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Budget strategy 2014/15 and the medium term financial plan

Budget strategy 2014/15 and the medium term financial plan

The Government continues to be quite clear that the key to reducing the national debt is to drive further efficiencies, most notably across the public sector. Undoubtedly this will be the focus for several years to come until such time as the economy becomes rebalanced.

The publication of Sir Ken Knight’s Review in May 2013 ‘Facing the Future: Findings from a Review of Efficiencies and Operations in Fire and Rescue Authorities in England’ made a strong case for opportunities for further reform within the Fire and Rescue Service. Many of the suggestions covered in his report have already been considered by this Authority and in certain cases have been underway for some time. However, it will be interesting to see the Government’s response to this review.

The Spending Round, announced on the 26 June, highlighted a range of measures that would make inroads into the delivery of further financial savings in 2014/15 and 2015/16, most notably for Fire and Rescue Authorities this would mean that, whilst Government funding would be cut by an average of 10% in 2015/16, there would be the opportunity to bid for one-off Transformation grant funding for 2015/16.

The Chancellor’s Autumn Statement, announced on 5 December 2013 emphasised the Government’s commitment to the long-term economic plan set out in 2010. It highlighted that the economy is now growing faster than predicted, so as a result, borrowing will be lower. Consequently, it focused on the continuing need to reduce spending, therefore reinforcing the Government’s commitment to tackle the deficit and help get the public finances back into balance. With the deficit and debt still at unsustainable levels, deviating from that plan now would be the biggest risk to recovery. This will inevitably mean that reductions in public sector funding will continue for some time to come.

Since the Comprehensive Spending Review (CSR) in 2010 this Authority has seen annual reductions to its formula grant funding. The Government was clear at that time that, for the fire and rescue authorities (FRAs), these reductions would be back-loaded to the last two years of the CSR period. Consequently, this Authority has faced grant funding cuts of 3% in the first two years, a cut of 9.2% in 2013/14 and now a further cut of 7.4% in 2014/15. The next major funding review will be the Comprehensive Spending Review in 2015, which will set the way forward and the funding parameters across the public sector for the medium term. Early indications are that public sector funding will continue to be reduced year on year, probably on an average trajectory of the previous four year period.

It is clear that the Authority will face challenging times for the foreseeable future. Despite the difficulties this presents, the Authority remains committed to a budget strategy which is Service-led, Business-focused and Sustainable over the medium term thus avoiding drastic changes to levels of service provision.

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