Appendix 2 Medium Term Forecast - London Fire Brigade

Appendix 2 – Medium Term Forecast

Description 2015/16 2016/17 Comments

£k £k

Previous Years Funding from the GLA

389,175 382,000

Previous Years Specific Grants Received

13,984 9,129

Previous Years Budget Requirement

403,159 391,129

Previous Years Use of / (Payments Into) Reserve

(3,088) 71

Previous Years Net Expenditure

400,070 391,200

2015/16 2016/17

Central Contingency for Inflation

5,007 5,490 Inflationary pressures will be kept under review.

Other budget pressures

Changes to Staff on Development Rates of Pay

(814) (2,616) This reduction reflects the anticipated change in the profile of the operational workforce, which will shift in 2015/16 to include more less experienced staff on lower pay rates.

Removal of National Insurance Rebate

0 5,674 From April 2016 the state second pension will be closed and everyone will have access to a single tier pension system. As a result there will be no State Second Pension to opt out of and no rebate either for employees or employers.

Revaluation of Local Government Pensions Scheme

180 188 This is the forecast increase in cost to LFEPA as a result of the past service deficit on the Local Government Pension Scheme.

Deputy Assistant Commissioner (DAC) Post

100 0 The approved savings proposal (SAV26 ) from the 2014/15 budget report would reduce the total number of DAC posts by 1 in 2015/16 within Technical and Service Support. This saving was originally proposed on the basis that the Authority would enter into a like for like PFI contract for fleet and equipment. It is now considered essential that this post is retained to oversee the implementation of the revised contract and the review of Protective Equipment Group.

LFEPA Commissioner Appointment

200 (44) This item reflects the additional funding required for the salary and recruitment costs for the Commissioner of LFEPA position.

Changes to Station and Group Managers terms and conditions

186 0 This change will underpin and enhance the operational rota for station and group managers, as well as giving the Brigade improved security for operational rota cover at the middle manager level.



£k £k

Control and Mobilising Services (CAMS) Project Team

165 0 This pressure is to fund the continuation of the CAMS project team to deal with the Emergency Services Mobile Communications Programme and also to cover any outstanding CAMS product issues.

Firefighters' Injury Pensions

0 398 This relates to inflation increases on injury pensions.

Firefighters' Ill Health Pensions

0 174 This is based on forecast ill health retirements.

Information and Communications Technology (ICT) Capacity

123 0 The increased use of technology to drive efficiency and savings throughout the Authority has meant that more and more demands are being placed upon ICT to deliver projects. In addition ICT have had to accommodate the requirements of a multi-sourced approach for support and maintenance of the Authority’s server, network and desktop environment. To meet these pressures an additional FRS F technical project manager (£67k) and a FRS E Desktop support manager (£56k) are required.

Internal Communications Capacity

38 0 The business demand for internal communications cannot be met by the current level of resource (1 x officer). It was not possible to meet Brigade internal communication requirements in 2012/13 and also there is no contingency for the absence of the current single officer. Officers see improved internal communications as a priority in the context of working towards the improvement of industrial relations and morale within the Brigade.

Prosecution Lawyers 102 0 The current structure in Legal Services provides for the Deputy Head of Legal to manage six established posts (currently occupied by 4.8 permanent employees). These six posts are intended to be responsible for all fire safety prosecution work; for all employment work (including tribunals); for all personal injury claims; for all inquest related work and for other matters within their professional competence, as they arise.

Over the past three to four years, the workload of the team has been at a level which has meant that the services of locums and a supernumerary member of staff has been required. At the present time, that amounts to the equivalent of 3.4 full time equivalent staff. The retention of the two unfunded members of staff would enable Legal to cope with present prosecution activity.



£k £k

Funding for Senior Lawyer 72 (72) An agency lawyer with significant senior local government experience has been engaged in Legal Services (on three days a week) to provide high level advice on a range of complex and sensitive issues and to manage employment tribunal cases.

His advice work concentrates on questions of statutory powers, constitutional matters and governance (including the principles of good decision-making). Legal Services is short of expertise in these areas. In the absence of this capacity insufficient assurance could be given of the integrity of the Authority’s decision-making leading to the unnecessary risk of successful legal challenge in the case of decisions affecting the safety of Londoners.

STAFF RELATED BUDGETS

Firefighter Recruitment 0 35 This cost reflects the timing of proposed firefighter recruitment campaigns.

Asbestos medicals 270 0 Provision of two yearly medicals to ensure legal compliance. The cost is based on the procurement estimate from our current Occupational Health provider.

Childcare Expenses 25 0 This pressure reflects the higher usage now being seen by this scheme, which is focused for lower paid members of staff.

PREMISES BUDGETS

Business Rates 272 279 This pressure is based on a forecast annual increase in business rates of 3% in 2015/16 and 2016/17.

Energy Costs 86 178 The forecast increases are based on 3.15% in 2015/16 and 6.3% in 2016/17.

Merton Regional Control Centre - Rent review

112 0 A rent review is scheduled for Feb 2015 when the rent is due to increase from £2,583,161 to £2,922,609. The additional LFEPA contribution is £112,018 per annum with the remaining increase in costs covered by the Department for Communities and Local Government grant.

Public Performance Licences

38 1 Operations have recently agreed with the appropriate collecting society that a licence is required at each fire station for the use of sound recordings (for recorded music played in mess and gym areas). The annual cost for this new licence is £37,180 in 14/15 and is expected to increase by 3% each year.

Performing Rights Society Licence

40 0 Property have recently been notified that a Performing Rights Society licence is required for the playing of music at all Authority sites. The current estimated cost is £40k per year.

Motion Picture Licensing Company Licence

11 0 A licence from Motion Picture Licensing Company is required each year for LFEPA.



£k £k

Grounds Maintenance 69 0 The savings proposal (SAV33 ) from the 2014/15 budget report to stop ground maintenance at fire stations cannot be implemented. The proposal was included subject to understanding the practicality of its implementation and any associated costs. This has concluded that the cost of providing the necessary training and equipment and its associated maintenance would out way any saving that might be achieved as a result of ceasing to provide this service via a third party.

Property PFI - Business Rates

384 303 The nine new PFI stations will be larger buildings that are expected to have a higher rateable value. The estates management consultant has updated the forecast for rates demand at the new sites based on the latest data. The current provisional projection is that four stations will be completed during 2014/15 and five during 2015/16.

Property PFI - Project costs

(29) (744) Once all of the stations are operational the team is expected to reduce in 2016/17. This reflects the estimated revenue costs as set out in FEP 1662 for Business Continuity Arrangements.

Property PFI - Unitary Payment and Credit

753 2,036 The figures shown here reflect the payments required for the Property PFI properties as they are completed.

Salix Energy Efficiency Programme

200 0 The 2014/15 budget included a one off saving of £200k for the Salix Scheme, which this item reverses. The savings generated though the Salix scheme are continuing to be reinvested in further energy efficiency projects and to repay the original loan from Salix.

Temporary rent for West Norwood Fire Station

0 (50) This follows on from the Build of West Norwood Fire Station report (FEP 1933). This is the £50k annual rental cost which was payable from completion of the sale of the old station until relocation to the new station. This will therefore no longer be required from 2016/17.

TRANSPORT BUDGETS



£k £k

Vehicle and Lease Car Insurance

113 0 The Authority’s vehicle fleet, lease car and airside insurance contracts were subject to renewal, as part of a three year contract, with effect from 1 July 2014. These insurance contracts cover all of the Authority's vehicles, the majority of which are required to travel under emergency response or blue light conditions. The Authority went to the insurance market in 2013. Only one insurer bid for the fleet and lease car contracts, with a separate specialist insurer bidding to provide cover at airside locations, where appliances have to go to assist at airports. The bids received resulted an additional budget requirement of £135k. This also reflected the fact that the Authority has now taken over responsibility from central government for 41 new dimensions vehicles, along with their insurance requirements. This pressure has been partly offset by additional grant income from DCLG of £22k.

Emergency Fire Crew Capability Training Vehicles and Equipment

116 4 As set out in the Vehicles and Equipment Contract and Emergency Fire Crews Contract Update report (FEP 2289), there is an annual service charge for the maintenance of 5 Emergency Fire Crew training vehicles. This increase is in respect of those costs and expected equipment maintenance costs.

SUPPLIES AND SERVICES BUDGETS

IT equipment Replacement Holiday

330 0 Savings were made from taking a ‘holiday’ from the ongoing replacement programme in 2012/13, as set out in the Budget Update Report (FEP 1742). This funding is now being returned.

Mobile Data Terminal Refresh Project

346 0 As approved by Resources Committee (FEP 2314), the provision of new Windows tablets with 4G connectivity will result in a new revenue pressure to cover the costs of the 4 G provision.

