Policing London Business Plan 2010-13

Report: 5
Joint Strategic & Operational Policing and Finance & Resources Committee
Date: 18 March 2010
By: Treasurer and the Director of Resources on behalf of the Chief Executive and the Commissioner

Summary

This report provides members with an update on the Policing London Business Plan 2010-13, notably revisions to the text under corporate objectives, amendments to the revenue and capital budget, adjustments to the headline indicators and targets, and the inclusion of statutory appendices, including a Value for Money Statement.

A. Recommendation

That Members

1. Note progress on the development of the draft Policing London Business Plan 2010-13
2. Comment on the draft Plan, including proposed measures and targets (where available) for 2010/11 and on the budget position
3. Subject to 2 above, recommend Full Authority approval of the Policing London Business Plan 2010-13.

B. Supporting information

Policing London Business Plan

1. The draft Budget and Business Plan 2010-13, approved at Full Authority (26 November 2009), is being developed within the Mayor’s budget planning framework:

• The key priorities and deliverables for 2010/11 have been agreed
• The budget gap has been closed for 2010/11, although a gap remains for 2011/12 and for 2012/13 against the Mayor’s guideline budget limits. Work is underway to close those future budget shortfalls and to plan for potential revisions to guideline budget limits in the light of the next CSR exercise.

The London Assembly’s Budget and Performance Committee’s ‘Response to the Mayor’s consultation draft budget 2010/11’, issued in January 2010, has been reviewed for potential implications to the Policing London Business Plan. The Mayor’s budget, which was in line with the Authority’s draft submission was approved without amendment on 10 February 2010.

2. The Policing London Business Plan 2010-13 has been structured (Appendix 1) in the same way as the Budget and Business Plan, in five sections. The Appendices have been added to meet statutory returns in relating MPS corporate objectives to public, Home Office and the Major’s priorities; in Protective Services Improvement Plans; and in Audit and Inspection outcomes.

3. A Value for Money statement has been added as Policing Plan Appendix H in response to the Policing Plan (Amendment) Regulations 2009. This covers planned improvements in efficiency and productivity during the period, how these will be achieved, cashable efficiencies generated, and reasons for not pursuing certain Value for Money options.

This has been completed with the limited guidance available and is, within this constraint, compliant with the Regulations. We are conscious that further guidance may be issued in due course. Proposed APA, ACPO and Home Office guidance on format, if produced, will inform the 2011-14 Statement.

4. Protective Services Improvement Plans, included in Policing Plan Appendix G, will be completed in Mid March 2010. These have been materially affected by reorganisation activity across the Service.

5. MPS Business Groups are finalising their 2010-13 Business Group Business Plans following decisions taken by MPS Management Board on 13 January 2010. The content and format have been revised to make Plans more accessible and to ensure that activities and deliverables are focused on meeting corporate objectives. S&ID has worked closely with planners and DACs from each Business Group to develop deliverables and performance indicators, and to ensure that cross-business priorities are captured and communicated.

Strategy

6. A summary of MetForward, the Authority’s strategic priorities, is set out at the front of the Policing London Business Plan.

7. The Service’s corporate objectives have been drafted with due attention to public priorities (Appendix C of the draft Policing London Business Plan 2010-13), Home Office strategy (Appendix A of the draft Policing Plan), the Mayor’s priorities and MetForward (Appendix B of the draft Policing Plan), and legislative requirements. Work has taken place during December 2009 and January 2010 to update the text under corporate objectives to make sure it reflects the right activity and covers cross-cutting and collaborative work.

Performance Management

8. The Commissioner and MPS Management Board have committed, in consultation with the MPA, to focus on monitoring Confidence, Safety and Improvement outcomes through a smaller number of Key Performance Indicators for 2010-13, supported by more defined corporate performance reporting and more dedicated decision making forums.

