Communities and Local Government Committee - Minutes of EvidenceHC 519

Oral Evidence

Taken before the Communities and Local Government Committee

on Monday 16 July 2012

Members present:

Mr Clive Betts (Chair)

Heidi Alexander

Bob Blackman

Simon Danczuk

Bill Esterson

David Heyes

George Hollingbery

James Morris

Heather Wheeler

________________

Examination of Witnesses

Witnesses: Steve McGuirk, County Fire Officer and Chief Executive, Greater Manchester Fire and Rescue Service, Dan Stephens, Chief Fire Officer, Merseyside Fire and Rescue Service, Jamie Courtney, Chief Fire Officer and Chief Executive, South Yorkshire Fire and Rescue Service, Joy Brindle, Assistant Chief Officer for Strategy and Performance, Tyne and Wear Fire and Rescue Service, Vijith Randeniya OBE, Chief Fire Officer, West Midlands Fire Service, and Martyn Redfearn, Assistant Chief Officer and Director of Human Resources, West Yorkshire Fire and Rescue Service, gave evidence.

Q1 Chair: Welcome all of you to this oneoff evidence session on the funding of the fire and rescue services in metropolitan areas. You are all most welcome. For the sake of our records, could you say who you are and which fire service you represent?

Martyn Redfearn: Martyn Redfearn, West Yorkshire Fire and Rescue Service.

Vijith Randeniya: Vijith Randeniya, West Midlands Fire Service.

Joy Brindle: Joy Brindle, Tyne and Wear Fire and Rescue Service.

Dan Stephens: Dan Stephens, Merseyside Fire and Rescue Service.

Steve McGuirk: Steve McGuirk, Greater Manchester.

Jamie Courtney: Jamie Courtney from South Yorkshire Fire and Rescue.

Q2 Chair: Right. I understand you want to make a brief collective statement at the beginning. You don’t all have to speak at once in making it; one of you presumably would like to say it on behalf of all of you.

Vijith Randeniya: Thank you very much indeed, Mr Betts. On behalf of the chief officers of the metropolitan fire and rescue services, we would like to thank you for the opportunity to present evidence here today. We understand the need for deficit reduction. We are not asking for any more funding. We are not asking to redress the financial distribution for years 1 and 2 of the Comprehensive Spending Review; for us, that is water under the bridge.

We are asking for a fair flat-rate cut for all fire and rescue services and some flexibility with financial tools; these present a zerosum option, which would still require significant change resulting in, for us in the metropolitan fire services, up to 1,600 firefighters being dis-established from the mets. We would still take the biggest quantum of cuts in any fire and rescue services, but we could just about manage. The Minister has the necessary financial mechanisms within his control to enable this to happen, and there is precedent. We are happy to take your questions.

Q3 Chair: Just before I begin, it is pretty obvious that we have a limited time for this-around about 45 minutes. It is up to you how you use that to get your information across to us with the questions we ask. If you all repeat yourselves and say the same thing over and over again, then we are not going to get as far as we otherwise could do. To begin, can you explain to us the cuts you have had to make so far in the first two years of the Comprehensive Spending Review? How do you think that compares with other non-met fire authorities? If you could set that in a historical context for us, prior to this Comprehensive Spending Review, during a period perhaps when there was more money around for local authorities in general, how did your authorities do at that time, when presumably you had additional resources? Again, how did you compare with non-met authorities? Could you deal with those two points for us?

Steve McGuirk: In simple terms, the national cut for fire and rescue services was 6%, and that translated for the metropolitans, in the way the fire funding formula played out, at around about 12.5% for each of us, in simple maths. Our concern, of course, is that if that formulaic approach rolls forward for the future, with the principle for fire and rescue services is of a backloading of the cuts for the Comprehensive Spending Review, with an overall quantum of about a 25% cut. The simple maths, therefore are, with 6.5% in years 1 and 2, leading to 12.5% for us, the remaining 17% or 18% that is yet to come could be into the 30% plus figure for us. Overall, we are potentially looking at very, very dramatic figures in terms of cuts for metropolitans. Add to that equation the fact that broadly speaking about 70% of our budgets comes from grant, whereas usually for combined fire authorities it is down as low as something like 35% to 40%. Those are the mathematics and the way it plays out at the moment.

Q4 Chair: The point is, you are managing the 12% cuts, aren’t you? You have a 12% cut, but you are all managing it. The world has not fallen apart.

Steve McGuirk: The document we have put forward makes exactly that point. As Vij said at the outset, our argument is not somehow to come back and correct that first two and a half years. We have plans, those plans are in train, and we also have plans on the basis of a planning assumption on an equitable cut level for years 3 and 4. That is exactly the same: we are not trying to redress that balance; we are accepting that.

Q5 Chair: At this stage, are you making cuts to services?

Steve McGuirk: Have Members got the document in front of them? If I could take you to page 6, there is a chart of the numbers of firefighters that we have reduced already, picking up the Chairman’s point about what has happened over the last few years, and what we are planning to achieve over the next few, assuming the level of cut. If you look at the table on page 6, broadly speaking it sets out in the end column the numbers of firefighter reductions that we have already made over the last few years, and you will see a direction of travel to make, assuming that the cuts continue at a reasonable level. That is going to happen anyway, which was the point my colleague made at the outset.

As well as that, we also outline in the document our cuts to management overheads, back- office services, combining stations, and so on: a whole range of other back-office and management savings that we have already made. One of my other colleagues might want to say something about the last 10 years, or the 10 years before that.

Vijith Randeniya: If I could just underscore what Steve has said, we made a number of changes before the first two years of the Comprehensive Spending Review. We have looked at making efficiencies for the last 10 or so years; they have been increasing in the last couple of years. We are looking forward now to years 3 and 4 and, depending on the level of cuts, the issue is whether we can deal with them with the tools we have currently got. That is our essential dilemma.

Q6 Chair: You were saying you were making cuts, savings, even before this Comprehensive Spending Review.

Vijith Randeniya: Yes.

Q7 Chair: The view around may be that local government had plenty of money in those years, everything was all right and there was no need really to address any difficulties.

Vijith Randeniya: If we look at the budgets that have been set for ourselves, local authorities, police, health and education, the fire service did not feature as well as those other organisations. We had much lower financial settlements. Indeed, one of the charts in the document underscores the fact that, if you take into account inflation, the majority of the fire services received less than the total amount of inflation in terms of increases.

Q8 Bill Esterson: Would it be fair if the cuts that are coming up now were redistributed, so that the shires had to take a greater proportion than what you just said in your theory?

Steve McGuirk: At the minute, one of the problems is that we do not yet know what the cut is going to be for all authorities. Like us, they have a range of planning assumptions, and it is fair to say, in triangulation with our colleagues, that one of those planning assumptions is for a flat cut. I do not think anybody is going to wilfully accept a cut or volunteer and put their hand up for it; but our intelligence suggests that one of the realistic options that colleagues are considering is a flat cut. I do not think it is redistribution of cuts necessarily; the decision has not been taken yet.

Q9 Bill Esterson: To be clear, you are looking for an across-the-board average, rather than a continuation of what you have seen in years 1 and 2.

Martyn Redfearn: That is all we are asking for, nothing else: just a flat cut across the board.

Dan Stephens: I would just make the point that our understanding is that that was the way the police service had been treated for the period of the Spending Review, in that all police authorities received the flat cut.

Joy Brindle: Could I also mention that when an equality impact assessment was done of this cut, at the time of the Spending Review-I have got this document here and can give you references-I think the assumption was that there would be an equitable cut? The document says, "Over the first two years of the Spending Review period formula grant funding for singlepurpose fire and rescue authorities, which makes up roughly 50% of their overall spend, will change by -5.8% in 2010-11 and a further -0.7% in 2012-13".

That is an assumption about an equitable cut, which I think has influenced the equality impact assessment in terms of whether this is fair across the piece. The equality impact assessment talks about how research had shown that people from deprived communities or vulnerable groups, of which there are more in metropolitan areas, are at a greater risk of fire. That did not take account of the equality impact assessment, because the assumption was for a flat cut at that time.

Steve McGuirk: Six authorities did not face a cut at all; they had a grant increase. Rather than a redistribution of the cuts, therefore, we are suggesting a different approach is taken for years 3 and 4 altogether.

Q10 Bill Esterson: You make the point in your document on page 2 that there are "four-fold differences in the rate of dwelling fire/casualty arising from differences in sociodemographic factors". Can I ask you to compare what the impact would be in terms of staff numbers, response times, the cost of repair to damage and lives lost if you had an average cut in 2014-15 as opposed to a continuation of the aboveaverage cuts that you have described for the first two years?

Martyn Redfearn: In terms of staffing, for West Yorkshire we are planning to lose 80 staff over the next two years; if we are subject to above average cuts, that would probably double to 160. It is the ability to do those cuts that is difficult, because we do not have any tools other than making firefighters redundant. At the end of the day, that is all we can do. If it goes to the worst-case scenario then we are expecting that 80 to go up to 300 firefighters.

