Capital and revenue budget monitoring 2010/11 – period 6

Report: 5
Date: 18 November 2010
By: Director of Resources on behalf of the Commissioner

Summary

This report provides an update on the revenue monitoring position for 2010/11 at Period 6 (to the end of September). The revenue budget is forecast to overspend by £8.9m (0.3% of budget).

The Capital Programme as at Period 6 (to the end of September) shows year to date total expenditure of £72m. This total represents 26.1% of the revised annual budget of £276.3m. The forecast for the year of £253.3m represents an underspend of £23m (8.3% of the revised annual budget)

A. Recommendations

Members are invited to:

1. note the year to date and forecast position for revenue and capital budgets.
2. Note that budget reductions of £17.7m have been allocated to Business Groups following the withdrawal of Government Grant. This follows the £10.3m which was allocated to Business Groups in Period 5.
3. Approve a budget virement of £1.2m (para 64 refers).

B. Supporting information

Background

1. This paper provides a forecast against the revenue and capital budgets for the MPA/MPS in 2010/11 based on the position at the end of September 2010.

Additional In-year savings

2. Following the announcement by the Chancellor of the Exchequer on 24 May 2010 regarding in-year savings measures, Home Office notified the MPA/MPS that grant allocations would be reduced by £30.4m, with a further £5m reduction in Counter Terrorism funding. Of the £30.4m general grant reduction £28m relates to revenue and £2.4m relates to capital allocations.

3. In order to provide visibility as to where savings were being forecast within Business Groups, earlier monitoring reports retained full budget allocations, with the reduction in grant allocation forecast centrally. As greater clarity has emerged around how the savings can be achieved, MPS Management Board agreed to amend Business Group budgets to match the reduction in funding. £10.3m of budget was transferred from Business Groups in Period 5 to offset the reduction in funding reported within Centrally Held, and a further £17.7m of budget reductions has been applied in Period 6. The reduction of £5m Counter Terrorism Grant was applied to Business Group budgets in period 4.

4. Table 1 shows the in-year budget savings package by Business Group.

Table 1 - Allocation of budget savings by Business Group

	Goods & Services £000	Property £000	Vehicle Hire £000	Catering Services £000	Overtime £000	Senior Officer Bonuses £000	Special Priority Payments £000	Police Staff / Interim Staff £000	Total £000
Territorial Policing	3,597		554		986	246	5,325	1,957	12,665
Specialist Crime	473		432		558	110	653	1,040	3,266
Specialist Operations	108		63		-	2	105	43	321
Central Operations	203		314		313	65	846	288	2,029
Deputy Commissioner’s Portfolio	101		39		27	32	71	150	420
Directorate of Public Affairs	16		1		2			33	52
Directorate of Information	2,406		40		26			411	2,883
Resources	200	4,000	17		7			338	4,562
Human Resources	396		40	500	81	45		740	1,802
Total	7,500	4,000	1,500	500	2,000	500	7,000	5,000	28,000

5. Given the overall financial position facing the Service, Police Officer recruitment has been put on hold, which is expected to result in further savings of £12.9m in 2010/11. Other savings may be necessary as information becomes available regarding the outcome of the Comprehensive Spending Review announced on 20 October, levels of other specific grants and income from partner organisations.

6. Following the pause on Police Officer recruitment, it had been intended to reallocate Police Officer Pay budgets in Period 6 to recognise changes to the deployment plan. However, at the time of writing, the proposed changes remain under discussion and budgets will therefore be reallocated as soon as possible.

Revenue Forecast by Business Group

7. Table 2 provides a summary of the revenue forecast by Business Group. Table 3 provides a comparison of the forecast outturn variances between Period 5 and 6 by Business Group. It also includes the budget decreases applied in Period 6 relating to the reduction in Home Office Grant allocation, with a further column to show the change in variance between Periods 5 and 6 when the budget decreases are taken into account. The report will comment on the changes in variance shown in the final column.

