Efficiency plan monitoring - outturn 2008/09

Report: 6
Date: 18 June 2009
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 outturn shows an over-achievement against the 2008/09 efficiency target by £3.9m.

A. Recommendation

Members are invited to:

1. Note the outturn position against the efficiency plan as at year-end 2008/09.

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 17th April 2008), as at year-end 2008/09.

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.

HM Treasury as part of the recent 2009 Budget announcement has increased the efficiency targets from 3% to 4%. The MPA/MPS is favourably placed to meet this new target as we are presently over achieving against the original target. However, Members should consider whether such an increase in the target is sufficiently challenging given the current financial position of the organisation in the medium-term.

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.

Overall position

4. The total efficiency savings achieved at the year end are £147.9m, of which £50.3m relates to surplus cashable savings permitted to be brought forward from 2007/08, represent an over-achievement of £3.9m 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 during 2008/09

Efficiency savings variances

5. 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.
3. Additional cashable gains have been found which help offset the rephasing 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

6. In order to achieve the three-year savings target of £311.4m, additional savings have been identified as part of the 2009/10 budget build process in addition to those already identified within the current Business Plan. 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: Paul James, Director of Finance Services, MPS

For information contact:

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

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