Revenue and Capital Budget Monitoring Report 2009/10 provisional outturn

Report: 06
Date: 17 June 2010
By: Director of Resources on behalf of the Commissioner

Summary

The report provides an update on the provisional & unaudited outturn position for revenue and capital budgets in 2009/10. The revenue budget is underspent by £2.9m (0.1% of budget). The provisional outturn takes account of proposed transfers to earmarked reserves as part of the year-end process of £15.7m.

The provisional outturn for the Capital Programme is £186.3m, which is £27.7m below the revised budget of £214m.

A. Recommendations

Members are invited to:

1. Note the provisional & unaudited outturn position against the revenue and capital budgets for the year.
2. Note and agree a write-off of £1.67m penalty interest relating to funds deposited with the Icelandic bank, Landsbanki (paragraph 5).
3. Note and agree the proposed “business as usual” transfers to reserves of £15.7m (paragraph 6).
4. Note and agree a transfer to reserves of £1.75m relating to the Transforming HR programme (paragraph 7).
5. Note and agree a proposal to reduce the third party provision for legal and accident claims by £3.3m (paragraph 8).
6. Note and agree a transfer to reserves of £1.13m relating to the Modernisation reserve (paragraph 7) rising to £4.43m subject to agreement by Audit Commission to an adjustment to the third party provision (paragraph 8).
7. Note that a detailed review of the Capital outturn is underway and that a paper will be produced in July for members to consider the re-phasing of projects into 2010/11.

B. Supporting information

Background

1. The purpose of this report is to inform members of the provisional outturn against revenue and capital budgets for the MPA/MPS in 2009/10.

2. The financial year 2009/10 presented a number of key challenges, particularly around the G20 summit, Tamil and Climate Camp demonstrations, Olympics planning, increasing fuel prices, activity relating to dangerous dogs and requirements for evidential analysis of CCTV & other data, as well as slippage to the introduction of Integrated Prosecution Teams, Finance & Resources Modernisation and Transforming HR. All of these issues together with the MPS having the lowest percentage increase in budget of any Police Service in the country have made financial management a key issue during the year.

3. Despite the budget pressures, and after accounting for the proposed transfers to earmarked reserves outlined in paragraphs 6 and 7, the MPS have been able to return a provisional revenue budget underspend of £2.9m (0.1% of budget).

4. Table 1 provides a summary of the provisional outturn by Business Group.

Table 1 - Summary of 2009/10 provisional outturn against budget

* = % of net expenditure budget

Write-off of penalty interest relating to Landsbanki

5. Following recent guidance received from CIPFA at the end of May, the provisional outturn underspend includes a reduction in interest receivable relating to Landsbanki investments which had previously been accrued on the advice of earlier CIPFA guidance at the penalty rate of interest of 22%, but which is now more likely to be paid at the reduced contractual rate. Members are asked to approve the write-off of £1.67m (subject to audit review) against the 2009/10 accounts. The anticipated write-off has been included in previous revenue forecasts submitted to Finance & Resources Committee.

Reserves

6. In line with normal and agreed business practice, a number of earmarked reserves have been included in the provisional outturn for approval. The proposals for allocating this additional reserve funding are shown below.

Summary of transfer to reserves as part of agreed business practice (£m)

• Service Improvement Plan Fund 14.59
• Motor Insurance 0.27
• Property Insurance 0.12
• MPA Partnership Funding in TP 0.37
• Youth & Violent Crime 0.10
• Climate Change Action Plan 0.25
• Total 15.70

Service Improvement Plan Fund – this relates to the unallocated element of the 2009/10 fund which is to be reserved for future service improvements including the MPS Language Programme and increases in Special Constables.

Motor Insurance – this relates to savings made on motor insurance premiums and will increase the motor insurance indemnity reserve to £3.12m, with the intention of reaching the level requested by the MPA of £5m in future years. The total increase to the reserve in 2009/10 will be £1m as an increase of £0.73 was previously approved by the MPA in Period 6.

