Update on Audit Commission and HMIC use of resources assessments and MPS response

Report: 8
Date: 8 December 2008
By: Director of Resources on behalf of the Commissioner and the Treasurer

Summary

This report provides Members with a summary of the key issues raised by the Audit Commission and HMIC in recent reports. This follows inspection activity which looked at how the MPA / MPS plan and make use of resources. This report also sets out the MPA/MPS response to the issues raised in the form of an action plan.

A. Recommendation

That the Committee notes the action being taken in response to the Police Use of Resources Evaluation and the Strategic Resource Leverage Inspection.

B. Supporting information

Background

1. Between April and June this year, both HMIC and the Audit Commission undertook planned inspection work looking at how the MPS /MPA manage resources. This inspection was the first of its kind in that it involved the two inspectorates coordinating their assessments. The Audit Commission conducts an annual Use of Resources Evaluation (called PURE) for every Police Authority in England. The Deputy Commissioner invited HMIC to conduct its inspection as a complementary piece of work, which focused on how the Service attracts and allocates resources and ensures they are used effectively.

2. The MPS prepared a comprehensive self-assessment for HMIC. The MPS and MPA worked together to develop a self-assessment for the Audit Commission. Each inspectorate had its own criteria against which they judged the performance of the MPA/ MPS. The self-assessments provided evidence on the corporate approach for each set of criteria along with operational examples provided by business groups.

3. Whilst on site, the inspection teams sought to test the evidence that the MPA/MPS had provided. They interviewed a range of staff, including senior MPA officers, attended key meetings, held focus groups and reviewed further documentation.

4. Both inspectorates have now issued their reports. The purpose of this report is to summarise their key findings and set out the MPA/MPS response.

Summary of findings

Pure

5. The main findings of the Audit Commission’s PURE work were:

• The MPA/ MPS have been assessed as achieving adequate performance (Level Two) overall for 2007/08. Our previous score has been maintained; however, the bar for performance at each level was lifted this year so overall we can be considered to have performed better.
• The scores for all five themes the Commission looked at (Financial Reporting, Financial Management, Financial Standing, Internal Control and Value for Money) have been assessed as the same as for 2007. However, the Commission’s view is that, while the scores are the same, the underlying direction of travel is positive and arrangements are generally stronger than a year ago. For the first time, no sub-theme was assessed as below minimum requirements.
• For financial management, internal control and value for money, performance remains at Level Two. The Commission has stated that it is clear that much work is being undertaken to strengthen arrangements within these themes, for example, within the areas of risk management and procurement. The new and revised procedures need to be embedded and delivering clear outcomes in order for a higher assessment to be achieved. This will inevitably take time and resources to achieve in such a large organisation.
• The scores for financial standing and arrangements for financial reporting remain at Level Three, indicating we are performing well.

6. The theme scores for the MPA/MPS are outlined in the table below, including comparators with last year. These scores have been confirmed by the Audit Commission's national quality control process which seeks to ensure consistency across all auditors.

MPA/MPS Summary of use of resources scores by theme

7. The Audit Commission has made 27 recommendations. These are set out in full in the Action Plan at Appendix 1. The areas covered by the recommendations include:

• Continuing to integrate business planning with financial planning and use this to drive the medium-term financial plan (MPA/MPS)
• Integrating operational performance data with financial performance data in budget monitoring reports (MPS)
• Providing regular financial training to members (MPA)
• Keeping reserves under review particularly with respect to future financial risks (MPA/MPS)
• Continuing to integrate and embed risk management with business and financial planning processes at both strategic and operational levels (MPS)
• Improving the system of internal control, both centrally and throughout the BCUs (MPS)
• Improving the understanding of the impact of external factors on costs and the cost difference between the MPS and most similar forces (MPS)
• Further integrate cost and performance information to highlight areas where costs appear high in relation to other organisations or the level of desired performance (MPS).