Table 2 – Summary of revenue forecast against budget at Period 6

	Full Year Budget (Version B06) £000	Forecast Outturn 　 £000	Variance £000	Variance to Full Year Budget %
Territorial Policing	1,372,625	1,395,619	22,994	1.7%
Specialist Crime	416,854	414,702	-2,152	-0.5%
Specialist Operations	8,730	8,018	-712	-0.3%*
Central Operations	195,490	192,540	-2,949	-1.5%
Olympics Security Directorate	0	0	0	0.0%
Deputy Commissioner's Portfolio	57,876	55,502	-2,373	-4.1%
Directorate of Public Affairs	6,701	6,716	15	0.2%
Directorate of Information	221,811	225,289	3,478	1.6%
Resources	274,405	276,766	2,361	0.9%
Human Resources	188,372	186,795	-1,577	-0.8%
MPA	13,362	12,701	-662	-5.0%
Centrally Held	-2,756,226	-2,765,723	-9,497	0.3%
Total	0	8,927	8,927	0.3%*

* = of net expenditure budget

Table 3 - Comparison of Period 6 forecast outturn variance with Period 5 forecast outturn variance

Business Group	Period 6 Forecast Variance £000	Period 5 Forecast Variance £000	Change in Variance £000	Grant Reduction Budget changes £000	Real change in variance £000
Territorial Policing	22,994	17,611	5,383	-9,842	-4,459
Specialist Crime	-2,152	-3,794	1,642	-2,793	-1,151
Specialist Operations	-712	-619	-94	-213	-307
Central Operations	-2,949	-3,745	796	-1,826	-1,030
Olympics Security Directorate	0	0	0	0	0
Deputy Commissioner's Portfolio	-2,373	-2,031	-342	-319	-661
Directorate of Public Affairs	15	-19	34	-36	-2
Directorate of Information	3,478	4,650	-1,172	-477	-1,649
Resources	2,361	2,000	360	-362	-2
Human Resources	-1,577	-1,955	378	-1,802	-1,424
MPA	-662	-293	-369	0	-369
Centrally Held	-9,497	3,007	-12,504	17,670	5,166
Total MPS	8,927	14,812	-5,886	0	-5,886

8. The forecast outturn variance at Period 6 is an overspend of £8.9m.

9. The subjective position by Business Group is at Appendix 1. The overall position for the MPS is at Appendix 2.

10. Territorial Policing – An overspend of £23m –1.7% of budget
This overspend is largely within Police Officer Pay. This is the result of the current Business Groups as originally planned (despite them holding vacancies and reporting under-spends in this area) and shortages in some units, ranks and roles in Territorial Policing which also limit movement.

11. There has been an overall favourable movement of £4.5m in the forecast position from that reported at Period 5. This is principally within Police Officer and Police Staff Pay, following a reassessment of the forecast strengths. Additionally, use of an earmarked reserve of £0.9m relating to Operation Reclaim (uninsured vehicles) has been forecast.

12. Specialist Crime – An underspend of £2.2m - 0.5% of budget.
The underspend is principally within Police Officer Pay relating to officer vacancies within the Directorate. This is offset by forecast overspends within Supplies and Services relating to increases in mobile data costs.

13. There has been an overall favourable movement of £1.2m in the forecast position from that reported at Period 5. This results from reductions in overtime cost forecasts following strict management controls on overtime and within running expenses as additional savings are identified within the forecast.

14. Specialist Operations – An underspend of £0.7m – 0.3% of budget.
The underspend is principally within Police Officer and Police Staff Pay relating to vacancies within the Directorate. This is partly offset by an overspend forecast within Police Officer Overtime due to additional costs generated by events such as the General Election and high profile visits to the UK and within Supplies and Services relating to Counter Terrorism expenditure.

15. There has been a favourable movement of £0.3m in the forecast position from that reported at Period 5. This is principally within Police Officer and Police Staff Pay, following a reassessment of the forecast strengths.

16. Central Operations – An underspend of £2.9m – 1.5% of budget.
The underspend is principally within Police Officer Pay relating to officer vacancies within the Directorate.

17. There has been a favourable movement of £1.0m in the forecast position from that reported at Period 5. This is principally within Police Officer Overtime following a reduction in the number of Police Officers deployed on Public Aid and within Income following additional funding for a Pedal Cycle initiative.