Introduction of the New Mobilising System

295 0 The introduction of the new mobilising system places additional burdens on the infrastructure required to support the new ways of working this will bring with it. This includes components to ensure the integrity of the network and remote management of devices associated with the mobilising solution, It also includes a more resilient and flexible solution for the management of emergency calls into the control room and a resilient link for the support of the newly deployed solution.

Emergency Fire Crew Capability (EFCC) Contract

2,286 0 This growth is required for the EFCC Contract as reported to by the Authority in October (FEP 2321).

Replacement of Hose (30) 0 The 2014/15 Budget included an increase of £30k to replace hose that was reaching the end of initial design life. This adjustment removes that one off budget increase.



£k £k

CAPITAL FINANCING BUDGETS

Borrowing Costs (1,151) 3,646 This estimate is based on no additional capital receipts being applied to the capital programme from the sale of the LSP5 properties, as set out in paragraphs 21 and 22..

Total other budget pressures

4,889 9,390

INCOME BUDGETS

Insurance Company Income

(725) (725) These increases assume growth of 3.5% per annum going forward.

Rental income at Southwark Training Centre and satellite sites

869 0 Southwark Training Centre is currently occupied by the training contractor (Babcock) and this adjustment reflects the budget income that would cease after the site is vacated.

Savings on Telecommunications Income

240 0 This is for the removal of the one-off telecommunications saving identified within property.

Union Street Space Rental (790) (140) This represents the latest forecast income levels from the lease of space at Union Street.

Total income (406) (865)

Additional savings from Fifth London Safety Plan (LSP5)

(143) 0

Total Additional Savings Identified

976 0

Total changes to savings and unavoidable pressures identified in previous years budget reports

833 0 This reflects changes to savings and pressures identified in previous years budget reports, and how they impact on 2015/16. This includes £143k of additional savings from LSP5 offset by the reversal of the one-year firefighter trainee savings in 2014/15. Where these savings are based on establishment changes the savings have been revised in line with updated unit costs.

Reduction in Implementation Costs for the Fifth London Safety Plan (LSP5)

(6,135) 0 This reduction reflects that the expenditure on LSP5 implementation costs in 2014/15 will not be required in future years. The Mayor also supplied £940k to meet firefighter voluntary redundancy costs, which was paid into reserves to return the costs incurred in 2013/14. This resulted in total additional Mayoral funding of £7,075k.



£k £k

Total Unavoidable Pressures and Savings identified

4,187 14,015

Change in Expenditure funded from Reserves and Specific Grants

(5,635) (71)

Revised Net Revenue Expenditure

398,622 405,144

Savings Identified as part of 2015/16 Budget Process

(4,261) 0

Savings Gap (3,161) (14,015)

Proposed Net Revenue Expenditure

391,200 391,129

Less Use of Reserves 0 0

Less Use of Earmarked Reserve

(71) 0

Financing Requirement 391,129 391,129

Specific Grants 9,129 9,129

Financing Requirement after use of Specific Grants

382,000 382,000

Revenue Support Grant 138,838 138,838

Retained Business Rates 112,162 112,162

LFEPA Element of Precept 131,000 131,000

Appendix 3 - Savings Proposals

Ref Department Saving Title Saving Description

Saving in 2015/16

£s Staff Impact GLA Savings

Category

1 Operations Running Costs (including fuel)

Savings from a range of underspending budgets including £80k on fuel, £80k on operational equipment, £80k on equipment, furniture and materials, £45k on staff reimbursements and £20k on catering equipment.

305,000 None Efficiency

2 Operations Overtime Budget

This saving reflects the underspend reported in the Review of Financial Outturn for 2013/14 report (FEP 2282).

410,000 None Efficiency

3 Operations Establishment and Performance Team

This saving is achievable following a restructure of the team.

46,000 None - Achieved

Savings

4 LIFE Professional Services

This was a capacity building budget set up to support the LIFE programme and is no longer required

72,000 None Efficiencies

5 Fire Safety Regulation

Staffing Reduction

Fire Safety Regulation is the second largest “pool” of staff, by far, outside of fire stations. The annual budget currently is in excess of £14m and the vast majority of this is on staff. The department has a current establishment of 298 posts, 187 of whom are inspecting officers. The inspecting officer cadre includes a combination of operational (81) and non-operational (106) officers. The latest report to Governance, Performance and Audit Committee provides information about some of the main activity areas of the department. It reports that around 14,000 audits/inspections are undertaken annually. The number of desktop audits has recently increased to around 7,000 annually. And around 20,000 consultative

385,412 Reduction of 8 inspecting officer posts

Savings



Saving in 2015/16


Category

items are dealt with annually. Some of the goodwill advice (which could be as high as 25% of the overall total) may have the potential to be chargeable and officers will examine this in more detail. The saving proposal for 2015/16 is to delete 8 inspecting officer posts, with a value of £385k. A further 7 are projected as likely to be deleted in 2016/17, alongside other potential savings which have yet to be worked through in detail. The issue to be considered is the impact upon the inspection programme. Officers are currently working on new performance reports which will enable more detailed scrutiny of workloads at a local level. But trend data in recent years does not seem to indicate that reducing the number of inspection officers necessarily has an adverse affect, in a completely linear fashion, as follows:

2010/

11

2011/

12

2012/

13

2013/

14

Number of inspecting

officers

218 198 187 187

Number of audits and

inspections

16,009 15,151 13,853 14,985

One reason for the increase in inspections in 2013/14, compared with the year before, is that more rigorous performance management has been applied. In order to support this continual rise in inspections, greater collaboration is being planned between the Fire Safety

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

Number of Inspecting Officers 218 198 187 187 Number of audits and inspections 16,009 15,151 13,853 14,985



Saving in 2015/16


Category

Regulation department and fire station staff, to assist with lower level fire safety inspections. At the present time, a new inspection plan for 2015/16 is being prepared and it is at least possible that we can maintain inspection rates and, at the same time, improve risk targeting. However, not yet properly assessed is whether it might be worth investing more time in the inspection of some high risk premises. Officers are currently considering the basis on which we might argue that the provisions of the Regulatory Reform Order (RRO) should extend into individual units in sheltered housing and if the outcome of that consideration is that it could be justified, then this could impact on how we use our available resources.

6 Operational Resilience

Staff Saving 1 x FRS C post reduction in the Water Team. 38,123 None - Vacant

Savings


Staff Secondment Income

A FRS F secondment to Cabinet Office has been agreed on an 80% repayment basis, with the remaining 20% of the staff member’s time providing LFEPA duties.



Control of major accident hazards (COMAH) Income

Next year Emergency Planning will provide additional COMAH training for partners. This will generate additional income.


9 Operational Procedures

Staff Costs Deletion of one Watch Manager B post from Incident Communications policy team. The loss of this post will have some impact on the capacity of the team's capability to undertake routine support functions for

52,719 None Savings



Saving in 2015/16


Category

incident communications and to produce and maintain operational policy in this area. However, it is believed this can be mitigated by the department taking a more flexible approach to workloads across the four functional teams and by covering this workload with the staff capacity allocated to other teams within Operational Procedures.

10 Procurement New Vehicles & Equipment Contract

As reported in FEP 2289, the retender of the vehicles and equipment contract resulted in savings of £930k. The 2013/14 budget report included a saving of £700k from a range of fleet and equipment budgets subject to the outcome of the retendering process for the fleet and equipment contract. This process has now concluded with a total saving of £930k per year. This is made up of £700k saving realised in 2014/15 and £230k that will be realised in 2015/16.


11 Procurement Pass Through Costs (including modifications)

The budgets for the cost of modifications, non fair wear and tear, and losses which are ‘passed through’ the fleet and equipment contract were reduced by 20% in 2012/13. A review of their utilisation since then, and in the run up to the implementation of the new contract, has indicated that they can be reduced by a further 10% resulting in a revenue saving of £84,810 per year. This reflects experience over the last 19 months and on the basis that demand led budgets for modifications are managed via a combination of pre-planning and controlling the spend on priorities as requirements emerge throughout the year. This saving is therefore considered to be manageable whilst noting that a




Saving in 2015/16


Category

significant accident, for example, could consume a large portion of the budget thus increasing the financial pressure in other areas.

12 Information and Communication Technology

Desktop Support Contract

As reported to members at Resources Committee 20 January 2014, the utilisation of new software tools allowed the department to develop new capabilities in relation to the monitoring of the ICT infrastructure. This task had until now been undertaken as part of an existing outsource contract for which a significant premium was paid. The re-procurement of this contact allowed ICT to re-specify the requirements, remove on-site staff provided by the outsourcer and undertake additional monitoring activities in-house. The saving will have no operational impact.



