PAPER C
Purpose: For Decision

Committee

CABINET

Date

THURSDAY 14 JUNE 2018

Title

PROPOSED CREATION OF A NEW COMBINED FIRE
AUTHORITY
TO
INCLUDE
HAMPSHIRE,
SOUTHAMPTON, PORTSMOUTH AND THE ISLE OF
WIGHT AUTHORITIES

Report of

CHIEF EXECUTIVE

EXECUTIVE SUMMARY
1.

Full Council agreed to accept an outline business case for the creation of a new
Combined Fire Authority (CFA), consisting of the Authorities of Hampshire, Isle
of Wight, Portsmouth and Southampton, in March 2018.

2.

This report sets out, for the Cabinet’s consideration, a more comprehensive
business case for a CFA, with a clear understanding of the day to day
operational implications for the Islands Fire and Rescue Service. Members are
asked to review and note this comprehensive business case as a basis for a
detailed public consultation exercise on the proposals.

3.

Any final decision on the establishment of a new CFA is a matter for the
Secretary of State. This will require a final business case to be submitted to
government, incorporating the public consultation exercise and with the support
of the Full Council, based on a recommendation of the Cabinet

BACKGROUND
4.

On 21 February 2017, both the council’s then Executive and the Hampshire
Fire and Rescue Authority (HFRA) agreed to an investigation into the extension
of the current Combined Fire Authority (CFA) to include the Isle of Wight Fire
and Rescue Service (IWFRS.). Members of the council’s Executive and the
HFRA asked the Chief Fire Officer to develop a business case for further
consideration and decision. On 21 and 22 March 2018 respectively, both Full
Council and the HFRA received an initial business case which outlined the risks
and benefits of creating a new CFA. Full Council requested more information,
specifically around the operational impact of creating a new CFA. This report
includes at appendix A, details of a full business case for Cabinet’s
consideration and provides an outline of the public consultation to follow
Cabinet’s approval.
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 5.

One of the key drivers for considering the governance of the service was and
remains the Police and Crime Commissioner (PCC). The Policing and Crime
Act 2017 places a duty on both constabularies and fire and rescue services to
collaborate, it also allows a PCC to make a local case for the change in
governance arrangements for a fire and rescue service. The PCC has recently
indicated his intention not to pursue a business case for a change in
governance.

6.

A change in governance and the creation of a new CFA requires Secretary of
State approval, as set out in the Fire and Rescue Services Act 2004. If both the
Council and the HFRA agree to proceed with public consultation, it is the
intention to bring a further report which details the outcome of the consultation
exercise, back to Full Council, with a Cabinet recommendation, and the HFRA
in autumn 2018. This report will inform the decisions of both organisations
before a final submission to the Secretary of State can be made.

THE ISLE OF WIGHT FIRE AND RESCUE SERVICE (IWFRS)
7.

The IWFRS delivers the functions of a fire and rescue service to the community
on the Isle of Wight. The IWFRS has been on a journey of improvement over
several years which started in 2005 when the Audit Commission judged the
IWFRS ‘Poor’ under Comprehensive Performance Assessment (CPA). The
following Direction of Travel for 2008 reported that the service was ‘Improving
Well’. The Comprehensive Area Assessment (CAA) judgement given in 2009
stated the service ‘Performs adequately overall’, this was after the last data
driven, evidence based review of the risks on the Isle of Wight.

8.

In 2014, the IWFRS commissioned a Peer Review which highlighted many
areas of nationally recognised notable practice, which demonstrates significant
improvements since the CPA judgement in 2005. However, the Peer Review
also stated that there were and would continue to be capacity and resilience
issues.

9.

Following the 2014 Peer Review, IWFRS approached Hampshire Fire and
Rescue Service (HFRS) to form a strategic partnership arrangement. The
Delivering Differently in Partnership (DDiP) programme was established on 1
April 2015, for a period of five years, to ensure the continued effective delivery
of fire and rescue service on the Island, to maintain capacity and resilience and
to provide efficiency savings to IWFRS.

