Efficiency plan monitoring – as at first quarter 2009/10

Report: 6
Date: 17 September 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 forecast indicates an over-achievement against the 2009/10 cumulative efficiency target (year 2 of the 3 year plan) by £4.4m.

A. Recommendation

That members note the cumulative position against the efficiency plan as at first Quarter 2009/10.

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 as at Quarter 1 2009/10.

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 2010/11.

3. As part of the recent 2009 Budget announcement HM Treasury has increased the efficiency targets from 3% to 4%. The MPA/MPS is favourably placed to meet this new target as the organisation is forecast to over achieve against the original target.

4. HM Treasury has raised the overall three year savings target for police forces in England and Wales from 9.3% to 10.3% (based on gross revenue expenditure). To remain consistent with the national position, the MPA/MPS is therefore increasing the efficiency savings target to 10.3%. For the MPA/MPS, based on a 2007/08 outturn of £3,349m, the new total efficiency savings target over 3 years equates to £344.9m. Cumulatively the internal target set to be achieved by the end of year 2 (2009/10) of the 3 year target is £257.3m, which equates to 75% of the HM Treasury 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.

Overall Position

5. Cumulatively, the total efficiency savings achieved at the end of the first quarter (including 2008/09 actuals and the permitted surplus savings brought forward from 2007/08) are £180.7m. The cumulative forecast for savings to be achieved by the end of 2009/10 is £261.7m, an over-achievement of £4.4m against the planned cumulative savings of £257.3m. Table 1 sets out the position. (Appendix 1 provides a more detailed breakdown of the Efficiency Savings position).

Table 1 – Cumulative Efficiency savings achieved and forecast for 2009/10

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: in addition to the issues commented on in 2008/09, the main areas of under achievement in 2009/10 are income from events at Wembley and Operation Reclaim due to more efficient use of rechargeable resources and less than anticipated activity respectively, and mutual aid due to an increase in activities associated with G20; Tamil protests and Climate Camp.
3. Additional savings were identified in 2008/09 which help offset the under achievement of some of the budget build savings. These include £5.0m on employer’s national insurance contributions; £4.4m on property rental costs; and a £3.0m increase as a result of the increased use of NSPIS for custody and case preparation.
4. At the Finance and Resources Committee meeting on 18th June 2009 Members requested an explanation as to why the planned savings relating to Special Constables under-achieved by £5.3m in 2008/09. This was due to the average actual strength for Special Constables being below the numbers planned for as a result of higher than expected wastage and lower than expected numbers of new recruits. It should be noted that further savings are anticipated to be achieved in 2009/10 and the cumulative savings forecast at the end of the year is an under-achievement of £1.4m - a favourable movement of £3.9m compared to the position as at the end of 2008/09.

Future years’ savings

7. In order to achieve the three-year savings target of £344.9m, additional savings are being identified as part of the 2010/11 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.

C. Race and equality impact

There are no equality and diversity implications directly 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: Anne McMeel, Director of Resources

For information contact:

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

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