Draft revenue budget 2002/03

Report: 06
Date: 25 October 2001
By: Treasurer and the Commissioner

Summary

This report summarises the conclusions and recommendations of the Finance Planning and Best Value Committee following consideration of the draft budget at a special meeting on 16 October 2001.

A. Recommendations

1. The Finance Planning and Best Value Committee recommends that the MPA submit its draft detailed budget for 2002/03 to the Mayor on the basis set out in Appendix 1 to this report with total expenditure of £2,149.4 million, an increase of 7.2% over the comparable figure for the current year.

B. Supporting information

Introduction

1. The Authority is required to submit its draft detailed budget to the Mayor by 26 October 2001. The Finance Planning and Best Value Committee considered the attached report at a special meeting on 16 October. The Committee also received a paper tabled on the day setting out MPS priorities.

Overview

2. It was suggested that, given that the MPA is not the precepting authority, it was important for the Authority to establish the minimum necessary budget to enable the MPS to meet its obligations. In this context the Committee agreed to recommend that the MPA submit its draft budget in accordance with the statement attached at Appendix 1. Eric Ollerenshaw did not support the recommendation.

3. The Committee was also clear that there would need to be consistency between the priorities set out in the policing plan and the resources made available through the budget.

Recommended submission

4. The recommendation includes the provision for inflation as outlined in the report to the Committee. It provides for pay awards at 3.5% and represents an overall 2.8% increase on the current year's budget. The recommended submission also includes all the unavoidable commitments listed in Appendix 3 to the original report and totalling £69.3 million.

5. The attached statement itemises a number of other commitments and developments selected from Appendices 4 and 5 of the original report which were given a high priority by the MPS and members of the Committee. These total £21.31 million. They include a further £5 million for civil staff recruitment and retention. Clarification is required as to the expected cost of implementing the Hay review of civil staff pay and grading so that the implications of this level of provision can be assessed.

6. Schedules setting out the detail of all the items included in the proposed submission, unavoidable commitments, other commitments and developments, are being circulated with the agenda to Members for consideration at the Authority meeting.

7. Provision is included for additional police officers at the amount calculated by the Mayor in indicating his precept intentions (£22.7 million). However when the full costs of employing substantial additional officers are taken into account it is estimated that this provision will fund the recruitment of around 700 new officers in 2002/03. The costs in addition to pay, personal equipment and recruit training relate to further recruitment initiatives, accommodation for recruits and new officers and correction of funding provision for existing police officers. It is the Committee's view that the priority requirement for additional officers in frontline policing activity operated through Special Operations should be met from this provision as well as allocating further officers to boroughs.

8. The proposed submission also incorporates a target for savings as yet unidentified of £21 million, in addition to savings of £4.2 million already itemised in the development of the budget. Approximately 70% of the budget is accounted for by police pay and allowances (but not including overtime), direct pensions payments and annual payments under long term contracts for outsourced services against which cash savings cannot be made. Thus although the savings target represents 1% of the total budget it is actually 3.3% of the 30% of the budget whence the savings will have to be found.

9. These savings are unlikely to be found wholly by improved efficiency and they will therefore include budget reductions. The proposed submission makes no provision for restoring the general reserve which currently stands below the minimum acceptable level agreed by the Authority. The reserve is also at further risk from current spending pressures. It will therefore be essential that the source of reductions required to balance next year's budget is clearly identified before the budget is finally approved.

10. The recommended expenditure budget totals £2,149.4 million which is a 7.2% increase over the comparable figure for 2001/02. The resulting precept increase would be 18.7%. Further savings of £29.8 million, making a total savings requirement of 8.3% of reducible expenditure, would be necessary to bring the precept increase in line with the Mayor's stated intentions.

11. The Authority has bids for additional funding from the Home Office still outstanding in respect of expenditure included in the budget figures. These relate to recruit training and the unfunded element of the pay lead. There is no indication that these claims will be met. However if they were the required precept increase would be reduced to 14.9%.

12. In considering the recommended submission the Authority needs to be aware that the draft budget makes no reference to the potential ongoing implications of the transformed terrorist threat. These are the subject of dialogue with the Home Office with the presumption at this stage that new funding would be forthcoming to meet such costs. No provision has been made either for the likely policing costs in relation to the Queen's Golden Jubilee next year. Again this issue has been raised with the Home Office.

13. The response to the Mayor's request for equalities information to be provided with the budget submission is still being prepared and will be forwarded later.

C. Financial implications

The budget will set the framework for approved expenditure in 2002/03.

D. Background papers

Finance Planning and Best Value Committee Draft revenue budget 2002/03 - 16 October

E. Contact details

The author of this report is Peter Martin, MPA.

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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