on smoke alarms forecasts a saving of £0.100m and a reduction in installation costs of £0.150m. Therefore overall the reduction in smoke alarms & installation costs is £0.250m. In addition income received from charged services is expected to fund £0.050m of smoke alarms per annum, reducing the anticipated borrowing costs. • Other minor movements between schemes within the approved programme have been actioned to reflect small variations in spend.

12. The changes are summarised in Table C below. The revised detailed capital programme is attached as Appendix B (2013/14 Capital Programme) and Appendix C (2013/14–2017/18 Capital Programme) to this report.

TABLE C Movement in the 5 Year Capital Programme Total 2013/14 2014/15 2015/16 2016/17 2017/18 Cost Expenditure £'000 £'000 £'000 £'000 £'000 £'000 2013/14 re-phasings 0.0 -1,467.5 1,589.0 -81.5 -20.0 -20.0 New Schemes; BA Sets Replacement & Telementary(CFO/140/13) 352.0 352.0 Fire Risk Mgt in Residential Blocks (CFO/135/13) 200.0 200.0 Time Resource Mgt System (CFO/132/13) 161.0 161.0 Amendments to Approved Schemes; Analytical Tool project (IT040) 50.0 50.0 JCC SHQ build scheme (CFO/004/14) 328.6 328.6 Reduction in Smoke Alarm spend / Installation -250.0 -250.0 841.6 -1,227.9 2,191.0 -81.5 -20.0 -20.0 Funding External Contributions M'side Police (JCC) 163.0 163.0 Capital Reserve 576.6 326.6 250.0 Capital spend funded from the Revenue Budget 50.0 -150.0 50.0 50.0 50.0 50.0 Grants: Government grant to fund Breathing Apparatus scheme 133.0 133.0 Borrowing: Re-phasing of approved schemes into future yrs 0.0 -1,467.5 1,589.0 -81.5 -20.0 -20.0 Reduction in Smoke Alarm expenditure -100.0 -100.0 Non-grant element of Breathing Apparatus scheme 219.0 219.0 Reduction in Smoke Alarms funded by borrowing -200.0 -50.0 -50.0 -50.0 -50.0 841.6 -1,227.9 2,191.0 -81.5 -20.0 -20.0

Page 12

Use of Reserves:

13. The analysis in Appendix A2 outlines the £0.716m movement on reserves during the third quarter of 2013/14. £0.351m relates to the planned use of the ill health penalty reserve to cover the penalty payment related to ill health retirements. £0.327m was the planned allocation from the capital investment reserve to fund approved capital programme changes (JCC build £0.166m and the new Time Resource Management system £0.161m discussed above). The balance, £0.038m relates to the drawdown from the New Dimensions grant reserve to fund operational investment in equipment and supplies.

The general revenue reserve has remained unchanged at £2.894m.

This report is proposes utilising the £1.500m forecast revenue saving to increase the smoothing reserve in light of the future financial challenges.

(B) Treasury Management Review

14. The Authority continues to “buy in” Treasury Management from Liverpool City Council. The following paragraphs reflect Treasury Management activities in the period April to December 2013/14.

15. Prospects for Interest Rates Optimism in growth forecasts has continued and a modest and sustained recovery over the next three years is indicated by the Bank of England. Inflation forecasts are also still benign. However, there is still a relatively weak outlook for economic growth and the prospects for any increase in Bank Rate before 2015 are low. Short-term rates have remained at 0.5% in line with the forecast for them to remain on hold for the rest of the financial year.

It was expected that there would be upward pressure on longer term rates due to a high volume of debt issuance and improved prospects of a return to economic growth. Long term PWLB rates rose by 0.25% during the first quarter then remained flat in the second quarter. Forecasts are for higher PWLB rates later in the year as a result of an improved economic recovery.

The strategy indicated that the overall structure of interest rates whereby short term rates are lower than long term rates was expected to remain throughout 2013/14. In this scenario, the strategy would be to reduce investments and borrow for short periods and possibly at variable rates when required.

16. Capital Borrowings and the Portfolio Strategy The borrowing requirement comprises the expected movements in the Capital Financing Requirement and reserves plus any maturing debt which will need to be re-financed. The Authority does not envisage that any new long term borrowing will be required in 2013/14. Current market conditions continue to be

Page 13 unfavourable for any debt rescheduling.

17. Annual Investment Strategy The investment strategy for 2013/14 set out the priorities as the security of capital and liquidity of investments. Investments are made in accordance with CLG Guidance and CIPFA Code of Practice. Investments are made in sterling with an institution on the counterparty list.

Extreme caution has been taken in placing investments to ensure security of funds rather than rate of return. The use of deposit accounts with high rated or nationalised banks and AAA rated money market funds has enabled reasonable returns in a low interest rate environment. In the period 1st April to 30 December 2013 the average rate of return achieved on average principal available was 0.71%. This compares with an average seven day deposit (7 day libid) rate of 0.36%.

The Authority had investments of £13.6m as at 27 December 2013, (most of which is due to the carry forward of £17.4m of investments from 2012/13 and the receipt of £19m of firefighters pension grant in July 2013):

ANALYSIS OF INVESTMENTS END OF December 2013

Bank / Building Institution Credit Rating MM Fund* Other Society

£ £ £ Ignis Liquidity Fund AAA 1,600,000 Handelsbanken Inst Access A 2,000,000 West Bromwich B Soc Unrated 1,000,000 HBOS 12 Month FTD A 4,000,000 Nationwide BS A 2,000,000 Skipton Building Society Unrated 1,000,000 Newcastle Building Society Unrated 1,000,000 Nottingham Building Soc Unrated 1,000,000

Totals 1,600,000 6,000,000 6,000,000

Total Current Investments 13,600,000 *MM Fund - Money Market Funds -these are funds that spread the risk associated with investments over a wide range of credit worthy institutions.

18. External Debt Prudential Indicators The external debt indicators of prudence for 2013/14 required by the Prudential Code were set in the strategy as follows:

Authorised limit for external debt: £82 million Operational boundary for external debt: £48 million

Page 14

Against these limits, the maximum amount of debt reached at any time in the April to December 2013/14 was £45.1 million.

19. Treasury Management Prudential Indicators

The treasury management indicators of prudence for 2013/14 required by the Prudential Code were set in the strategy as follows:

a) Interest Rate Exposures

Upper limit on fixed interest rate exposures: 100% Upper limit on variable interest rate exposures: 50%

The maximum that was reached in the first half of the financial year 2013/14 was as follows:

Upper limit on fixed interest rate exposures: 100% Upper limit on variable interest rate exposures: 0%

b) Maturity Structure of Borrowing

Upper and lower limits for the maturity structure of borrowing were set and the maximum and minimum that was reached for each limit in the period April to December 2013/14 was as follows: -

Maturity Period Upper Lower Maximum Minimum Limit Limit Under 12 months 80% 0% 3% 0% 12 months and within 24 months 50% 0% 3% 2% 24 months and within 5 years 50% 0% 9% 7% 5 years and within 10 years 50% 0% 10% 10% 10 years and above 80% 0% 77% 75%

c) Total principal sums invested for periods longer than 364 days

The limit for investments of longer than 364 days was set at £2 million for 2013/14. No such investments have been placed during 2013/14.

(C) Internal Audit 20. The Authority continues to “buy in” Internal Audit services from Liverpool City Council. Most audit work is carried out in the last quarter of the year to fit in with the Service work demands and provide relevant data for the year. Since the last financial review no new internal audit reviews have been completed although a number have commenced.

Page 15

(D) Financial Process Monitoring / Performance Indicators 21. To ensure the internal financial processes of the Authority are operating effectively, for example payroll, debt collection and the payment of invoices, a suite of performance indicators have been developed that now feed into the financial review. At present indicators relate to: • Payment of invoices, • Discounts obtained from prompt payments; • Debtors

22. Prompt Payment of Invoices Prompt payment of invoices was previously a statutory indicator under the Best Value legislation. While there is no longer a requirement for the Authority to report its prompt payment performance under BVPI8, the number of undisputed invoices paid within 30 days of receipt continues to be analysed to assess the effectiveness of the various Accounts Payable systems and procedures. Information about the prompt payment of invoices has now been incorporated with the suite of local performance indicators (LPI128) and is reported monthly.

23. In July 2009 the Authority joined the Prompt Payment Code (PPC). The PPC gives notice to suppliers of the Authority’s commitment to pay promptly. In the current economic climate the Government is keen for all businesses and local authorities to pay suppliers promptly. By paying promptly the Authority is able to make its contribution to improving the cash flow position of its supplier base, particularly small businesses, that rely on payments made promptly to keep them in business. Consistent with that objective, considerable effort has been made to develop a range of administrative processes to enable the Authority to comply with its obligations under the PPC which is deemed to be best practice.

24. A comparison of the third quarter performance over previous years confirms the effectiveness of systems and procedures that continue to enable the Authority to pay invoices (some 2,582 in the quarter ended December 2013) promptly.

2009/10 100.0% 2010/11 99.9% 2011/12 99.9% 2012/13 99.8% 2013/14 100.0%

25. The target for prompt payment in 2013/14 is 100%. The third quarter’s results confirm the Service continues to respond quickly and efficiently to requests for payment from suppliers with 100% of invoices being paid within the required timeframe.

26. We have continued to ensure discounts due from the prompt payment of invoices are vigorously pursued. During the quarter a total of 42 invoices that attracted prompt payment discounts were paid generating savings of £709, with total savings for the year of £5,211. This is evidence of the robustness of the systems in place that are enabling the Service to take advantage of the financial savings available from suppliers.

Page 16

27. The publication of payments to suppliers for goods and services over £500 is now fully embedded. Consistent with the Government’s drive for transparency in relation to spending by all Local Authorities, details of payments to suppliers for goods and services over £500 are available on the Authority’s website in both PDF and CSV formats for the convenience of those wishing to access and interrogate the information. Payments details are now available for the period from 1 April 2009 to 31 December 2013. Payments for each month are made available as soon as possible following the closure of each accounting period and subject to verification against guidance received from Government.

28. Processing Sales Invoices and the Debt Recovery Process A number of Performance Indicators have been developed to give drive and focus to improvements to the sundry debtor process and to plot the age profile of outstanding debt. Key Performance Indicators in relation to the processing of income generation type transactions are as follows:

SIRF Generation - 100% in 35 working days from service delivery Sales invoice production -100% in 2 working days from receipt of SIRF

(Note: SIRF = Sales Invoice Request Form. SIRFs are generated by Officers to request that a customer be invoiced for goods\services received)

29. Performance against these targets for the equivalent quarter in previous years is as follows: (Cumulative)

2009/10 2010/11 2011/12 2012/13 2013/14

SIRF Generation 69% 79% 86% 84% 92% Sales invoice production 97% 100% 100% 100% 100%

30. Members will be aware that the Authority’s Financial Regulations were amended for 2010/11 to require prepayment for services where possible. It is recognised that there is a correlation between the time taken to request payment for services and payment actually being received. While every effort is made to ensure customers receive their invoice as quickly as possible it is often necessary to wait for key information (e.g. confirmation of course attendees, Payroll data etc.) that is to be included with any invoice to enable the customer to make prompt payment. In certain circumstances it is deemed cost effective to wait until all appropriate information is available before issuing a sales invoice rather than it being raised prematurely to remove the potential for a credit note to be raised and an amended invoice reissued.

31. The Age Profile of Outstanding Debt A comparison of the value of aged debts over 60 days for the first quarter can be summarised as follows:

Page 17 Number of debts 60 days+

2009/10 2010/11 2011/12 2012/13 2013/14

October 93 57 19 43 38 November 83 60 20 40 23 December 91 38 21 36 26

Value of debts 60 days+

2009/10 2010/11 2011/12 2012/13 2013/14 £’000 £’000 £’000 £’000 £’000

October 217 113 25 58 61 November 121 165 65 69 18 December 261 124 67 50 25

32. The Service raises approximately 1,100 sales invoices per year and this can equate to income of between £2m - £3.5m. The profile of accounts raised varies significantly month by month and from year to year. It therefore can lead to significant variations when comparing the same month over a five year period. However, considerable effort has been made to actively engage with customers as part of the drive to improve the aged debt profile of the Authority and the success of that effort is reflected in the data set out above. The significant reduction in the number and value of aged debts in 2013/14 is a reflection of the work undertaken by the Finance and Legal Teams to tackle aged debts though active engagement with customers in the drive to maximise income for the Authority. Consistent with that effort the number of write offs each year is small.

33. Debtor accounts under £5,000 may be written off by the Deputy Chief Executive. Six accounts have been approved for write-off under delegated powers totalling £1,805 (excl. VAT) following advice from the litigation service.

Equality and Diversity Implications

34. There are no equality and diversity implications contained within this report.

Staff Implications

35. The biggest expenditure for the Authority is staff. A number of budget options have impacted upon staff.

Legal Implications

36. The Authority is required by law to manage its financial affairs effectively.

Financial Implications & Value for Money

Page 18 37. As set out in the body of the report an overall underspending of £1.5m is identified in 2013/14.

Risk Management, Health & Safety, and Environmental Implications

38. None arising from this report.

Contribution to Our Mission: Safer Stronger Communities – Safe Effective Firefighters

39. The achievement of actual expenditure within the approved financial plan and investment in delivery of the expected service outcomes is essential if the Service is to achieve the Authority’s Mission.

BACKGROUND PAPERS

CFO/025/13 MFRA Budget and Financial Plan 2013/2014-2017/2018” Authority 26th February 2013.

CFO/115/13 Financial Review 2013/14 – April to June” Policy & Resources Committee 26 September 2013

CFO/129/13 Financial Review 2013/14 – April to September” Policy & Resources Committee 19 November 2013.

GLOSSARY OF TERMS

RESERVES Amounts set aside to meet future contingencies but whose use does not affect the Authority’s net expenditure in a given year. Appropriations to and from reserves may not be made directly from the revenue account.

PPC Prompt Payment Code

PWLB Public Works Loans Board

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Page 20 APPENDIX A1 2013/14 REVENUE BUDGET MOVEMENT SUMMARY Base Qtr 2 Reserve Qtr 3 Vire- Actual SERVICE REQUIREMENTS Budget Budget Draw- Budget ments 2012/13 2013/14 2013/14 down 2013/14 £'000 £'000 £'000 £'000 £'000 £'000 65,284 Fire Service 69,304 69,740 716 -633 69,823 548 Corporate Management 599 601 0 -9 592 0 2012 - 13 B/fwd Dynamic Staff Saving -550 -466 0 312 -154 0 2013 - 14 New Dynamic Staff Saving -1,410 -640 0 465 -175 65,832 67,943 69,235 716 135 70,086 0 Contingency for Pay/Price Changes 792 365 0 -135 230 65,832 TOTAL SERVICE EXPENDITURE 68,735 69,600 716 0 70,316 -255 Interest on Balances -332 -367 0 0 -367 65,577 NET OPERATING EXPENDITURE 68,403 69,233 716 0 69,949

Contribution to /(from) reserves Spate/Other Emergency Related Res's 1,000 Catastrophe Reserve 0 0 0 0 0

Modernisation Challenge 3,454 Smoothing Reserve 0 -250 0 0 -250 -1,446 Severance Reserve 0 -165 0 0 -165 355 Ill Health Penalty Reserve 0 0 -351 0 -351 1,000 Recruitment Reserve 0 0 0 0 0 0 SMG Reserve 100 100 0 0 100

Capital Investment -808 Capital Investment Reserve -1,818 -2,534 -327 0 -2,861 510 Equality / DDA Investment Reserve 0 0 0 0 1,420 PFI Annuity Reserve 259 0 0 259 1,000 Firefighter Safety Investment Reserve 0 0 0 0 800 Facing the Future Challenge Reserve 0 0 0 0

Specific Projects -230 Job Evaluation Reserve 0 0 0 0 0 98 Community Sponsorship Reserve 0 -94 0 0 -94 -100 Regional Reserve 0 0 0 0 0 -217 Equipment Reserve 0 0 0 0 0 -17 Contestable Research Fund Reseve 0 0 0 0 0 -285 Training Reserve 0 0 0 0 0 -196 Pre Retirement reserve 0 0 0 0 0 18 FSD Reserve 0 0 0 0 0 4 Healthy Living / Olympic Legacy 0 -54 0 0 -54 -38 Water Rescue Reserve 0 0 0 0 0 -500 Inflation Reserve 0 0 0 0 0 Ringfenced Reserves 2 F.R.E.E. Reserve 0 0 0 0 -40 Princes Trust Reserve 175 0 0 175 0 Community Youth Team Reserve 0 0 0 0 -43 Beacon Peer Project Reserve -12 0 0 -12 12 Innovation Fund Reserve 0 0 0 0 -16 Regional Control Reserve 0 0 0 0 0 Energy Reseve 36 85 0 0 85 -18 St Helens District Reserve -22 0 0 -22 237 New Dimensions Reserve 0 -38 0 -38 -1,790 Appropriation to/From Revenue Balances 0 0 0 0 0 4,166 Reserve Movement -1,682 -2,512 -716 0 -3,228 69,743 BUDGET REQUIREMENT 66,721 66,721 0 0 66,721 -41,162 Government Start-up Funding -44,032 -44,032 0 0 -44,032 Additional NNDR forecast -15 -15 -15 -105 Collection Fund Deficit -55 -55 0 0 -55 -28,476 Precept Income -22,619 -22,619 0 0 -22,619 -69,743 -66,721 -66,721 0 0 -66,721 Page 21 APPENDIX A2 Budgeted Movement on Reserves 2013/14 Original Further Qtr 1 Qtr 2 Opening Budget draw- Closing Draw- Draw- Balance Planned down Qtr Balance down down Use 3 Earmarked Reserves £'000 £'000 £'000 £'000 £'000 £'000 Spate/Emergency Related Reserves Bellwin Reserve 147 0 147 Insurance Reserve 620 0 620 Emergency planning Reserve 75 0 75 Catastrophe Reserve 1,000 0 1,000

Modernisation Challenge Smoothing Reserve 5,500 -250 5,250 Severance Reserve 902 -150 -15 737 Ill Health Penalty Reserve 599 0 -351 248 Recruitment Reserve 1,000 0 1,000 SMG Reserve 0 100 0 100

Capital Investment Capital Investment Reserve 5,836 -1,818 -232 -484 -327 2,975 PFI Annuity Reserve 2,010 259 2,269 Equality / DDA Investment Res 510 0 510 Firefighter Safety Investment Res 1,000 0 1,000 Facing the Future Challenge Res 800 0 800

Specific Projects Community Sponsorship Res 113 -94 19 Equipment Reserve 56 0 56 Contestable Research Fund Res 25 0 25 FSD Reserve 53 0 53 Healthy Living / Olympic Legacy 113 -54 59 Water Rescue Reserve 9 0 9 Inflation Reserve 1,500 0 1,500

Ringfenced Reserves F.R.E.E. Reserve 37 0 37 Princes Trust Reserve 144 250 -75 319 Community Youth Team Reserve 54 0 54 Beacon Peer Project Reserve 65 -12 53 Innovation Fund Reserve 168 0 168 Concept Knowsley 0 0 0 Regional Control Reserve 18 0 18 Energy Reseve 0 36 49 85 St Helens District Reserve 22 -22 0 New Dimensions Reserve 706 0 -38 668

Total Earmarked Reserves 23,082 -1,682 -305 -525 -716 19,854

General revenue Reserve 2,894 0 0 0 2,894

Total Reserves 25,976 -1,682 -305 -525 -716 22,748

Page 22 APPENDIX A3 2013/14 FIRE SERVICE REVENUE BUDGET MOVEMENT SUMMARY Base Qtr 2 Reserve Qtr 3 Vire- Actual SERVICE REQUIREMENTS Budget Budget Draw- Budget ments 2012/13 2013/14 2013/14 down 2013/14 £'000 £'000 £'000 £'000 £'000 £'000

EMPLOYEES Uniformed 35,142 Firefighters 35,592 35,931 -415 35,516 1,394 Control 1,220 1,230 14 1,244 2,242 Additional Hours 1,170 1,296 62 1,358 38,778 TOTAL UNIFORMED 37,982 38,457 0 -339 38,118 APT&C and Manual 8,678 APT&C 9,066 8,799 -1 8,798 364 Handymen/Cleaning 485 283 1 284 144 Catering 180 120 120 537 Transport Maintenance 558 563 563 57 Other Manual 92 93 93 222 Casuals 0 21 7 28 10,002 TOTAL APT&C/MANUAL 10,381 9,879 0 7 9,886 Other Employee Expenses 9 Rent & Lodging 3 1 1 166 Allowances 967 955 -474 481 11 Removal Expenses 2 5 5 442 Training Expenses 600 624 -25 599 0 Interview Expenses 1 0 0 910 Other Expenses 40 201 201 4 Staff Advertising 30 30 -1 29 29 Development Expenses 106 97 97 424 Employee Insurance 131 132 4 136 796 MPF Pen Fixed Rate 833 833 833 241 Enhanced pensions 46 46 46 3 SSP & SMP Reimbursements -16 -16 -16 102 Catering Expenditure 113 117 117 -477 HFRA Capitalisation Payroll 0 0 0 2,660 TOTAL OTHER EMPLOYEE EXPEND 2,856 3,025 0 -496 2,529 Pensions 1,719 Injury Pension 1,694 1,694 1,694 0 Transfer Values 0 0 0 353 Ill Health Ret charges 174 174 351 525 12 Injury Gratuity 0 0 0 2,084 TOTAL PENSIONS 1,868 1,868 351 0 2,219 53,524 TOTAL EMPLOYEES 53,087 53,229 351 -828 52,752 PREMISES 364 Building Maintenance Repairs 393 356 -9 347 216 Site Maintenance Costs 157 183 5 188 693 Energy 653 624 132 756 121 Rent 946 451 -267 184 963 Rates 946 946 232 1,178 221 Water 253 244 9 253 50 Fixtures 74 68 -4 64 29 Contract Cleaning 28 158 158 47 Insurance 61 48 48 2,704 TOTAL PREMISES 3,511 3,078 0 98 3,176 TRANSPORT 397 Direct Transport 331 360 20 36 416 27 Tunnel Fees 29 29 29 100 Operating Lease 198 203 2 205 509 Other Transport Costs 589 590 590 231 Car Allowances 118 145 3 148 318 Insurance 344 354 -7 347 0 Driving Licences 0 0 0 1,582 TOTAL TRANSPORT Page1,609 23 1,681 20 34 1,735 APPENDIX A3 2013/14 FIRE SERVICE REVENUE BUDGET MOVEMENT SUMMARY Base Qtr 2 Reserve Qtr 3 Vire- Actual SERVICE REQUIREMENTS Budget Budget Draw- Budget ments 2012/13 2013/14 2013/14 down 2013/14 £'000 £'000 £'000 £'000 £'000 £'000 SUPPLIES & SERVICES 35 Administrative Supplies 40 53 6 59 319 Operational Supplies 274 277 18 1 296 14 Hydrants 20 20 20 65 Consumables 72 75 1 76 178 Training Supplies 147 161 -7 154 92 Fire Prevention Supplies 133 162 162 37 Catering Supplies 30 49 1 50 0 Radiation Monitoring 0 0 0 344 Uniforms 418 436 -6 430 123 Printing & Stationery 164 163 3 166 12 Operating Leases 2 11 2 13 714 Professional Fees/Service 860 1,069 51 1,120 595 Communications 680 673 8 681 27 Postage 38 35 35 4 Command/Control 5 9 9 321 Computing 405 408 -6 402 254 Medicals 288 305 305 73 Travel & Subsistence 79 138 -6 132 63 Grants/Subscriptions 78 88 14 102 11 Advertising 15 37 37 19 Furniture 44 46 9 55 73 Laundry 81 81 81 33 Insurances 47 46 46 8 Hospitality 16 31 10 41 3,414 TOTAL SUPPLIES & SERVICES 3,936 4,373 18 81 4,472 AGENCY SERVICES 76 Super Fund Admin 73 73 73 1,535 ICT Service Provider 1,434 1,460 -1 1,459 197 Third Party Payments (FSN) 197 197 197 458 ICT Managed Suppliers 459 472 6 478 1,177 PFI Unitary Charge(Int/Principal/Op Costs) 0 2350 2350 3,443 TOTAL AGENCY SERVICES 2,163 4,552 0 5 4,557 CENTRAL EXPENSES 227 Finance & Computing 241 241 36 277 0 Legal & Member Services 0 0 0 0 Property Management 0 0 0 0 Central Expenses 0 0 0 227 TOTAL CENTRAL EXPENSES 241 241 0 36 277 CAPITAL FINANCING 5,199 PWLB Debt Charges 5,722 5,722 5,722 83 MRB Debt Charges 76 76 76 22 Finance Lease Debt Charges 23 23 23 0 Debt Management 0 0 0 1,954 Revenue Contribution to Capital 1,868 2,636 327 3 2,966 7,258 TOTAL CAPITAL FINANCING 7,689 8,457 327 3 8,787 72,152 TOTAL EXPENDITURE 72,236 75,611 716 -571 75,756 INCOME 3,722 Specific Grants 1,168 3,411 -3 3,408 16 Sales 0 2 5 7 1,904 Fees & Charges 950 1,518 -78 1,440 7 Reinforcing moves 5 5 5 3 Rents etc 2 2 193 195 879 Recharges Secondments 456 536 536 108 Contributions 105 105 78 183 106 Recharges Internal 114 109 6 115 123 Other Income 132 134 -126 8 0 UKRO Income 0 49 -13 36 6,868 TOTAL INCOME Page2,932 24 5,871 0 62 5,933 65,284 NET EXPENDITURE 69,304 69,740 716 -633 69,823 APPENDIX A4 2013/14 CORPORATE SERVICES REVENUE BUDGET MOVEMENT SUMMARY Base Qtr 2 Reserve Qtr 3 Vire- Actual SERVICE REQUIREMENTS Budget Budget Draw- Budget ments 2012/13 2013/14 2013/14 down 2013/14 £'000 £'000 £'000 £'000 £'000 £'000 EXPENDITURE Finance & Legal costs 79 Finance Officer 79 79 79 95 Legal Officer 82 84 1 85 Democratic Rep (1020) 26 - Travel & Subsistence 48 48 48 5 - Conference fees 15 15 15 249 - Members Allowances 240 240 -10 230 0 - Telephones 2 2 2 2 - Training 1 1 1 0 - Hospitality 3 3 3 Central Expenses (1030) 18 Bank charges 18 18 18 39 District Audit Fees 68 68 68 35 Subscriptions 43 43 43 548 TOTAL EXPENDITURE 599 601 0 -9 592

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Page 26 APPENDIX B Capital Programme 2013/14 Qtr 2 QTR 3 QTR 3 Qtr 3 Approved Qtr 1 QTR 3 Re- Current Amend- Virem- Current Budget Budget phasings Budget ments ents Budget £ £ £ £ £ £ £ BUILDING & LAND PROGRAMME BLD001 Roofs & Canopy Replacements 90,000 118,000 43,000 -10,000 33,000 BLD004 Concrete Yard Repairs 15,000 35,500 15,500 15,500 BLD005 Tower Improvements 0 45,500 45,500 18,000 63,500 BLD007 L.E.V. Sys In App Rooms 0 0 0 2,700 2,700 BLD013 Appliance Room Floors 46,500 53,000 13,000 -8,000 5,000 BLD014 Boiler Replacements 50,000 54,000 54,000 54,000 BLD016 Community Station Investment 66,000 79,000 24,000 24,000 BLD017 F.S. Refurbishment Toxteth 0 0 0 0 BLD018 Conference Faciities H/Q 5,000 14,000 0 0 BLD020 5 Year Electrical Test 89,000 112,000 112,000 112,000 BLD026 Corporate Signage 0 5,000 10,000 10,000 BLD030 Kensington C.F.S. 0 5,000 0 0 BLD031 Diesel Tanks 0 150,000 150,000 -150,000 0 BLD032 Power Strategy (Generators) 0 1,500 1,500 1,500 BLD033 Sanitary Accommodation Refurb 87,500 118,500 58,500 -50,000 -2,700 5,800 BLD034 Office Accommodation 0 47,000 47,000 47,000 BLD035 Accommodation Marine Fire 1 0 619,000 644,000 644,000 BLD036 L.L.A.R. Accommodation Formby 0 533,000 533,000 -300,000 233,000 BLD040 F.S. Refurbishment Whiston 152,500 152,500 0 0 BLD041 F.S. Refurbishment Aintree 250,000 280,000 3,000 3,000 BLD042 St Helens Conversion 0 511,000 4,000 4,000 BLD044 Asbestos Surveys 0 19,500 19,500 19,500 BLD045 City Centre Community Facility 80,000 80,000 80,000 -70,000 10,000 BLD055 F.S. Refurbishment Bromborough 329,000 329,000 19,000 19,000 BLD056 F.S. Refurbishment Eccleston 338,000 338,000 0 0 BLD057 F.S. Refurbishment Crosby 375,000 375,000 0 0 BLD058 H.V.A.C. Heating, Vent & Air Con 150,000 194,000 92,000 -92,000 0 BLD059 Llar Accomodation Eccleston 237,500 237,500 0 0 BLD060 D.D.A. Compliance Work 0 89,000 89,000 89,000 BLD061 Lighting Conductors Surge Protectors 55,000 55,000 55,000 -50,000 5,000 BLD062 Emergency Lighting 0 44,500 26,500 26,500 BLD065 MACC Server Room Extension 0 4,000 4,000 4,000 BLD067 Gym Equipment Replacement 125,000 215,000 215,000 215,000 JCC SHQ 7,570,000 8,635,000 9,319,000 0 328,600 40,600 9,688,200 BLD070 Workshop Enhancement 0 0 350,000 350,000 BLD071 Station Refresh 0 0 100,000 -50,000 50,000 BLD072 SHQ Tower 0 0 50,000 60,000 110,000 BLD073 SHQ Museum 0 0 75,000 75,000 CON001 Energy Conservation Salix 0 8,500 8,500 8,500 DSO001 D.S.O. Cleaning Equipment 6,000 6,000 6,000 6,000 EQU002 Fridge/Freezer Rep Prog 16,500 16,500 16,500 16,500 EQU003 Furniture Replacement Prog 10,500 10,500 20,500 20,500 TDA001 Fire House Refurbishment 0 80,000 0 0 TDA006 T.D.A. Server Room Expansion 0 1,500 1,500 1,500 TDA008 Generator MACC 0 43,000 0 0 Total 10,144,000 13,715,000 12,305,000 -702,000 328,600 40,600 11,972,200

FIRE SAFETY FIR002 Smoke Alarms (H.F.R.A.) 500,000 500,000 500,000 -100,000 400,000 FIR005 Installation Costs (H.F.R.A.) 730,000 730,000 730,000 -150,000 580,000 FIR006 Deaf Alarms (H.F.R.A.) 49,000 49,000 49,000 49,000 FIR007 Replacement Batteries (H.F.R.A.) 4,000 4,000 4,000 4,000 Total 1,283,000 1,283,000 1,283,000 0 -250,000 0 1,033,000

Page 1 of 627 APPENDIX B Capital Programme 2013/14 Qtr 2 QTR 3 QTR 3 Qtr 3 Approved Qtr 1 QTR 3 Re- Current Amend- Virem- Current Budget Budget phasings Budget ments ents Budget £ £ £ £ £ £ £ ICT FIN001 F.M.I.S. Replacement 225,000 450,000 450,000 0 450,000 IT002 I.C.T. Software 2,000 2,000 2,000 2,000 IT003 I.C.T. Hardware 91,000 151,700 151,900 151,900 IT005 I.C.T. Servers 120,000 175,000 175,000 175,000 IT018 I.C.T. Network 104,000 183,500 183,500 -23,000 160,500 IT026 I.C.T. Operational Equipment 14,000 28,000 28,000 -15,600 12,400 IT027 I.C.T. Security 0 0 0 4,000 4,000 IT028 System Development Portal 90,000 105,500 105,500 -87,000 18,500 IT030 I.C.T. Projects / Upgrades 5,000 10,000 10,000 10,000 IT034 E-Mail Retention 45,000 45,000 45,000 -45,000 0 IT036 Portable Storage Media 27,000 27,000 27,000 27,000 IT037 Emerging Technologies 0 10,500 10,500 10,500 IT039 Estates Management System 20,000 20,000 20,000 -20,000 0 IT040 Analytical Tool CFS Work 30,000 30,000 30,000 -40,000 10,000 0 IT043 E Recruitment System 8,000 19,000 19,000 19,000 IT045 PFI ICT Equipment 0 47,500 47,500 -18,000 29,500 IT046 TRM System 225,000 0 0 161,000 39,000 161,000 IT047 Legl Case Management system 0 4,500 4,500 4,500 IT049 Wireless Rollout 0 15,000 15,000 15,000 IT050 Community Protection System 25,000 30,000 30,000 -30,000 0 IT051 JCC Airwave Solution 0 985,000 667,000 667,000 IT052 JCC Specialist IT 0 0 244,000 244,000 IT053 JCC Backup MACC 0 0 16,000 16,000 IT054 JCC Confeence Room Refresh 0 0 58,000 58,000 IT055 C3i C&C Comms and Info system 0 0 0 10,000 10,000 IT056 PFI Access Door System 0 0 0 -18,000 18,000 0 RC001 Vision F.X. 0 10,000 10,000 -10,000 0 RC003 Corporate Gazateeer 17,000 19,500 19,500 -10,000 9,500 Total 1,048,000 2,368,700 2,368,900 -195,000 161,000 -40,600 2,294,300 OPERATIONAL EQUIP. & HYDRANTS OPS001 Gas Tight Suits Other Ppe 0 10,000 10,000 10,000 OPS003 Hydraulic Rescue Equipment 75,000 143,500 143,500 -5,000 138,500 OPS005 Resuscitation Equipment 0 55,500 55,500 55,500 OPS009 Pod Equipment 50,000 50,000 50,000 40,000 90,000 OPS011 Thermal Imaging Cameras 24,000 24,000 24,000 -10,000 14,000 OPS019 Other Operational Equipment (Floodlights) 40,000 40,000 40,000 -40,000 0 OPS022 Improvements To Fleet 20,000 20,000 20,000 14,000 34,000 OPS023 Water Rescue Equipment 18,000 24,000 24,000 24,000 OPS024 BA equipment / Comms 150,000 150,000 350,000 -150,000 21,300 221,300 OPS026 Rope Replacement 15,000 15,000 15,000 15,000 OPS027 Light Portable Pumps 20,000 20,000 20,000 -20,000 0 OPS031 Cctv Equipment/Drone 11,000 32,000 32,000 -32,000 0 OPS033 Marine Rescue Launch 0 5,000 5,000 5,000 OPS035 Operational Compressors 10,000 28,000 28,000 -16,300 11,700 OPS038 Water Delivery System 66,000 66,000 66,000 66,000 OPS039 Water Delivery Hoses 50,000 84,000 84,000 84,000 OPS044 Acetylene Cylinders 14,000 14,000 14,000 -14,000 0 OPS049 Bulk Foam Attack Equipment 48,000 48,000 48,000 -48,000 0 OPS052 DEFRA FRNE Water Rescue Grant 19,000 20,000 20,000 20,000 HYD001 Hydrants (New Installations) 18,500 18,500 18,500 18,500 HYD002 Hydrants (Rep Installations) 18,500 23,000 23,000 23,000 Total 667,000 890,500 1,090,500 -260,000 0 0 830,500 VEHICLES VEH002 Ancilliary Vehicles 730,900 779,900 297,800 -39,500 20,000 278,300 VEH004 Special Vehicles 956,000 992,500 307,500 -271,000 -20,000 16,500 VEH005 Vehicles water Strategy 29,000 29,000 29,000 29,000 VEH006 Motorcycle Response 44,000 44,000 0 0 WOR001 Workshop Equipment 24,000 36,500 36,500 36,500 Total 1,783,900 1,881,900 670,800 -310,500 0 0 360,300

Grand Total 14,925,900 20,139,100 17,718,200 -1,467,500 239,600 0 16,490,300 PagePage 2 28of 6 APPENDIX B Capital Programme 2013/14 Qtr 2 QTR 3 QTR 3 Qtr 3 Approved Qtr 1 QTR 3 Re- Current Amend- Virem- Current Budget Budget phasings Budget ments ents Budget £ £ £ £ £ £ £ FINANCING

Capital Receipts Sale of Toxteth FS 250,000 250,000 0 0 0 0 Sale of Formby LLAR House 350,000 350,000 0 0 0 0 Sale of Derby Road 700,000 700,000 0 0 0 0

R.C.C.O. Cpitalisation of Sals HFRA 730,000 730,000 730,000 0 -150,000 580,000 It Equipment (IT003) 0 2,200 2,400 0 0 2,400 E recruitment Systems (IT043) 0 8,000 8,000 0 0 8,000 Joint Control Room (BLD068) 1,768,000 1,768,000 1,768,000 0 0 1,768,000 Gym Equipment (BLD067) 50,000 50,000 50,000 0 0 50,000 JCC IT Works (IT051-54) Cap Inv Res 0 232,000 232,000 0 0 232,000 FSN Charge for Alarms (FIR002) 0 50,000 50,000 0 0 50,000 Workshop Enhance Cap Inv Res 0 0 350,000 0 0 350,000 Station Refresh (BLD071) Inv Res 0 0 100,000 0 0 100,000 SHQ Museum (BLD073) Telent Year 1 0 0 40,000 0 0 40,000 SHQ Museum (BLD073) NWAS Year 1 0 0 35,000 0 0 35,000 TRM (IT046) Cap Inv Reserve 0 0 0 0 161,000 161,000 JCC BLD (BLD068) Cap Inv Reserve 0 0 0 0 165,600 165,600 Grant (Capital Grant) Fire Control Grant 1,100,000 1,100,000 1,100,000 0 0 1,100,000 (Capital Grant) Fire Control Grant 0 700,000 700,000 0 0 700,000 (Capital Grant) Police Grant 4,002,000 4,817,000 4,906,799 0 163,000 5,069,799 Capital Grant CSR07 (1,728,900) (BLD067) 1,243,966 1,243,966 1,243,966 0 0 1,243,966 Total Non Borrowing 10,193,966 12,001,166 11,316,165 0 339,600 0 11,655,765

Borrowing Requirement Unsupported Borrowing 4,731,934 8,137,934 6,402,035 -1,467,500 -100,000 0 4,834,535 Borrowing 4,731,934 8,137,934 6,402,035 -1,467,500 -100,000 0 4,834,535

Total Funding 14,925,900 20,139,100 17,718,200 -1,467,500 239,600 0 16,490,300

Page 3 of 629 APPENDIX B

Actual to December 2013 £

0 6,695 38,049 0 0 1,687 10,438 -75,538 0 0 3,460 0 0 0 0 0 643,548 219,351 0 0 0 0 636 16,299 0 0 0 0 7,240 0 0 0 104,658 4,296,391 0 0 0 0 0 1,179 5,820 8,440 0 0 0 5,288,351

185,195 0 0 2,464 187,659

PagePage 4 30of 6 APPENDIX B

Actual to December 2013 £

82,564 1,165 112,795 22,695 42,853 3,726 0 615 2,740 0 0 10,364 0 0 17,993 29,384 0 0 5,850 39 34,688 22,560 0 0 0 0 0 0 390,030

0 9,025 21,875 9,944 0 0 16,510 15,420 0 0 0 0 0 11,642 3,780 18,395 0 0 0 0 5,390 111,981

