Policing London business plan and budget 2008-11

Report: 6
Date: 27 March 2008
By:

Summary

The draft Policing London Business Plan and Budget 2008-11 was agreed by the Full Authority for submission to the Mayor in November 2007. Following approval to the Mayor’s final 2008-09 budget proposals in February 2008 and the Government announcements on the general policing grant and some specific grants, the Authority is now asked to approve the 2008-11 Policing London Business Plan and Budget (capital and revenue) for publication by 31 March 2008 as required by statute.

A. Recommendation

That members approve

1. the 2008-11 Policing London Business Plan and budget (capital and revenue) for publication by 31 March 2008 as required by statute (Appendix 1).

2. the Corporate Plan 2008/11: Executive Summary (Appendix 2)

3. the prudential indicators as set out in Appendix 5.

B. Supporting information

1. The 2008-11 Policing London Business Plan and Budget has continued to evolve in line with the objective of improving integration between the MPA/MPS business and financial planning processes. MPA officers and members have been involved in the development of the final document set out in Appendix 1. That involvement has been:

Table 1: MPA officers and members involvement in the development of the 2008-11 Policing London Business Plan and Budget

2. The proposed 2008-11 Policing London Business Plan is not appreciably different to the document that members considered on 28 February 2008. The main changes are summarised below:

A. Business Plan

• The introduction has been revised to provide more emphasis to the MPS’s purpose, commitment to citizen focused policing and the ‘Every Child Matters’ agenda.
• The business group high level plans have been updated to include their approved measures.
• The delivery plans (Appendix 1 – Business Plan Appendix A) have been updated to include the latest performance information.
• The targets for the CPAS ‘Tackling Serious Violence’ and ‘Reduce Young People’s Involvement In Serious Violence’ have been removed. Changes in Government guidance means that it is not now possible to baseline performance in 2008/09.
• Where possible targets have been classified in terms of movement against an identified baseline.
• Revenue and capital budget information has been included.
• Following comments at the Authority an Executive Summary has been produced (Appendix 2) for wider circulation. More information is provided in Section B, paragraph 20.

B. Officer and Staff Numbers

Details of officer and staff numbers have now been included in the business plan. More information is provided in B20 – 27.

C. Capital and Revenue Budgets

Details of the proposed capital and revenue budgets have been included in the business plan. More information is provided in Section D.

BUSINESS PLAN

3. The business plan is influenced by a number of external and internal drivers. These were set out in the report considered by the Authority on 28 February 2008 and are summarised below.

Home Office police planning regulations

4. The Home Office released, in January 2008, new police planning regulations that relate to 2008-11 Policing London Business Plan. The main points to note are that:

• they are broadly similar to the policing plan regulations that we have been working to for the last few years (1996 & 1998 regulations)
• there are some additional requirements regarding police collaboration and protective services
• there is additional emphasis on productivity, resources and efficiency.

5. The MPS’ direction of travel is entirely consistent with the Home Office guidance, particularly with regard to the emphasis on productivity and efficiency. However a balance has had to be struck in the plan between clarity of message and detailed evidence of areas of interest to the Home Office, e.g. collaboration and protective services.

The 2008/09 performance challenge

6. As previously stated, the MPA have been involved in the development of the performance framework and have contributed to, and approved, key stages of the process. The key changes were:

• Within the CPA of ‘reduce serious youth violence’, the MPA requested that the MPS look at including a measure around reducing the victimisation of young people as well as offenders.
• The CPA ‘disrupt more criminal networks’ includes a measure relating to the number of assets recovered. The MPA felt that this should also include the value of assets.
• The sanction detection rate for supply of Class A drugs should include both the rate and the number of sanction detections. (Note that this is now ‘trafficking’ of class A - which includes supply, possession with intent to supply, importation, manufacture and cultivation).

7. It is important to acknowledge that this has been a very challenging year with regard to developing a performance framework – caused by changes to the Government’s performance framework, very late in the planning cycle, and the introduction of APACS – which is still subject to change, with a number of issues as yet unresolved.

8. The targets remain indicative at this stage, as until the end-of-year performance is known and APACS is concluded, targets cannot be finalised.

