The formation of a new trading company will continue that work: Essex County Fire and Rescue Service has for many years been amongst the vanguard of local authority fire services in developing an income generation strategy that has resulted in an average net income of 200,000 [pounds sterling] per annum

THE INTRODUCTION OF THE FIRE and Rescue Services Act 2004 has meant that changes have had to be made to the way in which this income generation work is carried out. Amongst other provisions, the Act sets out changes in the charging and trading arrangements for fire services and makes it mandatory for fire services who wish to trade to do so through a properly constituted company.

The Act now makes it illegal for a fire service to trade for profit,

unless it does so through a properly constituted company and this provision is likely to mean that some fire services that formerly traded for profit will have to cease or amend their activities and/or charging mechanisms to cost-recovery only.

Essex County Fire and Rescue Service has consistently returned excellent income levels, and therefore it had little option other than to make the transition to a trading company in order to maintain this additional income.

The Service has therefore recently completed an innovative exercise to set up a wholly owned local authority trading company to undertake its income generation activities. The company, which will be called EFA (Trading) Ltd, will commence trading on April 1, 2005. It has nine directors consisting of a mix of fire authority members and principal management team.

The board of directors determines the policy of the company, and the day-to-day operations are the responsibility of the company management team. The company will continue to use rented accommodation within ECFRS.

The new company will continue to operate and develop the service's former income streams which include sale and refurbishment of fire appliances and equipment; vehicle repair and maintenance, provision of fire safety training to industry and businesses; provision of carbonaceous fire behaviour training to industry and other brigades, conferences and seminars; sale of DVDs and videos; partnership arrangements and consultancy services etc. The vision of the new company is: 'Continuously making communities safer'.

At each stage of the process of setting up such a company, there are choices to be made that include the type of company, management structure, tax efficiency measures, finance, probity, and support services infrastructure. This leads to the production of a business plan, a business risk analysis, financial cash flow forecast, profit and loss accounts, marketing and strategy plan, SWOT analysis etc. Considerable time and effort has therefore gone into the transition, and overall it has taken approximately six months of intense work.

The transition to the new company has been a very complex and time-consuming process. Many other fire authorities did not produce significant net income through trading activities and the transition to a local authority company would not be cost effective for them. In those cases, collaboration with fire services which do now legally trade and have the appropriate statutory powers to do so could go on to form partnerships that will benefit all concerned particularly in the area of community fire safety.

The coming year will provide many new challenges, but EFA (Trading) Ltd believe that it is well equipped to meet these and looks forward to a bright and prosperous future. With effect from April 1, 2005 the functions of the former External Services Department (income generation) will pass to a new local authority controlled trading company called EFA (Trading) Ltd. This information sheet has been prepared to inform the Service of the changes and implications involved.

In essence, the relationship between EFA (T) Ltd and the Essex Fire Authority will be somewhat different to that which previously applied, in so far as EFA (T) Ltd is a limited company, which has been given authority to trade on behalf of the EFA.

The ESD conducted a number of activities including service and departmental support schemes that provided for monies to be directly allocated from ESD income. This will cease under the new company with any profits of EFA (T) Ltd being returned to the EFA via a dividend payment or charitable donation. Once this money has been returned to the EFA it will be solely for them to determine its allocation to budgets with EFA (T) Ltd having no part in that process.

The administration of EFA (T) will in part rely on Service Level Agreements (SLAs) with ECFRS for the secondment of staff and provide various support services in return for an agreed fee. Overall responsibility for the operation of these SLAs will be with the Treasurer of the EFA, Mike Clayton. In practice the new company will still rely on ECFRS for the majority of its administrative procedures and resources. EFA (T) will be headed by a Chief Executive Officer, and this post will be held temporarily by Station Manager Phil Johnson. He in turn will report to a board of directors. The primary purpose of EFA (T) Ltd is to trade for profitable income that will then be made available for EFA community safety initiatives. In addition, many of its activities provide other direct benefits to local, national and international community safety. For information contact Phil Johnson on tel: 01376 347206.

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