79,223 5,000 0 0 4,325 88,548

6,066,568 Page 5 of 631 APPENDIX B

Actual to December 2013 £

0 0 0

0 2,200 8,000 1,768,000 50,000 232,000 50,000 350,000 100,000 40,000 35,000 0 0

0 0 1,141,524 1,243,966 5,020,690

1,045,878 1,045,878

6,066,568

PagePage 6 32of 6 APPENDIX C Authority Capital Progamme for 2013/2014 - 2017/2018 Total Cost 2013/14 2014/15 2015/16 2016/17 2017/18 Expenditure £ £ £ £ £ £ Building/Land 19,260,200 11,972,200 4,584,500 1,896,000 455,500 352,000 Fire Safety 6,353,000 1,033,000 1,481,000 1,281,000 1,279,000 1,279,000 ICT 4,629,300 2,294,300 641,000 637,000 516,000 541,000 Operational Equipment & Hydrants 2,060,500 830,500 754,000 57,000 352,000 67,000 Vehicles 6,472,100 360,300 1,722,200 1,383,800 1,793,800 1,212,000 TOTAL 38,775,100 16,490,300 9,182,700 5,254,800 4,396,300 3,451,000 2013/14 - 2017/18 Quarter 2 Approved Programme 37,933,500 17,718,200 6,991,700 5,336,300 4,416,300 3,471,000 Q3 Current to Quarter 2 Change 841,600 (1,227,900) 2,191,000 (81,500) (20,000) (20,000) Q3 Movements Explained by: Budget Amendment FIR002 Smoke Alarms estimated 20% reduction (100,000) (100,000) FIR005 Installation Costs estimated 20% reduction (150,000) (150,000) BA Sets Replacement (CFO/140/13) 219,000 219,000 BLD068 JCC (Capital Reserve) 165,600 165,600 BLD068 JCC (MPA Additional Contribution) 163,000 163,000 IT046 TRM (Capital Reserve) 161,000 161,000 BA Telementary Breathing Units (CFO/140/13) 133,000 133,000 Fire Risk Management in Residential Blocks (CFO/135/13) 200,000 200,000 IT040 Analytical Tool CFS Work (Capital Reserve) 50,000 50,000 Scheme Re-Phasing Total Buildings 0 (702,000) 742,000 (20,000) (20,000) Total Operational Equipment 0 (260,000) 260,000 Total IT (195,000) 195,000 Total Vehicles 0 (310,500) 392,000 (81,500) 841,6000 (1,227,900)0 2,191,0000 (81,500)0 (20,000)0 (20,000)0 Financing Available: Total 2013/14 2014/15 2015/16 2016/17 2017/18 Capital Receipts Toxteth Fire Station (Firefit Hub) 250,000 250,000 Sale of 2 existing N-le-W LLAR properties 275,000 275,000 Sale of LLAR house Cable Street, Formby 350,000 350,000 Sale of Derby Road 700,000 700,000 R.C.C.O./Reserves CFS alarm installation (salaries) 3,500,000 580,000 730,000 730,000 730,000 730,000 CFS alarm installation (FSD) 250,000 50,000 50,000 50,000 50,000 50,000 Capital Reserve to Gym Equipment 50,000 50,000 Capital Reserve to JCC 1,933,600 1,933,600 Capital Reserve - JCC ICT work 232,000 232,000 IT Laptops/e-recruiting 10,400 10,400 Capital Reserve to Museum 75,000 75,000 Fire Risk Management in Residential Blocks (CFO/135/13) 200,000 200,000 IT040 Analytical Tool CFS Work (Capital Reserve) 50,000 50,000 IT046 Time Resource Mgt system (Capital Reserve) 161,000 161,000 BLD070 Workshop Enhancement (CFO/104/13) 350,000 350,000 BLD071 Station Refresh (CFO/102/13) 500,000 100,000 400,000 Grant CLG General Capital Grant Allocation 2,487,932 1,243,966 1,243,966 CLG Fire Control Grant (£1.8m in total) 1,800,000 1,800,000 Dept. of Culture/Media/Sport (BA Telementary) (CFO/140/13) 133,000 133,000 Other BLD068 JCC MPA Contribution 5,069,799 5,069,799 BLD073 Museum - NWAS Contribution 35,000 35,000 BLD073 Museum - Telent Contribution 40,000 40,000 Total Non Borrowing 18,452,731 11,655,765 4,181,966 1,055,000 780,000 780,000 Unsupported Borrowing 20,322,369 4,834,535 5,000,734 4,199,800 3,616,300 2,671,000 Total Funding 38,775,100 16,490,300 9,182,700 5,254,800 4,396,300 3,451,000 Q2 Funding Level for 2013/14 - 2017/18 Programme 37,933,500 17,718,200 6,991,700 5,336,300 4,416,300 3,471,000 Q3 Current to Q2 Change 841,600 (1,227,900) 2,191,000 (81,500) (20,000) (20,000) Funding Change Explained by: Borrowing Smoke Alarms reduction in spend (100,000) (100,000) BA Sets Replacement (CFO/140/13) 219,000 219,000 Smoke Alarms funded by charges (200,000) (50,000) (50,000) (50,000) (50,000) Scheme Re-Phasing 0 (1,467,500) 1,589,000 (81,500) (20,000) (20,000) RCCO Smoke alarm Installation Costs reduction (150,000) (150,000) Smoke Alarms funded by charges 200,000 50,000 50,000 50,000 50,000 Grants BA Telementary Breathing Units Gov Grant 133,000 133,000 Use of Reserves (R.C.C.O.) Fire Risk Management in Residential Blocks (Fire Safety Res) 200,000 200,000 CFS Analytical Tool (ICT; Capital Reserve) 50,000 50,000 JCC Build (Capital Reserve) 165,600 165,600 New Time Resource Mgt System (ICT; (Capital Reserve) 161,000 161,000 External Contribution JCC Build additional Police Contribution Page163,000 33163,000 841,600 (1,227,900) 2,191,000 (81,500) (20,000) (20,000) Building / Land - Budget 2013/14 to 2017/18

Total Cost Job Code Type of Expenditure 2013/14 2014/15 2015/16 2016/17 2017/18 £ £ £ £ £ £ £ Site Refurbishment BLD016 Community Station Investment 120,500 24,000 35,500 36,000 25,000 BLD030 Kensington CFS BLD035 Accomodation MF1 644,000 644,000 BLD039 FS Refurbishment Heswall 150,000 150,000 BLD040 FS Refurbishment Whiston 152,500 152,500 BLD041 FS Refurbishment Aintree 280,000 3,000 277,000 BLD042 St Helens Conversion 511,000 4,000 507,000 BLD055 FS Refurbishment Bromborough 329,000 19,000 310,000 BLD056 FS Refurbishment Eccleston 338,000 338,000 BLD057 FS Refurbishment Crosby 375,000 375,000 BLD063 FS Refurbishment Kirkby 326,000 326,000 BLD069 FS Refurbishment Allerton 341,000 341,000 FS Refurbishment Huyton 350,000 350,000 FS Refurbishment Upton 275,000 275,000 FS Refurbishment West Kirby 400,000 400,000 BLD070 Workshop Enhancement 350,000 350,000 BLD071 Station Refresh 500,000 50,000 450,000 5,442,000 SHQ Major Refurbishement SHQ Joint Control Room 9,688,200 9,688,200 BLD072 SHQ Tower 185,000 110,000 75,000 BLD073 SHQ Museum 150,000 75,000 75,000 10,023,200 LLAR Accomodation BLD036 LLAR Accomodation Formby 533,000 233,000 300,000 BLD045 City Centre Community Facility 80,000 10,000 70,000 BLD059 LLAR Accomodation Eccleston 237,500 237,500 LLAR Accomodation Newton-le-Willows 375,000 375,000 1,225,500 General Station Upgrades BLD001 Roofs & Canopy Replacements 223,000 33,000 50,000 50,000 50,000 40,000 BLD004 Concrete Yard Repairs 95,500 15,500 20,000 20,000 20,000 20,000 BLD005 Tower Improvements 91,500 63,500 18,000 10,000 BLD011 Capital Refurbishment 57,000 57,000 BLD013 Non Slip Coating to Appliance Room Floors 184,500 5,000 46,500 46,500 46,500 40,000 BLD014 Boiler Replacements 54,000 54,000 BLD020 Electrical Testing 256,000 112,000 38,000 38,000 38,000 30,000 BLD031 Diesel Tanks 150,000 150,000 BLD033 Sanitary Accomodation Refurbishment 145,800 5,800 50,000 30,000 30,000 30,000 BLD044 Asbestos Surveys 144,500 19,500 50,000 50,000 25,000 BLD060 DDA Compliance 139,000 89,000 30,000 20,000 1,540,800 Other BLD007 L.E.V. System in Appliance Rooms 2,700 2,700 BLD018 Conference Facilities SHQ 24,000 4,500 4,500 10,000 5,000 BLD026 Corporate Signage 25,000 10,000 5,000 5,000 5,000 BLD032 Power Strategy 31,500 1,500 20,000 10,000 BLD034 Office Accomodation 112,000 47,000 25,000 25,000 15,000 BLD053 Headquarters Lighting BLD058 HVAC - Heating, Ventalation & Air Con 92,000 92,000 BLD061 Lightening Conductors & Surge Protection 55,000 5,000 50,000 BLD062 Emergency Lighting 26,500 26,500 BLD065 MACC Server Room Extension 4,000 4,000 BLD067 Gym Equipment Replacement 315,000 215,000 25,000 25,000 25,000 25,000 CON001 Energy Conservation Salix 108,500 8,500 25,000 25,000 25,000 25,000 DSO001 DSO Cleaning Equipment 30,000 6,000 6,000 6,000 6,000 6,000 EQU002 Replacement programme for Fridge Freezers 58,500 16,500 10,500 10,500 10,500 10,500 EQU003 Bulk purchase of furniture for refurbished premises 62,500 20,500 10,500 10,500 10,500 10,500 947,200 TDA TDA001 Fire house refurbishment 80,000 80,000 TDA006 TDA Server Room Expansion 1,500 1,500 TDA008 Generator install provision following MACC decant 81,500 19,260,200 11,972,200 4,584,500 1,896,000 455,500 352,000 Original Budget 14,084,000 10,144,000 1,031,000 1,976,500 560,500 372,000 Current Programme 19,260,200 11,972,200 4,584,500 1,896,000 455,500 352,000 Changes 5,176,200 1,828,200 3,553,500 (80,500) (105,000) (20,000) Q1 Movements/Adjustments 3,571,000 3,571,000 Q2 Movements/Adjustments 1,236,000 (1,410,000) 2,811,500 (80,500) (85,000) Q3 Movements/Adjustments Page369,200 34 (332,800) 742,000 (20,000) (20,000) Fire Safety - Budget 2013/14 to 2017/18 Total Cost Job Code Type of Expenditure 2013/14 2014/15 2015/16 2016/17 2017/18 £ £ £ £ £ £ FIR002 Smoke Alarms (100,000 HFRA target) 2,400,000 400,000 500,000 500,000 500,000 500,000 FIR005 Installation costs (HFRA) 3,500,000 580,000 730,000 730,000 730,000 730,000 FIR006 Deaf Alarms (HFRA) 245,000 49,000 49,000 49,000 49,000 49,000 FIR007 Replacement Batteries (12,000) 8,000 4,000 2,000 2,000 FIR009 Fire Risk Management in Residential Blocks (CFO/135/13) 200,000 6,153,000 1,033,000 1,481,000 1,281,000 1,279,000 1,279,000

Original Budget 6,403,000 1,283,000 1,281,000 1,281,000 1,279,000 1,279,000 Current Programme 6,353,000 1,033,000 1,481,000 1,281,000 1,279,000 1,279,000 Changes (50,000) (250,000) 200,000

Q3 Movements/Adjustments (50,000) (250,000) 200,000

Page 35 ICT including Regional Control - Budget 2013/14 to 2017/18 Total Cost Job Code Type of Expenditure 2013/14 2014/15 2015/16 2016/17 2017/18 £ £ £ £ £ £ IT002 ICT Software 395,000 Software Licences 2,000 2,000 2,000 2,000 2,000 3 Year Licences Antivirus & Filtering 155,000 Microsoft EA Agreement (Servers & Security) 60,000 60,000 60,000 Microsoft EA Agreement (Windows Desktop) Microsoft EA Agreement (Office Desktop) Microsoft SQL Upgrade 50,000 IT003 ICT Hardware 665,900 PC, monitor and laptop replacement (target 20%) 140,900 80,000 80,000 80,000 80,000 PC, monitor and laptop growth 5,000 5,000 5,000 5,000 5,000 Periherals replacement (target 20%) 6,000 6,000 6,000 6,000 6,000 Appliance Toughbook Replacement 110,000 LFS Laptops 40,000 IT005 ICT Servers 620,000 Server/storage replacement (target 20%) 160,000 190,000 65,000 65,000 65,000 Server/storage growth 15,000 15,000 15,000 15,000 15,000 IT018 ICT Network 672,500 Local Area Network replacement (discrete) 4,000 4,000 4,000 4,000 4,000 Network Switches/Routers replacement 146,500 141,000 100,000 Network Switches/Router growth 5,000 5,000 5,000 5,000 5,000 Vesty Road Network Link Refresh 40,000 IP Telephony 5,000 5,000 50,000 100,000 Wireles Network 40,000 IT026 ICT Operational Equipment 110,400 Pagers/Alerters 2,400 7,000 7,000 7,000 7,000 Station End Kit 10,000 5,000 5,000 5,000 5,000 Incident Ground Management System 50,000 IT027 ICT Security 12,000 Remote Access Security FOBS 4,000 2,000 2,000 2,000 2,000 IT028 Portal Development 205,500 18,500 112,000 25,000 25,000 25,000 IT030 ICT Projects/Upgrades 30,000 10,000 5,000 5,000 5,000 5,000 IT034 E-Mail retention (legal requirement) IT036 Portable Storage Media Security 27,000 27,000 IT037 Emerging Technologies 10,500 10,500 IT039 Estates Management System 20,000 20,000 IT040 Analytical Tool CFS Work (IRMP 09-01-15) 90,000 90,000 IT043 E-Recruitment System 19,000 19,000 IT045 PFI ICT Transition 29,500 29,500 IT049 Wireless Rollout 15,000 15,000 JCC ICT project 985,000 985,000 IT055 C.3.I. C.&.C Communication & Information System 10,000 10,000 IT056 P.F.I. Door Access System 18,000 18,000 Other FIN001 FMIS/Eproc/Payroll/HR Replacement 450,000 450,000 IT046 TRM System 200,000 200,000 IT047 Computerised Legal Case Management System 4,500 4,500 IT050 Community Protection IMS System 30,000 30,000 RC001 ICT Security RC003 Corporate Gazetteer 9,500 9,500 4,629,300 2,294,300 641,000 637,000 516,000 541,000 Original Budget 3,138,000 1,048,000 396,000 637,000 516,000 541,000 Current Programme 4,629,300 2,294,300 641,000 637,000 516,000 541,000 Changes 1,491,300 1,246,300 245,000 Q1 Movements/Adjustments 1,320,900 1,320,900 Q3 Movements/Adjustments 170,400 (74,600) 245,000

Page 36 Operational Equipment - Budget 2013/14 to 2017/18

Total Cost Job Code Type of Expenditure 2013/14 2014/15 2015/16 2016/17 2017/18 £ £ £ £ £ £ OPS001 Gas Tight Suits Other PPE 10,000 10,000 OPS003 Hydraulic Rescue Equipment 203,500 Hydraulic Rescue Equipment - Replacement Programme 138,500 Air Lifting units - Replacement programme Pneumatic Rescue Equipment - Air Bags 65,000 OPS005 Resuscitation Equipment 55,500 55,500 OPS009 POD Equipment Demountable Unit (POD) Refurbishment - 2013/14 IRMP 90,000 90,000 OPS011 Thermal imaging cameras 24,000 14,000 10,000 OPS022 Improvements to Fleet Equipment to utlise new emergency response vehicles 124,000 34,000 20,000 20,000 20,000 30,000 OPS023 Water Rescue Equipment 274,000 24,000 250,000 OPS024 BA Equipment/Comms 723,300 BA Cylinder Replacement 221,300 BA Sets (back pack/face mask/tubes/equip) Replacement 219,000 BA Telementary Breathing Units 133,000 Replacement of hand held communication radios 150,000 OPS026 Rope Replacement 35,000 15,000 20,000 OPS027 Light prtable Pumps 20,000 20,000 OPS031 CCTV Equipment (IRMP2 CCTV Drone) 32,000 32,000 OPS033 Marine Rescue Launch 5,000 5,000 OPS035 Operational Compressors 11,700 11,700 OPS036 Radiation Detection Equipment 45,000 45,000 OPS038 Water Delivery System 66,000 66,000 OPS039 Water Delivery Hoses 84,000 84,000 OPS049 Bulk Foam Attack Equipment 48,000 48,000 OPS052 DEFRA FRNE 20,000 20,000

Hydrants HYD001 Hydrants (New Installations) 92,500 18,500 18,500 18,500 18,500 18,500 HYD002 Hydrants (Replacements) 97,000 23,000 18,500 18,500 18,500 18,500 2,060,500 830,500 754,000 57,000 352,000 67,000

Original Budget 1,485,000 667,000 342,000 57,000 352,000 67,000 Current Programme 2,060,500 830,500 754,000 57,000 352,000 67,000 Changes 575,500 163,500 412,000 Q1 Movements/Adjustments 223,500 423,500 (200,000) Q3 Movements/Adjustments 352,000 (260,000) 612,000

Page 37 Vehicles - Budget 2013/14 to 2017/18 Price Per Total for 5 years 2013/14 2014/15 2015/16 2016/17 2017/18 Job Code Capital Scheme/Vehicle Type Unit Units Cost Units £ Units £ Units £ Units £ Units £ VEH001 Fire Appliances 245,000 12 2,940,000 4 980,000 4 980,000 4 980,000

Page 38 Page VEH004 Special Vehicles CPL's Vehicle 2 (refurbished) 300,000 1 300,000 1 300,000 Vehicle 3 (refurbished) 300,000 1 300,000 1 300,000 Vehicle 4 (NEW) 600,000 1 600,000 1 600,000 Other IMU - Prime Movers 98,000 4 392,000 2 196,000 2 196,000 contribution to price increase (Slippage) 16,500 16,500 BA Support Unit (POD) 75,000 1 75,000 1 75,000 SFU Vehicle 85,000 2 170,000 1 85,000 1 85,000 Water Rescue Unit 45,000 1 45,000 1 45,000

VEH005 Water Strategy 29,000 29,000

VEH006 Motorcycle Response AFA/RTC Bikes 6,000 2 12,000 2 12,000 Firefighting bikes 16,000 2 32,000 2 32,000

WOR001 Workshop Equipment Equipment 36,500 36,500 Replace steam clean lift 40,000 40,000 Workshop MOT/LCC contract 6,472,100 360,300 1,722,200 1,383,800 1,793,800 1,212,000

Original Budget 6,374,100 1,783,900 204,100 1,380,300 1,793,800 1,212,000 Current Programme 6,472,100 360,300 1,722,200 1,383,800 1,793,800 1,212,000 Changes 98,000 (1,423,600) 1,518,100 3,500 Q1 Movements/Adjustments 98,000 98,000 Q2 Movements/Adjustments (1,211,100) 1,126,100 85,000 Q3 Movements/Adjustments (310,500) 392,000 (81,500) APPENDIX D Quarter 3 Write-Offs 2013/14

Invoice Invoice Provision Customer Customer Name Line Description Write Off Reason Amount To Be Written Off Date Number Bad Debt Code List Nett Value VAT Gross Value £ £ £ 09/01/13 I0014956 NO DIL002 LEE DILLON FIREWORK LICENCE LITIGATION ADVICE 105.00 0.00 105.00

31/01/13 I0015044 NO BAL024 PHILIP BALLARD SPECIAL SERVICES LITIGATION ADVICE 340.00 68.00 408.00

26/04/13 I0015368 NO BEM002 BEM BRASIL SPECIAL SERVICES LITIGATION ADVICE 340.00 68.00 408.00

13/01/11 I0012693 YES HAR080 JUNE HARRIS SPECIAL SERVICES LITIGATION ADVICE 340.00 59.50 399.50

13/01/11 I0012694 YES EVA035 WILLIAM EVANS SPECIAL SERVICES LITIGATION ADVICE 340.00 59.50 399.50

27/07/12 I0014479 NO INT048 INTERLINK EXPRESS SPECIAL SERVICES LITIGATION ADVICE 340.00 68.00 408.00

1,805.00 323.00 2,128.00

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Page 40 Agenda Item 4

MERSEYSIDE FIRE AND RESCUE AUTHORITY

MEETING OF THE: AUTHORITY BUDGET MEE TING

DATE: 27 FEBRUARY 2014 REPORT CFO/020/14 NO: PRESENTING [PRINCIPAL/ STATUTORY OFFICER] OFFICER RESPONSIBLE DEB APPLETON REPORT DEB APPLETON OFFICER: AUTHOR: OFFICERS COLIN SCHOFIELD CONSULTED: TITLE OF REPORT: OUTCOMES FROM STATION MERGERS ENGA GEMENT

APPENDICES: APPENDIX A : TABLE DETAILING ENGA GEMENT APPENDIX B: ORS IRMP FORUMS REPORT APPENDIX C: CONSULTATION TEMPLATE APPENDIX D EQUALITY IMPACT ASSESSMENT

Purpose of Report

1. To request that Members consider the outcomes from the stakeholder/public engagement related to station mergers (and other operational response) options.

Recommendation

2. That Members; a. Note the content of this report and its appendices; and b. Consider the outcomes of the stakeholder/public engagement as they make any decisions on proposals relating to their financial plans including station mergers and the other operational response options taking account of the position advanced within paragraph 17 of this report.

Introduction and Background

3. The Authority at its meeting on 3 rd December 2013 considered report CFO/136/13 and resolved that:

1. “Members, in order to meet the budget cuts faced by the Authority as a result of Government announcements which will impact on the financial plan for 2014-16, approve in principle, subject to public consultation;

a) The options presented for the merger of two stations on Wirral (West Kirby to merge with Upton at a site within Greasby), two stations in St Helens (Eccleston to merge with St Helens at a site in the St Helens town centre ward) and two stations in Knowsley (the merger of Huyton and Whiston at Prescot which already has Authority approval). These mergers, if approved, will deliver a reduction of 66 wholetime

Page 41 equivalent (WTE) posts, reduce the Authority asset base down from 26 stations to 23 and deliver additional savings from a reduction in premises overheads.

b) The incremental move from wholetime crewing to day crewing to wholetime retained crewing of at least one appliance in Liverpool and/or Sefton, resulting in the closure of one or more station. This change in crewing and station closure, if approved, will deliver a saving of 22 WTE posts and deliver additional savings from a reduction in premises overheads.

2. Members give delegated authority to the Chief Fire Officer (CFO) in consultation with the Chair and Party Spokespersons to;

i. Identify the most suitable merger sites from which to operate whilst ensuring response standards are maintained.

ii. Identify potential partners for joint working.

iii. Undertake the necessary preparatory work around the procurement of appropriate sites in order to expedite the mergers option in the event that Authority approval is confirmed after the public consultation process is concluded.

iv. Submit a bid for resources to support any scheme as appropriate to any available funding sources

3. Members approve the associated consultation process.

4. Reports be brought back on each of the individual mergers as soon as practicable.”

4. This report details the stakeholder/public engagement undertaken in relation to the recommendations agreed by the Authority (stage one). Within CFO/136/13 the following engagement principles were set out:

a. “It is proposed that the Authority enters into a two-stage ‘consultation’ process to scrutinise the options and consider others. As such it is proposed to enter into consultation comprising of a more open-ended listening and engagement phase on the OPTIONS and a formal consultation process on the eventual PROPOSALS.

Stakeholder/public engagement

b. Following approval of the recommendations contained within this report Officers will, on behalf of the Authority, commence a series of presentations to those stakeholders directly affected by the proposals. These presentations will be delivered via the most appropriate forums in each area including established local authority forums and where appropriate facilitated public events.

Page 42

c. The consultation will explore and review the options and rationale applied in reaching the recommendations prior to formal consultation.

d. The Authority will also conduct a number of deliberative Integrated Risk Management Plan (IRMP) consultation events where the public will be asked to consider whether the recommendations reflect the proposals within the IRMP and are reasonable given the significant financial challenges placed on the Authority.

e. This will allow the Authority the opportunity to consider the OPTIONS in the light of any public concerns prior to moving to formal consultation, where more specific details on the PROPOSALS will be available.

Political engagement

f. Members and Officers will continue discussing the options with local and national politicians.

Staff Engagement

g. Staff engagement will underpin the consultation process –using the successful approach adopted with the PFI stations.

Trade Union Engagement

h. Engagement with the trade unions will underpin all aspects of the consultation process.”

The Engagement Process

5. The table attached as Appendix A details the range of public, political, partner and staff engagement that has taken place in relation to the options being considered by the Authority. This has included five IRMP forums (one in each District); two local Council forums, both in Knowsley (which was the only District to host such events); Council meetings in each District; City Region Cabinet meetings; individual meetings on request from councillors and MPs; representative body meetings and meetings with Council and other partner officers. In all cases the participants were provided with information that enabled them to consider the relative merits, or otherwise, of the following operational response options.

• Additional Low Level of Activity and Risk stations (LLARs) • Introduction of day only crewing at some wholetime stations • Introduction of Community Retained crewing • Merger of pairs of older stations and their replacement by modern community fire stations • Closure of some stations without replacement.

Page 43 6. In every case it was made clear that the Authority would not be considering these options if it was not for the known and anticipated budget constraints. The time available to present the information varied considerably, from only a few minutes at some Council meetings, to three hours at the Wirral IRMP Forum. As might be expected the feedback varied proportionately.

Outcomes from the Engagement Phase

7. Stakeholder/Public Engagement-Integrated Risk Management Plan (IRMP) Forums: Members will recall that the deliberative forum approach (facilitated by Opinion Research Services (ORS)) is a well-established element of the Authority’s consultation and engagement programme that has proved very effective in gauging public opinion on Authority ideas and proposals over the last five years. The 2014 IRMP Forums took place in January. The Forums were well attended with between 18 and 25 engaged and enthusiastic participants at each; 111 in total. The Forums used a ‘deliberative’ approach to encourage members of the public to reflect in depth about the Fire and Rescue Service, while both receiving and questioning background information and discussing service delivery options in detail.

8. Full details of the approach and outcomes from the Forums can be found at Appendix B. The outcomes are summarised below. When considering the outcomes Members should note the following comment from ORS:

“Although, like all other forms of qualitative consultation, deliberative forums cannot be certified as statistically representative samples of public opinion, the five meetings reported here gave diverse groups of people from Merseyside the opportunity to comment in detail on MFRA’ current and future direction of travel.

Because the recruitment was inclusive and participants were diverse, we are satisfied that the outcomes of the meeting are broadly indicative of how informed opinion would incline on the basis of similar discussions. In summary, the outcomes reported here are reliable as examples of the reflections and opinions of diverse informed people reacting to the important and diverse issues discussed in the meetings.”

9. Following detailed consideration of the options referred to in paragraph 5 above and of the Authority’s financial and operational resource position, the response of the Forums was to favour the option of mergers with more LLAR and station closures being second and third choices respectively (although some way behind mergers). There was limited support for day only crewing and less support for Community Retained crewing.

10. The ORS report summarises the outcome as follows:

“The overall impression is that, when faced with a broad choice between keeping all stations and changing to cheaper duty systems or reducing stations while protecting duty systems, the participants clearly favoured the latter. In other words, they made at least an implicit choice in favour of reducing stations rather than changing the way Merseyside is crewed.”

Page 44

11. There were of course comments and concerns expressed regarding all of the options and these are detailed in the report at Appendix B, but the overall preference was clearly for mergers.

12. Stakeholder/Public Engagement- Knowsley public forums: Only Knowsley Council holds the type of public forum that MFRA was seeking to attend and meetings were held on 21 st and 22 nd January in Huyton and Whiston respectively. The meetings were promoted in advance by the Council to a network of contacts and by posters in public areas. Despite this promotion, only one member of the public attended the Huyton meeting and one attended at Whiston. Councillors and Council officers were also present. As a result of the attendance the meetings took the form of an informal “round table” style discussion. The questions and answers are detailed at Appendix A.

13. Political Engagement: Appendix A details the engagement with politicians that has carried out by the Chief Fire Officer (CFO). The CFO attended meetings at each Council and gave either a statement or a full presentation depending on the time allocated. In each case he was able to detail the fundamental issues of reducing budget, historical over provision and the five options referred to in paragraph 5. The responses were as follows:

Knowsley – 11/12/13 – The presentation was well received with Councillors understanding that changes to operational provision would need to be made. Only three questions were raised about support services, the views of the FBU and further consultation. Details of these questions and the answers given are in Appendix A

St Helens – 9/1/14 – The CFO was able to explain the presentation in more detail and it was well received by the Councillors. Questions were received about whether Newton would revert to whole time if mergers implemented, whether MFRA has considered co location with partners, whether there would be a capital receipt for the sale of buildings, whether the Parr site would be saleable, about the wholetime/retained model, had MFRA identified land and would hospitals be suitably covered. Answers are detailed in Appendix A. In addition, comments included - “sounds sensible”, “best to look at the cover provided, not the stations”, “pragmatic”.

Liverpool – 15/1/14 – The CFO delivered a short statement at this meeting. There were no questions but Mayor Anderson offered support to the Authority and commented that the Council understood the challenges facing the Authority.

Sefton – 23/1/14 – the CFO delivered a presentation to the full Council. Only one question was asked, regarding the number of PFI stations in Merseyside.

Wirral – 27/1/14 – At the Wirral Economy and Environmental Policy and Performance Committee meeting the CFO delivered his presentation on options to the Committee, together with a number of other Wirral councillors in the public gallery. Questions were asked about the impact on response times,

Page 45 funding for a new station, why MFRA has received the cuts it has, timescales and prevention. Details can be found at Appendix A

14. In addition to the Council based engagement detailed above, a number of individual and group meetings have taken place with Councillors and MPs. These are also detailed in Appendix A. On each occasion the CFO outlined the challenges and options and discussed the potential implications for the areas concerned. All Councillors and MPs understood the challenges for the Authority and appreciated the CFO meeting with them to explain the thinking behind the options. Although some Councillors understandably had concerns for their own areas, they were reassured by the information given to them. All understood that this has been an engagement phase and that full consultation would follow with any detailed proposals.

Staff Engagement

15. District Managers and other senior managers have been involved in the engagement process, attending meetings and meeting colleagues and other partners to progress the actions. A series of regular Principal Officer briefings have provided updates for staff on the cuts/station response options; with staff given the opportunity to comment on the proposals. Mergers were recognised as the least worst option.

Trade Union Engagement

16. The CFO has undertaken extensive dialogue with both the FBU and FOA in advance of the formal consultation meetings detailed in Appendix A. Both representative bodies appreciate the financial situation faced by the Authority and whilst not supporting the proposals, understand why they are being considered.

Conclusion on engagement

17. The outcomes from the engagement that has taken place indicate that there is general understanding amongst stakeholders of the Authority’s position regarding the challenges it faces and the options it is considering and an agreement that to do nothing is not an option. When discussed, the option for mergers was presented by the public as their preferred choice, a sentiment largely echoed by politicians. This is a factor that Members must now take in to account when considering options involving Liverpool and to a lesser extent Sefton. There is a strong operational logic for mergers in Liverpool but this would invariably involve the closure of one old and one new or relatively new station to build a new station in an optimum location or the closure of two new stations to build a new station in an optimum location. It is the strong recommendation of the CFO that the Authority now consider this as a viable option as a result of the outcomes of the stakeholder/public and engagement and his professional judgement.

18. The ORS facilitated Forums worked particularly well as part of this engagement phase and similar Forums would be used for formal consultation. However,

Page 46 consideration has to be given to how to market open public consultation events prior to any formal consultation and this has now been added as an activity on the formal consultation template attached at Appendix C.

Progress on Programme Management actions

19. The four actions contained within point 2 of the recommendations from CFO/136/13 all relate to programme management activities. The progress that has been made in relation to these actions is detailed below:

20. In Knowsley, Officers have held two meetings with colleagues in Knowsley Metropolitan Borough Council to progress the acquisition of the previously identified site in Prescot. Discussions are proceeding to agree a price, pending a formal report back on the outcome of the engagement process.

21. In St. Helens, two meetings have been held with colleagues in St. Helens Metropolitan Borough Council to attempt to identify possible sites in the town centre for a merged station. Difficulties are being encountered in finding an appropriate plot of land as the Council has no suitable land available. Council officers have provided contact details of other land owners and a meeting has recently been held with one land owner to look at a particular piece of land and discuss potential prices for purchase or lease. However, it is not certain whether this site will prove suitable in terms of response times and modelling is currently underway to check this. In the meantime, the search for other sites continues.

22. In Wirral, two meetings have been held with colleagues from Wirral Metropolitan Borough Council, as a result of which one potential plot of land has been identified in the Greasby area. Further details are awaited from Council officers of land ownership and other information. It is not certain that this land will be suitable for a variety of reasons but enquiries are continuing and members will be kept informed of developments.

23. Meetings have been held with colleagues from Merseyside Police and North West Ambulance Service (NWAS) to discuss opportunities for sharing sites. Whilst discussions are ongoing, early indications are that in Prescot, the Police will have a presence, although not to the extent that was originally envisaged when the merger was initially proposed in 2011, but NWAS are unlikely to commit. In St. Helens the Police are unlikely to commit but a final decision will be made when the site is agreed. NWAS are also unlikely to commit. There is however a possibility that other partner organisations, e.g. NHS Health Improvement Teams, may wish to share any new facility. At Greasby, the Police may have a limited presence but NWAS indicate that there is a strong possibility they will use the site as a joint fire and ambulance station. Obviously this may well change as proposals become firmed up.

Page 47 24. Policy and Resources Committee, at its meeting on 14 th January 2014, approved a response the Government’s consultation on the bidding process for transformation funds. The consultation process closed on 14 th January 2014. Nothing further has been announced on the results of this consultation so it is still assumed that the bidding process will take place in April 2014 with the results announced in autumn 2014.

Equality and Diversity Implications

25. The Equality Impact Assessment originally considered by the Authority as part of CFO/136/13 has been updated following the engagement phase and is attached at Appendix D. There were no issues raised at this stage that would indicate any disproportionate impact on any of the protected groups.

Staff Implications

26. Formal consultation with Representative Bodies has commenced and will continue throughout the process. In particular, representatives from each station affected will be appointed to work on the project team to ensure that any new stations are suitable for a modern Fire and Rescue Service, mirroring the successful process undertaken on the recent PFI Project.

Legal Implications

27. Legal challenges to local authority decisions often focus on a perceived lack of consultation. It is important in avoiding any application for Judicial Review by members of the public that public consultation can be shown to have been “meaningful”. This means that no decisions should be made before the outcomes of any consultation are known and have been properly considered. The case of R v North & East Devon Health, ex parte Coughlan (2001) and other cases since have reiterated the fundamental principles of consultation and the balancing of disclosure against confidentiality as being that consultation should be: • At a ‘formative stage’ of a proposal • Give people ‘sufficient reasons’ for a proposal to allow intelligent consideration and an intelligent response • Allow ‘adequate time’ for responses • Be taken ‘conscientiously into account’ when the ultimate decision is made

28. Therefore the wider the consultation and the better informed the consultees, the lower the opportunity for challenge.

Financial Implications & Value for Money

29. The only direct costs incurred to date involve the employment of ORS which amounted to some £15,000 for which provision exists in the current year’s revenue budget and forms part of the Authority’s regular IRMP consultation and engagement processes and budget. There will be further direct costs as the Authority embarks upon the next phase of public consultation detailed above.

Page 48 Other costs will emerge as progress is made upon identifying and procuring appropriate sites and these will be detailed in the reports on the individual mergers.

Risk Management, Health & Safety, and Environmental Implications

30. Engaging at this stage of the decision making process reduces the risk of challenge at a later stage as the views of stakeholders will be taken into account.

31. Environmental Implications will be taken into account when identifying appropriate sites for any station mergers.

Contribution to Our Mission: Safer Stronger Communities – Safe Effective Firefighters

32. Engaging with our stakeholders ensures that the Authority does not make decisions in isolation and that feedback can be used to ensure that a wide variety of views can be considered.

BACKGROUND PAPERS

CFO/111/11 If this report follows on from another, list the previous report(s)

CFO/136/13 Station Mergers, MFRA 3 rd December 2013

CFO/008/14 Government Consultation on the Bidding Process for 2015/16 Transformation Funds, Policy & Resources Committee 14 th January 2014 GLOSSARY OF TERMS

CFO Chief Fire Officer

MFRA Merseyside Fire and Rescue Authority

NWAS North West Ambulance Service

ORS Opinion Research Services

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Page 50 Integrated Risk Management Plan Consultation Report Opinion Research Services January 2014 Merseyside Fire and Rescue Authority Opinion Research Services

Integrated Risk Management Plan

Listening and Engagement Forums with members of the public

Full Report

Opinion Research Services Spin-out company of Swansea University

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As with all our studies, findings from this research are subject to Opinion Research Services’ Standard Terms and Conditions of Contract. Any press release or publication of the findings of this research requires the advance approval of ORS. Such approval will only be refused on the grounds of inaccuracy or misrepresentation.

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Contents Contents ...... 3 Acknowledgements ...... 4 Project Overview ...... 6 The Commission ...... 6 Consultation Framework ...... 6 Deliberative Research: Public Forums...... 7 Background Information and Discussion Agenda ...... 8 The Report ...... 15 Forum Findings with Commentary ...... 16 Introduction ...... 16 Initial Interest in Options ...... 17 Considered Judgements on Options ...... 17 Interpretation ...... 18 Reasoning about the Options ...... 19 Equalities Issues ...... 24

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Acknowledgements

Opinion Research Services (ORS) is pleased to have worked with Merseyside Fire and Rescue Authority (MFRA) on the five IRMP Listening and Engagement Forums reported here. The forum participants engaged with the issues under consideration and discussed their ideas readily, so we trust the report will contribute to service planning by MFRA at a time of very serious financial constraints.

We thank MFRA for commissioning the project as part of its on-going programme of public and stakeholder engagement and consultation about its risk management planning. We particularly thank the senior officers and Fire Authority members who attended the sessions to listen to the public’s views. Such meetings benefit considerably from the readiness of fire officers and other staff to answer participants’ questions fully and frankly; and the public was pleased that elected members took such an interest.

We are grateful to all the members of the public who took part in the five interesting meetings and shared their views readily with us. They were patient in listening to background information before entering positively into the spirit of open discussions about challenging and complex topics.

At all stages of the project, ORS’ status as an independent organisation consulting the public as objectively as possible was recognised and respected. We are grateful for the trust, and we hope this report will contribute usefully to thinking about MFRA’s development in difficult times. We hope also that ORS has been instrumental in continuing to strengthen MFRA’s public engagement through the forum participants.

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The ORS Project Team

Project Design and Management

Dale Hall Kelly Lock

Fieldwork Management

Kirsty Millbank Leanne Hurlow

Forum Facilitator

Dale Hall

Report Author

Dale Hall

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Project Overview

The Commission

1. On the basis of our long-standing experience with the UK fire and rescue service, and our status as the sole approved provider of research and consultation services under the terms of the Fire Services Consultation Association’s National Framework Contract, ORS was commissioned by Merseyside Fire and Rescue Authority (MFRA) to convene and facilitate five Community Listening and Engagement Forums across the local authority districts of Merseyside, as part of the Authority’s on-going public engagement and consultation programme.

