South Wales Fire Service is considering a 12.7% increase in its funding from council tax payers in the area.

Under proposals to be considered by the South Wales Fire Authority on Monday, 13 February, next year's budget (2023/2024) would be £89.37m, a £10.07m rise from this year.

The service covers 10 areas including Blaenau Gwent, Bridgend, Caerphilly, Cardiff, Merthyr Tydfil, Monmouthshire, Newport, Rhondda Cynon Taf, Torfaen and Vale of Glamorgan.

The fire authority approved a draft budget for 2023/2024 for consultation in December and also in December a draft Welsh Government budget announced that local government funding for next financial year will increase by an average of 7.9% and the report said this is subject to change particularly around the transfer of specific grants previously paid to the fire authority.

For the current financial year (2022/2023), the fire authority set a budget of

£79.3m in year when councils received an increase in their funding from Welsh Government of around 10% while the fire authority requested an additional 2.29% in resources.

The increase proposed for next year assumes that the Welsh Government's Scape grant (which helps with the increased costs of employer's fire service pension contributions) previously paid to the fire authority, will be transferred to constituent councils in the final local government settlement, the fire authority report said.

The proposed increase for each area is as follows:

• Bridgend from £7.54m this year to £8.52m next year, an increase of £978,658 or 12.97%
• The Vale Of Glamorgan from £6.91m this year to £7.77m next year, an increase of £860,575 or 12.44%
• Rhondda Cynon Taf from £12.38m this year to £13.94m next year, an increase of £1,557,794 or 12.58%
• Merthyr Tydfil from £3.1m this year to £3.47m next year, an increase of £368,291 or 11.85%
• Caerphilly from £9.28m this year to £10.38m next year, an increase of 1,094,387 or 11.78%
• Blaenau Gwent from £3.54m this year to £3.95m next year, an increase of £405,797 or 11.44%
• Torfaen from £4.8m this year to £5.4m next year, an increase of £608,330 or 12.67%
• Monmouthshire from £4.87m to £5.47m, an increase of £600,610 or 12.33%
• Newport from £8.06m to £9.24m, an increase of £1,174,828 or 14.56%
• Cardiff from £18.77m to £21.19m, an increase of £2,422,151 or 12.9%

The report said that in setting its annual budget, the authority has always been

mindful of the resources available to its constituent councils both from Welsh Government and local taxpayers.

Budget considerations

The fire authority report said that pay inflation is the biggest challenge facing the authority in the current and next financial year and that the lack of any certainty represents a financial risk in setting the budget

It also said that pension costs are an ongoing uncertainty as they have been for several years now.

In terms of the widening of the role of a firefighter, any additional costs would be matched by additional funding from within the Welsh public sector.

The job evaluation scheme has been implemented and temporary staffing costs will be met from reserves.

After allowing for efficiency savings and budget reductions, the total employees budget of the authority is projected to increase by around 8% coming mainly from the current cost of living crisis faced by employees.

Premises costs in terms of energy and external contracts are rising with the high levels of inflation in the economy but the authority is actively working to reduce energy consumption across the estate but it will not offset increased unit costs.

Investment in ICT systems, operational equipment demands and the unavoidable inflationary pressures on budgets like insurances will increase supplies and services budgets in the coming year and essential operational equipment replacement is also funded from this area.

Large equipment purchases will be funded from reserves in a move to reduce budget volatility and make savings next year.

Capital financing costs will be around 5.7% of the total budget which the report said is well within the levels deemed appropriate given the nature of the organisation and its funding regime.

The authority has identified around £2m worth of reductions and has decided to undertake a review of culture following recent press reports and costs associated with this review are not included in these budget projections as there is no intention to pass the costs on.

Changes to Welsh Government grants

Existing grants which are continuing will do so on a cash flat basis as in previous years which the report said represents a real terms cut in funding and which is even more apparent with 10% inflation rates prevailing

The grants which are changing include the FireLink Grant which has seen fire and rescue services in Wales provided with around £1.6m of funding towards the cost of running the emergency services communications network which helps with the deployment of crews and equipment to incidents as well as with communication on scene. The grant to South Wales would have been £632,109.

The report said the decision to cut the grant represents a cut in funding which will now fall directly on the service and therefore the local authorities.

The other grant changing is the SCAPE grant which is worth £5.9m and helps with the increased costs of employer's fire service pension contributions.

The estimated grant for South Wales in 2023/24 was £2,946,710 but the deputy minister has indicated that when the final local government settlement is released in February 2023, this grant money will be included in local council funding and will no longer be paid to Welsh fire and rescue services.

If this happens, the service budget will increase by the value of the lost grant and councils will have to increase their contributions accordingly which should be cost neutral for both the service and the councils.

The report said that population changes at council level will be reflected in minor variations from the overall average increase in contributions set by the fire authority.