The 2008/09 target setting process

9. In order to ensure consistency in target setting at the corporate and local level, the following principles have been adopted:

• target setting has been locally driven (e.g. BOCU led in concert with CDRP partners with the corporate target being the aggregate of the BOCU targets), unless there is compelling evidence to suggest otherwise, for example:
  • performance analysis at a corporate level indicates that there is a need to improve overall performance
  • a corporate target has been agreed by Management Board/MPA as a result of a particular strategy
  • a target has been imposed by an external stakeholder.
• Where an indicator is part of a PSA and included in the national set but not chosen as a priority in the LAA, TP has proposed the minimum standard required.
• Targets have been negotiated in partnership with, and approved by, the MPA.

The target proposals for the CPAs are included within the Policing London Business Plan (Appendix 1 - Business Plan, pages 7-11 with full list at Appendix C).

TP’s variable target setting process

10. In broad terms TP have applied the same methodology this year as was used in previous planning processes - in that wherever possible target proposals have been 'variable'; appropriate within the local context; and the result of 'bottom-up' process. This approach is not only in line with the Government’s guidance around the new PSAs, but it also has a proven track record for delivering bespoke BOCU targets that are both realistic and achievable.

11. BOCUs have arrived at their draft proposals as a result of consultation with key partners, at both CDRP and LSP levels. Although LAA targets have yet to be fully defined, Borough Commanders have been better informed than ever about how the MPS and LSP (LAA) processes are intended to mesh together, and will have taken account of both the internal (MPS) and external (LSP, GOL, Whitehall) pressures when proposing their particular MPS/LSP targets.

12. TPHQ have managed the process to ensure that the aggregate targets arising from the variable target setting process will result in an improving corporate target in line with Home Office guidelines.

13. TP’s variable target setting process is explained more fully in the report considered by the Authority on 28 February 2008 (Corporate Planning Update Appendix 3).

Outstanding issues relating to the 2008/09 performance challenge

14. Members will be aware that the 2008/09 performance challenge has had to be developed in an uncertain environment, where the Government’s new Assessments of Policing and Community Safety (APACS) measures are still in the process of being confirmed. This process is expected to be concluded by the end of March 2008. The MPS has attempted to use APACS for its CPAs as far as is appropriate to ensure that the number of measures the Organisation has to focus on are minimised. As a result there are a number of outstanding issues that are in the process of being resolved. In particular:

• The MPS is in the process of ensuring that each of the CPAs proposed is able to be baselined, and where this is not possible, proxy measures will be considered
• The APACS measure ‘Most serious violence rate’ is unable to be baselined as a result of the Government’s change in guidance relating to GBH and assault with injury (options are currently being considered to develop some baseline data for 2008/09). The measures affected may also have data quality issues at the start of the reporting period due to the changes made. It is important to note that this issue affects all forces as the Home Office are still deciding how to advise forces to baseline MSV for 2008/09.
• The MPS has received correspondence from the Home Office that indicates CS Spray/Pepper Spray will be removed from the definition of Gun-enabled crime within APACS. However, this is still subject to confirmation following APACS consultation at the end of March 2008.
• The MPS is in the process of ensuring that as far as is practical, the reporting format for APACS measures used by the MPS is consistent with that reported by the Home office and HMIC.

15. The MPS/MPA’s performance development process is complicated by the assessment framework that the Government is in the process of implementing for the 2008-11 planning period. This includes APACS, Public Service Agreements (PSAs) and LAAs that will be agreed with Local Strategic Partnerships (LSPs). This is a shift in emphasis from central government, from targets set at a corporate level to locally agreed priorities and targets with some associated funding.

16. As a result of this shift in emphasis, MPA members have been advised to become members of their local strategic partnerships to ensure they are involved in the local target setting process. In addition, BOCU Commanders have been instructed to ensure that they engage with their link members throughout the variable target setting process. At the full authority meeting on 28 February, members discussed the need for clear guidance to members regarding membership of LSPs. This will be taken forward by the MPA.