To do that, we would have to shut fire stations, and we would have to take fire engines away from the busiest places, because you could not plan to remove them from quieter places. West Yorkshire’s plan is to shut 10 fire stations in the next three years, and build five new ones to save money. We are already then planning the next 12 closures, and six new fire stations to replace them. Those all take time. We cannot build them in two years; it would take five, six or seven years.

Q11 Bill Esterson: That is a similar experience for all six local authorities. Something else I wanted to talk about was response times, damage costs and the number of lives that will be lost. Is there an assessment of those issues?

Dan Stephens: In relation to response times, taking the example of colleagues in West Yorkshire, if you are closing 10 stations to replace them with five, self-evidently that is going to have an impact on your response times. In the Merseyside example, our assumption is that in the worst-case scenario-a cut at twice the national average-we would need to shut 10 fire stations, although we would not be in a position to build any to replace the 10 we would have to shut now.

I have made the comment in the past, and it is a matter of fact, that you do not need to be a chief fire officer to draw the assumption that that is going to have an impact, not just on your speed and weight of attack in terms of your response, but also across the full quality and breadth of service that you are able to provide. In that, I include risk-critical firefighter training, community safety interventions in the form of home fire safety checks, for example, and other elements of firefighter safety such as operational intelligence gathering, familiarisation visits and so forth. Could I give you a definitive figure in relation to that level of impact? No, simply because none of us here know what the scale of cuts is likely to be, nor will we until December at the earliest.

Vijith Randeniya: There is a lag effect between cuts taking place and then that being tangible out in communities. We have seen fire deaths settle for the last four or five years at a level of about 210 per year. That reflects the huge amount that we have done in preventive work and community safety, which has enabled this to happen. To look at my own organisation, with the current level of cuts in years 1 and 2, we would be looking at about 340 front-line firefighter jobs. We can just about deal with that.

If it comes in, as colleagues have talked about, in the way the formula was originally planned for years 1 and 2, we will lose 600 firefighters. That is a third of our entire operational workforce.

When we talked about the flat-rate cut being equitable across all services, because of the way that our budgets are constructed-with the grant, in my example, taking up nearly 70%-we would still take the biggest quantum of cuts as a sector, in relation to our colleagues in other brigades. So the burden still falls to us even with a flat-rate cut.

Q12 Bill Esterson: Has the Government modelled the impact of cuts at various different levels in the assumptions it has made so far?

Dan Stephens: There has been no risk assessment that certainly myself or my colleagues are aware of. As Joy referenced earlier on, in the equalities impact assessment, which was an initial assessment and then moved to the full assessment, both elements of that document acknowledges there is a clear link between deprivation and risk from fire, and indeed other emergencies. It also recognises that link in relation to age as well.

I think the position of the Minister, rightly, is that it is a matter for ourselves to undertake that local risk assessment, and that is enshrined within the Fire and Rescue National Framework, and I do not think any of us have an issue with that responsibility. However, that can only realistically be done meaningfully if you have a sufficient resource with which, when you have identified and assessed the risk, to then meet the risk.

As I say, at this point in time, we have a fairly wide variation of scenario that we may be looking at here, and the far extremes of that scenario-I can only speak for myself-would cause me grave concern that we would not be able to meet the risk in the way that we do now. I would suggest that would be the same for all these guys.

Q13 Bill Esterson: Can I try and tie you down on this point? If the extreme end of the prediction is made, what are you saying? In terms of the fire service we would end up with, how bad could things get?

Steve McGuirk: I don’t think we are ducking it, but it is very hard to give a definitive answer to that point. We have tried very hard not to shroud wave in our approach and ee have tried hard to be responsible. We are public leaders, we have got a budget deficit, and, like, every public leader will have to find new innovative ways of "doing more with less", to use the strapline. Our responsibility is to do the best we possibly can to provide the best service possible within the available resources.

And we constantly live with the risk versus resources debate. If you had asked us 10 years ago, which you did -in fact I think Mr Betts was one of those asking at the last Select Committee-"do you think you can save all these lives and still make efficiencies?" We would have said, "Let us see". Well, we have achieved that. So one of the dangers of us shroud waving is we weaken our argument. We are also not saying the fire service per se needs masses more funding, although that would be nice. We are saying that a sensible approach to managing within the resources available requires a readjustment of the funding allocation that is on the table currently.

Joy Brindle: Because we are used to talking about risk every day-it is our stock in trade; we always put the resource where the risk is-it feels really strange to us that that sort of thinking is not happening at the national level as well: that the resource goes where the risk is.

Q14 Bill Esterson: Can one of you say something about the impact on national resilience?

Dan Stephens: In terms of urban search and rescue teams, they are funded through a separate crewing grant, so provided that remains there would be no impact in that area. However, the massdecontamination capability, for example, the chemical, biological, radiological, nuclear explosive capability-I am trying to avoid using acronyms; apologies for the mouthful, but that is what it is termed as-relies very heavily indeed on support appliances to staff it. That is not funded by a crewing grant, nor is the high volume pumping capability.

Dependent on how fire and rescue services choose to crew those particular assets, given the fact that the mets have something in the order of around 50% of all national resilience assets, I would suggest that it stands to reason that, if the cuts are to the extent that they may be, there could well be an impact across those particular capabilities.

Q15 Bill Esterson: You would cut across the board; you would not cut either national resilience or local services.

Dan Stephens: It is the same people that provide the national resilience assets.

Q16 George Hollingbery: First of all, thanks to all of you for coming a long way today for this inquiry. I think you have answered this question, but I want to be absolutely clear: is it a change to the grant formula that has resulted in this, or are you implying there has been some discretion applied by Ministers to change funding formulas?

Vijith Randeniya: The formula, we are told, is a 27page algorithm, so it is quite a complex calculation, and the way that it has been applied has led to what we believe is a disproportionate settlement in the first two years. The Minister, we are told, has discretion over a number of elements of the formula, in terms of the floors and ceilings, and could, with the discretion that he has got, apply a flat-rate cut. As we have said before, there is precedent for it, both in what has happened within the police service, but also, as we have referred to, DCLG’s own equalities impact assessment had assumed that the grant reductions would be proportionate-

Q17 George Hollingbery: Just to stop you there, the relative needs formula is a relative needs formula, and it is supposed to reflect exactly what is supposed to have afflicted the met and its areas, and its relative poverty, and so on. The implication is that something has gone horribly wrong in there, is that correct?

Vijith Randeniya: There was additional damping to the outcomes from the formula, otherwise we would have been hit even harder, and the table that we have got-

Q18 George Hollingbery: I am interested to know: the changes that were made to the relative needs formula and the grant distribution must have been incorrect, or you are implying the Minister has actually decided to give you guys less. Is it the formula or the Minister in the first two years?

Vijith Randeniya: It is what the formula throws out depending on what weightings you put on the various factors. How you allocate priority to certain factors will determine what you get out of it as a formula.

Q19 George Hollingbery: Did it work adequately before? Prior to the Spending Review, did it work adequately?

Dan Stephens: It was a very different situation. The floors were set at above a cut. Taking, for example, the Comprehensive Spending Review in 2007, Merseyside was at the floor for three years, so we got a 1% increase, and a 0.5% and a 0.5%. We got an increase, albeit below inflation, but there was an increase none the less. To answer your question, with the greatest of respect, if you looked at the distribution of grant across authorities, I would respectfully suggest that you drew your own conclusions as to whether the Minister had used their discretion or not.

Q20 George Hollingbery: My job here is to ask you what it is we need to recommend to Government, and I would like you to tell me, as the experts in the field, whether there is a mistake in the formula. Is it not working properly? Did it work properly before? Or has the Minister short-changed you?

Steve McGuirk: One of the problems with any formula is that every time there is a change of any description, there will be winners and losers, and each party that wins or loses will argue for the obverse or the converse. The trouble with a formula for the fire service is that it is very difficult to come up with a mathematical, objective, abstract set of factors that we will all agree are the things that drive demand in the service. In the last Government and this Government, you would find people arguing the merits or demerits of the formula on that basis.

In our collective view, however, the way those factors have been given weighting on this occasion skewed the whole outcome in a very odd, perverse way, the perversity being, that, in the current climate, how is it possible for anybody to get an increase in grant at all? And for six fire authorities to get that just looks very, very odd.

Q21 George Hollingbery: The reason I am drilling down on this so hard-and I will stop pretty much here-is that on the one hand I have to recommend to the Minister that he looks very carefully at changing the formula, but it seems odd to me that you would want anything else. If you are recommending a flat-rate formula you are basically saying, "Ignore deprivation". What you are saying is, "The model doesn’t work".

Jamie Courtney: My understanding was, in fact, that the weighting that was applied for both deprivation and number of rented properties previously was reduced. That, in part, brought about the impact upon the metropolitan fire and rescue services and obviously elsewhere. My understanding is that the deprivation issue was very much a part of why we now find ourselves where we are.

Q22 George Hollingbery: The recommendation you are making is you do not want to take the risk of having another crack at the formula; you just want it to be flat to guarantee that you know what you are getting.

Dan Stephens: Yes, and the Minister could use his discretion.

