GLC Precept -London Fire _ Emergency Issues

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FINANCE AND SUPPORT SERVICES OVERVIEW AND SCRUTINY
COMMITTEEE
30TH JANUARY 2006

GREATER LONDON COUNCIL BUDGET AND PRECEPT -
LONDON FIRE AND EMERGENCY PLANNING AUTHORITY– ISSUES

General Points

 High precept increases for the fire service in London has been an issue
  since 2003/04.
 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
  fire service.


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
  taxation.
 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
  2005).


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
  pensions).
 Income required from the council tax (the precept) would have increased
  by 94.7%.
 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
Expenditure
Less:
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
Equals:
Net Expenditure       306.4      322.0       340.1      369.2       395.3     408.6     406.4
Less/plus:
Use of Reserves         0.0        -3.0       -5.0        -0.2       -6.9      -5.2     -25.4
Equals:
Budget                306.4      319.0       335.1      369.0       388.4     403.4     381.0
Requirement
Less:
RSG/NNDR             -238.0      -244.0     -256.2      -258.0     -268.4    -277.1    -247.8
Equals:
Council Tax            68.4       75.0        78.9      111.0       120.0     126.3     133.2
Income

                      £          £           £          £           £         £         £
Precept at Band       28.87      27.42       28.48      39.73       42.30     44.15     46.57
D

				
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