17. In addition, the MPS is endeavouring to keep members informed as the new process takes shape and starts to be implemented. For instance:

• The MPS and MPA jointly agreed the target setting principles in paragraph 3 and 2008/09 target setting process outlined in paragraph 16.
• The Strategic Planning team presented a comprehensive planning and performance document to the December 2007 PPRC that outlined how the corporate, local and Government assessment frameworks have been aligned.
• TP have emailed updates to members on the TP variable target setting and LAA processes
• MPA officers are involved in the corporate and TP planning processes, attending fortnightly meetings and were also involved in the variable target setting Star Chamber exercise that agreed the proposed targets.

Moving forward

18. The Business Plan, as drafted, also begins to indicate where the MPS wants to go in the future to embed a robust governance framework that will the assist MPS in:

• Taking informed and transparent decisions
• Being accountable
• Demonstrating values and good governance through high standards
• Achieving common purpose with clearly defined roles and functions.

19. The aim is to embed an appropriate planning and performance process within this robust corporate governance framework. This will allow:

• The centre to develop appropriate standards, in consultation with business groups, provide appropriate guidance and support and hold the business groups to account for delivery
• Business groups to take ownership of activities for which they are responsible
• Information to be compiled through the business planning process in a way that allows emerging issues and cross-service dependencies to be identified and managed.

OFFICER AND STAFF NUMBERS

20. Details of the officer and staff changes as reflected in the MTFP are summarised below:

 Table 2: Summary of officer and staff changes

Note: The planned strength at 31 March 2008 is based on the Period 9 monitoring report for 2007/08.

The net growth in police officers (1,353) and staff (465) in 2008/09 remains primarily dependent on the receipt of specific grants yet to be announced from Government in respect of the Olympic Games and Paralympic Games (267) and Counter-Terrorism (122) activity, compared to the bid figure of 300 and amended to reflect current deployment assumptions, and the successful negotiation of agreements with boroughs (320) for the provision of additional officers to support LAA target delivery.

21. The change in Police Officer numbers since the November submission can be summarised as follows:

 Table 3: Summary of change in Police Officer numbers since the November submission

22. In considering the Police Officer numbers the following issues should be noted.

• The budget reductions of 462 Officers take effect from 1 April 2008 whilst the growth of 1,353 is phased in over the financial year. This means that the planned strength at 1 April 2008 is 31,577 growing to 32,930 at 31 March 2009.
• Given the budget growth and anticipated attrition rates for 2008/09 the service is expecting to recruit and train some 1,875 new police officers during the year who will require, under IPDLP some 31 weeks on borough training and work experience.

23. As indicated in the November business plan and budget submission, the MPS has a significant challenge in managing force numbers against uncertain funding levels, particularly given the lengthy recruitment and training process. In developing and finalising the 2008-11 business plan and budget, the Service has tried to move away from the overnight BWT change between 31 March and 1 April. The officer numbers for each business group, therefore, tries to reflect more accurately the deployment of officers over the planning period, having proper regard to:

• the anticipated attrition rate of officers
• the implementation of budgets savings at the start of the year
• the phased implementation of approved growth
• the time taken to recruit (7 months) and train (31 weeks) new recruits
• the organisation’s operational priorities

24. Therefore a three year deployment plan has been introduced to deliver a more manageable recruitment programme which better meets the needs of the MPS over the three years. The deployment plan is needed to manage officer numbers to support organisational changes and budget saving and growth as part of the business planning process and to ensure recruitment plans deliver the required profile of police officers, reflecting agreed operational priorities. This deployment plan will need to be monitored against the approved budget to manage resources across the three years. The potential impact on years two and three of the plan will be reviewed in developing the 2009-12 Business Plan and budget.

25. The deployment plan will reflect more accurately where resources are. This involves moving to a strength position which will record current strength for each business group and detail the planned strength during the year. The strength reflects the fact that as the MPS grows in strength new officers have to be fully trained before they are allocated to Business Groups for deployment. Therefore numbers going through IPLDP and based in Territorial Policing will impact on other Business Groups’ strength.

26. The deployment plan has provided the basis for the allocation of police officer pay budgets to Business Groups. The allocations will be kept under review and adjusted as appropriate to reflect changes to the deployment plan. Some adjustments may be necessary before the first monitoring report for 2008/09 to reflect the actual position at the end of 2007/08 and pending Government announcements on specific grants.