Property Insurance - this relates to savings made on property premiums in 2009/10 and will increase the property damage insurance reserve to £0.3m, with the intention of reaching the level requested by the MPA of £2m in future years. A transfer to reserves of £0.18m was previously approved by the MPA in Period 6.

MPA Partnership Funding – this relates to the unspent element of funds set aside for MPA Partnership projects within Territorial Policing that are to be carried forward for use in 2010/11.

Youth & Violent Crime. – This relates to funds drawn down from the Youth & Violent Crime Reserve which were not used in-year and are required to be returned to the earmarked reserve for use in 2010/11.

Climate Change Action Plan – this relates to savings made following energy efficiency works that are to be invested in further environmental projects in order to deliver carbon reduction savings in line with the MPS Environment Strategy. This will increase the reserve to £0.37m.

7. Following the creation of these earmarked reserves, and the write-off of penalty interest relating to investments with Landsbanki, it is anticipated that an underspend of £2.9m will be realised. With this in mind, members are asked to approve two further transfer to earmarked reserves of:

• £1.75m to cover expenditure on Transforming HR that will now be delayed into 2010/11.
• £1.13m into the Modernisation Reserve to assist in the delivery of the organisation’s Service Improvement Plan and in particular associated redundancy costs.

8. A review of the third party provision for legal and accident claims has revealed that there is the potential to reduce this provision by removing the overheads costs from the provision calculation. If the Audit Commission is in agreement then there is the opportunity to reduce the third party provision, and therefore increase the underspend, by £3.3m. Subject to Audit Commission agreement members are requested to approve this proposal and the transfer of this one-off saving to the Modernisation Reserve.

9. In addition to the reserves described in paragraphs 6 to 8, MPA Finance & Resources Committee has already approved a number of reserve movements during 2009/10. If the reserves described above are approved, this will result in a total reduction of £21.8m in the level of earmarked revenue reserves during 2009/10. Table 2 sets out the MPA/MPS Reserves position as at 31st March 2010:

Table 2: MPA/MPS Proposed Reserves position as at 31 March 2010

Provisional Revenue Outturn by Business Group

10. Table 3 compares the provisional outturn variances with the Period 11 forecast by Business Group. The subjective position by Business Group is at Appendix 1.

Table 3 - Comparison of Provisional outturn variance with Period 11 forecast outturn variance.

11. Territorial Policing – An overspend of £29.4m – 2.1% of Budget.
The overspend relates principally to: Police Officer Pay as a result of officer strength being higher than anticipated due to Police Officers not moving to other Business Groups as originally planned and shortages in some units, ranks and roles in Territorial Policing which also limited movement; Police Officer Overtime caused by the policing of the G20 and Tamil demonstrations; PCSO Pay where the movement of PCSOs into other roles was managed to avoid vacancies; Police Staff Pay caused by delays to the implementation of Integrated Prosecution Teams (IPT) and delays to Finance & Resource Manager modernisation; Transport Costs relating to additional vehicle hire and increased fuel costs; Income, where there were reductions in immigration receipts as the UK Borders Agency made less use of MPS custody facilities as well as lower than budgeted local authority funding for cost sharing initiatives. These areas of overspend have been partly offset by underspending within Premises and Supplies and Services.

12. There has been an adverse movement of £4m from the position reported at Period 11 relating principally to Supplies and Services following higher than forecast spend on interpreters, Forensic Medical Examiners, Photocopiers and Community Relations. However, Supplies and Services as a whole was underspent within Territorial Policing. There has also been higher than anticipated spend within Police Officer pay relating to Special Priority Payments as the higher officer strengths within Territorial Policing led to more officers being eligible for these payments than had been estimated. This has been partly offset by a favourable movement of £1m in Police Officer Overtime as a result of continuing management control of overtime activity.

13. Specialist Crime – An underspend of £1.5m – 0.4% of Budget.
The underspend is principally within Police Officer Pay where strength has been below target and an over achievement of Income mainly as a result of additional POCA receipts. This is partially offset by an overspend on Police Staff Pay primarily caused by forensic services recruiting ahead of their original plans. There have also been overspends within Police Officer Overtime and Police Staff Overtime, principally relating to covering for vacancies as well as an increase in gun related crimes. /p>

14. There has been an adverse movement of £1.3m from the position reported at Period 11 relating principally to Supplies and Services following higher than forecast spend on Forensics and Photocopiers.