10. DDiP has seen IWFRS and HFRS deliver work packages in partnership across
a range of areas including strategic leadership, fire control and mobilising,
health and safety, fleet and equipment maintenance and operational policies
and procedures. To date, capacity and resilience have improved, and the
savings to IWFRS have been £437k per annum.
11. Recent analysis of the provision of fire and rescue services on the Isle of Wight
identified the continued relevance of the current Integrated Risk Management
Plan (IRMP) and the impact of the service in its achievement. As one of the
range of services provided by the Isle of Wight Council it continues to be
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 subject to the same tight budgetary controls as applied across the whole
organisation as the council strives to be a ‘financially balanced and sustainable’
organisation. This may have the effect of limiting the service’s capacity to
undertake some of the extended functions of a larger, stand-alone fire and
rescue service.
12. The contributing financial factors, along with the challenge of sustaining the
capacity and resilience of the fire service, and with the powers granted to
PCC’s within the Policing and Crime Act 2017, means that investigating a
change in the future governance of the IWFRS is the next logical step to
ensuring communities on the Island receive an optimal fire and rescue service.
13. The business case at appendix A explores the risks and benefits of creating a
new CFA by considering operational and financial risks and benefits of a
combination. Within the Fire and Rescue Services Act 2004, the Secretary of
State, when considering creating a new CFA, will make a decision based on the
areas of;
(a)

efficiency,

(b)

effectiveness,

(c)

economy

(d)

public safety.

14.

Issues of efficiency, effectiveness and public safety are all part of the day to
day operations of a fire and rescue service and are explained in the
‘operational analysis’ section of appendix A. The economy aspects are
explored within the ‘financial analysis’ section of appendix A which explains
the impacts to the IWC as result of the creation of a new CFA.

15.

The business case suggests that the creation of a new CFA could lead to a
more efficient and effective FRS providing improved levels of service to the
public across the combined geography. This is especially the case in the
delivery of community safety and business fire safety courses and initiatives
which would help to reduce risk and improve public safety

16.

Across a larger geographical area, operational staff will still maintain their
existing local relationships and continue to have an understanding of the local
context of the area they work in. No changes to the current operations of the
fire and rescue service are envisaged in the business case, they will still be
driven by a locally delivered IRMP. The creation of a new IRMP for the new
CFA are would be required at a later date.

17.

A new CFA, one organisation with a single purpose is likely to be a more,
focussed way of running a Fire Service. It would allow for greater resilience,
removal of duplication, enhanced capacity and ensure continuous
improvement and development. The downside for the Isle of Wight being that
decisions will no longer be made locally on the Island but by the larger CFA,
although there will be IOW representation on the CF.

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 OPERATIONAL ANALYSIS
18. The Chief Fire Officer (CFO) is legally responsible for the operational delivery
of fire and rescue service functions on the Isle of Wight. It is the view of the
CFO that a new CFA would improve the efficiency and effectiveness of the
IWFRS. There would be no reduction in the day to day operational delivery of
fire services on the Island. There would be a single point for decision making
without loss of influence on strategic planning, an increased capacity and
resilience, reduced duplication of work and effective continuous improvement.
There would also be improved public safety through the joined-up activities of
community safety and business fire safety because of the joint capability gained
by both services.
19. Being able to utilise firefighters, and other staff, to deliver the range of activities
that HFRS currently carry out across a new CFA would help reduce the risk of
fire and other emergencies.
FINANCIAL ANALYSIS
20. The Director of Finance (the statutory section 151 Officer) has been directly
involved in the Financial Evaluation set out in the Business Case at Appendix A
and is content with the information contained therein. The evaluation focusses
on the following:
i)

The mechanism for the transfer of Fire Funding from the IOWC to the new
Combined Fire Authority

ii)

The financial implications of such a transfer of funding to the Isle of Wight
Council as a whole

iii)

The implications to the Isle of Wight Council Tax payers, specifically in
relation to future levels of Council Tax paid by residents

