Funding of C3i

Report: 10
Date: 10 May 2001
By: Treasurer

Summary

This report sets out the funding implications for the options put forward by the MPS Management Board and advises on feasibility.

A. Recommendations

1. Members are advised that funding for C3i beyond the affordability benchmark already set is not realistic.
2. On this basis funding for option 8 is feasible, but not for option 4.

B. Supporting information

Introduction

1. The Commissioner has reported separately on the delivery options for the C3i command and control project following the termination of work on the PFI-based proposal as decided by the Authority at its meeting on 8 February 2001.

2. The MPS Management Board has indicated a preference for option 4 (Borough-based despatch with two call handling centres) if funding is ignored, but recommends the adoption of option 8 (Centralised call-handling and despatch in three centres) if the MPA believes that the funding necessary for option 4 is not available.

Comparative costs

3. The following table extracts the relevant comparative costs for options 4 and 8 from the Commissioner's report. I have taken the costs based on civilianisation that is the more cost-effective approach.

4. Option 4 is therefore more expensive than option 8 by £165 million over the period 2000/01 to 2017/18.

5. Affordability has been assessed against the same benchmark used in evaluating the PFI option in February, i.e. an annual cost of £95 million. It should be recalled that this sum represents the current costs ascribed to call handling and despatch although only £80 million of this could be readily found from existing budgets. Members should also appreciate that this includes the deletion of approximately 1,000 police officer posts currently employed on this function. Table 3 in the Commissioner's report compares the option costs against the affordability benchmark and the relevant figures are highlighted below.

6. On this basis option 8 shows a surplus over the available funding of £54 million whilst option 4 costs £111 million more than the available funding. Furthermore the financial modelling assumes that capital requirements beyond the initial £70 million will be found within the overall annual revenue availability of £95 million. In practice all the options require more capital investment in the early years than can be met in this way. Option 8 requires £19.8 million to be found in 2004/05 specifically as capital funding but option 4 has a comparable requirement of £82.9 million spread over 2004/07.

Funding

7. The funding assumptions upon which the affordability benchmark is based require the following changes to be achieved in practice.

• Acquisition of specific capital funding of £70 million.
• Additional revenue funding of £15 million per year from 2003/04 to bridge the gap between £95 million and the savings achievable of £80 million.

8. An initial contribution of £10 million towards the capital funding has been identified from the MPA's own resources and reflected in the approved capital programme for 2001/02. We are actively engaged with the Home Office and the Treasury to secure the remaining balance as additional government grant. There is no certainty at this stage that this will be achieved.

9. The Finance Planning and Best Value Committee has considered a report on medium term financial projections. We have reflected an increase in revenue expenditure of £15 million from 2003/04. This would have to be met from grant and council tax precept. The projections show a significant additional demand on the precept in that year. Again there can be no certainty at this stage that all increased demands identified in 2003/04 can actually be funded. The priority given to C3i may therefore mean that other requirements cannot be met.

10. On any option there is a further requirement to identify additional capital resources in 2004/05 and subsequent years. The need in the case of option 8 (£19.8 million) should be capable of being planned into the programme. The requirement for option 4 totalling £82.9 million of which £44 million would have to be found in 2004/05 is more challenging.

11. The MPA's ability to fund C3i in line with the affordability benchmark is not a foregone conclusion. It requires significant funding support from the Home Office that is by no means assured at this stage. It will probably involve difficult decisions about relative priorities for revenue funding. Not least it requires acceptance that 1,000 police officer posts will be deleted. In these circumstances funding beyond the affordability benchmark cannot realistically be contemplated.

C. Financial implications

These are set out in the body of the report.

D. Background papers

None.

E. Contact details

The author of this report is Peter Martin, MPA Treasurer.

For information contact:

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

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