15. Specialist Operations – An underspend of £1.8m - 0.7% of Net Expenditure Budget.
The underspend is principally within Police Officer Pay where strength has been below target. Lower than planned workforce levels at Heathrow Airport and the Palace of Westminster have been matched by an under-recovery of income in these areas. There is an underspend within Transport costs which relates to reduced spending on overseas travel. Police Officer Overtime was overspent due to covering vacancies and additional Protection requirements.

16. There has been a favourable movement of £2.1m from the position reported at Period 11, principally relating to lower than expected Police Officer Pay, receipt of additional Counter Terrorism Grant and other income receipts.

17. Central Operations – An underspend of £3.1m – 1.5% of budget.
The underspend relates principally to Police Officer Pay as officer numbers were below target strength. This was partly offset by overspends in the following areas; Police Officer Overtime caused by the policing of the G20, Tamil and Climate Camp demonstrations; Transport Costs relating to additional Public Order vehicle hire resulting from the demonstrations, increasing fuel costs and unfavourable exchange rates relating to services purchased by the Air Support Unit (helicopter maintenance); Employee Related Expenditure relating to seconded officers used for Public Order Aid; Supplies and Services relating to increased firearms and Taser training as well as additional equine costs; an under-recovery of income forecast for sporting events.

18. There has been a favourable movement of £2.8m from the position reported at Period 11, principally following the allocation of budget to Police Officer Pay and Police Staff Pay for Counter Terrorism work undertaken.

19. Olympics Security – Nil variance.
Whilst there is a nil variance overall, subjectively there are underspends, principally within Supplies & Services due to lower than budgeted airwave radio and external consultant costs. These underspends are matched by lower than budgeted specific grant receipts.

20. Deputy Commissioner’s Portfolio – An underspend of £1.7m – 3.2% of budget.
The underspend relates principally to Police Officer Pay due to officer numbers being below target strength. There has also been an over recovery of income relating to work carried out by MPS staff on behalf of the Cayman Islands and additional recovery of legal costs.

21. There has been a minor favourable movement of £0.4m from the position reported at Period 11.

22. Directorate of Public Affairs – An underspend of £0.3m - 5.6% of budget.
The underspend is principally within Police Staff Pay due to vacancies carried throughout the year and Supplies and Services relating to reduced publicity expenditure.

23. There has been a minor adverse movement of £0.1m from the position reported at Period 11.

24. Directorate of Information – An underspend of £0.7m - 0.3% of budget.
The underspend relates principally to Police Staff Pay and Police Officer Pay due to vacancies carried throughout the year. This has been partially offset by an overspend within Supplies and Services due to a variety of reasons such as increased demand for evidential analysis, additional workstation support costs, growth in data storage, new applications, services and associated licences.

25. There has been a favourable movement of £0.6m from the position reported at Period 11, principally within Police Staff Pay.

26. Resources Directorate – An underspend of £4.6m – 1.7% of budget.
The underspend relates to a number of areas; Police Staff Pay has an underspend of £1.7m principally within Property Services reflecting a reduction in the use of agency staff and preparations for restructuring which are yielding permanent savings; Employee Related Expenditure has an underspend of £2.5m principally resulting from a reduced tax liability on free rail travel (offset by the additional cost of free rail travel recorded within Human Resources Directorate); Capital Financing has an underspend of £1.5m linked to a lower than budgeted Capital Financing requirement; Specific Grant has an over-achievement of £2.3m relating to additional Loan Charges grant resulting from a lower balance of useable capital receipts (due to the need to use significant levels of usable capital receipts to finance the Capital Programme in 2008/09) and an additional allocation of Counter Terrorism Grant. These have been partially offset by an overspend of £1.6m on Premises costs relating to additional facilities management and utilities costs and an under-recovery of Interest Receipts of £2.9m following inclusion of an anticipated £1.7m write-off of penalty interest relating to Landsbanki investments that had previously been accrued in 2008/09 on the advice of Cipfa. Additionally, there has been a reduction in the level of interest rates achievable on investments reflecting changes to the Authority’s Treasury Management policy.