Microsoft Desktop Licensing

This saving is achievable following the completion of the move to a subscription model for desktop licensing and will have no impact.



System Centre Implementation

As a direct result of the re-procurement of the of the desktop support contract (referred to above), ICT were able to transfer some core infrastructure support elements such as mail filtering software to an in house system. This saving will have no impact.



Deletion of 1 x FRS F (including shift allowance)

The role heads up the operational support engineers at Merton (London Operations Centre) but has in fact been working exclusively on the Control and Mobilising Systems (CAMS) project for the last 12 months. The intention is for this post to be seconded to the CAMS team until the new mobilising system is live. During the period that this post has been working with the CAMS

51,000 1 x FRS F - Redundancy

Efficiencies



Saving in 2015/16


Category

team, the operational support team at Merton has continued to function very effectively. This post will therefore not be required once the new mobilising system has gone live.

Part year saving in 2015/16 of 8 months, which equates to £ 51k.


Quick Address System Replacement

The implementation of the gazetteer will replace the address lookup facility currently provided by the Quick Address System in a number of systems. As a consequence we will not be required to licence these systems for the use of this product, which will deliver a saving to the Authority.


17 Technical And Service Support

Energy Consumption Reduction (Electricity/Gas)

An actual budget reduction of £75k was approved in the 14/15 budget report resulting from completed energy saving projects. Additional budget savings have been identified through further analysis of the control of appliance bay temperatures and the REFIT Phase 3 Project (FEP 2135 - to retrofit premises with energy control measures to achieve new GLA targets) and energy capital works planned over the next three years. Gas budget- These savings are based upon the appliance bay temperature being maintained at 5 degrees with a boost facility to 8 degrees if the external temperature falls to 0 degrees. Electricity budget - additional savings will be achieved through improved management of REFIT tranche 1 and 2a and b, and 3, this will ensure that contracted savings are made. This will be coupled with the completion of further installations of combined heat and power systems,




Saving in 2015/16


Category

increasing LED lighting installations and ensuring all are maintained to achieve self generation of approximately 10% to achieve the sustained savings. Energy efficiencies made through the Salix revolving scheme have also contributed to this proposed reduction. These savings are based upon estimated future energy prices which could vary. The saving also assumes that the stations closed as a result of LSP5 are sold.


Southwark Training Centre Security Costs

To remove dedicated security (which includes reception service) from Southwark Training Centre when Babcock vacate the site (currently scheduled for 31 March 2015). The site will then be secured by an enhanced caretaker service to that currently provided to Southwark fire station following station closure in the Fifth London Safety Plan (LSP5). No reception service will be provided. The estimated net saving is £70k pa. The museum does not currently use the reception service but if this proposal is agreed signage will be reviewed to ensure that it remains adequate. It also assumes that any proposals to use this site in the future (e.g. short term lets) would need to include the cost of any dedicated security/reception requirements.

70,000 None Savings


Southwark Training Centre - Business Rates

Southwark Training Centre should be unoccupied (excluding museum) from April 15 when Babcock have vacated the site. It is proposed to request exempt status for business rates and this should save an estimated £300k per year. The actual saving will be confirmed by the Valuation Office. Any future proposal to re-use this site or sub-let this site will need to include the full cost of business rates.




Saving in 2015/16


Category


Property PFI Consultants

A review of the funding requirements for Property PFI project has resulted in a forecast reduction in the funding requirement for consultancy services in 15/16. This reduction is possible mainly because the need for consultancy services has been considerably less than originally envisaged before contract award. Part of this reduction is occurring earlier than previously forecast. A £150k reduction had been reported for 16/17, which has now been amended to £100k.


21 Communications Communications department

To achieve this saving 1 x FRS F post (business support manager) would be deleted. Some of his workload would be redistributed within the team and capacity maintained to ensure that the Department can progress any future recommendation in respect of the Museum.

40,000 1 x FRS F Savings

22 Human Resources & Development

Targeted Development

This is a proposal to delete the Targeted Development Programme budget and devolve the budget to budget holders.



Staff Savings This saving reflects the outcome from the department restructuring that was implemented in April 2014.



Firefighter Recruitment

This is a proposal to delete the budget for Firefighter recruitment for one year only in 2015/16, if there is no need for a recruitment campaign. A pressure is included in the Medium Term Forecast for 2017/18.

35,000 None Savings

25 Legal & Reduction in Based on expenditure over the past three years this 19,000 None Efficiencies



Saving in 2015/16


Category

Democratic Services

Members Allowances Budget

budget has proved to be more than is necessary. Therefore the proposal is to reduce the budget to an appropriate level. This saving has minimal impact on the current members allowances expenditure. However the outcome of the Department of Communities and Local Government consultation on LFEPA membership may result in the need for this budget to be increased for the payment of an additional three basic allowances.

26 Finance Services Finance Savings A review of the Finance Department will be carried out to deliver the target savings for the department. This will look at, and challenge, the provision of the Finance function with a view to seeking improvements and efficiencies, that also deliver cashable savings.

Areas to be considered include: Departmental budget support The review will consider the staffing structure, roles and responsibilities of the departmental Finance Contacts. This should deliver more resilience, better cover arrangements, and more efficient financial management to stakeholders, whilst costing less to provide. Automation of operational overtime This will allow on-line input and approval, and save staff time in the payroll team.

56,000 1 X FRS D 1 X Vacant FRS B

Efficiencies

27 Central Finance Operational Salaries

This saving can be made as a result of the average rate of employers pensions contributions being lower than




Saving in 2015/16


Category

budgeted, due to operational staff either moving to the new pension scheme, or opting out / retiring / not joining the pension scheme. There would be minimal impact with this saving.

28 Central Finance Pension Sanction Charge

The budget reduction of £100k is due to ongoing underspends on the sanction charge budget. The current commutation factors allows firefighter retirees to generate lump sums in excess of Her Majesty’s Revenue and Customs (HMRC) limits, giving rise to unauthorised payments. The Authority is required to pay a 15% sanction charge on the unauthorised payments. Due to low take up, this budget can be reduced by £100k. There would be minimal impact with this saving.


29 Central Finance Debt Charges Debt charges are the interest and principal loan repayments that the Authority makes on money it borrows to fund its capital programme. The planned 2015/16 budget for debt charges are based on a capital programme of £63.3m for 2014/15 and £45.7m for 2015/16. Major projects include the Operational Fleet Vehicle Replacement programme and the Control and Mobilising System project. Any capital receipts from the disposal of the stations closed under the fifth London Safety Plan and 8 Albert Embankment, would potentially reduce the need for borrowing, which could lead to revenue savings.


30 Central Finance Metropolitan Fire Brigade (MFB) Additional Income

There is currently a 3.5% (£725k) year-on-year inflationary increase factored into the medium term forecast for increases in MFB income. The current 2014/15 budget is £21,375k. It is felt that in addition to this increase, it is feasible to increase the estimated




Saving in 2015/16


Category

income by an additional £100k to contribute to the savings targets. There are planned audit inspections of a number of insurance companies which, from previous experience, can result in additional income. It should be noted that audit visits may identify overpayments that will need to be refunded, as well as any underpayments.

31 Operational Directorates Support Group

Review of Function

A review is ongoing and is currently expected to achieve these savings in addition to the £109k saving included in the 2014/15 budget round.

24,000 TBC Efficiencies

32 Authority Wide Analysis of Underspends

Savings identified as part of an analysis of underspends in previous financial years.


33 Authority Wide Sundries savings This proposal is a manageable reduction in a range of non staff budgets across the authority.

