How covid is hitting fire and rescue crews in the pocket

Fire chiefs have warned more Government cash may be needed to fill holes in balance sheets caused by the coronavirus pandemic.
Tyne & Wear Fire and Rescue is facing a shortfall due to covidTyne & Wear Fire and Rescue is facing a shortfall due to covid
Tyne & Wear Fire and Rescue is facing a shortfall due to covid

The UK’s financial sector is increasingly feeling the strain from COVID-19, following the Bank of England’s decision to slash interest rates to a new historic low of just 0.1% earlier this year (March 2020).

And now emergency service chiefs in Tyne and Wear have warned the fallout from this is likely to affect their own spending plans.

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“Although [our investments are] outperforming the base rate [at the moment], I don’t think that will be maintained,” said Dennis Napier, strategic finance manager at Tyne and Wear Fire and Rescue Service (TWFRS).

“Towards the later stage of the financial year (2020/21) we expect to be £40,000 under budget as a direct impact of the rates falling.

“As the year goes on and our reinvestment of income happens the rates will be lower and our returns of investment will be lower.

“The good news about the £40,000 is the government has provided additional funding for the impact of COVID and we expect that loss to be met by government grant.”

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Napier was speaking at a meeting of the Tyne and Wear Fire and Rescue Authority’s Governance Committee, which was held by videolink and broadcast via YouTube.

According to a report for the panel, the authority actually received about £100,000 more than it was expecting in returns on its investments during the first half of the financial year.

However, this was based on previous interest rates, prior to the most recent cut, and by the end of the current financial year investment return is likely to be £40,000 less than expected.

But there is also hope ministers may step in to provide some support.

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Napier added: “The pandemic will have a real impact on our finances and that is unavoidable, unless the government provides additional funding.

“The chancellor did mention this in his spending round last week, that [the governing] is going to provide £1.55 billion for local authorities, to help with the impact of COVID in 2021/21, and I expect the fire service will receive some of that funding.”

Bank of England base rates:

The Bank of England’s Monetary Policy Committee meets every six weeks to discuss rates.

2007 – Base rate set at 5.5%

December 2008 – Base rate cut to 2% due to the growing global financial crisis

2009 – Base rate cut again, to 0.5%, a record low

August 2016 – Following the Brexit vote the rate was changed for the first time in seven years, cut to 0.25%, a new record low

March 19, 2020 – The COVID pandemic saw the rate slashed even deeper, to 0.1%

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