27. There has been a favourable movement of £3.7m from the position reported at Period 11 relating principally to Premises costs (£1.9m) due to lower than anticipated general rates, additional specific grant (£0.7m) and a reduction in Police Officer Pay costs (£0.3m) relating to a tax adjustment credit for Compensatory Grant payments.

28. Human Resources – An underspend of £3.4m – 2% of budget.
The underspend is principally within Police Staff Pay relating to existing vacancies within the Transforming HR Programme and within Police Staff overtime, principally within Catering Services where more efficient working practices have reduced the requirement for overtime. There has also been an over-recovery of Income relating to the sale of training courses, merchandising and intellectual property rights. The underspend is partially offset by an overspend in Supplies and Services for Information Technology costs relating to the Transforming HR Programme (previously forecast within Employee Related Expenditure). It is proposed to transfer £1.75m of the underspend into a Transforming HR reserve (paragraph 7).

29. There has been a minor favourable movement of £0.1m from the position reported at Period 11.

30. Metropolitan Police Authority – Nil variance.
The provisional outturn position is equivalent to budget following the use of MPA reserves to cover extraordinary Employee Related Expenditure and Legal costs. Employee Related Expenditure incorporates non controllable costs of the MPA in respect of ACPO recruitment where more recruitment drives were needed than planned, and ill health retirement costs. This budget also includes final staff payments relating to the MPA reorganisation; the cost of secondments; and early retirement costs.

31. The provisional outturn position has remained in line with that reported at Period 11.

32. Centrally Held Budgets – An underspend of £19.1m - 0.7% of Budget.
The underspend principally relates to Police Officer Pay where at the MPA Remuneration Sub-Committee on 21 December members approved the proposed posts and payments with regard to Special Priority Payments (SPPs) for 2009. The expected budget savings have been moved from Business Groups to Centrally Held. The underspend also relates to accounting adjustments to write off unmatched goods receipts in respect of previous financial years and includes receipt of a grant payment of £3.6m from Home Office relating to reimbursement of additional costs incurred as a result of the G20 summit.

33. There has been a favourable movement of £2.1m from the position forecast at Period 11, principally relating to additional write-offs of unmatched goods receipts in respect of previous financial years, partially offset by a charge to revenue for costs relating to the discontinued Metafor programme).

34. Discretionary Pension Costs – An overspend of £3.9m – 13.5% of budget.
The overspend is principally due to a higher number of ill health retirements than budgeted for as well as increased payments for injury awards and 30+ pensions.

35. There has been a minor favourable movement of £0.3m from the position reported at Period 11.

Provisional Revenue Outturn by expenditure/income type

36. Table 4 compares the provisional outturn variance to the Period 11 forecast variance by income/expense type.

Table 4 – Comparison of Provisional outturn variance with Period 11 forecast outturn variance by Income/expense type

37. Police Officer Pay – Underspend of £18.3m – 1% of budget
The underspend is principally due to Police Officer actual strength throughout the year being below the levels assumed in the original budget. Additionally, there have been reductions in the amount of Special Priority Payments and Compensatory Grant paid to officers. As indicated in Table 5, the end of year strength of 33,260 was 58 officers below the revised target strength. Sufficient candidates were recruited and selected to meet the target but those officers have joined in April and May 2010.

Table 5 – Police Officer Actual Strength v Target

38. Police Staff Pay - An underspend of £6.2m – 1% of budget
The underspend is principally within Human Resources relating to existing vacancies within the Transforming HR Programme, the Vehicle Removal & Examination Service and Catering Services. There are also underspends within Resources, reflecting a reduction in the use of agency staff and preparations for restructuring which will yield permanent savings, and within the Directorate of Information reflecting vacancies and the capitalisation of some staff costs. This is partly offset by an overspend within Specialist Crime Directorate primarily caused by Forensic Services recruiting ahead of their original plans and an overspend within Territorial Policing following delays to the implementation of Integrated Prosecution Teams (IPT) and delays to Finance & Resource modernisation.