139,970 None Multiple categories

Total Saving Items 4,260,911

Appendix 4 - Capital Forward Programme and Prudential Limits

CAPITAL PROGRAMME

Prior

Years

Spend

2014/15

Budget

July 2014

Resource

Comm

Projected

Outturn

Qtr 2

2014

Variance 2015/16

Capital

Budget

2016/17

Capital

Budget

Approved

Budget

TOTAL

PROJECTED

COST

£’000s £’000s £’000s £’000s £’000s £’000s £’000s

ICT PROJECTS

Upgrade Operating System 1,975 132 132 0 0 0 2,350 2,107

Firelink project 5,940 19 19 0 0 0 6,175 5,959

Telephone System (2+8) replacement at Fire

Stations 522 40 40

0 0

0 562 561

ICTS – Data Warehouse 0 600 600 0 0 0 tba 600

Redevelopment of the Intranet 97 153 153 0 0 0 250 250

Control & Mobilisation System Replacement

(CAMS) 2,942 4,688 5,126 438

2,305 0

10,650 10,373

ICT – Building Control IT 0 80 0 (80) 0 0 80 80

Mobile Data Terminals Replacement 0 250 0 (250) 2,250 0 2,100 2,250

Personal Radio Replacement 0 200 200 0 1,100 0 tba 1,300

Home Fire Safety Database 0 0 0 0 50 80 tba 130

Wide Area Network Procurement (FEP2313) 0 0 0 0 3,000 0 3,000 3,000

Public Services Network ICT Infrastructure 0 0 0 0 0 707 0 707

ICT PROJECTS 6,162 6,270 108 8,705 787

ESTATE PROJECTS

Rebuild or Refurbishment at West Norwood Fire

Station 7,157 2,206 2,283 77

76 0

9,527 9,516

Refurbishment of East Ham Fire Station 0 400 0 (400) 2,000 0 tba 2,000

Alteration works to Union St HQ 0 0 400 400 0 0 300 400


CAPITAL PROGRAMME

Prior

Years

Spend

2014/15

Budget

July 2014

Resource

Comm

Projected

Outturn

Qtr 2

2014

Variance 2015/16

Capital

Budget

2016/17

Capital

Budget

Approved

Budget

TOTAL

PROJECTED

COST

£’000s £’000s £’000s £’000s £’000s £’000s £’000s

Refurbishment of Plumstead Fire Station 105 1,432 548 (884) 2,379 114 tba 3,210

Refurbishment of Acton Fire Station 0 150 150 0 900 850 tba 1,900

Business Continuity for PFI Projects (Phase 2) 47 30 30 0 0 0 230 77

Business Continuity for PFI Projects – Purchase of

Mobilising Equipment (Phase 3) 35 40 40

0

50

0 212 125

Business Continuity for PFI Projects – Installation of

ICT hardware at Orpington temporary station and

new stations (Phase 4)

0 188 188

0

235

0

507 423

Heating at various stations n/a 900 900 0 600 600 n/a n/a

Window replacement at various stations n/a 200 85 (115) 550 300 n/a n/a

Rewiring replacement at various stations n/a 103 103 0 250 250 n/a n/a

London Resilience Yards and Forecourts Project n/a 31 31 0 0 0 n/a n/a

Walthamstow Fire Station 92 92 0 0 0 n/a n/a

Sustainability Projects

Energy Conservation/ Invest to Save Projects n/a 883 532 (351) 893 800 n/a n/a

Building Energy Efficiency Programme 2 (BEEP2) n/a 875 875 0 0 0 n/a n/a

Minor Improvement Programme n/a 769 769 0 750 500 n/a n/a

Corporate Property Project n/a 50 50 0 50 50 n/a n/a

Appliance Bay Floors Resurfacing Programme

Phase3

n/a 200 91 (109)

0 300

n/a n/a

Appliance Bay Doors (Phase 3) n/a 200 200 0 200 200 n/a n/a

Brigade wide Survey for Asbestos & Removal n/a 50 50 0 50 50 n/a n/a


CAPITAL PROGRAMME

Prior

Years

Spend

2014/15

Budget

July 2014

Resource

Comm

Projected

Outturn

Qtr 2

2014

Variance 2015/16

Capital

Budget

2016/17

Capital

Budget

Approved

Budget

TOTAL

PROJECTED

COST

£’000s £’000s £’000s £’000s £’000s £’000s £’000s

Fire Safety Works at Fire Stations n/a 1,111 861 (250) 750 400 n/a n/a

Refurbishment of Rear yards & Forecourts at Fire

Stations

n/a 42 42 0

0 300

n/a n/a

Electric Vehicle Charging Points (FEP2288) 0 0 790 790 0 0 790 790

Development costs n/a 250 250 0 250 250 n/a n/a

ESTATE PROJECTS 10,202 9,360 (842) 9,983 4,964

OTHER

Replacement of Fleet (FEP2103) n/a 19,656 17,672 0 8,079 10,455 n/a n/a

Gas Tight Suits Replacement 0 0 0 0 700 0 tba 700

OTHER TOTAL 19,656 17,672 0 8,779 10,455

CAPITAL EXPENDITURE EXCL CONTINGENCY 36,020 33,302 (2,718) 27,467 16,206

Contingency n/a 1,360 0 (1,360) 1,000 1,000 n/a n/a

CONTINGENCY 1,360 0 (1,360) 1,000 1,000

CAPITAL EXPENDITURE TOTAL 37,380 33,302 (4,078) 28,467 17,206

Long-term Liabilities 0 24,542 24,542 0 28,187 0 52,729 52,729

TOTAL CAPITAL PROGRAMME 0 61,922 57,844 (4,078) 56,654 17,206


Prudential Limits

CAPITAL PROGRAMME

2014/15

Approved

Limits

£

2014/15

Revised

Limits

£

2015/16

£

2016/17

£

Operational Limit for External Debt 190m 190m 215m 220m

Authorised Limit for External Debt 195m 195m 220m 225m

External Borrowings 102m 110m 133m 135m

Other Long term Liabilities 18m 43m 70m 68m

TOTAL External Debt 120m 153m 203m 203m

Appendix 5 – Statement on the Adequacy of Reserves

Robustness of Estimates

1. As in every year the budget is a series of estimates and these carry with them a certain amount of risk that actual spending will not be the same as the estimate. There are risks around significant major projects, pay awards, inflation rates etc. as set out in the main report. The estimates in today’s report will need to be kept under review in the light of decisions agreed after this date, updated information and further changes arising from 2014/15 budget monitoring.

Reserves and general balances

1. Subject to the London Assembly’s powers, the Mayor sets one overall figure for the general funding he intends to provide to each of the functional bodies. LFEPA can vary its final spending and funding plans as long as they balance to the final overall funding that the Mayor sets..

2. To meet the requirement of the Local Government Act 2003 in respect of adequacy of reserves and demonstrate compliance with the guidance on local authority reserves and balances issued by CIPFA in June 2003, the GLA and the functional bodies must provide:

A statement of reserve policy

Details of all reserves and general balances

An analysis and explanation of the expected movements between the start and end of each year from 1 April 2014 to 31 March 2017

In the case of earmarked reserves held for purposes beyond 31 March 2017, an indication should be given as to when they are likely to be applied.

Proposed allowances for contingencies separately identified and justified.

Statement of Reserve Policy

3. CIPFA guidance to local authorities addresses the need for prudence in assessing the adequacy of reserves and recommends the chief finance officers take into account the strategic, operational and financial risks facing the Authority when setting the budget. The assessments should be made on the basis that core services will continue to operate in the event of unforeseen scenarios occurring and that there are adequate levels of reserves to meet these requirements. The guidance is non prescriptive in its approach as it expects each Authority to form its own view on the adequacy of reserves.

4. In terms of an allowance against contingencies, the previously assessed minimum of 2.5% of the net revenue expenditure requirement is a challenging but not untypical position for an upper tier local authority, and it is considered that this is still a reasonable basis for forward planning.

5. Whilst it is the case that a well managed authority with a prudent approach to budgeting should be able to operate with a relatively low level of reserves it is important to understand the quantum and likelihood of financial risks or threats in a given year. It is arguable that an FRA faces less financial volatility than a multi purpose local authority. However, it does face financial risks in a single year, for example, financial compensation claims for firefighters’ death in service or the impact of industrial action. It should be noted that if a risk materialises that requires significant


cover from reserves the Authority would need to prudently seek to rebuild reserves back to an adequate level in future years through savings as appropriate.

6. It is also important to bear in mind that reserves are not the only method of managing financial risks. Insurance cover is in place for a wide range of eventualities. There is an excess in place on the insurance cover. The Authority has greatest exposure in relation to claims for corporate manslaughter where the Authority in responsible for the first £500k of any settlement and claims in aggregate up to £6.5m. The amount of this excess is determined in discussion with the Head of Legal and Democratic Services..

7. This insurance is supported by provisions that are raised in the accounts each year for potential uninsured events where we have knowledge of a claim. They are specific amounts set aside where we know we have a present obligation as a result of a past event and a reliable estimate can be made of the amount of the obligation. The provisions that it is expected LFEPA will have in place as at 31 March 2015 are set out in Table 8 below:

Table 8: Summary of Provisions Expected at 31 March 2015

£000

Legal 3,002

Motor Insurance 1,450

PFI Vehicles 170

Property 1,687

MMI 146

Backdated Employment 59

Total 6,367

8. The Authority also has potential access, through the GLA, to the Bellwin scheme in particular circumstances for emergency financial assistance. The scheme is named after the late Lord Bellwin, a minister in the former Department of the Environment who introduced the scheme in 1983. It was given a statutory basis in Section 155 of the Local Government and Housing Act 1989. The scheme may be activated in any case where an emergency or disaster involving destruction of or danger to life or property occurs and, as a result, one or more local authorities incur expenditure on, or in connection with, the taking of immediate action to safeguard life or property, or to prevent suffering or severe inconvenience, in their area or among its inhabitants. However it should be noted that there is no automatic entitlement to financial assistance: Ministers are empowered by Section 155 of the Local Government and Housing Act 1989 to decide whether or not to activate a scheme after considering the circumstances of each individual case.

