Reserves to fund pensions injury deficit
Essex Fire Authority will use its reserves to repay £15m to the Government, a debt that has built as a result of changes made to the way firefighter injury pension payments are funded.
A shortfall of £1.8m a year has been building since 2006 when changes to accounting for injury payments to retired firefighters were made, leaving this financial burden with fire authorities. The payments relate to firefighters who have left the Service since 1992 and have been given early access to their pensions because of a Service injury, which attracts an additional injury pension.
The Fire Authority’s accounts have been audited annually by independent auditors appointed by the Audit Commission but until now, the discrepancy was missed. Even the Department for Communities and Local Government, who receive an annual return from all UK fire and rescue services failed to pick up on the liability.
The Authority has already predicted a £1.8m under spend in this year’s budget, so the Service is able to meet the shortfall going forward. However, repayment of the outstanding debt, with the potential for interest charges on top, will deplete ECFRS’ reserves challenging Service Managers to bring review expenditure plans that potentially were cushioned.
“Because of our prudent financial management over the last few years we have built up significant reserves and we are in a healthy financial position and able to wipe out this debt immediately. This is a significant burden but unlike other fire and rescue services that will likely face a similar financial challenge, the Fire Authority has the cash to pay while remaining financially sound,” said DCFO Adam Eckley, acting as Chief Fire Officer.
“We had already set the target of delivering £5.9m of savings over the next few years, we now have to look for £7.7m. As an organisation, we are geared up for transformation and although this presents an additional challenge, Essex is still far better off than many Fire Authorities nationwide who have already had to look to job cuts and station closures to balance their books.
“This year’s underspend has been the result of the organisation pulling together to deliver more with less and we are confident through our innovative and progressive approach, we can continue to keep Essex safe while meeting budgetary demands.
“As a result of this discovery, I have moved quickly to commission an independent external enquiry. We have reviewed our governance arrangements and believe that no individual is to blame. While the Treasurer and Finance Director is clearly accountable, we are not looking for any scapegoats. This was a genuine oversight by a number of parties and was brought to the Fire Authority’s attention as soon as it was discovered. We will now move forward and put this behind us while we concentrate on preparing for an uncertain future with cuts in government funding expected to continue after 2015/16.”
The Treasurer and Finance Director of neighbouring Kent Fire and Rescue Service will conduct the investigation.
Notes to Editors
1. No officers are available for interview, instead film footage is available to download and free to use by accredited news agencies here.
2. Please direct any enquiries to ECFRS press office on 01376 570814