MPS capital expenditure programme 2001/02

Report: 8
Date: 19 December 2000
By: Treasurer and Commissioner

Summary

This paper proposes a capital expenditure programme for the MPS in 2001/02 based on the £75m funding limit agreed by the Committee in November. It provides details of projects where expenditure is already committed, and a prioritised list of projects within the funding limit.

The paper also briefly explains the effect of the new capital accounting policy on the capital expenditure programme and highlights where projects have an impact on revenue expenditure. Any revenue consequences arising from the capital schemes detailed in this paper are consistent with the 2000/01 revenue budget proposals put forward to the MPA.

The paper seeks formal approval for 2001/2 capital expenditure programme.

A. Supporting information

1. Introduction

1.1 The November meeting of the Committee discussed the funding position of the MPS Capital Programme for 2001/02. The following recommendations were agreed:

• a budget of £75m would be set;
• that detail of the programme at individual project level would be provided;
• a prioritised list of projects would be provided to the committee.

1.2 This paper provides the details of next year’s programme on a project by project basis. Projects have been prioritised according to, and in order of, the following criteria:

• where expenditure is contractually committed and unavoidable;
• where the tendering process is currently on-going;
• where there is a legislative or health and safety requirement to progress the project, or where it is part of a spend to save scheme;
• where the project is rated as a very high or high priority in relation to MPS objectives.

2. Capital programme 2001/02

Committed expenditure

2.1 Following the setting of the £75m funding limit the MPS has reconsidered its potential capital expenditure for 2001/2. Business Groups have provided details of expenditure that is already contractually committed or that is currently in the process of being tendered for. This expenditure is considered unavoidable by the MPS. These details are summarised in Table 1 below. Further details of this expenditure in relation to individual projects 1 is at Appendix 1.

Table 1: Capital expenditure- committed and tendering 2001/2

2.2 Members should note that all figures quoted now exclude expenditure that will be revenue under the movement of the de minimis limit for single item capital expenditure from £1,000 to £5,000 (this change is explained further at paragraph 3).

2.3 Given the advanced and unavoidable nature of the projects listed at Table 1/Appendix 1, it is recommended that authority is given to continue/proceed with the £55.6m expenditure. This would leave £19.4m to fund non-committed expenditure.

2.4 Members will note that major projects, over £1m, that would go ahead/be continued under this recommendation are as follows:

• IT Infrastructure Renewal Programme - £15.5m
• Replacement of Cars, Vans, Motor Cycles and Commercial Vehicles - £10.9m
• CRIS Refreshment Project - £5.4m
• Crime & Flying Squad HQ (East) Barking - £5.1m
• Holborn Police Station Alterations - £4.2m
• Crime HQ (West) Hendon - £3.8m
• Wembley Police Station & Section House alterations - £3.2m
• Operations HQ Construction (North-East) - £2.2m
• Leman Street SO19 HQ relocation - £1.4m
• New Recruiting Centre - £1.2m

Revenue funding associated with all schemes within Table 1 is already in place within the 2001/2 budget bid, and totals £14.1m.

Non-committed expenditure

2.5 MPS Business Groups have identified uncommitted expenditure in excess of £19.4m remaining from the original £75m funding limit. In order to prioritise this uncommitted expenditure further projects which met the following criteria were identified:

• is a legislative requirement;
• is necessary to comply with heath and safety regulations;
• has a strong invest to save element.

2.6 These schemes are summarised at Table 2 below, with further individual project detail available at Appendix 2

Table 2: Uncommitted capital expenditure meeting criteria

* Note that the sum of the rows does not equal the total, since some projects meet 2 or more criteria

2.7 Uncommitted projects meeting the criteria in paragraph 2.5 above are regarded as unavoidable, in the case of meeting legislative requirements or health and safety regulations, or highly desirable, for invest to save projects. It is therefore recommended that authority is granted for these projects to proceed in 2001/2. This would leave a further £14.3m available to fund remaining uncommitted expenditure.

2.8 MPS Management Board has previously agreed that the balance of any remaining funding would fall to Directorate of Information (DoI) development projects, which support MPS Policing Priorities. However, because the MPS has also agreed to allow some devolved capital funding to Business Groups to support operational policing and devolved financial management, it is recommended that the uncommitted minor capital works budgets are allocated direct to MPS business groups within the available funding limit. Minor Capital works expenditure is shown at Appendix 3. Total expenditure is £2.2m, leaving £12.1m funding to allocate to remaining uncommitted projects.