2. ORS’ role was to design, recruit, facilitate and report the five forums about MFRA’s integrated risk management planning (IRMP) during January 2014. We worked in collaboration with MFRA to prepare informative stimulus material for the meetings before facilitating the discussions and preparing this independent report of findings.

Consultation Framework

3. The context and status of the forum meetings is important. MFRA has had an extensive programme of consultation for a number of years – and in this context ORS has facilitated forums regularly, normally with five coordinated district forums each year, with a corporate (all Merseyside) forum held in the interim, six months later. With this on-going framework, MFRS manages “listening and engagement” followed by formal consultation on a regular cycle.

4. The five IRMP forums reported were listening and engagement exercises, since there were no formal draft proposals adopted by the Fire Authority, but rather a number of fairly open-ended options which participants were invited to review as “ideas for consideration” in the general context of MFRA’s financial constraints.

5. Having considered the feedback from the five forums (as reported here), and also other information and insights, the MFRA will probably provisionally adopt draft proposals which will then be subject to formal consultation – most likely through the five forums, but also involving consultation in the most affected communities.

6. Therefore, the outputs reported here should not be considered s “definitive” – for they are a stage in the evolution of options into proposals – and the progression from general listening and engagement to eventual formal consultation on draft proposals.

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Deliberative Research: Public Forums

7. The forums used a ‘deliberative’ approach to encourage members of the public to reflect in depth about the fire and rescue service, while both receiving and questioning background information and discussing service delivery options in detail.

8. The meetings lasted for at least two-and-a-half hours, except that the first, in the Wirral on Saturday morning, lasted three hours. In total, there were 111 diverse participants at the forums. The dates of the meetings and attendance level by members of the public at each forum were as follows:

AREA TIME AND DATE NUMBER OF ATTENDEES

Wirral 10.00 – 13.30 25 Saturday January 11 2014 St Helens 18:00 – 20.45 20 Monday January 13 2014 Liverpool 18.00 – 20.45 25 Tuesday January 14 2014 Knowsley 18.00 – 20.45 18 Wednesday January 15 2014 Sefton 18.00 – 20.45 23 Thursday January 16 2014

9. The attendance target for each meeting was between 20 and 25 people, so the recruitment programme was successful, except for a smaller than average attendance at Knowsley.

10. In each forum, about half the participants had attended a previous similar meeting within the last couple of years, while half were new recruits to the process. The new recruits were recruited by random-digit telephone dialling from the ORS Social Research Call Centre (in the same way as existing panellists had originally been). Having been initially contacted by phone, they were then written to - to confirm the invitation and the arrangements; and those who agreed to come then received telephone or written reminders shortly before each meeting. Such recruitment by telephone is the most effective way of ensuring that all the participants are independently recruited.

11. In recruitment, care was taken to ensure that no potential participants were disqualified or disadvantaged by disabilities or any other factors, and the venues at which the forums met were readily accessible. People’s special needs were all taken into account in the recruitment and at the venues. The random telephone recruitment process was monitored to ensure social diversity in terms of a wide range of criteria – including, for example: local authority area of residence; gender; age; ethnicity; social grade; and disability/long-term limiting illness (LLTI).

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12. In all five forums (as shown in the table below), participants were a broad cross-section of residents from the local areas and, as standard good practice, were recompensed for their time and efforts in travelling and taking part.

WIRRAL ST HELENS LIVERPOOL KNOWSLEY SEFTON

Gender Male: 15 Male: 12 Male: 12 Male: 12 Male: 12 Female: 10 Female: 8 Female: 13 Female: 6 Female: 11 Age 18-34: 4 18-34: 2 18-34: 6 18-34: 5 18-34: 6 35-54: 9 35-54: 8 35-54: 9 35-54: 6 35-54: 7 55+: 12 55+: 10 55+: 10 55+: 7 55+: 10

Social Grade AB: 7 AB: 4 AB: 7 AB: 2 AB: 6 C1: 6 C1: 5 C1: 9 C1: 5 C1: 8 C2: 5 C2: 3 C2: 2 C2: 5 C2: 3 DE: 7 DE: 8 DE: 7 DE: 6 DE: 6

BME 0 0 3 1 0

Disability/LLTI 8 5 2 2 1

13. Although, like all other forms of qualitative consultation, deliberative forums cannot be certified as statistically representative samples of public opinion, the five meetings reported here gave diverse groups of people from Merseyside the opportunity to comment in detail on MFRA’ current and future direction of travel.

14. Because the recruitment was inclusive and participants were diverse, we are satisfied that the outcomes of the meeting (as reported below) are broadly indicative of how informed opinion would incline on the basis of similar discussions. In summary, the outcomes reported here are reliable as examples of the reflections and opinions of diverse informed people reacting to the important and diverse issues discussed in the meetings.

Background Information and Discussion Agenda Previous Forums

15. ORS worked in collaboration with MFRA to agree a suitable agenda and informative stimulus material for the meeting, which fell into three very unequal parts. The first part of each meeting began, for the sake of continuity and context, with a short review of the outcomes of the forums held over the last two years. This retrospective review mentioned all of the following topics - the: Importance of prevention in the context of protection and response services Changing profile of MFRA – including resources, strategic roles, and incident profiles 53% reduction in the number of emergency incidents over the last nine years

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Impact of the Phase 1 public spending reductions on MFRA – and in particular the reduction of fire engines from 42 to 37 to 33 and to the current 28; and the reduction of 270 staff – comprising 180 fire fighters and 90 support staff Continuation of 26 fire stations – including 10 in Liverpool, six in Wirral, four in Sefton, three in Knowsley and three in St Helens Introduction of a single overall Merseyside-wide response time standard – based on the first fire engine attending critical incidents within 10 minutes on at least 90% of occasions Use of more productive and flexible crewing systems – including the introduction of 12 hour day and night shifts 2% increase in the MFRA council tax precept for 2013-14. Financial Constraints

16. Following the brief review of the previous forums, the second part of each meeting reviewed the implications of the continuation of the public spending reductions towards 2020. The key issues considered were: The projected budget deficit of £6.5 million by the end of 2015/16, based on known financial information The possibility of the deficit growing to £9.1 million by the end of 2017/18, based on likely financial projections.

17. These financial challenges were explained neutrally and did not form a major focus of the discussion – though they were presented as constraints requiring substantial reductions in spending to be made on a progressive basis. In order to encourage free discussion, the financial position was not used as a repeated justification of each proposal: participants were invited to assess proposals on their general merits, albeit within a generally constrained position. Taking Stock

18. In this context, the third part of each meeting attempted to ‘take stock’ of MFRS in terms of its much reduced risk levels (with incidents having reduced by 53% over the last nine years), strategic roles and allocation of resources.

19. Participants were also shown comparative data to illustrate both the high levels of government funding and the substantial emergency cover resources that MFRS and the other metropolitan fire and rescue services have enjoyed over the last half century. For example, the following graphics were explained briefly – with Merseyside highlighted in red and the other big metropolitan authorities in yellow.

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20. The chart above shows that, relative to most other fire authorities, Merseyside still receives a high proportion of its total funding from the government and raises a relatively small proportion through council tax.

21. Therefore, even in recent years, it has been able to maintain a relatively high level of expenditure per head of population – as the chart immediately below shows.

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22. Due to its funding, and due to historical assessments of risk deriving from intensive bombing in WW2, Merseyside has had a large number of closely located fire stations (especially in Liverpool and the Wirral) in order to meet the statutory response time standards that prevailed from the 1950s to 2004 –as the two charts below illustrate.

23. Indeed, on the basis of its population of about 1.4 million people, MFRA has more wholetime fire stations than any other area of the country, including London – and so, as the chart below shows, each of its 26 stations cover relatively small areas of the authority area.

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24. Given its high levels of fire stations and fire engines, MFRA has maintained a relatively large number of wholetime firefighters compared with most other authority areas – as the next chart shows.

25. Partly as a result of MFRA’s very active preventative and educational work, all categories of incidents have reduced very significantly in Merseyside over the last nine years, as the chart below shows.

26. Not surprisingly, then, all of MFRA’s fire stations deal with many fewer incidents each year than they used recently to do – as shown below.

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27. In the context of the above data, the forums were shown the current distribution of MFRA’s fire stations with the following map.

28. As part of the context for discussion, participants were informed that in principle it would be possible to maintain MFRS’s current 10-minute response standard for critical incidents from only 10 strategically located fire stations across Merseyside – including, for example, two in Liverpool, two in Wirral, three in Sefton, two in Knowsley and one in St Helens, as the following map shows.

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29. In connection with the map above, it was also pointed out that although a reduction to ten strategic fire stations would be compatible with the current response time targets, it would nonetheless lengthen the current average response time of 5 minutes 22 seconds for critical incidents.

30. It was made clear in all the forums that the ten-station scenario was an “indicative hypothetical model” (albeit based on reliable data), rather than a proposal or implicit plan. Discussion of Options

31. The final and much the longest part of the meeting was devoted to detailed discussion of several possible options for further financial savings – ranging from:

Additional “low level activity and risk” stations (LLARs) Introduction of day crewing at some wholetime stations Introduction of “community retained” (RDS) stations “Merger” of pairs of older stations and their replacement by modern community fire stations – in effect a “one-for-two option” Closure of some stations without replacement.

32. Participants were encouraged to consider the above ideas and options in principle – on their merits in terms of suitability, sustainability, resilience and acceptability for Merseyside. In other words, financial issues were not the primary focus of the discussion – but the options above and the choices facing MFRA were examined carefully and at length. Participants were given extensive time for questions prior to being invited to make up their minds on each discussion topic.

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The Report

33. This report concisely reviews the sentiments and judgements of participants about MFRA and the five important options listed above.

34. Verbatim quotations are used, in indented italics, not because we agree or disagree with them – but for their vividness in capturing recurrent points of views. ORS does not endorse the opinions in question, but seeks only to portray them accurately and clearly. While quotations are used, the report is obviously not a verbatim transcript of the sessions, but an interpretative summary of the issues raised by participants in free-ranging discussions.

35. The way in which the five options for consideration were assessed in the forums is explained at the start of the next chapter.

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Forum Findings with Commentary

Introduction

36. The first part of this chapter reviews the relative support for each of the five options as concisely as possible; the second part reviews the arguments, considerations and points of view that the participants relied upon in making the judgements of the relative merits of the five options.

37. In the forums, following the background financial and operational information, the relative support for each option was assessed in two main ways – as follows:

First, after an explanation of each option, participants were asked whether they were “initially or provisionally interested” in the option as a possible way forward for MFRA; Finally, when all the options had been reviewed in detail, participants were asked to nominate their first, second and third preferences and the relative levels of support were assessed through a “points score” – based on counting: Three points for each first choice Two points for each second choice One point for each third choice.

38. In these ways, the relative support for each option was measured. Not surprisingly, the two measures were generally very consistent in their results; but the “points score” is the most reliable and important since it is based on participants’ considered or final judgements, after reviewing all the options fully and explicitly comparing their merits.

39. It is worth noting that in each forum this method of ‘scoring’ the options was explained to the participants, and examples of the points scores for selected options were quickly generated following people’s first, second and third choices – in order to confirm that the procedure was acceptable and generated intuitively acceptable results. This was confirmed in each forum and no one contested the scores generated.

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Initial Interest in Options

40. The table below shows the numbers of people showing initial interest in each option. The numbers have been weighted and rounded to compensate for small variations in the number of participants at each Forum. (The numbers attending each forum are shown in brackets beside the district names.)

T H E O P T I O N S LOW LEVEL DAY COMMUNITY STATION STATION ACTIVITY/RISK CREWING RETAINED MERGERS CLOSURES Wirral (25) 23 6 1 25 14

St Helens (20) 14 7 0 23 18

Liverpool (25) 23 2 0 24 17

Knowsley (18) 12 0 0 19 18

Sefton (23) 19 6 1 21 16

Total initial 91 21 2 112 83 supporters

41. In terms of initial interest, station mergers was clearly the most popular, followed fairly closely by increasing the number of low level activity and risk (LLAR) stations and, perhaps surprisingly, reducing the number of fire stations (but certainly not to a few as 10).

42. In three districts initial support for more LLAR stations almost matched support for mergers; but in St Helens and Knowsley it was less. In no area was support for station closures quite as high as for mergers, but in Knowsley they had almost equal support. In three areas initial support for LLARs exceeded that for closures, but not in St Helens and Knowsley.

Considered Judgements on Options

43. As explained above, people’s final judgements based on their rankings are more important than their initial interest levels reviewed above. Therefore, the “points scores” for each option shown on the next page are the most reliable guide to the participants’ considered or final judgements, after reviewing all the options fully and explicitly comparing their merits.

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T H E O P T I O N S LOW LEVEL DAY COMMUNITY STATION STATION ACTIVITY/RISK CREWING RETAINED MERGERS CLOSURES Wirral (25) 33 5 1 75 21

St Helens (20) 37 12 0 57 20

Liverpool (25) 45 10 0 69 21

Knowsley (18) 25 5 4 60 39

Sefton (23) 21 18 2 68 33

Total Points 161 50 7 329 134

44. Station mergers was clearly the most popular option – and the points scoring method emphasises its ‘leadership’ position in all the districts; but it is interesting that LLARs and station closures had comparable levels of support, though both are a long way behind mergers – though, of course, mergers are one form of station closure in any case.

45. In Knowsley and Sefton, the prospect of station closures was more popular than increasing LLARs, but not so in the other three areas. In none of the districts was there significant support for the introduction of day crewing and community retained stations, except perhaps in Sefton, where day crewing got nearly as many points as LLARs.

Interpretation

46. The overall impression is that, when faced with a broad choice between keeping all stations and changing to cheaper duty systems or reducing stations while protecting duty systems, the participants clearly favoured the latter. In other words, they made at least an implicit choice in favour of reducing stations rather than changing the way Merseyside is crewed.

47. Significantly, while two options were unpopular, no one rejected the options in their entirety or thought that MFRA should not even be considering such courses of action. That is, there was implicit agreement that MFRA’s current ideas and options are a reasonable and responsible reaction to the budget reductions it is facing – and indeed in most cases could be introduced safely and sustainably.

48. So far, though, we have considered comparative levels of support only, without taking account of the reasons people had for their views or the reservations about particular options – so those are considered in the next section.

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Reasoning about the Options Introduction

49. People’s reasons for their views are obviously important in relation to the various options considered – for ultimately listening and engagement and formal consultation are not simply a ‘numbers game’ in which majority support counts for everything: the key issue is not numbers but the cogency of the arguments for or against the various options.

50. This section concisely reviews the various opinions, reasons, considerations and attitudes of the participants. Low Level Activity and Risk Stations

51. People were interested in the current LLAR stations and could appreciate the value of keeping fire fighters ready for almost immediate response at night, while also saving on the costs of full night time crewing. Their main questions and concerns were about: Potential impact on response times The safety and fatigue of crews after a busy 12-hour day shift How many 24-hour shifts do people do in sequence How many stations might be converted to LLAR What savings are achieved by LLARs The cost of installing accommodation on/near the stations Whether the LLAR system would work/operate if there were fewer stations Whether fire fighters living very close to LLAR stations could be on call during the night time from their homes How fire fighters feel about the system where it has been operated Whether the system would suit married fire fighters as well as single persons Whether the system would discourage potential recruits.

52. As the points scores demonstrate the option was received very positively – for example: Theoretically, you could manage with 10 stations – so this is a good compromise to prevent you losing stations which could otherwise be closed One of the positives of the LLAR is that if the risk is increased in an area in future then you could restore 24/7 cover if necessary.

53. Insofar as there were any real worries about the crewing system, they mainly focused on the welfare of the fire fighters:

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Our responsibility is to the safety of the fire fighters – and I have reservations about LLAR because they might not sleep well; and the 12-hour day shift is long; and they are away from their families – so that could reduce their commitment and effectiveness. Day Crewed Stations

54. People were much less favourable towards the principle of day crewed stations than LLARs. Their main questions and concerns were about: Potential impact on response times – especially at night when wholetime RDS attend from their homes Whether response time statistics include the five minute night time delay Whether slower response times would be acceptable in lower risk areas Night times might have many fewer incidents, but they were likely to be more serious Whether it is possible to cover a station area from another wholetime station – and rely on the wholetime RDS only as a support vehicle rather than the primary response Back-up plans if wholetime RDS are unavailable on some nights The size of the recruitment catchment areas and the effectiveness of recruitment and retention How much saving day crewed stations might yield How many such stations might be required to save the necessary money Whether it would be better for fire fighters to come from their own homes (compared with LLAR) The proportion of fire fighters who live within five minutes of their stations Whether the system has been tried and tested elsewhere

55. Overall, people felt that day crewing is an inferior form of cover for Merseyside, even though they were told that many FRSs use it. Many wanted to consider station closures rather than what they thought as an inferior emergency cover duty system: It could be better to write-off the older stations and reduce your losses – it feels like [with day crewing] you are trying… to keep all your stations open – but you need to stop just trying to keep hold of all your stations! This suggestion [day crewing] could suggest you could consider closing a station if it is so quiet at night We don’t have to choose just one option; we could have a range of options.

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Community RDS Stations

56. People were very interested in the idea of community retained stations, but also very much against the prospect of introducing them in Merseyside – even though they were told that two- thirds of the area of England and Wales is primarily covered by RDS stations. Their main questions and concerns were about: Potential impact on response times – when RDS take five minutes to attend from their homes or workplaces How response times are monitored How RDS availability is managed Whether wholetime and RDS crews can work together on the same appliance The numbers of RDS crews employed in the big metropolitan areas The degree and intensity of training that RDS staff get Whether RDS staff could deal with chemical hazards effectively The risk of injury for RDS staff Whether retired wholetime fire fighters could serve as RDS crews How reversible is the system if risk increases over time.

57. Some telling comments from across the forums were: The technical difficulties with fires mean that this approach [community RDS] is not suitable in urban areas – it’s for rural areas where fires are fewer and smaller and less complex I would rather have trained and experienced fire fighters than enthusiastic ‘amateurs’ doing the job It would make more sense to have fewer stations and keep the wholetime fire fighters – where they are focused and ready You want the best people but the pool would be restricted to people within five minutes – so you are reducing the available people Congestion could stop people getting to their stations within five minutes I don’t trust the five minute response time at night – when people have to get up and get dressed first Recruitment is difficult and employers do not want to release their staff We don’t want to devalue our wholetime fire service!

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Station Mergers

58. People were very interested in how and where this option might be used; and they were also very favourable about it following discussion. In particular, it seemed a positive option because it reduces the number of old, expensive-to-run, unsuitable stations while providing new and better located facilities. Their main questions and comments were about: Whether the capital value of the closed sites could be realised for MFRA Whether the capital would have to be borrowed Whether they would be PFI schemes Whether government funding would be available Whether the new stations would be built before the old ones are closed How long the building programme would take Whether there would be a net reduction in fire engines compared with the un- merged cover How the second fire engine on merged stations would be crewed and used, if not an immediate response vehicle Whether the second appliance could be maintained as now If the new sites would provide a chance to collaborate with the ambulance and police services more effectively Would there be compulsory redundancies as a result of mergers How sites for the new stations would be selected in relation to risk and populations How many potential mergers could there be.

59. In the context of a generally favourable reception for this option, some typical comments from across the forums were: This would be a positive change which moves forward by reducing the excessive number of fire stations (the costs of those are a burden) and it is good that it lets the emergency services work together It would be good to have a new Wirral station inland rather than just near the coast Prescot makes sense as a location Mergers are a good idea in principle.

Page22 72 Integrated Risk Management Plan Consultation Report Opinion Research Services January 2014 Merseyside Fire and Rescue Authority

Station Closures

60. In all areas participants knew that, in principle, station closures could affect all districts (depending on relative risk, and station numbers and coverage); but in both Sefton and Liverpool the participants were made aware that their areas could be affected, owing to the relative numbers of fire stations in the five districts.

61. It might seem surprising that participants across the forums were able to accept that some stations might be closed – but they took seriously the comparative and historical evidence about the over-provision of stations (particularly in relation to Liverpool, Sefton and the Wirral districts).

62. As we have said about the points scores, overall, when faced with a broad choice between keeping all stations and changing to cheaper duty systems or reducing stations while protecting duty systems, the participants clearly favoured the latter: they made at least implicit choices in favour of reducing stations rather than changing the way Merseyside is crewed.

63. All the participants were aware that station closures are an emotive issue and difficult for the public to understand. Their main questions and concerns were about: How the public will react to closures Whether it is safe to close stations Resilience for big incidents with fewer fire fighters and stations Whether risk will increase significantly in the medium term due to economic, social and benefits changes Whether educational and preventative work could continue with many fewer fire fighters The criteria that would be used to select stations for closure How education and prevention have reduced risk Whether fire engines would be reduced The fact that stations might be lost for good Whether the government grant to MFRA would be adversely affected by station closures Whether the capital value of the closed sites could be realised for MFRA Whether closures are being imposed by the government.

64. There were a number of supportive comments across the forums, including in Liverpool and the Wirral. For example, the following comments came from Wirral: Closures are much more emotive and hard to sell, but there is some point to it You can sell mergers more easily than this Emotion should not come into it – the fire service has to educate local opinion properly on the options

Page23 73 Integrated Risk Management Plan Consultation Report Opinion Research Services January 2014 Merseyside Fire and Rescue Authority

You have to run in a business-like manner in relation to costs If you could run with 10 stations then there is scope for some closures You have to look to the future because the cuts won’t go away.

65. In Liverpool there was also an interest in the possibility of station closures and the option was the third most popular. Two significant comments were: Which are the quietest Liverpool stations? If you closed a station you could still use some of the fire fighters elsewhere If you close a station completely, will this affect the grant from the government.

66. In Sefton the comments were less overt and more guarded (as one person suspected a ‘government conspiracy to privatise the fire and rescue service’ and others were concerned about a reduction in the number of fire fighters and amount of prevention work if MFRA stations were closed); but there was broad support for the view that: A hybrid solution and partnership with [FRS] neighbours could continue – so this would give flexibility: shared services is an idea that won’t go away!

Equalities Issues

67. In most of the forums there was just time to ask participants whether the options in any way disadvantaged any of the equalities streams or protected groups.

68. The unanimous response was that they did not jeopardise any minority group; indeed, it was generally agreed that the elderly and other groups would gain positive benefit from the enhanced community facilities at newly built ‘merged’ fire stations.

Page24 74 Example consultation programme - 12 weeks

Scenario - Merger of stations 1 and 2 in one council area at a third location in the same council area

note: Programme would be coordinated by Strategy and Performance

Preparati on & Marketin g Consultation Communication Consultation Type Produce Present Marketing Staff Staff Staff Online Online Rep body Station Public Public Public Public Public Public Joint Joint Staff Staff docume to of communica- communica- communica- surveys surveys consultati- users Focus Meeting Focus Meeting Focus Meeting Stakehol- Forum meeting - Meeting - ntation Council consultat- tion tion tion - other staff Public on consulta- Group Station Group Station Group NEW der (using Station 1 other ion Station 1 Station 2 stations in tion Station Area 1 Station Area 2 NEW Station Business members and stations in the council Page 75 Page events Area 1 Area 2 Station Area Breakfast of the Station 2 the areas Area existing council IRMP areas forums)

Date 4 weeks Wk 1 Weeks 1-5 Week 1 Week 1 Week 2-4 Week 1 - Week 1 - Week 1 - Week 1- Week 4 Week 4 Week 5 Week 5 Week 6 Week 6 Week 6 Week 7 Week 8 week 9-11 prior to 12 12 12 12 start of consult'n Officer Principal District District District District Principal Principal Principal Principal Principal Principal Principal Principal District District representing CC, S&P NA NA NA NA Officer Manager Manager Manager Manager Officer Officer Officer Officer Officer Officer Officer Officer Manager Manager MFRS External Facilitator TBC Yes TBC Yes TBC Yes TBC Yes Yes (where applicable) This page is intentionally left blank

Page 76

Merger Engagement 2013/14

Date Event/Location MFRS attendees Notes/outcomes 10/9/13 Deputy Chief Exec (DCE) met St DCE & Chris Case Meeting at St. Helens Helens District Manager 12/9/13 DCE met Wirral District manager DCE & Paul Murphy Meeting at Birkenhead fire station 17/9/13 Chief Fire Officer (CFO) met Louise CFO CFO briefed Louise on the financial position of the Authority, the Ellman MP challenges in 2015/16 and beyond and the options open to the Authority to meet the financial challenge. 20/9/13 CFO addressed City Region Cabinet CFO, D Appleton Short presentation explained the challenges facing the Authority and potential options for mergers and/or closures. Mayor Anderson was supportive and understood the challenges. No support for seeking permission for increases in council tax

Page 77 Page beyond that allowed. 23/9/13 Meeting officers, Wirral BC DCE Initial meeting to look at options for sites for a potential station merger in the Wirral area 11/10/13 CFO addressed Merseyside MPs CFO CFO briefed MP’s on the financial position of the Authority, the breakfast meeting challenges in 2015/16 and beyond and the options open to the Authority to meet the financial challenge. 23/10/13 Visit to potential St. Helens sites C Schofield, C Case Visited a range of sites in the St. Helens area & evaluated their potential to house a new station & gain access to the main highway network. 4/11/13 Meeting DCE & Colin Schofield General meeting to discuss mergers. 6/11/13 Meeting re consultation C Schofield, D Approach explained and discussed. ORS forums, meetings with Appleton councillors, Formal consultation process also discussed. 6/11/13 Knowsley BC officers & Developer C Schofield, G Oakford, Discussed options for the acquisition of a site in Prescot for a A Subramanayam new fire station/blue light hub & discussed whether the Council had a ‘Preferred Developer’ for the site. 8/11/13 CFO met Shaun Woodward MP CFO CFO briefed Shaun on the financial position of the Authority, the challenges in 2015/16 and beyond and the options open to the Authority to meet the financial challenge. 8/11/13 CFO met Angela Eagle MP CFO CFO briefed Angela on the financial position of the Authority, the challenges in 2015/16 and beyond and the options open to the

Authority to meet the financial challenge. 11/11/13 Meeting DCE, Colin Schofield & General meeting re mergers. Anantha Subramanayan 19/11/13 Members seminar All Options explained in detail. Members expressed a wish for council public forums to be added to engagement phase. 28/11/13 CFO met Stephen Twigg MP CFO CFO briefed Stephen on the financial position of the Authority, the challenges in 2015/16 and beyond and the options open to the Authority to meet the financial challenge. 29/11/13 CFO spoke to Graham Burgess, Chief CFO CFO briefed Graham on the financial position of the Authority, Exec, Wirral BC the challenges in 2015/16 and beyond and the options open to the Authority to meet the financial challenge. 3/12/13 CFO/136/13 to Authority Agreed

Page 78 Page 4/12/13 Email to Carole Hudson, Chief Exec, C Schofield Advised of the Authority resolution (3/12/13) & sought a meeting St. Helens with the appropriate officers to attempt to identify potential sites for a station merger. 5/12/13 Estates & Procurement planning C Schofield, D Discussions about engagement, consultation, procurement and meeting Appleton, A building phases to assist in establishing project plan. Subramanayam, S Woods, C Atkinson, S Mathews 11/12/13 Fire Brigades Union (FBU) consultation C Schofield, M Opened consultation. Outlined Authority resolution & CFO Cummins delegated powers. Undertook to keep FBU advised & meet again after the initial communication/consultation phase was complete. FBU to nominate station representatives to liaise with CS. 11/12/13 Knowsley full Council, Huyton CFO, G Oakford, C Options presentation delivered. 20 minutes available. Attendees Schofield, D Appleton supportive. Questions “What do the FBU think of the options?” A - neither the FBU or Fire Authority wanted to make the changes, but that the FBU were being consulted and understood the need to change. Q - “What savings have and will be made from the back office?” A - significant savings have already been made from support staff and further savings will be made, but opportunities are

limited as the budget spent on support staff is much smaller than that for firefighters Q - “What consultation will take place on the proposals?” A - full consultation will take place with stakeholders when firm proposals are agreed.

12/12/13 Wirral, meeting with Cllr Phil Davies CFO Explained the options. Those present understood the Leader and CEO challenges. 12/12/13 St. Helens Reporter article on Includes MP Shaun Woodward’s comments on safety and job cuts/mergers losses.

16/12/13 Eccleston ward councillors: CFO First of a series of briefings this week with local politicians. Ward Michael Haw, Geoff Pearl, Teresa councillors to produce a newsletter on the options for local Sims residents

Page 79 Page 18/12/13 Fire Officers Association (FOA) C Schofield, M Opened consultation. Outlined Authority resolution & CFO consultation Cummins delegated powers. Undertook to keep FOA advised & meet again after the initial communication/consultation phase was complete. Rob Pritchard to alert his members & seek comments 18/12/13 MFRA officers C Schofield Pre-meeting for Knowsley BC meeting on 19/12/13.

19/12/13 Knowsley BC officers re Prescot C Schofield, A Further discussions on options for the acquisition of a site in Subramanayam Prescot for a new fire station/blue light hub & established whether the Council had a ‘Preferred Developer’ for the site. 19/12/13 FOA chair email to FOA members on C Schofield consultation 20/12/13 NWAS officer C Schofield, A Discussed whether NWAS are interested in coming into any new Subramanayam merged station. Initial views – Prescot, yes but will recheck & advise by 6/1/14; St. Helens probably not; Greasby, strong possibility but will confirm by 31/1/14. 20/12/13 Meeting with Esther McVey MP + Cllrs CFO CFO briefed Esther and the Wirral Conservative Leaders on the Jeff Green & Lesley Rennie financial position of the Authority, the challenges in 2015/16 and beyond and the options open to the Authority to meet the financial challenge with particular focus on the Wirral. 20/12/13 CFO addressed City Region Cabinet CFO CFO briefed the City Region Cabinet on the financial position of

the Authority, the challenges in 2015/16 and beyond and the options open to the Authority to meet the financial challenge. 23/12/13 CFO met Councillor Walsh, Knowsley CFO CFO briefed Frank on the financial position of the Authority, the challenges in 2015/16 and beyond and the options open to the Authority to meet the financial challenge with particular focus on the Huyton with Whiston merger. 8/1/14 Merseyside Police representative C Schofield, S Woods, Discussed whether Police are interested in coming into any new A Subramanayam merged station. Initial views – Prescot, yes (as previously advised but possibly less than originally proposed); St. Helens probably not but depends on site selected; Greasby, possibility but relatively small requirement 8/1/14 Wirral BC officer re Greasby C Schofield, A Discussed options & land ownership issues for a potential site in Subramanayam Greasby. Wirral to provide further details. 9/1/14 St. Helens BC officer DCE, C Schofield, C Further meeting to look at options for sites for a potential station

Page 80 Page Case merger in the St. Helens area. Two potential additional sites identified for further investigation. 9/1/14 NWAS officer NWAS not now likely to be involved in Prescot

9/1/14 Presentation to St Helens Council CFO, DCE, C One hour available so able to explain in more detail. Well members Schofield, D Appleton, received by those present. Questions about 1. Whether Newton C Case would revert to whole time if mergers implemented (A – yes), 2. Have we considered co location? (A - yes, discussions are ongoing) 3. Will there be a capital receipt? will the Parr site be saleable? (A - yes there will be capital receipts, but this will be more in some places than others. Consideration will be given to the impact on the community of closing a station), 4. Some questions about the WT/retained model (A – The CFO explained the model in more detail) 5. Can we identify land (A – we are in the process of looking for land) 6. Would hospitals be suitably covered (A – yes, this is a key consideration). All answered to the satisfaction of the questioners. Comments included - “sounds sensible”, “best to look at the cover provided, not the stations”, “pragmatic”. 11/1/14 Wirral IRMP Forum DCE, AM Platt, D Considerable support for mergers. Some support for closures Appleton, W Kenyon, C and day crewing, very little for community retained. Engaged

Schofield participants asked intelligent questions. Some clarification required from DCE and AM but not a great deal.

13/1/14 St Helens IRMP Forum DCFO, AM Mottram, C The presentation had to be shortened to fit the shorter timescale Page 81 Page Case, D Appleton, W of the evening meetings and although it initially appeared that Kenyon, C Schofield some relevant points had been omitted, these were picked up as questions by attendees and responses given by officers. Results were similar to Wirral but with less of a gap between LLAR and mergers.

14/1/14 Liverpool IRMP Forum DCE, W Kenyon, J There were 25 people present. Sutton, Once more, ORS initial interpretation of this and the “provisional

interest” also recorded is that there was support for a package deal – with respective emphasis to LLAR, Mergers and Closures – with Day Crewing Community RDS a very long way behind. ORS were very frank about Liverpool stations – so they were well aware of that This image cannot currently be displayed. Page 82 Page

15/1/14 Knowsley IRMP Forum DCE, AM Searle, G Fewer attendees at Knowsley, but still engaged. There is a need Oakford, P Hitchen, M to weight both St Helens (20 attendees) and Knowsley Cummins, P Rushton, (18 attendees) upwards because they generate fewer points W Kenyon, C Schofield than Wirral and Liverpool (with 25 attendees in both cases). In practice, the difference will not be huge – and definite priorities are emerging.

This image cannot currently be displayed.

15/1/14 Liverpool full Council CFO, D Appleton, R CFO delivered 3 minute statement which was responded to by Davis Mayor Joe Anderson who expressed support for the FRA and FBU. The main focus of Mayor Anderson’s comments was the

Page 83 Page government cuts. 16/1/14 Sefton IRMP Forum DCFO, D Mottram, J Well attended (23) with preferred option mergers, followed by Sutton, D Appleton, P station closures Hitchen, M Cummins, R Pritchard 17/1/14 Wirral Council meeting CFO, D Appleton, C One hour meeting with Leader and Labour Group members. Schofield CFO explained the options. Councillors understood the situation the Authority is in. Questions mainly involved discussion on whether the merger at Greasby was the only option for Wirral and the CFO explained other options were possible, but Greasby was the optimum location for response and that it also opened up opportunities for partnerships. Asked about further consultation, CFO explained that following MFRA agreement of proposals we would come back to Councils for their views on the best ways to engage in line with our plan. 21/1/14 Huyton local public forum (Council) DCFO, W Kenyon, C The meeting was organised and widely promoted to the public Schofield, P Rushton, and community organisations by the Council and held at Huyton M Thomas Suites from 4pm to 5pm on the 21 st of January. Five people attended, four of them from the council. Questions and Answers

Q. Is the fact that we’re a port taken into account by Government when providing fire cover? A.There is still an historical basis to the provision of fire services on Merseyside and as a result we are, by comparison with most other services, still well provided for. Coastline is a factor within the grant formula – however more people die in house fires in the UK than in Industry. Q. I live in Netherley and we’ve always had two fire engines. A. If you call in a house fire the nearest appliance is sent and a second one will be very close behind. We guarantee we’ll be there within 10 minutes, but generally we will get there far quicker than that. The average response time to Knowsley is currently 5 minutes 22 seconds. Q What do you mean by merging stations?

Page 84 Page A It does mean we will be closing stations and we’re being quite clear about that. I will explain the merger option further on, but in affect two older stations will be merged into one new station located somewhere between both to ensure the best response possible within the parameters set. Q What are the weekly hours for firefighters? A. Firefighters work 48 hours over an 8-day period – we have recently changed the shifts to increase productivity – so a fire fighter working the wholetime duty system will normally work 2 x 12 hour days followed by 2 x 12 hour nights followed by 4 days free from work (locally known as 2-2-4). Q Does the airport employ its own firefighters? A Yes, but if a plane was to come down outside the airport then we will respond and lead on the incident. The airport has limited resources. Q When a fire happens in the day it is easier to spot. At night it could be more difficult to see and take you longer to respond. A. Of course we do need cover at night and it is also important that we continue to do our community prevention work to reduce the number of fires. Q Are community retained firefighters trained in the same way

as wholetime firefighters? A Initially yes, but it is far more difficult to maintain their training and skills because they are not available as much during the week. Wholetime fire fighters undertake approximately 20hrs training a week – with a community retained fire fighter that reduces to between 2/3 hours. Q The proposed new Prescot station is going to be built on Manchester Road but there is nowhere to build on that road. A We haven’t finalised a site yet or purchased any land for a new station. We want to go through a detailed consultation process and listen to what people say before we come back with final proposals. Q Why does a fire station have to have community facilities, why can’t it be just a fire station? There are plenty of community centres.

Page 85 Page A Modern fire stations have many community facilities such as gyms which are used by local organisations. For instance, Wirral Heartbeat use our gyms which are often available and used by community groups. Q I don’t really agree that Huyton has to be closed. It could be done up. I can understand why you wouldn’t want to close Whiston. I am from Huyton. A I understand why you are suggesting that but we have to come up with the best solutions for everyone on operational response. I’m sure some people at Whiston will be saying the same thing. Q How many staff are you going to lose? A. We estimate we will have to lose around a further 150 posts and that includes support staff and firefighters. Q Is the change to when firefighters retire going to make any difference? A Not really, but we are concerned that if we don’t do some recruitment over the coming years that we are going to end up with a skill gap in future years – the skill is to introduce

firefighters over a period of years to ensure competence in the long term. Q Do the possible job losses include advocates? We have some fantastic advocates doing great prevention work in Huyton and I wouldn’t want to lose them. A I couldn’t agree more - the work of our advocates is excellent We don’t want to lose any of our staff but unfortunately we are dealing with realities – it is our intention to protect the frontline as best we are able - our excellent prevention staff are in my mind frontline.

22/1/14 Whiston local public forum (Council) DCFO, W Kenyon, M ST EDMUND ARROWSMITH, Thomas, K Mansfield One member of the public who has an interest in history and CENTRE FOR LEARNING. was a firefighter, three council officers and Councillor Tony

Page 86 Page Newman from Fire Authority attended. The council advertised it through community messaging – to 300 to 400 people in the area – and by contacting their contacts on all the community groups.

Questions:

Q: What was the percentage of staff lost during that time (when DCFO speaking about recent changes and CSR 2010)? (Question from councillor Byron). A: DCFO gave approximate figures but said he would have to come back to give the exact figures on that.

Question on how many appliances would “we have” and whether community retained was “part-time firefighters” (DCFO said they are those with jobs in the day)

Q: Where are you thinking of siting (the new station at Prescot) A: DCFO said in the Manchester Road area – Councillor Tony Newman added some further local knowledge of where it may be

Q: Will prevention work continue at the same level? That work has made a difference. A: DCFO said the investment in prevention had got us where we are and the balance between prevention and operational staff had to be “right”. He said there was no way he wanted to “compromise” safety and recognized that the specialist teams do a lot of the preventative work.

The member of the public spoke about not using “expensive” firefighters to install smoke alarms or do hydrant walks, after asking who did the hydrant checks, and perhaps pay a company or others to do these roles. A: Councillor Tony Newman said advocates do the smoke alarm fitting too and other home visit work and the Authority cannot

Page 87 Page afford to pay people to do the hydrant checks anymore. DCFO said in Merseyside between 3% and 10% of firefighters’ time was spent on calls, so there is time to undertake other work – training, preparedness and prevention activity. DCFO said he would much rather they go into schools or homes to carry out prevention work than just wait for calls.

Q: On the money available for building new stations/efficiencies is that on a first come first served basis? A: DCFO said you have to bid for the money – DCLG have set aside £70million for invest to save projects.

Q: If you relocate with police and ambulance (to Prescot), would they put money in? How advanced are the discussions with them? A: DCFO said yes and the discussions were quite advanced.

