Provisional MPA/MPS efficiency plan for 2009/10 and monitoring report for 2008/09

Report: 11
Date: 19 March 2009
By: Director of Resources on behalf of the Commissioner

Summary

This report sets out the financial aspects of the provisional MPA/MPS Efficiency Plan for 2009/10, and provides an update on the monitoring of the 2008/09 – 2010/11 Efficiency Plan. Overall, the forecast indicates an over-achievement against the 2008/09 efficiency target of £2.2m.

A. Recommendations

That

1. Members approve the provisional plan for 2009/10; and
2. note the position against the 2008/09 Efficiency Plan as at Quarter 3.

B. Supporting information

Introduction

1. The purpose of this report is to present the 2009/10 MPS/MPA Efficiency Plan, which is summarised at Appendix 1, and to provide an update on the monitoring of the 2008/09 – 2010/11 Efficiency Plan, as at Quarter 3. The monitoring report for Quarter 3 is summarised at Appendix 2.

Background

2. As part of their Annual Policing Plan, all police forces and authorities are required to identify efficiency savings and demonstrate that performance has been maintained or improved.

3. In the period 2005/06 – 2007/08, the Home Office required Police Forces to produce efficiency plans on a 3 year rolling basis. The savings target during this period was 3% of net revenue expenditure, of which a minimum of 1.5% was to be cashable. The MPS successfully met the required target in each year.

4. Following the 2007 Comprehensive Spending Review, the Home Office issued an Efficiency and Productivity Strategy for the Police Service for the period 2008 - 2011. The strategy resulted in the target for cashable savings being increased to 3% of gross revenue expenditure per annum, (it was previously 1.5% of net revenue expenditure). 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 2010/11.

5. 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 will be regarded as cashable.

6. Under the current guidance, there is no longer a requirement for the Efficiency Plan to be sent to the Home Office by the end of March. Greater emphasis is now placed on the inclusion of the Efficiency Plan within the Annual Policing Plan.

Budget savings

7. The exercise to balance the revenue budget for 2009/10 has identified £139.6m of savings and additional income. Of this £90.5m can be counted towards our Efficiency Plan, in accordance with the latest Home Office guidance. This saving is evidenced by demonstrating a reduction in budgets and by managing within those reduced budgets throughout the financial year.

8. In addition, surplus cash savings of £46.8m were achieved in the Gershon Review period (2005/06 – 2007/08). These can be carried forward to the current three-year planning period that began in 2008/09 (Inflated to £50.3m following existing Home Office guidance).

9. It should be noted that any carry forward of cashable savings represents measures already taken to balance the budget. The carry forward is not available as a future benefit to balance a budget gap.

Additional savings

10. These efficiency savings are the result of better utilisation of existing resources. Areas identified so far for 2009/10 include:

• A further increase in the number of Special Constables.
• Further savings resulting from IT initiatives, such as the NSPIS custody and case preparation project.
• Savings resulting from the work carried out by MPS Volunteers.

A list of the currently projected savings is included within Appendix 1.

Contribution to performance

11. Home Office guidance requires the MPS to consider, for items over £1m, whether there are any risks to performance by implementing the savings. Strategic Finance may need to consult separately with Business Groups on these aspects.

Summary 2009/10 MPS/MPA Efficiency Plan

12. Appendix 1 shows the provisional 2009/10 Efficiency Plan, which is an updated forecast of MPS performance in the three-year period 2008/09 – 2010/11. The figures for 2008/09 are the latest available Quarter 3 position. It can be seen that the current forecast indicates savings of £408.1m in 2008 –11, against a three-year target of £311.4m. The current forecast therefore indicates an overachievement against the Home Office target of £96.7m.

Efficiency planning in the medium term

13. The current Home Office guidance requires savings to be planned for and monitored over a 3 year period. As in previous years, Finance Services has worked with Business Groups to develop a plan that looks at future years in as much detail as possible. Whilst this report focuses on the period 2008/09 to 2010/11, information is also being captured and analysed for future years to ensure that the Organisation will be in a position to meet forthcoming targets.

Service improvement plan

14. The MPS is currently developing and implementing a Service Improvement Plan. One key strand of this Plan will be the identification and delivery of cashable efficiency savings. Savings identified by the Service Improvement Plan in 2009/10 will be included in the Efficiency Plan as in-year items, and will count towards the final cumulative savings figure.

Overall position for 2008/09

15. The total efficiency savings achieved at the end of the third quarter of 2008/09 are £125.3m, 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 £146.2m, an over-achievement of £2.2m against the plan. Table 1 sets out the position. (Appendix 2 provides a more detailed breakdown of the Efficiency Savings position).

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

Efficiency savings variances

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

• Surplus cashable savings, where the amount carried over was greater than that anticipated when the plan was approved.
• 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 onwards. 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.
• Additional savings have been identified, 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.

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

• Home Office guidance papers

F. Contact details

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

For more information contact:

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

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