18. Olympics Security – A nil variation.
The overall forecast variance remains nil as planned expenditure is matched by specific grant funding.

19. Deputy Commissioner’s Portfolio – An underspend of £2.4m – 4.1% of budget.
The underspend is principally within Police Officer and Police Staff Pay relating to vacancies within the Directorate.

20. There has been a favourable movement of £0.7m from the position reported at Period 5. This principally relates to Police Officer Pay, where additional posts have been identified to contribute towards corporate savings and additional income forecast within the Directorate of Legal Services.

21. Directorate of Public Affairs – A minor variation.

22. Directorate of Information – An overspend of £3.5m - 1.6% of budget.
The overspend is principally within Supplies and Services relating to contract inflation being higher than that budgeted (4.2% applied against 2.5% budgeted) which has caused a cost pressure of £3m. Savings arising from the extension of the ICT contract have been included in the forecast, but also as part of the in-year budget cuts.

23. There has been a favourable movement of £1.6m from the position reported at Period 5. This relates principally to forecast improvements in income recovery, a reduction in the Premises costs forecast for the Eagle Data Centre and a favourable movement in Supplies and Services following a review of forecast expenditure relating to Safer Neighbourhoods.

24. Resources Directorate – An overspend of £2.4m - 0.9% of budget.
The overspend is principally within Capital Financing costs resulting from borrowing undertaken earlier than originally anticipated. This is partly offset by additional Loan Charges Grant which follows the need to use higher levels of capital receipts to finance the Capital Programme in 2010/11 than originally anticipated.

25. There has been a minor favourable movement from the position reported in Period 5.

26. Human Resources – An underspend of £1.6m - 0.8% of budget.
The underspend relates principally to Police Officer Pay relating to vacancies within the Directorate. Some of the vacancies relate to seconded officers which results in a matching reduction in the Income forecast. Additionally, there are underspends within Police Staff Pay due to vacant posts and in Police Staff Overtime following strict management controls in this area.

27. There has been a favourable movement of £1.4m in the forecast position from that reported at Period 5. This is principally within Police Staff Pay following reductions to the use of agency staff within Commercial Services. There is also a further reduction in Police Staff Overtime forecast within Catering Services.

28. Metropolitan Police Authority – An under-spend of £0.7m - 5.0% of budget. This is mainly attributable to savings from vacant posts following a reorganisation towards the end of last financial year and a more recent review of Audit Risk & Assurance where some posts were removed from the organisation structure. In addition the MPA incurs a number of non-controllable costs such as legal expenses and ill health retirement costs which are forecast to overspend.

29. There has been a favourable movement of £0.4m in the forecast position from that reported at Period 5, principally within Premises Costs following a refund of rent and service charges and Employee Related Expenditure with a reduction in the forecast costs for ill-health retirements.

30. Centrally Held Budgets – An under-spend of £9.5m.
The underspend relates principally to savings anticipated from the pause in Police Officer recruitment that have not yet been included within Business Group forecasts.

31. There has been an adverse movement of £5.2m following a reduction in the centrally forecast savings which are now included within other Business Group forecasts. The specific grant budget has been reduced to match the reduction in grant funding of £28m announced by the Chancellor of the Exchequer in May.

Revenue Forecast by expenditure/income type

32. Table 4 compares the forecast outturn variances for Period 6 and Period 5 by expenditure/income type. As with Table 3, it also includes the budget decreases applied in Period 6 relating to the reduction in Home Office Grant allocation, with a further column to show the change in variance between Periods 5 and 6 when the budget decreases are taken into account. The report will comment on the changes in variance shown in the final column.