Q23 George Hollingbery: Should we do this for time immemorial? Going forwards, that is what should happen; forget relative needs formulas.

Steve McGuirk: I think it is a matter for the Government of the day to determine how they allocate resources among sectors. From our perspective there ought to be some kind of face validity test; does it make sense, broadly speaking in the context of what drives fire and rescue services? One of the problems is that lots of elements of the formulas do: population and all those things drive demand in fire and rescue services. Then you get the odd thing come up-something called sparsity factor for example-for which colleagues in counties and shires may argue. I am not sure we quite recognise why such a factor drives demand in the fire and rescue service-as it is people who do that.

Our view would be, you are going to change the formulas whichever way and we have got a new baseline that is required for the new business rate retention approach. One of our further concerns is, that if you try and tinker with the formula too much without focusing on the outcome, we lose the potential to get a sound baseline going forward in the new approach. And we are still unclear exactly how the new approach will be applied to met fire authorities.

Q24 Chair: I do not think anyone has quite answered. George really has put his finger on it. You want a flat-rate cut. Normally, formulas are there; you can disagree about them and how they should be constructed and how they apply, but everyone agrees there is going to be a formula of some kind for distribution of Government money to local authorities and fire authorities, etc. You are saying now that you want to throw the formula out of the window; you want a flat-rate cut, so everyone gets the same. Is that something you want to see as a matter of principle for the future, or something that is just going to apply in these circumstances? And why in these circumstances, and not on other occasions?

Vijith Randeniya: I think we could settle for the application for the next part of the Comprehensive Spending Review. Then we would perhaps welcome a chance to look at the formula in its totality in the future, given the time that would take. The issue about the formula is, because the Minister has sufficient latitude in terms of the mechanisms, the outcome could be varied at the Minister’s discretion.

Q25 Chair: Of course it can, but why is it here and now so imperative to have a flat-rate cut-uniquely, you seem to be saying that to me now, not as a matter of principle? Why is this a unique set of circumstances where we should be saying to the Minister, "Throw the formula out of the window for the time being; this circumstance here and now demands a flat-rate cut, unusually"?

Dan Stephens: Because that sets the baseline moving forward. I am sorry if that is an over-simplistic answer. What happens in the future will largely be determined by the settlements; if you like, that is the baseline.

Q26 George Hollingbery: Can we just ask this question, then? If the Minister was capable of running the algorithm now for 2013-14 and 2014-15, and it gave you half the cut that it gave all the shire authorities, would you still be going for a flat-rate cut?

Steve McGuirk: Probably not, I suspect. That is our point; what you are arguing, what we are trying to debate is the finer points of a mathematical formula, and at this point in time and history which elements would be more or less relevant. What we are suggesting is that the outcome of the application of weightings in this current period has skewed against the metropolitans.

Q27 George Hollingbery: You are basically saying to the Minister, "We need some certainty. If it comes out like it did this year, we are screwed."

Vijith Randeniya: Yes.

Q28 Simon Danczuk: I read the document that you referred to earlier. It makes some interesting reading. It says if the cuts occur as is being proposed, it will increase the risk to members of the public, and is certain to increase risk and increase damage to life. The cuts would be threatening to the most at-risk and vulnerable people in our society. A 27% cut will increase risk. Safety nets become smaller. Just to be clear, for my benefit, in terms of the worsecase scenario-and just give yes or no answers-in terms of your service, if this goes ahead, will it cost lives, Jamie?

Jamie Courtney: I have no way of knowing the answer to that.

Q29 Simon Danczuk: You do not know. Steve?

Steve McGuirk: That depends on whether we can carry on our safety activities at the same time.

Q30 Simon Danczuk: It is a yes or no question. I am asking, if the cuts go ahead, worst-case scenario, as set out by Government, will it cost lives? You guys know much better than I do. Dan?

Dan Stephens: I would have concerns that certainly the level of service we provide would be nothing like that we provide now. The level of prevention activity that we undertake makes a substantial contribution to community safety, and I am speaking from our having 32 of the top 100 deprived areas in the country. Do I think it is going to have an impact? Yes, absolutely.

Q31 Simon Danczuk: It will cost lives then.

Dan Stephens: Whether it will cost lives remains to be seen.

Q32 Simon Danczuk: Joy?

Joy Brindle: It could cost lives. The impact of our preventive activity over the last few years has been to reduce fire deaths and fire injuries. It does logically follow that if you are not able to do as much prevention, which makes people change their behaviour and keeps them safer in their homes, then it could cost lives. I think we are all anxious not to talk in a shroud waving way about this; we are trying to be reasonable about it.

Q33 Simon Danczuk: No, I understand that Joy, but I think you should also be honest and straight with people, because that is the question; that is what people want to know. From what I am hearing, the indication is that it may or may not. Probably not from what I have heard, but let us carry on.

Vijith Randeniya: People would definitely be at much more risk, and our ability to respond in the way we currently do would be severely disrupted. Therefore, those people have an increased chance of losing their life or suffering injury, and therefore, damage to the infrastructure of the country as well.

Martyn Redfearn: Being a blunt Yorkshireman, the answer is yes, but long-term. It is not going to happen next year; it will happen in four or five years’ time, because of the reduction in prevention work. If we cannot phase and plan the cuts, we will end up with a situation where the isolated pockets of the community cannot get the service they should get. I am talking about at-risk communities. This is why we have staged this all over right through to 2020, reducing the services, but putting the resources where they need to be. If it is cut in the next two years-just point blank cut-then what we will end up with is all the prevention work will stop, all the protection work will stop, and the people who are most at risk will not get the service they should get. The fact is that prevention and protection is what actually stops people dying, not fire engines.

But I can tell you now that our next round of cuts, which will happen this year, mostly come out of the front line and prevention and protection, because that is the only thing you can do in a short-term cut.

Q34 Simon Danczuk: We talked earlier about the formula, and the Government has consulted about changes to the relative needs formula. Some people were against the efficiency data being used in terms of that formula. Have you any views on the efficiency data; what efficiency savings had already been made; whether that should be incorporated into this formula or not in terms of assessment? Were you for it or against it?

Jamie Courtney: I would certainly have been a supporter of efficiency data being used within the formula. As a fire and rescue service who have been introducing efficiencies since 2000, yes, absolutely. I think it would have moderated the outcome, certainly from a South Yorkshire Fire and Rescue point of view.

Steve McGuirk: Absolutely but it is difficult to see how it has not been used. The bottom line is, these charts show you we have made huge savings over the last 10 years, and it does not look like we have got any credit for that at all.

Dan Stephens: Over the last decade, Merseyside have reduced their total firefighters by about 40%, over 500 firefighter roles. That has not been accounted for.

Q35 Bob Blackman: Looking at the scope for efficiencies, clearly you have staffing levels that you require 24 hours a day; you have a whole variety of different functions that you have described. What is the scope for greater efficiencies? If you are faced with the challenge now, what greater efficiencies can you make?

Vijith Randeniya: In the West Midlands, we have approximately 60 front-line fire engines and one of the things that we are looking to do is to strip out a third of those and replace them with faster, smaller vehicles, crewed with up to three people-so a completely different approach. That is trying to get more with less.

As you say, 24 hours a day: a quarter of our entire fleet is on stand-down at night, because the demand is less. There are means that are being applied to draw out the efficiencies over the years. If we get a 27% cut, the things I have just talked about we will have done as well, and we will have to shut a further 11 fire stations and lose another 300 firefighters. That sort of additionality would be difficult absorb. The flat-rate cut would require significant change for all of us, in order to deliver that successfully in the next two and a half years.

Steve McGuirk: To just add to that, we are all reducing management costs; we are all significantly reducing our overheads in terms of management; we have taken out about 40% of senior managers in the last two years, as well as administrative people on fire stations and catering staff. We have done over 20 strategic reviews in back-office functions; we are sharing our facilities, including control facilities. Every aspect of a Star Chambertype approach we are doing-

Q36 Bob Blackman: Sorry, can I just interrupt? When you say "sharing services", is that across different services here? Are you all sharing your back-office functions together, or are you keeping separate ones?

Vijith Randeniya: Not just back office but front office. I have 38 fire stations and I have 35 ambulances based at them; that is an example of sharing front-office functions.

Q37 Bob Blackman: For example, HR functions: why do you need a separate HR function for each fire authority; why not merge them all together?

Joy Brindle: Can I comment on that? I think we are tending to do our shared services work within our regions, rather than with each other. If I can just give you an example, we deliver a number of back-office services on behalf of Northumberland, which includes fleet management, occupational health, and we offer them HR advice as well. That has been part of our overall approach to efficiencies even to date.

Steve McGuirk: Joint procurement, training facilities, shared control centres, and so on. There is a lot more we can do, and I am sure that is exactly what we will have to do to drive efficiencies.

Q38 Bob Blackman: I can understand your concern about the grant funding, but clearly the Government’s concern is going to be, "Are you as efficient as you can be with the funding you are getting". Therefore, hearing your evidence to say how far you can go in terms of efficiency, versus front-line crew reductions, is the key.

