FINANCE AND SUPPORT SERVICES OVERVIEW AND SCRUTINY
30TH JANUARY 2006
GREATER LONDON COUNCIL BUDGET AND PRECEPT -
LONDON FIRE AND EMERGENCY PLANNING AUTHORITY– ISSUES
High precept increases for the fire service in London has been an issue
The funding of firefighter pension until and including the current financial
year has been a key issue. Pensions had been accounting for an
increasing proportion of the LFEPA’s budget requirement, (21.9% of
LFEPA net expenditure in 2005/06).
The issue is whether the Government has adequately funded the fire and
emergency planning service in London.
In particular the point has been repeatedly made in recent years that the
Government has not adequately funded the fire service costs in relation to
the London Resilience programme.
The budget consultation document provides inadequate information about
LFEPA’s Budget and Precept Requirement 2006/07 - Issues
The provisional precept increase, at Band D, is £2.42, or 5.5%.
LFEPA had a relatively poor local government finance settlement, with
Formula Grant increasing by only 1.5%. (The floor level: the LFEPA was
adversely by formula changes within the formula grant system).
It is impossible to compare the budget and government grant changes
between 2005/06 and 2006/07 because of the changes in firefighter
pension funding arrangements. The budget document has does provide a
like for like comparison between the financial years 2005/06 and 2006/07.
Details of the financial impact of the pension funding changes on the
budget and grant position are not given in the budget consultation paper.
The LFEPA has reported that there were no immediate costs arising from
the July terrorist attacks other than a small amount of overtime managed
within the 2005/06 budget.
The LFEPA is seeking an additional £3.3 million for more equipment to
improve its London Resilience capacity in 2006/07. The Government has
yet to advise how much of this cost it will fund. The LFEPA have therefore
earmarked £10.5 million of its Reserves for existing commitments for
London Resilience pending Government support.
The Government should provide additional funding to cover the cost of the
enhanced London Resilience programme. The programme relates to
London’s position as a capital city and should be funded through national
LFEPA may have significant work in providing fire service coverage for the
Olympic Games. The preparatory of costs of this work is not identified in
the 2006/07 budget.
LFEPA has reported that £7.4 million of efficiency savings have included in
the 2006/07 budget. In 2005/06, LFEPA has realised £2.6 million of
efficiency savings and £5.0 million of modernisation savings through the
London Safety Plan 2005 to 2008. LFEPA advise that there will now be a
focus on greater productively in the work undertaken by fire stations. The
outcome of these changes are not identified in the 2006/07 draft budget.
Efficiency savings could lead to the loss of more fire stations or fire
appliances in Westminster, (Manchester Square Fire Station was closed in
LFEPA – change in precept and budget requirement 2000/01 to 2006/07
Details of the LFEPA gross and net expenditure, budget requirement and
precept requirement is given in the table below. The analysis of change
assumes that the 2006/07 draft budget proposals are implemented. Because
of the changes in the funding of firefighter pensions, some of the figures for
2006/07 are not strictly comparable with those for earlier years.
In 2000/01, LFEPA accounted for 14.1% of GLA’s Budget Requirement
and 23.5% of the GLA precept. For 2006/07, the respective figures (as
proposed) are 12.9% and 15.7%.
Gross Expenditure will have increased by 28.8%.
Specific grants will have increased by 4100.0%. (Specific grants are still a
relatively small element of the LFEPA’s income).
Other income will have fallen by 40.4%.
Net Expenditure will have increased by 32.6%.
Budget Requirement will have increased by 24.3%. (The difference
between Net Expenditure and Budget Requirement is due to the significant
application of Reserves for 2006/07).
Revenue Support Grant and Business Rate income is assumed to have
increased by 4.1%. (The figures for 2000/01 and 2006/07 are not
comparable because of the change in funding arrangement for firefighter
Income required from the council tax (the precept) would have increased
Precept at Band D will have increased by 61.3%.
It is arguable that Government funding of the police in London has been
inadequate and this has resulted in a 61.3% in the fire and emergency
planning precept since 2000/01.
The budget requirement has not been match by a growth in Government
support; therefore, the funding of the expansion of the fire service in
London has fallen on the council taxpayer.
The shortfall in Government grant has been compounded by the “gearing
problem”. A 1% increase in LFEPA expenditure results in a 3.2% increase
in the fire service precept.
Gross Expenditure and funding analysis of the LFEPA 2000/01 to 2006/07
2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07
£m £m £m £m £m £m £m
Gross 335.1 351.4 373.0 404.6 442.2 449.4 431.7
Specific Grants -0.2 0.0 -2.0 -2.0 -13.7 -6.6 -8.4
Other Income -28.5 -29.4 30.9 -33.4 -33.2 -34.2 -17.0
Net Expenditure 306.4 322.0 340.1 369.2 395.3 408.6 406.4
Use of Reserves 0.0 -3.0 -5.0 -0.2 -6.9 -5.2 -25.4
Budget 306.4 319.0 335.1 369.0 388.4 403.4 381.0
RSG/NNDR -238.0 -244.0 -256.2 -258.0 -268.4 -277.1 -247.8
Council Tax 68.4 75.0 78.9 111.0 120.0 126.3 133.2
£ £ £ £ £ £ £
Precept at Band 28.87 27.42 28.48 39.73 42.30 44.15 46.57