Scottish Fire and Rescue Service: governance and accountability framework 2024

Specific financial provisions

Delegated authorities

46. The SFRS’s specific delegated financial authorities - as agreed in consultation between the SFRS and the SG - are set out in the attached Appendix. The SFRS shall obtain the SG’s prior written approval before entering into any undertaking to incur any expenditure that falls outside these delegations. The SFRS shall also comply with any requirements for prior SG approval included in the SPFM and/or this document. Prior SG approval must always be obtained before incurring expenditure for any purpose that is or might be considered novel, contentious or repercussive or which has or could have significant future cost implications.

Income generation

47. The SFRS shall seek to optimise income - grant in aid does not qualify as income - from all sources and ensure that the SG is kept informed. Novel or contentious proposals for new sources of income or methods of fundraising must be approved by the SG. Fees or charges for any services supplied by the SFRS shall be determined in accordance with the Fees & Charges section of the SPFM.

48. Gifts, bequests or donations received by the SFRS score as income and should be provided for in the agreed resource DEL and capital DEL budgets, updated as necessary in consultation with the SG. However, the SFRS should be able to demonstrate that expenditure funded by gifts etc is additional to expenditure normally supported by grant in aid (i.e., SG core funding) or by trading and other income. Before accepting such gifts etc the SFRS shall consider if there are any associated costs in doing so or any conflicts of interests arising. The SFRS shall keep a written record of any such gifts etc and what happened to them.

Financial investments

49. Unless covered by a specific delegated authority the SFRS shall not make any financial investments without the prior approval of the SG. That would include equity shares in ventures which further the objectives of the SFRS. The SFRS shall not invest in any venture of a speculative nature.

Borrowing

50. Borrowing cannot be used to increase the SFRS’s spending power. All borrowing by the SFRS - excluding agreed overdrafts - shall be from the Scottish Ministers in accordance with guidance in the Borrowing, Lending & Investment section of the SPFM.

Lease arrangements

51. Unless covered by a specific delegated authority the SFRS shall not enter into any finance, property or accommodation related lease arrangement – including the extension of an existing lease or the non-exercise of a tenant’s lease break - without the SG’s prior approval. Before entering/ continuing such arrangements the SFRS must be able to demonstrate that the lease offers better value for money than purchase and that all options of sharing existing public sector space have been explored. Non-property/ accommodation related operating leases are subject to a specific delegated authority. The SFRS must have capital DEL provision for finance leases and other transactions which are in substance borrowing.

Tax arrangements

52. Non-standard tax management arrangements should always be regarded as novel and/or contentious and must therefore be approved in advance by the SG. Relevant guidance is provided in the Tax Planning and Tax Avoidance section of the SPFM. The SFRS must comply with all relevant rules on taxation, including VAT. All individuals who would qualify as employees for tax purposes should be paid through the payroll system with tax deducted at source. It is the responsibility of the SFRS to observe VAT legislation and recover input tax where it is entitled to do so. The implications of VAT in relation to procurement and shared services should be considered at an early stage to ensure that financial efficiency is achieved. The SFRS must also ensure that it accounts properly for any output tax on sales or disposals.

Settlement, severance, early retirement and redundancy

53. The SFRS shall seek to deliver, and demonstrate, robust governance processes, best practice and value for money when developing and implementing a severance scheme or when developing a settlement agreement, in compliance with current policy, observing all policy limits as set out in the Settlement, severance, early retirement, redundancy section of the SPFM.

Lending and guarantees

54. Any lending by the SFRS must adhere to the guidance in the Borrowing, Lending & Investment section of the SPFM on undertaking due diligence and seeking to establish a security. Unless covered by a specific delegated limit the SFRS shall not, without the SG’s prior approval, lend money, charge any asset, give any guarantee or indemnity or letter of comfort, or incur any other contingent liability (as defined in the Contingent Liabilities section of the SPFM), whether or not in a legally binding form. Guarantees, indemnities and letters of comfort of a standard type given in the normal course of business are excluded from this requirement.

