Efficiency plan 2010/11 and efficiency plan monitoring 2008/09 - 2010/11

Report: 07
Date: 18 March 2010
By: Director of Resources on behalf of the Commissioner

Summary

This report sets out the financial aspects of the Metropolitan Police Authority (MPA)/Metropolitan Police Service (MPS) Efficiency Plan for 2010/11, and provides an update on the monitoring of the MPA/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 £3.9m.

A. Recommendations

That Members

1. Approve the plan for 2010/11.
2. Note the forecast position against the 2009/10 cumulative Efficiency Plan as at Quarter 3.

B. Supporting information

Introduction

1. The purpose of this report is to present the 2010/11 MPS/MPA Efficiency Plan, which is summarised at Appendix 1, and to provide an update on the monitoring of the MPA/MPS 2008/09 – 2010/11 Efficiency Plan, (presented to the MPA Finance Committee on 17 April 2008), as at Quarter 3. The monitoring report for Quarter 3 is summarised at Appendix 2.

Background

2. The Policing Plan Regulations 2008 provide that as part of their Annual Policing Plan, all police authorities are required to set out within the policing plan any planned increases in efficiency and productivity of the police force during the plan period and how it is proposed such increases will be achieved, and any matters relating to the efficiency and effectiveness of the police force (i) arising out of any inspection of the police force by HMIC, or (ii) raised with the police authority by the Secretary of State, and how the police authority intends to address such matters.

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 budget, of which a minimum of 1.5% was to be cashable. The Metropolitan Police Service 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), and an emphasis on the inclusion of an effective Efficiency Plan within the Police Authority’s Business Plan. Home Office guidance stated that the value of the target was 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. As part of the 2009 Budget announcement, HM Treasury increased the efficiency targets from 3% to 4%, and therefore the overall three year savings target for police forces in England and Wales has risen 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 £292.2m, which equates to 85% 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 all savings within the Efficiency Plan are now 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, and embedding efficiency savings within the planning process.

Budget Savings

7. The exercise to balance the revenue budget for 2010/11 has identified £100.5m of savings and additional income, and of this £98.2m can be counted towards our Efficiency Plan, in accordance with the latest Home Office guidance. We evidence this saving 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), and these have been 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 2010/11 include:

• A further increase in the number of Special Constables.
• Savings relating to the MPS Climate Change Action Plan
• Efficiencies 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 (Efficiency and Productivity Strategy for the Police Service 2008 - 11) requires the MPS to consider, for items over £1m, whether there are any risks to performance by implementing the savings. Group Finance may need to consult separately with Business Groups on these aspects.

Summary 2010/11 MPA/MPS Efficiency Plan

12. Appendix 1 shows the provisional 2010/11 Efficiency Plan, which is an updated forecast of MPS performance in the three-year period 2008/09 – 2010/11. The figures for 2009/10 are the latest available Quarter 3 position. It can be seen that the current forecast indicates savings of £433.3m in 2008 –11, against a three-year target of £344.9m. The current forecast therefore indicates an overachievement against the Home Office target of £88.4m.

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 has developed and implemented a Service Improvement Plan. One key strand of this Plan is the identification and delivery of cashable efficiency savings. Savings identified by the Service Improvement Plan in 2010/11 have been included in the Efficiency Plan. The contribution of the Service Improvement Plan savings to the overall cumulative total is £24.4m.

Overall Position for 2009/10

15. Cumulatively, the total efficiency savings achieved at the end of the third quarter (including 2008/09 actuals and the permitted surplus savings brought forward from 2007/08) are £259.7m. The cumulative forecast for savings to be achieved by the end of 2009/10 is £296.1m, an over-achievement of £3.9m against the planned cumulative savings of £292.2m. (Appendix 2 provides a more detailed breakdown of the Efficiency Savings position).

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

Efficiency savings variances

16. 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, such as the implementation of Integrated Prosecution Teams within Territorial Policing and the review and restructure of the Finance & Resource function, the main area of under achievement in 2009/10 is in the Aid Fund 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. Special Constables: measures have been taken to reduce wastage and to increase the number of hours that Special Constables will commit to the MPS. These measures have resolved the issues that led to savings in 2008/09 being less than expected. As a result of these measures there has been a favourable movement of £4.8m compared to the position as at the end of 2008/09.

Environmental impact

17 There are no direct environmental issues arising from this report.

C. Race and equality impact

There are no Race and Equality implications arising from this report.

D. Financial implications

The financial implications are those set out in this paper.

E. Legal implications

1. The legal issues have been identified in the body of the report.

2. Improving efficiency and productivity by making better use of resources is increasingly becoming a core responsibility for all involved in policing. In future, this responsibility will be embedded in legislation, which will require the policing plan to include a Value for Money statement. Achieving value for money also forms part of the assessment carried out by the HMIC and Audit Commission in terms of the Comprehensive Area Assessment.

F. Background papers

• Policing London 2009-12 Business Plan.

G. Contact details

Report author(s): Nicholas Rogers, Director of Group Finance, MPS.

For more information contact:

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

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