3. The Medium Term Financial Plan (MTFP)
The need to generate the savings highlighted above is reflected in our Medium Term Financial Plan (MTFP). Covering the period 2019/20 – 2022/23, the MTFP is a fundamental part of our corporate planning process and ensures that we have the requisite financial resources to maintain our emergency service cover to the public,
whilst delivering the improvements planned for the Service. This includes both whilst delivering the improvements planned for the Service. This includes both capital and revenue expenditure and income. The capital budget sets out the planned purchase of assets, such as vehicles, equipment, property and information systems. The MTFP is our financial plan which reflects and supports the delivery of our operational and frontline plans which are detailed in our Safety and Wellbeing Plan, Customer and Corporate Plan and out service specific plans.
Planning for day-to-day costs over the medium term is vital as this allows us to take a well-structured and considered approach to any investments in people or infrastructure, and to be aware of any potential significant costs that could arise from changes to legislation or government policy. The development of the four year MTFP is always service-led, that is to say led by what will allow us to achieve the best possible service, whilst also being achievable and, importantly, sustainable.
For 2019/20 our day-to-day revenue budget has shown a slight increase on the previous financial year, going up from £69.9m to £70.8m. This is due to a combination of population growth in the county leading to more individuals paying council tax and a small increase in the council tax that households pay. To put this into context, just over 69% of the Authority’s funding comes from Council Tax.
However, it is expected that there will be a number of cost pressures over the medium term. These include the anticipated annual inflationary staff pay increases; the cost of recruiting new wholetime firefighters; inflationary increases relating to non-pay expenditure, such as contracts and utility costs; and the need to maintain our infrastructure assets to an appropriate standard. To be able to meet these costs, we must constantly look to save money wherever possible. As a result, for 2019/20 we plan to make savings of just over £2.3m, which will come from a number of pay and non-pay budgets.
Another important aspect highlighted in the MTFP is the need to generate efficiencies by continuing to explore new ways of delivering our services. Examples of this include changes to duty systems at wholetime and day crewed stations, as well as a variety of non-pay savings.
Reserves
The Service holds two types of Reserves, known as general and earmarked. The general reserve is maintained at approximately 5% of our net revenue budget (£3.5m) whereas the earmarked reserves are established for specific purposes and can vary in value. The largest earmarked reserve is currently the Infrastructure reserve with a balance of approximately £24m. This reserve is used to help fund the projects in the capital programme as it is currently more cost-effective for the Service to use its own funding resources rather than to borrow. Significant savings are made by not incurring interest charges on large sums of borrowing.
Funding
At £49m, just over 69% of the Authority’s funding comes from council tax and, for the 2019/20 financial year, the Authority proposes to increase council tax by 2.98%. For a Band D property, this would result in an annual increase of £2.25 per year (or just over 4p per week), making the B and D council tax charge £77.76 for 2019/20. This
increase, whilst relatively modest, will help us to continue to deliver the best possible fire and rescue service in the current economic environment.
Unfortunately, the bid to be part of the 100% Business Rates Retention Pilot in 2019/20 was unsuccessful. Those authorities selected as pilots do not receive Revenue Support Grant (RSG) or Top-up Grant from central Government, but instead receive an additional share of the Business Rates income collected locally. Because the bid was unsuccessful, funding for 2019/20 has reverted back to the previous arrangements, whereby the Authority will receive a grant (£6.3m) and Top-up Grant (£8.4m) from central Government as well as a share of locally retained
Business Rates (£6.5m). Further information about these changes may be found in the MTFP.