The member of the public made the comment it was “annoying” you cannot set the budget to the Service.

23/1/14 Sefton Council meeting CFO, P Rushton Full Council meeting. One question on the number of PFI stations answered by CFO. 27/1/14 Met site owner in St. Helens C Schofield, C Case, A Options to purchase or lease potential site discussed. Subramanayam 27/1/14 Wirral Economy and Environmental CFO, C Schofield CFO delivered presentation on options to the Committee, Policy and Performance Committee together a number of other Wirral councillors in the public meeting gallery. Then Q&A session. Q. What is average response time? A. 5 mins 15 seconds, pan-Merseyside Q. What impact would there be on average response times from a merged station in Greasby? A. Slight increase in Upton & West Kirby areas but decrease to the Greasby/Frankby area.

Page 88 Page Q. How will funding be achieved? A. Beauty contest for resources – more efficiencies = more resources. Q. Why has Merseyside received cuts twice the national average? A. CFO set out historical context – 1947 FS Act; National Standards of Fire Cover; attendance at A Risk in docks; declining population; change in funding mechanism etc Q. What is timescale for merger? A. Need to address now for 2015/16 cuts. Probably 18 – 24 months but depends on availability of land in Greasby. Q. Wouldn’t Greasby location have significant effect on attendance times to Hoylake, particularly down narrow lanes? A. Potentially but so would a closure of West Kirby & there are no other alternatives. Q. What are the effects of cuts on Fire Safety initiatives such as free smoke alarms etc? A. 90 support posts already gone (many front line) & more to come. However, recent changes to firefighter work routine, agreed with FBU, improved efficiency & additional time generated for HFSC etc.

29/1/14 Members Strategy Day Members, SMG, A detailed presentation on scale of the budget challenges, District Managers and income and expenditure, how much can be saved from support other MFRS managers, services and what the Members need to consider when setting partners, the budget was followed by presentation on the outcomes of Representative Bodies public engagement, the options for operational response. Members were asked to consider what would be in their budget resolution and to provide any other suggestions for making savings. 31/1/14 Cllr R Kemp, Liverpool CC CFO CFO briefed Richard Kemp on the financial position of the Authority, the challenges in 2015/16 and beyond and the options open to the Authority to meet the financial challenge with particular focus on South Liverpool. 7/2/14 Maria Eagle MP re Allerton/Speke CFO CFO briefed Maria Eagle MP on the financial position of the Authority, the challenges in 2015/16 and beyond and the options open to the Authority to meet the financial challenge with

Page 89 Page particular focus on South Liverpool – Allerton / Speke. 24/2/14 Sefton councillors - Cllr Cuthbertson, CFO CFO briefed the Sefton Councillors on the financial position of Cllr Dutton, Cllr Killen at Formby FS the Authority, the challenges in 2015/16 and beyond and the options open to the Authority to meet the financial challenge.

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Page 90

Merseyside Fire and Rescue Service

Equality Impact Assessment Form

Station Mergers , Closures and other Operational Title of Response Options policy/report/project:

Strategy and Performance Department:

EIA Stage 1 - 19 .11.13 Date: EIA Stage 2 – 31.1.14

EIA Stage 3 -

Scope of EIA

The purpose of this EIA is to review information and intelligence available at an early stage in the development of options for station mergers and closures. It is intended that the EIA can be used to help inform decisions as the options progress and will help Principal Officers and Authority Members to understand equality related impacts on the decisions being made in relation to local diverse communities

The EIA will be a living document which will developed further during the life cycle of the consultation stages. This initial EIA will provide be an opportunity to plan ahead for various activities such as community and staff consultation and equality data gathering

The EIA will be conducted in a number of stages :

Stage 1 – Desk Top Assessment by 3/12/13 :To provide Principal Officers with some initial thoughts on equality impacts arising from the Mergers and Closures Authority Report and provide an outline of what further data, research and consultation may be needed to inform the EIA fully in preparation for Community Engagement and Consultation Exercises in the new year (by 19/11/13)

Stage 2 – Consultation External and Internal: to gain feedback from those communities and MF&RS Staff groups affected by the mergers and closures options to ensure equality impacts are considered throughout the process and included in the final version of the EIA for review by final decision makers (Dec 2013 onwards)

Stage 3 – More detailed assessment on the local areas affected by options : for Authority members to take into account at their meeting when they review the EIA in full. (By April 2014)

1 Page 91 MF&RS March 2012

1: What is the aim or purpose of the policy/report/project

This should identify “the legitimate aim” of the policy/report/project (there may be more than one)

The reports purpose is to provide Authority Members a number of recommendations for approval, subject to public consultation, around station mergers and closures as follows:

Options for mergers • Two stations on Wirral (West Kirby to merge with Upton at Greasby)

• Two stations in St Helens (Eccleston to merge with St Helens at a site in the St Helens town centre ward)

• Two stations in Knowsley (the merger of Huyton and Whiston which already has Authority approval)

In order to meet the budget cuts faced by the Authority as a result of Comprehensive Spending Review (CSR) 13. These merger options, if approved, will deliver a reduction of 66 whole time equivalent (WTE) posts, reduce the Authority asset base down from 26 stations to 23 and deliver additional savings from a reduction in premises overheads

Options for closures

The incremental move from whole time crewing to day crewing to whole time retained crewing of at least one appliance in Liverpool and/or Sefton, resulting in the closure of one or more station. This change in crewing and station closure, if approved, will deliver a saving of 22 WTE posts deliver additional savings from a reduction in premises overheads

The options for mergers and closures would not affect the local communities which live in and around the closure areas in relation to fire response times, they would remain within a 10 minute response time, and therefore this EIA will not focus on response times but around the following:

• The impact of the options and any changes (positive and negative) in relation to any particular equality groups of the local communities’ use of MF&RS services and stations • The impact of options and any changes on staff affected by closures

2: Who will be affected by the policy/report/project?

This should identify the persons/organisations who may need to be consulted about the policy /report/project and its outcomes (There may be more than one)

2 Page 92 MF&RS March 2012

Communities of Wirral , St Helens, Liverpool, Sefton and Knowsley MF&RS staff affected by the mergers and closures

3. Monitoring

Summarise the findings of any monitoring data you have considered regarding this policy/report/project. This could include data which shows whether it is having the desired outcomes and also its impact on members of different equality groups.

What monitoring data have you considered?

3.1 Profile of Merseyside and Demographics 2012 report - http://intranetportal/sites/smd/equalityanddiversity/Shared%20Documents/Public%20 Sector%20Equality%20Data%20- %20Reports%20for%202012/Profile%20of%20Merseyside%20(Demography,%20Eq uality%20and%20Diversity).pdf

3.2 Ward Demographics from Census 2011 - Appendix A

3.2 Profile of MF&RS staff - http://intranetportal/sites/smd/equalityanddiversity/Shared%20Documents/Public%20 Sector%20Equality%20Data%20- %20Reports%20for%202012/Public%20Sector%20Equality%20Data%20Report%20 -%20Published%20version.pdf

Nb. The links above are only available to those with access to the MFRA network.

What did it show?

3.1 and 3.2 - The demographics in each of the districts is broadly similar with no significant differences to consider.(Significant being + or- 5% difference).To gain a greater understanding of the make-up of the local communities affected by the impact of the closures and mergers, demographics for the local wards broadly covered by each station have been produced in Appendix A

Notable highlights showing differences in relation to the average for each district area are as follows:

Huyton Age Structure : The Huyton Station ground has a mix of age groups depending on the ward; the wards of Longview and Page Moss have younger populations whilst the wards of Prescot West, Roby and Stockbridge in particular have older populations. Socio Economic (including Disability): In Page Moss, Longview and Stockbridge wards in particular there are well above average levels of people with disability or long term health problems. Within these same wards there are proportionally high

3 Page 93 MF&RS March 2012

levels of adult unemployment. Racial Profile: Within the Station Ground the predominant ethnicity grouping is "White". Within the Huyton Station Area, the ward of Longview has above district average counts of BME population particularly "Asian/British Asian" persons.

Whiston Age Structure: The Whiston Station Ground has a mix of age groups depending on the ward. The wards of Rainhill and Whiston North primarily have older populations whilst the wards of Prescot East and Whiston South have younger populations. Socio Economic: There are no negative Socio Economic factors in the Whiston station ground. Racial Profile: Within the Station Ground the predominant ethnicity grouping is "White". However BME populations are more diverse within this station ground with above average populations of "Asian/British Asian" in each ward and above average populations of "Black /African /Caribbean/ Black British" within Prescot East.

St Helens Age Structure: The St Helens Station Ground has a mix of age groups depending on the ward. The wards of: Parr, Bold, Sutton, Thatto Heath, Town Centre tends to have younger populations - particularly Parr and Thatto Heath. By contrast the wards of: Billinge & Seneley Green and Blackbrook have older populations Socio Economic: The wards of: Parr, Thatto Heath, Sutton and Moss Bank have higher than average levels of adult unemployment as well as having above average levels of disability / long-term illness in these wards. Racial Profile: Within the Station Ground the predominant ethnicity grouping is "White". The wards of Town Centre and Thatto Heath (in particular) are the most culturally diverse with well above average counts particularly of "Asian/British Asian" residents. Both Wards also have above average counts of "Black /African /Caribbean/ Black British" people, though this is to a lesser extent to "Asian/British Asian" residents. St Helens has a significant Gypsy and Traveller community.

Eccleston Age Structure: The Eccleston Station Ground has a mix of age groups depending on the ward. The wards of Eccleston and Rainford (Rainford has one of the highest average population ages in Merseyside) have older populations whilst the wards of West Park and Windle have younger populations. Socio Economic: The wards of Eccleston and West Park have slightly above average levels of unemployment within the Eccleston station ground. West Park also has slightly above average levels of long term sickness / disability. Racial Profile: Within the Station Ground the predominant ethnicity grouping is "White", Rainford and West Park have particularly low levels of BME residents. Within the Station Area the Ward of Eccleston has slightly above average BME population "Asian/British Asian" for and West Park has slightly above average counts "Black /African /Caribbean/ Black British" residents.

Upton Age Structure: The Upton Station Ground has a mix of age groups depending on the ward. Pensby & Thingwall, Greasby, Frankby - Irby and Claughton have older than average populations. Socio Economic: Generally within the Upton Station there are no particularly significant Socio Economic issues, with the Exception of the Bidston & St James

4 Page 94 MF&RS March 2012

ward which primarily rests within the Upton Station Ground. Bidston and St James have well above average adult unemployment and levels of long term health problems / disability. Racial Profile: Within the Station Ground the predominant ethnicity grouping is "White". Claughton and Bidston & St James have the most diverse populations with above average counts of "Asian/British Asian" residents.

West Kirby Age Structure : The West Kirby Station Ground has a mix of age groups depending on the ward. The demographic for the wards of Hoylake & Meols and West Kirby & Thurstaston is much older than the Wirral average. Socio Economic: There are no negative Socio Economic factors in the West Kirby station ground. Racial Profile: Within the Station Ground the predominant ethnicity grouping is "White".

3.3- Staff Demographics for Operational Staff

95% of operational uniformed staff are Male and 5% are Female 65% of operational uniformed staff are aged 41 to 50 5% of Operational staff have declared a Disability or Long term health condition 3% of MF&RS staff are Black Minority Ethnic the remainder are classed as White

4: Research

Summarise the findings of any research you have considered regarding this policy/report/project. This could include quantitative data and qualitative information; anything you have obtained from other sources e.g. CFOA/CLG guidance, other FRSs, etc

What research have you What did it show? considered? The Equality Act 2010 replaced and enhanced the Disability Discrimination Acts (DDA) 1995 & 2005.It sets out the legislation for Public Bodies to make reasonable adjustments to 4.1 A review of the Access Audit premises to enable disabled people to access report - results for the stations all services and fully participate in public life. affected by options MF&RS has conducted access audits for all its stations (except new builds) and is in the process of reporting on the results and recommendations to the Authority in December 2013.

The Audits have highlighted significant access issues for the stations identified in the mergers and closures options with a total of £ 267,875 cost for making them more accessible

5 Page 95 MF&RS March 2012

Community Fire Stations. It has been an important factor when considering the options and proposals for station mergers and closures and the building of new stations.

Review of MF&RS Community Profiles for station areas affected by Currently being worked on ready for Stage 2 of proposals to help understand the the EIA type of communities who may be affected by the options and consider their needs.

A review of current Partnership agreements for stations affected by proposals to help understand the Currently being worked on ready for Stage 2 of impact of station closures /mergers the EIA on those service users

5. Consultation

Summarise the opinions of any consultation. Who was consulted and how? (This should include reference to people and organisations identified in section 2 above) Outline any plans to inform consultees of the results of the consultation

What Consultation have you undertaken?

No Consultation has taken place at Stage 1 of this EIA, however consultation is proposed to take place in two stages to scrutinise the OPTIONS and consider others. As such it is proposed to enter into consultation comprising of a) a more open-ended listening and engagement phase on the OPTIONS and b) a Formal consultation process on the eventual PROPOSALS. Part of the consultation process will take into account the needs and experiences of those equality protected groups who have been deemed to be affected by the mergers and closures.

Consultation specifically with Protected Groups (as required by the Equality Act 2010) in relation to this EIA and its assessment of the mergers and closures report /options is currently being planned by the Diversity and Consultation Manager. A number of cost effective options are being considered within the time frame available including : • The development of a new MF&RS Diversity Consultation Forum ; a public voice for diverse groups across each district • Using the 2 stage consultation process mentioned above to consult on the EIA with representative groups from those protected groups affected by the Options and subsequent proposals (where representation is available ) • Consultation with Community Groups currently using the Stations identified as potentially being closed and merged – Impact on equality • Making the EIA accessible via the Staff Portal and MF&RS Webpage to enable staff , stakeholders and the public to make comments and provide feedback easily

6 Page 96 MF&RS March 2012

What did it say? To follow with Stage 2 and 3

Stage 2 Engagement and Consultation January 2014

Stage two of the EIA involved engaging members of the public on the current EIA findings in relation to the Mergers and Closures options ,specifically the 5 options provided to the Public Engagement Forums held in January 2014.The possible options discussed at the for further financial savings :

1. Additional “Low Level Activity and Risk Stations ( LLAR) 2. Introduction of “Day Crewing” at some whole time stations 3. Introduction of “Community Retained “ (RDS) stations 4. Merger of pairs of older stations and their replacement by modern community fire stations 5. Closure of some stations without replacement

Five forums were held across each of MFRS District :

• Wirral - Saturday 11 th January 2014 – 10.00am -1.30pm • St Helens - Monday 13 th January 2014 – 18.00pm -20.45pm • Liverpool – Tuesday 14 th January 2014 – 18.00pm- 20.45pm • Knowsley – Wednesday 15 th January 2014 - 18.00pm – 20.45pm • Sefton – Thursday 16 th January 2014 – 18.00pm – 20.45pm

Part of the engagement presentation included canvasing views from the forum on the impact of each of the 5 options in relation to protected equality groups. The forums were broadly representative of the current demographic profiles for each district when compared to the demographic reports for each district, with the exception of Ethnicity for Wirral, St Helens and Sefton.

Table 1 – Equality Monitoring breakdown for each District engagement forums

WIRRAL ST Helens LIVERPOOL KNOWSLEY SEFTON Gender Male: 12 Male: 10 Male: 13 Male: 10 Male: 13 Female: 11 Female: 11 Female: 12 Female: 6 Female: 9 Age 18 -34: 5 18 -34: 3 18 -34: 7 18 -34: 3 18 -34: 4 35-54: 7 35-54: 9 35-54: 10 35-54: 7 35-54: 8 55+: 11 55+: 9 55+: 8 55+: 6 55+: 10 Social Grade AB: 6 AB: 4 AB: 6 AB: 2 AB: 6 C1: 8 C1: 7 C1: 9 C1: 3 C1: 5 C2: 4 C2: 3 C2: 4 C2: 6 C2: 3 DE: 5 DE: 7 DE: 6 DE: 5 DE: 8 BME 0 0 2 1 0

Disability 6 6 6 3 0

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Members of the Forum were given a summary of the outcomes from the EIA stage one, and asked if there were any specific concerns about those outcomes and indeed any of the 5 options. No concerns about the options were raised in any of the Forums, the general view was that the favoured option chosen by the members; mergers and closures, would provide a positive opportunity for members of the Disabled community and those elderly residents with limited mobility to access new station for community events and activities more easily than some of the current stations. The building of new stations would benefit many minority community groups who may have limited access to community spaces.

Stage 3 of the EIA will now involve consulting with the Public Proposals which will include consultation with specific organisations who support specific Protected Groups through various consultation methods.

6. Conclusions Taking into account the results of the monitoring, research and consultation, set out how the policy/report/project impacts or could impact on people from the following protected groups? (Include positive and/or negative impacts)

(a) Age

The needs of different Age groups, especially those minority age groups, in relation to station mergers and closures options and proposals are difficult to fully assess at this early stage of the EIA. Section 3 and 4 sets out the current age profiles which should be considered when taking into account possible options for closures and mergers. Engagement and consultation will provide more opportunities to assess negative and positive impacts and results will be used to inform Stage 2 and 3 of this EIA.

(b) Disability including mental, p hysical and sensory conditions)

The building of new stations will be positive for the disabled communities affected by the station mergers as the development of new high functioning stations will enable disabled people to access community services delivered from Fire Stations.

As a) above but in relation to Race and Minority ethnic groups

(d) Religion or Belief

As a) above but in relation to Religion and Belief and minority faith groups

(e) Sex (include gender reassignment, marriage or civil partnership and pregnancy or maternity)

8 Page 98 MF&RS March 2012

As a) above but in relation to Gender and Gender Reassignment

(f) Sexual Orientation

As a) above but in relation to the needs of minority sexual orientation groups (g) Socio -economic disadvantage As a) above but in relation to the needs of those most affected financially (if at all) by any mergers and closures.

9 Page 99 MF&RS March 2012

7. Decisions

If the policy/report/project will have a negative impact on members of one or more of the protected groups, explain how it will change or why it is to continue in the same way. If no changes are proposed, the policy/report/project needs to be objectively justified as being an appropriate and necessary means of achieving the legitimate aim set out in 1 above.

EIA Stage 1 – Decisions On reviewing the research and data available for stage 1 of this EIA, there are no significant equality Impacts established so far with the exception of Disability, where current stations earmarked for mergers are currently not fully accessible for disabled community groups. It is important to note that the impact of the Mergers and Station Closure Options and subsequent Proposals will not impact on any members of the public disproportionately in relation to the current level of service received by these groups e.g. response times and fire safety , prevention and protection services

EIA Stage 2 – Decisions The outcomes of the Engagement forums across the 5 Districts has identified no particular negative impacts that need to be considered in any of the 5 Options. The Merger and Closure option appears to be the most positive for a number of minority equality groups in terms of accessibility to community spaces.

EIA Stage 3 – Decisions To Follow

8. Equality Improvement Plan

List any changes to our policies or procedures that need to be included in the Equality Action Plan/Service Plan.

9. Equality & Diversity Sign Off The completed EIA form must be signed off by the Diversity Manager before it is submitted to Strategic Management Group or Authority. 19.11.13 - EIA Stage 1 Signed off Wendy Kenyon 31.1.14 – EIA stage 2 Date:

Action Planned Responsibility of Completed by Actions Identified during EIA stage 1 Diversity and Jan-April14 9.1 Consultation with Staff , Stakeholders Consultation and Communities , in relation to the EIA and Manager (DCM) with its assessment of the Mergers and Closures Support from IRMP 10 Page 100 MF&RS March 2012

Options and subsequent Proposals ; Officer specifically those Protected groups and the potential impact ( both negative and positive ) 9.2 Analysis of Community Profiles for Business Intelligence TBC station areas affected to understand the Manager and DCM types of communities affected by the Mergers and Closures Options and subsequent Proposals

9.3 Equality analysis of those staff affected DCM with support TBC by the Options and subsequent Proposals from POD to see if any particular protected group are affected disproportionately. Actions Identified during EIA stage 2 WK TBC Consider ways to engage further with members of different Ethnic communities when proposals are identified for consultation on in Stage 3 of the EIA Actions Identified during EIA Stage 3 TBC

For any advice, support or guidance about completing this form please contact the [email protected] or on 0151 296 4237

The completed form along with the related policy/report/project document should be emailed to the Diversity Team at: [email protected]

11 Page 101 MF&RS March 2012 This page is intentionally left blank

Page 102 Agenda Item 5

MERSEYSIDE FIRE AND RESCUE AUTHORITY

MEETING OF THE: AUTHORITY BUDGET MEE TING

DATE: 27 FEBRUARY 2014 REPORT NO: CFO/011/14 PRESENTING DEPUTY CHIEF EXECUTI VE OFFICER RESPONSIBLE KIERAN TIMMINS REPORT IAN CUMMINS OFFICER: AUTHOR: OFFICERS CONSULTED: TITLE OF REPORT: MERSEYSIDE FIRE AND RESCUE AUTHORITY BUD GET AND FINANCIAL PLAN 2014/2015 – 2018/2019

APPENDICES: APPENDIX A(1): DRAFT SUMMARY REVENU E BUDGET ANALYSIS APPENDIX A(2): DRAFT DETAILED REVENUE BUDGET ANALYSIS APPENDIX B: PROPOSED CAPITAL PROGRAMME 2014/15 – 2018/19 SUMMARY APPENDIX B(1): CURRENT APPROVED CAPITAL PROGRAMME 2013/14 – 2017/18 APPENDIX B(2): PROPOSED NEW CAPITAL SCHEMES 2014/15 – 2018/19 PROPOSED SAVING OPTIONS TO APPENDIX C DELIVER £6.300M SAVING

2014/15 – 2018/19 MEDIUM TERM APPENDIX D FINANCIAL PLAN

Purpose of Report

1. To present information 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. This will also allow the Authority to determine a budget for 2014/2015 and a precept level in line with statutory requirements.

Recommendation

2. That Members; Members consider this report and proposed budget and:-

a. Note the 2014/15 service budgets set out in the report.

b. Endorse the Deputy Chief Executive’s recommendation on maintaining the current level of general fund balance, £2.894m, and maintaining the reserves as outlined in Paragraph 19 to 22 of this report

Page 103 c. Endorse the proposal to increase the precept by just below 2%, raising the Band D precept from £68.70 to £70.07 and confirm the strategy for future precepts rises (the plan assumes 2% in each year thereafter).

d. Approve the £6.300m saving plan outlined in Appendix C.

e. Endorse the assumptions in developing the 2014/15 – 2018/19 Financial Plan outlined in the report and approve the Medium Term Financial Plan in Appendix D and the 2014/15 budget estimate of £64.356m

f. Approve the capital strategy and investment strategy as summarised in Appendix B

g. Approve the Minimum Revenue Payment (MRP) strategy for 2014/15 as outlined in Paragraph 97 of this report

h. Note the prudential indicators relating to the proposed capital programme, paragraph 107 to 111 of this report

i. Approve the Treasury Management Strategy outlined in Section F and agree the Treasury Management indicators set out in paragraph 141 – 148 of this report for:-

• External Debt • Operational Boundary for Debt • Upper limits on fixed interest rate exposure • Upper limits on variable rate exposure • Limits on the maturity structure of debt • Limits on investments for more than 364 days

j. Note that recommendations f. to i. above provide an approved framework within which officers undertake the day to day capital and treasury activities.

Introduction and Background

Information 3. The Authority is required to determine its budget and precept level for 2014/2015 by 1st March 2014.

4. This report will present all the necessary financial information in a single report. This report considers:-

a. Forecast Revenue Estimates b. The Proposed Capital Programme c. Savings and Growth Options d. The Treasury Management Strategy e. The Minimum Revenue Payment Policy for the Authority

Page 104

5. Considering all the financial issues to be taken into account in a single report ensures that the Authority can:-

a. Consider the borrowing freedoms available under the prudential code b. Reflect best practice c. Provide value for money d. Focus on the link between capital investment decisions and revenue budgets e. Continue developing their strategic financial planning

6. The following report structure will be adopted:-

Section Focus Page A Executive Summary 4-12 B Background Information 13-22 C Capital Programme 23-29 D Minimum Revenue Provision Statement 30-31 E Prudential Indicators 32-34 F Treasury Management Strategy 35-43 G Revenue Forecasts 2013/14 – 2017/2018 44-51 H Options for Tackling the Financial Challenge 52-63 I Adequacy of Reserves and Balances 64-67 J Budget Timetable & Resolution 68-71

Page 105 A) EXECUTIVE SUMMARY

7. The Authority must set a balanced budget and a precept level by 1st March 2014.

8. The budget and financial plan should allocate resources in line with the Authority’s Mission and aims:-

Our Mission : To Achieve; Safer, Stronger Communities - Safe Effective Firefighters

Our Aims: Excellent Operational Preparedness Excellent Operational Response Excellent Prevention and Protection Excellent People

9. As a starting point for this budget and financial plan members will recall that they set a balanced budget and plan for two years (2013/14- 14/15) The key elements of that plan based on the best information at that time were:-

• The reduction in fire appliances from 42 to 28, achieved by a reduction in Firefighter posts of 90 delivered by national turnover rates saving £3.1m

• Reduction in support staff numbers by 57 and overall support costs by £2.3m

• Technical and income savings of £4.7m

10. The Government has now announced the settlement funding for 2014/15 and indicative estimate for 2015/16. The grant settlement cut in 2014/15 is 7.6% (slightly higher than anticipated last year) and the indicative figure for 2015/16 is a cut of 8.5%. This is equivalent to a further £3.5m grant cash cut by 2015/16.

11. A draft 5 year financial plan has been prepared using the latest information and the following key assumptions:

• Annual increases in council tax of (fractionally below) 2%. • A pay bill increase of 1% in 2014/15 and 2% thereafter (in line with the Treasury medium term inflation targets of 2% per annum). The pay bill includes all pay related costs including pension contributions and national insurance.) • 2% per annum General Price Inflation • Allowances for the costs of funding the proposed capital programme • That government funding cuts will continue beyond 2015/16 in a profile broadly similar to that which has been applied over the spending review period since all major political parties have committed to eliminate the national deficit by 2020.

Page 106 12. The report considers three possible scenarios:-

1) Just 2014/15 Budget This identifies that (if the Authority set a precept increase at just below 2% no further savings would be required to set a balanced budget for just 2014/15 .

Whilst the Authority might take a view that they only need to set a budget for 2014/15 it seems abundantly clear from the current economic position and the stated intent of all political parties that there will be significant ongoing reductions in public expenditure beyond 2014/15. Indeed the grant cuts and some of the increased pensions cost increases have already been firmly announced. It is therefore recommended that the Authority takes a longer term view and establishes a mid-term financial plan based on, at least, the confirmed financial announcements.

2) Scenario Based on Confirmed Announcements to date This identifies a two year deficit to the end of 2015/16 of £6.3m.

These known changes significantly impact on the current financial plan and require an additional £6.300m of savings to be identified.

It should be noted that because:- • this forecast is based upon confirmed government announcements only • All political parties have committed to honour financial decisions already made and to on-going efforts to reduce the UK deficit

this is regarded as the minimum position the Authority should reasonably plan for in the mid-term. It is recommended the Authority formulate a plan to deal with at least this level of financial challenge with scalable options to meet even higher deficits if required

3) Forward look based on assumptions about future Grant Cuts The Government has announced that the current austerity period is now likely to continue beyond 2015/16 and has committed to ongoing cuts in public expenditure until the UK deficit is eliminated by 2020.

Whilst there is a general election in 2015/16 the Labour party have also committed to eliminate the UK deficit by 2020.

A number of bodies have attempted to model what this might mean for local government including the Institute for Fiscal Studies and the LGA, particularly if any future government maintains current arrangements to protect large elements of the public sector from expenditure cuts.

This scenario assumes the recent government funding reduction profile will continue up to 2018/19 and perhaps beyond. After allowing for inflation increases at 2% p.a the Authority might face a deficit of as much as £20m by 2019/20 as shown in the table at the end of this section (NB table runs only for five years to 2018/19).

Page 107 Whilst to a degree any such longer term forecast is necessarily speculative what seems clear is that there are likely to be ongoing budget reductions. In its financial planning the Authority needs to be mindful of longer term pressures and develop a scalable model which can be extended whatever the future financial pressures.

Conclusion 13. It is recommended that the Authority develops a firm plan to deal with the £6.300m forecast deficit based upon confirmed announcements up to the end of 2015/16

Whilst there is considerable uncertainty about the detailed position beyond 2015/16 the Government (and possible successors) has been very clear that there will be ongoing cuts in public spending until possibly 2020. This is likely to result in further government funding cuts requiring savings.

The table overleaf summarises the financial scenarios:-

Page 108 2014/15 - 2018/19 DRAFT MTFP

2014/15 2015/16 2016/17 2017/18 2018/19 £'000 £'000 £'000 £'000 £'000 FORECAST NET EXPENDITURE 2013/14 Base Budget 66,721 66,721 66,721 66,721 66,721 Approved changes to the base budget: Loss of 2013/14 Transitional Grant for LCC Council Tax Support 64 64 64 64 64 Adjustment to take out one-off SMG Reserve contribution (2013/14 only) -100 -100 -100 -100 -100 Impact of Capital Programme / Funding Changes: 900 1,255 1,565 1,765 1,765 Inflation 800 2,075 3,500 5,000 5,000 2013/14 Saving Options Full Year Impact Income PFI Stations -25 -25 -25 -25 -25 Workshops income 0 -100 -100 -100 -100 Joint Control Room -200 -200 -200 -200 -200 Phase 2 Proposed Cuts in Support Savings -582 -632 -632 -632 -632 Phase 2 Proposed Cuts in Front Line Savings -1,445 -2,795 -2,795 -2,795 -2,795 Use of Smoothing Reserve -1,783 2013/2014 Approved Financial Plan 64,350 66,263 67,998 69,698 69,698 2014/15 Issues The end of contracting out -start paying the standard rate of National Insurance 0 0 1,000 1,000 1,000 contributions. Increase employer costs by 3.4 per cent. LGPS Actuarial review, current benefits, employer rate from 11% to 13%, and potential 300 340 381 381 381 increase in historic deficit payment currently c£0.8m 2018/19 Inflation Provison 1,500 New Sec 31 Grant to cover 2014/15 restricted NNDR increase -190 -190 -190 -190 -190 New Sec 31 Grant to cover NNDR adjustments -194 Adjust Planned Drawdown from smoothing Reserve (original £1.783m) 90 2014/15 DRAFT Financial Plan Net Expenditure Forecast 64,356 66,413 69,189 70,889 72,389 FUNDING Government Funding: Settlement Funding Assessment -40,693 -37,214 -34,487 -32,340 -30,674

Anticipated Local Business Rate income from Districts 174 Council Tax - Base Precept Income -22,619 -23,430 -23,899 -24,377 -24,865 Council Tax Base (increase) / decrease -355 0 0 0 0 Assume 2 % rise 2014/15 to 2018/19 -458 -469 -478 -488 -497 Precept Income yield, rounding adjusmtment 2 Collection Fund (surplus)/deficit -407 Forecast Council Tax Income -23,837 -23,899 -24,377 -24,865 -25,362

Updated Income Forecast -64,356 -61,113 -58,864 -57,205 -56,036

Forecast Net Position (surplus) / deficit 0 5,300 10,325 13,684 16,353

Known Government Tax Changes: For employers, the end of contracting out -start paying the standard rate of National Insurance 1,000 contributions. Increase employee costs by 3.4 per cent 01.04.2016 Onwards

Recommended Saving Target for 2014/15 - 2018/19 Financial Plan 6,300 Longer 2014/15 term Only

Confirmed Announcements

Page 109 14. The revenue position is considered in more detail in section G.

15. Section “H” of this report “Options for Tackling the Financial Challenge” considers how the Authority can deliver savings. Because of the savings and cuts to service already made the room for manoeuvre is small. Officers have identified all possible proposals from the back office and support services that might be available to minimise the impact on the front line. These total £2.900m

16. This means that £3.400m needs to be found from front line firefighting costs in order just to meet the forecast deficit of £6.3m based on announcements to date. This equates to about 100 Firefighter posts. The table below summarises the savings plan:-

£'m Technical Minimum Revenue Provision (MRP)& Interest Payable on loans 0.900

Non- Employee Inflation 0.125

Non-Employee Budget review 0.275 Staff Related

Employee Vacancy / Incremental saving 0.200 Assume pay restraint in 2015/16. Currently provision for 2% pay/ Assume 1%? 0.500

Non Uniform Establishment 0.900

2.900

Firefighter Savings 3.400

6.300

17. 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 has been supported by initial public consultation.

18. The table overleaf summarises the financial plan that is recommended to the Authority:-

Page 110 2014/15 - 2018/19 PROPOSED MTFP

2014/15 2015/16 2016/17 2017/18 2018/19 £'000 £'000 £'000 £'000 £'000 2014/15 Net Expenditure Forecast 64,356 66,413 69,189 70,889 72,389

Updated Income Forecast -64,356 -61,113 -58,864 -57,205 -56,036 Forecast Net Position (surplus) / deficit 0 5,300 10,325 13,684 16,353 New £6.300m Savings Phasing: Back Office and Support Services Minimum Revenue Provision (MRP) & Interest Payable on loans -750 -850 -900 -900 -900 Non Employee Inflation -50 -75 -125 -125 -125 Non Employee Budget review -150 -275 -275 -275 -275 Assume ay restraint in 2015/16. Currently provision for 2% pay/ 0 -400 -500 -500 -500 Assume 1% Employee Vacancy / Incremental saving -200 -200 -200 -200 -200 10% saving on Non Uniform Establishment 0 -450 -900 -900 -900 One-Off saving from discount on LGPS deficit payment if Authority pay 0 0 0 0 0 2014/15 - 2016/17 in April 2014 By delivering some of the £6.3m ahead of schedule the amount of 1,150 0 0 0 0 reserve drawdown can be reduced by £1.150m Operational Response 0 -350 -3,000 -3,400 -3,400 Required Smoothing Reserve -2,700 -400 Savings Profile: 0 -5,300 -6,300 -6,300 -6,300 Future Financial Challenge 0 0 4,025 7,384 10,053

Reserves and Balances 19. In the light of the financial risks facing the Authority the Deputy Chief Executive has worked with Officers and Members to increase reserves in recent years. The latest financial review report CFO/010/14 identifies a 2013/14 forecast revenue underspend which will allow the Authority to increase its reserves by a further £1.5m. The current estimated reserves, before any adjustment for the 2014/15 financial plan, as at 31.03.14 is;

• Ringfenced Reserves (not available for general spend) £1.4m • Earmarked Reserves (created to fund future projects or as a resource to meet some potential future spend) £19.9m • General Fund Reserve (required to cover unexpected events) £2.9m £24.2m

20. Approximately £19.9m of earmarked reserves might be seen as available, however £8.1m of this has already been committed to fund approved future capital or revenue spend that is built into the current financial plan with a further £1.9m being committed from options proposed in this plan. £1.8m is required to cover insurance and catastrophe risks leaving £8.1m of earmarked reserve to consider. Although this would appear relatively high it reflects the level of risk associated with the

Page 111 current financial plan and the severity of cuts imposed on the Authority for 2014/15 and beyond. The £8.1m earmarked reserves are for; £’m Smoothing Reserve 3.1 Severance Reserve 0.7 Recruitment Reserve 1.0 Capital Investment 0.9 Facing the future Challenge 0.8 Inflation Reserve 1.5 Other 0.1 8.1 21. Based upon assumptions that;

• the Authority will adopt all the savings identified and their attendant risks, and • that the Authority needs a buffer to give it time to make changes required, and • in order to avoid compulsory redundancy if possible,

22. The Deputy Chief Executive recommends the Authority hold the £8.1m identified above in reserves at the start of the financial plan.

23. As previously stated this report identifies a number of potential risks in relation to the key assumptions in the medium term financial plan. If any of these assumptions vary then the forecast balanced budget position will be affected. Any resultant material deficit might result in the Authority having difficulty in maintaining its value for money principles and in particular avoiding compulsory redundancies.

24. Members should bear in mind that reserves and balances and one-off savings should only be used to finance one-off expenditure. If such monies are used to fund ongoing revenue expenditure without taking action to reduce underlying expenditure, the Authority would find itself facing the same deficit in the next and future years but without reserves available to finance it. This is underlined by the District Auditor’s ‘Golden Rule’ - that “one off” revenue reserves should not be used to support ‘ongoing’ revenue expenditure.

Council Tax Increase 25. The proposed financial plan assumes a (just below) 2% council tax increase in 2014/15 and each year thereafter.

26. The Authority may choose to use a further precept increase to bridge the gap, however current legislation requires any increase above a threshold set by the Secretary of State must be subject to a referendum of the electorate of Merseyside. Any vote against such an increase will require a revised budget and incur the expense of re-billing all the districts within Merseyside. For 2014/15 any proposed increase at or in excess of 2% or more will require such a referendum.

27. Alternatively the Authority might take-up the option of the council tax freeze grant in 2014/15. A (just below) 2% increase in the precept would yield £0.458m and a 1% council tax freeze grant is £0.290m, a variance of £0.168m.

Page 112 28. The ready reckoners below show the impact of potential Council Tax increases.

Council Tax Increase 0% 2% Change Band D Tax 68.7 70.07 1.37 District Precept £m £m £m LIVERPOOL 6.3188 6.4448 0.126 WIRRAL 6.0309 6.1512 0.120 ST.HELENS 3.2093 3.2733 0.064 SEFTON 5.2894 5.3948 0.105 KNOWSLEY 2.1239 2.1663 0.042 22.9723 23.4304 0.458

Council Tax Freeze Grant 0.290 Additional Income IF precept increased by 2% 0.168

Capital 29. The proposed 5 year capital programme is detailed in section C. The table below summarises the proposed investments which are mainly in the Authority’s property, vehicle and ICT assets which total nearly £26.1million across the life of the programme.

Proposed Authority Capital Progamme for 2014/2015 - 2018/2019 Total Cost 2014/15 2015/16 2016/17 2017/18 2018/19 Expenditure £ £ £ £ £ £ Building/Land 7,684,500 4,584,500 1,896,000 455,500 352,000 396,500 Fire Safety 6,599,000 1,481,000 1,281,000 1,279,000 1,279,000 1,279,000 ICT 2,921,000 656,000 652,000 531,000 556,000 526,000 Operational Equipment & Hydrants 1,387,000 844,000 57,000 352,000 67,000 67,000 Vehicles 7,510,800 2,472,200 1,383,800 1,543,800 1,212,000 899,000 TOTAL 26,102,300 10,037,700 5,269,800 4,161,300 3,466,000 3,167,500 Financing Available: Total 2014/15 2015/16 2016/17 2017/18 2018/19 Capital Receipts Toxteth Fire Station (Firefit Hub) 250,000 250,000 Sale of 2 existing N-le-W LLAR properties 275,000 275,000 Sale of LLAR house Cable Street, Formby 350,000 350,000 Sale of Derby Road 700,000 700,000 R.C.C.O./Reserves 0 CFS alarm installation (salaries) 3,650,000 730,000 730,000 730,000 730,000 730,000 CFS alarm installation (FSD) 250,000 50,000 50,000 50,000 50,000 50,000 Capital Reserve to Museum 75,000 75,000 Fire Risk Management in Residential Blocks (CFO/135/13) 200,000 200,000 IT040 Analytical Tool CFS Work (Capital Reserve) 50,000 50,000 BLD071 Station Refresh (CFO/102/13) 400,000 400,000 Grant 0 CLG General Capital Grant Allocation 1,243,966 1,243,966 Dept. of Culture/Media/Sport (BA Telementary) (CFO/140/13) 133,000 133,000 Total Non Borrowing 7,576,966 4,181,966 1,055,000 780,000 780,000 780,000

Unsupported Borrowing 18,525,334 5,855,734 4,214,800 3,381,300 2,686,000 2,387,500 Total Funding 26,102,300 10,037,700 5,269,800 4,161,300 3,466,000 3,167,500

Page 113 30. This capital programme has a borrowing requirement of £5.856 million in 2014/15 and £18.525 million across the whole life of the plan. The proposed borrowing is unsupported borrowing or prudential as Members will note that the Government no longer allocates any supported borrowing to fire and rescue authorities and therefore no longer builds any revenue grant funding support for new borrowing in the formula grant. This means all borrowing is prudential.