9. Following this lead, MPS Performance Group has identified eight performance areas to which headline Key Performance Indicators will be aligned and within which performance monitoring and reporting will be structured. This will support corporate decision making and drive activity across the Service.

10. Each headline Key Performance Indicator is assigned a Management Board lead with corporate responsibility for achieving the outcome. Delegated officers at DAC and Director level will lead on driving activity.

11. Targets will be shown only against headline Key Performance Indicators. Although a larger set of performance indicators will be monitored and reported on, some by exception, targets will be used as appropriate.

12. 10 draft headline key performance indicators (KPIs) are proposed in the Policing Plan, Appendix A, aligned to the eight performance areas shaded grey. These KPIs are shown with targets. Targets remain subject to final mediation through year end outturn data in April 2010.

This set will populate headline performance (KPI) reports to MPS Management Board and Performance Board, and to MPA SOP Committee and Full Authority in 2010/11.

13. These indicators sit within a performance control set of about 80 indicators, aligned to the eight performance areas shaded grey. These are drawn from operational and corporate health indicators across the Service, and reflected in MPS Business Group Plans and scorecards. The current list is a working set of indicators, subject to development throughout the year. Whilst they will be managed within the MPS, they are not shown with targets.

This set will populate the broader performance reports to Management Board SMT, and will be escalated by exception to headline performance (KPI) reports.

14. This control set is supplemented by more tactical indicators at Business Group and OCU level, and by other corporate health indicators that are monitored locally. Many of these will be captured and reported on through Business Group MMRs in 2010/11, and through Corporate Health Indicator reports.

In this way performance indicators across the MPS are aligned to outcomes and are cascaded throughout the organisation.

15. The performance control set of about 80 indicators and the more tactical indicators remain a work in progress and are subject to amendment throughout the year in consultation with the MPA.

Financial Information

16. The financial information in the Policing London Business Plan highlights the issues facing the MPA/MPS which are expected to impact on next year’s budget and the medium term financial forecasts.

Revenue Budgets

17. Following review of the draft Policing London Business Plan 2010-13 by the Mayor there has been no change to the budget requirement announced in the original Mayor’s Budget Guidance. The final budget, now presented for approval, provides the basis for budget monitoring in 2010/11.

18. The draft budget and Business Plan 2010-13 approved at MPA Full Authority on 26th November 2009 was amended in consultation with MPA officers before being forwarded to the GLA to adjust an overstatement of revenue expenditure and grant income in the Olympics Security Directorate of £15.65m for the three years 2010-13. This does not affect the overall net revenue expenditure (or the precept level) or subsequent budget gap in any of the planning years, and relevant pages in the Policing Plan have been adjusted.

19. Since the budget submission, MPS Management Board has agreed to the following transfer of functions between Business Groups:

• Firearms Cadre created in Central Operations transferred from various other Business Groups
• CO14 Clubs and Vice transferred from Central Operations to Specialist Crime Directorate
• G20 Civil Actions Group transferred from Central Operations to Deputy Commissioner’s Portfolio
• Diversity and Citizen Focus Directorate from Territorial Policing to Deputy Commissioner’s Portfolio
• CAD function transferred from Central Operations to Territorial Policing CCC, net saving used to fund establishment of TSG team in Central Operations
• Status Dogs Unit transferred from Human Resources to Central Operations.

These adjustments have no impact on the overall budget requirement and are now reflected in the relevant business group budgets.

20. On 09 December 2009 the Chancellor published his pre-budget report. A number of issues included in that report will impact on the draft budget requirements for 2011/12 and 2010/13.

The overall position can be summarised as follows:

22. The centrally held budgets for pay inflation in 2011/12 and 2012/13 have been reduced to reflect the guidance provided in the recent pre-budget report by the chancellor, i.e. that pay increases in the public sector will be limited to 1% per annum from 2011/12. This results in a saving of £30m in 2011/12 as the budget for pay inflation had previously been included at 2.5%.

