Efficiency Plan Quarterly monitoring as at Quarter 1 2010/11

Report: 09
Date: 23 September 2010
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 2010/11 HM Treasury cumulative efficiency target of 10.3% (year 3 of the 3 year plan) by £69.8m.

A. Recommendations

Members are invited to:

1. Note the cumulative position against the efficiency plan target set by HM Treasury as at first Quarter 2010/11. 

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 2010/11.

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 2009 Budget announcement HM Treasury 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 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 therefore increased 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 equated to £344.9m. The MPA/MPS has exceeded the HM Treasury target by £69.8m. The plan has been updated to reflect the current position as outlined in a paper submitted to the Finance and Resources Committee on 18th March 2010. 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 will now be regarded as cashable.

Overall position

5. Cumulatively, the total efficiency savings achieved at the end of the first quarter (including 2008/09 and 2009/10 actuals and the permitted surplus savings brought forward from 2007/08) are £333.8m. The cumulative forecast for savings to be achieved by the end of 2010/11 is £414.7m, an over-achievement of £69.8m against the HM Treasury target of £344.9m, which equates to an over achievement of 20%. (Appendix 1 provides a more detailed breakdown of the efficiency savings position).

Efficiency savings variances

6. Over the three year cycle the original target has been changed to incorporate actuals achieved and additional savings identified during the 3 years. As previously advised additional savings have been identified such as £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.

Future years’ savings

7. The new coalition government has not made any announcement regarding a future savings target for the MPS. It is therefore not yet clear whether there will be a requirement to continue with this form of reporting beyond 2010/11.

C. Other organisational & community implications

Equality and Diversity Impact

1. 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.

Consideration of MET Forward

2. Met Forward recognises that the MPS has to make challenging financial decisions whilst minimising the impact on front line policing. This report outlines the efficiency savings achieved by the MPS in comparison to the target set by the HM Treasury.

Financial implications

3. The financial implications are those set out in this report.

Legal implications

4. This report is submitted as part of the governance process and no legal implications arise. There are none specific to this report.

Environmental implications

5. There are none specific to this report.

Risk Implications

6. Risk management is integrated into the Service’s budget, business planning and performance management processes. Business Groups and Management Board monitor risks on a regular basis. This report sets out the financial risks and pressures currently being managed by the Service. 

D. Background papers

• MPA/MPS Efficiency Plan 2008/09 – 2010/11

E. 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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