2.9 DoI’s capital budget submission detailed the following developmental capital projects, as being either very high or high priority for capital funding:

• Information Strategy Implementation
• NSPIS Custody and Case Preparation
• Human Resources (PRISM)
• C3i
• Integrated Intelligence System

These projects are consistent with those identified as very high or high priority in DoI’s revenue budget bid that has gone to the MPA, and it should be stressed that to go ahead these projects require both revenue and capital funding to be agreed. A full list of these projects (and those projects that have moved entirely from capital to revenue under the change of accounting policy) is shown at Appendix 3. These projects total £15.0m of capital expenditure

2.10 The £15.0m exceeds the remaining funding by £2.9m. However the DoI funding bid does not make any allowance for any project slippage. Allowing a slippage factor of approximately 8% would allow the additional requirement to fit within the programme. Historically technology projects have recorded in-year slippage between 10 and 15%. Based on £2.9m slippage being included in DoI’s overall capital programme it is recommended that these projects are approved.

3. Movement of the de minimis limit for capital expenditure

3.1 The Accounting Code of Practice allows authorities discretion in setting a de minimis limit above which expenditure on long-life assets is classified as capital (and below which is charged to revenue). This discretion enables authorities to record assets of a value which is material, given the overall scale of the organisation’s activities. The current limit for the MPS is £1,000, which is regarded as extremely low and which requires a considerable administrative and bureaucratic effort to track and record large numbers of very small value items each year.

3.2 It is therefore proposed that the MPS move to a de minimis limit of £5,000 with effect from 1st April 2001. This change will be reflected in a new capital accounting policy that will be introduced on the same date.

3.3 In order to deal with the change in accounting policy £10m has been allocated in the MPA revenue budget submission for expenditure that will move from capital to revenue. The projects listed at Appendix 3 have total revenue consequences totalling £22.9m (i.e. £5.6m supporting revenue and £17.3 revenue reclassified from capital). This revenue funding is supported by the £14.4m in DoI’s development bid (which also includes £0.5m funding for Glidewell) and £9m of the £10m de minimis allocation. Thus all the revenue funding to support the proposed capital projects is contained within the revenue budget submission to the MPA.

3.4 Members are reminded that at the time of developing this report, the outcome of the 2001/2002 revenue budget submission to the Police Authority is not known. Any impact on this proposed programme as a result of revenue budget deliberations at the full MPA meeting on 14 December will be reported orally at the committee meeting.

4. Monitoring and capital programme post 2001/2

4.1 Progress reporting of the 2000/01 capital programme is quarterly (the January FPBV Committee is due to receive information to December 2000). It is proposed that this reporting arrangement continues into 2001/2.

4.2 Work is underway to complete the 5-year capital programme from 2001/02 to 2005/6. As previously agreed by the FPBV Committee, the programme will be brought before members prior to the end of this financial year to approve.

B. Recommendations

1. Individual recommendations from section A are summarised below:

1. Capital expenditure that is already committed and at tendering stage for 2001/2 is approved (£55.6m - see paragraph 2.3)
2. Uncommitted Capital expenditure that meets the following criteria is approved (£5.1m - see paragraph 2.7):

• Is a legislative requirement
• Is necessary to comply with heath and safety regulations
• Has strong invest to save element.

3. Uncommitted capital expenditure for minor works is allocated to individual MPS Business Groups (£2.2m - see paragraph 2.8)
4. DoI’s very high and high priority projects are approved (£15.0m - see paragraph 2.10)
5. £2.9m slippage is allocated within DoI’s overall capital programme
6. That the overall programme detailed in section C is approved

2. Members should also note:

• That a new capital accounting policy will be introduced from 1/4/2001 (paragraph 3)
• That monitoring of capital expenditure will be provided quarterly to FPBV Committee (paragraph 4.1)
• The 5 year capital programme will be provided to FPBV prior to the end of this financial year (paragraph 4.2)

C. Financial implications

Based on the individual recommendations listed in section B, FPBV Committee is recommended to approve the Capital Expenditure Programme for 2001/2 as detailed in Table 3 below:

Table 3: MPS capital programme by type of expenditure - 2001/2

This allocation by expenditure type would result in the following budgets to Business Groups (Table 4):

Table 4: MPS capital programme by business group

1. Includes £2.9m reduction for project slippage
2. Includes £4.1m reduction for project slippage

D. Review arrangements

There will be quarterly monitoring of capital expenditure reports to FPBV Committee (paragraph 4.1) and a 5-year capital programme will be provided to FPBV Committee prior to the end of this financial year (paragraph 4.2).

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 upon to a material extent in preparing the report. They are available on request to either the contact officer listed below or to the Clerk to the Police Authority at the address indicated on the agenda.

• MPS Finance Department Capital Budget Files
• MPA Treasurer’s Budget Files

F. Contact details

If you require any further information relating to this report, the author is Peter Martin.

For information contact:

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

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