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APPENDIX A “MRSA’S RESPONSE TO FIRE AND RESCUE CIRCULAR 36/2008” APPENDIX B “FIRE AND RESCUE CIRCULAR 36/2008 …. UPDATE ON THE NEW DIMENSION LTCM PROJECT AND THREE-YEAR FUNDING ALLOCATION” *A Glossary of Terms has been provided at the end of this report for your reference Purpose of Report 1. To advise Members of the contents of Fire and Rescue Circular 36/2008 (FSC 36/2008) and to seek approval for the proposed Authority response to this circular to Communities and Local Government (CLG).

Recommendation 2. That Members: (a) Note the contents of this report, and (b) Approve the draft response to CLG attached as Appendix A to this report, and


Request the Director of Finance to submit a copy of the response to the Regional Management Board in order that the Board can take the Authority’s views into account when formulating any response to circular 36/1008 by the Regional Management Board.

Executive Summary

Fire and Rescue Circular 36/08 deals with the New Dimension Long Term Capability Management project which is intended to put in place arrangements and structures to maintain the long term sustainability of the New Dimension resource and integrate it into FRS core business. The circular provides details of how CLG intend to do this and this report includes a draft response to CLG that raises questions and seeks clarification on a number of matters that are integral to these arrangements. These include: • Clarification on a number of matters surrounding the maintenance contract for New Dimension assets that has been awarded to Vosper Thorneycroft Critical Services. A concern that there is no certainty over longer term funding: In particular the effect that the proposed transfer of grant funding into the Revenue Support Grant formula will have on authorities that are at the RSG floor. There are also a number of concerns and queries around the definitions used in the CLG circular such as those relating to Asset Refresh and what these will mean for the authority in real terms.



Introduction & Background 3. The vision of the New Dimension programme when it was created in 2001 was to enhance the fire and rescue service’s (FRS’s) ability to respond to catastrophic incidents by putting in place the necessary structures, systems and assets. The main investment was in: • • • • • • Fire and Rescue Service National Co-ordination Centre (FRS NCC) Urban Search and Rescue (USAR) Crewing USAR Strategic Reserve New Dimension Accommodation USAR Consumables USAR Dog Teams



The New Dimension Long Term Capability Management (LTCM) project seeks to put in place the necessary structures to ensure the long term sustainability of the New Dimension capabilities and integrate them into FRS core business. Fire and Rescue Circular 36/2008 (FSC 36/2008) seeks to update authorities on all aspects of the LTCM project and provide confirmation over the funding allocation for the New Dimensions programme for the 2008/09 – 2010/11 period. The circular identifies four elements to the project: • • • • The process to transfer ownership of the assets from CLG to FRSs that host them The long term maintenance contract for all vehicles and equipment The Assurance Function, provide assurance that capabilities remain fit for purpose Settling continuing funding for the New Dimension capability.


Although no response is required it is important to formally notify CLG of any concerns the Authority has with the proposals in the circular. The rest of this report outlines officers concerns with the proposals specifically with regards to future funding and liabilities over maintenance and asset refresh. Transfer of ownership – the circular proposes FRAs should take full and direct responsibility for the management of the New Dimension assets that they host. Certainty over the longer term funding is still unclear for maintenance, refresh and the implications of how the funding is channelled into FRAs, this is covered in more detail in the Finance section in paragraph 10. Maintenance – Vosper Thornycroft Critical Services (VTCS) have been awarded a 16 year national contract to maintain the New Dimension assets. All FRAs taking ownership of New Dimension assets will be required to enter into this contract. The contract has yet to be shared with FRAs but the Authority will have no choice but to use VTCS. It is important for FRAs to see the detailed charges for reactive and planned maintenance of assets to assess the potential future liabilities as the circular states CLG will only meet maintenance costs associated with “fixed” charges and in relation to expected wear and tear for dealing with level 4 incidents. Clarification from CLG is therefore sought on: • • • • • • What CLG define as fixed charges What CLG define as variable charges What constitutes fair wear and tear (is this anticipated planned maintenance? what about reactive maintenance, unforeseen / accidental damage)? Is, by default, the Authority liable for funding all other maintenance? How will the VTCS contract be monitored and any contract price uplifts be agreed. Will there be a periodic bench marking of contract prices against the current market charges? Will CLG or the FRAs be responsible for arranging insurance for these assets and will the associated costs be fully funded?




Operational Assurance – following work undertaken jointly with CLG, CFOA (Chief Fire Officers Association) and the LGA (Local Government Association) an FRS led body (made up of senior fire officers and councillors) will provide the operational assurance and governance arrangements for New Dimensions capability. Currently this body is known as the Transition Board but it will become the National Resilience Board post asset transfer.

