Communities and Local Government CommitteeWritten evidence from the Local Government Association (FRR 06)
About the LGA
1. The Local Government Association (LGA) is the national voice of local government. We work with councils to support, promote and improve local government. We are a politically-led, cross party organisation which works on behalf of councils to ensure local government has a strong, credible voice with national government. We aim to influence and set the political agenda on the issues that matter to councils so they are able to deliver local solutions to national problems. The LGA covers every part of England and Wales, supporting local government as the most efficient and accountable part of the public sector.
2. The role of the FSMC is to represent as an LGA body the views and concerns of the fire community in relation to the fire services modernisation agenda. It ensures that local circumstances have a voice in the national context.
Introduction
3. The FSMC welcomes Sir Ken Knight’s review as a timely reflection on the future of the Fire and Rescue Service at a time when government funding for public services is reducing. In the 2010 spending review period Fire and Rescue Authorities have seen government funding reduce by around 22%. This downward trend in funding is expected to continue at least until 2017/18.
4. The review recognises the decline in call-outs and fire incidents which continue to reduce because of the excellent preventative work undertaken by the fire and rescue service.
5. Fire authorities are always looking to increase efficiencies with many already operating differently in order to manage an unprecedented decline in funding and will continue to find savings through measures such as shared service arrangements, reducing the number of fire stations and new flexible employment practices.
6. The efficiency review points to many options for future reform. The best solutions will be found if Fire and Rescue Authorities are able to lead the reform agenda.
Summary of Key Points
7. This is a timely review. It contains lots of interesting analysis which the sector will want to question and debate. Fire and Rescue Authorities understand that it is incumbent on them to be as efficient as possible in the expenditure of public money. The sector knows that with declining budgets the status quo is increasingly untenable and is willing to engage in discussions about reform.
8. There is already a lot of good practice emerging which should be recognised and widely communicated.
9. The sector is benefiting from robust peer review which can evolve to take account of assurance statements and other developments which negates the need for a reintroduction of an inspectorate.
10. Reform options could include mergers, but a number of individual Fire and Rescue Authorities have done in-depth studies which indicate that the financial case for mergers is not robust. However, there is much that can be done through greater collaboration and this is certainly a way forward. Future Control projects are paving the way for more collaborative relationships to develop.
11. Fire and Rescue Authorities are anticipating further reductions in government funding in 2015/16 and beyond. There is an untested assumption in government that this can be absorbed without changing the risk factors that underpin communities’ high regard of and trust in Fire and Rescue Services. The number of incidents are declining, but communities have an expectation about the quality and universality of Fire and Rescue Service response. The government should use Sir Ken’s efficiency review to also consider the impact of further reductions in funding on risk levels and stand ready to have an open discussion with communities about the level of risk mitigation it is prepared to pay for.
Funding, Efficiency and Effectiveness
12. The Knight efficiency review sets out a range of evidence to demonstrate that the 46 Fire and Rescue Authorities have very different spend profiles. With the publication of the review FSMC anticipates that individual fire authorities will consider the comparative analysis as a basis for revisiting the efficiency of their service delivery models.
13. However, it is worth noting that although there is a significant disparity in the expenditure per head of population, there is a very close correlation between the total number of incidents and net spend in a given Fire and Rescue Authority area (R2 = 0.9088). This suggests a potential reason for the variation in expenditure across Fire and Rescue Authorities and at the very least argues against random or unfathomable differences.
14. Sir Ken Knight’s financial analysis does not go beyond 2011/12. It is certainly the case that Fire and Rescue Authorities have made substantial reductions to their budgets in the knowledge of funding reductions to 2014/15. These reductions will at least equal if not exceed the upper level of efficiencies that Sir Ken Knight considers achievable. It is still an open question therefore what further reductions can be made beyond 2015 without an impact on risk.
15. Sir Ken Knight’s review implies that an overhaul of the funding arrangements for the Fire and Rescue Service is required so that the funding system can reward the efficient. As it stands revenue and capital funding are largely based on formula. The funding formula has had its critics over the years because of the lack of transparency and unpredictability. However, it is unclear how adding a subjective efficiency factor either to revenue or capital funding will increase transparency or predictability, both of which are required for long term planning.
16. The other source of funding is council tax. Like the rest of local government, the capacity to increase council tax has been constrained by the government’s requirement for Fire and Rescue Authorities to hold referendums on increases it considers excessive; currently the limit is 2%. Fire and Rescue Authorities have argued that in many cases the cost of holding referendums is greater than the additional income it would generate. The Chief Fire officers Association has estimated that “to increase council tax amongst all precepting [fire] authorities by just 5% would cost an estimated £41 million in referenda costs and yet would raise just £38 million in extra income”
17. In the 2012 settlement, eight Fire and Rescue Authorities were exempted from the referendum requirements. FSMC would like to see all Fire and Rescue Authorities exempted from the council tax referendum requirements.