Steve McGuirk: One thing we should stress is, that when we embarked on the modernisation journey a few years ago, the idea was, if you get your fires down and your risk reduced, surely you do not need all these fire engines day and night? And that is exactly what we’ve done-reduce them.

Q39 Bob Blackman: I am glad you refer to that, because your chart of the percentage reduction in fires over the last six years shows a dramatic reduction in the number of fires.

Steve McGuirk: Absolutely.

Q40 Bob Blackman: Therefore, you would say, a reduction in the number of firefighters, fire engines and fire stations required, which may be what you are going to have to do.

Steve McGuirk: That is what we are doing. If you look on average, we are saying 30% fewer firefighters in the six metropolitan fire and rescue authorities. Alongside that change with fires, are also seeing other issues such as climate change. Looking at the weather now, all of our firefighters have been out dealing with floods-

Q41 Bob Blackman: You have certainly plenty of rain to dampen the fires.

Steve McGuirk: Indeed we have. There is also the terrorist threat, road traffic collisions and the whole balance of other risks that we have to contend with. It is not a straight linear mathematical equation, but, absolutely, we have all introduced flexible crew patterns, different levels of appliances day and night at different seasons of the year, putting extra appliances on, or smaller or different types of appliance. We would argue we have done exactly that.

Q42 Bob Blackman: What are the firefighters asked to do, say, overnight when they are not having to respond to fires and are on standby?

Martyn Redfearn: Part of that is having the correct duty system in the first place, because if you can cut the number of staff who are on at night, that reduces the downtime. Certainly most of us have introduced crewing periods where, in effect, firefighters are on call for 72 or 92 hours a week.1 We have got those advantages. We have brought things into the nightshift in terms of work for them to do, but you cannot go and do home fire safety checks on people’s houses in the middle of the night, and you cannot do much in terms of prevention other than things like nightclubs. There is a limited amount, so you do it by reducing the staff on duty when the actual calls are low as well.

Vijith Randeniya: We have also changed the nature of our working day. Working routines go up to 01.30 in the morning, and start at 06.30. We have squeezed as much out of a 24 hour day as we can without interrupting communities.

Q43 Bob Blackman: One last thing I invite your views on: how do you react to the view that says the least efficient fire services are getting the best benefit out of this grant settlement; the ones that have made efficiency savings originally are getting hit the hardest? Do you share that view?

Vijith Randeniya: It is a bit difficult to swallow.

Steve McGuirk: Yes.

Martyn Redfearn: It is true. The cheapest fire and rescue services per head of population are the metropolitans, and we are getting squeezed more.

Q44 James Morris: I have some specific questions to Vij about the West Midlands. Talking about cost savings and the discussion that we are having, we have recently taken on a joint fire control project with the Stoke-on-Trent and Staffordshire Fire and Rescue Authority. You have around £3.6 million funding for that. Is that something that is going to lead to efficiencies that can then be recycled into front-line services in the West Midlands?

Vijith Randeniya: I do not know that they will necessarily be recycled into it. Through a combination of the two fire control systems, the efficiency would just mean that facility costs a lot less to manage, and that will be part of our overall reduction in our budget. As Steve said, there are 20 strategic trawls through the organisation; we are all spending time-it is the day job-going constantly through trawl after trawl after trawl; where can we extract efficiencies? What we are looking to try and do is re-circulate and recycle where we can. We have a chance of doing that with a flat-rate cut. If it comes to a 27% or greater cut, then we are talking about cutting out large chunks of the service without any hope of recycling and efficiency.

Q45 James Morris: If you take another service in the West Midlands, the West Midlands Ambulance Service, they have moved to very much a regionalised model. They are moving away from having ambulances based in specific stations, and they are doing it on a hub basis.

Vijith Randeniya: Yes, that is correct.

James Morris: Is there any reason why the West Midlands Fire Service should not move towards that model? Doesn’t the same argument apply to fire engines as to ambulances? Wouldn’t that give you massive scope for cost reduction?

Vijith Randeniya: They are two different types of organisation. In terms of the cost reductions, we are charging the ambulance service for having their ambulances based at our fire stations, which is a much cheaper charge than they would have had if they had them based at their normal ambulance stations. The West Midlands Ambulance Service has a regional basis. The Government previously did look at a regional approach, and decided this was not the way that they wanted to go.

If we were to look at size as an issue for fire brigades, a number of us are the same size as three or four of our smaller brigades combined already. If you look at the overheads, other organisations may have 15 senior managers at director level; we have six, seven or eight.

Q46 James Morris: Have you exhausted the possibilities of cost saving? Is that what you are arguing?

Vijith Randeniya: No.

Q47 James Morris: For example, you have recently set up a commercial arm of the West Midlands Fire Service.

Vijith Randeniya: That is right.

James Morris: Does that give you increased scope to be able to generate additional revenue that could be recycled into the front line?

Vijith Randeniya: First of all, I don’t think you ever exhaust the point at which you can squeeze efficiencies out. We will always be going at it, but I think that the margin reduces over time. We have set up a commercial trading entity, because the Localism Act enables us to trade profits outside of the West Midlands Fire Service as a public service.

Q48 James Morris: What sort of revenue are you projecting that that commercial arm might be able to deliver to you in order, I presume, to recycle into front-line services?

Vijith Randeniya: There is a difference between revenue and profit. We have only been going for about three months. We are looking at maybe £40,000 to £50,000 in the first year. The difficulty with that is, as a fire service, we are not allowed to-

Q49 James Morris: That is about a quarter of a fire engine, isn’t it?

Vijith Randeniya: Yes. It is not very much, but we are new at this.

James Morris: It is a start; it is a quarter of a fire engine.

Vijith Randeniya: It is a start; there is potential there. We are getting a lot of complaints from the industry that we, as large organisations, are now entering the marketplace. We have only got so much time we can spend doing these other activities. My core responsibility is to make sure that the people of the West Midlands are safe, have the best possible firefighters and equipment provided to them to do their job. I have people who are spending part of their time looking at revenue generation; if it becomes something that starts to really take off, we will probably put more resource into that. I do not think in the short term that is going to provide a viable financial solution for the problems we are facing.

Q50 James Morris: In the medium term, is that not precisely the sort of innovation that all of the mets should be encouraged to look at?

Vijith Randeniya: In the mediumterm, yes.

Steve McGuirk: Can I just make a point about the idea of the hub model utilising depots? That is fine if all you are doing is going to emergencies. Our goal, however, has been to reduce demand. The reason why that demand is now an issue is that ambulance demand is rising at 6% a year, and that is going to go incrementally upwards. What we have done with fire is to use same resources to drive demand down as respond.

If all we had to do was go to fires and emergencies, absolutely, that is the model that we would follow. In terms of the cost to the economy and the savings that were made in terms of death and injury, where we are using the same resources, I would argue we are effectively getting two jobs out of the same firefighter. Our firefighters are both firefighting professionals and safety professionals. We are the only country in the world that has achieved that cultural transformation.

Q51 James Morris: I think West Midlands Fire Service got an 80% increase in the capital budget, which you and I have discussed on several occasions. Isn’t that also an example of where you can deploy capital budget in order to increase effectiveness and efficiency? We know a particular example where you have been arguing that by deploying new capital and building a new station it does not have an impact on response times and on the safety issues that you are raising. That is the argument that you have put in relation to the changes that are happening in the Halesowen and Rowley Regis constituency.

Vijith Randeniya: As you know, closing a fire station is a very difficult matter, not just for us as fire officers but for you as MPs as well. The issue is, we want even greater flexibility with the capital, as we have asked for in our proposals. If we had some greater flexibility, we could move money around. We are not after a greater quantum.

Now, you can only do so much with capital, because it is such a small proportion of our budget-83% of our budget is spent on staff. Therefore, when we get cuts of the quantum that we have talked about, we can go to capital; it is marginal; it can produce an effect. However, it is the revenue budgets that we need to make the greatest changes on. If there is flexibility between capital revenue then we have a much better chance, which is why we have put it as one of our proposals.

Martyn Redfearn: I have to say, though, certainly for us, we are looking to invest that capital and save money long term. We are looking at these new fire stations to make sure we keep risk down, so capital is important to us as well.

Q52 Heidi Alexander: I have a couple of questions about the longerterm funding of fire and rescue services from 2015 onwards. Can I just clarify something first? When we had the discussion about the way the formula was put together, which has resulted in the situation that brings you here today, somebody said that the weighting that was given predominantly to deprivation and the number of rented properties has created the situation that we see today. Is that the case, or was it other factors that were given a slightly different weighting that spews out the result that we got?

Joy Brindle: Yes, I think it is other factors. The point that we were making was that those elements are part of the formula, and we think it plausible that, if deprivation is given quite a lot of weight in the formula, the result that we had would not have happened. It did, so it has to be some other elements that have caused that result that we believe to be perverse.

Q53 Heidi Alexander: But you do not know what those elements are.

Joy Brindle: We do not know exactly how the different elements worked together to throw out the result that has been thrown out.

Martyn Redfearn: Certainly the Government’s own papers always index link fires with the index of multiple deprivation. The link is there; deprivation is a good indicator of the number of fires and deaths.