The Funding Transfer Mechanism
21. In aggregate the cost of the Fire Services, including all direct costs of service
provision, support services, corporate overheads and debt financing costs, for
2018/19 is estimated to be £7.16m (comprising £6.14m of direct costs and
£1.02m of other central costs). Naturally, any transfer of Fire Function should
be accompanied by an equivalent amount of funding to match the current cost
of provision.
22. The Chartered Institute of Public Finance and Accountancy (CIPFA) have
developed some guiding principles to both determine the cost of provision and
then disaggregate an equivalent level of funding.
In broad terms the
methodology seeks to achieve the following:


An overarching requirement to transfer funding equivalent to the cost of
current Fire Service provision, achieved by:
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 

o

Transfer all Fire Specific Funding streams to the new CFA (from both
the Revenue Support Grant and Business Rate Retention system)

o

The balancing sum of funding required to meet the cost to be met by
a transfer of Council Tax (i.e. a reduction in the Council Tax to the
IOWC and a new Council Tax precept payable to the new CFA)

o

Where there is any difference between the current Council Tax of the
existing HFRA and the amount calculated above, the difference to be
harmonised over time

In addition, the new CFA will be entitled to all Earmarked Reserves held
for Fire Purposes as well as a proportionate share of the IOWC General
Reserves and Useable Capital Receipts to the extent that they exist

23. The proposals set out in the Business Case, for the most part, follow the
methodology developed by CIPFA. There are three areas of departure /
difference from that methodology which are described below, however those
departures will be marginally positive to Council over the longer term:
i)

The treatment of outstanding debt - Estimates at £725,000
Debt is a single corporate cost and not distinguishable by Service Area.
An appropriate apportionment methodology has been used to estimate its
value of £725,000 per annum. The CIPFA methodology suggests that this
cost should be transferred to the new CFA with an equivalent funding
transfer which inevitably affects the element of Council Tax transferred.
To follow this methodology in this case would however lead to a large
disparity between the Council Tax levels of HFRS and the notional
amount calculated for IOW Fire Service and therefore a significant upward
harmonisation (increase in Council Tax) for all current Hampshire
residents, the proposals in the Business Case.
The approach adopted, has been to leave the debt costs with the IOWC
and the associated level of Council Tax, ensuring that the IOWC is no
worse off. In the longer-term, this arrangement will have a marginally
positive affect on the Council's financial position

ii)

Direct Support Costs - £270,000
These costs relate to support services and corporate overheads which
would likely remain with the IOWC whether the Fire Service remained or
transferred to a new CFA. The CIPFA guidance would suggest that
funding for all costs should be transferred whether they are transferable or
not on the basis that they may be able to be reduced over time. A
pragmatic approach has been adopted which leaves the funding for these
costs with the IOWC since associated savings are not deliverable in the
short term, this however, represents a saving opportunity for the IOWC in
the medium to longer term.

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 iii)

A transfer of a proportionate share of the Collection Fund Balance - £
£135,000 (total IOWC balance)
Collection Fund balances arise as a consequence of differences between
amounts budgeted for Council Tax and Business Rates versus those
received. Any surpluses or deficits are rolled into subsequent years and
factored into future Council Tax and Business Rate estimates. These
balances are essentially of a one off nature and not embedded into the
recurring funding of the Fire Service. The CIPFA guidance is silent on this
point and the agreed approach has been to leave these balances intact
with the IOWC. This will not have a detrimental financial impact on IOWC