27. Members will be aware that given the early uncertainties relating to the 2008/09 funding, a discussion was taken in the current year to slow down recruitment in order to avoid an unsustainable level of officer numbers at the start of the new financial year. The anticipated strength at 31 March 2008, based on month 9 forecast, is expected to be 31,577, the highest number of officers ever engaged in the MPS. Subject to the delivery of the income streams identified in paragraph 20, the number of officers in the Service should increase to 32,930 (+ 1,353) by 31 March 2009.

STRATEGY IMPLICATIONS

28. The budget and business plan are fundamental elements of the framework established to deliver policing priorities and strategies as well as mayoral objectives.

ENVIRONMENTAL SUSTAINABILITY AND HEALTH IMPLICATIONS

29. Environmental sustainability and health, as strands of sustainable development, are also seen as drivers for improvement within the Service. The business plan highlights the key areas of MPS activity in relation to environmental sustainability and health issues. The MPS will also contribute to the GLA annual review on environmental and health activity which will cover:

• the structures and processes in place to embed environmental and health activity into the work of the Service
• the impact of the final budget on environmental and health activity
• achievements to date and future targets

C. Race and equality impact

1. Equalities is seen as one of the three key strands of sustainable development activity (see B29 and B30 for other strands of environment and health) which support the drive for continuous improvement throughout the MPS.

2. The business plan highlights the key areas of MPS activity in relation to equality issues. The MPS will also contribute to the GLA annual equalities review, expected to take place in June 2008, which will consider the same issues as the environmental and health issues review (see B29).

3. Strategic Planning is currently completing an overarching equality impact assessment (EIA) for the Business Plan that will also cover the public consultation process. In addition EIAs are being completed for each of the corporate objectives including the Business Plan.

D. Financial implications

Revenue Budget

1. The Authority, through the Finance Committee, has been kept informed of changes to the draft 2008/09 budget since its submission to the Mayor last November. The Mayor’s 2008/09 budget was approved on 13 February 2008 and the main changes to the MPA/MPS submission can be summarised as follows:

Table 1: Summary of changes to the MPA/MPS budget

 Note:
(1) announcement of change made at end of budget process. Savings to be held in corporate budgets pending decisions on use of released resources

2. The MPA/MPS gross expenditure for 2008/09 is £3.56bn. After deducting fees, charges, investment income, the budget requirement is £2,595m which is £62.8m higher than for 2007/08. The main changes in the MPA/MPS spending plan can be summarised as follows:

Summary of changes to the MPA/MPS budget

The change in the final budget proposal as compared to the Mayor’s budget is primarily due to the grant announcements on DSP cover.

3. The final budget proposals include net growth of £140.6m, details of which are included in Appendix 3.

4. Savings and efficiencies totalling £71.8m (see Appendix 4 for details) are included in the final budget proposals. As indicated in the original budget submission, these proposals focus particularly on the reduction of overheads and support services. Over the planning period the efficiencies and savings can be summarised as follows:

Table 2: MPA/MPS budget - summary of savings

It should be noted that in approving the 2008/09 budget the Mayor has indicated future financial envelopes which would require the MPA/MPS to identify savings over and above those already identified of £40.5m and £64.1m in 2009/10 and 2010/11 respectively.

Government Grant

5. Government announcements have now been made on a number of specific grants for 2008/09 which have been reflected in the final budget proposals, i.e.:

Table 3: Specific grants for 2008/09

Announcements are still awaited on 2008/09 grants for the preparation for the London 2012 Olympic and Paralympic Games and for Counter-Terrorism activity. The budget proposals, therefore, still reflect the bids made by the Authority and will be adjusted when grant announcements are made.

6. The final settlement for the general policing grant was announced in January for 2008/09 at £1,930m together with provisional grant settlements for 2009/10 of £1,978.3m and for 2010/2011 of £2,027.7m. The settlement was in line with the provisional grant settlement announced in December.

Policing Precept

7. The MPA/MPS has developed a medium-term financial planning process including a three year financial plan. The current forecast of the impact of the 2007/08 budget decisions, having regard to the Mayor’s budget guidance, on the next three years is:

Table 4: Current forecast of the impact of the 2007/08 budget decisions, over the next three years

General Reserves

8. The Authority’s current policy is to maintain a general reserve (including Emergency/Contingency Reserve) of at least 2% of Net Revenue Expenditure. The MPA’s reserve position reflect this policy. There are currently no plans to use general reserves to support the budget requirement. Movements to earmarked / general reserves will be considered as part of closing the 2007/08 accounts and will be reported to the MPA as part of the closedown process. In year movement in reserves will be reported to MPS Management Board and MPA Finance Committee as part of the regular monitoring process.

