Nottinghamshire Fire and Rescue Service
Financial Regulations

3. Financial Planning

  1. Financial Planning

    1. Introduction

      1. The Fire Authority is responsible for approving the budget policy framework including budgetary guidelines as submitted by the Chief Fire Officer and the Head of Finance and Treasurer no later than November each year.
      2. The submitted budgetary guidelines will include a detailed programme of capital expenditure and detailed estimates of income and expenditure for the following financial year that support the strategies contained in the Annual Delivery Plan.
      3. The Chief Fire Officer shall draw up a statement of capital expenditure and estimates of income and expenditure for future periods beyond the following financial year in a format and for a period agreed with the Treasurer.
      4. The Treasurer will advise the Fire Authority on the determination of the precept and the associated levels of Council Tax.
      5. The Fire Authority shall, before the 1st March in any year, determine the appropriate level of precept and council tax and issue such notices as may be required to the billing authorities.
      6. The Treasurer will arrange for the issue and receipt of the precept.
      7. In terms of financial planning the key elements are:
        • The Medium-Term Financial Strategy
        • The Annual Revenue Budget
        • The Medium-Term Financial Plan (statement of income and expenditure for the following four years)
        • The Capital Programme (for the next 10 years)

    2. Policy Framework

      1. The financial policy framework comprises of the following key statutory plans and strategies:
        • Community Risk Management Plan
        • Annual Delivery Plans
        • Capital Strategy
        • Reserves Strategy
        • Treasury Management Strategy (including Minimum Revenue Provision Policy)
      2. The Authority is also responsible for approving procedures for agreeing variations to approved budgets, plans and strategies forming the policy framework and for determining the circumstances in which a decision will be deemed to be contrary to the budget or policy framework.

    3. Community Risk Management Plan (CRMP)

      1. The Chief Fire Officer (as Head of Paid Service) is responsible – in conjunction with other officers on the Service Leadership Team - for developing and proposing this document to the Fire Authority for approval.

    4. Medium Term Financial Strategy (MTFS)

      1. The Head of Finance and Treasurer is responsible for coordinating the four-year Medium Term Financial Strategy each year for approval by the Fire Authority. The Medium Term Financial Strategy should be clearly linked to the CRMP and other corporate plans as necessary.

    5. Budgeting

      1. Budget Format

      2. The Chief Fire Officer on the advice of the Head of Finance and Treasurer will determine the general format of the budget for approval by Fire Authority. The draft budget should include allocations to different services / projects, proposed taxation levels (precept) and the nature and level of contingency funds and reserves.

      3. Revenue Budget preparation

      4. The Chief Fire Officer is responsible for ensuring that a revenue budget and Medium-Term Financial Plan (four-year revenue budget) is prepared on an annual basis for consideration by Fire Authority. The Fire Authority may amend the budget or ask it to be reconsidered before approving it, subject to compliance with the relevant statutory requirements for budget setting.
      5. The MTFP must contain:
        • Plans for the development of services and the priorities for the allocation of resources between services.
        • The financial effects of all known commitments together with any other proposals for changes to levels of existing services or the introduction of new services and
        • The implications of efficiency measures and efficiency gains identified.
      6. It is the responsibility of employees with a financial responsibility (Principal Officers, Area Managers and Budget Holders) to ensure that budgets reflect the agreed annual delivery plans and are on a prudent basis.
      7. The Chief Fire Officer is responsible in consultation with the Head of Finance and Treasurer for providing the information requested by the Fire Authority to allow the precept to be set.
      8. The Chief Fire Officer is responsible for issuing guidance on the general content of the budget in consultation with the Head of Finance and Treasurer as soon as possible following approval by the Fire Authority.