Financial Implications of Transfer
24. Whilst the transfer of funding of £6.055m (which includes a further £80,000
saving identified from 2019/20 as detailed in appendix A) to the new CFA
reduces the Council’s overall cost base from which to make potential future
savings, it is not considered to be a significant issue given that following the
savings already made by the Fire Service to date and following the service
review it is unlikely that there is further scope for any additional meaningful
level of savings to contribute towards the Council’s overall savings requirement
of £16.5m over the next 3 years
25. As previously mentioned, one of the main financial implications associated with
the proposed is the transfer of liabilities relating to the maintenance and
replacement of assets used by the Fire Service such as building and vehicles.
It is estimated that some £2.3m of capital funding for property maintenance
would be required over the next five years with £1.4m of this required in the first
1 to 2 years and a further significant annual revenue budget for non-capital
maintenance and works would be required. In addition it is estimated that a
further £1.8m over and above our current planned budget for the replacement
of vehicles would need to be funded. These future costs will be avoided for the
council if the new CFA is established. Future capital resources are very limited
and therefore avoiding the need to allocate resources to the Fire Service will
allow investment for other council services which will contribute towards the
future financial sustainability of the council e.g. regeneration and other income
generating projects.
Council Tax Implications
26. The proposed methodology for the transfer of funding will result a need for
council tax harmonisation in order to form a single new CFA (as described in
Appendix A). This would require that the Isle of Wight Council tax payer would
pay an extra £3.74 per annum for a band D property which would be an
increase of 0.24% on the current 2018/19 council tax.

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 Transition Costs
27. There are no anticipated additional costs to the council in creating a new CFA
as currently any one-off costs associated with the transfer itself for the
preparation of a final business case to Government, the legal process required
and costs associated with the transfer of staff including equipment etc will be
met by Hampshire Fire and Rescue Authority.
28. In overall terms, the financial implications of the transfer of the Fire Service into
the new CFA are will be positive for the following reasons:
i)

In terms of the reduction in funding, the methodology has been
undertaken in a way which is practical, fair and financially beneficial to the
IOWC.

ii)

In terms of the ability to make a contribution towards the Council's £16.5m
savings requirement, it is unlikely that the Fire Service, with its relatively
small scale and in its current form will be able to make any meaningful
contributions, leaving the burden of savings to be made in all other
Service areas (i.e. a disproportionate amount of savings being in other
Service areas should the Fire Service remain within the IOWC).

iii)

The transfer removes future obligations for capital expenditure on
buildings, vehicles and equipment which would otherwise have to be
funded from the same level of capital funding that would exist whether the
Fire Service remained within the IOWC or the new CFA.

LEGAL IMPLICATIONS
29. Advice from the Home Office has clarified that a change in the governance
model of the HFRA and the IWFRS, which sits within the council, would need a
new combination scheme to be created. This is set out in section 2 of the Fire
and Rescue Services Act 2004.
30. A new Combined Fire Authority (CFA) would be established consisting of
elected Councillors from Hampshire County Council, Portsmouth City Council,
Southampton City Council and the Isle of Wight Council. A new Combination
Order would have to be created for the new CFA. This would be drafted by
Home Office lawyers in conjunction with HFRA and IWC legal representatives.
All existing employees of the IWFRS would transfer into the new CFA.
31. The detailed legal implications of the creation of a new CFA, including things
such as the transfer of assets and contract management would be explored as
part of the report presented to Cabinet later in the year.
32. The Policing and Crime Act (the Act) came into effect from 1 April 2017. The
Act establishes ‘legislation to enhance the democratic accountability of police
forces and fire and rescue services, improve the efficiency and effectiveness of
the emergency services through collaboration and build public confidence in
policing’.
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 There are 3 main provisions within the Policing and Crime Act 2017 which
affect Fire and Rescue Services:


A new duty to collaborate on Police, Fire and Emergency Ambulance
Services.



The enabling of Police and Crime Commissioners (PCC’s) to be
represented on their local Fire and Rescue Authority (FRA) with voting
rights, where the FRA agrees.



The enabling of PCC’s to take responsibility for the governance of fire and
rescue services where a local case is made.