9. The Bellwin scheme requires an expenditure threshold to be exceeded in order to trigger claims, and the threshold is set each year for the GLA Group as a whole. In addition, only a proportion of costs can be recovered.

10. There are however other schemes that the Government may provide in exceptional circumstances. For example as reported to members in FEP 1797, The Department for Communities and Local Government (DCLG) wrote on 19 August 2011 to Leaders of local authorities, and fire and rescue authorities, which were affected by the civil disturbances advising of a recovery package for communities, including new funding for local authorities and fire and rescue authorities which incurred additional costs because of the disturbances. The funding that


was made available was at or below the Bellwin scheme threshold with funds nationally available of £10 million, and LFEPA was able to recover £194k through this scheme.

11. The corporate and departmental financial risk assessment that was introduced in 2011/12 has been refreshed for this report, using the approach that was originally reported to Finance, Procurement and Property Committee in July 2009 (FEP 1383).

12. The robustness of the current assessment of adequacy of reserves is tested against the Authority’s established and audited risk management arrangements by carrying out an evaluation of the potential financial impact of each of the relevant corporate and departmental risks materialising and assessing this against the likelihood of this given the control measures that are in place. The current assessment of risk impact and likelihood once current controls have been applied highlights the areas where the financial consequences might be considered to be significant (if the risk materialised), and where these cannot be covered from existing provisions or insurance arrangements.

13. A summary of the current corporate and departmental risks that are assessed as having a potential financial impact along with the estimate of that impact and examples of the types of events the risk covers is set out in Table 9 below. This shows both the estimated short term and long term financial impact. It also shows the estimated highest single drawing that might need to be made from reserves in both the short and long term. It should be noted that these can only be estimates based upon an informed judgement in the absence of any other detailed information.


Table 9 – Corporate and Departmental Risks

Corporate Total Highest Single Drawing

Risk Level Type of risk Short Term Long Term Short Term Long Term

High Breakdown in industrial relations £5.0m - £5.0m -

Medium

Breakdown in safe system of work, significant contractual failure, strategic decisions impacting ability to budget effectively, risk averse culture, ESN national programme failure

£0.9m £25.0m £0.8m £15.0m

Low Failure to deliver service, ability to affect change

£1.0m £12.6m £1.0m £7.6m

Departmental Total Highest Single Drawing

Risk Level Type of risk Short Term Long Term Short Term Long Term

High Emergency funding to save an initiative £0.1m £1.1m £0.1m £1.0m

Medium

Data breach, key staff/skills loss, regulations breach, mobilising system breakdown, poor specifications, supply chain breakdown, H&S breach, effective training programme, variations in uncontrolled costs, capital projects, debt recovery.

£2.5m £6.8m £0.5m £5.0m

Low

Fraud, project overspend, bank failure/collapse, extra resources, claims, shared service failure, maintenance fixes

£3.7m £22.6m £2.0m £15.0m

14. The main cause of the increase in short term corporate risk is for the costs of Industrial Action taking place at present. This has resulted in an increase to value put against this risk to £5m, raised from £1m as reported last year.

15. The focus of this review of the adequacy of reserves is on the short term only as reserves can only be used once and are not a permanent source of funding. The table shows that the total short term exposure, if all risks were to materialise in a single year, is £13.6m. However this needs to be considered against the probability of more than one significant risk materialising in any one year. The CIPFA guidance emphasises that a well managed authority will ensure that reserves are not only adequate but also necessary. It would not be appropriate to set funds aside to cover risks that are deemed extremely unlikely to occur. CIPFA also advises that a balance needs to be found


between maintaining adequate levels of reserves and investing in risk reduction measures – for example it may be possible to reduce the level of balances held where appropriate action to mitigate or remove risks has been successfully taken. The table shows that £4.7m of the total short term exposure is assessed as low. This brings the total exposure for medium and high risks below the Authority’s currently assessed minimum level of reserves of £9.6m, whilst noting that the highest estimated single drawing in the short term is for £5m.

Conclusion

16. There are a range of factors that need to be taken into account in determining an appropriate level of reserves and as the CIPFA guidance states a considerable degree of professional judgement is required. For LFEPA the combination of a maximum insurance liability of £6.5m in any one year, the current availability of £6.4m in provisions to cover known or expected events, the availability of £4.9m in earmarked reserves, and a generally prudent approach to cost estimation and budgeting indicates that a general reserve level of 2.5% (£9.6m based upon the current forecast budget and costing for 2015/16) can currently be deemed to be adequate given the corporate governance and control arrangements in place across the organisation.

Details of Reserves

17. Table 10 below shows the forecast use of reserves in 2014/15. These are discussed in turn below.

Table 10 – Movement on Reserves

£000s Opening

Balance at 01/04/14

Payments into

Reserve

Underspend/ (Overspend) in 2014/15

Use of Reserves

in 2014/15

Transfer between Reserves

Anticipated Balance at 31/03/15

Compensation 150 (150) 1,000 1,000

Firefighters' Pension 652 652

Hazardous Material Protection

435 0 435

Hydrants 337 (300) 37

London Resilience 1,496 1,496

National Operational Guidance Programme

3,376 (1,557) (813) 1,007

Pension Early Release Costs

0 400 400

Property PFI 245 (30) 215

Review of Property Services

260 (51) 209

Review of Workwear 128 128

Salix 195 (195) 0

Sustainability 235 235

Vehicle & Equipment Contract

1,723 (1,290) 433

General 10,238 3,940 (1,666)

(587) 11,925

Total 19,470 3,940 (1,666) (3,572) 0 18,172


18. The largest portion is the general reserve which provides working balances to help cushion the impact of uneven cash flows and a contingency to cushion the impact of unexpected events or emergencies. There are also a number of earmarked reserves. These contain funds that the Authority has agreed should be set aside for specific purposes. The table also shows how these reserves are moving over time.

19. The compensation reserve (FEP 1698) was set up during the 2011/12 budget process. The aim of this reserve is to move financial risk out of the annual revenue budget. Previously the budget had contained a budgeted sum for compensation – which is unpredictable, and which will therefore often significantly under or over spend. The remaining compensation budget has been assessed at a level to deal with 80% of cases, with the reserve used to fund compensation expenditure in excess of this. Its level has been kept under review for adequacy.

20. The fire fighter pensions reserve was created as cover in the event of additional ill health retirements for which there is no budgetary provision. It was previously used to dampen the effect of volatility under the previous pension arrangements, and it is planned to use it in this way in 2015/16.

21. The National Operational Guidance Programme (NOG) (FEP 1830) reserve was set up during the 2012/13 budget process to support the running of the programme. This was budgeted at £6m over the 3 years to 2014/15. It is anticipated that from 2015/16 the NOG Programme will be fully funded through contributions from Fire and Rescue Authorities and from DCLG. Once the new funding streams are implemented any reserves remaining will be transferred to the General Reserve at the start of the 2015/16 financial year.

22. The hydrants reserve (FEP1698) was set up during the 2011/12 budget process. This is to manage payments for water companies catching up with a backlog of repairs that has built up over a number of years. It is difficult to predict the water companies’ ability to catch up, and progress can be hampered by other events affecting water companies such as bad weather, which diverts resources. Once the backlog of repairs has been dealt with, this reserve should be able to be wound down.

23. The Review of Property Services (FEP 1901) reserve was set up in 2012/13 for the purposes of reviewing the organisations Property and Estates Management and Support Services, this is expected to be used by March 2017.

24. The Review of Workwear (FEP 2032) reserve was set up in 2013/14 for the purposes of funding the new workwear worn by Operational Staff. Expectation is for this reserve to be used, however any unused funds will be returned to the General Reserve at the start of the 2015/16 financial year.

25. The Vehicle PFI reserve was set up to hold grant that was paid from DCLG for the vehicle PFI scheme. The Vehicle PFI arrangements are no longer in place, with the Authority now owning its operational fleet. Any remaining funds are intended to be used for the vehicle programme under the new contractual arrangements and the Fired Up project.

26. The hazardous material protection reserve (FEP 0185) was set up during the 2012/13 budget process. This was funded from the underspend on the existing gas tight suits budget to take advantage of new technology in future years. At present the options for this are being reviewed with completion expected by March 2017.