8. The following actions have been set out for Police Authority Members in ensuring a continued focus on effective use of resources:

• Encourage further integration of financial and business planning
• Foster the development of integrated financial and operational performance information
• Maintain effective scrutiny of the overall system of internal control
• Review the MPA/MPS research to better understand costs and to benchmark these costs with similar organisations.

SRL inspection

9. HMIC summarised the MPS’ position in relation to ‘resource leverage’ as follows:

‘The medium term financial prognosis for the Metropolitan Police Service (MPS) is challenging notwithstanding the levels of efficiency gains which have previously been achieved. The MPS is actively developing its business capability to respond to this challenge and recognises the need to demonstrate that costs can be controlled and that a clear plan exists to optimise the use of resources to close any potential budget gap.’

10. Five recommendations have been made in the inspection report. Some for the MPS, others for the MPA and Home Office. The recommendations are:

• The MPS supported by the MPA should set out an agreed and shared ambition for resource leverage in the medium term (MPS/MPA).
• The MPS should progressively develop ‘Business Intelligence’ indicators that benchmark MPS costs (MPS).
• Reliable benchmarking information facilitated by the Home Office would be of assistance to the MPS and other Forces when making comparisons on costs and overheads (Home Office).
• To help maximise the use of resources the MPS should provide senior managers with appropriate resource management skills and awareness training (MPS).
• The MPA should review its oversight and expectation in the way the MPS applies resource leverage (MPA).

11. In addition to these recommendations, HMIC highlighted a number of more detailed ‘areas for improvement’. Details of the ‘areas for improvement’ can be found in the Action Plan in Appendix 1.

MPA/MPS response to reports

12. Both the MPA and the MPS welcomes the recognition given by both inspectorates to the progress made by the organisation over the recent period and of the positive direction of travel outlined. It is also reassuring that the recommendations made so closely reflect the work that is already underway within the MPA/MPS to ensure the most efficient, effective and economic use of all resources entrusted to the Service to support policing in London.

13. The Authority is at the start of a new four year administration and has been reviewing the way in which it works to ensure that it is in the best position to be more strategic in the way in which it undertakes business. This will include an increased emphasis on ensuring the MPS makes the most effective, efficient and cost conscious use of all its resources. This includes:

• establishing a Resources Sub Committee
• Augmenting internal capacity to ensure the Authority has the necessary resources in place to enable increased oversight of resource leverage
• Workplans are being developed that will ensure more effective oversight of resource use and productivity.

14. A number of programmes of work already underway within the MPS will contribute to disseminating and embedding the good practice highlighted in the reports. They will also support the organisation in addressing the areas for improvement and in preparing for next year’s PURE assessment and looking forward, Comprehensive Area Assessments. These programmes include:

• The creation of the Strategy and Improvement Department, the main aims of which are to:
  • Support ensure that strategic research and analysis is available to inform the development of corporate objectives and priorities;
  • Support effective decision making;
  • Further develop stakeholder relationships and
  • Develop the corporate planning and performance framework.
• The Service Improvement Plan
• The formation of the new Service Improvement Board to oversee delivery of our service improvement priorities and track benefits
• The Corporate Governance work programme (update on this agenda)
• Transforming Human Resources (THR)
• The Estates Strategy

15. The MPS detailed response to the recommendations that have been made by both inspectorates and the ‘Areas for Improvement’ highlighted by HMIC are set out in the Action Plan in Appendix 1.

16. As is made clear in both reports, the MPS and MPA will need to work together to ensure the positive direction of travel is maintained. It is therefore proposed that progress by both organisations on responding to the PURE/SRL inspection recommendations is reported to the next meeting of the Committee on 23 March 2009 before the commencement of the next PURE assessment.

C. Race and equality impact

Diversity impact formed part of both the Audit Commission and HMIC approaches to assessment. None of the recommendations made relate to race or diversity issues.

D. Financial implications

The work streams identified in the Action Plan will be delivered within approved budgets.

E. Background papers

• MPA Police Use of Resources Report, Audit Commission
• MPS Strategic Resource Leverage Report, HMIC

F. Contact details

Report author: Lucy Dunn, Resources Directorate, MPS.

For information contact:

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

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