Table 4 - Comparison of forecast outturn variance by expenditure/income type

	Period 6 Forecast Variance £000	Period 5 Forecast Variance £000	Change in Variance £000	Grant Reduction Budget Changes £000	Real Change in Variance £000
Police Officer Pay	-8,835	-13,188	4,353	-7,500	-3,147
Police Staff Pay	-2,034	-6,963	4,929	-5,000	-71
PCSO Pay	1,012	1,446	-434	0	-434
Traffic Wardens' Pay	62	746	-684	0	-684
Total Pay	-9,795	-17,959	8,163	-12,500	-4,337
Police Officer Overtime	-763	-1,588	825	-2,000	-1,175
Police Staff Overtime	-1,252	-811	-441	0	-441
PCSO Overtime	-187	-213	26	0	26
Traffic Wardens' Overtime	-21	-22	1	0	1
Total Overtime	-2,223	-2,634	411	-2,000	-1,589
Total Pay & Overtime	-12,019	-20,593	8,574	-14,500	-5,926
Employee Related Expenditure	2,715	2,332	383	0	383
Premises Costs	3,237	2,138	1,099	0	1,099
Transport Costs	1,305	266	1,039	-1,500	-461
Supplies & Services	5,440	2,412	3,028	-1,170	1,858
Capital Financing Costs	2,916	2,916	0	0	0
Total Running Expenses	15,613	10,064	5,550	-2,670	2,880
Total Expenditure	3,595	-10,529	14,124	-17,170	-3,046
Income - interest Receipts	0	0	0	0	0
Income - Other	3,366	6,246	-2,879	-500	-3,379
Total Income	3,366	6,246	-2,879	-500	-3,379
Discretionary Pension Costs	0	0	0	0	0
Net Expenditure	6,961	-4,284	11,245	-17,670	-6,425
Specific Grants	1,965	19,097	-17,132	17,670	538
Net Revenue Expenditure	8,926	14,813	-5,887	0	-5,887
Transfers to/from Earmarked Reserves	0	0	0	0	0
Transfers to/from General Reserves	0	0	0	0	0
Budget requirement	8,926	14,813	-5,887	0	-5,887
Financed by Police Grants/Precept	0	0	0	0	0
Total MPS	8,926	14,813	-5,887	0	-5,887

33. The main forecast variances from budget are set out below.

34. Police Officer Pay – an underspend of £8.8m – 0.5% of budget.
Following the pause in Police Officer recruitment it is now anticipated that the year end target strength will be 32,137. Business Groups have begun to reflect this action in their forecasts, and the remaining reduction in target strength (695 officers) is being reported and forecast within Centrally Held. As indicated in Table 5, actual strength for 30 September shows an understrength position of 276, which contributes to the forecast underspend position. Territorial Policing is still overstrength at the expense of the other Business Groups being understrength. Workforce Planning hold monthly meetings with all Business Groups (Strategic Planning Workforce Forum) to monitor strengths against target, and recruitment plans. Appendix 3 shows the variance in Police Officer numbers from the deployment plan by Business Group since Quarter 1 of 2009. This shows that Territorial Policing remains above the deployment plan whilst most other Business Groups are below the deployment plan targets.

35. There has been a favourable movement of £3.1m from the position reported at Period 5. There is principally within Territorial Policing following a reassessment of their forecast strength.

Table 5 – Police Officer Actual Strength v Target Strength

Business Group	Target Strength at 30 Sept 2010	Actual Strength at 30 Sept 2010	Target Strength for 31 March 2011 as per Business Plan	Forecast Target Strength as at 31 March 2011	Variance between target strength and forecast
Territorial Policing	21,225	21,623	21,156	21,578	422
IPLDP Students	256	155	264	102	-162
Specialist Crime	3,872	3,700	3,861	3,733	-128
Specialist Operations	3,735	3,559	3,828	3,608	-220
Central Operations	2,740	2,683	2,740	2,707	-33
Olympics Security Directorate	180	169	196	236	40
Deputy Commissioner's Portfolio	397	354	397	359	-38
Directorate of Public Affairs	0	1	0	0	0
Directorate of Information	76	68	76	62	-14
Resources Directorate	6	5	6	5	-1
Human Resources	567	461	567	443	-124
Centrally Held	0		0	-695	-695
Total MPS	33,054	32,778	33,091	32,137	-954

36. Police Staff Pay - An underspend of £2.0m – 0.3% of budget.
In addition to a budget reduction of £5m to meet the fall in Home Office Grant funding, an additional £2m of savings is forecast across a number of Business Groups, reflecting the impact of the Star Chamber and efforts made by management to reduce costs.