Greater Collaboration and Interoperability
18. The case for greater collaboration between fire and rescue services and across the blue light services is well made. Closer working across the emergency services will raise the quality of the service to communities and potentially realise efficiencies. Fire and Rescue Services have already begun this process. Examples include the Future Control programmes and the Joint Emergency Service Interoperability Programme (JESIP).
19. These Initiatives provide the catalyst for further collaboration. But, for this to be meaningful strong local political and operational leadership is required.
20. Merger might be the solution for some, and the Government should ensure that all barriers to merger, including the current requirement for the equalisation of council tax across merging authorities, are removed.
21. However, there is much that can be achieved short of merger. FSMC sees the merits in collective procurement exercises across the fire sector and beyond where standardisation is achievable and desirable. Continuing to explore shared services, co-location with other blue light services and other public sector organisations, and asset rationalisation will also be necessary.
22. There is an important role for government here in breaking down the barriers in Whitehall which have the potential to stall further and sustained collaboration at the local level.
Scrutiny and Sector Led Improvement
23. The efficiency review questions the quality of scrutiny arrangements operating in stand-alone Fire and Rescue Authorities and links this to a failure to achieve greater levels of efficiency. Following the Local Government Act 2000 the vast majority of local authorities adopted the cabinet and scrutiny model which was itself based on the UK Parliamentary model. This approach is now synonymous with what we commonly understand scrutiny to be.
24. Stand-alone Fire and Rescue Authorities are not subject to the Local Government 2000 Act and as such they have adopted a variety of approaches to scrutiny. Some of these examples are very innovative. For example, Humberside Fire and Rescue Authority has established a Governance Audit and Scrutiny (GAS) Committee which is made up of eight members of the general public (all with prior experience in the public and private sectors).
25. Given the lack of a standard model of scrutiny, stand-alone Fire and Rescue Authorities, supported by the LGA and CFOA will need to consider how they can raise the transparency and profile of scrutiny in the sector. Sharing best practice will be a key element of this work.
26. The local government sector has worked very hard over the last 15 years to establish a successful model of sector led improvement. The confidence that the government has in the sector’s approach has led to the abolition of the Audit Commission.
27. Fire and Rescue Authorities have been enthusiastic participants in sector led improvement. All Fire and Rescue Authorities have or will undergo an OpA Peer Challenge in the three years from 2012/13. Fire and Rescue Authority Chairmen and relevant Cabinet Portfolio holders in County led services are actively engaged in the LGA’s Leadership Academies and the LGA and CFOA work in a bespoke way with Fire and Rescue Authorities as required. Members engagement with the Leadership Academy is also an indication of the willingness to face challenges and take difficult decisions and the value placed on learning from other areas.
28. The model benefits from collegiate but robust challenge and transparency; all peer challenge reports have been published.
29. However, the sector is not complacent and this year the peer challenge process, as it relates to fire and rescue authorities, is being independently reviewed. This will provide information on the effectiveness of the model and help to guide further refinements to the approach.
30. FSMC considers that sector led improvement is credible and successful and negates the need for the reintroduction of an inspectorate.
Governance Arrangements
31. The efficiency review points to savings from lean governance arrangements and also sets out options for wholesale reform of the governance arrangements for the Fire and Rescue Service. In considering any wholesale reform there must be clear net financial and quality benefits to the public purse and to communities.
32. Fire and Rescue Services operate across diverse geographic and socio-economic environments. One solution will not fit all and although this does not rule out a single national service it substantially reduces the benefits of such an approach. Scotland has moved to a single service and this approach will be watched with interest.
33. As an alternative to a national service the review poses, in line with the county model, the option of embedding the fire service in local authorities where it would be required to compete fully with other local priorities.
34. FSMC recognises the benefits to be achieved from greater alignment of purpose and budgets at the local level. Community budgets provide a route for this and also a great opportunity for the Fire and Rescue Service to benefit financially from the preventative work that they provide in areas such as adult social care and children and young people.
35. A further option proposed in the review is to move to governance by Fire Commissioners. This approach does potentially have advantages in terms of the simplicity and visibility of the accountability arrangements. However, FSMC’s preliminary view is that it will be important to consider the progress and impact of Police Commissioners, which have only been in place since November 2012.
36. In the view of FSMC, top down wholesale governance reform would be a distraction at this stage and rather than contributing to greater efficiencies it would divert attention and energies away from the key changes required in the medium term to ensure the fire and rescue service’s viability and continued high quality delivery.
National Resilience
37. The efficiency review focused almost exclusively on the service that Fire and Rescue Services provide to their local communities. However, the Fire and Rescue Service has a significant role to play in national resilience as is made clear in the Fire National Framework 2012. The area of expenditure and the policy and practice that comprises national resilience should now also be the subject of a review.
June 2013