39. There has been a favourable movement of £1m from the forecast position reported at Period 11 following the allocation of additional Counter Terrorism budgets within Specialist Crime and Central Operations.

40. PCSO Pay - An overspend of £3.5m – 2.3% of budget.
The overspend is within Territorial Policing where there has been lower than expected wastage and where the movement of PCSOs into other roles has been managed to avoid vacancies. There has been an adverse movement of £0.5m from the position reported at Period 11 due to lower than expected wastage.

41. Traffic Warden Pay - An overspend of £0.8m – 9.8% of budget.
The overspend is within Territorial Policing, Transport OCU, following delays in anticipated transfers to PCSO roles. There has been a minor favourable movement from that reported at Period 11.

42. Police Officer Overtime – An overspend of £7.6m – 6.2% of budget.
The overspend relates principally to the policing of the G20, Tamil and Climate Camp demonstrations. Appendix 3 shows that £10.9m of the overtime cost relates to major operations for which no specific budget provision existed. If the costs for these major operations are excluded then the outturn would show an underspend of £3.3m (2.7% of budget). Funding of the additional costs incurred as a result of the G20 demonstrations has been received from the Home Office and, given the favourable provisional outturn, we do not propose to use reserves to offset the cost of the Tamil demonstrations.

43. There has been a favourable movement of £2.2m from the position reported at Period 11. This is principally within Territorial Policing and Specialist Crime Directorate following management control of overtime activity.

44. Police Staff Overtime – An overspend of £0.5m – 1.5% of budget.
The overspend relates principally to Specialist Crime Directorate for increased activity within Forensic Services department and covering vacancies within the Intelligence Bureau. Additionally there is an overspend within Territorial Policing relating to increased use of Police Staff to provide support for operational activities. This is partly offset by an underspend within Human Resources Directorate relating to reduced overtime within Catering Services and reduced activity within the Vehicle Removal & Examination Service.

45. There has been a minor favourable movement from the position reported at Period 11.

46. PCSO and Traffic Warden Overtime – An overspend of £0.4m - 25.7% of budget.
The overspend is within Territorial Policing relating to operational requirements, where activities such as Operation Winter Nights (a Safer Neighbourhoods initiative to reassure the public via a high visibility police presence) have required the support of PCSOs to increase visibility. There has been a minor adverse movement from the position reported at Period 11.

47. Employee Related Expenditure – An underspend of £2.2m – 6% of budget.
The underspend is principally within Human Resources and relates to costs that were originally budgeted to be incurred as Employee Related Expenditure but have now been incurred within Supplies & Services category as revenue contributions to capital outlay (RCCO) for the Transforming HR Programme. There is also an underspend within Resources Directorate in respect of reduced tax liability for free rail travel. These are partially offset by overspends within Specialist Crime principally relating to external training costs; Central Operations relating to seconded officers used for Public Order aid; Directorate of Information for increased advertising costs to address staff recruitment issues and the MPA relating to additional legal expenses, early retirement costs, secondment costs and recruitment drives to fill vacancies.

48. There has been a favourable movement of £4.9m from the position reported at Period 11, relating to Transforming HR expenditure being incurred within Supplies and Services rather than Employee Related Expenditure as originally forecast (see Supplies & Services below).

49. Premises Costs – An underspend of £1m – 0.4% of budget.
The underspend is principally within Territorial Policing relating to the rent-free Period for the Training Centre and delayed works in respect of Operation Tyrol (Safer Transport Team accommodation). This has been partially offset by overspends within Resources relating to Facilities Management costs for reactive works across the MPS estate with additional overspends in Specialist Crime relating to the refurbishment of the fingerprint bureau at New Scotland Yard, Directorate of Information relating to storage improvement works and within Central Operations due to additional costs for parking facilities at Bishopsgate Firearms training centre.