37. There has been a minor favourable movement in the forecast position from that reported at Period 5.

38. PCSO Pay - An overspend of £1.0m - 0.6% of budget.
The forecast overspend relates to an overstrength position during the first few months of the year.

39. There has been a favourable movement of £0.4m since Period 5. This principally relates to a reassessment of forecast strength levels within Territorial Policing.

40. Traffic Warden Pay - An overspend of £0.1m – 0.7% of budget.
A minor overspend.

41. There has been a favourable movement of £0.7m from the position reported at Period 5 following the allocation of budget to recognise additional funding from Transport for London in this area.

42. Police Officer Overtime – An underspend of £0.8m – 0.7% of budget.
The forecast underspend is in addition to savings of £2m made to meet the reduction in Specific Grant announced by the Chancellor of the Exchequer in May, and is principally within Territorial Policing, Central Operations and Specialist Crime, following action taken to deliver the savings required by MPS Management Board. These are partially offset by an overspend in Specialist Operations, which relates principally to additional protection duties required leading up to and following the General Election, as well as a number of high profile events requiring increased levels of protection.

43. There has been a favourable movement of £1.2m from the position reported in Period 5. This is principally within Central Operations where the number of officers carrying out Public Order work has reduced.

44. Police Staff Overtime – An underspend of £1.3m – 4.1% of budget.
The forecast underspend is principally within Human Resources and relates to the management of overtime within Catering Services.

45. There has been a favourable movement of £0.4m from the position reported in Period 5. This relates to a review within Specialist Crime, to reflect a more realistic end of year position, and further work to find additional savings within Human Resources.

46. PCSO and Traffic Warden Overtime – An underspend of £0.2m - 13.3% of budget.
A minor underspend.

47. There has been a minor adverse movement from the position reported in Period 5.

48. Employee Related Expenditure – An overspend of £2.7m – 7.9% of budget.
This relates to a number of areas of overspends within Business Groups including; seconded officer costs of £1m, principally within the Olympics Security Directorate (£0.5m) and Specialist Operations (£0.3m) where costs are budgeted for within Police Officer and Police Staff Pay; premature retirement costs of £0.6m (the unpredictable nature of this area of expenditure makes it difficult to set budgets with any degree of accuracy); activity levels relating to the recruitment of Special Constables are higher than budgeted (£0.8m) which is being investigated; and savings anticipated from the relocation of Mandela Way stores, which had been allocated to this category, will not be achieved (£0.2m).

49. There has been an adverse movement in the forecast variance of £0.4m from the position reported in Period 5 relating to ACPO TAM seconded officer costs within Specialist Operations (matched by specific grant).

50. Premises Costs – An overspend of £3.2m – 1.4% of budget.
The forecast overspend is after savings of £4m have been applied to meet the reduction in Home Office Grant announced by the Chancellor of the Exchequer in May and relates principally to Facilities Management costs within Property Services.

51. There has been an adverse movement of £1.1m from the position reported in Period 5. This relates principally to a reduction in the forecast use of reserves for property costs.

52. Transport Costs - An overspend of £1.3m – 2.0% of budget.
The forecast overspend is after savings of £1.5m have been applied to meet the reduction in Home Office Grant announced by the Chancellor of the Exchequer in May and lies principally within Territorial Policing relating to increased fuel costs.

53. There has been a favourable movement of £0.5m in the forecast from the position reported at Period 5. This covers reductions in several Business Groups following reviews of forecast expenditure, including a favourable movement in Specialist Operations where preferential rates have been negotiated for overseas travel for Principals.

54. Supplies and Services - An overspend of £5.4m - 1.3% of budget.
The forecast overspend is after savings of £8m have been applied to meet the reduction in Home Office Grant announced by the Chancellor of the Exchequer in May. The overspend relates principally to the Directorate of Information where contract inflation is higher than that budgeted (4.2% applied against 2.5% budgeted) which has caused a cost pressure of £3m and within Specialist Crime Directorate relating to increases in mobile data costs. The overspends are partially offset within Territorial Policing where additional savings are forecast.

55. There has been an adverse movement of £1.9m from the position reported in Period 5, principally within Specialist Operations relating to Counter Terrorism expenditure. There have also been adverse movements in Territorial Policing following a review of expenditure forecasts and within Central Operations relating to increased expenditure in the Traffic OCU (matched by additional income).