      9. Capital Programme & Budget

      10. The accounting regulations stipulate that there is a significant difference between Capital and Revenue Expenditure and therefore the accounting treatment is different. Definitions of Capital and Revenue Expenditure is enclosed within Appendix 3 – Glossary of Financial Terms and Abbreviations. In general terms capital expenditure is on a items or activity that has a life of greater than 1 year while revenue expenditure is day-to-day expenditure.
      11. Accounting Policies confirm the de-minimis limit for Capital is set at £30,000.
      12. Capital assets shape the way services are delivered for the long-term and create financial commitments for the future in the form of financing costs and revenue running costs. The Government places strict controls on the financing capacity of the Authority.
      13. This means that capital expenditure should form part of a capital strategy and the Chief Fire Officer must be satisfied that the capital scheme fits into the overall business strategy.
      14. Capital projects should be carefully prioritised in order to maximise the benefit of scarce resources while ensuring timescales and costs are realistic and prudent.
      15. The Chief Fire Officer is responsible for ensuring that a capital programme is prepared on an annual basis together with a 10-year capital programme for approval by the Fire Authority. The Capital Programme should support the capital strategy and CRMP.
      16. The Fire Authority may amend the Capital Programme or ask that areas of detail contained within it be reconsidered for things like new schemes and/or re-profiling of existing schemes.
      17. The inclusion of a scheme in the Capital Programme ringfences the authorisation of the capital funds but importantly is not the final approval for the scheme to itself. Before a scheme can commence the Chief Fire Officer and Head of Finance and Treasurer must be satisfied that a robust business case exists for the scheme – the business case should include depending on the size and scope of the scheme:
        1. it will be properly managed
        2. cost estimates are within the schemes budget
        3. All lifecycle costs (revenue and capital) have been identified
        4. business benefits have been properly assessed and can be achieved
        5. Appropriate contractual and procurement arrangements are identified and can be delivered
      18. Capital costs for the purpose of cost estimates should be analysed into:
        1. Land acquisition costs
        2. Construction costs
        3. Plant, equipment and furniture costs
        4. Professional fees and consultancy costs
        5. Hardware and software costs
        6. Any other relevant costs.
      19. Provided the business case is approved, the capital and revenue costs do not exceed the amounts shown in the detailed annual budget and the scope of the scheme remains unchanged the Chief Fire Officer is authorised to incur expenditure on any scheme with an approved start date in the first year of the capital programme.
      20. Where the capital or revenue costs of any scheme cannot be contained within the amounts shown in the detailed annual budget the Chief Fire Officer must identify the reasons for the variances in expenditure from those included in the detailed estimates and notify the Head of Finance and Treasurer of proposals for meeting any overall increase in expenditure. Where the cost estimates exceed the exceed budgets by the limits identified in the Scheme of Financial Delegation, approval of Finance and Resources Committee is required to increase the budget.

      21. Budget monitoring and control

      22. The Head of Finance and Treasurer is responsible for ensuring the general ledger and financial systems and processes are sufficient to provide appropriate financial information to enable budgets to be monitored effectively.
      23. It is the responsibility of Principal Officers, Area Managers and Budget Holders to control and monitor income and expenditure within their area. They should also take any action necessary to avoid exceeding their budget allocation. The Chief Fire Officer may delegate budget responsibility to any of his/her Officers as appropriate, in consultation with the Head of Finance and Treasurer. Such designated budget holders:
        • will be recorded in writing
        • may only incur expenditure on approved policy
        • will contain such expenditure within approved budgets; and
        • may vire resources within budgets as outlined in the Scheme of Delegation
      24. Each month, in accordance with the budget monitoring timescales set out by the Head of Finance and Treasurer, Budget Holders must provide budget monitoring information to evidence effective budgetary control. This will include any variances and highlighting problems within their areas and must include any proposals for actions to address these, together with a forecast of projected outturn.
      25. The Head of Finance and Treasurer is responsible for submitting regular reports to SLT and the Finance and Resources Committee on the budget monitoring position for both revenue and capital expenditure.
      26. The Chief Fire Officer in consultation with the Head of Finance and Treasurer should take any action necessary to avoid exceeding the budget allocation.

      27. Guidelines

      28. Guidelines will issued as part of the budget preparation process by the Chief Fire Officer following agreement with the Head of Finance and Treasurer. The guidelines will take into account:
        • legal requirements
        • medium-term planning prospects
        • the CRMP and Annual Delivery Plan
        • available resources
        • spending pressures
        • best value and other relevant government guidelines
        • other internal policies.

    6. Maintenance of reserves

      1. It is the responsibility of the Head of Finance and Treasurer to advise on prudent levels of reserves after taking into consideration the Local Government Finance Act and CIPFA Guidance. A Reserves Strategy will be prepared annually and submitted alongside the Medium-Term Financial Strategy to the Fire Authority for approval.
      2. The Fire Authority shall hold reserves for the following purposes:
        • A working balance to help to cushion the impact of uneven cash flows and avoid unnecessary temporary borrowing – this shall form part of general reserves.
        • A contingency to cushion the impact of unexpected events/emergencies – this shall also form part of general reserves.
        • A means of building up earmarked funds to meet known or predicted liabilities.
      3. For each reserve the Fire Authority shall have a clear protocol setting out the following:
        • The reason for/purpose of the reserve should be established and recorded.
        • Annual review of the reserve should be completed to ensure continuing relevance and adequacy.
        • Any changes of use of a reserve must be approved by the Fire Authority.
      4. The Treasurer shall provide the Fire Authority, as part of the budget report, with a statement showing the estimated opening general reserve and earmarked reserve balance for the year ahead, the addition to/ withdrawal from balances, and the estimated end of year balance.
      5. The Treasurer shall provide a statement to the Fire Authority on the adequacy of the general reserves and earmarked reserve and provisions in respect of the forthcoming year and the Fire Authority’s medium term financial strategy.
      6. The Fire Authority is responsible for ensuring the adequacy of reserves and provisions when the budget is set.
      7. All requests for movements, transfers and changes to earmarked and unearmarked reserves during the financial year must be approved in accordance with the thresholds set out in the Financial Scheme of Delegations.