50. There has been a favourable movement of £2.4m from the position reported at Period 11, principally within Resources Directorate.

51. Transport Costs - An overspend of £3m – 4.4% of budget.
The overspend is principally within Territorial Policing relating to increased fuel and vehicle hire costs and within Central Operations relating to additional public order vehicle hire resulting from the G20 and Tamil demonstrations, increasing fuel costs and unfavourable exchange rates relating to helicopter maintenance within the Air Support Unit.

52. There has been an adverse movement of £1.7m from the position reported at Period 11, principally within Specialist Operations following a review of the Counter Terrorism budget allocations (budget has been moved from Specialist Operations to other Business Groups and into other categories of expenditure - para 64 refers) and within Territorial Policing as year end accruals indicate previous under-forecasting of fuel and vehicle hire costs.

53. Supplies and Services - An overspend of £9.9m - 2.2% of budget.
The overspend is principally within Human Resources Directorate (£4.8m) relating to Information Technology costs for the Transforming HR Programme, Specialist Operations (£2.7m) relating to Counter Terrorism spend where budget is in other categories of expenditure, Specialist Crime (£2.3m) where spending in a variety of areas such as scenes of crime equipment, photocopiers and office equipment has been above budget and within Centrally Held (£2m), principally relating to a charge to revenue for costs relating to the discontinued Metafor programme and an element of unachieved savings. (Members will be updated on the Metafor programme at the Finance and Resources Committee meeting on 15 July 2010). These are partly offset by an underspend within Territorial Policing (-£2.5m).

54. There has been an adverse movement of £9.4m from the forecast position reported at Period 11, principally within Human Resources following the revenue contribution to capital outlay (RCCO) for Information Technology costs relating to the Transforming HR Programme (previously forecast within Employee Related Expenditure). There have also been increases within Territorial Policing and Specialist Crime following higher than forecast spend on interpreters, Medical Examiners, Photocopiers, Community Relations, Forensics, covert activity and a variety of other items. There has been an increase within Centrally Held relating to the charge to revenue for the discontinued Metafor programme . These have been partially offset by reductions of £2m in expenditure previously forecast amongst the remaining Business Groups.

55. Capital Financing Costs – An underspend of £1.5m – 6.6% of budget.
The underspend is principally due to a lower than budgeted Minimum Revenue Provision (MRP). This is due to a lower than budgeted 2008/09 capital outturn and hence a lower than expected capital financing requirement. This is partly offset by additional interest payable on new external loans arranged by the Authority.

56. There has been a minor favourable movement from the position reported at Period 11.

57. Interest Receipts – An adverse position of £2.9m – 140% of budget.
The principal cause of the adverse position is the inclusion of an anticipated write-off of penalty interest (£1.67m) relating to Landsbanki investments (accrued in 2008/09 on the advice of Cipfa) which members are asked to agree (see paragraph 5). Additionally, there has been a reduction in the level of interest rates achievable on investments reflecting changes to the Authority’s Treasury Management policy.

58. There has been a favourable movement of £0.4m from the position reported at Period 11 following a reduction in the forecast write off of penalty interest relating to Landsbanki following advice from Cipfa.

59. Other Income - An over-achievement of £3m – 0.8% of budget.
The over-achievement is principally within Centrally Held relating to accounting adjustments to write off unmatched goods receipts relating to previous financial years, within Specialist Crime with regard to increased POCA receipts and with Human Resources relating to the sale of training courses, merchandising and intellectual property rights. These are partially offset by under-recovery of income within Territorial Policing where there were reductions in immigration receipts as the UK Borders Agency made less use of MPS custody facilities as well as lower than budgeted local authority funding for cost sharing initiatives, and Specialist Operations although much of it relates to areas where expenditure has also reduced such as for the provision of policing at Heathrow Airport and the Palace of Westminster.

60. There has been a favourable movement of £4.5m from the position reported at Period 11, principally within Centrally Held relating to additional write-offs of unmatched goods receipts in respect of previous financial years and within Specialist Operations relating to a variety of operational receipts.