Third party grants

55. Unless covered by a specific delegated authority the SFRS shall not, without the SG’s prior agreement, provide grant funding to a third party. Such funding would be subject to the guidance in the Subsidy Control section of the SPFM. Guidance on a framework for the control of third party grants is provided as an annex to the Grant & Grant in Aid section of the SPFM.

Impairments, provisions, and write-offs

56. Assets should be recorded on the balance sheet at the appropriate valuation basis in accordance with the FReM. Where an asset - and that includes investments - suffers impairment it is important that the prospective impairment and background is communicated to the SG at the earliest possible point in the financial year to determine the implications for the SFRS’s budget. Similarly, any significant movement in existing provisions or the creation of new provisions should be discussed in advance with the SG. Write-off of bad debt and/or losses scores against the SFRS’s resource DEL budget classification and is subject to a specific delegated limit.

Insurance

57. The SFRS is subject to the SG policy of self-insurance. Commercial insurance must however be taken out where there is a legal requirement to do so and may also be taken out in the circumstances described in the Insurance section of the SPFM - where required with the prior approval of the SG. In the event of uninsured losses being incurred the SG shall consider, on a case-by-case basis, whether or not it should make any additional resources available to the SFRS. The SG will provide the SFRS with a Certificate of Exemption for Employer's Liability Insurance.

Procurement and payment

58. The SFRS’s procurement policies shall reflect relevant guidance in the Procurement section of the SPFM and relevant guidance issued by the SG’s Procurement and Commercial Directorate. Procurement should be undertaken by appropriately trained and authorised staff and treated as a key component of achieving the SFRS’s objectives consistent with the principles of Best Value , the highest professional standards and any legal requirements. All external consultancy contracts over the value of £100,000 or any proposal to award a contract without competition (non-competitive action) over the value of £100,000 must be endorsed in advance by the Chief Officer.

59. Any major investment programmes or projects undertaken by the SFRS shall be subject to the guidance in the Major Investment Projects section of the SPFM [and is also subject to a specific delegated authority]. The sponsor unit must be kept informed of progress on such programmes and projects and Ministers must be alerted to any developments that could undermine their viability. ICT investment plans must be reported to the SG’s Office of the Chief Information Officer.

60. The SFRS shall pay all matured and properly authorised invoices relating to transactions with suppliers in accordance with the Expenditure and Payments section of the SPFM and in doing so shall seek wherever possible and appropriate to meet the SG’s target for the payment of invoices within 10 working days of their receipt.

Gifts made, special payments and losses

61. Unless covered by a specific delegated authority the SFRS shall not, without the SG’s prior approval, make gifts or special payments or write-off of losses. Special payments and losses are subject the guidance in the Losses and Special Payments section of the SPFM. Gifts by management to staff are subject to the guidance in the Non-Salary Rewards section of the SPFM.

Clawback

62. Where the SFRS has financed expenditure on assets by a third party, the SFRS shall make appropriate arrangements to ensure that any such assets above an agreed value are not disposed of by the third party without the SFRS’s prior consent. The SFRS shall put in place arrangements sufficient to secure the repayment of its due share of the proceeds - or an appropriate proportion of them if the SFRS contributed less than the whole cost of acquisition or improvement. The SFRS shall also ensure that if assets financed by the SFRS cease to be used by the third party for the intended purpose an appropriate proportion of the value of the asset shall be repaid to the SFRS.

Subsidy Control

63. The EU State aid regime was effectively revoked from UK law from 1 January 2021 and subsidy control provisions are now covered by the UK-EU Trade and Cooperation Agreement (TCA) and the UK’s international obligations including various Free Trade Agreements and those arising as a consequence of World Trade Organisation membership. This position may be subject if the UK Government establishing its own domestic subsidies control regime: a UK wide consultation on this is set to take place in the first half of 2021. Currently any activity that the SFRS undertakes itself, or funds other bodies to undertake, that can be offered on a commercial market for goods and services is subject to the TCA subsidy rules. A full assessment is therefore required prior to disbursing any funding and would be subject to the guidance in the subsidy regime section of the SPFM.

Board expenses

64. Remuneration (daily fees), allowances and expenses paid to board members [and any pension arrangements] must comply with the SG Pay Policy for Senior Appointments and any specific guidance on such matters issued by the Scottish Ministers.