Vijith Randeniya: Our view would be as well that if IMDs-indices of multiple deprivation-were given sufficient weighting, as evidenced on page 5 of our submission, you would see the metropolitan fire and rescue authorities by and large have a greater amount of deprivation in their organisations. Yet, revenue spending per fire in the metropolitan fire authorities is at a much lower level.

Q54 Heidi Alexander: I have a couple of questions about 2015 onwards. Obviously there is a lot of change in local government financing potentially at the moment, with the Local Government Resource Review, and looking at the partial retention of business rates. Have you given any thought to how those changes from 2015 may affect funding for fire and rescue services?

Steve McGuirk: We understand the consultation is due out imminently, and I think all six of us are going to be designated as topup authorities. I think fire has been put into the equation because of the complex governance arrangements. If you are part of a county council, you are already in the equation anyway, and it is apparently very difficult to disentangle combined fire authorities and the different governance arrangements from that, so fire has been brought into the review anyway.

The consultation is out shortly. We were assured by Ministers and officials that as an approach we are better in than out, and we are taking that at face value just now, which is why the baseline is crucial. Assuming we are better in than out-but let’s see the formula-we are being consulted on that, and to be fair to the Minister and the officials, we have been talking to them over the last few months, and we will continue to do that. In terms of the link between the baselining that has to take place and the discussion we are having now, and the component parts of any formulaic basis going forward, it is crucial to tie those two together, because it will be seven or eight years, or even longer, before there is a reset of that.

Q55 Heidi Alexander: My other question is about the future as well. Earlier in the summer, the Government published their new Fire and Rescue National Framework, and I wonder what that says, in your view, about the financial position that you are facing in the next couple of years and the future? What does that framework say about the cuts that you are facing?

Dan Stephens: The framework came out last week, and it does not say anything at all about the-

Q56 Heidi Alexander: It seemed to include a lot of extra demands and a lot of talking about the challenges that you are facing.

Vijith Randeniya: It talks about the continuing terrorist threat, the issues around climate change, the issues around the increasing number of vulnerable people, particularly the elderly. These all place demands on us. The elderly and the vulnerable are our target groups. We spend a lot of time working with them. There are new challenges, there are new responsibilities, but the framework was silent on the funding.

Q57 Heidi Alexander: Do you think it is possible to meet the objectives for the fire service as set out in the framework, given the financial prospects that you face at the moment?

Vijith Randeniya: It is increasingly difficult. If it is a flatrate cut we have half a chance; if it is a replicated cut of the order of years 1 and 2, then it will be very difficult, particularly with the pressure for front line versus back office. It is going to be very difficult to do that.

Q58 Chair: I want to ask you very briefly: the Minister may well say, "Some of these authorities have quite significant reserves stashed away; all they have to do is spend those and not come to me for extra money."

Dan Stephens: You can only spend reserves once; I would make that point. You spend it one year and then you have nothing left the year after. The reason why a lot of authorities-certainly we in Merseyside-have a reasonably high level of reserves now is simply that is an anticipation of the scale of the cuts that we may face in years 3 and 4.

Q59 Chair: Is it an insurance policy.

Dan Stephens: That is what reserves are for.

Steve McGuirk: We also want to avoid compulsory redundancy of firefighters, and, in order to be able to do that, we lose people over a period of time; we need to stress that although we are only asking for a flat cut, we are still losing hundreds of firefighters. That is going to happen. And in order to achieve that without compulsory redundancies we must be able to smooth our way through that, and that is one of the reasons we have a reasonably healthy level of reserves and balances.

Martyn Redfearn: In terms of a flat cut, West Yorkshire will use all expendable balances to meet the flat cut.

Q60 Chair: Okay. Thank you all very much for coming to give evidence this afternoon. We will move on to the Minister. You are all very welcome to stay and listen if you want.

Examination of Witnesses

Witnesses: Robert Neill MP, Parliamentary Under-Secretary of State for Communities and Local Government, and Sir Ken Knight, Chief Fire and Rescue Adviser, Department for Communities and Local Government, gave evidence.

Q61 Chair: Minister, thank you very much for joining us this afternoon to look at the funding for fire and rescue services in metropolitan areas. You are most welcome, as you always are, to our Committee.

Robert Neill: Thank you very much. I am sorry we were a little late coming in. Sir Ken was helping a young lady who had been taken ill outside, which is what you expect the fire service to do.

Q62 Chair: Absolutely. If you do hear some restrained cheering from your left, the chief fire officers are remaining in the room, so they can applaud all your commitments to them during the course of the afternoon.

Robert Neill: Always nice to have a friendly audience.

Q63 Chair: Obviously, we want to talk about the grants to the metropolitan fire and rescue services, and their comparison with other fire authorities up and down the country. As the mets have just explained to us, in the first two years of the Comprehensive Spending Review, clearly they have had a larger cut than other fire authorities, six of whom have had a small increase. Was this disproportionate effect on the metropolitan authorities something that was done deliberately, or was it just one of the accidents of the formula funding arrangements, which are very complicated?

Robert Neill: Well, I do not think I would accept the premise of the question, Mr Betts, and therefore let me perhaps explain why. The first part of the answer is, yes; we applied the formula, which we inherited from the previous Government. There were a couple of technical adjustments, which I can explain in a moment, that we made. It was inevitable in any case, as part of the coalition Government’s deficit reduction strategy, that all elements of local Government were going to have to take a share of the reduction in spending necessary to pay down the deficit. In the case of fire, the reductions were back-loaded over the whole of the Spending Review period to give extra time for some of the joint working, collaboration and efficiencies that might enable the services to drive economies to take place.

Let me then say how that works in terms of the operation, and how it affects the mets as against everyone else; that is probably the next bit against that background. As I say, we used the same formula as we had previously inherited. There were, in a couple of instances, some very small increases for one or two non-metropolitan brigades. However, we in fact applied damping to the formula, which significantly protected the metropolitan authorities more than anyone else. Across the first two years of the period, metropolitan authorities were protected by the floor damping to a total of £26 million. That is a judgment as to where you put the floor for those damping purposes.

The mets were given a protection that a pure application of the formula would not, in fact, have given them. Therefore, to reflect that, those one or two increases were scaled back from what they would otherwise have been. I would also observe two other things as far as the mets are concerned: we did make some technical adjustments to the formula, which included, in effect, an increase in the weighting, in the needs element of the formula, around density, which would tend to work to the advantage of more urban areas, the mets included.

Of course, while we are talking particularly about revenue spend, you will note, of course, that over the two year period we had increases for the met brigades in their capital funding of between 50% and 82%, driven by the fact that some of that capital spend was linked into the reconfiguration to drive efficiencies in service delivery. So I do not think, taking the picture as a whole, the mets have been singled out.

Q64 Chair: We will come back to the details of the formula funding grant in just a second, but in terms of language that the public might understand, the residents of metropolitan areas would understand that on average their fire authorities have had a 12% cut in grant. The average for the country is about 6%, and some six authorities have had an increase. At this time of great austerity, when we were going to be all in this together, some appear to have escaped that general manifesto commitment from Government, and have actually got an increase in their funding at a time of great austerity; yet the mets have got double the cuts of the national average. That is how the public would understand it, isn’t it?

Robert Neill: I think the public would also understand it, Mr Betts, if they looked at it on the basis that the average funding per head of population for the mets in this current year, at the end of that two year period, is £26 on average, versus the funding in the shire brigades of £19 per head. There is a significant difference in funding, which I would be the first to say reflects some of the extra demand.

Q65 Chair: None the less, the figures I gave about the cuts for the first two years of the Comprehensive Spending Review are accurate, aren’t they?

Robert Neill: I would never accuse you of inaccuracy, Mr Betts, but of course it’s the way in which you choose to present the figures, isn’t it?

Q66 Chair: Yes; and we would also accept, Minister, that generally the mets have a bigger percentage of their total spend from Government grant because they get a low percentage from Council Tax. Even if it was the same percentage cut across the board, the mets would still have had a bigger percentage reduction in their spending capacity.

Robert Neill: That is the same for metropolitan fire authorities as it is generally for most metropolitan authorities of all classes. That is, of course, in a longerterm scenario, an argument for looking at the way in which we deal with the dependency local authorities generally have upon grant as such a principal source of income, hence our proposals for business rates retention, and why we are including fire and rescue authorities in them.

Q67 Bill Esterson: Minister, don’t you think it was rather odd that there was this amazing difference, in that on the one hand mets had double the national average in cuts, and at the same time a number of authorities saw increases?

Robert Neill: Bill, as I say-Mr Esterson; I am not going to do a Bob Diamond and be improperly informal.

Chair: We would never accuse you of that.

Robert Neill: Can I say, Mr Esterson, with respect, you talk about an amazing increase; actually, when you look at the figures, one or two of the smaller brigades had very small percentage increases. I would just gently point out, as I think I already have, what we did as Government was simply to apply the same formula as your own Government had been applying for a number of years, with a couple of minor adjustments, which, if anything, would have helped the mets, albeit perhaps marginally, around the needs element. Then I applied a damping level, which gave the mets protection, paid for by other classes of authority. I simply do not accept the suggestion that the mets were singled out.