31. The Government has announced that the Authority may bid for transformation funding in 2015/16. It is anticipated that the Authority bid will be based on station mergers (the Authority has already been successful in bidding for capital grant of £1.770m for a new fire station at Prescot). At this stage no costs or funding for any station mergers have been included within the capital programme or financial plan.

32. The Authority needs to be mindful of the revenue costs of borrowing. There has been an increase in Authority debt levels in recent years as the Service needed significant capital infrastructure investment following a long period of restricted capital spend under previous capital control regimes. Current and future debt servicing costs as a consequence of the proposed capital programme have been built into the proposed financial plan. This report provides members with a number of prudential indicators so they can ensure that this commitment is considered affordable, prudent and sustainable in light of these prudential indicators (Section E).

Treasury Management 33. The Prudential Code requires the Authority to set a Treasury Management Strategy that includes a number of indicators and limits. It sets a framework for the Deputy Chief Executive to manage investments and borrowings within.

34. The proposed strategy is set out in Section F and includes limits for the next three years on:- • Overall Level of External Debt • Operational Boundary for Debt • Upper limits on fixed interest rate exposure • Upper limits on variable rate exposure • Limits on the maturity structure of debt • Limits on investments for more than 364 days

Minimum Revenue Payment (MRP) Statement 35. MRP is the amount of money set aside in the revenue budget by the Authority each year to reduce its overall level of debt. The Authority is required under the new Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2008 to prepare a statement on its policy for MRP in respect of the forthcoming year. Regulations require authorities to pay debt at a rate which it considers prudent.

36. The Deputy Chief Executive has reviewed the MRP policy in line with the legislation and the report outlines the proposed MRP policy for 2014/15 and future years.

Page 114 B) BACKGROUND INFORMATION

37. This section provides general financial information on the Authority’s finances and financial health.

Corporate Strategy 38. If any organisation wants to be successful its budget setting and medium term financial plan must allocate resources to support its key strategic aims and priorities. This is a vital consideration when organisations face periods of severe resource shortages.

39. For many years now the Authority has maintained a comprehensive five year financial plan and capital programme. In 2010 the new Government announced its spending review targets for 2011/12 – 2014/15, indicating that fire authorities faced a 25% reduction in government funding (equivalent to a cash reduction of 18%) over this period. The Government stated that at a national level the reduction would be back loaded for fire authorities.

40. The overall grant cut for MFRA between 2011/12 – 2014/15 equates to a 26% reduction, compared to a national average grant cut of 19.9% over the four year period , as shown in the table below:

41. The Authority has already approved plans to deal with the previously announced cuts up to 2014/15. In its latest announcements the Government has increased the cut to the 2014/15 figure and given indicative figures for 2015/16.

42. The Integrated Risk Management Plan (IRMP) is the key driver in the allocation of the Authority’s resources in response to the risks facing Merseyside.

43. The Authority’s IRMP states the main strategic themes that the Authority has been progressing and its plans for the future. The 2013/16 IRMP was agreed in June 2013 and remains current for 2014/15.

Page 115 44. The Authority’s key Mission and Aims as set out in the IRMP are repeated out below. Any financial plan should aim to allocate resources to deliver that mission and aims.

Our Mission; To Achieve; Safer Stronger Communities - Safe Effective Firefighters

Our Aims; Excellent Operational Preparedness We will provide our firefighters with the training, information, procedures and equipment to ensure they can safely and effectively resolve all emergency incidents.

Excellent Operational Response To maintain an excellent emergency response to meet risk across Merseyside with safety and effectiveness at its core.

Excellent Prevention and Protection We will work with our partners and our community to protect the most vulnerable through targeted local risk reduction, health inequality intervention and the robust application of our legal powers.

Excellent People We will develop and value all our employees, respecting diversity, promoting opportunity and equality for all.

Is the Overall Strategy Working? 45. The Authority has achieved great success in its aims to make Merseyside a safer community over the last decade. Members receive detail on this excellent performance in a variety of formats but highlights include:-

• Becoming the first Authority in the world to visit 100,000 households in a single year to carry out Home Fire safety Checks (and approximately 700,000 visits in total have been carried out).

• Fitting approximately 800,000 smoke alarms.

• Significantly reducing the impact of antisocial behaviour during the bonfire period through effective joint working with partners. During the 2013 bonfire period Merseyside Fire and Rescue Service attended 213 deliberate secondary fires which makes it the quietest bonfire period on record with a 50% drop from 2012.

• Reducing fire deaths from an average of 20 in 1999 to 5, 5, and 6 respectively over the last 3 full years, (a +70% reduction).

• Reduced the total number of all types of fires and their impacts.

Page 116 46. The table below summarises performance over the last decade:

Injuries in Fatalities in Accidental Anti Social Year Accidental Accidental Dwelling Fires Behaviour Fires Dwelling Fires Dwelling Fires 2003-2004 1612 171 9 18984 2004-2005 1470 173 11 12258 2005-2006 1456 155 11 11689 2006-2007 1336 126 8 12721 2007-2008 1286 69 9 10449 2008-2009 1302 107 9 7648 2009-2010 1299 117 8 7394 2010-2011 1199 137 5 6893 2011–2012 1196 131 5 6088 2012-2013 1136 128 6 3903 2013-2014 Q3 901 99 7 4506 Reduction between -29.53% -25.15% -33.33% -79.44% 2003/04 to 2012/13

Financial Strategy and where are we now? 47. In recent years the Authority has adopted a financial strategy that:-

• Sought to control Council Tax increases, • Planned for pay awards and cost increases in line with HM Treasury inflation forecasts, • Recruited and trained employees to meet the Authority’s high performance standards and budgeted for staff actually in post • Sought to generate significant savings through staff reductions whilst avoiding compulsory redundancy • Sought to minimise the impact of cuts on frontline services including prevention • Made significant investment in IT and computing (including outsourcing) • Provided further investment in equality and health and safety • Attempted to plan prudently over the medium term by considering all significant risks to the assumptions in the financial plan and creating specific reserves if deemed necessary • Maintained a general reserve of at least £2m following assessments of risk • Because of pressures on revenue budget generally avoided funding capital expenditure from revenue through leasing or RCCO • Invested in the capital infrastructure of the Authority in line with the Asset Management Plan, vehicle replacement strategies and corporate objectives.

48. These strategies have over recent history allowed the Authority to reduce cost and maintain relatively low levels of Council Tax increase despite very tight grant settlements.

Page 117 The Authority’s 2013/14 (Band D) Council Tax is £68.70. This is slightly above the fire and rescue services national average (£68.10);

49. In 1996/97 Merseyside’s Council Tax was more than 50% above the average of Metropolitan Fire Authorities. Now it is only 10.4% above the average of that group:

Page 118 50. Over the past 10 years when compared to the other fire and rescue authorities Merseyside has had one of the lowest cumulative council tax increases:

51. The Authority’s control of council tax should be considered in light of the fact that across the same time period the council tax base of Merseyside has increased by only +0.7% against a national average of +6%. (n.b. the criteria for the tax base was redefined from 2013/14 so equivalent figures post 2012/13 are not available ). The tax base reflects how much income is generated by £1 of “Band D” equivalent council tax. So if the tax base increases so does income increase, even if the council tax charge remains unchanged.

Page 119 52. However, despite recent improvements it should be noted that we remain, in comparison to our peers, a relatively high spending authority on a direct expenditure per head basis.

Overall Financial Health 53. The Authority has a proven track record for meeting significant financial challenges in the past. The Authority, as part of a risk based strategy, has built up reserves in recent years to provide a short term buffer whilst the Authority implements the business re-engineering to deliver the required savings on a permanent basis. The unprecedented reductions in Government funding will require difficult decisions but the Authority has a proven track record in managing its financial affairs well as can be seen in the following indicators:-

• Authority accounts 2012/13 audited without qualification once again. • Annual Audit Letter highlighted general satisfaction with financial corporate governance and reporting arrangements. • IRMP recognised as innovative. • The Authority has maintained a general revenue reserve of at least £2.9m in recent years. • Cost centre budgeting now well established along with a culture of financial management. • Maintained a five year financial plan and capital programme and most importantly a consistent medium term strategy. • Successfully delivered large-scale changes and savings

Page 120 Current Allocation of Resources 54. Members will be aware that Fire and Rescue Service expenditure is predominantly employee related (approximately 70%) as is shown in the pie chart below. (The blue sections relate to employee costs)

A full subjective analysis of the base budget for 2014/15 is set out in Appendix A

A subjective analysis is only part of the overall view on spending and in order to assist Members the same data is shown in a “thematic” view overleaf and is based upon the service’s strategic objectives:

Allocation of Resources in line with Corporate Objectives 55. The Authority has an excellent track record of investing in line with its corporate priorities. It can be seen from the pie chart below that most expenditure 58.6% goes on emergency and specialist response. In addition 8.7% goes on Operational Preparedness and 7.5% on Prevention & Protection, and therefore over 74.9% of

Page 121 expenditure is on the “front line” services. In addition the 10.5% on capital costs relates mostly to previous investment in front line assets, fire stations, vehicles and equipment. The remaining 14.6% is on support services.

Looking in more detail at each area the expenditure includes:-

Operational Response & Control (Total £38m) • Service delivery and emergency response through its 26 fire stations. • Specialist teams like Search and Rescue Team, Targeted Response Group, Hazmats Team and Search Dogs. • Invested in staff safety – procured effective fire kit, helmets, boots and appliances. • Invests £1.6m operating a training and development academy • Invests £0.4m on the Incident Management Team. • Deliver HFSC programme. • Investing in new community fire stations.

Prevention & Protection (Total £5m) • Protection Teams; £2.5m • Prevention teams and youth engagement; £1.2m • Purchase of £0.5m worth of smoke alarms per annum • Fire Service Direct; £0.2m • Employment of specialist Advocates continuation of the Princes Trust and other programmes; £0.2m • Other specialist teams; Fireworks; Arson; Crime Prevention; £0.2m • Invested in volunteers with the Fire Support Network; £0.2m • Working with the private sector to deliver speedier restoration of property

Page 122

Operational Preparedness (Total £6m) The investment of over £6m delivers a variety of services which helps prepare for a full range of possible incidents in Merseyside and ensure Firefighter safety. • Operational Planning and Policy • Contingency Planning • New Dimensions (National Resilience) to cope with major disasters and terrorist threats • Operational Equipment Team • Water Section • Health and Safety Department • Transport/Fleet Management – to keep vehicles operating effectively • Workshops • Marine Rescue Unit to support the airport and safety on the river • Standard Operating Procedure Review Team

Support Services & Other (Total £9m) The investment in support services of £9m (14.6% of the budget) :

Page 123 It should be noted that many of the services are key “front line” parts of a modern fire and rescue service. For example:-

• Estates – includes the running costs of buildings including 26 Community Fire Stations; • ICT – includes the cost of the Mobilising Communications Centre; • Occupational Health – to support staff and manage sickness

In addition some costs are unavoidable for any organisation; • Insurance- to cover 3 party, vehicle and employer liabilities; • Legal, Payroll, Accounting; Human Resources; Procurement etc. to support the organisation in paying its staff, suppliers, carrying out activities within the law and preparing statutory returns.

Also the cost of governance in relation to elected members is also contained within support and other costs.

Page 124 C) CAPITAL PROGRAMME

56. Capital is considered first in this report so that Members can clearly consider the revenue impacts of capital investment and borrowing decisions as part of revenue budget and council tax considerations. The following sections C) to F) anticipate the Authority agreeing the proposed capital programme and financing review undertaken by the Deputy Chief Executive .

Introduction 57. From 1st April 2004, the Local Government Act 2003 replaced the previous regime of capital controls with the Prudential System for Capital Finance. Local authorities are free to decide for themselves how much they can afford to borrow for capital purposes, subject to various safeguards. The Government has reserve powers to limit an authority’s borrowing if the Government believes it to be unaffordable, or in times of public spending restraint.

Prudential Code 58. A key part of the revised capital system is the CIPFA “Prudential Code for Local Authority Capital Finance” which provides a framework of decision-making under which authorities will decide their capital investment and financing plans and set limits for borrowing.

59. Authorities will be required to ‘have regard to’ the “Prudential Code” when setting their future budgets and Council Tax levels - which in practice means that they would need to have very good reasons not to comply.

60. The over-riding objective of the “Prudential Code” is to ensure that the capital investment plans of local authorities are affordable, prudent, sustainable, and follow good practice.

61. Some of the main features of the “Prudential Code” are as follows: • The full Authority must consider and set a number of indicators and limits for its capital plans as part of the annual budget setting process. The limits can be revised during the year but only by the full Authority. The mandatory indicators are shown in Section E. • The indicators and limits must be monitored during the year and outturn figures reported. • The Authority must produce and maintain capital and revenue plans for at least three future years including three year estimates of its future Council Tax taking account of the proposed capital programme and other plans. • The Authority must set an authorised limit for its total debt (including borrowing and long term liabilities) which may not be exceeded. • Limits relating to treasury management matters must be considered as part of the Annual Treasury Management Strategy Report.

62. Fundamentally, the objective of the Code is that the total of an authority’s capital investment remains within sustainable limits, following consideration of the impact on the “bottom line” Council Tax. This is ultimately determined by a judgement about what Members consider is an acceptable level of Council Tax.

Page 125 Capital Investment Strategy . 63. Each financial year the Authority produces a capital programme to manage major capital schemes. Owing to the nature of capital expenditure a large number of schemes span more than one financial year so the programme is a rolling programme covering five future financial years.

64. The starting point for this programme has been an assessment of the capital investment requirements for the Authority for future years based upon needs identified by the various expert professionals in areas like buildings, vehicles, ICT, and operational equipment. Initial bids were requested and through an iterative process Officers have modified the programme in the light of:-

• service requirements, and in particular investments required to support and deliver the IRMP. • the need to adopt a prudential approach to capital borrowing under the new regime, being mindful of affordability, prudence and sustainability and in particular the impact on Council Tax levels.

65. This has produced a five-year future capital programme proposal of £26.102m which is set out in the summary table below. This table also identifies funding of the programme and a resultant borrowing requirement of £18.525m. The full programme is set out in Appendix B (Appendix B (1) is the updated programme and Appendix B (2) the new additions to previously agreed programmes).

Proposed Authority Capital Progamme for 2014/2015 - 2018/2019 Total Cost 2014/15 2015/16 2016/17 2017/18 2018/19 Expenditure £ £ £ £ £ £ Building/Land 7,684,500 4,584,500 1,896,000 455,500 352,000 396,500 Fire Safety 6,599,000 1,481,000 1,281,000 1,279,000 1,279,000 1,279,000 ICT 2,921,000 656,000 652,000 531,000 556,000 526,000 Operational Equipment & Hydrants 1,387,000 844,000 57,000 352,000 67,000 67,000 Vehicles 7,510,800 2,472,200 1,383,800 1,543,800 1,212,000 899,000 TOTAL 26,102,300 10,037,700 5,269,800 4,161,300 3,466,000 3,167,500 Financing Available: Total 2014/15 2015/16 2016/17 2017/18 2018/19 Capital Receipts Toxteth Fire Station (Firefit Hub) 250,000 250,000 Sale of 2 existing N-le-W LLAR properties 275,000 275,000 Sale of LLAR house Cable Street, Formby 350,000 350,000 Sale of Derby Road 700,000 700,000 R.C.C.O./Reserves 0 CFS alarm installation (salaries) 3,650,000 730,000 730,000 730,000 730,000 730,000 CFS alarm installation (FSD) 250,000 50,000 50,000 50,000 50,000 50,000 Capital Reserve to Museum 75,000 75,000 Fire Risk Management in Residential Blocks (CFO/135/13) 200,000 200,000 Analytical Tool CFS Work (Capital Reserve) 50,000 50,000 Station Refresh (CFO/102/13) 400,000 400,000 Grant 0 CLG Capital Grant 1,243,966 1,243,966 Dept. of Culture/Media/Sport (BA Telementary) (CFO/140/13) 133,000 133,000 Total Non Borrowing 7,576,966 4,181,966 1,055,000 780,000 780,000 780,000

Unsupported Borrowing Required 18,525,334 5,855,734 4,214,800 3,381,300 2,686,000 2,387,500 Total Funding 26,102,300 10,037,700 5,269,800 4,161,300 3,466,000 3,167,500

Page 126 66. The additions to the capital programme has increased the overall expenditure by £3.818m, (Appendix B(2)), the reasons for this are :-

(a) The addition of the “extra year” to the programme 2018/19, £3.168m (b) Re-phasing of the fire appliance replacement programme £0.650m. Because of the reductions in appliances the CFO believes a 10 year replacement programme is more appropriate given the increased wear and tear on vehicles. This has been reflected in the programme.

67. Details of the new starts can be found in Appendix B(2) attached to this report. The main capital programme items are presented below. Appendix B(2) provides a full analysis of the updated approved 5 year capital programme and also the current financial review (CFO/010/14), elsewhere on the agenda, details the movements on the approved capital plan during the financial year .

68. The key areas of investment (2014/15 -2018/19) are:-

Building Investment Strategy (£7.685m) 69. The estate comprises of 26 fire stations, a Training and Development Academy (TDA), a Mobilising & Communication Centre (MACC), Service Headquarters, Marine 1, and the Engineering Centre. The capital programme reflects the funding required to replace, maintain and enhance the current estate stock, and when possible seeks to attract external funding (PFI) or specific contributions (capital receipts, capital reserves) to reduce the level of borrowing requirement. Estates maintain and revise a 5 year property asset management plan and the proposed capital programme is consistent with the priority areas that are contained within the plan.

70. Investment is proposed in line with the current Asset Management Plan. Nearly all the planned work is around the refurbishment and essential work at fire stations, £6.9m. The proposed capital programme does not take into account any station mergers or closures.

71. The Authority was awarded a specific capital grant of £1.770m for the new fire station proposal at Prescot. This scheme and associated grant have not been built into the capital programme at this stage as the project is still being finalised.

72. The construction of the new Joint Control room at SHQ with Merseyside Police has been built into the 2013/14 programme. Any re-phasing of expenditure will be reported to members.

Fire Safety (£6.599m) 73. Smoke alarms and sprinkler systems are being classed as capital expenditure in line with Government guidance. This follows the awarding of historic capital grants by the (then) ODPM towards the purchase cost of such items in financial years 2004/05 through to 2007/08. Current policy is to capitalise the installation costs of smoke alarms estimated at £3.65m over the period, however this expenditure is not funded through borrowing but financed in the year by a revenue contribution to capital.

Page 127

ICT – Investing in line with the ICT Strategy (£2.921m) 74. In line with the increasing use of technology to improve the service there is a significant investment in ICT within the programme. The most significant investments are in line with a planned replacement policy of 5 years for PCs, Servers and Network £1.8m, and software licenses £0.5m.

75. The other main investment is in the continued development of the portal, £0.2m.

Operational Equipment & Hydrants (£1.387m) 76. Provision is also made to ensure that a modern fire and rescue service can be delivered and firefighters kept safe, in particular provision is made for investment in specialist rescue equipment and new breathing apparatus such as :- • BA Sets and Telemetry Breathing Units, £0.4m • Specialist emergency & rescue equipment, £0.8m • Installation of new or replacement hydrants in line with our water strategy, £0.2m.

Vehicle Replacement Strategy (£7.511m) 77. The Fleet Manager has identified needs as follows:-

Fire Appliances 78. The Authority has developed an appliance replacement strategy based on the economic life of an appliance. Each appliance has an estimated service life of 10 years (reduced from 12 years due to anticipated increase in use following the reduction from 42 pumps to 28) on the front line followed by 2 years as a reserve appliance. The plan provides for 17 new appliances.

A Need for Specialist Vehicles 79. There is a need to make provision for the purchase of specialist vehicles to support the IRMP and to support the wider range of roles for the fire service including rescue: • Combined Pump Platform appliances (2 refurbished and 1 new vehicle) • IMU - Prime Movers (4) • Special Vehicles (Water Rescue, BA Support unit)

Ancillary Vehicles 80. Provision is included for the phased renewal of the ancillary vehicle fleet.

Officers have commenced a review of the specialist vehicle and ancillary fleet and this will not be completed until after the budget. Any amendments to the proposed capital programme will be brought back to members for approval during 2014/15.

Funding The Programme Capital Receipts 81. Capital receipts are usually the proceeds from the sale of assets. Any such receipts can be applied either to reduce an Authority’s outstanding debt or to be reinvested in the capital infrastructure.

Page 128 82. The Authority has (when available) used capital receipts as a source of funding for new capital investment with little, if any, being used for debt repayment – unless regulations require a proportion of the receipts to be used specifically to repay debt. However, under the new regime the Authority needs to consider if a proportion of any future receipts should be used for debt repayment as part of its overall strategy.

83. The proposed capital programme anticipates capital receipts from the following site sales: -

Toxteth Fire Station £0.250m (2014/15) Derby Road £0.700m (2014/15) LLAR House Formby £0.350m (2014/15) Existing LLAR Houses Newton-le-Willows £0.275m (2015/16)

84. It assumes that this income will be used to reinvest in the capital infrastructure and support the capital programme. Members should note that the anticipated capital receipt values are based on the best estimates at a point in time.

Capital Grants 85. As part of the 2010 spending review the Government also made the decision that there will be no supported borrowing allocations for the Fire and Rescue Service in the spending review period. Government capital support will be given in the form of capital grant only. The Government has announced that the Authority will receive a £1.244m general capital grant in 2014/15 and this grant has been taken into account in the current capital programme. In addition the Authority has received a specific capital grant of £1.770m for a new joint blue light station at Prescot in line with its bid, this scheme and associated grant have not been built into the capital programme at this stage as the project is still being finalised.

Alternative to Operating Leasing 86. Under the previous system of capital controls, investment that was funded by operating leases did not count as either capital expenditure or the financing as a credit arrangement. Therefore, in common with most other local authorities, operating leasing has been a source of funding for some limited eligible assets (e.g. vehicles, plant and machinery, and computer equipment) although the Authority generally avoided this because of the impact on the revenue account. However, whilst operating leasing as a source of funding remains outside of the Prudential Capital System, no leasing is assumed in this programme. The Deputy Chief Executive will monitor the suitability of alternative methods of finance.

Borrowing 87. Under the Prudential capital system Local Authorities are now able to determine their level of borrowing. However, the Government has retained reserve powers to limit an authority’s borrowing if the Government believes an authority’s proposals to be “unaffordable” or in times of national public spending constraint.

88. In the past Government provided support for the Authority’s capital spending through supported capital expenditure. The revenue costs associated with supported borrowing was funded through the revenue formula grant. As part of the CSR2010, the Government made the decision that no new supported borrowing

Page 129 allocations will be made to the Fire and Rescue Service in the Spending Review period. This will impact on revenue support grant allocations. Whilst there will be no new allocations after 2010/11, the level of assumed outstanding historic debt still forms part of the Formula Grant calculation and hence the Authority still receives some grant funding. All borrowing from 2011/12 is therefore effectively now unsupported or prudential borrowing.

89. The proposed capital programme represents an overall expenditure increase of £3.818m reflecting the proposed “new starts” expenditure, of which £3.168m relates to the addition of 2018/19. Appendix 2B sets out these changes in more detail.

90. The impact of these net additions to the programme on the Authority’s borrowing is a net increase of £3.038m: £m Increase in expenditure 3.8

Change in Non Borrowing Funding Sources: RCCO (HFSC installation costs) 0.8 Required Increase in Borrowing 3.0

The level of prudential “unsupported” borrowing therefore will increase by £3.038m to £18.525m.

Impacts on Revenue Budget and Financial Plan 91. When the Authority borrows money it has to factor the debt repayment and interest costs into its financial plans. The minimum revenue provision (MRP) methodology calculates how much debt repayment is required each year. Following the new Capital Regulations announced in 2008 the Authority must approve an MRP Statement each year that sets out the policy on MRP. Section D of this report outlines for Members the proposed MRP policy for 2014/15 – 2018/19 and the methodology for calculating the MRP. The additional borrowing and proposed MRP policy require an increase to the 2013/14 base figure for MRP and Interest of:-

Estimate Estimate Estimate Estimate Estimate 2014/15 2015/16 2016/17 2017/18 2018/19 £'m £'m £'m £'m £'m Cumulative increase in MRP / Interest 0.900 1.255 1.565 1.765 1.965

92. A significant factor in the large increase in the budget requirement is down to the Government’s decision to factor in no new supported borrowing in the 2011/12 or future years grant settlement and the capital regulations requiring all non-supported borrowing to be repaid over the relevant asset life. This has meant a four or five fold increase in MRP calculations for assets with a short asset life that previously had MRP calculated over a twenty-five year period.

93. Anticipated increase in MRP and Interest had already been built into the previously agreed financial plan for 2014/15 – 2018/19. To give Members an indication of the impact of the proposals, for each £1M reduction in borrowing it would reduce the associated revenue cost by potentially £0.050m - £0.100m (depends on the

Page 130 relevant asset life), the council tax equivalent reduction would be 0.4% - 0.7% or £0.27 to £0.48.

More information on the impact on the Capital Programme is shown in the section on Prudential Indicators (Section E).

Page 131 (D) MINIMUM REVENUE PROVISION STATEMENT

94. Under the Local Authorities and Accounting Regulations the Authority is required to set aside a sum of money each year to reduce the overall level of debt, this sum is known as the Minimum Revenue Provision (MRP). The 2003 regulations set a minimum annual amount to be charged to revenue based on the Authority’s Capital Financing Requirement (CFR) which is an amount broadly equivalent to the Authority’s outstanding debt. The regulations have been updated in 2008 and now require each authority to repay debt at a rate it considers prudent and to set out in an annual statement the Authority’s policy on making MRP in respect of the forthcoming year.

95. The new regulations guidance interprets MRP may be deemed to be prudent if it is either:

• Based over a period that is reasonably commensurate with that over which the capital expenditure / asset provides benefits (asset life), or • For the element of expenditure met from borrowing supported by Government Grant a period reasonably commensurate with the period in the determination of that grant (this in reality would equate to the current 4% MRP methodology).

96. The regulations guidelines set out four options for calculating MRP; (however as the Government are issuing no new supported borrowing only 2 of the 4 options are applicable for new borrowing; Asset Life or Depreciation methods):

1. Regulatory Method – This provides for local authorities to continue to calculate MRP in line with the minimum existing statutory charge of 4% of outstanding debt related to supported borrowing only. This option is available for all capital expenditure incurred prior to 1 April 2008.

• Capital Financing Requirement Method – This is very similar to the regulatory method but it does not take account of the adjustment that ensures authorities do not pay more MRP than under the previous capital regulatory regimes. For most authorities this method may not be appropriate as it would result in a higher level of provision than option 1.

• Asset Life Method – MRP is determined by reference to the life of the asset and the amount is either based on; o equal instalments method. This generates a series of equal annual amounts over the life of each asset that is financed from borrowing; or o annuity method. This method links the MRP to the flow of benefits from an asset where the benefit is expected to increase in later years.

These options are available to both supported and unsupported borrowing in determining the MRP requirement.

Finance Leases and PFI The guidance indicates that for finance leases and on balance sheet PFI contracts, the MRP requirement is met by making a charge equal to the element of the finance

Page 132 lease rental that goes to write down the balance sheet liability under proper accounting practices. This is in effect a modified version of the asset life - annuity method, the impact on the revenue account is neutral with MRP for these items matching the principal repayment embedded within the PFI or lease agreement.

Depreciation Method - MRP is to be equal to the provision required in accordance with depreciation accounting in respect of the asset on which expenditure has been financed by borrowing. This option is available to both supported and unsupported borrowing in determining the MRP requirement

2014/15 MRP : 97. The 2014/15 MRP is determined by the actual level of outstanding debt (CFR) as at the end of 2013/14. It is recommend that the Authority adopt a similar strategy for MRP determination as that in 2013/14; • For all capital expenditure incurred before 1 April 2008 and for all capital expenditure funded via supported borrowing ; MRP to be calculated using the Regulatory Method. • For all capital expenditure incurred after 1 April 2008 financed by unsupported (prudential) borrowing ; MRP to be calculated using the Asset Life Method – equal instalments method. • For credit arrangements such as on balance sheet leasing arrangements (finance leases) ; the MRP charge is to be equal to the principal element of the annual rental. • For on balance sheet PFI contracts ; the MRP charge will be equal to the principal element of the annual rental

98. The above options meet the requirement for MRP to be deemed prudent but also allows certainty and predictability over MRP charges. The financial plan outlined in this report reflects the proposed Authority’s policy on prudential MRP.

99. By adopting the recommendations above the MRP charge for 2014/15 would be £3.601m, consisting of £1.726m for prudential borrowing schemes incurred after 1st April 2008, £1.875m for all other capital schemes (these figures exclude PFI and Finance lease as the MRP charge is a notional figure and contained within the rental budget). This amount has been included within the budget estimate for 2014/15.

100. In addition it is proposed that if any approved MRP/Interest budget becomes available due to; capital schemes being re-phased; additional specific non- borrowing funding becoming available; or a reduction on the approved capital programme/ required borrowing, then the Service may choose to make additional MRP payments if the overall financial position of the Authority in that year remains consistent with the approved financial plan.

101. The Authority in the past has determined it can afford and sustain significant prudential borrowing in order to allow the required level of investment in the infrastructure and assets of the Authority to deliver a modern well equipped fire service.

Page 133 (E) PRUDENTIAL INDICATOR REPORT

102. Having formulated a draft Capital Programme, the Authority, in making final decisions upon that Capital Programme and Revenue Budget 2014/15, will need to consider a report setting out a range of Prudential Indicators aimed at demonstrating the intended Investment Programme’s affordability, prudence and impact upon Treasury Management activity and strategy.

103. It should be noted, however, that in order to provide those Indicators, both Capital and Revenue financial plans need to be prepared for each of the next 3 financial years, commencing with 2014/15.

104. The financial plans prepared in respect of the financial years 2015/16 and 2016/17 are not to be mistaken for approved Budgets. They are, at this stage, only a guide for financial planning and as such subject to significant change as a result of decisions made by the Authority. However, such plans are required to be supported by an indication of future Council Tax. At this stage an assumption of Council Tax increases of 2% in 2014/15 and 2015/16 and then 4% thereafter has been made.

Prudential Indicators 105. The Authority must demonstrate that its spending plans comply with the Prudential Code by the publication of a number of performance indicators, which are known as the Prudential Indicators. Details of the prudential indicators for this Authority are provided below.

106. The purpose of the indicators is to demonstrate that capital investment remains within sustainable limits and that the Authority has considered the impact of the whole plan on future levels of Council Tax. The indicators that will measure this are:- • Estimates of the ratio of capital financing charges to the net revenue budget • Estimates of the precept that would result from the three-year capital plan. • Estimates of the capital financing requirement.

107. The prudential indicators for Merseyside are:-

a) Capital Expenditure The actual capital expenditure that was incurred in 2012/13 and the estimates of capital expenditure to be incurred for the current and future years that are recommended for approval are:

Actual Estimate Estimate Estimate Estimate Estimate Estimate 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 £000,s £000,s £000,s £000,s £000,s £000,s £000,s Capital Expenditure 8,010 16,490 10,038 5,270 4,161 3,466 3,168

Members will note that the increase in expenditure in 2012/13 to 2013/14 reflects the year-end re-phasing of £3.5m of planned expenditure into 2013/14 at the end of 2012/13. In addition in 2013/14 the inclusion of the major building project for the new Joint Control Room, (£9.7m), explains why the total expenditure in this year

Page 134 appears relatively high. More details on the capital programme are given elsewhere in the report (Section C).

(b) Ratio of financing costs to net revenue stream Estimates of the ratio of financing costs to net revenue stream (amounts met from government grants and local taxpayers) for the current and future years, and the actual figures for 2012/13 are:

Actual Estimate Estimate Estimate Estimate Estimate Estimate 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Ratio of Financing costs to 7.61% 7.94% 8.89% 10.31% 10.64% 11.33% 12.05% Net Revenue Stream

This shows that forecast debt financing costs will increase from 7.94% in 2013/14 (based on the actual forecast capital spend in 2013/14) to 12.05% by 2018/19. As stated previously the impact of the Government’s decision to issue no new supported borrowing for CSR10 has meant all MRP calculations are now based on asset life. This has resulted in a significant rise in MRP over the medium term, but eventually the ratio will fall as historic debt is repaid and all other debt is paid off over the life of the asset. This is also affected by the fact that whilst the Authority’s debt is increasing its overall budget is reducing because of forecast Government funding cuts.

(c) Effect on the Precept The estimate of the incremental impact of capital investment decisions proposed in this budget report, over and above capital investment decisions that have been previously been taken by the Authority are:

Actual Estimate Estimate Estimate Estimate Estimate Estimate 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Incremental Impact of -£1.24 £0.55 £2.39 -£0.02 -£0.12 -£0.00 £1.12 Capital Investment Decisions.

This indicator compares the capital programme set by the Authority in last year’s budget process to the proposed revised capital programme submitted this year. It is intended to show the marginal impact of the overall capital programme, and the decisions being made by the Authority, on the Council Tax levels. The re-phasing of expenditure from 2012/13 into 2013/14, and the relatively lower capital spend in 2015/16 to 2017/18 compared to 2013/14 and 2014/15 have resulted in a negative or reduced incremental increases over that period. The new start programme in 2018/19 has resulted in the increase in 2018/19.

Capital Financing Requirement 108. The Capital Financing Requirement (CFR) measures the authority’s underlying need to borrow for capital investment purposes.

109. Based on current commitments for 2013/14 and the latest estimates of capital investment decisions in future years, the capital financing requirement at the 31st March is as follows:

Page 135 Actual Estimate Estimate Estimate Estimate Estimate Estimate 31.3.13 31.3.14 31.3.15 31.3.16 31.3.17 31.3.18 31.3.19 £000,s £000,s £000,s £000,s £000,s £000,s £000,s Capital Financing Requirement 54,381 56,038 58,260 58,367 57,795 56,355 54,372 (Excluding PFI)

In accordance with best practice, the Authority does not associate borrowing with particular items or types of expenditure. The Authority has, at any point in time, a number of cash flows both positive and negative, and manages its Treasury position in terms of its borrowings and investments in accordance with its approved Treasury Management Strategy and practices. In day to day cash management, no distinction can be made between revenue cash and capital cash. External borrowing arises as a consequence of all the financial transactions of the Authority and not simply those arising from capital spending. In contrast, the capital financing requirement, CFR, reflects the Authority’s underlying need to borrow for a capital investment purposes.

Net Borrowing and the Capital Financing Requirement 110. CIPFA’s Prudential Code for Capital Finance in Local Authorities includes the following as a key indicator of prudence:

“In order to ensure that over the medium term net borrowing will only be for a capital purpose, the local authority should ensure that net external borrowing does not, except in the short term, exceed the total capital financing requirement in the preceding year plus the estimates of any additional capital financing requirement for the current and next two financial years.”

111. The Authority had no difficulty in meeting this requirement as the Authority’s CFR (excluding PFI) is expected to reach £57.795m by the end of 2016/17 and the expected maximum debt position, (the “operational boundary” – see Treasury Management Strategy) for 2016/17 is £43.000m. The reason for the borrowing figure being lower than the CFR figure reflects the availability of cash in the form of reserves to the Authority and therefore the ability to defer having to take out new loans for the short to medium term.

Page 136 (F) TREASURY MANAGEMENT STRATEGY STATEMENT 2014/15

INTRODUCTION 112. This report sets out the expected treasury operations for this period, linked to the Authority’s Budget, Medium Term Financial Plan, and Capital Programme. It is inextricably linked to delivering the Authority’s mission and aims. It contains four key legislative requirements:-

(a) The Treasury Management Strategy Statement which sets out how the Authority’s treasury service supports capital decisions, day to day treasury management and the limitations on activity through treasury prudential indicators. The key indicator is the Authorised Limit required by S3 of the Local Government Act 2003 and is in accordance with the CIPFA (The Chartered Institute of Public Finance & Accountancy) Codes of Practice.

(b) The reporting of the prudential indicators for external debt and the treasury management prudential indicators as required by the CIPFA Treasury Management Code of Practice.

(c) The investment strategy which sets out the Authority’s criteria for choosing investment counterparties and limiting exposure to the risk of loss. This strategy is in accordance with the Department for Communities and Local Government (DCLG) Guidance on Local Government Investments updated in 2010. It is proposed to maintain the Authority’s minimum long term credit rating requirement of Fitch A- or equivalent.

(d) The Authority’s Minimum Revenue Provision (MRP) Policy, which sets out how the Authority will pay for capital assets through revenue each year as required by Local Authorities (Capital Finance and Accounting) Regulations 2008.

RECOMMENDATIONS; PROPOSED STRATEGY 113. The above policies and parameters provide an approved framework within which the Officers undertake the day to day capital and treasury activities. The Authority is recommended to approve each of the key elements contained within this report:-

(e) The Treasury Management Strategy 2014/15. (f) The External Debt and Treasury Management Prudential Indicators and Limits for 2014/15 to 2016/17. (g) The Investment Strategy 2014/15. (h) The Minimum Revenue Provision (MRP) Statement included in section D which sets out the Authority’s policy on MRP.

TREASURY MANAGEMENT STRATEGY 114. The suggested strategy for 2014/15 in respect of Treasury Management is based upon treasury officers’ views on interest rates supplemented by leading market forecasts. The strategy covers:- (i) prospects for interest rates; (j) capital borrowing and debt rescheduling; (k) annual investment strategy; (l) external debt prudential indicators;

Page 137 (m) treasury management prudential indicators; (n) performance indicators; (o) treasury management advisers.

PROSPECTS FOR INTEREST RATES 115. Short term rates are expected to remain on hold for a considerable time. There are signs that the economic recovery has begun. Growth forecasts have been raised and unemployment has fallen. However, this is not expected to translate into rising inflation which could trigger an increase in bank rate. The Monetary Policy Committee (MPC) has indicated in its forward guidance that the economy is still relatively weak and that the recovery will be a modest one. US fiscal tightening and continuing Euro zone problems could also depress UK growth. The MPC is expected to hold bank rate at 0.5% throughout 2014 but with the possibility of an increase in early 2015 should the recovery prove stronger than expected.

116. Longer term fixed interest borrowing rates are based on central government borrowing costs i.e. UK gilt yields. The longer run trend is for gilt yields and PWLB rates to rise, due to the high volume of gilt issuance in the UK, and of bond issuance in other major western countries. Increasing investor confidence in economic recovery is also likely to compound this effect as a continuation of recovery will further encourage investors to switch back from bonds to equities. Whilst very difficult to predict, the effect would be upward pressure on long term rates and longer-term Public Works Loans Board (PWLB) rates could rise by around 0.25% – 0.50% in 2014/15.