10. Finance – The circular summarises the required funding support into three distinct areas and then outlines how CLG intends to pass the funding onto FRAs: • Continued funding to support the New Dimension capabilities, (USAR crewing & other costs, Mass Decontamination units/training, enhanced Command & Control support, Training, and other). The circular identifies the level of grant funding CLG will make available for the 2008/09 – 2010/11 period. Support for the Assurance Function. (i) CLG will directly fund the Transitional Board / National Resilience Board and central training for the 2008/09 – 2010/11 period. Short Term Refresh – CLG will provide grant funding of £1.5m per annum once the Assurance body has taken over full responsibility for New Dimension capabilities.



(iii) Major asset refresh – the circular states the assumption is this will be every 5-6 years but this will be a matter for Ministers to consider at the time and no funding decision is being taken now. The circular states any request for major asset refresh would be considered against other proposals for Government funding in the context of a spending review. • National Maintenance Contract. CLG will fully fund FRAs to meet their fixed charges under the contract that are required to maintain the New Dimension capability to respond to level 4 incidents. Funding Mechanism – CLG have agreed to continue funding New Dimensions through specific grants for the 2008/09 – 2010/11 period. However CLG will consider the case for transferring these grants, where possible, into the Revenue Support Grant (RSG) in the next formula grant review.


11. The Authority may wish to make the following points to CLG in relation to the Finance proposals: • The circular provides no certainty over funding beyond 2010/11 and therefore given the current financial environment a risk exists to host FRAs that the additional commitment arising from the transfer of New Dimension capabilities may not be fully covered in the long term.


The intention to transfer grants into the RSG formula post 2010/11 potentially means that those authorities at the RSG floor are at risk of receiving no real increase in funding to cover all or part of these additional burdens following New Dimension asset transfer. (Members will recall that this Authority has been at the “floor” for grant increases in recent years.) The circular does not provide the required clarification on future costs to ensure funding is adequate to meet these commitments, specifically – (i) National Maintenance contract – what is CLG’s definition of fixed and eligible costs? National Maintenance contract - FRAs if deemed liable for variable and reactive maintenance costs require supporting information, (contract price list, asset life / maintenance profile projections) to assess the potential liability.



(iii) Asset refresh – What do CLG mean by “short term” refresh, what does this cover, will the £1.5m funding continue year on year and will it be paid as a grant directly to the assurance body? (iv) Major Asset refresh – Do CLG have an agreed asset life for all assets to be transferred to FRAs. How will CLG fund asset refresh – as a capital grant to FRAs. If the Government do not support the funding of a replacement asset at the time the Assurance Body/FRAs make the request, what do CLG propose FRAs do for example how will increased maintenance costs arising from using equipment beyond its asset life be met? (v) Major Asset refresh – FSC Circular 26/2007 page 9 point 4 states that CLG will only be responsible for replacing New Dimension equipment that has expired due to correct use during training or at level 4 incidents, known as scheduled replacements. Does this mean any “unscheduled” replacements must be funded by the relevant FRA on the basis that CLG have taken the view that the FRA has used the asset excessively to respond to local level 1,2, or 3 incidents. How will CLG identify such incidents and agree with the relevant FRA a prorata liability for replacement costs?

(vi) If asset procurement is required through Firebuy will CLG meet any proposed recharge from Firebuy? (vii) Support for the Assurance Body & central training – do CLG intend to continue funding this body after 2010/11 through a direct grant to this entity? (viii) Will future funding post transfer of assets to FRAs take into account the additional liabilities transferred – insurance. Firelink connection / usage costs?

(ix) If a host FRA decides to no longer continue providing a New Dimension capability can it transfer the ownership of New Dimension assets back to CLG at any point in the future without any financial penalty to the FRA or ongoing commitment? 12. A draft response to FSC 36/2008 has been produced and is attached as Appendix A for Members information. Equality & Diversity Implications 13. None arising from this report. Financial Implications & Value for Money 14. There are no costs associated with the report. However, the proposal to transfer New Dimension assets to the Authority will result in an increase in revenue and capital expenditure but at this point in time officers require further information from CLG to determine if these commitments will be covered by an increase in Government funding. Contribution to Achieving the Vision “To Make Merseyside a Safer, Stronger, Healthier Community” 15. The New Dimension vehicles are an important extra facility in Keeping Merseyside Safe. This needs to be balanced with the impact on the council taxpayers of Merseyside of additional cost.

BACKGROUND DOCUMENTS Fire and Rescue Circular 36/2008 “Update on the New Dimension LTCM Project and Three-Year Funding Allocation”

Glossary of Terms CFOA - Chief Fire Officers Association CLG - Communities and Local Government. FRAs - Fire & Rescue Authorities LGA - Local Government Association LTCM - New Dimension Long Term Capability Management project RSG - Revenue Support Grant USAR - Urban Search and Rescue VTCS - Vosper Thornycroft Critical Services

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