Q68 Bill Esterson: I suspect they don’t feel terribly reassured by the fact that the damping saved them, given the level of cuts.

Robert Neill: Are you suggesting that I should have applied the formula I inherited without the use of the damping?

Q69 Bill Esterson: You are in Government now, and have been in Government for two years; it is not about what happened before you came into Government. The evidence we heard earlier talked about levels of deprivation, and the fact that, including deprivation, socio-demographic factors suggest a fourfold difference in the rate of dwelling fires and casualties. Given that you would be aware of that as anybody in the fire service, were you not inclined to look again at the figures that were produced from the formula?

Robert Neill: Actually, Mr Esterson, in looking at the whole of the formula, you have to look at it over a period of time-first point. Secondly, as you will know, we are proposing in the future to revise the formula, but when we came into Government we had to take a decision as to whether or not we went in for a wholesale review. That would not be practical, because after all the formula grant is the way it operates for all local authority funding. In dealing with fire, not only did we back-load the reductions in the settlement to give fire authorities more time to take preparatory steps to make some savings, but in many respects, it might be said we acted in a way that was helpful particularly to metropolitan authorities in how we operated the formula.

In terms of statistics, we have fortunately seen a continuing decline over many years in the number of fire deaths. That is a good and a desirable thing. We have also seen a reduction in attendances at both fire and nonfire incidents. There has equally been some reduction in headcount, but the reductions in headcount have been significantly fewer than in the number of attendances. I do not draw a simplistic correlation, but I think it is a fair thing to put that into context as well.

Q70 Bill Esterson: We had a fairly robust debate in Westminster Hall a few months ago, and during that debate you said that the formula is "potentially flawed". Do you think the formula is unfair?

Robert Neill: I have always been on record as saying-and I say this gently-the formula we inherited does have unfairness in it, right across the whole system, and that is why the Government is proposing to change the way in which we fund local authorities across the piece. That is the whole point of moving to the introduction of retained nondomestic rates, so that we can move away from such a system of reliance.

Equally, Mr Esterson, given that we have to work the formula that we have, we consulted, as you will know, and by and large the decisions that we took as a Government around the formula reflected, in the fire context, the opinion of the majority of fire authorities who responded to it. Let me put it this way: I wouldn’t start from here with a system of formula grants, and everybody knows that, because we do not regard it as localist. But I do believe we have operated as fairly as we can a system that we inherited, and we have proposed reforms to improve the situation.

Q71 Bill Esterson: Not wanting to put words in your mouth, it sounded to me like you said "Yes" in answer to my question whether you think it is unfair.

Robert Neill: What I inherited was unfair, yes.

Bill Esterson: You said it is unfair.

Robert Neill: I said what I inherited was unfair.

Q72 Bill Esterson: What plans do you have to change the formula? The evidence we have heard earlier-with great reluctance, because the chief fire officers did not want to raise unnecessary alarm and were very reluctant to say what the danger would be and whether people would die as a result-is that if the worstcase scenario were to be realised in the coming years, there would be a dramatic increase in risk. Do you plan to change the formula so the worstcase scenario for metropolitan authorities does not arise?

Robert Neill: Again Mr Esterson, I, like you, have read the document produced by the Association of Metropolitan Fire and Rescue Authorities. I do not think the evidence of the document quite bears the degree of language you put it in, but I do accept that we must always keep the formula under review. Of course, over this coming summer we will be consulting, as is normally the case, upon the settlement for the coming year, and that includes how we operate the formula.

Given that this will be setting the baseline for the new Business Rates Retention Scheme, we will be changing the system, so an opportunity arises for the points that members of this Committee, and the fire authorities right across the country, make to feed into that consultation. I am sure people will take that opportunity.

Q73 Bob Blackman: That leads us neatly on to the consultation you conducted two years ago. Can we just be clear what the submissions to the consultation were from the metropolitan fire authorities at the time?

Robert Neill: Yes, certainly, Mr Blackman. Let me go through it. You and I, I suspect, have lived with the details of these things for longer than we care to think.

Bob Blackman: A lot longer.

Robert Neill: Let me tell you what we consulted on and about the feedback that came from that. First, I consulted on changes to the formula, posing four questions. The first two questions related to updating the expenditure data that are used in the regression analysis. The way that we dealt with that was through those elements of the data that are used to determine the weights for some of the indicators-as you know, there are a lot of indicators in the formula.

The first question we proposed was whether or not to update the data from expenditure that was averaged over a period from 1989-99 through to 2000-01; should we update that to 2006-07 or 2008-09-use more up-to-date figures? The response to that was overwhelmingly-28 to eight-in favour. That is not surprising, and it has always been the policy under Governments of all complexions to try and use the most up-to-date figures, but we consulted on it.

The second question proposed was the same: do we use that updated expenditure, but should we add in annual cashable efficiency savings that had been reported between 06-07 and 08-09 by authorities? There, the majority, by 28 to seven, were against adding in the efficiency data. That included the mets: Merseyside, West Midlands, West Yorkshire and Tyne and Wear were opposed to adding in the efficiency data. The main reason given was that it was felt it did not provide a consistent reflection of the ability of authorities to make efficiencies over the period. Some said they had made their efficiencies before the 06-07 period.

Q74 Chair: Perhaps the mets argued for it to be included because they had done the efficiency savings that other people had not done?

Robert Neill: That was one of the points I was making; some people said, "We have done it already", and others said that there was more scope to achieve some, so some were saying it would not necessarily produce a fair comparison, in a nutshell. That is what we went with there. There was also a suggestion as to whether or not the efficiency data would be audited in a way that some of the other data were. Those were fair enough responses. I think that gives you the answers to the first two questions, Mr Blackman.

The second two questions related to the risk index used in the deprivation element of the fire and rescue services relative needs formula; as you know, it has its own formula within it. The original analysis to derive that index had been undertaken in 2002, and so the analysis was re-run with more recent data, and that produced two options that were consulted on. I am sure members of the Committee have seen the papers. FIR3 proposed a new index and a separate, negatively weighted population sparsity indicator in the relative needs option. Option FIR4 contained a slightly different index and a separate positively weighted population density indicator-so weighting density as opposed to weighting sparsity.

The outcome of that was a bit more mixed; 11 authorities supported FIR3 and eight supported FIR4, and 15 opted for neither of those. That is not uncommon when it comes to dealing with different types of authority, although there was general support for updating the data and so on, which is understandable. As a result of that, I decided to update the expenditure data, which there seemed to be a consensus on, and update the indicator for deprivation risk. That is the change to the formula that I made, which, if anything, would tend to operate to the benefit of metropolitan and other more urbanised fire authorities.

Q75 Bob Blackman: Given that that was the aim, to improve the position for more densely populated areas, can you explain to us how that has worked in an almost perverse fashion, where metropolitan authorities, which are by definition more densely populated than others, seem to have lost more money than other areas? That seems to be completely contrary to what you have just told us.

Robert Neill: It surprised us rather at the time as well, I have to say to you. It made up my mind, Mr Blackman, as to (a) why I was going to use the damping in the way in which I did to protect the mets and (b) why I thought it was necessary to include fire authorities for the future in business rates retention, to make sure we get away from that. It is not the first time, in fairness, that we have seen some rather odd outliers come out of the system. Although that is one variable, a lot of other variables go into it as well.

Q76 Bob Blackman: One of the things that we have heard in evidence is that there are various different variables that you as Minister can adjust accordingly.

Robert Neill: That is right, yes.

Q77 Bob Blackman: What adjustments did you make around that?

Robert Neill: I made that one adjustment, which it seemed to me accorded with the consultation responses. Because we knew already it was our intention to seek to move to a different system for the future, I was anxious not to cause undue disturbance before then. I thought it was better to leave some of the rest alone, but we did decide, of course, collectively to back-weight the reductions, so that there was more time for authorities to take the steps. I then also consulted on what we should do about the damping, and adopted what seemed to be the view that was shared-

Q78 Bob Blackman: We are going to come on to those areas in a minute. One of the things that is of concern, of course, is the assessment you have made during the consultation process of the reductions in staffing levels, the number of firefighters that will be available, and the potential risk there is to the public. How much was that in your deliberations?

Robert Neill: They are always in the deliberations. The key thing above all is always to ensure protection of the public; that is the key driver, and that is why, for example, it is logical to have the most up-to-date population figures, because that will drive risk and deprivation figures. There is an interesting point in relation to the mets, when we look at risk and staffing levels. The nature of firefighting has changed and we are dealing not purely with fires and firefighting activity; there is also very good work around fire prevention and awareness work, the key objective being to stop fires in the first place. Therefore, over the last 10 year period, what we have seen in the mets, in effect, is a reduction in total incident attendance of 51%, and a reduction in the firefighter strength of 11%. It is clear that while there had been a reduction in firefighter strength, thanks to other work that had been done, there was a very significant reduction in the number of call-outs, I am glad to say. That has an impact on the amount of demand, in other words. There is not a simplistic argument that says, if you reduce numbers of firefighters, that automatically increases risk; it depends what other work is being done, some of which is being done by the fire services, some of which is done by better building design and work by other agencies

Q79 Bob Blackman: Was the reason for excluding the efficiency data as a result of consultation or was this something you decided to do anyway?