117. The overall structure of interest rates is expected to remain the same and short term rates will continue to be lower than long term rates and are likely to remain so throughout 2014/15. In this scenario, the strategy will be to reduce investments and borrow for short periods and possibly at variable rates when required.

CAPITAL BORROWING AND DEBT RESCHEDULING 118. The borrowing requirement comprises the expected movements in the Capital Financing Requirement and reserves plus any maturing debt which will need to be re-financed. The Authority does not envisage that any new long term borrowing will be required in 2014/15. Given the likely structure of interest rates described above, it is envisaged that any borrowing to meet short term cash flow shortages will be for very short periods. Against this background, Treasury Officers will monitor the interest rate market and adopt a pragmatic approach to any changing circumstances.

119. Rescheduling of debt is the early repayment of loans and replacement by loans for different periods and at different interest rates. It can be used to enhance the balance of the long term portfolio, by for example, amending the maturity profile or changing volatility levels and may on occasion generate cash savings. Debt rescheduling becomes more beneficial when the relationship between short and long term rates moves appreciably.

120. Current PWLB lending terms have severely constrained the option to generate savings via debt rescheduling. A significant rise in long term interest rates is required before rescheduling of debt is viable. However, interest rate structures will

Page 138 be continually monitored for opportunities to generate savings from debt rescheduling. Any rescheduling that takes place will be reported to Members in monitoring reports.

ANNUAL INVESTMENT STRATEGY 121. The primary purpose of the Annual Investment Strategy is to set out the policies for managing investments giving priority to the security and liquidity of the Authority’s investments. It also contains the policy on the use of credit ratings and credit ratings agencies, procedures for determining and limiting the use of higher risk investments and the use of external advisors.

122. The Authority’s investment priorities are (a) the security of capital and (b) liquidity of its investments. The Authority will aim to achieve the optimum return on its investments commensurate with the proper levels of security and liquidity. All investments will be in sterling. All cash balances will be invested in accordance with the Code of Practice and with regard to the statutory guidance.

123. A counterparty list of institutions with which the Authority will invest shall be maintained by reference to the criteria set out below for the different categories of institution and their credit rating. Regardless of these criteria, the money market will be closely monitored and any institution will be suspended from the counterparty lending list should any doubts arise concerning its financial standing. Under the guidance, investments fall into two separate categories, either specified or non-specified investments.

Specified Investments 124. Specified investments offer high security and high liquidity and satisfy the conditions set out below: • The investment is denominated in sterling and any payments or repayments in respect of the investment are payable in sterling only. • The investment is not a long-term investment (has a maturity of less than one year). • The investment does not involve the acquisition of share capital in any corporate body. • The investment is made with a body or in an investment scheme which has been awarded a high credit rating by a credit rating agency, or with the UK Government or a local Authority.

Specified investments will comprise the following institutions: - • The UK Government (such as the Debt Management Account deposit facility, UK Treasury Bills or a Gilt with less than one year to maturity). • Supranational bonds of less than one year’s duration. • UK Local Authorities. • Money Market Funds. • UK Banks. • Foreign banks registered in the UK. • Building Societies.

Page 139 Credit Rating Criteria 125. The Authority will invest with UK institutions or non-UK institutions that are domiciled in a country which has a minimum Sovereign long term rating of “AA”. The institution must have a high credit rating assigned by any of the three credit ratings agencies (Fitch, Moodys and Standard & Poors). To be deemed highly rated the institution must satisfy at least the minimum of the following Fitch (or equivalent) criteria:

Long term credit rating A-

If any of the agencies assigns a rating lower than the Fitch minimum (or equivalent) to an institution then the Authority will not invest with that institution.

In addition, the Authority will use institutions that are part nationalised UK banks.

126. Regardless of the credit rating assigned to an institution or whether it is covered by a guarantee, if any doubt over its financial standing exists then that institution is removed immediately from the counterparty lending list.

Investment Limits 127. The credit ratings and individual limits for each institution within the categories of investments to be used by the Authority in 2014/15 are as follows:

UK Government (including gilts and the DMADF) Unlimited UK Local Authorities (each) Unlimited Part Nationalised UK banks £4m Money Market Funds (AAA rated) £3m UK Banks and Building Societies (A- or higher rated) £2m Foreign banks registered in the UK (A or higher rated) £2m

No limits on investments with the UK Government and Local Authorities have been set because they are considered to be of the highest credit quality and are essentially risk free. The limits placed on other categories reflect some uncertainty and marginally higher risk profile of the institutions within those categories. The status of part nationalized banks is unlikely to change for at least 5 and probably 10 years but there is an element of uncertainty about their status. Money Market Funds although AAA rated, invest in a diverse portfolio so are not completely risk free and have been assigned a lower limit. There is a slightly higher risk for A- rated banks as described in para 30 below and so these institutions have the lowest limit.

128. Ways to increase investment returns have been considered including (a) reducing the minimum credit rating criteria from A- to BBB; (b) increasing the limits with individual institutions and (c) investing for periods longer than one year. Any of these ways would involve taking on additional risk because higher investment returns can only be achieved by taking higher risks. The decision not to do this but to continue with current policies was taken in the light of a change in the Banking Reform Act which enables the government to force investors to take losses if a bank became insolvent. It is now unlikely that the government would fully fund a taxpayer bailout of a failed bank.

Page 140 129. The maximum that may be invested with different banks that are part of the same conglomerate shall not exceed the maximum of the highest rated bank within the group. The limits may be exceeded for short periods when there are adverse conditions in the money market with the agreement of the Deputy Chief Executive or Treasury Manager.

Non-Specified Investments 130. Non-specified investments do not, by definition, meet the requirements of a specified investment. The Department for Communities & Local Government (CLG) guidance requires that greater detail is provided of the intended use of non- specified investments due to greater potential risk. The following types of non- specified investments may be used.

• Deposits with the Authority’s own banker shall be unlimited for transactional purposes and to allow for unusual cash flow circumstances.

• Deposits with a maturity of greater than one year (including forward deals in excess of one year from inception to repayment) with any bank or building society that meets the credit rating criteria above.

• Building societies which do not meet the normal credit criteria but are one of the top ten building societies, determined by asset size. Those societies that are within the top ten but do not have an agency determined credit rating shall have an individual limit of £1m. Building Society rankings are checked annually with the Building Societies Association.

Risk Management of Investment Counterparties 131. Bank and Money Market Fund ratings are checked daily. The Authority is alerted by e-mail when there is an amendment by any of the agencies to the credit rating of an institution. If an amendment means an institution no longer meets the Authority’s minimum requirement, or any doubt over its financial standing exists, then that institution is removed immediately from the counterparty lending list. Conversely, an institution may be added to the list should it achieve the minimum rating.

132. Credit ratings are only the starting point when considering credit risk. The Code of Practice requires the Authority to supplement credit rating information with additional operational market information which will be applied before making any specific investment decision from the agreed pool of counterparties. Credit Default Swaps and negative rating watches/outlooks are examined and the financial press, internet and financial information systems are monitored for market information regarding its counterparties. It also receives daily e-mails from various market participants that could identify potential problems. Any information that casts doubt on an institution's creditworthiness is acted on by suspending investment with that institution.

Liquidity of Investments 133. Each investment decision is made with regard to cash flow requirements resulting in a range of maturity periods within the investment portfolio. Investments are normally short term having a maturity of less than one year. The Prudential Code

Page 141 does allow longer term investments and under certain money market conditions it may be prudent to invest for up to three years dependent on cash flow forecasts.

Risk Benchmarking 134. The CIPFA Codes and the DCLG Investment Guidance recommend the consideration and approval of security and liquidity benchmarks. Yield benchmarks are currently widely used to assess investment performance. Security and liquidity benchmarks are new requirements although the application of these is more subjective in nature. The benchmarks are simple guides to maximum risk and so may be breached from time to time depending on movements in interest rates and counterparty criteria. The purpose of them is for officers to monitor the current and trend position and amend the operational strategy to manage risk as conditions change. Any breach of the benchmarks will be reported, with supporting reasons in the Mid-Year or Annual Report.

135. Security: - Security is currently evidenced by the application of minimum credit quality criteria to investment counterparties, primarily through the use of credit ratings. A method to benchmark security risk is to assess the historic level of default against the minimum criteria used in the Authority’s investment strategy. The Authority’s minimum credit rating criteria is “A-”. The average expectation of default for a one year investment in a counterparty with an “A-” long term rating is 0.09% of the total investment. The inclusion of unrated Building Societies raises this factor to 0.14% e.g. for a £1m investment the average loss would be £1,400. This is only an average and any specific counterparty loss is likely to be higher but these figures do act as a proxy benchmark for risk across the portfolio. The Authority’s maximum security risk benchmark of 0.14% is embodied in the criteria for selecting cash investment counterparties and will be monitored and reported to Members.

136. Liquidity: - The Authority seeks to maintain liquid short term deposits of at least £1 million available daily.

137. Yield: - The Authority’s benchmark for investment returns is the 7 day LIBID rate.

Reporting Arrangements 138. The Investments Strategy forms part of the Treasury Management Strategy which is referred to Audit and Value For Money Scrutiny Panel for monitoring. An interim report is produced during the year and a final annual report by 30th September following the end of a financial year.

EXTERNAL DEBT PRUDENTIAL INDICATORS : 139. The Prudential Code requires the following external debt indicators of prudence: • Authorised limit for external debt • Operational boundary for external debt

Authorised Limit 140. The Authorised Limit for Debt represents the maximum level of debt which the Authority may have during the year. The Authority has no powers to exceed this unless a further report with revised prudential indicators is approved by the Authority. The limit therefore makes appropriate allowance for the risks and

Page 142 uncertainties which affect day-to-day debt levels, and the ups and downs of short term cash flow.

141. The authorised limits reflect the Authority's Capital Financing Requirement, identified in its capital expenditure and financing plans. They are consistent with the treasury management policy statement and practices. The limit will ensure that total gross debt does not exceed the total of the CFR in the preceding, current or following two financial years. The Authority is asked to approve the limits below and to delegate authority to the Deputy Chief Executive, within the total limit for any individual year, to effect movement between the separately agreed limits for borrowing and other long term liabilities.

Authorised Limit for 2014/15 2015/16 2016/17 External Debt £’000 £’000 £’000

Borrowing 80,000 77,000 75,000

Other Long Term Liabilities 2,000 2,000 2,000

TOTAL 82,000 79,000 77,000

Operational Boundary 142. The Operational Boundary indicator represents the expected maximum debt position during each year. It takes into account projections of borrowing requirement and repayments in future years. It may be different from the year end position as it reflects cash flows within each year. The Authority is asked to approve the limits and to delegate authority to the Deputy Chief Executive, within the total limit for any individual year, to effect movement between the separately agreed limits for borrowing and other long term liabilities.

Operational Boundary for 2014/15 2015/16 2016/17 External Debt £’000 £’000 £’000 Borrowing 44,000 43,000 41,000 Other Long Term Liabilities 2,000 2,000 2,000

TOTAL 46,000 45,000 43,000

Actual External Debt 143. The prudential indicator for actual external debt considers a single point in time and hence is only directly comparable to the authorised limit and operational boundary at that point in time. Actual external debt is monitored during the year against the limits. It is forecast to be £43.6 million at 31st March 2014.

TREASURY MANAGEMENT INDICATORS: 144. The Treasury Management Code requires the following Treasury Management indicators of prudence:

Page 143 Upper limit on fixed interest rate exposures; Upper limit on variable interest rate exposures; Upper and lower limits for the maturity structure of borrowing; Total principal sums invested for periods longer than 364 days.

Interest Rate Exposures 145. It is recommended that the Authority sets upper limits on its fixed and variable interest rate exposures as a percentage of its net outstanding principal sums as follows: -

Upper Limits on Interest 2014/15 2015/16 2016/17 Rate Exposures % % % Fixed 100 100 100 Variable 50 50 50

146. This means that the Deputy Chief Executive will manage fixed interest rate exposures within the range 50% to 100% and variable interest rate exposures within the range 0% to 50% for 2014/15.

Maturity Structure of Borrowing 147. It is recommended that the Authority sets upper and lower percentage limits for the maturity structure of its borrowings as follows. Percentage of projected fixed rate borrowing that is maturing in each period:

Upper Limits on Interest 2014/15 2015/16 2016/17 Rate Exposures % % %

Fixed 100 100 100 Variable 50 50 50

Total Principal Sums Invested For Periods Longer Than 364 Days 148. It is recommended that the limit for investments of longer than 364 days be set at £2 million for each of the years 2014/15, 2015/16 and 2016/17.

PERFORMANCE INDICATORS 149. The Code of Practice on Treasury Management requires the Authority to set performance indicators to assess the adequacy of the treasury function over the year. These are distinct historic indicators, as opposed to the prudential indicators, which are predominantly forward looking.

150. The Authority will maintain performance indicators for both borrowing and investment though it must be stressed that the pursuit of higher performance shall not be at the expense of taking undue risks. The indicators for the treasury function are:

• Borrowing - Average rate of borrowing for the year compared to average available.

Page 144 • Investments – Internal returns compared to the 7 day LIBID rate.

The results of these indicators will be reported in the Treasury Management Monitoring and Annual Reports.

TREASURY MANAGEMENT ADVISORS 151. The Treasury Management service is provided to the Authority by Liverpool City Council. The terms of the service are set out in an agreed Service Level Agreement. The Council employs treasury management advisers appointed under a competitive procurement exercise who provide a range of services which include: - - Technical support on treasury matters, capital finance issues. - Economic and interest rate analysis. - Debt services which includes advice on the timing of borrowing. - Debt rescheduling advice surrounding the existing portfolio. - Generic investment advice on interest rates, timing and investment instruments. - Credit ratings/market information service comprising the three main credit rating agencies.

152. Whilst Liverpool City Council and its advisors provide the treasury function, the responsibility for any decision on treasury matters remains with the Authority.

Page 145 (G) REVENUE FORECASTS

153. The Authority has in recent years maintained robust medium term financial plans.

154. This plan is fully reviewed on an annual basis and monitored quarterly. This section of the report will develop a financial forecast for the Authority based upon the latest information. It will:-

• Outline any movement since the 2013/14 – 2017/18 previously approved financial plan, • Outline the underlying assumptions to support the forecast, • Discuss the key pressures that contribute to forecast deficits.

Members will recall that in the past few years the Authority’s budget forecasts have dealt with significant financial challenges because of government decisions about the funding of Firefighters pensions and the poor outcomes of the Comprehensive Spending Review 2007 and 2010 (CSR2007 & CSR2010).

155. The Authority has faced significant financial pressures over the last decade as in general terms, funding for fire was moved slowly towards a more standard level of expenditure.

156. Between 2000 and 2010, the Fire Authority reduced the number of Firefighters, amongst other savings, from 1400 to 1000.

157. Following the financial crisis of 2008, the Government set its spending review for 2010 to reflect major reductions in public expenditure. The spending review dealt with funding for 2011/12 to 2015/16. For the first two years of that period, the Fire Authority suffered cuts at double the national average for fire.

158. Following a successful lobby, when a new system for fire service funding was introduced for 2013/14, Merseyside subsequently received cuts at the same level as all other fire and rescue services in percentage terms (albeit the absolute impact is higher because Merseyside is more reliant on grant than most other fire and rescue authorities).

159. The Authority has already developed and implemented plans to cope with the spending review cuts to date. It approved last year a financial plan that dealt with the 2013/14 budget, and planned to deal with the indicative grant cuts for 2014/15 in a prudent pre-planned way.

The key elements of that plan were:-

• The reduction in fire appliances from 42 to 28. (Achieved by a reduction in Firefighter posts of 90 delivered by national turnover rates), saving £3.1m,

• Reduction in support staff numbers by 57 and overall support costs by £2.3m

• Technical and income savings of £4.7m

Page 146 The section below summarises the good progress in delivering these targets.

2013/14 2014/15 2015/16 2016/17 £'000 £'000 £'000 £'000 Options formally Implented -4,950 -9,655 -9,497 -9,572 Options awaiting some business re-engineering but -175 -405 -505 -505 being delivered in cash terms -5,125 -10,060 -10,002 -10,077

Plans are well advanced to deliver the remaining savings. Therefore the Authority’s current financial plan has remained on track.

160. In order to develop a financial forecast the starting point will be the balanced budget plan the Authority agreed last year for 2013/14 and 2014/15 based on the information available last February. This report will examine changes from that position. Three potential scenarios will be examined:-

A. 2014/15 forecast alone B. Forecast based upon those government announcements that have already been confirmed (to 2015/16) C. Longer term prospects post 2015/16

A) Changes to 2014/15 Balanced Position:

1) Government “Grant”: Increased Grant Cuts : Government Grant funds approximately 65% of the Authority’s budget requirement. The Government has announced the settlement funding for 2014/15. The Chancellor has assumed ongoing public sector pay restraint and reduced grant funding accordingly. This means a slightly increased cut in government funding which now totals 7.6% which worsens the position by £0.585m.

Variation in Business rates: Since 2013/14 part of the Government settlement is in the form of an assumed level of local business rate income. The Authority receives 1% of the Merseyside districts gross business rates. There has been a net reduction in the anticipated proportion of local business rates because the total to be collected locally is less than originally anticipated by Government. This has an adverse impact of £0.174m. This is partially as a consequence of Government business rates relief initiatives reducing.

The Authority is at risk from future business rating appeals and business closures giving rise to deficits in the anticipated business fund. Any shortfall in business rate income will be charged to the Authority in the following year, in the same way any deficit on the Council Tax collection fund is passed on.

Other Grant Changes: • Small Firms Business Rates Exemption:

Page 147 The Government has given some exemptions/discounts to small firm’s which affects the amount of funding which the Authority receives from the new scheme for localised business rates. The government has recently announced it will be issuing a (Section 31) grant to compensate the authority for that loss which totals £0.384m for the Authority.

• New Dimensions Grant: The Authority receives a grant of £1.2m in each year for crewing New Dimensions Vehicles from CLG. The financial plan assumes this grant will continue in 2014/15 – 2018/19.

2) Council Tax Base & Collection Fund changes: Council Tax Base; The Districts of Merseyside have set their tax bases 2014/15 and they are shown in the table below:-

2013/14 2014/15

District Council Tax Council Tax Variance Taxbase Taxbase

£ £ £ % LIVERPOOL 88,777.98 91,976.50 3,198.52 3.60% WIRRAL 87,116.40 87,786.20 669.80 0.77% ST.HELENS 46,240.00 46,715.00 475.00 1.03% SEFTON 76,516.20 76,992.00 475.80 0.62% KNOWSLEY 30,573.00 30,916.00 343.00 1.12%

329,223.58 334,385.70 5,162.12 1.57%

2013/14 Band D Tax Level 68.70 68.70 Total Income £ 22,617,660 22,972,298 354,637.64 1.57%

The total tax base for the Authority has increased by 1.57%, this means that each £1 of Council Tax the level of income will be greater than that generated in 2013/14 by £5,162. The result of this is that the income from the current level of Council Tax is anticipated to higher by £354,638 without any precept increase being applied (this is assumed to be a permanent increase).

This means that the additional income forecast from a just below 2% increase in Council Tax in 2014/15 is now £0.458m.

The Districts of Merseyside have reviewed their collection funds and identified the proportion of any surplus or deficit attributable to the Authority. The results are set out in the table below and show a net surplus of £406,951. This impact is a one-off.

Page 148

3) Local Government Pension Scheme Costs: The pension fund has actuarially reviewed the costs of the pension scheme and costs have increased by £0.300m p.a.

The overall impact of these issues is a net surplus of £0.090m for 2014/15 compared to what members expected to be a balanced position.

£’m £’m • 2014/15 Original Forecast overall position (after £1.783m drawdown from the smoothing reserve) 0.000 • Unavoidable Changes to the plan: Higher Government Grant reduction 0.585 Increase in LGPS payment 0.300 Sec31 Grant to cover NNDR discounts -0.384 Increase in CTax Base & 2% increase yield -0.358 Reduction in local NNDR estimate 0.174 One-off collection fund surplus -0.407 • Reduction in 2014/15 Forecast -0.090

• Reduce Smoothing reserve in light of above 0.090

Page 149 B) Forecast Based Upon Confirmed Government Announcements

It should be noted that the issues mentioned below are in addition to the 2014/15 considerations above and reflect changes to the estimates in the current financial plan.

1) 2015/16 Government Grant: The Government has now provided information on the indicative grant settlement for 2015/16. This sets out a further reduction of £3.473m (-8.5%). This is £2.387m above the estimate in the current financial plan.

2) Ongoing Council Tax restraint: The original plan had assumed Council Tax would increase by 4% from 2015/16 however; it became clear during the year that the Government had an aspiration to freeze council tax for the life of parliament. Therefore it expected to set in place arrangements to restrict rises in 2014/15 and 2015/16 to 2% or even lower unless a referendum was held, the plan has now been amended to reflect this. The plan has been amended to assume permanent council tax increases in line with RPI inflation forecasts of 2%.

3) Inflation & Pay Changes: The forecast plan currently includes a contingency for pay awards and price increases in each year. This has been prepared using the following assumptions:- • Pay bill; In 2014/15 an increase in the pay bill of 1%, and then an annual increase of 2% thereafter as It is assumed that long term pay awards will fall in line with HMT expectations of inflation. • All Other Price Inflation 2% p.a.

As an indicator to Members and a guide in assessing the volatility of inflation estimates - a movement of 1% in pay bill inflation equates to approximately £0.5m in a full year

4) Cost of Capital Borrowing: The revenue impacts of capital investment decisions and the agreed 2014/15 – 2018/19 capital programme are included within forecasts. This includes additional new start schemes of net +£3.568m. The plan also takes into account the proposed MRP policy discussed previously in section D.

5) Pensions – SERPS Opt OUT: State Earnings Related Pension Scheme (SERPS) was a UK Government pension arrangement, to which employees and employers contributed. Members of occupational pension schemes could be "contracted out" of SERPS by their employer, in which case they and the employer would pay reduced National Insurance (NI) contributions. The Government has announced the reduction in employer and employee NI payments will cease from April 2016 increasing Authority’s NI payments by £1.000m.

Page 150 6) Pensions- Scheme Changes: The Government is concerned about the cost of public pensions and is in the process of finalising proposals on changes to firefighter pensions- members will be well aware that this is a matter of ongoing dispute with the Fire Brigades Union. At this time the assumption is that the pension changes will have no impact on the employer’s pension costs. However, it should be noted that the last valuation in 2007, which was not enacted, suggested employer contribution rates of 3% but this was never implemented. In addition in the short term the net deficit on firefighters pension (which is paid through Government Annually Managed Expenditure) continues to grow significantly in the short term whilst the government has set a cash limit on AME expenditure in total as part of its financial plans. At this stage the financial plan assumes that the firefighter employer’s pension contribution rate will continue at current rates

The forecast deficit therefore based upon Government announcements to date and reasonable assumptions about the growth in pay and pensions is set out in the table below. £’m £’m • 2015/16 Original Forecast overall position- deficit 2.667 • Unavoidable Changes to the plan: o Increase in LGPS payment 0.340 o Sec31 Grant to cover capped NNDR increase -0.190 o Higher Government Grant reduction 2.387 o Net change to forecast Council Tax Yield (after increase in tax base) 0.096 o SERPS - Employer’s NI ** 1,000

• Increase in Forecast Deficit 3.633 _____ • Financial Challenge Based on Known changes 6.300

** This will only actually impact on the Authority from April 2016

These known changes significantly impact on the current financial plan and require an additional £6.300m of savings to be identified.

It should be noted that because :-

• this forecast is based upon confirmed government announcements only • All political parties have committed to honour financial decision already made and to on-going efforts to reduce the uk deficit

This is regarded as the minimum position the Authority should reasonably plan for in the mid-term. It is recommended the Authority formulate a plan to deal with at least this level of financial challenge with scalable options to meet even higher deficits if required.

Page 151 C) Longer Term Prospects Post 2015/16

1) Government “Grant”: The current Government has announced that the current austerity period is now likely to continue beyond 2015/16 and has committed to ongoing cuts in public expenditure until the UK deficit is eliminated by 2020.

Whilst there is a general election in 2016/17 the Labour party have also committed to eliminate the UK deficit by 2020.

This scenario assumes the recent government funding reduction profile will continue for the next few years up to 2018/19 and perhaps beyond. After allowing for inflation increases at 2% p.a the Authority might face a deficit of as much as £20m by 2019/20 as shown in the table at the end of this section (NB table below runs only for five years to 2018/19).

Whilst to a degree any such longer term forecast is necessarily speculative what seems clear is that there are likely to be ongoing budget reductions. In its financial planning the Authority needs to be mindful of longer term pressures and develop a scalable model which can be extended whatever the future financial pressures.

The baseline financial forecast is based upon historic assumptions. The Deputy Chief Executive has reviewed the underlying inflation assumptions in order to identify savings, this is considered in Section (H).

Conclusion 161. It is recommended that the Authority develops a firm plan to, at least deal, with the £6.300m forecast deficit based upon confirmed announcements up to the end of 2015/16

162. The overall forecast of the deficit based upon these assumptions is shown in the table overleaf:

Page 152 2014/15 - 2018/19 DRAFT MTFP

Updated Income Forecast -64,356 -61,113 -58,864 -57,205 -56,036

Forecast Net Position (surplus) / deficit 0 5,300 10,325 13,684 16,353

Known Government Tax Changes: Scenario C For employers, the end of contracting out -start paying the standard rate of National Insurance 1,000 contributions. Increase employee costs by 3.4 per cent 01.04.2016 Onwards

Recommended Saving Target for 2014/15 - 2018/19 Financial Plan 6,300 Scenario B

A Scenario

Page 153 (H) Options for Tackling the Financial Challenge

163. The Authority has agreed a number of Value For Money Principles that have underpinned its approach to budgets and financial plans in recent years. During 2012/13 the principles were reviewed and updated to better reflect the challenges facing the Authority now and in the future. They are:-

Budget Principles Principle 1 – Allocate resources in a way that contributes towards the achievement of MFRA’s Mission, Aims and Values

Principle 2 – To continue to seek to avoid compulsory redundancy (if possible given the difficult financial circumstances)

Principle 3 – To choose budget options which minimises negative impact on the front line services or on firefighter safety

Principle 4 – To consider budget approaches which ensure the right balance between local and national funding levels and considers the views of local people on the right level of council tax balanced against aspirations for service levels

Principle 5 – To allocate resources having considered the impact on our diverse communities and our employees .

164. In applying these principles the Authority has already made large scale budgetary changes and savings. As it faces up to its biggest ever financial challenge the Authority has very limited room for manoeuvre and these principles have proved difficult to maintain. The graphs below show how staff numbers have been reduced already.

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165. The Authority has already approved saving of £19.2m over the current spending review period and some of these saving will not deliver the required full saving until 2015/16. In addition it should be noted that the current plan for 2013/14 -2014/15 assumes a £1.783m use of the smoothing reserve in 2014/15.

166. The previous section of the report considered three potential scenarios. It recommended that the Authority should develop a financial plan to at least cope with the minimum of those confirmed announcements already made – recognising that savings options should be scalable to meet the likelihood of further cuts moving forward.

167. In the past the Authority has been presented with a range of options to choose between when setting a budget process. Because of the options already taken the room for manoeuvre going forward is limited. To address a £6.3m deficit could not be realistically achieved without impacting on the front line services to Merseyside. The Approach has therefore been taken to:-

2) Identify all the savings from back office, support services and technical areas that are available 3) Assume that all these savings will be taken to minimise the impact on the front line. 4) Identify the least worst options for cuts in frontline services

Council Tax: 168. The Financial Plan assumes a just below 2% council tax increase for 2014/15 and 2015/16 and future years which is in line with inflation forecasts. For 2014/15 and

Page 155 2015/16 this is expected to be the maximum level of increase before holding a referendum. The Authority has three potential options it might consider:-

• A higher (above 2%) Council Tax increase and holding a referendum ; Members may choose to increase the precept by more than 2% to tackle any deficit. This would require the Authority to hold a referendum (local vote on its proposals). The advantages of this approach would be:-

o Permanently increased income o Reduced reliance on grant funding in the mid term o Potentially avoids cuts in service, although the increase would need to be large (35% approx.)

Future council tax increases would be cumulative on this base

There are a number of practical issues relating to a potential referendum that would make it a risky proposition; o The Authority has to meet the costs of the referenda – it would need to hold one in each district and get a positive vote in each (Estimate £1m-2m), o The Authority would have to meet the cost of rebilling if it were not successful (potentially as high as £2m) and would still have to find the required savings to balance the budget, o There are administrative limitations on the process and campaigning around any referendum which would limit the ability to present a comprehensive argument o There would be a substantial impact on the taxpayer

Each additional 1% increase would generate approximately £0.229m for the service.

• Freezing the Council Tax; The Government have announced the availability of a 2014/15 Council Tax freeze grant if authorities agree to freeze their Council Tax for 2014/15 at 2013/14 levels. The grant will be equivalent to 1% of the basic amount of council tax set for 2013/14 multiplied by the amount calculated as the authority’s council tax base for 2014/15 not taking into account the reduction in the tax base due to the council tax reduction scheme. For Merseyside this would be equivalent to a 2014/15 Council Tax freeze grant, £0.290m. In practice what this means the 1% is calculated on a higher tax base. This has the effect that the 1% freeze grant is equivalent to a 1.26% rise in the precept.

Ministers have agreed that the funding for 2014/15 freeze grant should be built into the spending review baseline in the future. This gives as much certainty as possible at this stage that the extra funding for freezing council tax in 2014/15 will remain available in future years. (A 2% increase in the precept would yield £0.458m and the 1% council tax freeze grant is £0.290m, a difference of £0.168m.)

However:- o Future council tax increases would not be cumulative on this total

Page 156 o Once included in base grant the freeze grant is likely to be subject to reduction in future years if public spending is cut as expected. o This approach would not reduce reliance on grant funding (but rather increase it)

• Freezing the Council Tax; Increase at Just below the limit before a Referendum ie 2%

The financial plan assumes the precept will increase by 2% in 2014/15 and future years. A 2% increase in the precept would yield £0.458m. If, however, the Authority decided to freeze the council tax and accept the grant it would make the financial scenarios worse than that set out in this report by £0.168m. The main advantages of this approach are:-

o Permanently increased income o Reduced reliance on grant funding in the mid term o Maximises income (albeit difference with freeze is small) o Avoids referendum costs and risks o Future council tax increases would be cumulative on this base

However:- o Central Government has clear expectations that local government should, in their opinion, freeze the council tax o There would be an impact on the local tax payer although this is relatively small in absolute terms. The current band d council tax is £68.70 and this would increase by £1.27pa to £70.07

Budget Proposals to Minimise the Impact on the Front Line: 169. The table below summarises the maximum identifiable total permanent savings of £2.9m from back office, support and technical areas. It is assumed these will all be adopted.

Back Office and Support Services 170. The table below summarises total savings of £2.9m.

No Option £’m 1 Minimum Revenue Provision (MRP) & Interest Payable on loans 0.900 The MRP is calculated based on the amount of historic and planned capital expenditure that is funded through borrowing and represents the repayment of those loans. Borrowing in turn leads to interest charges on the loans taken out. The MRP & Interest budget by 2018/19 will be £7.8m (£4.9m MRP, £2.9m Interest). The Authority currently has a strategy of building up reserves to maximise flexibility in light of the financial challenges and risks ahead; it has created a specific capital investment reserve to meet any unforeseen capital spend; and has a treasury management strategy to avoid long term borrowing while investment returns are low. It therefore uses surplus cash to defer borrowing. After taking account of these issues and the long term borrowing profile it has allowed the DCE to identify a manageable saving in the MRP & loan interest budget of £0.900m in the mid-term.

Page 157 2 Non - Employee Inflation 0.125 The financial plan includes a provision for non-pay inflation of 2%. In the 2013/14 budget a significant saving option was approved reducing the accumulated inflation provision down by £1.500m by 2016/17. After reviewing the remaining provision and by managing inflation pressures from within the relevant departmental base budgets, a further saving of £0.125m is considered to be deliverable.

3 Non -Employee Budget review 0.275 The plan includes approximately £8m on non-employee expenditure lines (after excluding PFI rentals and Rates and Utility costs). After taking into account saving option 2, that now requires these budgets to cover any inflationary pressures, it is considered reasonable to set a saving target of £0.275m from non-employee budgets.

4 Pay Bill Assumptions 0.500 The forecast contains an assumption that the total pay bill increase will be 1% in 2014/15 and then 2% per annum. Members may take a view that it is likely that there will be further pay restraint for staff for the next two years (up to and including 2015/16) in light of Government assumptions and comments from Treasury Ministers. Assuming a further two years of pay restraint for all staff and reducing the provision for pay bill increase to 1%- saving £0.5million.

There are significant risks associated with this approach (even at a 2% level) and the DCE recommends holding specific reserves for the short term to cover any pay increases higher than this recognising that in the medium term yet more savings will be required if this is the case.

Pay bill includes employer pension contributions and national insurance contributions that may also vary as discussed in the report.

5 Employee Vacancy / Incremental saving 0.200 The financial plan assumes all posts will be filled throughout the year and at the top of the relevant grade. Each year a number of posts remain vacant for short periods of time and any new employees can take 3 to 4 years to reach the top of the grade. A saving of £0.200m is reasonable to assume from vacancy management.

6. Review of Support Services 0.900 A fundamental review of all support services was carried out as part of the 2013/14 budget, delivering approximately £3m savings.

Whilst no further detailed review has been carried out a rough assessment of the capability for further reductions has indicated that it may be possible for the Authority to assume to save a further 10% (approximately 40 posts) from non- uniformed operational staff. It should be noted that • This will impact on the services delivered to Merseyside. Many of the “support service” areas and posts affected in fact provide front line services to the community of Merseyside notably prevention and protection • This will put a number of non-uniform staff at risk of redundancy..

Page 158 • In addition many of these staff are required to deliver the business re- engineering, at least initially, to deliver some of the £6.3m saving target so the timing of savings will need to be carefully planned.

Other Proposed One -Off Savings

7 LGPS Deficit One -Off Saving The Authority has been offered a £0.198m saving on its total 3 year payment, 2014/15 – 2016/17 if it pays the contribution in full in 2014/15, £2.818m. This can be accommodated by using £1.853m from the smoothing reserve in 2014/15 and repaying the reserve back from the LGPS budget in 2015/16 – 2016/17.

8 Use of Any Savings Delivered in Advance of need: The current plan required the use of £1.721m of the smoothing reserve to balance 2014/15. Because the Authority is slightly ahead of schedule in delivering savings the use of reserves will be reduced.

171. Due to the nature of some of the savings being proposed they will require time to either re-engineer the service or require more than one year to deliver the full savings expected. The table below reflects the anticipated phasing:

2014/15 - 2018/19 DRAFT MTFP

Risk H / Ref. Description M / L 2014/15 2015/16 2016/17 2017/18 2018/19 £'m £'m £'m £'m £'m

Minimum Revenue Provision (MRP)& Interest Low - 1 -0.750 -0.850 -0.900 -0.900 -0.900 Payable on loans Medium Low - 2 Non- Employee Inflation Medium -0.050 -0.075 -0.125 -0.125 -0.125 Low - 3 Non-Employee Budget review Medium -0.150 -0.275 -0.275 -0.275 -0.275

Assume ay restraint in 2015/16. Currently provision Medium - 4 0.000 -0.400 -0.500 -0.500 -0.500 for 2% pay/ Assume 1% high

Low - 5 Employee Vacancy / Incremental saving Medium -0.200 -0.200 -0.200 -0.200 -0.200

6 10% saving on Non Uniform Establishment Medium 0.000 -0.450 -0.900 -0.900 -0.900 One-Off saving from discount on LGPS deficit 7 payment if Authority pay 2014/15 - 2016/17 in April N/A 0.000 -0.078 -0.120 0.000 0.000 2014

In the current plan £1.7m is required to balance 2014/15. By delivering some of the £6.3m ahead of 8 N/A 1.150 schedule the amount of reserve drawdown can be reduced by £1.150m

TOTAL 0.000 -2.328 -3.020 -2.900 -2.900

Page 159 Operational Response 172. Since the maximum possible saving is £2.9m from the back office this means inevitably that £3.4 would need to come from the front–line. A cut of £3.4m is equivalent to about 100 firefighter posts.

173. Based on the current firefighter retirement profile and taking into account the required savings in operational response to deliver that scale of saving will take until 2017 to deliver without compulsory redundancy. The table below highlights the phasing of the saving based on firefighter retirements over the next few years. Reserves would be required in the meantime.

174. In response to previous cuts the service has recently reduced the number of fire appliances from 42 to 28. This has reduced most of its 26 fire stations from two pump to one.

175. As of 9th October 2013 the Authority has 28 fire appliances operating from 26 stations. Of the 28 appliances, 24 are crewed wholetime and 4 are crewed on the Low Level of Activity and Risk (LLAR) duty system (wholetime 12 hour day shifts and retained 12 hour night shifts on a 1.9 minute recall). The CFO is in the process of establishing an additional 2 wholetime retained appliances to provide operational resilience. These appliances will be crewed by wholetime firefighters providing retained cover on rota days. The methodology supporting the operational response model was approved by members at the Authority meeting on 26th February 2013 following a fundamental review of operational response by the CFO (Authority report CFO/027/13 Operational Response Review) and further endorsed when Integrated Risk Management Plan (IRMP) 2013-16 was approved on 27th June 2013 (CFO/074/13).

176. The operational priority of the CFO is to maintain the availability of wholetime appliances in order to sustain as far as possible the existing standards of speed and weight of attack. The CFO recognises however that with a further inevitable reduction in Firefighter numbers as a result of the 2015/16 budget cuts it will not be

Page 160 possible to maintain the existing numbers of wholetime appliances. Given the existing ratio of appliances to stations this will necessitate either station mergers, days only crewing, station closures or changing duty systems to, for example, retained.

177. The Authority operational response model is predicated on a pan Merseyside 10 minute response standard. In order to achieve the 10 minute response standard Officers have designated 10 strategic locations (key stations) which, if always covered, will ensure that the 10 minute response is maintained. The aspiration is however to attend incidents well within the 10 minute standard. This is best achieved by maintaining as many wholetime appliances as possible from as many stations as possible (CFO/027/13 refers). When faced with an inevitable reduction in appliances it is essential that the appliances that remain are sited at the most optimal deployment locations.

Strategic review – Identifying least worst options 178. In the light of the challenging financial position the Authority commissioned a strategic review of its estate (CFO/101/13 Appendix A) in order to identify potential saving options. The key conclusions of that review are reproduced below:-

• Given the financial pressures on the Authority further large-scale savings will be required from operational response up to 2016/17 • Encouraging partners to share buildings helps generate some income to offset the cost of stations • Borrowing costs will form an increasing proportion of the Authority’s expenditure unless the number of assets is reduce • As the size of the organisation continues to reduce in line with budget pressures, savings from corporate overheads cannot be made unless the number of stations reduce • As all but 2 fire stations are now single pump, significant savings can only be delivered by:- o Changing crewing systems from wholetime to Low Level of Activity and Risk (LLAR) or retained o By strategic mergers that reduce the number of stations o Reducing the number of hours that stations are open i.e. open of a day only between 10am – 10pm o Closing stations

179. The operational implications of these are

Changing crewing systems from wholetime to Low Level of Activity and Risk (LLAR) or retained 180. Changing the crewing at a station from wholetime to LLAR would deliver a saving of 8 WTE posts. In order to deliver the same savings as for a station merger 3 wholetime stations would need to convert to LLAR resulting in a disproportionate distribution of LLAR to wholetime stations. Whilst this option would maintain an immediate emergency response it is less resilient than wholetime crewing and is therefore not considered to be a viable option by the CFO.

