2007/08 revenue budget

Report: 9
Date: 29 March 2007
By: Acting Director of Resources and the Treasurer

Summary

This report sets out proposed allocation of the 2007/08 budget to business groups taking account of updates since approval of the Mayor’s budget in February 2007, including allocation of some centrally held budgets, and other budget changes and transfers across business groups. The final MPA/MPS Budget is now presented for approval.

A. Recommendation

That

1. the final MPS/MPA revenue budget for 2007/08 be approved; and
2. the Prudential Indicators given at Appendix 3 be approved.

B. Supporting information

Introduction

1. The full Authority meeting on 19 December 2006 approved the MPS Draft Corporate Business Plan which formed the budget submission to the Mayor for 2007/08– 2009/10. At that stage the budget proposals for 2007/08 exceeded the target set by the Mayor for 2007/08 issued on 7 November by £16.2m.

2. The Government’s provisional grant settlement for 2007/08 was announced in the last week of November 2006. Apart from changes to the Neighbourhood Policing Fund the MPA received a settlement in line with the indicative two year settlement figures previously announced by the Home Office for 2006/07 and 2007/08.

3. The Neighbourhood Policing Fund settlement removed the requirement to increase PCSO numbers beyond April 2007 levels, which is of benefit to the MPS. This change was anticipated, but the funding provided was £4.3m lower than that assumed in the draft Corporate Business Plan.

4. The Mayor noted as part of his consultation that he had sought views from the MPA on the budget requirement that was lower than the proposal. However due to the scale of the additional work the MPS is involved in, the MPA advised that it was not possible to secure a lower target. Indeed figures could have been higher due to the additional costs of security operations.

5. The Mayor agreed to fund the MPA’s budget gap of £16.2m, but in order to restrict increases in the GLA council tax precept the Mayor asked the GLA group to look for additional savings, with a target of at least £8m for further budget reductions being sought.

6. The MPS agreed to meet the full £8m savings target. The £8m savings are in addition to the already challenging savings identified as part of the 2007/08 budget. The savings were delivered through a stringent review of budgets and policies, plus charging TfL for services. The proposals for identifying savings of £8m to bridge this budget gap were agreed at the MPA Full Authority meeting on 25 January 2007.

7. These changes were incorporated in the Mayor’s draft consolidated budget, which was presented to the London Assembly on 30 January 2007. The Assembly did not agree any amendments to the Mayor’s budget at that stage and subsequently fully ratified the MPS budget at the 14 February meeting.

8. The final approved budget reflects a 6.1% increase in the MPA component of the GLA precept with a Band D amount of Council tax of £233.60.

9. Since the Mayor’s budget was approved, the Home Office has formally announced the specific grant funding for Counter Terrorism in 2007/08 of £277.7m. This contains an overall increase of £4.9m relating partly to Dedicated Security Posts (£0.7m) and partly for inflation on the CT grant (£4.2m which had already been budgeted for).

10. The overall summary of the MPA budget compared to the 2006/07 is as follows:

The planned spending after deducting any funding from reserves and expected income (other than general funding from the government and the precept) is known as the budget requirement and this increased by 4.4% from £2,425.7m in 2006/07 to £2,532.7m in 2007/08.

Police Officer Deployment Plan

11. As part of the budget process the deployment plan for officers has been developed. The plan details the planned number of officers and builds in any an overall increase in officer numbers that were agreed as part of the budget process to give the overall numbers provided for in the 2007/08 budget. The use of the deployment plan to inform the overall budget process has ensured the protection of front line policing.

12. The planned numbers have increased by 272 over the position in the Corporate Business Plan due to a number of changes, including variations in the planned CT/DSP growth and additional posts for the Olympics preparation. There are also additional externally funded posts provisionally included in the 31 March 2008 BWT including increased secondments, posts funded by Proceeds of Crime Act income, partnership posts and Transport OCU posts. Such commitments will require formal confirmation of funding.

13. The deployment plan forms the basis of the police pay allocation to business groups.

Business group budget allocations and management

14. The MPA budget submission to the Mayor included an indicative distribution of budgets to business groups and to subjective budget headings based on information available up to November 2006.

15. This report now establishes the correct distribution of the approved overall budget for management purposes in 2007/08. The allocation to each business group has therefore been updated.

16. All Business Groups have been requested to carry out a detailed budget build by Units and Cost Centres and to set realistic budget allocations within the overall sums available. These allocations will need to take account of expected expenditure patterns.

17. The final budget, now presented for approval, provides the basis for budget monitoring in 2007/08. These budgets will now be formally notified to all Unit Heads and Business Managers and will form the basis of regular monitoring reports to the MPS Management Board, Investment Board and to the MPA.

