Finance and Resources Committee legacy report

Report: 5
Date: 15 December 2011
By: Chief Executive

Summary

This report summarises the successes of the committee and its sub committees and proposes areas of work to be taken forward in the new Mayor’s Office for Policing and Crime, which is due to start work in January 2012.

A. Recommendations

That members

1. Endorse the recommendations identified below for continuation under the Mayor’s Office for Policing and Crime (MOPC) as summarised in paragraph 29 of the report.
2. Agree to submit this report to Full Authority in January 2012. note the report.

B. Supporting information

1. The MPA’s Finance and Resources Committee was established in November 2008 and alongside the Resources and Productivity Sub Committee and the Estates and IT Panels has been key in ensuring the MPA fulfils its responsibility to ensure there is an effective, efficient, fair and accountable police service in London. Specific responsibilities include:

• Oversight and management of capital and revenue budgets, including budget monitoring and consideration (jointly with SoP) of the London Policing Plan before submission to the Full Authority
• Approval of major procurement contracts and oversight of the procurement function
•  Treasury management
•  Oversight of the estate including approval of the estates strategy and major property projects
•  Oversight of IS IT including approval of the IS IT strategy and major IT projects

2. The following paragraphs summarise some of the key achievements of the Finance and Resources Committee, Resources and Productivity Sub Committee and Estates and IT Panels. With consideration given to how the work of the Committee should be taken forward by the Mayor’s Office for Policing and Crime.

Production of the annual policing plan and monitoring of the capital and revenue budgets

3. Finance and Resources Committee, jointly with the Strategic and Operational Policing Committee has overseen the development of the annual policing plan through what has been an increasingly difficult financial climate. Through regular meetings, budget scrutiny meetings and budget workshops, members have ensured that a policing plan is developed with appropriate priorities and objectives and with a suitable budget to deliver them.

4. Through regular budget monitoring reports members have effectively scrutinised the budget, ensuring an underspend has been delivered year on year. This is in despite of there being a number of unforeseen financial challenges including the £28M in year grant reduction in 2010/11 and an increasing number of public demonstrations in the last two years.

5. Overtime has been a key area of concern, and the Resources and Productivity Sub Committee have responded to this through initiating quarterly monitoring reports on overtime and its causes. Based on forecast expenditure for 2011/12 (excluding the impact of the costs arising from the policing response to recent public disorder within London), this has seen a reduction of £46M (25%) in overtime since 2008/09.

6. Based on the current budget forecast, the Finance and Resources Committee has overseen since 2008/09 the successful delivery of savings in excess of £1,106M. The majority of which have been delivered through the modernisation and rationalisation of the back office through the service improvement programme, thereby protecting the front line and police officer numbers. The Resources and Productivity Sub Committee have been at the forefront in challenging and supporting the MPS as they have developed the service improvement programme. Receiving regular updates on the delivery of the programme which has a key role to play in modernising the delivery of services so significant savings can continue to be delivered.

7. However there are still a significant level of savings to be delivered in future years, currently estimated to be in excess of £820M by 2014/15. This is one of the key aspects of work that will need to be taken forward under the Mayor’s Office for Policing and Crime.

8. The capital programme has historically underspent year on year. Ongoing scrutiny and challenge of this area, with detailed scrutiny undertaken by the Resources and Productivity Sub Committee has seen, through improved processes put in place by the MPS, a marked improvement in the performance of the capital programme. The programme is currently forecasting spend to budget for the financial year, with 46% spent as at period 7 (October).

Modernisation of the estate

9. The significant work of the estates panel has enabled Finance and Resources Committee to effectively oversee the development and approval of a revised estates strategy and the start of what will be significant modernisation of the estate.

10. This has included a disposals programme in support of the rationalisation of the estate, a patrol base and custody centre programme to modernise existing facilities over years to come, and proposals to modernise and rationalise facilities at Hendon. The estates panel have scrutinised all property related proposals before submission to Finance and Resources Committee, in effect acting as a gate keeper for the Committee. This has been particularly important in relation to the front counters, where the panel developed a process to ensure compliance with the Mayoral priority that no front counter would be closed without a new improved facility being put in its place.