Page 161 181. Changing the crewing at a station from wholetime to retained would deliver a net saving of 22 WTE posts. Pursuing this option would require the Authority to either seek volunteers from existing Firefighters who would be required to live within a 5 minute response time of the station (wholetime retained) or for the Authority to recruit members of the public who live or work within 5 minutes of the station. Whilst it is not beyond the realms of possibility that this would be achievable there are three substantive issues for the Authority to consider.

182. Firstly, given the distribution of where Merseyside Firefighters live at present, there are insufficient numbers residing within 5 minutes of the stations that the CFO would recommend for retained crewing at this time, to recruit a full crew. That being so the Authority would need to recruit almost a full crew of retained Firefighters. It is the view of the CFO that a retained Firefighter does not have sufficient contact time within the Grey Book retained contract to acquire and maintain the skills of an existing Merseyside wholetime Firefighter (the Merseyside Trainee Firefighter course is 40 weeks duration and the wholetime work routine allocates in excess of 20 hours per week to training against the 2/3 hours per week contact time in the Grey Book retained contract). If the Authority were minded to still pursue this option they would have to accept that the retained Firefighters would not be trained to the same level as their wholetime counterparts and it would take a long period of time to train the crew to a position whereby they were deemed fit to ride. Additionally to maintain retained appliance availability a minimum of 4 members of the crew including a driver and an officer in charge would have to be permanently available within 5 minutes of the station.

183. Secondly, with 3 hours contact time each week retained Firefighters would only be able to undertake very limited amounts of community safety work.

184. Thirdly , assuming the 5 minute delay in responding in to the station and given the geography of Merseyside, it is likely that the nearest wholetime appliances would attend an incident in at least the same time as the retained crew if not quicker.

185. For these reasons this option is not considered viable by the CFO.

Strategic mergers that reduce the number of stations 186. Merging two stations would deliver a net saving of 24 WTE posts. There are a number of advantages to mergers when compared to the options detailed previously; • Mergers allow the maintenance of the best possible speed and weight of attack by the identifying the optimum deployment location to cover the two former station areas • Mergers would allow a rationalisation of the asset base to reduce capital and support costs • Mergers would allow the delivery of a much improved community asset with high quality purpose built firefighter facilities and training arrangements • Mergers allow better consideration of shared buildings with partners • Mergers and shared facilities with partners are likely to be suitable for bids for funding resources

Page 162 187. The significant disadvantage of a merger is the potential loss of one fire appliance. This can be offset by maintaining one wholetime pump and one pump crewed wholetime retained, albeit on a 30 minute recall. The wholetime retained appliance would be utilised for resilience rather than for immediate response to incidents (hence the 30 minute recall). In practical terms the appliance would be recalled in to service when the overall number of available appliances across Merseyside dropped below a pre-determined trigger point (currently 17 appliances). This option would deliver a net saving of 22 WTE posts but has the significant advantage of maintaining a second wholetime pump at the station, albeit on a 30 minute delay, thus negating all of the issues detailed at paragraphs – 185 to 189 above.

Reducing the number of hours that stations are open i.e. - Days Only Crewing 188. Days only crewing would deliver a saving of 12 WTE posts per station. In these circumstances the appliance would be crewed for 12 hours each day on the wholetime duty system but would be unavailable for the 12 hours of the night shift. In practical terms the appliance would be used during the day shift for strategic standby moves to one of the 10 key stations to facilitate crew based training etc. in addition to providing emergency response cover for its own station area.

189. There are a number of disadvantages with this option: • There would be no reduction in the asset base and associated debt servicing and support costs • Assets would be significantly underutilised and the Authority would still have a number of older stations (some in poor condition) with limited firefighter training and community facilities • It is unlikely to be possible to bid for funding resources to support this option

Closing stations 190. Closing a station would deliver a saving of 24 WTE posts per station along with the additional savings from station overheads. In this option however the appliance from the station is permanently taken out of service.

191. From a community perspective this would be a loss of a community asset with no offsetting improvements. It would also be unlikely to be possible to bid for funding resources to support this option.

192. In order to offset the loss of the appliance but still deliver the substantive savings required, the appliance could be relocated to another station to be crewed on a wholetime retained basis.

Consultation 193. Elsewhere on the agenda is report CFO/020/14 which considers the outcomes of the public engagement to date on these options. There is clear public support for mergers as the least worst option.

Conclusion 194. In order to maintain the best possible speed and weight of attack from the remaining appliances it is the professional view of the CFO that merging stations where the opportunity arises to secure the optimum deployment location is

Page 163 preferable to days-only crewing, closing stations or changing duty systems. Members should note however that the merger option would still involve the closure of stations.

195. Members should also note that having previously assessed the disposition and suitability of its stations and the operational response needs of the Service the CFO has identified that strategic mergers can be realistically pursued in the Wirral, St Helens and in Knowsley given the age and location of the stations in these areas.

196. Work is underway developing the options presented for station mergers on Wirral (West Kirby to merge with Upton at a site within Greasby), in St Helens (Eccleston to merge with St Helens at a site in the St Helens town centre ward) and in Knowsley (the merger of Huyton and Whiston at Prescot). These mergers would reduce the Authority asset base down from 26 stations to 23 and deliver additional savings from premises overheads.

197. To maintain resilience and offset the loss of a wholetime pump the CFO recommends that each merged station would have 2 pumps (1 pump wholetime, 1 pump wholetime retained). The wholetime retained pump would be utilised for resilience and therefore could be made available within 30 minutes. Analysis of Firefighters home addresses that would allow for a 30 minute recall to the stations in question suggests sufficient numbers of personnel to achieve full wholetime retained availability of the second appliance.

198. These three specific mergers would deliver a reduction of 72 WTE posts gross and 66 net (the 6 post differential to pay for the retained contracts), which would deliver a saving of £2.4m.

199. Members will recognise however that, that this saving alone, is not enough and the CFO is also considering options for either • Further merger in Liverpool • incremental closure of a station(s) in Liverpool or Sefton for the balance of savings required as a result of the Government cuts.

200. One station closure would deliver a reduction of 24 posts gross and 22 net which is a saving of £814,000 for salary costs.

201. The Authority might then apply this broad methodology to manage further cuts as necessary recognising that savings would be also delivered from support budgets in no small part due to a much reduced asset base.

202. The service has already commenced consultations with the Merseyside community and this will continue in 2014. The mergers plan will not be without risks; relevant stations will need to be identified; suitable land identified; planning permission sought; and capital funding will be required. In the interim the CFO will therefore need to manage staff dynamically to ensure in cash terms the firefighter savings are being delivered. Throughout the 2014/15 the Authority will receive reports back as the proposal options are developed and approval is sought on implementing the required changes.

Page 164 Use of Smoothing Reserve : 203. The VFM principle 2; “To continue to seek to avoid compulsory redundancy (if possible given the difficult financial circumstances)”, particularly in relation to the operational response saving, would require using the smoothing reserve to compensate for the timing profile of the likely delivery timing of the £6.300m saving options. The smoothing reserve was set-up to reflect the fact that it takes time to re- engineer the service, especially for any station merger options, and in the Section (I) identifies that sufficient reserve exists to allow for the phasing of the £6.300m saving options.

204. The table below summarises the proposed saving options for the 2014/15 financial plan;

2014/15 - 2018/19 PROPOSED MTFP

2014/15 2015/16 2016/17 2017/18 2018/19 £'000 £'000 £'000 £'000 £'000 Forecast Net Position (surplus) / deficit 0 5,300 10,325 13,684 16,353 New £6.300m Savings Phasing: Back Office and Support Services Minimum Revenue Provision (MRP) & Interest Payable on loans -750 -850 -900 -900 -900 Non Employee Inflation -50 -75 -125 -125 -125 Non Employee Budget review -150 -275 -275 -275 -275 Assume ay restraint in 2015/16. Currently provision for 2% pay/ 0 -400 -500 -500 -500 Assume 1% Employee Vacancy / Incremental saving -200 -200 -200 -200 -200 10% saving on Non Uniform Establishment 0 -450 -900 -900 -900 One-Off saving from discount on LGPS deficit payment if Authority pay 0 0 0 0 0 2014/15 - 2016/17 in April 2014 By delivering some of the £6.3m ahead of schedule the amount of 1,150 0 0 0 0 reserve drawdown can be reduced by £1.150m Operational Response 0 -350 -3,000 -3,400 -3,400 Required Smoothing Reserve -2,700 -400 Savings Profile: 0 -5,300 -6,300 -6,300 -6,300 Future Financial Challenge 0 0 4,025 7,384 10,053

Page 165 (I) ADEQUACY OF RESERVES AND BALANCES

205. Responsibilities of Chief Finance Officers

206. Under Part 2 of the Local Government Act 2003, the Chief Finance Officer of an Authority is now required to comment on the following matters:

• the robustness of the estimates made for the purposes of determining its Budget Requirement for the forthcoming year;

• the adequacy of the proposed financial reserves.

207. There is then a requirement for the Authority to have regard to the report of the Chief Finance Officer when making decisions on its Budget Requirement and level of financial reserves.

208. In the Fire Authority the Chief Finance Officer is the Deputy Chief Executive – Kieran Timmins. For the purposes of the Act the “financial reserves” of the Authority would incorporate Earmarked Reserves and Working Balances.

209. To make a final judgement on these issues it will be necessary to consider the proposed budget decisions of the Authority in the light of this budget report.

Robustness of Estimate 210. To fully satisfy the Chief Finance Officer any proposed Budget or amendment should therefore:- • Be fully based upon the advice of Service Officers (supported by Finance Officers) – or based upon or supported by information the Chief Finance Officer considers reasonable to accept. • Provide only for Budget proposals that are fully costed to service level and where the implications – both financial and upon service performance – are estimated and identified. • Provide for all known future developments either through direct service Budget allocations or the establishment of specific reserves for such purposes. • Provide for an adequate level of Balances and Reserves consistent with the requirements of any Regulation that may be earmarked and/or the Authority’s own risk assessment. • Provide for the full revenue implications of the Capital Programme. • Establish clear targets for income collection in respect of key income streams. • Ensure there are no unidentified savings targets. • Where appropriate ensure that the consequences of current over and under spending have been taken into account.

Adequacy of proposed Financial Reserves 211. Under the 2003 Local Government Act the Secretary of State may enact Regulations that define certain types of “controlled reserves” and the minimum level

Page 166 for those Reserves. At the time of preparing this report the Secretary of State has not enacted any such Regulations.

212. However, the 2003 Act still places a requirement upon the Chief Finance Officer to report if the level of reserves is likely to be inadequate. That report should contain comment upon: • the reasons for that situation • the actions, if any, considered appropriate to prevent the situation arising.

213. There is then a requirement for the Authority to respond to the report when making decisions on its future financial reserves.

214. In recent years the Authority has maintained a general revenue reserve of, in excess, of £2m and also maintained a number of earmarked reserves.

215. A pilot Comprehensive Performance Assessment (CPA) performance indicator relating to the level of general fund reserves indicated that;

• an appropriate level of was 5% of the forecast Net Operating Expenditure. Or;

• that the organisation had a financial risk management process operating which justified a lower level of reserves.”.

This is for ‘normal’ rule for multi-service local authorities.

216. For this Authority a 5% forecast Net Operating Expenditure equates to approximately £3million. The Authority’s general revenue reserve is currently £2.894m, however:-

• The Authority’s risk management arrangements have improved. As part of this budget process the Deputy Chief Executive has prepared a financial risk management matrix and also assessed the year on year variation in risk facing the Authority. This takes account of the corporate risk register. • The Authority has previously maintained a number of specific earmarked reserves against risk. • The Authority is single purpose and does not face as full a range of risks to manage as a multi-purpose authority. • The Authority is unlikely to face significant increases in cost because of uncontrollable demand issues (unlike for example Social Services care for the elderly). • Members will note that the Authority’s revenue reserves have not generally been consumed during the year by overspendings but have been maintained throughout the year.

Therefore as the significant risks are known and are being managed or have a specific reserve, the Deputy Chief Executive recommends maintaining the general reserve at its current £2.894m level.

Page 167 Current Reserves 217. Based on the latest financial review and known planned future use the Authority’s forecast reserves are outlined in the table below:

Forecast Movement on Reserves 2014/15 - Future Years EXPECTED USE "31.03.14 To cover Closing Future 2014/15 2015/16 2016/17 2017/18 specific / Balance Years general risks Earmarked Reserves £'000 £'000 £'000 £'000 £'000 £'000 £'000 Spate/Emergency Related Reserves Bellwin Reserve 147 -147 0 Insurance Reserve 620 -620 0 Emergency planning Reserve 75 -75 0 Catastrophe Reserve 1,000 -1,000 0 Smoothing Reserve 6,750 -2,396 -1,773 526 0 0 3,107 Severance Reserve 737 737 Ill Health Penalty Reserve 248 -248 0 Recruitment Reserve 1,000 1,000 SMG Reserve 100 100 Capital Investment 2,975 -539 -1,526 910 PFI Rental Annuity Reserve 2,269 -19 -100 -100 -100 -1,950 0 Equality / DDA Investment Res 510 -510 0 Firefighter Safety Investment Res 1,000 -200 -800 0 Facing the Future Challenge Res 800 800 Specific Projects Community Sponsorship Res 19 -19 0 Equipment Reserve 56 -56 0 Contestable Research Fund Res 25 -25 0 FSD Reserve 53 -53 0 Healthy Living / Olympic Legacy 59 -59 0 Water Rescue Reserve 9 -9 0 Inflation Reserve 1,500 1,500 Ringfenced Reserves F.R.E.E. Reserve 37 -37 0 Princes Trust Reserve 319 -319 0 Community Youth Team Reserve 54 -54 0 Beacon Peer Project Reserve 53 -53 0 Innovation Fund Reserve 168 -168 0 Concept Knowsley 0 0 0 Regional Control Reserve 18 -18 0 Energy Reseve 85 74 -159 0 St Helens District Reserve 0 0 0 New Dimensions Reserve 668 -668 0 Total Earmarked Reserves 21,354 -3,328 -4,709 426 -100 -5,489 8,154

General revenue Reserve 2,894 0 0 0 0 0 2,894

Total Reserves 24,248 -3,328 -4,709 426 -100 -5,489 11,048

218. In total the estimated value of all reserves as at 31.03.14 is £24.248m. Of this figure £1.842m is to cover potential future catastrophe, insurance or emergency planning costs. 6.5million relates to grant related or contractually committed projects.

Page 168 £1.476m is to cover project costs associated with grants or external monies given to deliver specific outcomes and is deemed “ring-fenced”. £11.386m is committed to meet future spend such as the PFI future rentals or capital schemes funded from the capital reserve. The £11.386m also includes the planned drawdown from the smoothing reserve to cover £3.100m to reflect the profile of the £6.300m Phase A savings and the revised 2014/15 budget requirement of £0.571m.

219. Although the balance of earmarked reserves, £8.1m, may appear relatively high it reflects the level of risk associated with the current financial plan and the severity of cuts imposed on the Authority for 2014/15 and beyond. The £8.1m earmarked reserves are for; £’m Smoothing Reserve 3.1 Severance Reserve 0.7 Recruitment Reserve 1.0 Capital Investment 0.9 Facing the future Challenge 0.8 Inflation Reserve 1.5 Other 0.1 8.1

220. Based upon assumptions that; the Authority will adopt all the savings identified and their attendant risks; that the Authority needs a buffer to give it time to make changes required; and, in order to avoid compulsory redundancy if possible the Deputy Chief Executive recommends the Authority hold the £8.1m identified above in reserves at the start of the financial plan.

Members should bear in mind that reserves and balances should only be used to finance one-off expenditure. If such monies are used to fund ongoing revenue expenditure without taking action to reduce underlying expenditure, the Authority would find itself facing the same deficit in the next and future years but without reserves available to finance it. This is underlined by the District Auditor’s ‘Golden Rule’ - that “one off” revenue reserves should not be used to support ‘ongoing’ revenue expenditure.

Review of Reserves and Balances 221. Members need to consider their strategy on reserves and balances in the light of the guidance from the Deputy Chief Executive.

Page 169 (I) BUDGET TIMETABLE & RESOLUTION

222. There is a legal requirement for the Authority to set a balanced budget and decide its level of precept before 1st March 2014. The Authority meeting is now invited to:

• approve the financial plan set out in Appendix D and associated £6.300m saving proposals. • approve the budget requirement of £64.356m for 2014/15 as outlined in Appendix D. • note that the Authority’s council tax base for 2014/15 is 334,385.70, being the aggregate of the tax bases calculated by the Districts • approve the following amounts calculated in accordance with Sections 42a to 49 of the Local Government Finance Act 1992:-

Calculation of Aggregate Amounts Under Section 42a (2) and (3) of the Local Government Act 1992 (Updated in the Localism Act 2011) Gross Gross Estimate Ependiture Income 2014/15 2014/15 2014/15 £'000 £'000 £'000

(A) sec 42 (2) (a) Service Budget 71,548 71,548

(B) sec 42 (3) (a) Income -5,965 -5,965

Reserves Movement: (A) sec 42 (2) (c) Contribution to reserves 74 74 (B) sec 42A (3) (a) Contribution from reserves -1,301 -1,301 Budget Requirement 71,622 -7,266 64,356

(B) sec 42A (3) (a) Spending Funding Assessment -40,693 -40,693 (B) sec 42A (3) (a) Local NNDR Estimate Adjustment 174 174 (B) sec 42A (3) (a) Collection Fund Deficit / (Suplus) -407 -407

In accordance with Sec 42A (4), ( C) Precept Requirement 23,430 aggregate of (A) over (B)

Tax Base 334,385.70

Basic Tax Amount At Band 'D' £70.07

Page 170 223. The valuation bands calculated by the Authority in accordance with Section 47 (1) of the Act, as the amounts to be taken into account for the year in respect of categories of categories of dwellings listed in different valuation bands:

2014/15 Property Band Increase

£ £ % £46.71 For properties in Band A 0.91 1.99 £54.50 For properties in Band B 1.07 2.00 £62.28 For properties in Band C 1.21 1.98 £70.07 For properties in Band D 1.37 1.99 £85.64 For properties in Band E 1.67 1.99 £101.21 For properties in Band F 1.98 2.00 £116.78 For properties in Band G 2.28 1.99 £140.14 For properties in Band H 2.74 1.99

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

PRECEPT AUTHORITY £ 6,444,793 Payable by LIVERPOOL 6,151,179 Payable by WIRRAL 3,273,320 Payable by ST.HELENS 5,394,829 Payable by SEFTON 2,166,284 Payable by KNOWSLEY

23,430,405

225. The precept payments are to be made 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

Page 171 Equality and Diversity Implications

226. Future reports on individual aspects of the savings required to balance the budget will be accompanied by EIAs.

227. The financial plan makes provision for the required investment to ensure the Authority meets and exceeds its Equality and Diversity requirements in addition to work carried out by all staff and teams.

Staff Implications

228. The relevant consultation will take place as and when the plans are drawn up to deliver the required staffing change to deliver the reduction in support staff, - 10%, and firefighters, estimated at -96.

Legal Implications

229. The Authority must set a balanced budget and decide its level of precept before 1st March 2014.

Financial Implications & Value for Money

230. See Executive Summary

Risk Management, Health & Safety, and Environmental Implications

231. The budget and capital investment programme make large-scale investments in staff Health and Safety.

Contribution to Our Mission: Safer Stronger Communities – Safe Effective Firefighters

232. To Achieve; Safer Stronger Communities - Safe Effective Firefighters. The proposed financial plan considers how best to allocate resources and deliver a balanced budget in light of the approved mission of the service and service priorities.

BACKGROUND PAPERS

CFO/025/13 “MERSEYSIDE FIRE & RESCUE AUTHORITY BUDGET & FINANCIAL PLAN 2013/2014 – 2017/2018” AUTHORITY 26 FEBRUARY 2013.

CFO/010/14 “FINANCIAL REVIEW REPORT 2013/14 APRIL TO DECEMBER REVIEW” AUTHORITY 27 FEBRUARY 2014

GLOSSARY OF TERMS

MFRA Merseyside Fire and Rescue Authority

MFRS Merseyside Fire and Rescue Service

Page 172

CFR Capital Financing Requirement – measures the amount of capital spending that has not yet been financed by capital receipts, capital grants or contributions from revenue income. It measures the underlying need to borrow for capital purpose, although this bo rrowing may not necessarily take place externally (use of available cash etc).

CSR07, 10, 13 Government comprehensive spending review to identify support for the public sector over 2 to 3 year period

MINIMUM REVENUE PROVISION - An amount set aside from revenue MRP towards the repayment of loan debt.

Amounts set aside to meet future contingencies but whose use does not RESERVES affect the Authority’s net expenditure in a given year. Appropriations to and from reserves may not be made directly from the revenue account.

UNSUPPORTED No Re venue Support Grant to cover the costs associated with borrowing and BORROWING the Authority must earmark revenue funds to cover these costs.

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Page 174 APPENDIX A (1) DRAFT BUDGET 2014/15 (Before any new saving proposals) DRAFT 2014/15 £'000 Fire Service (See A (2) for details) 65,609 Corporate Management 589 66,198 Contingency for Pay/Price Changes 907 TOTAL SERVICE EXPENDITURE 67,105

Interest on Balances -372 NET OPERATING EXPENDITURE 66,733

Contribution to /(from) reserves Smoothing Reserve -1,693 Capital Investment (RCCO) -525 Firefighter Safety Investment Reserve (RCCO) -200 Capital Investment revenue -14 2011 - 14 Savings yet to be formally implemented 0 PFI Annuity Reserve -19 Energy Reseve 74 Contribution to /(from) reserves -2,377

BUDGET REQUIREMENT 64,356

Government Settlement Estimate -40,693 Local NNDR Estimate adjustment 174 Collection Fund Deficit / (Suplus) -407 Council Tax Freeze Grant 0 Precept Income -23,430 -64,356

Saving Target 0

Page 175 APPENDIX A(2) FIRE SERVICE Base Budget 2014/15 (Before any new saving proposals) DRAFT 2014/15 £'000 EMPLOYEES Uniformed Firefighters 34,244 Control 1,261 Additional Hours 1,284 TOTAL UNIFORMED 36,789 APT&C and Manual APT&C 8,100 Handymen/Cleaning 284 Catering 103 Transport Maintenance 563 Other Manual 93 TOTAL APT&C/MANUAL 9,143 Other Employee Expenses Allowances 74 Training Expenses 585 Other Expenses 36 Staff Advertising 30 Development Expenses 97 Employee Insurance 129 Enhanced pensions 46 SSP & SMP Reimbursements -16 Catering Expenditure 113 TOTAL OTHER EMPLOYEE EXPEND 1,094 Pensions Injury Pension 1,694 Ill Health Ret charges 174 MPF Pen Fixed Rate 870 TOTAL PENSIONS 2,738

TOTAL EMPLOYEES 49,764 PREMISES Building Maintenance Repairs 369 Site Maintenance Costs 172 Energy 759 Rent 76 Rates 1,194 Water 264 Fixtures 66 Contract Cleaning 157 Insurance 61 TOTAL PREMISES 3,118 TRANSPORT Direct Transport 330 Tunnel Fees 29 Operating Lease 198 Other Transport Costs 584 Car Allowances 133 Insurance 344 TOTALPage TRANSPORT 176 1,618 SUPPLIES & SERVICES Administrative Supplies 42 Operational Supplies 277 Hydrants 20 Consumables 74 Training Supplies 154 Fire Prevention Supplies 138 Catering Supplies 31 Uniforms 358 Printing & Stationery 165 Operating Leases 2 Professional Fees/Service 965 Communications 663 Postage 35 Command/Control 5 Computing 391 Medicals 306 Travel & Subsistence 84 Grants/Subscriptions 103 Advertising 15 Furniture 44 Laundry 81 Insurances 46 Hospitality 16 TOTAL SUPPLIES & SERVICES 4,015 AGENCY SERVICES Super Fund Admin 73 ICT Service Provider 1,466 Third Party Payments (FSN) 197 ICT Managed Suppliers 544 PFI Unitary Charges ((Int/Principal/Op Costs) 2,633 TOTAL AGENCY SERVICES 4,913 CENTRAL EXPENSES Finance & Computing 278 TOTAL CENTRAL EXPENSES 278 CAPITAL FINANCING PWLB Debt Charges 6,645 MRB Debt Charges 76 Revenue Contribution to Capital 775 TOTAL CAPITAL FINANCING 7,496

TOTAL EXPENDITURE 71,202

INCOME Specific Grants 3,584 Fees & Charges 885 Rents etc 448 Recharges Secondments 456 Contributions 100 Recharges Internal 115 Other Income 5 TOTAL INCOME 5,593

NET EXPENDITURE 65,609 Page 177 This page is intentionally left blank

Page 178 APPENDIX B

Unsupported Borrowing 18,525,334 5,855,734 4,214,800 3,381,300 2,686,000 2,387,500 Total Funding 26,102,300 10,037,700 5,269,800 4,161,300 3,466,000 3,167,500

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Page 180 APPENDIX B (1) Proposed Capital New Starts for 2014/2015 - 2018/2019 Total Cost Expenditure 2014/15 2015/16 2016/17 2017/18 2018/19 £ £ £ £ £ £ Building/Land 396,500 396,500 Fire Safety 1,279,000 1,279,000 ICT 586,000 15,000 15,000 15,000 15,000 526,000 Operational Equipment & Hydrants 157,000 90,000 67,000 Vehicles 1,399,000 750,000 (250,000) 899,000 TOTAL 3,817,500 855,000 15,000 (235,000) 15,000 3,167,500

Financing Available: Total 2014/15 2015/16 2016/17 2017/18 2018/19 Capital Receipts R.C.C.O. 780,000 780,000 Grant Other

Total Non Borrowing 780,000 780,000 Unsupported Borrowing 3,037,500 855,000 15,000 (235,000) 15,000 2,387,500 Borrowing 3,817,500 855,000 15,000 (235,000) 15,000 3,167,500 Total Funding 3,817,500 855,000 15,000 (235,000) 15,000 3,167,500

Page 181 Buildings - Proposed New Starts 2014/15 to 2018/19 Job Code Type of Expenditure Total 2014/15 2015/16 2016/17 2017/18 2018/19 £ £ £ £ £ £ New Fire Stations NO provision made for resourcing proposals for station merger options. Once outcome know, costings available, grant / capital receipts and other contributions confirmed, any funding shortfall will be met from borrowing. Site Refurbishment BLD016 Community Station Investment 45,000 45,000 General Station Upgrades BLD001 Roofs & Canopy Replacements 40,000 40,000 BLD004 Concrete Yard Repairs 20,000 20,000 BLD005 Tower Improvements 10,000 10,000 BLD013 Non Slip Coating to Appliance Room Floors 40,000 40,000 BLD014 Boiler Replacements 20,000 20,000 BLD020 Electrical Testing 20,000 20,000 BLD033 Sanitary Accomodation Refurbishment 30,000 30,000 BLD044 Asbestos Surveys 10,000 10,000 BLD060 DDA Compliance 20,000 20,000 Other BLD018 Conference Facilities SHQ 5,000 5,000 BLD026 Corporate Signage 5,000 5,000 BLD032 Power Strategy 10,000 10,000 BLD034 Office Accomodation 15,000 15,000 BLD058 HVAC 30,000 30,000 BLD067 Gym Equipment Replacement 25,000 25,000 CON001 Energy Conservation Salix 25,000 25,000 DSO001 DSO Cleaning Equipment 6,000 6,000 EQU002 Replacement programme for Fridge Freezers 10,000 10,000 EQU003 Bulk purchase of furniture for refurbished premises 10,500 10,500 396,500 396,500

Page 182 Fire Safety - proposed New Starts 14/15 to 2018/19

Total Cost Job Code Type of Expenditure 2014/15 2015/16 2016/17 2017/18 2018/19 £ £ £ £ £ £ FIR002 Smoke Alarms (100,000 HFRA target) 500,000 500,000 FIR005 Installation costs (HFRA) 730,000 730,000 FIR006 Deaf Alarms (HFRA) 49,000 49,000 1,279,000 1,279,000

Page 183 ICT - Proposed New Starts 2014/15 to 2018/19 Job Total Cost 2014/15 2015/16 2016/17 2017/18 2018/19 Code Type of Expenditure £ £ £ £ £ £ IT002 ICT Software Software Licences 2,000 2,000 New Visualisation Infrastructure 75,000 75,000 IT003 ICT Hardware PC, monitor and laptop replacement (target 20%) 80,000 80,000 PC, monitor and laptop growth 5,000 5,000 Periherals replacement (target 20%) 6,000 6,000 IT005 ICT Servers Server/storage replacement (target 20%) 65,000 65,000 Server/storage growth 15,000 15,000 New SAN Solution 100,000 100,000 IT018 ICT Network Local Area Network replacement (discrete) 4,000 4,000 Network Switches/Routers replacement 110,000 110,000 Network Switches/Router growth 5,000 5,000 IT026 ICT Operational Equipment Pagers/Alerters 7,000 7,000 Station End Kit 5,000 5,000 IT027 ICT Security Remote Access Security FOBS 2,000 2,000 IT028 Portal Development 25,000 25,000 IT030 ICT Projects/Upgrades 5,000 5,000 IT055 C3I Command and Control Communications and Information Systems 75,000 15,000 15,000 15,000 15,000 15,000 Assumption is that CLG will extend current contrac Firelink MDT And Radio Refresh deferring replacement until 2019/20 586,000 15,000 15,000 15,000 15,000 526,000 The 5 year Capital Budget the budget split in three ways:

Firstly capital spends on Underlying ICT Infrastructure (IT002, IT003, IT005, IT018, IT026, IT027, IT028, IT030 and IT055). This spend is to renew existing ICT equipment and services as they become obsolete avoiding the ICT Infrastructure becoming out of date.

Secondly capital spends on new projects to improve the ICT infrastructure or release organisation efficiencies. Thirdly capital spends on projects identified to be in the Integrated Risk Management Plan (IRMP). In terms of ICT and IRMP projects, capital spend usually occurs in the first year of the budget plan, unless it is a complex project. This budget round does not include any new IRMP projects

2. New Growth for the year 2018/2019 £ IT002 ICT Software 77,000 Underlying 5 Year Spend for Software Licences 2018/2019 2,000 New Virtualisation Infrastructure: New Growth: Currently a free version of software called ESXI is being used. As virtualisation becomes more of a specialist application, it is believed that to utilise this new and specialist technology, MF&RS would need to purchase a commercial off the shelf offering. 75,000

IT003 ICT Hardware 91,000 Underlying 5 Year Spend for Hardware Lifecycle management 2018/2019 91,000

IT005 ICT Servers 180,000 Underlying 5 Year Spend for Servers and Storage Growth 2018/2019 80,000 New SAN Solution (Live and DR). this will be 10 years old, the assets will have been sweated and will require upgrade 100,000

IT018 ICT Network 119,000 Underlying 5 Year Spend for Local Area Network and Network Switch/Router Growth 2018/2019 9,000

The Network Switch/Router 5 Year Replacement has been forecast for £100,000 in (2017/2018) and £110,000 in 2018/2019 110,000

IT026 ICT Operational Equipment 12,000 £12,000: Underlying 5 Year Spend for Operational Equipment 2018/2019 12,000

IT027 ICT Security 2,000 Underlying 5 Year Spend for ICT Security 2018/2019. 2,000

IT028 Portal Development 25,000 Underlying 5 Year Spend for Portal development and delivery of efficiencies 2018/2019. 25,000

IT030 ICT Projects/Upgrades 5,000 Underlying 5 Year Spend for ICT Projects/Upgrades 2018/2019 5,000

IT055 C3I C&C Communications and Information Systems 15,000 Underlying 5 Year Spend for on-going strategy for minor improvements to Command and Control Computer Aided Despatch Systems 2018/2019 This has been requested by GM Lomax and allows a strategy plan to be in place for minor improvements to Computer Aided Dispatch (CAD) Command and Control Communication and Information systems. 15,000 In ADDITION growth required for 2014/15 and future years of £15k p.a.

POTENTIAL FUTURE YEARS GROWTH - NOT INCLUDED AT THIS POINT: Firelink MDT And Radio Refresh (possibly 2019/20??) 1,124,000 Support of existing Radio and MDT Airwave equipment runs out December 2016. CLG have an option of extending by 12 months then an additional 2 years. We have no control over this decision, so worst case scenario if CLG do not renew for January 2017 is we would need to purchase similar equipment and Annual Service Support (See Detailed Commentary below) Page 184 Ops - Proposed New Starts 2014/15 to 2018/19

Total Cost Job Code Type of Expenditure 2014/15 2015/16 2016/17 2017/18 2018/19 £ £ £ £ £ £

OPS001 Gas Tight Suits Other PPE 40,000 40,000 OPS009 POD Equipment Demountable Unit (POD) Refurbishment - 2013/14 IRMP 50,000 50,000 OPS022 Improvements to Fleet 30,000 30,000 HYD001 Hydrants (New Installations) 18,500 18,500 HYD002 Hydrants (Replacements) 18,500 18,500 157,000 90,000 67,000

Page 185 Vehicles - Proposed New Starts 2014/18 to 2018/19

Price Per Total 2014/15 2015/16 2016/17 2017/18 2018/19 Job Code Capital Scheme/Vehicle Type Unit Units Cost Units £ Units £ Units £ Units £ Units £ VEH001 Fire Appliances 250,000 5 1,250,000 3 750,000 (1) (250,000) 3 750,000 VEH002 Ancillary Vehicles Ancillary Vehicles Offices response covert 20,000 2 40,000 2 40,000 4x4 (Isuzu) 21,000 2 42,000 2 42,000 4X4 climbing wall vehicle 21,000 1 21,000 1 21,000 7 Seater cars (Galaxy type) 23,000 2 46,000 2 46,000 1,399,000 750,000 (250,000) 899,000

2016/17 -1 reduces planned spend from 4 (current prog) appliances to 3

Page 186 APPENDIX B(2) Authority Capital Progamme for 2013/2014 - 2017/2018 Total Cost 2013/14 2014/15 2015/16 2016/17 2017/18 Expenditure £ £ £ £ £ £ Building/Land 19,260,200 11,972,200 4,584,500 1,896,000 455,500 352,000 Fire Safety 6,353,000 1,033,000 1,481,000 1,281,000 1,279,000 1,279,000 ICT 4,629,300 2,294,300 641,000 637,000 516,000 541,000 Operational Equipment & Hydrants 2,060,500 830,500 754,000 57,000 352,000 67,000 Vehicles 6,472,100 360,300 1,722,200 1,383,800 1,793,800 1,212,000 TOTAL 38,775,100 16,490,300 9,182,700 5,254,800 4,396,300 3,451,000 2013/14 - 2017/18 Quarter 2 Approved Programme 37,933,500 17,718,200 6,991,700 5,336,300 4,416,300 3,471,000 Q3 Current to Quarter 2 Change 841,600 (1,227,900) 2,191,000 (81,500) (20,000) (20,000) Q3 Movements Explained by: Budget Amendment FIR002 Smoke Alarms estimated 20% reduction (100,000) (100,000) FIR005 Installation Costs estimated 20% reduction (150,000) (150,000) BA Sets Replacement (CFO/140/13) 219,000 219,000 BLD068 JCC (Capital Reserve) 165,600 165,600 BLD068 JCC (MPA Additional Contribution) 163,000 163,000 IT046 TRM (Capital Reserve) 161,000 161,000 BA Telementary Breathing Units (CFO/140/13) 133,000 133,000 Fire Risk Management in Residential Blocks (CFO/135/13) 200,000 200,000 IT040 Analytical Tool CFS Work (Capital Reserve) 50,000 50,000 Scheme Re-Phasing Total Buildings 0 (702,000) 742,000 (20,000) (20,000) Total Operational Equipment 0 (260,000) 260,000 Total IT (195,000) 195,000 Total Vehicles 0 (310,500) 392,000 (81,500) 841,6000 (1,227,900)0 2,191,0000 (81,500)0 (20,000)0 (20,000)0 Financing Available: Total 2013/14 2014/15 2015/16 2016/17 2017/18 Capital Receipts Toxteth Fire Station (Firefit Hub) 250,000 250,000 Sale of 2 existing N-le-W LLAR properties 275,000 275,000 Sale of LLAR house Cable Street, Formby 350,000 350,000 Sale of Derby Road 700,000 700,000 R.C.C.O./Reserves CFS alarm installation (salaries) 3,500,000 580,000 730,000 730,000 730,000 730,000 CFS alarm installation (FSD) 250,000 50,000 50,000 50,000 50,000 50,000 Capital Reserve to Gym Equipment 50,000 50,000 Capital Reserve to JCC 1,933,600 1,933,600 Capital Reserve - JCC ICT work 232,000 232,000 IT Laptops/e-recruiting 10,400 10,400 Capital Reserve to Museum 75,000 75,000 Fire Risk Management in Residential Blocks (CFO/135/13) 200,000 200,000 IT040 Analytical Tool CFS Work (Capital Reserve) 50,000 50,000 IT046 Time Resource Mgt system (Capital Reserve) 161,000 161,000 BLD070 Workshop Enhancement (CFO/104/13) 350,000 350,000 BLD071 Station Refresh (CFO/102/13) 500,000 100,000 400,000 Grant CLG General Capital Grant Allocation 2,487,932 1,243,966 1,243,966 CLG Fire Control Grant (£1.8m in total) 1,800,000 1,800,000 Dept. of Culture/Media/Sport (BA Telementary) (CFO/140/13) 133,000 133,000 Other BLD068 JCC MPA Contribution 5,069,799 5,069,799 BLD073 Museum - NWAS Contribution 35,000 35,000 BLD073 Museum - Telent Contribution 40,000 40,000 Total Non Borrowing 18,452,731 11,655,765 4,181,966 1,055,000 780,000 780,000 Unsupported Borrowing 20,322,369 4,834,535 5,000,734 4,199,800 3,616,300 2,671,000 Total Funding 38,775,100 16,490,300 9,182,700 5,254,800 4,396,300 3,451,000 Q2 Funding Level for 2013/14 - 2017/18 Programme 37,933,500 17,718,200 6,991,700 5,336,300 4,416,300 3,471,000 Q3 Current to Q2 Change 841,600 (1,227,900) 2,191,000 (81,500) (20,000) (20,000) Funding Change Explained by: Borrowing Smoke Alarms reduction in spend (100,000) (100,000) BA Sets Replacement (CFO/140/13) 219,000 219,000 Smoke Alarms funded by charges (200,000) (50,000) (50,000) (50,000) (50,000) Scheme Re-Phasing 0 (1,467,500) 1,589,000 (81,500) (20,000) (20,000) RCCO Smoke alarm Installation Costs reduction (150,000) (150,000) Smoke Alarms funded by charges 200,000 50,000 50,000 50,000 50,000 Grants BA Telementary Breathing Units Gov Grant 133,000 133,000 Use of Reserves (R.C.C.O.) Fire Risk Management in Residential Blocks (Fire Safety Res) 200,000 200,000 CFS Analytical Tool (ICT; Capital Reserve) 50,000 50,000 JCC Build (Capital Reserve) 165,600 165,600 New Time Resource Mgt System (ICT; (Capital Reserve) 161,000 161,000 External Contribution JCC Build additional Police Contribution Page163,000 187163,000 841,600 (1,227,900) 2,191,000 (81,500) (20,000) (20,000) Building / Land - Budget 2013/14 to 2017/18