Part 1 of the Act specifically relates to fire and rescue services and makes
several additions to the Fire and Rescue Services Act 2004. The act, as
amended, now provides powers to the Secretary of State to transfer the Fire
and Rescue governance to a PCC upon the request of the PCC.
33. The Isle of Wight Council is the fire authority. On 21 February 2017 the
Executive committed to preparing a business case for full council’s
consideration that examined the potential for a new CFA with Hampshire,
Portsmouth and Southampton fire authorities. The ultimate decision as to
whether to request that the Secretary of State make a new CFA rests with
Cabinet, as it is an executive function. However, before Cabinet consider their
decision the matter will be reported to full council in order that the views all
memebrs council can be taken into account by the Cabinet.
STRATEGIC CONTEXT
34. The council’s Corporate Plan 2017 to 2020 has the following actions in the
community safety and public protection portfolio, which directly link to the
delivery of the initial business case for the creation of a new combined fire
authority:


Develop a business case considering the options for future governance of
the Isle of Wight Fire and Rescue Service building on the successful
partnership with Hampshire Fire and Rescue Authority.



Fully assess the options and opportunities presented by the Policing and
Crime Act 2017, liaising with the Hampshire police and crime
commissioner, through a memorandum of understanding.



Develop options to improve the overall effectiveness of the Isle of Wight
Fire and Rescue Service, ensuring an effective, resilient and safe service
for the Island at all times.



Work with strategic partners and key stakeholders to ensure the Island
has effective and robust arrangements to ensure the safety of the
community at all times.
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 CONSULTATION
35. A public consultation about the potential for a new CFA is only necessary if
Members are minded to accept the business case in support of its
consideration. If this is the case then a 12 week consultation exercise on the
proposals is required, in order to inform the final detailed business case for the
creation of a new CFA across Hampshire, Portsmouth, Southampton and the
Isle of Wight. This would the form part of a submission to the Secretary of
State.
36. Two separate consultation exercises will be required if members wish to
proceed along these lines, one would be carried out in the current Hampshire
Fire Authority Area, and the other on the Isle of Wight. A report back to the
HFRA and the council would be expected later in the year.
37. The Home Office has been engaged in the process of developing the outline
business case; it has welcomed the investigations into the proposed creation of
a new CFA and is supportive of the direction of travel that both the HFRA and
council have taken.
38. The Consultation Institute has undertaken a retrospective review of the
business case and provided advice and guidance around best practice for
consultation.
39. Dorset and Wiltshire Fire and Rescue Service (DWFRS) formed a new CFA in
2016. HFRS Officers have taken advice from DWFRS Officers to get an
understanding of how they approached the combining of the two Services.

EQUALITY AND DIVERSITY
40. The council as a public body is required to meet its statutory obligations under
the Equality Act 2010 to have due regard to eliminate unlawful discrimination,
promote equal opportunities between people from different groups and to foster
good relations between people who share a protected characteristic and people
who do not share it. The protected characteristics are: age, disability, gender
reassignment, marriage and civil partnership, pregnancy and maternity, race,
religion or belief, sex and sexual orientation.
41. An equality impact assessment has been completed and shows no impact
should the council choose the recommended options in this report. A further
equality impact assessment will be carried out taking into account the outcome
of the consultation, prior to delivery of a detailed business case in the future.

PROPERTY IMPLICATIONS
42. A building condition survey has been carried out for each fire station to identify
its current condition and highlight any maintenance issues. This has helped to
inform the finance section of the report.
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 43. If a new CFA is established the council would be committed to transferring all of
its property assets used in support of the IWFRS to the new CFA, in their
current state of repair.

OPTIONS
44. The following options are available to the council:
1.

Accept the business case for the creation of a new combined fire authority
covering the Hampshire, Portsmouth, Southampton and Isle of Wight
area.

2.

Undertake a 12-week public consultation exercise on the Isle of Wight to
inform the development of a decision paper for the Council setting out the
risks and benefits of a new combined fire authority.

3.

Maintain the existing governance arrangements and not proceed with
consultation on the creation of a new combined fire authority.