It was also announced in the pre-budget report that from 1st April 2011 there would be an increase of 0.5% in Employer’s National Insurance Contributions. This will result in an additional cost of £13.9m in 2011/12. Overall, these changes reduce the budget gap for 2011/12 by £16.1m to £94.6m and for 2012/13 by £19.7m to £125.4m. It should, however, be noted that these budget gaps may increase once the outcome of the next CSR and government grant settlements for 2011/12 and 2012/13 are known.

23. The Home Secretary has announced the totality of National CT Specific Grants (including DSP) for 2010/11 at £579m. The breakdown of the individual grants within this allocation has not yet been announced, although considerable discussions have been held between the MPS, ACPO (TAM) and the Home Office over the distribution of the funding.

24. While the National Grant settlement indicatively provides for full 3rd year CSR period growth and pay inflation on the CT Specific Grants, it does not include any inflation on the DSP grant for Royalty, Diplomatic and VIP Protection over the entire 3 year CSR period. This means that there is likely to be a significant shortfall on the DSP grant in 2010/11. In order to mitigate this shortfall, in what is already an under-funded area, it is likely that MPS CT Specific Grant will be applied to DSP funded functions. The movement of funding from MPS CT Specific Grant to DSP is likely to reduce CT Grant funded officer growth in 2010/11. Full details of CT Grant settlements and their impacts are likely to available at the end of February 2010.

Budget Requirement

25. The MPA/MPS budget requirement for 2010/11 is £2,673.3m as set by the Mayor. The year on year budget movements can be summarised as follows:

Growth and Reductions

26. The growth and reductions included in the 2010-13 budget and business plan can be summarised as follows:

Growth

Savings

27. It should be noted that the adjustments to the budgets described in paragraph 14 have had a minor effect on the savings and growth numbers in the table above due to the TSG Surveillance and CAD savings/growth.

2009/10 Outturn

28. The draft Policing London Business Plan 2010-13 reflects the revenue budget monitoring position for 2009/10 at Period 9 (to the end of December). A net overspend of £10.3m is currently forecast against the approved budget. The Service is looking to manage this expenditure down over the remainder of the year. To the extent that this does not prove possible, any overspend at year end will be covered by drawing down from Budget Pressures earmarked reserve.

Reserves

29. The organisation is forecasting to have the following revenue reserve balances at 31 March 2010:

• Earmarked Reserves - £178.8.m (assuming an overspend of £10.3m in 2009/10 as described above)
• General Reserve - £47.4m.

30. Currently the 2010/11 budget assumes the use of £4.2m earmarked reserves to support specific Service expenditure. Revenue reserves are cash backed balances, held on the balance sheet until they are spent or released for other purposes. As such, they can only be spent once, and are not part of the ongoing base budget.

31. The general reserve balance as at 31st March 2010 is forecast to be £47.4m, which is approximately 1.8% of the 2010/11 Budget Requirement figure of £2,673.3m. In line with MPA policy, when the Emergencies Contingency Reserve (£23.1m) is taken into account general resources available total £70.5m which represents 2.6% of the 2010/11 Budget Requirement.

General Policing Grant & Specific Grants

32. The final settlement for the general policing grant was announced in January for 2010/11 at £2,027.8m. The settlement was in line with the provisional grant settlement announced in December. This announcement does not affect the Authority’s budget requirement as set by the Mayor.

33. There has been no announcement of the grant settlement for 2011/12 and 2012/13 due to the delayed CSR. The MPA/MPS have produced draft budgets for these years based on the Mayor’s budget guidance reflecting a 1.5% reduction in government grant in each year. This full reduction is not totally passed on to the MPS whose budget requirement reduces each year by only 1%. It should be recognised that it is probable that future grant settlements will move adversely when compared to the current planning assumption resulting in an increase to the current budget gaps.