61. Specific Grant – An over-achievement of £3.2m.
The over-achievement relates to additional Loan Charges grant resulting from a lower balance of useable capital receipts (due to the need to use significant levels of usable capital receipts to finance the Capital Programme in 2008/09) and a grant payment of £3.6m from Home Office relating to reimbursement of additional costs incurred as a result of the G20 summit. This is offset by lower than budgeted grant within the Olympics Security Directorate which is matched by reduced expenditure.

62. There has been a favourable movement of £1m from the forecast position reported at Period 11, principally within Specialist Operations relating to additional Counter Terrorism Grant.

Budget movements

63. The major budget movements undertaken in Period 12 are shown below in Table 4.

Table 4 – Major budget movements actioned in Period 12

Movements in Reserves

64. The reserve movements carried out in Period 12 are shown in Table 5.

Table 5 – Reserve movements carried out in Period 12

Capital Monitoring

65. Despite the downturn in the economy adversely affecting the expected level of capital receipts available in 2009/10 to support the capital programme, an ambitious level of investment was still proposed. This has proved possible thanks to the judicious use of (a) unsupported borrowing; (b) capital reserves; (c) revenue underspend from 2008/09; and (d) Service Improvement Programme funds. This financing situation is closely monitored to ensure all funding sources remain available and the capital programme continues to be affordable and sustainable in accordance with the requirements of the Prudential Code. This is critical when considering the projects that have been rephased from 2008/09 and the capacity issues that arise from this.

66. On 19th November 2009, the MPA Finance and Resources Committee agreed a revised capital programme reflecting a rephasing of project expenditure into 2010/11 and beyond. This report provides forecast variations against the revised annual budget.

67. Appendix 2 sets out the expenditure for the 2009/10 Capital Programme as at Period 12 (March) by programme. Provisional outturn is £186.3m (including the purchase on Sovereign Gate) representing 87% of the revised annual budget of £214m. The outturn of £186.3m is £27.7m below the revised annual budget.

68. Property Programme – An underspend of £2.7m - 5.3% of revised annual budget.
As previously advised, the main reasons for the underspend are slippages in the implementation of the sustainable development projects associated with the Climate Change Action Plan; prolonged negotiations in obtaining licence agreement from the landlord to alter the Polar Park site at Heathrow and the late receipt of security clearance which has resulted in slippage in the implementation of projects associated with the Central London operational facilities at New Scotland Yard. It should be noted that the Climate Change Action Plan has its own dedicated funding source which allows for underspends to be rolled forward into future years. Furthermore, extended negotiations with prospective occupants of several floors at Empress State Building will result in delays to the proposed works. Additionally, changes to technical specification and other acquisition issues have resulted in delays to the purchasing of a covert property. Moreover, there were cost savings generated on the construction of Havering Patrol Base and contractual delays in providing feasibility costings have resulted in a decision to delay the Jubilee House upgrade. The underspend is partially offset by the acquisition of Sovereign Gate for £5.7m.

69. Information Programme – Excluding C3i – An underspend of £16.3m - 16.5% of revised annual budget.
As previously advised, the main reason for the underspend results from a decision not to proceed further with the Metafor project. (Members will be updated at the Finance and Resources Committee meeting on 15 July 2010). The National Number Plate Recognition Data Centre project (funded solely by capital grants from NPIA, ACPO TAM & Hertfordshire Constabulary) has been delayed due to prolonged negotiations to obtain operational funding, and as a result the project will be rephased into 2010/11. Capital expenditure associated with the Tactical Response Unit and Real Time Communications projects (which are ICT-based solutions to assist operational requirements) was written off to revenue expenditure. Further underspends result from slippage in procurement of equipment associated with the Events Management Futures project where tendering bids received were significantly higher than expected. Additionally, in order to ensure that the main part of the Pyxis project is completed by the end of March, the supplementary work on email and audit will be rephased to the second quarter of the 2010/11 financial year. Development work to move PDA software onto the new Personal Digital Assistants and to put the PDA onto the Information, Communication & Technology catalogue will be rephased into 2010/11.

