Efficiency plan monitoring - as at second quarter 2008/09

Report: 05
Date: 18 December 2008
By: Director of Resources on behalf of the Commissioner

Summary

This report provides an update on the monitoring of the Metropolitan Police Authority (MPA)/Metropolitan Police Service (MPS) 2008/09 – 2010/11 efficiency plan. Overall, the forecast indicates an over-achievement against the 2008/09 efficiency target by £2.8m

A. Recommendations

That

1. Members note the position against the efficiency plan as at Quarter 2.

B. Supporting information

Introduction

1. The MPS has a successful track record of delivering savings and has implemented a number of programmes and reviews to drive forward efficiency in the organisation. In the period 2001/02 to 2007/08, the organisation identified and delivered savings of more than £569m. The purpose of this report is to provide an update on the monitoring of the MPA/MPS 2008/09 – 2010/11 Efficiency Plan, (presented to Finance Committee on 17 April), as at Quarter 2.

Background

2. Following the 2007 Comprehensive Spending Review, the Home Office issued a draft. Efficiency and Productivity Strategy for the Police Service 2008 - 2011. The strategy resulted in the target for cashable savings being increased to 3% of gross revenue expenditure per annum, (previously 1.5% of net revenue expenditure), and an emphasis on the inclusion of an effective Efficiency Plan within the Police Authority’s Business Plans. Home Office guidance states that the value of the target is compounded, cumulative net cashable efficiency or productivity gains, worth 9.3% of 2007/08 Gross Revenue Expenditure, to be achieved by the end of 20010/11.

3. For the MPA/MPS, based on a 2007/08 outturn of £3,349m, the total efficiency savings target over 3 years equates to £311.4m. The internal target set for 2008/09 is £144.0m, which equates to 46% of the total 3-year target. In previous years, savings have been reported as “cashable” or “non-cashable”. The Home Office definitions of these savings have now been broadened so that it is likely that all savings within the Efficiency Plan are regarded as cashable.

4. The process will be monitored by HMIC inspections, covering both financial and operational performance. Failure to meet the overall three-year efficiency target may result in a reduction to funding, in particular to the Crime Fighting Fund. Forces are required to report progress to the Home Office at the end of the second quarter of each year, showing actual gains achieved to date and the forecast gains for the remainder of the year.

Overall position

5. The total efficiency savings achieved at the end of the second quarter are £103.3m of which £50.3m relates to surplus cashable savings permitted to be brought forward from 2007/08. The forecast savings to be achieved by the end of 2008/09 are £146.8m, an over-achievement of £2.8m against the plan. Table 1 sets out the position. (Appendix 1 provides a more detailed breakdown of the Efficiency Savings position).

Table 1 – Efficiency savings achieved and forecast for 2008/09

Efficiency savings variances

6. The main areas showing variances to the plan are:

1. Surplus cashable savings, where the amount carried over was greater than that anticipated when the plan was approved.
2.  Budget Build Savings, where the initiatives to review and restructure the Finance & Resource function and the implementation of Integrated Prosecution Teams within Territorial Policing are still ongoing. The full anticipated savings on these projects are now likely to be achieved from 2009/10. Despite this rephasing of the savings, the organisation has taken the appropriate steps to identify additional compensating savings to ensure that the overall forecast position for the Revenue Budget is favourable.
3.  As referred to in 4(ii), additional cashable gains have been found which help offset the re-phasing of some of the budget build savings. These include £5m on employer’s national insurance contributions and £4.4m on property rental costs.

Future years’ savings

7. In order to achieve the three-year savings target of £311.4m, additional savings are being identified as part of the 2009/10 budget build process in addition to those already identified within the current Business Plan. These will be reported in more detail once they have been confirmed. A Service Improvement Plan has also been developed that will deliver significant efficiencies during the three years.

C. Race and equality impact

There are no equality and diversity implications arising from this report.

D. Financial implications

The financial implications are those set out in this report.

E. Background papers

• MPA/MPS Efficiency Plan 2008/09 – 2010/11

F. Contact details

Report author(s): Anne McMeel, Director of Resources

For more information contact:

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

Appendix 1

Analysis by Savings Category as in Efficiency Plan - Position as at Quarter 2

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