34. In terms of specific grants, it should be noted that the MPS has yet to receive formal confirmation of the CT/DSP grants from the Home Office for 2010/11. There is a risk that the grant levels that the MPS will receive will differ from the current planning assumption.

Home Office Efficiency and Productivity Strategy

35. The Home Office Efficiency and Productivity Strategy for the Police Service for 2008-11 resulted in the target for cashable savings increasing to 3% of gross revenue expenditure per annum. Currently, Home Office guidance states that the value of the target is compounded, net of cashable efficiency or productivity gains worth 10.3% (increased from 9.3% as part of the Budget announced by the Chancellor in March 2009) of 2007/08 Gross Revenue Expenditure, to be achieved by the end of 2010/11. For the MPA/MPS, over 3 years, equates to £344.9m. The current forecast for the period to 2010/11 is £433.3m.

36. The MPA/MPS has a strong record of delivering efficiency plans and targets and in implementing significant change programmes. The MPS has identified savings to contribute to the 2010/11 position - projected savings of £124m in 2010/11 rising to £193.6m in 2012/13 are included in the current planning assumptions.

37. The Service has reviewed and adapted its approach to delivering efficiency, productivity and change to ensure continuous improvement is integral to business planning. The establishment of a medium-term Service Improvement Plan (SIP) and associated governance arrangements will assist the organisation in managing the medium-term financial position.

The Service Improvement Programme (SIP) is planned to deliver a significant level of savings in the medium term. In 2010/11, the SIP is budgeted to deliver savings of £44.9m rising to £66.8m in 2012/13. As part of the 2011-14 budget process, these savings levels will be reassessed and any additional savings will be built into the organisations budget position.

38. The MPA/MPS continues to work with other members of the GLA Group to explore the efficiencies available from joint working. Significant benefits will be pursued through the SIP.

39. The implications for the Police Service’s budgets and approach to value for money of the Pre-Budget Report (PBR) 2009 and the Policing White Paper (Protecting the Public: Supporting the Police to Succeed) are:

• The Government has emphasised that sufficient funding will be available to maintain current numbers of warranted Police Officers, PCSOs and other staff exercising police powers.
• The need to increase value for money in policing - including £545m cashable savings (procurement, ISIS, overtime and business support services) and £500m from business process improvement was highlighted.
• A value for money statement is to be included in policing plans.
• The PBR also announced that the Government will seek a one per cent cap on basic pay uplifts for 2011/12 and 2012/13 and those earning the highest salaries expected to make a greater contribution towards their pensions.

Borrowing and Capital Spending Plan 2010/11 - 2016/17

40. A separate report is being considered by the same meeting on the Borrowing and Capital Spending Plan 2010/11 - 2016/17.

Police Officer and Staff numbers

41. The table below shows the Police Officer and Staff numbers that the current planning assumptions are based on:

42. Based on current planning assumptions, a small decrease in police officers (-199 in 2010/11 from the original 2009/10 position) and a small decrease in police staff (-122 in 2010/11 from the original 2009/10 position) is anticipated, alongside a significant increase in special constables (+1,397 in 2010/11). The principal reasons for the officer movements between 2009/10 and 2010/11, 2011/12, 2012/13 are related to:

• The impact of the rollout of Operation Herald (-200, -450,-450 posts)
• Reductions in the projected number of Olympics posts (37, 76, -130 posts)
• Reductions in the number of recruits coming through the IPLDP process (-485, -441, -484 posts)
• Other growth and reductions agreed as part of the 2010-13 process (+449, +380, +413 posts).

43. Since the draft budget and Business Plan completed in November 2009 there has been a net reduction in the number of Police Officers of 52 posts by 2012/13. This reduction is primarily due to a reduction in the number of seconded Police Officer posts within HR. The allocation between Business Groups reflects the structural changes detailed in paragraph 14. The change in Police Staff numbers in 2012/13 is predominantly due to a reduction of 100 posts as part of Transforming HR.