Robert Neill: In both cases, that was as a result of the consultation, as I think I indicated. The point was made that, if I summarise, it seems like a nice idea, but it may not be reliable data.

Q80 George Hollingbery: Minister, I am delighted to say that my own local authority of Hampshire got the highest increase, extraordinarily, under this amazing formula. Does it include projections of numbers of exploding BMWs? It seems a bizarre formula that deals with relative need and ends up giving Hampshire more than the metropolitans. If we can both accept that that is frankly a pretty ludicrous outcome, and given that we are about to abandon the formula anyway, why don’t we just abandon it for the current year, give the flatrate increase or decrease as the fire authorities are suggesting, and then move forwards under the new system thereafter, such that there is some predictability for the fire authorities and they know where they are going?

Robert Neill: It is a superficially attractive argument, but we trailed it, Mr Hollingbery. In the 2010 local government consultation, we asked whether we should set the baseline at a flat level, as is the case for police. Two thirds of single-purpose fire authorities did not want to do that; they wanted it to be set in such a way as some change to formula grant came through. Again, we were not acting arbitrarily; we were reflecting a very clear majority among the fire authorities that were consulted.

Q81 George Hollingbery: I understand that absolutely, and I have to say there was a degree of inconsistency in this regard in our questioning a little earlier of the chief fire officers. Given that we are at a crucial point where we are setting baselines for a conversion of the entire way we fund this, would it not be to everybody’s advantage to make this simple, so everyone knows where they are going for the next year or two?

Robert Neill: I perfectly understand the point, Mr Hollingbery. We will be consulting very shortly indeed upon the baseline for the coming period, and you will understand it would be inappropriate for me to prejudge that consultation.

Q82 Heidi Alexander: Minister, you said you were surprised with the way that some of the outcomes came about when the formula was run for the funding of fire and rescue authorities. If you were surprised, why did you not change it and adjust it at that stage, and why did you go ahead with it?

Robert Neill: Perhaps I should say, Ms Alexander, that I was surprised, but it is not the first time I have been surprised in something like 35 years of dealing with local government finance and formulas of one kind or another. I do not say that flippantly; it is one of the problems that we have to deal with, and why we argue in many ways that this is an immensely opaque system. It would be theoretically possible to unscramble every bit of the regression analysis, but I do not think that would have been practical in the time that was available.

Therefore, as with previous Governments, what we have tended to do is, rather than seeking in a short period to unscramble the whole of that regression analysis, use some judgment about certain indices and where we pitch the damping as the principal means of dealing with some of the issues that arise.

Q83 Heidi Alexander: I am still not convinced about why more was not done at that stage, when you could see what the impact was going to be on fire and rescue authorities in the met. However, leaving that aside, you have the consultation this summer. You are going to be running the formula, presumably, again to set the allocations for 2013-14 and 2014-15. What are you minded to adjust to ensure that we do not have a similar outcome in terms of the metropolitan areas being hit much harder than the shire authorities?

Robert Neill: Two things: first, as I said, we will be announcing the formula consultation very shortly, and the normal protocol and propriety is that we make a statement to let the House know that. It would be wrong of me therefore to announce that in advance, and equally wrong of me to prejudge what the outcome would be. The other point that I would make is this: we have been hearing evidence about the funding situation in relation to metropolitan authorities. I am the first to accept that there are funding pressures for all local government, as a result of the inevitable need to reduce the deficit. It would be wrong to think that the metropolitan fire authorities are the only class of authority that have made representations in relation to the operation of the formula either now or, indeed, in many years in the past. To be blunt, there are funding pressures on other types of authorities: issues around sparsity, which we consulted on in the past, and beyond that. The mets are not in a unique position in terms of feeling that they would like things done differently; that is why, again, we are changing the system.

Q84 James Morris: I would like to ask some further questions about damping. First, on the point you made about capital funding, there has been a range of increases in the met areas. What was the thinking behind those increases in capital funding? Secondly, some representations have been made to us that there should be more flexibility around that capital funding in order for it to be able to be allocated to other revenuerelated activity. Can you just explain that?

Robert Neill: The reason for the increases in capital funding were principally that a number of representations were made that some of the longerterm changes in the way in which the service operated and delivered things required an element of capital to be put into them. Very often, the investment in capital was a means of driving longerterm efficiency gains, so it seemed sensible to do that. That is the principal issue, and that remains the case. We are looking from 2013 onwards, again subject to the consultation-and we will consult on this shortly-to consider whether we cannot be more explicit in recognising efficiency proposals in the allocation of capital funding bids.

That was an area where, because you were not tied so rigidly to a formula, you could recognise that you could take efficiencies out by being more helpful to capital funding. And, of course, then there is a separate stream; having agreed with this Committee’s views on the FiReControl project, we took a decision to negotiate our way out of that contract, which we successfully did, and then provided a separate pot of capital funding in addition to the increases I have referred to.

Q85 James Morris: Is there an opportunity for the capital funding to be used more flexibly?

Robert Neill: Maybe people will make that point in the course of the consultation and we will look at it. The only thing you would have to bear in mind is, because of the way Treasury and other rules work, and the distinction between capital and revenue, you could not do that in isolation for one local government service and not for others. That is a factor. It does not mean that the point will not be made by all classes of authority, but we would have to consider that, not just in terms of fire, and not just in terms of local government, but more generally.

Q86 James Morris: There seems to be some consensus in this discussion that the current grant formula is flawed because you had to go through a very complex process of damping even to achieve what was achieved. I think we are agreeing that the current grant formula is flawed, so when you are looking forward to years 3 and 4 of this settlement, with the new changes to business rate localisation, with fire authorities becoming topup authorities, is it your expectation that there will be a fairer and better settlement for the mets out of that new set of arrangements?

Robert Neill: I would hope that all fire authorities would get a fairer settlement, because one of the issues we have had to deal with generally is the lack of transparency around the operation of the current formula grant. You make the point that by all authorities, including the mets, being topup authorities, that reflects, first, the fact that although they might have some influence, they have less influence on business rates than billing authorities. Second, it gives them protection over the whole of the period by the topup being uprated by way of inflation throughout that period.

Q87 James Morris: Do you think you can give assurances or reassurances to, for example, the metropolitan fire service and the people of the West Midlands that the impact of 2013-14 will be less of an impact than has been described for the first two years of the settlement?

Robert Neill: All I would say is that the settlement itself is set out, and I am not in a position to change that. In terms of the distribution, again, I am not going to prejudge the formula, Mr Morris, you will understand that, but we are consulting. I think everyone wants to ensure that we have a formula that gives the best possible outcome we can, given the financial constraints under which we have to operate.

Q88 James Morris: Just a point about the damping criteria: clearly you adjusted through damping in order to mitigate the full scale of the impact on the metropolitan authorities. How was that paid for?

Robert Neill: As is always the way with the damping, that is clawed back from those authorities that would have been gainers. It is a recycling. It is always the way; essentially, the increases that would have been above the floor are scaled back to pay for the damping that protects those who are the beneficiaries.

Q89 Simon Danczuk: Minister, just to be clear, is fire service provision in met areas going to deteriorate as a result of these cuts?

Robert Neill: No. I have no reason to believe that that is the case, because I accept that there are funding pressures upon all local authorities. As I said before, Mr Danczuk, that is because we have to reduce public expenditure to pay down the deficit. I am heartened by the positive attitude that is being adopted by metropolitan authorities, as well as authorities in the shires and combines, towards greater collaboration, towards driving out greater efficiencies. Greater Manchester, for example, is one of the authorities that has done a lot of work already to change their rostering systems to drive out efficiencies from workforce organisation, and I pay tribute to those authorities for that.

I do not sense from the professionals themselves that it is inevitable that this will end in a worse service for the public. These are challenges, but professional firefighters do rise to the challenges, and I have confidence in the professionals.

Q90 Simon Danczuk: I am sure you have read this report.

Robert Neill: Yes.

Q91 Simon Danczuk: It suggests otherwise, doesn’t it?

Robert Neill: As I say, again, Mr Danczuk, professionals will naturally make their point of view. I have to come to a judgment across all fire authorities, and it would be wrong and misleading to think that purely metropolitan authorities are those who have a case that they could make about the way in which funding is distributed.

Q92 Simon Danczuk: Speaking to chief officers before you arrived here, some of them believe, in a worst-case scenario, how you are handling their budgets could over time result in an increase in the loss of life. What are you going to do about that, Minister?

Robert Neill: I do not believe that is justified by any evidence that we have seen.

Q93 Simon Danczuk: Sir Ken, I just wanted to ask you, do you think that the met authorities are being treated fairly?

Sir Ken Knight: The Chairman will know that I have been a chief fire officer of a county, a CFA, West Midlands, as well as London.

Simon Danczuk: I’ve read your CV.