Total Cost Job Code Type of Expenditure 2013/14 2014/15 2015/16 2016/17 2017/18 £ £ £ £ £ £ £ Site Refurbishment BLD016 Community Station Investment 120,500 24,000 35,500 36,000 25,000 BLD030 Kensington CFS BLD035 Accomodation MF1 644,000 644,000 BLD039 FS Refurbishment Heswall 150,000 150,000 BLD040 FS Refurbishment Whiston 152,500 152,500 BLD041 FS Refurbishment Aintree 280,000 3,000 277,000 BLD042 St Helens Conversion 511,000 4,000 507,000 BLD055 FS Refurbishment Bromborough 329,000 19,000 310,000 BLD056 FS Refurbishment Eccleston 338,000 338,000 BLD057 FS Refurbishment Crosby 375,000 375,000 BLD063 FS Refurbishment Kirkby 326,000 326,000 BLD069 FS Refurbishment Allerton 341,000 341,000 FS Refurbishment Huyton 350,000 350,000 FS Refurbishment Upton 275,000 275,000 FS Refurbishment West Kirby 400,000 400,000 BLD070 Workshop Enhancement 350,000 350,000 BLD071 Station Refresh 500,000 50,000 450,000 5,442,000 SHQ Major Refurbishement SHQ Joint Control Room 9,688,200 9,688,200 BLD072 SHQ Tower 185,000 110,000 75,000 BLD073 SHQ Museum 150,000 75,000 75,000 10,023,200 LLAR Accomodation BLD036 LLAR Accomodation Formby 533,000 233,000 300,000 BLD045 City Centre Community Facility 80,000 10,000 70,000 BLD059 LLAR Accomodation Eccleston 237,500 237,500 LLAR Accomodation Newton-le-Willows 375,000 375,000 1,225,500 General Station Upgrades BLD001 Roofs & Canopy Replacements 223,000 33,000 50,000 50,000 50,000 40,000 BLD004 Concrete Yard Repairs 95,500 15,500 20,000 20,000 20,000 20,000 BLD005 Tower Improvements 91,500 63,500 18,000 10,000 BLD011 Capital Refurbishment 57,000 57,000 BLD013 Non Slip Coating to Appliance Room Floors 184,500 5,000 46,500 46,500 46,500 40,000 BLD014 Boiler Replacements 54,000 54,000 BLD020 Electrical Testing 256,000 112,000 38,000 38,000 38,000 30,000 BLD031 Diesel Tanks 150,000 150,000 BLD033 Sanitary Accomodation Refurbishment 145,800 5,800 50,000 30,000 30,000 30,000 BLD044 Asbestos Surveys 144,500 19,500 50,000 50,000 25,000 BLD060 DDA Compliance 139,000 89,000 30,000 20,000 1,540,800 Other BLD007 L.E.V. System in Appliance Rooms 2,700 2,700 BLD018 Conference Facilities SHQ 24,000 4,500 4,500 10,000 5,000 BLD026 Corporate Signage 25,000 10,000 5,000 5,000 5,000 BLD032 Power Strategy 31,500 1,500 20,000 10,000 BLD034 Office Accomodation 112,000 47,000 25,000 25,000 15,000 BLD053 Headquarters Lighting BLD058 HVAC - Heating, Ventalation & Air Con 92,000 92,000 BLD061 Lightening Conductors & Surge Protection 55,000 5,000 50,000 BLD062 Emergency Lighting 26,500 26,500 BLD065 MACC Server Room Extension 4,000 4,000 BLD067 Gym Equipment Replacement 315,000 215,000 25,000 25,000 25,000 25,000 CON001 Energy Conservation Salix 108,500 8,500 25,000 25,000 25,000 25,000 DSO001 DSO Cleaning Equipment 30,000 6,000 6,000 6,000 6,000 6,000 EQU002 Replacement programme for Fridge Freezers 58,500 16,500 10,500 10,500 10,500 10,500 EQU003 Bulk purchase of furniture for refurbished premises 62,500 20,500 10,500 10,500 10,500 10,500 947,200 TDA TDA001 Fire house refurbishment 80,000 80,000 TDA006 TDA Server Room Expansion 1,500 1,500 TDA008 Generator install provision following MACC decant 81,500 19,260,200 11,972,200 4,584,500 1,896,000 455,500 352,000 Original Budget 14,084,000 10,144,000 1,031,000 1,976,500 560,500 372,000 Current Programme 19,260,200 11,972,200 4,584,500 1,896,000 455,500 352,000 Changes 5,176,200 1,828,200 3,553,500 (80,500) (105,000) (20,000) Q1 Movements/Adjustments 3,571,000 3,571,000 Q2 Movements/Adjustments 1,236,000 (1,410,000) 2,811,500 (80,500) (85,000) Q3 Movements/Adjustments Page369,200 188 (332,800) 742,000 (20,000) (20,000) Fire Safety - Budget 2013/14 to 2017/18 Total Cost Job Code Type of Expenditure 2013/14 2014/15 2015/16 2016/17 2017/18 £ £ £ £ £ £ FIR002 Smoke Alarms (100,000 HFRA target) 2,400,000 400,000 500,000 500,000 500,000 500,000 FIR005 Installation costs (HFRA) 3,500,000 580,000 730,000 730,000 730,000 730,000 FIR006 Deaf Alarms (HFRA) 245,000 49,000 49,000 49,000 49,000 49,000 FIR007 Replacement Batteries (12,000) 8,000 4,000 2,000 2,000 FIR009 Fire Risk Management in Residential Blocks (CFO/135/13) 200,000 200,000 6,353,000 1,033,000 1,481,000 1,281,000 1,279,000 1,279,000

Original Budget 6,403,000 1,283,000 1,281,000 1,281,000 1,279,000 1,279,000 Current Programme 6,353,000 1,033,000 1,481,000 1,281,000 1,279,000 1,279,000 Changes (50,000) (250,000) 200,000

Q3 Movements/Adjustments (50,000) (250,000) 200,000

Page 189 ICT including Regional Control - Budget 2013/14 to 2017/18 Total Cost Job Code Type of Expenditure 2013/14 2014/15 2015/16 2016/17 2017/18 £ £ £ £ £ £ IT002 ICT Software 395,000 Software Licences 2,000 2,000 2,000 2,000 2,000 3 Year Licences Antivirus & Filtering 155,000 Microsoft EA Agreement (Servers & Security) 60,000 60,000 60,000 Microsoft EA Agreement (Windows Desktop) Microsoft EA Agreement (Office Desktop) Microsoft SQL Upgrade 50,000 IT003 ICT Hardware 665,900 PC, monitor and laptop replacement (target 20%) 140,900 80,000 80,000 80,000 80,000 PC, monitor and laptop growth 5,000 5,000 5,000 5,000 5,000 Periherals replacement (target 20%) 6,000 6,000 6,000 6,000 6,000 Appliance Toughbook Replacement 110,000 LFS Laptops 40,000 IT005 ICT Servers 620,000 Server/storage replacement (target 20%) 160,000 190,000 65,000 65,000 65,000 Server/storage growth 15,000 15,000 15,000 15,000 15,000 IT018 ICT Network 672,500 Local Area Network replacement (discrete) 4,000 4,000 4,000 4,000 4,000 Network Switches/Routers replacement 146,500 141,000 100,000 Network Switches/Router growth 5,000 5,000 5,000 5,000 5,000 Vesty Road Network Link Refresh 40,000 IP Telephony 5,000 5,000 50,000 100,000 Wireles Network 40,000 IT026 ICT Operational Equipment 110,400 Pagers/Alerters 2,400 7,000 7,000 7,000 7,000 Station End Kit 10,000 5,000 5,000 5,000 5,000 Incident Ground Management System 50,000 IT027 ICT Security 12,000 Remote Access Security FOBS 4,000 2,000 2,000 2,000 2,000 IT028 Portal Development 205,500 18,500 112,000 25,000 25,000 25,000 IT030 ICT Projects/Upgrades 30,000 10,000 5,000 5,000 5,000 5,000 IT034 E-Mail retention (legal requirement) IT036 Portable Storage Media Security 27,000 27,000 IT037 Emerging Technologies 10,500 10,500 IT039 Estates Management System 20,000 20,000 IT040 Analytical Tool CFS Work (IRMP 09-01-15) 90,000 90,000 IT043 E-Recruitment System 19,000 19,000 IT045 PFI ICT Transition 29,500 29,500 IT049 Wireless Rollout 15,000 15,000 JCC ICT project 985,000 985,000 IT055 C.3.I. C.&.C Communication & Information System 10,000 10,000 IT056 P.F.I. Door Access System 18,000 18,000 Other FIN001 FMIS/Eproc/Payroll/HR Replacement 450,000 450,000 IT046 TRM System 200,000 200,000 IT047 Computerised Legal Case Management System 4,500 4,500 IT050 Community Protection IMS System 30,000 30,000 RC001 ICT Security RC003 Corporate Gazetteer 9,500 9,500 4,629,300 2,294,300 641,000 637,000 516,000 541,000 Original Budget 3,138,000 1,048,000 396,000 637,000 516,000 541,000 Current Programme 4,629,300 2,294,300 641,000 637,000 516,000 541,000 Changes 1,491,300 1,246,300 245,000 Q1 Movements/Adjustments 1,320,900 1,320,900 Q3 Movements/Adjustments 170,400 (74,600) 245,000

Page 190 Operational Equipment - Budget 2013/14 to 2017/18

Page 191 Vehicles - Budget 2013/14 to 2017/18 Price Per Total for 5 years 2013/14 2014/15 2015/16 2016/17 2017/18 Job Code Capital Scheme/Vehicle Type Unit Units Cost Units £ Units £ Units £ Units £ Units £ VEH001 Fire Appliances 245,000 12 2,940,000 4 980,000 4 980,000 4 980,000

VEH002 Ancillary Vehicles Water Training Vehicle (Mercedes Sprinter) 42,000 1 42,000 1 42,000 Cars (5 door - Fiesta/Corsa/Focus) 8,300 49 406,700 32 265,600 1 8,300 16 132,800 Small Vans (Fiesta/Corsa) 7,000 5 35,000 5 35,000 Renault Master Panel Vans 18,200 16 291,200 3 54,600 13 236,600 Invoiced Mini Buses (Princes Trust) 22,750 2 45,500 2 45,500 Panel Vans 18,500 6 111,000 1 18,500 3 55,500 2 37,000 Panel Vans 25,000 2 50,000 2 50,000 Ford Connect Vans 9,500 8 76,000 4 38,000 2 19,000 2 19,000 PCVs (Ford Transit) 18,000 4 72,000 1 18,000 3 54,000 4x4s (Ford Ranger/Toyota Hilux) 16,000 5 80,000 3 48,000 2 32,000 4x4s (Ford Ranger/Toyota Hilux) 21,000 3 63,000 3 63,000 4x4s (Isuzu) 27,000 2 54,000 2 54,000 Officer response Cars 22,000 2 44,000 2 44,000 Officer response Cars 26,000 2 52,000 2 52,000 Order on Officer response Cars - Insignia (With Blues & Twos) 18,350 2 36,700 2 36,700 Car -Automatc 25,000 1 25,000 1 25,000 Page 192 Page VEH004 Special Vehicles CPL's Vehicle 2 (refurbished) 300,000 1 300,000 1 300,000 Vehicle 3 (refurbished) 300,000 1 300,000 1 300,000 Vehicle 4 (NEW) 600,000 1 600,000 1 600,000 Other IMU - Prime Movers 98,000 4 392,000 2 196,000 2 196,000 contribution to price increase (Slippage) 16,500 16,500 BA Support Unit (POD) 75,000 1 75,000 1 75,000 SFU Vehicle 85,000 2 170,000 1 85,000 1 85,000 Water Rescue Unit 45,000 1 45,000 1 45,000

VEH005 Water Strategy 29,000 29,000

VEH006 Motorcycle Response AFA/RTC Bikes 6,000 2 12,000 2 12,000 Firefighting bikes 16,000 2 32,000 2 32,000

WOR001 Workshop Equipment Equipment 36,500 36,500 Replace steam clean lift 40,000 40,000 Workshop MOT/LCC contract 6,472,100 360,300 1,722,200 1,383,800 1,793,800 1,212,000

2014/15 - 2018/19 SAVING PLAN 2014/15 2015/16 2016/17 2017/18 2018/19 £'000 £'000 £'000 £'000 £'000 Phase A, £6.300m Savings Phasing: Back Office and Support Services Minimum Revenue Provision (MRP) & Interest Payable on loans -750 -850 -900 -900 -900 Non Employee Inflation -50 -75 -125 -125 -125 Non Employee Budget review -150 -275 -275 -275 -275 Assume ay restraint in 2015/16. Currently provision for 2% pay/ 0 -400 -500 -500 -500 Assume 1% Employee Vacancy / Incremental saving -200 -200 -200 -200 -200 10% saving on Non Uniform Establishment 0 -450 -900 -900 -900 One-Off saving from discount on LGPS deficit payment if Authority pay 0 0 0 0 0 2014/15 - 2016/17 in April 2014 In the current plan £1.7m is required to balance 2014/15. By delivering some of the £6.3m ahead of schedule the amount of reserve drawdown 1,150 0 0 0 0 can be reduced by £1.150m

Operational Response 0 -350 -3,000 -3,400 -3,400

Required Smoothing Reserve -2,700 -400 Phase A, Savings Profile: 0 -5,300 -6,300 -6,300 -6,300

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Page 194 APPENDIX D 2014/15 - 2018/19 DRAFT MTFP 2014/15 2015/16 2016/17 2017/18 2018/19 £'000 £'000 £'000 £'000 £'000 FORECAST NET EXPENDITURE 2013/14 Base Budget 66,721 66,721 66,721 66,721 66,721 Approved changes to the base budget: Loss of 2013/14 Transitional Grant for LCC Council Tax Support 64 64 64 64 64 Take out one-off SMG Reserve contribution (2013/14 only) -100 -100 -100 -100 -100 Impact of Capital Programme / Funding Changes: 900 1,255 1,565 1,765 1,765 Inflation 800 2,075 3,500 5,000 5,000 2013/14 Saving Options Full Year Impact Income PFI Stations -25 -25 -25 -25 -25 Workshops income 0 -100 -100 -100 -100 Joint Control Room -200 -200 -200 -200 -200 Phase 2 Proposed Cuts in Support Savings -582 -632 -632 -632 -632 Phase 2 Proposed Cuts in Front Line Savings -1,445 -2,795 -2,795 -2,795 -2,795 Use of Smoothing Reserve -1,783 2013/2014 Approved Financial Plan 64,350 66,263 67,998 69,698 69,698 2014/15 Issues End of contracting out -start paying the standard rate of National Insurance 0 0 1,000 1,000 1,000 contributions. Increase employer costs by 3.4 per cent. LGPS Actuarial review, current benefits, employer rate from 11% to 13%, and 300 340 381 381 381 potential increase in historic deficit payment currently c£0.8m 2018/19 Inflation Provison 1,500 Sec 31 Grant to cover 2014/15 restricted NNDR increase -190 -190 -190 -190 -190

Sec 31 Grant to cover NNDR adjustments -194

Adjust Planned Drawdown from smoothing Reserve (original £1.783m) 90 2014/15 DRAFT Financial Plan Net Expenditure Forecast 64,356 66,413 69,189 70,889 72,389 FUNDING Government Funding: Settlement Funding Assessment -40,693 -37,214 -34,487 -32,340 -30,674

Adjustment for Local Business Rate income from Districts 174 Council Tax - Base Precept Income -22,619 -23,430 -23,899 -24,377 -24,865 Council Tax Base (increase) / decrease -355 0 0 0 0 Assume 2% rise 2014/15 to 2018/19 -458 -469 -478 -488 -497 Precept Income yield, rounding adjusmtment 2 Collection Fund (surplus)/deficit -407 Forecast Council Tax Income -23,837 -23,899 -24,377 -24,865 -25,362

Updated Income Forecast -64,356 -61,113 -58,864 -57,205 -56,036

Forecast Net Position (surplus) / deficit 0 5,300 10,325 13,684 16,353 Phase A, £6.300m Savings Phasing: Back Office and Support Services Minimum Revenue Provision (MRP) & Interest Payable on loans -750 -850 -900 -900 -900 Non Employee Inflation -50 -75 -125 -125 -125 Non Employee Budget review -150 -275 -275 -275 -275 Assume ay restraint in 2015/16. Currently provision for 2% pay/ Assume 1% 0 -400 -500 -500 -500 Employee Vacancy / Incremental saving -200 -200 -200 -200 -200 10% saving on Non Uniform Establishment 0 -450 -900 -900 -900 One-Off saving from discount on LGPS deficit payment if Authority pay 2014/15 - 0 0 0 0 0 2016/17 in April 2014 By delivering some of the £6.3m ahead of schedule the amount of reserve drawdown 1,150 0 0 0 0 can be reduced by £1.150m Operational Response 0 -350 -3,000 -3,400 -3,400

Required Smoothing Reserve -2,700 -400 Phase A, Savings Profile: 0 -5,300 -6,300 -6,300 -6,300 Phase B Possible Financial Challenge Page 195 0 0 4,025 7,384 10,053 This page is intentionally left blank

Page 196 Agenda Item 6

MERSEYSIDE FIRE AND RESCUE AUTHORITY

MEETING OF THE: AUTHORITY BUDGET MEE TING

DATE: 27 FEBRUARY 2014 REPORT CFO/021/14 NO: PRESENTING CLERK TO THE AUTHORI TY OFFICER RESPONSIBLE JANET HENSHAW REPORT JANET OFFICER: AUTHOR: HENSHAW OFFICERS STRATEGIC MANAGEMENT GROUP CONSULTED: TITLE OF REPORT: CONSULTATION FROM DC LG: OPENNESS OF LOCA L GOVERNMENT BODIES DRAFT REGULATIONS 2014

APPENDICES: APPENDIX A : LETTER FROM DCLG APPENDIX B: DRAFT REGULATIONS APPENDIX C: DESCRIPTIVE SUMMARY OF REGULATIONS APPENDIX D: DRAFT RESPONSE TO DCLG

Purpose of Report

1. To request that Members consider the response to DCLG in respect of Draft Regulation on openness in Local Government.

Recommendation

2. That Members; a. approve, the consultation response attached as Appendix D to this report , and/or b. instruct the Monitoring Officer regarding any proposed amendments to the consultation response

Introduction and Background

3. On 10 February 2014 the Department for Communities and Local Government (DCLG) issued a Consultation on draft Regulations entitled “The Openness of Local Government Bodies Regulations 2014”. The consultation closes on 12 March 2014.

4. The letter from DCLG is attached as Appendix A to this report with the draft Regulations attached as Appendix B. A “Descriptive summary” is attached as Appendix C.

5. Members will note that the draft Regulations makes reference to proposed amendments to Local Government legislation as refer to public meetings of the

Page 197 Authority or its Committees as well as making proposed changes to delegation of powers to Officers.

6. A response is attached at Appendix D and Members are asked to consider this and propose any amendments they may wish to make to the response.

Equality and Diversity Implications

7. There are no direct Equality and Diversity implications in this report. If the Regulations are given assent then any future meetings of the Authority or its Committees will need to consider the implications in any future report 8. Staff Implications

9. There will be implications for any staff who are given delegated authority to ensure compliance with these Regulations if they are given assent

Legal Implications

10. The draft 2014 Regulations propose amendments to the Public Bodies (Admission to Meetings) Act 1960, the Local Government Act 1972; the Local Government Act 2000 and the Local Authorities (Executive Arrangements) (Meetings and Access to Information)(England) Regulations 2012.

Financial Implications & Value for Money

11. There are no direct financial implications however the draft Regulations make reference to delegations to officers under the Scheme of Delegation which concern (amongst other things) where such delegated decisions may incur expenditure which materially affects the Authority’s financial position.

12. There is the potential for an increased administration burden to comply with the regulations

Risk Management, Health & Safety, and Environmental Implications

13. There is a risk that inaccurate or misleading information may be published before approved Minutes are available which could create difficult problems.

Contribution to Our Mission: Safer Stronger Communities – Safe Effective Firefighters

14. It is the view of DCLG that these Regulations will make Local Authorities more accountable however this could also create other problems if information is not accurate.

BACKGROUND PAPERS

NONE

Page 198 GLOSSARY OF TERMS

DCLG Department for Communities and Local Government

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Page 200

Carolyn Downs Chief Executive Local Government Association 10 February 2014

Via email

DRAFT REGULATIONS: OPENNESS OF LOCAL GOVERNMENT BODY MEETINGS

As you know, the Government is minded to make, as soon as practicable, regulations under section 40 of the Local Audit and Accountability Act 2014 about filming and the use of social media at council meetings and the recording of decisions taken by officers under delegated powers. I am now writing to invite your Association both to comment on the enclosed draft Regulations, for which I also enclose a descriptive summary, and to work with us over the next month or so on developing a Plain English Guide to accompany the Regulations.

You will see that the draft Regulations (The Openness of Local Government Bodies Regulations 2014) would, if approved by Parliament (these Regulations are subject to the affirmative resolution procedure) and made:

• Require local government bodies to allow any persons including professional journalists to attend, film, audio record, take photographs or provide commentary on the proceedings at public meetings;

• allow persons wishing to report or provide commentary on the proceedings at a meeting to use any communication means such as the internet to produce the result of their activities;

• require local government bodies to keep written records of material decisions taken by officers under delegation from the relevant local government body, its committees, subcommittees or joint committees; and

• make it an offence for a person to intentionally obstruct, or refuse to make available for inspection by members of the public, documents relating to these decisions.

Paul Rowsell Tel 0303 44 41858 Deputy Director – Democracy Email [email protected] Department for Communities and Local Government 3/J1, Eland House Bressenden Place London SW1E 5DU Page 201

We will be in touch very shortly about a meeting on the Plain English Guide, which could also be an opportunity for you to provide comments on the drafting of the Regulations. In any event, we would be grateful for all comments on the draft Regulations by 12 March 2014.

As to the Plain English Guide to accompany the Regulations, we envisage a Guide which will incorporate the existing Guide on openness ( Your council’s cabinet – going to its meetings, seeing how it works ) which applies to meetings of a council’s executive and will cover such matters as what would constitute ‘disruptive behaviour’ at a meeting, and what the public should do if they wish to film a meeting.

I am writing similarly to the National Associations of Local Councils, the Society of Local Authority Chief Executives and Lawyers in Local Government.

If you have any queries on the draft Regulations, please refer them to Hannah Brook (0303 444 1858, [email protected]) and Eleanor Smyllie ([email protected]).

Yours sincerely

Paul Rowsell

Page 202

Draft Regulations laid before Parliament under section 43 of the Local Audit and Accountability Act 2014, for approval by resolution of each House of Parliament.

DRAFT STATUTORY INSTRUMENTS

2014 No.

LOCAL GOVERNMENT, ENGLAND

The Openness of Local Government Bodies Regulations 2014

Made - - - - *** Coming into force in accordance with regulation 1

The Secretary of State in exercise of the powers conferred by section 40 of the Local Audit and Accountability Act 2014(a), makes the following Regulations:

Part 1

General Citation and commencement 1. These Regulations may be cited as the Openness of Local Government Bodies Regulations 2014 and come into force on the day after the day on which they are made.

Interpretation 2. In these Regulations— “the 1960 Act” means the Public Bodies (Admission to Meetings) Act 1960; “the 1972 Act” means the Local Government Act 1972; “the 2000 Act” means the Local Government Act 2000; “the 2012 Regulations” means the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012.

Part 2 Admission to and Reporting of Meetings of Relevant Local Government Bodies Amendment of the 1960 Act 3. The 1960 Act is amended as follows—

(a)

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(1) Insert after section 1(3)— “(3A) Where any person is excluded from a meeting under subsection (2) and (3), a relevant local government body are also permitted to exclude and prevent persons from reporting using methods which can be carried out without that person’s presence.” (2) Insert after section 1(4)(c)— “(d) Where a meeting of a relevant local government body is required by this Act to be open to the public during the proceedings or any part of them, any person shall be permitted to attend that meeting or part for the purposes of reporting as defined by subsection (9).” (3) In section 1(7) substitute ‘but nothing in this section’ with “but subject to paragraph (7A) nothing in this section”. (4) Insert after subsection (7)— “(7A) Any person shall be permitted to attend a meeting of a relevant local government body for the purposes of reporting as defined by subsection (8).” (5) Insert after subsection (7)— “(8) For the purposes of this section– “relevant local government body” means— (a) the Council of the Isles of Scilly; (b) a parish council; or (c) a parish meeting. “reporting” means— (a) filming, photographing or audio recording of proceedings; (b) using any other means for enabling persons not present to see or hear proceedings of a meeting as it takes place or later; and (c) reporting or providing commentary on proceedings of a meeting, orally or in writing, so that the report or commentary is available as the meeting takes place or later to persons not present.” (6) After section 1 insert— “1A. Publication and dissemination of reports (1) Any persons who attend meetings of a relevant local government body with the aim of reporting under section 1(7A) may use any communication methods, including the internet, to publish, post or otherwise share the results of their reporting activities. (2) Publication and dissemination can take place at the time of the meeting or occur after the meeting.”

Amendment of the 1972 Act 4. The 1972 Act is amended as follows— (1) After section 100A(5) insert— “(5A) Where any person is excluded from a meeting under subsections (2)-(5), relevant local government bodies are also permitted to exclude and prevent persons from reporting using methods which can be carried out without that person’s presence.” (2) In section 100A(6) for (c) substitute— “(c) while the meeting is open to the public: (i) duly accredited representatives of newspapers attending the meeting for the purpose of reporting the proceedings for those newspapers shall, so far as practicable, be afforded reasonable facilities for taking their report,

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(ii) in relation to relevant local government bodies as defined in subsection (9); any person attending a meeting under subsection (7A) shall so far as practicable, be afforded reasonable facilities for taking their report.” (3) Insert at the beginning of section 100A(7) “Subject to subsection (7A),” (4) Insert after subsection (7)— “(7A) (a) Any person shall be permitted to attend meetings of relevant local government bodies for the purposes of reporting as defined by subsection (10) (b) Any persons who attend meetings of relevant local government bodies with the aim of reporting may use any communication methods, including the internet, to publish, post or otherwise share the results of their reporting activities (c) Publication and dissemination can take place at the time of the meeting or occur after the meeting” (5) Insert after subsection (8)— “(9) For the purposes of this section– “relevant local government bodies” means— (a) a district council, (b) a county council in England, (c) a London borough council, (d) the London Assembly (e) the Common Council of the City of London in its capacity as a local authority or police authority, (f) the London Fire and Emergency Planning Authority, (g) Transport for London, (h) a joint authority established under Part 4 of the Local Government Act 1985, (i) an economic prosperity board, (j) a combined authority, (k) a fire and rescue authority in England constituted by a scheme under section 2 of the Fire and Rescue Services Act 2004 or a scheme to which section 4 of that Act applies, (l) a National Park Authority for a National Park in England (m) the Broads Authority, or (n) any committee, joint committee or sub-committee of the above bodies. (10) Reporting for the purposes of subsection (7A) is defined as— (a) filming, photographing or audio recording of proceedings, (b) using any other means for enabling persons not present to see or hear proceedings of a meeting as it takes place or later, and (c) reporting or providing commentary on proceedings of a meeting, orally or in writing, so that the report or commentary is available as the meeting takes place or later to persons not present.”

Amendment of the 2012 Regulations 5. The 2012 Regulations are amended as follows— (1) In regulation 4 insert after subsection (6)— “(7) Subject to subsections (2)-(5), a decision-making body is required to permit any person attending a meeting of such a body to report on the proceedings. (8) For the purposes of this regulation, report on proceedings is defined as—

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(a) filming, photographing or audio recording the proceedings of a meeting, (b) using any other means for enabling persons not present to see or hear proceedings of a meeting as it takes place or later, and (c) reporting or providing commentary on proceedings of a meeting, orally or in writing, so that the report or commentary is available to persons not present, as the meeting takes place or later. (9) Any person who attends a meeting to report on proceedings under subsection (7) may use any communication methods, including the internet, to publish, post or otherwise share the results of their reporting activities. Publication and dissemination can take place at the time of the meeting or occur after the meeting.” (2) After regulation 4(5) insert— “(5A) Where any person is excluded from a meeting under subsections (2)-(5), a decision making body is also permitted to exclude and prevent persons from reporting using methods which can be carried out without that person’s presence.” (3) In regulation 20 omit paragraph (4).

Part 3 Record of Decisions and Access to Documents Interpretation of this Part 6. For the purposes of this Part— “confidential information” means – (a) Information provided to the local authority by a government department on terms (however expressed) which forbid the disclosure of the information to the public; or (b) Information the disclosure of which to the public is prohibited by or under any enactment or by order of a court, and in either case, a reference to the obligation of confidence is to be construed accordingly. “decision making officer” means an officer of a relevant local government body who makes decisions on behalf of their relevant local government body, with authority to do so. “exempt information” has the meaning given by section 100I of the 1972 Act (exempt information and power to vary Schedule 12A). “open meeting” means a meeting of a relevant local government body to which any person who is not a member of that body may also attend. “proper officer” has the same meaning as in section 270(3) of the 1972 Act (general provisions as to interpretation. “relevant local government body” means— (c) a district council, (d) a county council in England, (e) a London borough council, (f) the Greater London Authority, (g) the Common Council of the City of London in its capacity as a local authority or police authority, (h) the London Fire and Emergency Planning Authority, (i) Transport for London, (j) a joint authority established under Part 4 of the Local Government Act 1985, (k) an economic prosperity board,

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(l) a combined authority, (m) a fire and rescue authority in England constituted by a scheme under section 2 of the Fire and Rescue Services Act 2004 or a scheme to which section 4 of that Act applies, (n) a National Park Authority for a National Park in England, (o) the Broads Authority, (p) the Council of the Isles of Scilly, (q) a parish council, or, (r) a parish meeting.

Recording of decisions 7.—(1) The decision making officer or other suitable officer within a relevant local government body is required to produce a written record of any decision which falls within paragraph (2). (2) A decision falls within this paragraph if it would otherwise have been taken by the relevant local government body, or a committee, sub-committee or joint committee of that body but it has been delegated to an officer of that body either— (a) under a specific express authorisation; or (b) under a general authorisation to officers to take such decisions and, the effect of the decision is to— (i) grant permissions or licences; (ii) affect the rights of individuals; (iii) award contracts; or (iv) incur expenditure which materially affects that relevant local government body’s financial position. (3) The written record should be produced as soon as reasonably practicable after an officer has made a decision of the kind in paragraph (2) and should contain the information specified in paragraph (4). (4) The record required by paragraph (1) must contain the following information— (a) the title of the decision making officer; (b) the date the decision was taken; (c) a record of the decision taken along with reasons for the decision; (d) details of alternative options considered and rejected; and (e) where the decision falls under paragraph 2(a), the names of any member of a relevant local government body who has declared a conflict of interest in relation to the decision. Decisions to be made available to the public 8.—(1) The written records described in regulation 7, along with any connected or supporting documents, must as soon as reasonably practicable be made available to the public— (a) at the offices of the relevant local government body; (b) on website of the relevant local government body, if it has one; and, (c) through any other means thought appropriate by the relevant local government body. (2) On request and on receipt of payment of postage, copying or other necessary charge for transmission, the relevant body must provide subject to regulation 9— (a) a copy of the written decision. (b) a copy of connected and supporting documents. (3) Any written record required by paragraph (1) to be available for inspection by members of the public, must be retained by the relevant local government body and made available for

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inspection by the public for a period of at least 6 years beginning on the date on which the decision, to which the record relates, was made. (4) Any connected or supporting documents relating to a decision to which a record must be made under regulation 7 which is required to be available for inspection by the public by paragraph (1), must be retained by the relevant local government body and made available for inspection by the public for a period of at least 4 years beginning on the date on which the decision, to which the record relates, was made. Confidential and Exempt information 9.—(1) Nothing in this Part is to be taken to authorise or require the disclosure of confidential information in breach of the obligation of confidence. (2) Nothing in this Part— (a) authorises or requires a relevant local government body to disclose to the public or make available for public inspection any document or part of a document if, in the opinions of the proper officer, that document or part of a document contains or may contain confidential information; or (b) requires a relevant local government body to disclose to the public or make available for public inspection any document or part of a document if, in the opinion of the proper officer, that document or part of a document contains or is likely to contain exempt information. Offences 10.—(1) A person who has custody of a document which is required by regulation 8 to be available for inspection by members of the public commits an offence if, without reasonable excuse, that person— (a) intentionally obstructs any person exercising a right conferred under this Part in relation to inspecting written records and connected and supporting documents; or (b) refuses any request under this Part to provide written records and connected and supporting documents. (2) A person who commits an offence under paragraph (1) is liable on summary conviction to a fine not exceeding level 1 on the standard scale.

EXPLANATORY NOTE (This note is not part of these Regulations)

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DESCRIPTIVE SUMMARY OF THE DRAFT OPENNESS OF LOCAL GOVERNMENT BODIES REGULATIONS 2014

The Regulations amend the:  Public Bodies (Admission to Meetings) Act 1960, “the 1960 Act”  Local Government Act 1972, “the 1972 Act”  Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012, “the 2012 Regulations

Admission to and reporting of Meetings of Relevant Local Government Bodies The Regulations:  Allow any person to attend a public meeting of a relevant local government body for the purposes of reporting.  ‘Reporting’ is defined in the regulations as: o Filming, photographing or audio recording of proceedings; o Using any other means for enabling persons not present to see or hear proceedings of a meeting as it takes place or later; and o Reporting or providing commentary on proceedings of a meeting, orally or in writing.  Allow any persons with the aim or reporting to use any communication methods, including the internet, to publish, post or otherwise share the results of their reporting activities, during or after the meeting.  Do not affect the current circumstances in which a private meeting may be held or a person may be excluded (for example, where exempt information would be disclosed or in the case of disorderly conduct).

Regulation 3 amends the 1960 Act to apply the policy to: o parish councils; o parish meetings; and o the Council of the Isles of Scilly.

Regulation 4 amends the 1972 Act to apply this policy to: o a district council, o a county council in England, o a London borough council, o the London Assembly o the Common Council of the City of London in its capacity as a local authority or police authority, o the London Fire and Emergency Planning Authority, o Transport for London, o a joint authority established under Part 4 of the Local Government Act 1985, o an economic prosperity board, o a combined authority,

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o a fire and rescue authority in England constituted by a scheme under section 2 of the Fire and Rescue Services Act 2004 or a scheme to which section 4 of that Act applies, o a National Park Authority for a National Park in England o the Broads Authority, or o any committee, joint committee or sub-committee of the above bodies (this includes Police and Crime Panels and Health and Wellbeing Boards).

Regulation 5 amends the 2012 Regulations to apply the policy to councils operating executive arrangements to ensure a consistent approach.

Record of Decisions and Access to Documents

The Regulations also:  Require a written record to be made of any decision that has been delegated to an officer of the relevant local government body under a specific express authorisation, or under a general authorisation where the effect of the decision is to grant permissions or licences, affect the rights of individuals, award contracts or incur expenditure which materially affects the body’s financial position.  Require that the written records are made available to the public at the relevant body’s offices, on their website if they have one, by post if requested and on receipt of payment for copying and postage, and through any other means thought appropriate by the local government body.  Require the written record to be available for public inspection for at least 6 years, and any supporting documentation for at least 4 years.  Provide a criminal penalty for non-compliance. A person who has custody of documents which should be available for inspection, will commit an offence if that person refuses to disclose or intentionally obstructs the disclosure of such documents under these Regulations. The penalty for the offences is a fine not exceeding level 1 - that is £200 - on the standard scale. This replicates the existing penalty for failure to disclose or obstructing the disclosure of documents in the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012.

This part of the Regulations applies to the same local government bodies as listed above, but will not apply to decisions on executive matters in councils operating executive arrangements as there are already equivalent provisions in the 2012 Regulations to cover these decisions.

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DRAFT RESPONSE TO DCLG: OPENNESS OF LOCAL GOVERNMENT BODIES REGULATIONS 2014

There are two overriding matters referenced in the Draft Regulations

The first concerns the proposed amendments to the 1960 Act; the 1972 Act and the 2012 Regulations all deal with the same wording – which would be to allow “any person” in an open meeting of the Merseyside Fire and Rescue Authority or its Committees (MFRA) to film, photograph, audio record or use any other means (which would no doubt involve the use of social media) to enable other people not at that meeting to see or hear the proceedings as they take place or later.

This would include according to the definitions in these draft Regulations, “reporting or providing commentary on proceedings of a meeting, orally or in writing ”

This Authority is committed to openness and transparency and the press, as required by law, are provided with all the papers for each meeting as well as the Agenda and regularly attend meetings and report on the same. In addition all papers and Agendas as well as Minutes of meetings are published on the Authority’s website 5 working days before each meeting. The Authority has a Facebook and Twitter account and members of the public may post on these if they wish to. The Authority therefore considers that it has many processes in place to ensure its transparency. However there are concerns about some of the issues that these draft Regulations raise:

1. Inaccurate; deliberately misleading or mistaken reporting could take place. This could potentially lead to allegations of libel. 2. Out of context reporting could take place which could lead to unfounded complaints or damage to reputation. 3. The reporting proposals and timing could lead to damaging accusations appearing widely in social media before a meeting has finished and any final decisions made or out of context comments made mid debate before a final decision has been made or any vote taken. 4. Complainants could use these reporting rights instead of going through the correct procedure which could create confusion. 5. Even when meetings are open other bodies may be referred to in debate and again could be misrepresented. 6. There could be disruption to meetings, particularly if proceedings are filmed or there is oral reporting.

We consider that Local Government should be trusted to be open and we suggest respectfully that these Regulations could have the opposite effect by constraining elected Members in their debates due to the concerns expressed above.

The second issue with the draft Regulations is that of delegations of authority to officers to make certain decision. The draft Regulations propose that written records of some detail must be made in the case of both specific express authorisation or in general authorisations

Page 211 (which we take as meaning those contained within the Scheme of Delegation) which have an effect on the grant of licences; the rights of individuals, the award of contracts or the incurring of expenditure materially affecting the financial position of the Authority

Local Government must have a Scheme of Delegation in order for the Council or other body to operate efficiently and effectively. This scheme is carefully considered and approved by MFRA every year. Any additional delegation which is not placed within the scheme must be separately approved and a Minute of any such decision is taken and published.

It would be an unnecessary administrative burden to record each and every decision delegated that is prosed by the draft Regulations as many decisions delegated to officers are concerned with contracts and financial issues. The Officers are qualified and experienced in taking these decisions and always report back to elected Members at a later stage. It therefore seems to be stretching resources to make written records when a Scheme of Delegation already exists and other delegations are already recorded in Minutes.

The effect of these Regulations could potentially be to constrain Members in granting delegations to officers which in turn would slow down the decision making process and delay operational decisions generally.

Finally there are a number of inconsistencies

1. The Regulations (e.g. 1A, 7A (a) of the LGA 1972) provide that “any persons who attend meetings . With the aim of reporting may use any communication methods, including the internet, to publish, post or otherwise share the results of their reporting activities” 2. The Regulations provide for a written record of delegated decisions where the effect of that decision is to “materially affect the body’s financial position”. There is no definition of “materially affect”. 3. The Regulations refer to subsection 9 (LGA 1972) however there is no subsection 9. Does this refer to the definition of “reporting”? 4. LGA 1972 proposed 3A provides that a local government body are permittedDoes this mean “ is” permitted?

We would look forward to discussing our concerns in more detail as the Consultation period has been extremely short.

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