27. The sustainability reserve was set up to deliver the Authority’s programme of investment in enhanced energy efficiency and renewable technologies. The Salix reserve (FEP 1165) relates to ring fenced funding received in support of projects that will pay back in energy efficiency.

28. The London Resilience reserve was established to manage the costs of implementation of new London Resilience workstreams between financial years. These workstreams are now well established. It is however recommended that this reserve be retained in the event of the Authority needing to access further funding in response to or to ensure preparedness for a catastrophic event.

Appendix 6 - Risks and Opportunities to the Financial Position

a) The potential impact on employers pensions contribution that may increase depending on the outcome pensions valuation for the firefighters’ pension schemes.

b) The recommendations arising from the Hazardous Materials Protection Project.

c) Telecommunications income in respect of radio masts may be reduced in the future due to a reduction in the number of operators in the industry and a potential change to legislation on access to land by operators.

d) The review of space utilisation at Union Street has been carried out and has identified potential sub-letting opportunities with estimated income of £270k for 2014/15, £1.06m in 2015/16 and a full rental income of £1.2m in 2016/17 onwards. However this is subject to agreement by both the tenants and the landlord and the timing of any actual occupation. This was discussed further in the report setting out the end of year financial position for 2013/14 (FEP 2282).

e) DCLG will replace the existing Airwave contracts, which expire between 2016 and 2020 as part of the Emergency Services Mobile Communications Programme. There could be significant financial pressures to LFEPA under any new contract provision. The current contract is subsidised and DCLG have notified LFEPA that its share of this will be £827k in 2013/14. DCLG may be unwilling to continue to subsidise any future system. In addition a project team may be required to deliver any new system into the Authority.

f) As a result of the implementation of LSP5, staff numbers are above establishment in the 2014/15 financial year. The estimated financial impact of this is £6.1m and is being met by additional funding from the GLA. However if leaver rates are higher or lower than forecast over the next 12 months this could cause an underspend or overspend, which will be reported in the quarterly financial position reports to Resources Committee.

g) The Property PFI project – Financial Close and Contract Award Report (FEP 2042) noted that the Authority retains the risk of unforeseen ground conditions, contamination and archaeological finds beneath the existing buildings. The Authority also retains the risk for asbestos within the existing buildings not identified in the contract surveys. This risk of expenditure applies throughout the construction phase. During the first phase of the construction programme asbestos has been discovered at three of the stations during demolition and claims for compensation have been submitted by Blue3 as a result. These claims are currently being discussed with Blue3 and the project team is considering options to mitigate this risk for the phase 2 stations.

h) The FBU has been taking industrial action as part of the dispute with Government over pensions. The forecast cost of maintaining preparedness in 2014/15 is £1.5m, with strike action taken to date costing £5.9m. This has been offset by £2.3m in deductions to pay for a forecast net cost of £5.1m in 2014/15. There is no budget for this expenditure, and is it leading to a forecast overspend position for the Authority in 2014/15.

i) The 2015/16 budget currently assumes that the disposal of the 9 sites identified as part of the LSP5 will be completed by the start of the financial year. If the properties are not disposed of additional security costs will be incurred at those sites.

j) A report on the Wide Area Network and Internet Service Provider (FEP 2313) was put before Resources Committee on 18 September 2014. That report states that while the proposals will

Appendix 6 - Risks and Opportunities to the Financial Position

result in an increase to revenue costs, these may be offset by a reduction in network costs. Any net pressure will be included in the 2015/16 budget process, if identified.

k) The Authority is currently considering options to achieve best value from the disposal of the 9 sites identified as part of LSP5. Any capital receipts generated and applied would result in revenue savings in future years, for example through a reduction in the cost of servicing debt or invest to save projects, as considered in a report to Resources Committee in January 2014 (Options for Capital Receipts FEP 2195). A further report which provides an update on the disposal of these stations and the resulting recommendations is also on todays agenda (FEP 2341/X).

l) A rent review for 169 Union Street is due in December 2015, and the resulting increase in cost may be significant. This potential increase reflects the fact that the Authority is currently paying considerably below market rent for 169 Union Street. This rent review may bring the Authority rent into line with the market rate. The actual pressure will be dependant both on prevailing market conditions in December 2015 and negotiations with the landlord. In the meantime options are being considered for alternative accommodation for the Headquarters functions.

m) LFEPA currently receives an annual new dimension grant of £4.5m from DCLG to support the cost of the brigades resilience activities. This grant includes £3.8m in support of USAR crewing and other related costs. DCLG are currently consulting Fire and Rescue Authorities on a reduction to this grant, which could equate to a reduction of £0.4m for LFEPA.

n) LFEPA has made a budget provision for a 1% pay award for all staff in 2014/15. Discussions regarding the London Weighting Allowance award for 2014/15 are still ongoing with Unions, who have requested a 3.1% increase. Any increase above 1% will create a budget pressure in future financial years. In addition the national joint council has announced that it is consulting on a 2.2% increase for Local Government with effect from 1 January 2015. This could result in a knock on higher requirement for LFEPA’s staff.

Appendix 7 – Equality Analysis

Budget Savings 2015/16 Equality Analysis (Draft)

Prepared by the Corporate Management Team

October 2014


Equality Analysis

Table of Contents 1. Name of Report and Reference Number 2. Purpose of Report 3. Anticipated impact on people who share protected characteristics 4. Evidence or information in support 5. Consultation 6. Actions proposed that could mitigate any impact

1. Name of Report and Reference Number (if available) Budget Savings 2015/16

2. Purpose of Report

The statutory provision relating to setting the LFEPA budget are contained in the Greater London Authority Act 1999. Schedule 6 of the Act sets out the process for the development and approval of the GLA consolidated budget and the various component budgets of the functional bodies including LFEPA.

The Equality and Human Rights Commission has provided guidance stating that organisations subject to the Equality Duty must ensure that the impact financial proposals could have on the performance of the general equality duty is properly considered as part of the decision making process.

This analysis considers the savings proposals put forward in the first place to Corporate Management Board, followed by the informal budget review meeting before consideration by the Authority. Proposed savings will be implemented from April 2015 in order to meet the spending target for the 2015/16 financial year.

The strategic management of the Authority’s budget is the responsibility of the Corporate Management Board. The equality analysis has been prepared by the Corporate Management Team.


3. What is the anticipated impact (negative, positive or neutral) on people who share protected characteristics? Staff Savings Staff savings proposed for the 15/16 year are 5 operational staff, who will be assimilated into other operational roles, and 9 FRS posts. 6 of the 9 FRS posts are currently vacant, and so savings will have no direct impact on specific staff in these cases. Of the 3 other FRS posts, 2 are individual posts where the incumbents have opted for severance (both White Male); in the one remaining post put up for savings there are 2 staff members (both of whom have protected characteristics) who will need to go through a competitive process. The FRS posts identified for savings are: 2 x FRS F 1 x FRS D 4 x FRS C/D 1 x FRS C 1 x FRS B The restructure of Establishment and Performance Team (Item 7) was undertaken to enable better ways of working rather than as a vehicle to save money, and any savings have already been achieved. The staffing reduction in Fire Safety Regulation (FSR) (Item 9) will be offset by greater collaboration by FSR staff with fire station staff to assist with lower level fire safety inspections. It is anticipated that inspection rates can be maintained, and risk targeting can be improved. There should therefore be no negative differential impact on any service users with protected characteristics. The review of function (Item 59) of the Operational Directorates Support Group is ongoing and, as with Item 7, is being undertaken to consider better ways of working rather than find savings. Savings will be realised, however analysis of the staff affected can be undertaken only on the outcome of the report. Further analysis will be undertaken should there be any changes to the proposals. Individual savings There are also some savings other than the reduction in staff numbers that could potentially have a negative differential impact on staff or service users who share protected characteristics, which are commented on individually below. The comments highlight only those individual savings proposals where it is considered that there is a potential negative or disproportionate impact on staff or service users who share a protected characteristic as defined by the Equality Act 2010.


Southwark Training Centre Security Costs (Item 24). This saving would be realised when Babcock vacate the STC site and the security requirements are changed. There may be possible redundancies, however the staff are employed by contractors, and will be considered under their employer’s redundancy and redeployment procedures. Targeted Development Programme (Item 43). This saving is realised by subsuming the separately held budget which pays for the staff on the Targeted Development Programme into the general staffing budget, and realising savings on the underspend . This should have no impact on staff currently part of the Programme. Firefighter Campaign (Item 46). This saving will only be realised if there is no firefighter recruitment campaign in the 15/16 year. Recruitment for firefighters is always targeted at communities who share protected characteristics; the budget would be available to continue this work.