70. Transport Projects – An underspend of £1.6m - 9.3% of revised annual budget.
As previously advised, the main reason for the underspend results from the setting up of an internal car hiring pool associated with the Service Improvement Plan. Budget has been earmarked to purchase additional vehicles for the hire pool but these will not be delivered in this financial year. Transport Services will request formal approval to rephase this project into 2010/11.

71. Other Plant & Equipment Expenditure – A minor underspend against the revised annual budget.

72. Language Programme − An underspend of £3.6m - 98.5% of revised annual budget.
As previously advised, the delays in the tendering process for the procurement of language services are ongoing. This means that contracts will not be awarded and associated work is not scheduled to start until 2010/11. This programme has ring-fenced funding from the Service Improvement Plan fund.

73. Directorate of Information – C3i Programme – An underspend of £2.1m - 52.1% of revised annual budget.
As previously advised, the main reason for the underspend is due to slippages in the supply of equipment for the Crime Reporting Information System (CRIS) and the Telephony Call Routing System (CRS) projects. These projects will address the capacity and design life in the original CRIS and CRS specification, thought to be insufficient to meet current demand. The Directorate of Information will request formal approval to rephase these projects into future years.

74. Safer Neighbourhoods Programme – An overspend of £2m - 10.3% of revised annual budget.
The Property Services element is reporting an overspend of £4.9m. Previously reported delays in the sourcing of suitable accommodation by the Property Services element have been resolved and as a result the forecast has been increased to show a £3.5m overspend. This £3.5m was included within the original Property Services budget but was rephased into next financial year following approval by the MPA in Period 6. Property Services are now on target to fully complete its scheduled work in this financial year. The remainder of the overspend relates to the transfer of the Croydon Park site into Safer Neighbourhood Programme from non funded Property Programme. The Directorate of Information element is reporting an underspend of £2.9m. This represents the Safer Neighbourhood contribution towards the purchase of Personal Digital Assistants for front-line officers. However, as the current model is still being upgraded and undergoing substantial testing, formal approval will be requested to rephase this amount into future years.

75. Olympics/Paralympics – An underspend of £0.8m – 66% of revised annual budget. As previously advised, the Olympics/Paralympics Programme is funded by specific grant and each project is subject to Home Office approval following the submission of individual business cases. In Period 6, MPA Members approved a budget reduction of £25.9m to this Programme. The initial Olympics/Paralympics Programme budget assumed a high level of Intelligence staff personnel, which will not materialise this year. The effect of this is a significant reduction in proposed building works (and the associated IT fit-out costs) to house these personnel. Instead, options around enhancing existing estates are currently being reviewed.

76. Counter Terrorism – A minor overspend of £0.2m - 1.8% of revised annual budget.

77. ACPO TAM – An underspend of £2.7m - 34.2% of revised annual budget. As previously advised in Period 6, MPA Members approved a budget increase of £7.8m which represented the Association of Chief Police Officers Terrorism Allied Matters (ACPO TAM) projects not included in the original 2009/10 programme. This increase formed part of the revised Capital Programme. However, as advised in Period 9, there was a possibility that some of the ACPO TAM projects may not result in an MPS-owned asset. Following a detailed investigation of this issue, it is now apparent that some of the ACPO TAM funded budget is for non-MPS owned projects.

Environmental implications

There are none specific to this report.

C. Race and equality impact

Equality Impact Assessments are completed on business group activities undertaken where there is deemed to be an impact. The equality and diversity implications are identified in business cases and reports on individual proposals through our normal decision making process.

D. Financial implications

The financial implications are those set out in this report.

E. Background papers

• Appendix 1: MPS Revenue Monitoring Report 2009/10 ~ Provisional Outturn
• Appendix 2: MPS Capital Monitoring Report ~ Provisional Outturn
• Appendix 3: Metropolitan Police Service Police Officer Overtime: Analysis of Overtime Costs on Major Operations as at Period 12 - 2009 / 2010

F. Contact details

Report author(s): Nick 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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