Business Group budget allocations

18. The allocations to Business Groups are set out in Appendix 1. The subjective analyses of the individual Business Group budgets are detailed in Appendix 2. These Appendices set out the budget allocations as reflected in the Mayor’s budget approved by the GLA and the allocations as now established following review by the MPS.

19. Allocations now reflect the MPS structural changes previously announced, including the creation of the new Operational Services business group, which will be implemented in full by 1 April 2007.

20. Allocations have also been updated to reflect the transfer of HR posts from business groups into HR as part of the Transforming HR project.

21. Territorial Policing has received additional budget for PCSOs and Counter Terrorism. Also budgets for Safer Neighbourhood Teams and TfL income have been realigned, with changes being made to Police Officer Pay, Police Staff Pay, PCSO Pay and Income.

22. The pay budget for probationer officers has been transferred from HR to TP to reflect the introduction of the Initial Police Learning and Development Programme (IPLDP) as the revised basis for probationer training.

23. Specialist Crime now includes the Disclosure Service transferred from Central Operations. This has mainly impacted on Police Officer Pay, Police Staff Pay, Police Officer Overtime and Income.

24. Specialist Operations has transferred a number of units to Central Operations.

25. Central Operations has received a number of units from Specialist Operations, but has also transferred Central Communications Command (CCC) to Operational Services.

26. The Standards and Intelligence Command and Central Services business groups have been disbanded and their functions taken over by other business groups. The Strategy Modernisation and Performance Directorate and the Directorate of Public Affairs, which were both previously part of Central Services, are now both shown as separate business groups. Other units transferred to the new Operational Services business group.

27. Strategy Modernisation and Performance Directorate, which used to be part of Central Services, is now shown as a separate business group.

28. The Directorate of Public Affairs, which used to be part of Central Services, is now shown as a separate business group.

29. Operational Services has been created as a new business group, and includes the Professional Standards Unit, CCC, Diversity and Citizen Focus and the Directorate of Legal Services within its portfolio.

30. Directorate of Information has transferred some CCC budgets to Operational Services.

31. The Resources Directorate budget shows a decrease, which reflects the transfer of Logistical Services to HR under the restructuring.

32. The Human Resources Police Officer Pay budget has reduced to reflect the transfer of the IPLDP budget to TP. The HR budget has also increased because of the transfer of Logistical Services from Resources Directorate and also the transfer of HR posts from other business groups as part of the Transforming HR project.

33. Transfers have been made from centrally held budgets, primarily for pay and price increases in relation to 2006/07 cost increases since the budget report was initially submitted in November. In addition to pay awards, as part of the recalculation and reallocation of police pay, the Special Priority Payments budget of £4.2m, London Pay Lead budget increase of £2.3m and Housing Allowances reduction of £5m have been allocated from centrally held to business groups.

Borrowing and capital spending plan 2007/08 to 2009/10

34. The MPA Finance Committee approved the latest version of the capital programme for 2007/08 to 2009/10 at its meeting on 15 February 2007. Expenditure totals of £180.7m for 2007/08, £176.1m for 2008/09 and £178.5m for 2009/10 were agreed.

35. Based on the approved capital programme for 2007/08 to 2009/10 and the latest capital budget for 2006/07 prudential indicators have been prepared for formal approval and are attached at Appendix 3.

Capital Settlements 2006/07 and 2009/10

36. Payment of additional 2006/07 capital grant of £6.552m was announced by the Home Office on 19 February 2007. This represents the MPA share of £25m made available to police forces in England and Wales and reflects the part reimbursement of £50m previously held back in 2006/07 to finance police force restructuring. Proposals have still to be made on how the additional grant of £6.552m should be utilised, but bearing in mind the financial year is nearly over, it is likely that the capital grant will be utilised in 2007/08. A report on final proposals will be brought to the Finance Committee in April.

37. Details of the capital settlement for police forces in England and Wales for 2007/08 are still awaited. It is to be hoped that some of the £75m previously held back in 2007/08 will be returned to the overall sum available for distribution. If the settlement is better than estimated then the decision will be taken during 2007/08 on how any additional funding sources should be utilised.

Budget Book

38. Following formal approval of the detailed budget details in this report, it is hoped that the budget book will be available shortly.

C. Race and equality impact

There are no specific implications arising from information set out in this report.

D. Financial implications

Financial implications are set out throughout this report.

E. Background papers

• 2007/08 Budget Submission – Bridging the Gap to MPA Full Authority – 25 January 2007
• The GLA Consolidated Budget 2007/08 – February 2007

F. Contact details

Report author: Simon Hart, A/Director of Finance Services, MPS and Ken Hunt, Treasurer, MPA.

For more information contact:

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

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