4. What is the evidence or other information in support of this? The Authority holds data on staff with regard to sex, race, disability, age, sexual orientation and religion. Specific data is not collected on the remaining protected characteristics of gender reassignment, marital/civil partnership status and maternity. The data held is supplied both at recruitment and on employment, and staff are periodically reminded to review and update the information held on them according to the requirements of the Data Protection Act.

Service delivery data is collected by departments.

5. Who did you consult, and what was their response? Consultation on the Budget proposals is still ongoing, and outcomes will be included in the final report.

6. What actions are proposed that could mitigate any negative impact? The voluntary redundancy package on enhanced terms made initially to FRS staff in October 2012 has now been agreed on a permanent basis.

Line managers will be instructed to have individual meetings with staff who are accepting redundancy or redeployment to encourage them to discuss whether there are any specific


impacts on them, including as a result of a protected characteristic. The line managers will then discuss with HR and any other relevant department whether there are any actions that might be taken to mitigate individual impact.

Further actions will be advised as required, in the final report.

Appendix 8 – Operational Budget Potential Savings

Item 1: Operational Support Units (OSUs) – reduction/alternate crewing

1. The Brigade has six OSUs which are permanently crewed by one operator (Firefighter (FF) or FRS B). A seventh OSU is held in reserve. The FRS B post holders are former non-operational FFs who were converted into main grade staff when the non-operational FF role was phased out. The six fire stations at which the OSUs are located are listed below, together with the current establishment levels:

Station FRS B Operator FF Operator

Ealing 1 7

Finchley 0 8

Lee Green 4 4

Stratford 2 6

Sutton 0 8

Wandsworth 3 5

Total: 10 38

Total Establishment: 48

2. The OSUs provide a range of resources to operational incidents. The resources they supply depend on the nature of the incident. They are mobilised as part of specific Pre-Determined Attendances (PDA) or can be requested by an incident commander to support firefighting and/or rescue procedures. They also fulfil a logistical function because they are used for the movement and distribution of operational equipment.

3. Equipment and resources supplied by the OSU are divided into pre-packed units termed Resource Packs (RPs). There are currently 23 different RPs that can be supplied in response to a variety of incident types and these range from supplementary firefighting equipment through to additional Protective Equipment Group (PEG) equipment. Each OSU has its own default load of RPs although these can be removed and additional units added depending on the nature of the incident to which it is responding.

4. In terms of operational utilisation, IMS data shows that the number of incidents attended by OSUs is relatively low. The average number of incidents they attend per year is 436 (based on a three year sample - July 2010 to June 2013); this is an average of 73 incidents annually for each OSU. Of the six OSUs, Wandsworth is the busiest, attending on average 113 incidents annually. The OSU at Sutton is the lowest utilised; it attends 34 incidents on average annually. There has been a slight reduction in the demand for OSUs over the same three year period.

5. Each OSU costs in the order of £341k pa (based on staff revenue costs).

6. There is no pressing case to retain the current number of these units and the evidence of current usage points to very significant spare capacity. Consequently, it would be possible to remove one of the units from 1 April 2015. The date from which the saving would actually begin to accrue depends upon leaver rates, but at this stage it is believed that it could be almost immediately. The unit would come from Sutton, in the light of its very low usage. Currently available analysis suggests that there could be potential to remove more in the future, but this would require more work, to take into account the effect of the removal of the Sutton OSU and following a review of the read across to the day van service. The potential for further removals


would also be affected by changes to crewing arrangements, as discussed in the following paragraphs.

7. In combination with the reduction suggested above, or as an alternative, it would be possible to introduce alternate crewing1 of the (remaining) OSUs. Alternate crewing is an arrangement whereby the pumping appliance would be the ‘primary’ asset that is immediately available for mobilising. It would have the normal crewing arrangements. If alternately crewed, when the OSU appliance is required for mobilising , the crew from the pumping appliance would switch to the OSU appliance and crew that appliance, because the OSU appliance would not have its own crew, as now. Because the crewing level for the OSU is less than that of a pumping appliance, this would potentially result in three or four staff remaining at the station while the OSU is at the incident. It may be possible to use these personnel to crew other appliances.

8. Alternate crewing has been successfully implemented for a number of special appliances, including incident response units (IRUs), bulk foam units (BFUs), hose layer lorries (HLLs) and scientific support units (SSUs).

9. The significant savings (i.e. staff revenue costs) associated with either removal or alternate

crewing is the same. Alternate crewing of the fleet of 6, as an alternative to any removals, would realise savings of £2,047,008. This saving is based on establishment post reductions of 48 (as described in the table in paragraph 1 of this appendix).

Item 2: Command units (CUs) – reduction/shared crewing

10. There are eight CUs located at stations across London at Edmonton, Islington, Barking, Lewisham, Woodside, Richmond, Wembley and Fulham. CUs attend incidents that are declared 3 or 4 pump incidents and above (not 3 pump grass fires or special services) in addition to other PDAs including:

Multiple calls to fires in premises

Persons reported fires

Fires involving fire survival guidance

Confirmed Hazardous Materials incidents

Cylinder incidents

Forward mobilising procedure

Major incidents

Mass decontamination

A second CU is mobilised to all 6 pump fires.

1 Alternate crewing: is where two appliances share the crew needed to mobilise the vehicles, but there is usually only

crew sufficient for one of the vehicles to be mobilised at a time. This means that once one vehicle has been mobilised, the other vehicle becomes unavailable for use. Example: the fourth London Safety Plan introduced alternate crewing of Hose Layers (HL) against Pump Ladders (PL) at Incident Support Centres. When the PL is mobilised, the HL is unavailable for immediate mobilising, as the crew will be on the PL. Conversely, if the HL is mobilised first, then the PL will come “off the run” instead. Only one person is needed to crew the HL, so if there are enough crew on duty at the time the HL is mobilised, the PL can remain available for mobilising.


11. CUs are staffed by Watch Manager As, with crewing levels of either 2 or 3 depending on the availability of staff. The total establishment for CUs is 96 WMAs (3 per watch). Other than attending incidents, their day to day duties include attendance at incident training exercises and delivery of the familiarisation of incident command through the delivery of Vector simulations to fire station staff.

12. Although the crews are based at fire stations and managed by the local station manager, they

operate separately to the watches that they work alongside. They do not fall within the line management structure on the station and staff that are co-located alongside CUs cannot be used to crew CUs in the event of a shortfall in available CU crew. Other CU personnel from around the Brigade are required to standby in these situations.

13. As can be seen in the table below, there is a significant variation in the demand for these

appliances across the Brigade and whilst there is also variation in the time spent at scene, CUs on average spend longer on scene than most other specials. However, demand overall is falling slightly year on year. There is a trend of more incidents during the day than at night with peak demand between 14:00hrs and 16:00hrs and demand falls by nearly half between 00:00hrs and 09:00hrs.

Station Average time in hrs: mins: secs Average

annual incidents Turnout Attendance At scene

Edmonton 00:03:08 00:17:56 01:00:50 140

Islington 00:03:21 00:16:11 01:03:43 245

Barking 00:02:48 00:14:21 01:15:05 206

Lewisham 00:03:55 00:17:59 01:08:08 192

Woodside 00:03:08 00:17:36 01:06:14 125

Richmond 00:03:12 00:16:57 01:03:41 100

Wembley 00:03:33 00:16:57 01:03:41 152

Fulham 00:02:53 00:17:23 01:08:01 191

Overall 00:03:15 00:16:53 01:06:53 1,351

Minimum 00:02:48 00:14:21 01:00:50 100

Maximum 00:03:55 00:18:21 01:15:05 245

Three year sample July 2010 to June 2013


14. Like the OSUs, there are available options, involving combinations of reductions and/or shared crewing. However, the lead in time for shared crewing for CUs is very different, for the reasons discussed in more detail below.

15. ORH Ltd were asked to undertake analysis and modelling in relation to the potential options for change based on the current eight CUs. The analysis provides an assessment of the current service profile based on three years of data and the model results were based on optimal locations of CUs. The modelling also ranked the optimally located stations in terms of the best candidates for shared crewing. The approach taken to rank the locations sought to minimise the impact on pumping appliance performance as a result of being share crewed against a CU and used the following rules (this approach was used in the LSP5 modelling process):

No borough which is currently outside of the London attendance standards should deteriorate further; and

No borough which is inside target should move outside of target 16. Although there are no formal attendance times for CUs, two approaches for optimisation have

been considered, which include:

Minimising average response times; and

Maximising the number of incidents reached within 20mins 17. In addition to this, a number of criteria were considered in addition to the modelling process,

these were:

Other skill sets at existing CU stations;

Physical station constraints; and

The distance of existing CU locations in relation to any proposed relocation. 18. The modelling identified that when finding eight optimum locations to minimise average

response times, the distribution of appliances is fairly similar to current deployment.

