Contents
Report 05 for the 12 Oct 00 meeting of the MPA Committee and discusses the detailed intermediate draft budget submission for 2001/02 agreed by Finance Planning and Best Value Committee.
Warning: This is archived material and may be out of date. The Metropolitan Police Authority has been replaced by the Mayor's Office for Policing and Crime (MOPC).
See the MOPC website for further information.
2001/02 budget submission
Report: 6
Meeting: Metropolitan Police Authority
Date: 12 October 2000
By: Treasurer and Commissioner
Summary
The report informs the full Authority about the detailed intermediate draft budget submission for 2001/02 agreed by Finance Planning and Best Value Committee within the strategy framework approved by the Authority at its last meeting, which was provided to the GLA in accordance with the Mayor’s deadline of 26 September 2000. The report also outlines the further tasks in relation to the 2001/02 budget which will have to be carried out before the final draft is submitted to the Mayor in December 2000.
A. Supporting information
Intermediate draft budget submission
1. At its meeting on 19 September 2000 the Finance Planning and Best Value Committee approved the intermediate draft budget in accordance with the strategy agreed by the Authority. The budget submission was delivered to the GLA to meet the deadline of 26 September. The submission, in the format required by the GLA, is attached at Appendix A.
Status of figures
2. In approving the submission the Committee noted that it had been put together in a very short space of time to meet the Mayor’s deadline and it had not been possible to test rigorously all the requirements for increased expenditure which had been put forward. It was therefore agreed that the Treasurer and Director of Resources should carry out a critical examination of all components of the submission before the final budget is considered.
Summary of submission
3. The following table sets out a brief summary of the submission.
| £000 | |
|---|---|
| 1 2000/01 Net service expenditure | 1,835,418 |
| 2 Changes of function (loss of PCO licence income) | 700 1,836,118 |
| 3 Inflation | 84,525 |
| 4 Pensions growth | 15,250 |
| 5 Committed service increases/decreases | 78,314 |
| 6 Changes in fees and charges | 4,300 |
| 7 New service increases | 20,278 |
| 8 Efficiency savings | (9,212) |
| 9 Other changes | (3,250) |
| 10 2001/02 Net service expenditure | 2,026,323 |
| 11 Capital financing costs | 13,777 |
| 12 External interest receipts | (10,000) |
| 13 Policy contingency | 5,000 |
| 14 2001/02 Cash limit | 2,035,100 |
| 15 Special/specific grants | (41,700) |
| 16 Transfers to reserves | 0 |
| 17 Adjustments | 250 |
| 18 2001/02 Budget requirement | 1,993,650 |
4. The Finance Planning and Best Value Committee considered and endorsed each line of this table subject to the caveat about the status of the figures set out in paragraph 2 above. The cash limit (line 14) represents a 10.5% increase over the corresponding figure for 2000/01.
Relationship to budget strategy
5. At its last meeting the Authority approved a budget strategy based on the following features:
- Securing agreement with the Mayor on a three year view of the MPA’s expenditure budget requirement.
- Securing a substantial increase in police officer numbers.
- A policy contingency.
- Realistic provisions for inflation, pensions, committed growth, legislative requirements and securing the Authority’s financial position.
- A 3-year efficiency plan.
6. The following paragraphs indicate how the submission reflects this strategy.
a. Securing agreement with the Mayor on a three year view of the MPA’s expenditure budget requirement
The Committee was presented with the following three year broad expenditure projection compared with the illustrative funding projection reported to the Authority at its last meeting.
| 2001/02 | 2002/03 | 2003/04 | |
|---|---|---|---|
| Forecast cash limit (£million)1 | 2,035 | 2,148 | 2,260 |
| Year-on-year increase | 10.5% | 5.6% | 5.2% |
| Funding projection 2 | 9.7% | 4.8% | 3.4% |
1. Forecast cash limits exclude cashable efficiency savings after 2001/02, but also exclude estimated additional costs from implementation of C3i and other PFI projects which could raise the year-on-year increase in 2003/04 to 8.0%. They include an increase in police officer numbers in line with the 2001/02 submission and to take up the full CFF allocation.