Impact of 2007/08 Outturn

9. The 2007/08 outturn forecast included in the Policing London Business Plan is based on the month nine monitoring report considered by the Finance Committee in February 2008.

10. At present the Business Plan reflects a transfer to the general reserve of the underspend of £16m as reported a month 9. The creation of further reserves will be determined as part of the 2007/08 closing of accounts proves and subject to Authority approval before the accounts are closed.

Business Group Budget Allocation

11. The Policing London Business Plan includes analyses of budget allocations by business group (objective – p20) and by type of spend (subjective – p22). The final budget, now presented for approval, provides the basis for budget monitoring in 2008/09. Following Authority approval these budgets will be submitted to Management Board members for sign-off and notified to budget holders. Regular monitoring reports will be made to Investment Board and the MPA Finance Committee.

Borrowing and Capital Spending Plan 2008/09 – 2014/15

12. The 2008-15 Capital Programme and Budget is set out on p49 to 53 of the Policing London Business Plan. The Plan recognises that a number of projects have received approval to adjust expenditure profiles since the budget submission. These changes reflect the results of contract negotiations etc and have been agreed either under delegated authority by MPS boards (Capital Programme Review Board [CPRB] and/or Investment Board) or MPA Finance Committee.

13. As previously identified to the Authority in November 2007, the MPS recognises the need to carry out more detailed work on the Service demands and anticipated projects costs for 2009/10 and beyond. This work will be carried out during 2008/09 to ensure the best match with strategic objectives is achieved and the proposals for increasing capacity in providing departments can be assessed. The affordability of the programme in terms of its impact on the MTFP will also need to be determined in more detail. The programme requirements for 2009/10 and beyond should, therefore, be regarded as indicative at this stage and further refinement of investment needs will be undertaken to align longer term plans to available resources. The first opportunity for this will be when considering the need to rephase project estimates in the light of the 2007/08 outturn and the actual slippage on project expenditure. A report on the updated Borrowing and Capital Spending Plan for 2008/09 to 2014/15 will be presented to the Finance Committee as part of the first monitoring exercise for 2008/09 early in the financial year.

14. The capital settlement announced by the Government provides capital grant of £38.443m and supported borrowing of £19.635m for each of the next three years. The capital grant is £2.586m more than the provision included in the draft budget submission. Due to the need to refine the investment needs for 2009/10 onwards, the additional grant being received in 2008/09 is to be used to offset some of the funding shortfall in 2009/10.

Prudential Indicators

15. Based on the revised capital programme for 2008/09 to 2014/15 an updated set of prudential indicators have been prepared. These indicators are attached at Appendix 5.The MPA Treasurer in discussion with GLA officers regarding the Mayor’s Capital Spending Plan for 2008/09 to 2010/11 has given his agreement that the authorised limit and operational boundary for 2007/08, 2008/09, 2009/10 and 2010/11 should remain at levels approved during the budget setting process. The reason for this is the uncertainty surrounding borrowing requirements associated with the development of facilities for the 2012 Games. Subject to the decision taken by the GLA Director of Finance and Performance the updated prudential indicators are submitted for approval.

E. Legal implications

1. The Mayor’s component and consolidated budget requirements for 2008/09 was determined on 13 February 2008 in accordance with the GLA Act Schedule 6 Paragraph 8. This included a 2008/09 budget requirement for the MPA totalling £2,595m.

2. Expenditure or activities undertaken by the MPA, as a statutory body, must be based on the specific powers given to it. Expenditure should only be budgeted for activities which fall within these statutory powers and can only be spent for such purposes whether budgeted or not.

E. Background papers

• November 2007 – 2007 – 11 Business Plan and Budget Submission to Mayor
• February 2008 – 2008/09 GLA Consolidated Budget

F. Contact details

Report authors: Ken Hunt, Treasurer, MPA and Anne McMeel, Director of Strategic Finance, MPS

For more information contact:

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

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