RISK MANAGEMENT
45. The Isle of Wight Fire and Rescue Service is highly regarded by the Isle of
Wight public who have demonstrated a strong sense of ownership and
commitment to the service and its staff. Any final case to be put to the
Secretary of State will need to address this key issue for the local community
and ensure that the current levels of engagement and support for the service
are not seen to be lost under any new governance arrangements.
46. Hampshire Fire and Rescue Authority has supported the development of the
business case for a new combined fire authority but, like the council, it still
needs to make a formal decision to develop a final business case informed by a
wide ranging public consultation exercise.
47. The Police and Crime Commissioner has, for the present, indicated that he is
not minded to develop a business case for the transfer of the responsibility for
fire and rescue services from the council and the HFRA to his office. He has
however indicated that how both parties approach the further investigation of a
new CFA could be a ‘trigger’ for reconsideration of his position. There is
therefore a risk that, if the council and HRFA do not undertake a public
consultation exercise and the development of a final business case then the
PCC may initiate his own programme of work that could ultimately lead to the
governance of the both fire services transferring to the PCC.
48. The existing strategic partnership agreement between the council and HFRA is
time limited and will need to be renegotiated within the next eighteen months.
A public consultation exercise and development of a final business case for a
new CFA could inform the renegotiation process should no agreement be
reached on the implementation of a new CFA. It is difficult to identify at this
stage what the impact of those negotiations might be for the council and HRFA.
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 49. Risk Management practices have been applied throughout the investigation of
the creation of a new CFA. Appendix A sets out the operational risks
associated with the any decision taken in respect of the potential new CFA. The
matrix at appendix A would be developed further as part of a full business case.

EVALUATION
50. The analysis at appendix A that has informed this report demonstrates that the
creation of a new CFA could realise many benefits for the effective and efficient
delivery of the fire service across Hampshire and the Isle of Wight.
51. A new CFA has the potential to offer enhanced operational resilience and
capacity for the fire and rescue service. It would also provide employees the
opportunity to fully benefit from shared operational learning and knowledge and
would allow for the simplification of organisational processes.
52. The strategic partnership has resulted in the establishment of good
relationships between the two authorities, however a more stable platform, to
ensure the continued success of these relationships, would be assisted by the
creation of a new CFA.
53. Both authorities have their own individual strengths which if combined into a
new CFA would allow for the consistent and continued improvement of
reputation and profile, locally and nationally.
54. The current strategic partnership between the council and HFRA has been
successfully operating for three years and has delivered benefits to both
authorities. A new CFA could provide the opportunity for increased and shared
organisational resilience and capacity, organisational learning and knowledge.
A larger organisation could provide greater learning and development
opportunities for staff.
55. The council’s vision is to make life safer by ensuring safer communities and
delivering the best possible services. The creation of a new CFA and the
bringing together of two organisations into a larger service would allow for the
alignment of safety campaigns and greater consistency of safety messages to
the public.
56. A new larger CFA with an enhanced organisational and operational capacity
would allow for enhanced cutting-edge delivery of services to communities and
businesses across the whole of Hampshire and the Isle of Wight.

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 RECOMMENDATION
57. On the basis of the information contained in this report it is recommended that
Cabinet adopt options 1 and 2:
1.

Accept the business case for the creation of a new combined fire authority
covering the Hampshire, Portsmouth, Southampton and Isle of Wight
area.

2.

Undertake a 12-week public consultation exercise on the Isle of Wight to
inform the development of a decision paper for the Council setting out the
risks and benefits of a new combined fire authority.

APPENDICES ATTACHED
58. Appendix A: Business case
BACKGROUND PAPERS


February 2017 IWC Executive report on IMPLICATIONS OF THE POLICING
AND CRIME ACT 2017



March 2018 IWC Full Council report on INITIAL BUSINESS CASE INTO THE
PROPOSED CREATION OF A NEW COMBINED FIRE AUTHORITY TO
INCLUDE HAMPSHIRE, SOUTHAMPTON,PORTSMOUTH AND THE ISLE OF
WIGHT AUTHORITIES

Contact Point:

John Metcalfe, Chief Executive
 01983 821000, e-mail john.metcalfe@iow.gov.uk

JOHN METCALFE
Chief Executive of the Isle of Wight
Council

CLLR DAVE STEWART
Leader of the Isle of Wight Council

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