19. The results also show it would be possible to remove one CU and still improve coverage, if CU locations were optimised (but we would wish to make an assessment of whether the size of the improvement would justify the activities involved in relocating).

20. Further modelling work was undertaken to ascertain an ordered removal of CUs based on the attendance time impact and separately on the number of incidents attended within a notional 20 minutes. This work produced Richmond and Fulham respectively, as the locations from which to remove a CU.

21. A CU provides a support role at incidents and on that basis officers have considered the ability to

attend more incidents within a given timeframe (20 minutes) as the more important factor for determining the location where a CU should be removed.

22. As a result this option would remove the CU from Fulham which would deliver full year savings in the region of £584K. This would result in an establishment reduction of 12 WM A posts. It is likely to be achievable from or close to 1 April 2015 (subject to leaver rates).


23. A different option would be to introduce shared crewing, which is similar to alternate crewing. In this instance, when the CU is required for mobilising a driver from the pumping appliance would switch to the CU and drive that unit. The pumping appliance would then accompany the CU to the incident with the pumping appliance no longer being available for other calls. Shared crewing would require two drivers to be available to drive the PL and CU. On arrival at an incident the crew on the pumping appliance would carry out designated roles as the CU crew. Introducing shared crewing on CUs would replace the current WMAs with a crew from a pumping appliance. This crew would be led by the WM of the pumping appliance against which it is share crewed.

24. Shared crewing has been considered rather than alternate crewing because it increases the

number of people available to staff the CU. Currently, there is the option for a CU crew to be supplemented with available FFs on the incident ground, but they will not be fully trained.

25. To make this scheme work, a ‘support’ station would be required at an adjoining station so that

they can be used to mobilise the resource if the home station is unavailable for any reason. This arrangement also offers the added benefit of being able to implement reliefs that allow the CU to remain at the scene and maintain the continuity of operations.

26. Shared crewing has been successfully implemented for high volume pumps (HVPs) in the LFB.

Other FRSs including West Midlands and Cheshire have successfully implemented shared crewing on their CUs.

27. A number of the CUs are currently co-located with other specialist appliances. Therefore, to

enable all eight CUs to be shared crewed there would be a requirement to move five of the existing CUs to stations without other skill sets.

28. The modelling also shows that if all eight CUs were shared crewed, there would be a minimal impact on pumping appliance attendance times. Although CUs are at incidents on average for just over an hour this unavailability is offset by their low level of utilisation.

29. If shared crewing were to be implemented across the whole fleet, five of the CUs would need to

be re-located because they are currently co-located with other special appliances. Implementation of this scheme would have a significant lead in time and, if work commenced now, mid 2016 would be a reasonable target. Set out in the table below are details of the potential level of cashable savings associated with this idea:

Staff Type Number Reduced*

Unit Cost per Role**

Min saving Max saving

WMA Posts Between 12 and 96 £48,706 £584,472 £4,675,776

Total savings: £584,472 £4,675,776

*Based on current skill requirements and a ridership factor of 1.4

** Unit costs for 2014/15

NB: The minimum saving assumes the shared crewing of one CU whereas the maximum saving is based on the entire CU fleet (8

vehicles). The number of staff reduced reflects four watches.

30. The implementation impacts of this scheme are greater than with some of the other possibilities. They would include:


Skill sets at some existing CU stations would require the appliance to be moved to a new location

Likely increase in watch training and workload

IR issues – change of roles /additional skill set

Initial training could be lengthy to implement across watches and stations

Reintegration of up to 96 CU staff into service delivery may require officer refresher courses 31. Subject to the above, the estimated earliest time for implementation of shared crewing would be

mid 2016/17 allowing for development of training packages and training delivery to staff at stations. Training package development would need to begin in the near future in order to have it in place to ensure implementation of shared crewing on CUs could take place in 2016.

Appendix 9 –GLA Budget Submission

Service Analysis

2013/14 Outturn2

£000s

2014/15 Budget3

£000s

2014/15 Forecast Outturn3

£000s

2015/16 Budget

£000s

2016/17 Budget

£000s

Community safety 34,944 33,627 32,998 32,581 33,512

Firefighting 349,357 331,116 333,921 327,100 335,894

Pensions 19,991 21,978 21,478 21,881 22,453

Emergency Planning 781 847 831 794 794

Central services 430 441 441 440 440

Savings to be agreed 0 0 0 (3,161) (17,176)

Net Service Expenditure 405,504 388,008 389,669 379,634 375,916

Capital Financing 10,556 10,633 10,483 12,067 15,713

Interest Receipts (609) (501) (345) (501) (501)

Net Revenue Expenditure 415,451 398,140 399,807 391,200 391,129

Use of Reserves (3,073) 367 (1,299) (71) 0

Financing Requirement 412,378 398,508 398,508 391,129 391,129

Specific Grants (11,607) (9,333) (9,333) (9,129) (9,129)

GLA Funding 400,771 389,175 389,175 382,000 382,000

2 From Review of Financial Outturn (FEP 2282)

3 From Quarter 2 Financial Position (FEP XXX)


Subjective Analysis

2014/15 Budget3

£000s

2015/16 Budget

£000s

2016/17 Budget

£000s

Operational Staff 247,915 243,663 250,313

Other Staff 48,747 48,271 48,316

Employee Related 22,816 22,966 23,042

Firefighter's Pension Expenditure 21,701 21,601 22,173

Premises 30,343 31,642 33,846

Transport 20,037 17,186 17,790

Supplies and Services 23,529 24,423 25,430

Third Party Payments 1,608 1,620 1,623

Authority savings to be achieved 0 (3,161) (17,176)

Capital Financing Costs 10,633 12,067 15,713

Central Contingency Against Inflation 918 3,145 3,145

Total Revenue Expenditure 428,248 423,422 424,216

Income (30,108) (32,222) (33,087)

Net Revenue Expenditure 398,140 391,200 391,129

General Reserve 3,940 0 0

Earmarked Reserve (3,573) (71) 0

Financing Requirement 398,508 391,129 391,129

Specific Grants (9,333) (9,129) (9,129)

GLA Funding 389,175 382,000 382,000


Analysis of changes from the budgeted figures for 2014-15

£000s

2014-15 Council Tax Requirement 138,200

Inflation 5,007

Savings (632)

Efficiencies (3,629)

New initiatives and service improvements 0

Change in use of reserves (3,160)

Net Change in Government grants 12,031

Other adjustments (6,456)

Savings to be identified (3,161)

2015-16 Council Tax Requirement 138,200

Savings and efficiencies

2014-15 Savings

Achieved

£000s

2015-16 Savings

Proposed

£000s

Savings

Procurement efficiencies 1,000 0

Cost avoidance 2,400 116

Establishment efficiencies 25,700 516

Total savings 29,100 632

Efficiencies

Procurement 300 469

Cost avoidance 600 1,088

Establishment 4,200 404

Other 400 1,668

Total efficiencies 5,500 3,629

Total savings and efficiencies 34,600 4,261

Financing Requirement 398,508 391,129

Percentage represents of financing requirement

8.7% 1.1%


Capital Spending Plan

2013-14

Outturn

2014-15 Revised Budget

2014-15 Forecast Outturn

2015-16 Budget

2016-17 Plan

£m £m £m £m £m

IT projects 3.1 6.1 6.4 8.7 0.7

Resilience projects 0.5 0.0 0.0 0.0 0.0

Refurbishment of fire stations

1.5 5.3 3.6 5.3 1.0

New/Replacement fire stations

3.3 2.2 2.3 0.1 0.0

Other property projects 0.0 0.0 0.0 1.5 1.5

Sustainability projects 1.0 1.9 1.7 2.3 2.0

Minor improvements programme

0.6 0.8 0.8 0.8 0.5

Contingency programme 0.0 1.4 0.0 1.0 1.0

Service concessions 0.0 24.5 24.5 28.2 0.0

Other projects (including Fire Brigade fleet re-procurement)

0.0 19.7 18.6 8.8 10.5

Capital spending plan 10.0 61.9 57.9 56.7 17.2

Funding:

Capital receipts 0.0 0.0 0.0 0.0 0.0

Borrowing and PFI leases 0.0 43.1 38.3 56.7 17.2

Capital grants 8.1 18.8 19.6 0.0 0.0

Revenue contributions 1.9 0.0 0.0 0.0 0.0

Total funding 10.0 61.9 57.9 56.7 17.2

Documents

Appendix 2 Medium Term Forecast - London Fire Brigade