2. The funding projections do not include any increase in the precept.
Further work needs to be done both to clarify the funding position and to refine the expenditure projections. It would be inappropriate at this stage to draw detailed conclusions from these figures.
b. Securing a substantial increase in police officer numbers
The allocation to the Metropolitan Police of additional police officers to be financed from the Home Office’s Crime Fighting Fund (CFF) is 2,044 over three years (663 in 2000/01, 699 in 2001/02, 682 in 2002/03). The Committee agreed that the budget submission should provide for total officer numbers of 26,650 which exceeds the CFF allocation by 251 and represents an increase of more than a thousand over the original budget provision for the current year. This is summarised in the following table.
| 2000/01 original budget | 25,600 |
|---|---|
| Less original CFF-funded officers included | 242 25,358 |
| Anticipated shortfall from original budget assumption | 321 25,037 |
| Revised CFF numbers | 663 |
| Revised estimate of numbers at end of 2000/01 | 25,700 |
| Second year CFF allocation | 699 |
| Excess over CFF | 251 |
| 2001/02 budget submission | 26,650 |
c. A policy contingency
A sum of £5 million has been included to finance initiatives to take forward the Authority’s policies as they are agreed during this year. It is anticipated that some or all of this provision will be allocated before the budget is finally agreed.
d. Realistic provisions for inflation, pensions, committed growth, legislative requirements and securing the Authority’s financial position
Inflation assumptions reflected in the submission are detailed in Schedule 4 of Appendix A. An analysis of the committed growth is contained in Schedule 3. The figures included here will particularly need to be subjected to the critical examination referred to in paragraph 2. No provision has been made at this stage to set money aside out of this budget for reserves. The Finance Planning and Best Value Committee has given preliminary consideration to this issue and has approved a financial strategy which may require improvement of the authority’s reserves position. This will need to be addressed again when the opening balance sheet has been confirmed.
e. A 3-year efficiency plan
The submission assumes that we will be required by the Home Office to demonstrate 2% efficiencies in 2001/02, as in the previous two years. However at this stage we have included a cautious estimate that only 0.5% efficiency savings will be cashable. Before the final budget submission in December we need to develop a three year efficiency plan.
Capital investment plan
7. The information requested for incorporation into the Mayor’s capital investment plan is shown at Appendix B. It is based on the existing capital programme approved prior to the establishment of the MPA. The Finance Planning and Best Value Committee will be reviewing the capital programme shortly.
Future actions
8. A number of tasks will have to be undertaken over the next two months:
- The critical examination of all components of the budget submission
- Clarification of the central government funding position
- Refinement of the medium term projections
- Development of a 3 year efficiency plan
- Linkage of the budget with the Authority’s emerging policy priorities and performance measures
- Review of the budget presentation
- Review of the capital programme
9. It is intended to take a draft final budget to the Finance Planning and Best Value Committee in November that can then come forward with recommendations to the meeting of the Authority in December, together with information on the provisional local government finance settlement. This will enable the Authority to approve its final budget submission to meet the Mayor’s timetable for producing his draft consolidated budget.
B. Recommendations
- To endorse the intermediate draft budget submission for 2001/02 as agreed by Finance Planning and Best Value Committee in accordance with the strategy framework approved by the Authority at its last meeting.
- To note the further tasks to be carried out before the final draft budget is approved for submission in December 2000.
C. Financial implications
The approved budget will set the expenditure plans and funding requirements for 2001/02.
D. Review arrangements
The final budget submission for 2001/02 will be determined by the Authority in December 2000.
E. Background papers
The following is a statutory list of background papers (under the Local Government Act 1972 S.100 D) which disclose facts or matters on which the report is based and which have been relied on to a material extent in preparing this report. They are available on request to either the contact officer listed above or to the Clerk to the Police Authority at the address indicated on the agenda.
- 2001/02 intermediate draft budget submission: Report by Treasurer and Commissioner to the Finance Planning and Best Value Committee, 19 September 2000.
F. Contact details
The author of this report is Peter Martin.
For information contact:
MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18
Send an e-mail linking to this page
Feedback