Policing London Business Plan Timeline

44. The final version of the Plan will be presented for approval to MPA Full Authority on 25 March 2010 and published electronically by 31 March.

Business Planning Consultation

45. The MPS is reviewing the 2010-13 business planning cycle and starting planning for the 2011-14 cycle over the next two months:

• The London Landscape scan and the Corporate Strategic Assessment have been drafted for consultation
• Lessons learned on the 2010-13 cycle are being identified and consultation is starting on the 2011-14 cycle
• MPA and MPS officers are working together to develop the budget and business planning process for 2011-14.

Environmental impact

The Policing London Business Plan 2010-13 references the MPS’ Corporate Social Responsibility (CSR) Strategy for 2010-13 and the 2009/10 Environment Report, which detail the MPS’ work to improve the quality of life for Londoners and our employees and to drive the sustainable consumption of resources.

C. Race and equality impact

An Equality Impact Assessment is currently being undertaken on the final Policing London Business Plan 2010-13 proposals, and will be available for the meeting on 18 March 2010. Equality Impact Assessments are also completed on Business Group activities undertaken to meet corporate objectives where there is deemed to be an impact, and on MPS control strategies where there is deemed to be an impact.

The Policing London Business Plan 2010-13 references the MPS’ Equalities and Diversity Strategy 2009-13. The strategy will drive delivery of our Policing Pledge commitment of fair, dignified and respectful treatment; and support how we go about building a talented and diverse workforce and developing people to their full potential. The MPS is also implementing the national Equality Standard for the Police Service, a means of assessing improvements through delivery of the strategy, and a way to address gaps in service delivery and share good practice.

The MPS has committed to respond to the recommendations of the MPA Race and Faith Enquiry, when published.

D. Financial implications

The Mayor’s budget, which reflects the Authority’s draft submission was approved without amendments on 10 February 2010. The Policing Plan considered by MPS Management Board in February and now submitted for Authority consideration reflects the budget limit agreed by the Mayor and actions required to deal with financial issues which have emerged since the draft budget submission was made.

E. Legal implications

The Greater London Authority Act 1999, as amended, sets out the requirements of the GLA to calculate the budget requirements for the Mayor and the Assembly and four functional bodies. The budget requirement for each body is calculated by determining the difference between projected expenditure and projected income including specific Government grants. In order for the GLA to estimate the sums required by the MPA/MPS, the MPA/MPS must provide information to the Mayor and Assembly to facilitate this. The Mayor is required to consult with the MPA/MPS prior to setting the final budget.

To help assist budget setting and fulfil meeting the priorities within the Policing Plan, the budget and business development process is a key element to ensure there are sound financial plans within which the MPA/MPS priorities and objectives are adequately funded.

Expenditure or activities undertaken by the MPA/MPS as statutory bodies must only budget for activities that fall within its statutory powers. There are also positive duties under S3 Local Government Act 1999 to secure the continuous improvement in the ways functions are exercised having regard to a combination of the economy, efficiency and effectiveness. This report identifies steps under the budget and business plan process will be taken to ensure best value is achieved in the delivery of policing services.

The Local Government and Public Involvement in Health Act 2007 confers a duty on named public sector agencies to co-operate with the local authority to agree LAA targets and then to have regard to the targets they have agreed. The Act further confers a duty to involve local representatives - Police Authorities are exempt from this duty as they are already covered by similar provisions in Section 96 of the Police Act 1996, and Section 157 the Serious Organised Crime and Police Act 2005.

F. Background papers

• Mayor’s 2010/11 Budget Guidance (July 2009)
• Interim Budget Submission 2010-13
• Budget and Business Plan 2010-13
• Supporting financial Information 2010-13

Appendices

• Appendix 1 - Draft Policing London Business Plan 2010-13

G. Contact details

Report authors:

• Paul Clarke, Strategy and Improvement, MPS
• Chris Strange, Strategic Finance, MPS

For information contact:

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

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