Tyne and Wear 2018/19

Tyne and Wear Fire and Rescue Service is good at making best use of resources. But we found the following area in which it needs to improve:

We set out our detailed findings below. These are the basis for our judgment of the service’s performance in this area.

How plans support objectives

The service has a good grasp of the financial challenges it faces. In recent years, it has shown a good track record in reducing its spending to match available funding. It reduced its annual spending from £59.4m in 2010/11 to £48.1m by 2018/19. This was done partly through structural changes and introducing new ways of working. Two years ago, the service carried out a comprehensive organisational management review which ultimately saved £1.6m.

We consider the service’s medium-term financial plan to be sound. It makes prudent assumptions about future income and expenditure.

The service has introduced new shift systems and reduced the number of firefighters who crew fire engines. Since 31 March 2010, it has reduced operational firefighter FTE numbers from 880 to 611, a reduction of 31 percent. The service has worked hard to reduce back office costs. Since 31 March 2010, support staff FTE numbers have been reduced from 284 to 177, a reduction of 38 percent.

Due to budget reductions, the service froze recruitment of firefighter roles between 2010 and 2018. Staff work overtime to fill operational staffing gaps. In the nine months to 31 December 2018, overtime costs for wholetime staff were £549,300. This is a reduction from £931,400 in the previous financial year. The service plans to further monitor this spending.

Although the service has reduced the number of people in positions of temporary promotion, this figure remains high. As at 31 December 2018, 61 staff were on temporary promotion. This is a reduction compared with 31 March 2017, when the number was 141.

In the year to 31 March 2018, the cost of a firefighter per head of the population was £27.60. This compares with the England rate of £22.38 over the same period. Many factors influence this cost, such as the higher proportion of wholetime staff in a metropolitan service such as Tyne and Wear.

Despite staffing reductions, the service remains on course to meet its integrated risk management plan (IRMP) priorities. It also remains productive, demonstrated in the year to 31 March 2018 when it carried out a higher rate of HFSCs and fire safety audits than the England rate.

Productivity and ways of working

The service has thoroughly reviewed how it works. It has made important structural changes to its workforce model to make it more efficient. We saw a range of flexible working arrangements designed to improve efficiency and effectiveness. We are impressed by the way the service encourages non-uniformed staff to switch to uniformed roles, which allows it to make the best use of its employees.

The service has become more commercially aware, and is now generating income when other organisations use its assets. It has significantly increased its rental income and full recharging – two measures which add to the revenue budget.

We found good evidence of the service working with others to achieve more with less. For example, it used some joint funding from partner organisations to fund the installation of domestic sprinklers which are intended for properties deemed to be at highest risk of fire.

Collaboration

The service wants to collaborate further as a way of improving efficiency and cutting the costs of providing services in its medium-term financial plan.

The service actively explores collaborative opportunities. It is part of a joint strategic collaboration committee to promote closer work with the police and other partner agencies. It also has a dedicated IRMP collaboration working group.

We saw several examples of joint working arrangements, as well as examples of the service working with partner agencies. The service is also exploring opportunities to collaborate with neighbouring fire services in a bid to share resources and work more closely together.

The service evaluates its collaborative arrangements both through case studies and, periodically, reports to senior management meetings.

While we saw some good examples of the service working more closely with partner agencies, we believe it has yet to realise the full potential benefits of collaboration.

Continuity arrangements

The service has business continuity plans in place covering foreseeable interruptions. Departmental plans are aligned to risk registers. The administering of plans is well managed, and the plans we saw had been reviewed by their due date. But we found little evidence that the service tests its plans regularly. This means it can’t be confident that its arrangements are robust enough to deal with service interruptions. The service should make sure it has a regular testing programme for its continuity plans, particularly for high-risk areas.

We set out our detailed findings below. These are the basis for our judgment of the service’s performance in this area.

Improving value for money

We noted a gap between expenditure and income every year in the service’s current medium-term financial plan. This shortfall is due to rise to £3.6m by 2021/22.

The service did plan to save more than £3m by 2021/22. However, in February 2019, the fire and rescue authority declined to approve the service’s plans in full. It agreed only to a short-term proposal achieving savings of £680,000 in 2019/20, rising to £710,000 by 2021/22.

The proposed savings of £680,000 won’t be enough to meet the anticipated shortfall of £841,000.

With no further agreed savings plans in place, the service’s future financial outlook is uncertain. In 2020/21, the expected gap will reach almost £1m. The only way to balance the budget will be to use money held in reserves, which is not sustainable. Moreover, by 2021/22, the service’s total reserves are expected to have fallen by more than half, from £28.4m in 2018/19 to £10.95m by 2021/22. Of this amount, £7m is earmarked for specific expenditure. The service can’t keep overspending and relying on reserves. This position is unsustainable.

Because the current IRMP proposals haven’t been approved in full, it is still unclear whether the service can make the necessary future savings.

The risk is that, even if its original savings proposals are resubmitted and approved, there will be insufficient time to fully implement them and make the necessary savings. Relying on reserves will also leave the service with limited funds to draw on, invest or use in future.

The service has decided to sell three sites that are surplus to requirement. These sales are expected to generate more than £1.5m, which the service can then reinvest. But it needs to make further savings to meet predicted budget shortfalls.

Innovation

The service has made several important changes across the organisation to meet the needs of its IRMP and reduce its budget. These changes include adapting its model for operations. We particularly welcome the service’s innovative use of TRVs, which makes a fire engine available at times of high demand. We see this as a good use of resources.

The service has a good record of investing in new operational technology and equipment. For example, both fire control and its mobile command unit can view live feeds from Newcastle city centre’s CCTV cameras. This can help the service to gather operational information, which we see as a good use of technology. Staff we spoke to were complimentary about this investment.

The service needs to evaluate key areas of its change programme. It should do this to monitor the programme’s effectiveness, and to evaluate any harmful or adverse consequences that have arisen.

Future investment and working with others

Previously, the service held a specific reserve, which it set aside for ‘transformation and reform’. In 2018/19, the reserve stood at £5.5m. The service plans to draw on this reserve each year, so that by 2021/22 it will only be £450,000. The service has no plans to replenish this fund, so it isn’t clear how the service intends to invest in change and innovation in future.

It sees collaboration as an important way to improve efficiency and reduce costs, and make savings as the medium-term financial plan requires.

In 2015/16 and 2016/17, the service secured £930,000 of transformation funding. It has used this money on building works that have enabled Northumbria Police to co-locate at five fire stations. These co-located bases are now well established.

The service has benefited modestly from closer working relationships with the police. Sharing premises has generated some income. But the service has done little to increase integration or interoperability, which might have resulted in greater financial efficiencies and resilience.

In 2015, the service established an arm’s-length trading company, in the form of a social enterprise offering training and compliance services. However, this company has a complex structure and has yet to produce any measurable benefits (other than a small income from the use of service facilities).

We found the service had been ambitious about the profit forecasts for its trading company. These assumptions were added to future budget plans. This put the service in the position where further savings had to be realised.