56. Capital Financing Costs – an overspend of £2.9m - 12.3% of budget.
The forecast overspend relates to increased interest charges resulting from borrowing which was undertaken earlier than originally anticipated for cash flow purposes. This is partly offset by an increase in the forecast for Loan Charges Grant (see Specific Grant) which follows the use of higher levels of capital receipts to finance the Capital Programme in 2010/11 than originally anticipated, resulting in additional grant.

57. Interest Receipts – no variance to budget.

58. Other Income - forecast under-achievement of £3.4m – 1.1% of budget.
This under-achievement is principally within Human Resources, where income recovery for secondments is below budget (matched by reduced Police Pay expenditure) and within Specialist Operations relating to Aviation Security (matched by reduced expenditure).

59. There has been a favourable movement of £3.4m from the position reported in Period 5 principally within Territorial Policing, relating to forecast use of reserve funding for Operation Reclaim (uninsured vehicles), within Specialist Crime, where the favourable movement relates to reductions in budget (previous forecasts had already included reductions in forecast income) and within the Directorate of Information following a review of expected receipts.

60. Discretionary Pension Costs - a nil variation

61. Specific Grant – forecast under-achievement of £2.0m – 0.3% of budget.
This is primarily due to a forecast under-achievement within the Olympics Security Directorate, where the forecast grant position is in line with forecast expenditure.

62. There has been an adverse movement of £0.5m from the position reported at Period 5 which reflects changes to the expenditure forecast within the Olympics Security Directorate.

63. Budget movements - The MPA/MPS Business Plan was approved by MPA Strategy and Operational Committee on 1 April 2010. Since that time budget amendments have been made for a number of reasons. Appendix 2 shows the subjective budget movements that have been required in the time between the original budget submission and the presentation of this report.

The major budget movements undertaken since Period 5 are shown below in Table 6.

Table 6 – Major budget movements actioned since Period 5

Description of Budget Move	Amount £000
Allocation of Centrally Held budget for the 2010/11 Police Officer pay award.	22,360
Allocation of ACPO TAM budget to the Directorate of Information.	2,154
Within Directorate of Information, a movement from Supplies and Services to Premises Costs to subjectively match where Eagle Data Centre rent costs are incurred.	1,464
Within Specialist Operations, contributions from National Domestic Extremism Team for National Public Order Intelligence Unit and National Coordinator for Domestic Extremism.	1,000
Within Specialist Crime Directorate, reduction in expected income from the UK Border Agency.	700
Allocation of Service Improvement funding to Directorate of Information for the Solutions Centre (Projects Into Service).	617

64. In addition members are asked to approve the following budget virement (a permanent budget move between different categories of expenditure): This budget virement is already reflected in the figures reported in this paper.

• A movement of £1,174k from Premises costs to Police Staff Pay within Territorial Policing to correct identified budget setting issues. This relates to ongoing additional costs associated with the non-transfer of SROs to PCSOs, and delays in the implementation of IPI release 1. Alternative budget savings have been found from TP Training Centre rent, reductions in internal redecorations and reductions in Operation Tyrol premises costs.

65. In addition, the following budget virement has taken place, approved by MPS Management Board:

• Movement of £945k from Supplies and Services to Police Staff Pay. This is within Human Resources, and relates to the reallocation of the Language Programme Budget.

66. Movements in Reserves - The reserve movements carried out between Period 5 and Period 6 are shown in Table 7.

Table 7 – Reserve movements carried out between Period 5 and 6

Reserve description	Amount £000
Drawdown of funds from the 'Increasing Operational Capacity' reserve (Operational Costs) - relates to the use of the MERLIN IT system within Territorial Policing.	187
Drawdown of funds from the Youth and Violent Crime Initiatives Reserve (Operational Costs) within Territorial Policing	110
Transfer of funds from the MPA Projects Reserve (MPA initiatives) within Territorial Policing.	85

Capital Monitoring

67. The Government has made clear its requirement that a significant reduction in public expenditure is achieved. Notification was received of cuts in police revenue and capital grants for 2010/11. An internal review exercise was undertaken examining areas where savings through efficiencies or reductions in service will be made. There was a level of over-programming at April 2010, which was considered manageable and kept under close review by Management Board to ensure proper consideration was given to Service priorities in managing the overall programme within the available resources.