11. An estates engagement strategy in support of the estates strategy was developed by the panel and approved by the Finance and Resources Committee in February 2010. This was intended to ensure Londoners are aware and understand the rationale for why changes will occur to the estate.

Procurement

12. With responsibility for oversight of procurement and the approval of major contracts, Finance and Resources Committee and Resources and Productivity Sub Committee have since November 2008 awarded contracts with a total value in the region of £1.5bn, scrutinising proposals to ensure they offer value for money. The committee also approved the procurement strategy, whose development and subsequent implementation has been overseen by Resources and Productivity Sub Committee. The sub committee has also closely monitored specific issues in relation to procurement including compliance, variations to the Cap Gemini contract and contracts awarded through single tender actions. Through this and through the support and work of the MPS the procurement function is felt to be in a much stronger position than it was 4 years ago.

13. The Olympics Sub Committee has approved 22 business cases within the overall £600 million budget allocated to police and emergency services for Olympic security. However the committee has been unable, due to the large volume of work undertaken, to satisfy itself whether or not contracts for goods and services within individual approved business cases provide value for money.

IS IT

14. With responsibility for oversight of IS IT the committee has considered and approved a number of business cases for large scale IT projects, key to ensuring the MPS have in place the infrastructure to support front line services. As part of the oversight function, Resources and Productivity Sub Committee commissioned a review of the IT strategy, and successfully oversaw the implementation of all actions including the production of a revised IT strategy. A key recommendation of this review was the establishment of an IT panel, which has over recent months strengthened oversight of this area. This has included assessing and challenging the contribution that IT plays in improving productivity in each of the MPS business groups.

15. However, IT is a complex area and most committee members believe they do not have the relevant expertise to enable them to fully understand the complexity of some of the detailed proposals that come before the committee. This is an area of work where the MOPC should consider the need for independent expert advice which would allow it to more effectively to hold the Commissioner to account under the new governance arrangements

Treasury Management

16. Following the £30M investment with Landsbanki, and the subsequent collapse of this and a number of other Icelandic banks Finance and Resources Committee and the Resources and Productivity Sub Committee has strengthened its oversight of treasury management. This has included the provision of treasury management training to all interested members, increased reporting to committee and the appointment of Arlingclose as treasury management advisors who attend committee meetings to advise members.

The future under the Mayor’s Office for Policing and Crime

17. The Mayor’s Office for Policing and Crime (MOPC) will become responsible for ensuring there is an efficient and effective Metropolitan Police force, and holding the Commissioner of the Metropolis to account. The work to date undertaken by the Finance and Resources Committee, Resources and Productivity Sub Committee, Estates and IT Panels will be important in supporting the MOPC in meeting this statutory requirement. Areas of importance are summarised below.

Revenue and capital budget

18. The budget for 2012/13 currently includes a budget gap of £86M, therefore the first task for the MOPC will be overseeing the completion of the budget submission, ensuring there is a balanced budget in place by 2012/13.

19. The budget submission for 2012/13 to 2014/15 includes significant savings, careful monitoring will be required to ensure these are delivered

20. The current system whereby the scrutiny of the annual budget is done primarily by a series of two hour meetings with business groups needs to be significantly strengthened. Therefore it is recommended that in addition to the annual budget scrutiny meetings, the MOPC is involved in the budget setting process for the entire year. This will enable a more detailed understanding and input into budget proposals as they are developed

21. The ongoing need to identify significant savings in future years would be greatly assisted by moving over time to zero based budgeting.

22. The service improvement programme has, and will continue to play a key role in delivering the savings needed. Strong programme and business change skills are key in the successful delivery of the programme. Whilst this is an area where improvements have been made, the MOPC will need to ensure they continue to be strengthened and embedded throughout the MPS.