Sir Ken Knight: I do not actually believe it is less fair. I have seen this tussle go on for a number of years, because of the inadequacy of the existing formula, and being party to that. At this particular time, I know that my colleagues sitting behind me, who were all chief fire colleagues where I was working until I came into this post, are facing a huge challenge. But I do not think they are facing a greater challenge than the rest of local government.

Fire is very much a part of local government. It is going through some very tough times in austerity, and it is going to take both the chief fire officer and the fire authority making some tough decisions about sharing best practice. That is going on, I have to say.

Q94 Simon Danczuk: They are not facing a greater challenge than those authorities that have received an increase in their budgets.

Sir Ken Knight: They are facing a very different challenge. It is unfortunate that there is any increase at this time, and everyone recognises the austerity that the country and local government are facing. We do see some incredibly good practice going on as well, and sharing that good practice is going to be really important. I will give you one example.

Q95 Simon Danczuk: I do not need examples of good practice for the moment, but you were saying it is unfortunate that some authorities have received an increase. Do you think it is wrong that any authorities, during these times of austerity, got an increase?

Sir Ken Knight: I think the inadequacies of the formula proved that to be the case, and it is right. Can I give you that one example, Chairman, because I really would like to? Fire deaths are not down by accident; they are down because of the tremendous work the fire and rescue service has done in driving down fire deaths, involving firefighters working with the very disadvantaged. But as you will know, if you look at the figures just published, while there are something like 223,000 fires, of all types, a year, from grass fires to bin fires to house fires, there are still 250,000 false alarms from automatic fire alarms. There is a lot more work to be done to drive out some of those efficiencies.

Q96 Heidi Alexander: Sir Ken, I think you just referred to some of the really excellent work that has happened over the years in terms of preventive work to decrease the number of fires that we see. Over the next two years that we are talking about in terms of the financial settlement, if we see the same level of cuts in the metropolitan areas as we have seen in the last two years, what is your assessment of whether metropolitan fire services will be able to continue to do that really important preventive work? We have certainly received evidence from one of the officers who spoke to us previously that, given the financial climate, it would be very hard to continue that work. What is your take on that?

Sir Ken Knight: I do not think the outcome will be lessened; it may be done differently. We are seeing it done much more now in partnership with the rest of local government. Instead of a series of visits to elderly people’s homes, we have some joint partnership with social services and education, not solely in silos of individual departments. We are seeing a lot more joint working.

As we are now seeing something like 86% of homes fitted with smoke detectors, which was something like 7% in the 1970s and 1980s, we are seeing a natural reduction in fire deaths and risk. We are seeing some of those big ticket items, like the foam filled furniture regulations of 20 years ago, coming into fruition, as well as the effects of the fire safe cigarettes passed through the European Parliament last year. I think we will gradually continue to see a reduction in fire deaths and fire injuries, and the fire service will be the prime deliverer and leader of that, but they will not be the only deliverer; there will be more partnership working driven by the innovation that has been caused by some of the savings that have to be made.

Q97 Bob Blackman: In your letter, Minister, we have a series of different menu items where you can see efficiencies are happening.

Robert Neill: Yes, indeed.

Bob Blackman: We have heard evidence that a lot of authorities are considering efficiencies across regions, together with other forms. Given the number of fire authorities that there are, do you believe that there are too many and should we see mergers? Or should we see back-office functions merged across authorities? HR functions in every fire authority: is that justifiable in this day and age? Where do you see these efficiencies coming from?

Robert Neill: I think there will be a great deal more collaborative working. I think you are absolutely right; it is surprising in all but the very largest authorities to be expecting stand-alone, back-office functions. Exactly how they are shared and configured I would not seek to dictate from the centre, but I have made it absolutely clear to authorities that we will not do nothing to impede any mergers operationally or, indeed, beyond. Some authorities have at least posited and discussed the possibility of a full administrative merger. It is not something that we are seeking to drive from above, as with local government reorganisation generally. But equally, if people come to us with a case, there is no obstacle from the Department, and we are happy to discuss ways forward to help people to achieve whatever operational efficiencies are best for them.

Q98 David Heyes: I think you said, Minister, earlier that you would make an announcement about the consultation process, so the consultation could take place during the summer?

Robert Neill: Yes.

David Heyes: You may not agree with me, but this is summer.

Robert Neill: It may not seem like the summer, Mr Heyes, but I accept it is.

David Heyes: But it is not happening yet. You said you would make that announcement to Parliament first. So, unless you are going to do it tomorrow, when are you going to do it?

Robert Neill: You are a very shrewd observer, Mr Heyes.

Q99 David Heyes: Okay; we look forward to it tomorrow. It is difficult now, because I am asking you to anticipate your statement, but I think you could probably share with us when you think the determinations would be made after that consultation process is over. Can you give us an idea about that?

Robert Neill: Absolutely. Knowing your experience in the matter as well, Mr Heyes, you will know that when you run those consultations through the recess period, you have to make allowances for that fact, and that generally-and I do not anticipate it will be any different this year from normally-the provisional settlement comes out at the back part of the autumn. That is to say, it is normally November/December sort of time. I would not pretend that it is likely to be much different this year. But I am sure you would not hold me to an exact date, particularly as this is a complex process this year, because we are setting the baseline for a larger reform going forward. We do not anticipate significantly departing from the normal timeframe for that process.

Q100 David Heyes: Can I take you back to this issue of the back-loading of the original decision to make cuts? It was said that the cuts to the fire service were back-loaded. We have had a longer discussion about the bad news, the worries that exist on the basis of the cuts that have been made so far. Is it not the case, if the cuts were back-loaded, that this is going to get much worse by a huge factor? The worries we have discussed so far in this Committee will seem small beer compared with what might happen with back-loaded cuts that could come out in your announcements towards the end of this year.

Robert Neill: There are two factors at play there. First, there is the overall financial envelope of the settlement, and that does not normally change in the course of the consultation on the distribution. Second, there are distribution elements, which is the whole point of the consultation itself, Mr Heyes, and that is why you will understand I am not going to anticipate that.

Q101 David Heyes: Isn’t it likely that the back-loading is going to have a similar disproportionate impact on the mets?

Robert Neill: I do not think that necessarily follows, because the whole point that Sir Ken was making, and others, is that there is a great deal of work being done already around efficiency work. We have not sought to prescribe centrally how it is that authorities meet the need, which probably will be there under a Government of any dispensation, to make savings through changing working practices.

A lot of the money that may have been invested already may be paying off in that. I have indicated already that we have been quite generous in our increases to capital funding, to seek to drive out efficiencies through that capital investment.

Q102 David Heyes: I have to say to you Minister, as a one-time member of the Greater Manchester Fire Authority, mostly during the 1990s, I would have admitted at that time there was scope for efficiency savings. The fact is that during recent years, we have seen the huge impact of efficiency. The organisation has been pared to the bone, the back-office functions have been severely cut, with £80 million worth of cumulative efficiency savings according to the chief in Greater Manchester in the last six years alone. With further back-loaded large cuts, it is difficult to see how that is going to be achieved through further efficiency savings in authorities like Greater Manchester and the other mets.

Robert Neill: I think I was a member of London at much the same time as you were in Greater Manchester, by the sound of it Mr Heyes, and I would agree with you that considerable efficiency has been driven out. I do not dispute what you will have heard earlier about efficiency working having been done. I am not going to say that that precludes further saving being made, because very often one can take efficiency to yet a further degree by much more joint working and collaboration, but neither am I going to predetermine arguments that may well be made to me perfectly legitimately in the course of the consultation process.

Q103 David Heyes: Minister, you said, in answer to a previous question, that the scope for efficiencies through shared functions is much less in the larger authorities, and by definition those are the met authorities.

Robert Neill: Interestingly, I said "the very largest authorities"; that was in the context of having your own payroll function. I did not say I would exclude any authority from considering that; the challenges of achieving that may be greater, but I do not believe that any authority should be ruling that out. Indeed, it need not just be among fire authorities; there are examples of fire authorities sharing payroll function with districts in their own area. We can think outside purely the fire brigade world, as far as that is concerned. Maybe that is the stage at which authorities, which have already done good internal efficiencies, can now be looking to in terms of driving out savings with their partner authorities in other parts of local government.

Q104 Chair: Minister, thank you very much indeed for coming. One final point: if you were, in the end, minded to accept politically that there was a case for the same percentage cut for all fire authorities in the last two years of the Comprehensive Spending Review, there would be nothing to stop you legally from doing that, would there?

Robert Neill: Legally, I am sure there is not, but I would have to act rationally on the basis of the consultation, and you would have to look at the way that works in terms of the rest of local government. With respect, Mr Betts, it is a very nice attempt to draw me into prejudging the consultation and I am not going to do that.

Q105 Chair: It is a decision you could make if you wanted to.

Robert Neill: Any Minister has a range of discretions, but they are wise to act upon what comes out of the consultation without prejudging.

Chair: Minister, as always, thank you very much indeed for coming to give evidence this afternoon.

Robert Neill: Good to see you, Mr Betts.


[1] Correction by witness: It should be 96 hours.

Prepared 17th October 2012