68. At a meeting of the MPA Finance & Resources Committee on 15 July 2010 the first review of the capital programme for 2010/11 was considered and a revised budget of £276.3m was approved. This represented an increase of £12.8m in expenditure on the original budget of £263.5m. However, because of additional funded projects within the programme, the over-programming sum of £42.3m was reduced to £33.2m. As part of the review it was verified that provisioning departments had the capacity to deliver all listed schemes.

Period 6 (September) 2010 Summary Position

69. Appendix 4 sets out the expenditure for the 2010/11 Capital Programme as at Period 6 (September) by programme. Year to date expenditure is £72.0m, representing 26.1% of the revised annual approved budget of £276.3m. Current forecasts predict spend for the year as £253.3m. This is £23.0m below the target expenditure figure of £276.3m. This represents a significant reduction in the over-programming sum - £33.2m down to £nil. Over programming has now been removed. Discussions with Business Groups continue to ensure that the changes are reflected into the 2011/12 capital programme which is under construction.

70. The forecast level of capital receipts to support capital expenditure remains at £20m. However, the MPA Finance & Resources Committee on 21 October approved the disposal of additional properties and noted that the level of capital receipts in 2010/11 will now reach £22.3m. It is proposed that this additional £2.3m should be utilised as part of the 2011 - 14 budget process.

71. Property Based Programme – Nil variance
A number of minor variations due to changes in project specifications have occurred. Delays in certain lease negotiations have been recorded. It is expected that these will be resolved shortly. Property Services is confident that expenditure will be contained within the revised annual approved budget figure of £90.6m.

72. Information Based Programme – An overall underspend of £28.7m - 21.0% of revised annual budget.
As previously advised DoI has undertaken a detailed review of the forecast for their projects. Important in this was verifying that suitable revenue funds were available to support implementation and ongoing costs once projects reach fruition. A number of projects have been delayed into the next financial year due to problems associated with the purchase of appropriate hardware; extended commercial negotiations and resolving governance and specification issues. Schemes affected include the CCC Appointments System; the Messaging Project and Real Time Communications Improvements.

73. Transport Based Expenditure – An overall forecast overspend of £3.4m - 15.6% of revised annual budget.
This is primarily due to the additional vehicles being purchased from revenue contributions on behalf of the Transport OCU, etc. These purchases are being specifically financed and put no additional pressure on available funding sources. The MPS will be requesting an adjustment to the Transport budget in a paper to be submitted to the MPA shortly.

74. Other Plant & Equipment Expenditure – A minor variance

75. Language Programme - Nil variance
This programme has ring-fenced funding from the Service Improvement Plan Fund. No expenditure to date but there is now an order placed committing £1.5m.

76. Safer Neighbourhoods Programme – An overall underspend of £13.2m - 58.6% of revised annual budget.
This is the current year impact of the changes to the Programme covered by Stage 2 Safer Neighbourhoods Property Programme Update which is covered elsewhere on the committee agenda.

77. Olympics/Paralympics – An overall underspend of £17.m - 53.2% of revised annual budget.
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. After a review of the Olympics programme initial estimates, which included Home Office Optimising Bias, the forecast has been reduced for the current year. There is no loss of outputs, nor programme slippage. The adjustment is due to improving estimate accuracy.

C. Other organisational and 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. The in-year reductions to reflect withdrawal of Government grant are not permanent adjustments to the Service’s base budget. Permanent reductions in the light of the Comprehensive Spending Review will be reflected in the 2011-14 Policing Plan and Budget and will be subject to EIAs as appropriate.

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 current financial position against the budget approved by the Authority (Policing London Business Plan, 2010-13) and identifies additional savings to address the deficit.

Financial implications

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

Legal implications

4. 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

• Policing London 2010-13 Business Plan

E. Contact details

Report authors: Nick Rogers, Director of Finance Services, MPS.

For more information contact:

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

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