Procurement

23. An ongoing role in the tendering and award of major contracts, plus oversight of contract management will be essential in ensuring improvements that have been made are embedded throughout the MPS. This should include oversight of Olympic contracts.

Estate

24. The modernisation of the estate has a vital role to play in delivering savings in future years, consideration needs to be given as to how the role of the work undertaken by the estates panel can be carried through under the new governance arrangements. This should include further development of the estates strategy with the production of detailed implementation plans.

25. A review should be undertaken of the estates engagement strategy to assess whether this has met its overall objective to inform Londoners of changes to the estate.

26. Modernisation of the estate is dependent on a significant disposals programme, however there are concerns that given the current economic climate, now may not be the right time to be disposing of some of the properties. An independent review should be undertaken to assess whether some of the proposed disposals should be put on hold until there is an upturn in the market, with borrowing being undertaken in the short term to meet the MOPCs capital funding requirements.

IT

27. Although members of the MPA have a breadth of experiences that have helped them fulfil their current role in holding the Commissioner to account, IT is an area where it is felt oversight could be strengthened under the new arrangements. Building on improvements made in recent months by the IT panel.

28. Given the importance of IT, an in depth external review of IT, including the function, infrastructure and the revised IT strategy should be undertaken by independent experts to make recommendations as to whether they are fit for purpose.

Recommendations

29. The MOPC should:

• Oversee the completion of the budget submission for 2012/13
• Put in place monitoring systems to ensure that savings for 2012/13 to 2014/15 are delivered.
• Significantly enhance the scrutiny of the development of the annual budget and ensure they are involved in the budget setting process throughout the year.
• Implement a system of zero based budgeting as soon as practically possible.
• Ensure ongoing improvements are made in the MPS’S programme and business change skills.
• Ensure an enhanced and ongoing role in procurement, including oversight of Olympic contracts including adequate Audit procedures.
• Ensure that strong programme and business change skills are strengthened and embedded throughout the MPS.
• Develop the estates strategy further through the production of detailed implementation plans for the estates strategy.
• Undertake a review of the estates engagement strategy to assess whether it has met its overall objective.
• Commission an independent review of the disposal strategy.
• Commission an in depth external review of IT including the function, infrastructure and the revised IT strategy.

Role of members and MPA and MPS officers

30. The report has highlighted the success and work of the Committee and its sub committees; however it is important that work carried out by members behind the scenes is also acknowledged. Much of this goes unnoticed, however the background knowledge and informal challenge and support provided by members to the MPS has been key in the effective scrutiny and oversight of the committees.

31. It is also important that the role of both MPA and MPS officers is acknowledged when highlighting the successes of the Finance and Resources Committee and the sub-committees. The good relationships established and the spirit of mutual support in order to achieve a shared aim was key to having accomplished so much. This spirit will be key in ensuring the new governance arrangements are successful and officers are currently identifying ways in which joint working can be strengthened.

C. Other organisational and community implications

Equality and Diversity impact

1. All reports provided to Finance and Resources Committee have included relevant data and information on equalities and diversity for consideration in the context of the report being considered. Consideration will continue to be given to this area under the new governance areas.

Met Forward

2. The work of the Finance and Resources Committee has supported all strands of MetForward, especially the MetSupport strand in fighting crime, securing value for money and increasing confidence in policing.

Financial implications

3. The financial implications of all decisions are robustly scrutinised by the Finance and Resources Committee as part of the decision making process, ensuring the effective and efficient use of resources.

Legal implications

4. Where appropriate the committee has considered the legal implications in the reports it has received. The MOPC governance arrangements are being designed to meet statutory requirements.

Environmental implications

5. Where appropriate, the committee has considered the environmental implications arising out of the reports it has received.

Risk implications

6. Where appropriate, the committee has considered the risk implications arising out of the reports it has received.

Report author:
Background papers: None

D. Background papers

None

E. Contact details

Report authors: Annabel Adams – Deputy Treasurer, MPA

For more information contact:

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

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