Capital expenditure programme 2000/01 - 3rd quarter

Report: 5
Date: 22 January 2001
By: Treasurer & Commissioner

Summary

This paper provides forecasts for the 2000-2001 capital expenditure programme (CEP) based on outturn up to the end of the 3rd quarter of the financial year. It also includes an update on revenue to capital virement.

Members are invited to:

• note the 2000-2001 forecast outturn summarised in Table A
• note the levels of revenue to capital virement in Table B
• note the funding levels in Table C

A. Supporting information

Introduction

1. This paper sets out the current projected level of expenditure for each of the Land and Buildings (L&B) and Vehicles, Directorate of Information (DoI), Transport (Trans) and Miscellaneous Equipment (Misc) programmes and compares them with the agreed annual budget.

3rd quarter forecast

2. Table A below summarises the 3rd quarter forecasts for each of the four main headings. The Miscellaneous figure includes £1.6m in boundary transfer payments made to Surrey, Hertfordshire and Essex police authorities in lieu of the transfer of vehicles and police houses on the establishment of the Metropolitan Police Authority. Dispensation was granted by the Home Office to treat this figure as a capital payment under section 40(6) of the Local Government and Housing Act 1989.

Table A

Attached at Appendix 1 (see Supporting material) is an exemplification of the capital budget, which itemises the above top-level summary into project headings within departments.

Land and buildings

4. The capital funding requirement for 2000-2001, forecast by Property Services Department (PSD) building programme has been reduced by £2.3m from £22.4m to £20.1. These figures include slippage of £0.7m.

5. Various factors have contributed to this change in forecast. However, a number of projects have been delayed by the new contracting strategy, which involves consultation with contractors at a much earlier stage in proceedings. PSD report that whilst this increases the time needed at the beginning of a project, shorter contract periods and greater cost certainty more than make up for the delay

6. Projects where a delay has caused the project to slip and therefore reduce or defer expenditure to the next financial year include:

• Belvedere cell refurbishment
• HQ for Operational specialist units (eg: Traffic) at Catford and Chadwell Heath
• Major Crime/Flying Squad Support Unit at Ripple Road, Barking
• Temporary cells at Chingford and Hornsey
• Re-location of the Force Firearms Unit at Leman Street
• Wembley police station and section house

All of these slipped projects have been included in the 2001/2 capital expenditure programme approved at the December FPBV Committee.

Directorate of information

7. Directorate of Information (DoI) forecasts an overall expenditure of £40.1m against a total budget of £35.6m. This represents a total overspend of £4.5m.

8. This figure is mainly represented by spend from within the Information Technology element which is £7.5m above budget. Whilst a significant headline overspend, it is clear that there is no single reason for its occurrence. Changes in the definition of some elements of project expenditure combined with the front-loading of certain projects to produce earlier business benefit are two of the major factors that have contributed to the position. It should also be noted that approx. £1.5m of this will be funded by revenue to capital virement.

9. Within the overall figure DoI also forecast a slippage of £8.7m This represents money that is planned to be spent in the current financial year but, because of contractual or planning process delays will result in expenditure in the following year.

10. This project slippage within DoI is consistent with the 2001/02 Capital Programme report approved in December (i.e those projects which have declared slippage are included in the 2001/2 capital budget).

Transport

11. Overall expenditure on transport (cars, vans, motorcycles etc) is forecast as in line with the budget allocation

12. It should be noted, however, that the re-classification of specifications for dog vans and the disposal parameters of motorcycles have resulted in a higher forecast than allocation in each respective budget line. This is supported by a forecast saving of £1.268 in the purchase of cars effected by the greater impact of single badge purchasing.

Revenue to Capital Virement

13. The level of virement from revenue to capital budgets to the 3rd quarter of 2000-2001 totals £1.1m. This process allows purchase of small capital equipment locally by the redirection of revenue savings into the capital budget. A breakdown of these figures by Area/Department is shown in Table B.

Table B to 31/12/00

14. This compares with a figure of £1.6m at the same period of the last financial year. Based on previous profiles Corporate Finance forecast an outturn figure of £1.5m

Funding

15. The 2000-2001 capital programme is funded from central and project specific grants ie: Police capital grant of £22.6m and 0.2m in respect of Red Route technology: approved borrowing £11.768m: and capital receipts arising from the sale of property, vehicles, plant and equipment. The present forecast for capital receipts stands at £49.1m, and is substantially above the budget of £40.0m. The revenue to capital virement referred to in paragraph 6.3 also serves to fund the capital programme. Total forecast funding of £86.0m would lead to an addition to reserves of £11.9m at year-end. Total funding is set out in Table C below:

Table C – 2000/01 capital funding

B. Recommendations

In summary the Committee is invited to note the current position of the MPS Capital Expenditure Programme.

C. Financial implications

1. Capital expenditure at the end of the 3rd quarter of 2000-2001 is forecast to overspend by £1.8 million for the financial year.

2. The present funding position shows that this forecast overspend can be funded through higher than expected levels of capital receipts. Previous forecasts of capital receipts had assumed that the moratorium on residential sales would significantly reduce the level of receipts generated. The continued prosperity of the housing market and the lifting of the moratorium have increased this forecast significantly.

3. The higher levels of capital receipts will be reflected in the 5-year capital programme that will be presented to this committee in February.

D. Review arrangements

A report on the capital expenditure programme will be submitted to this Committee on a quarterly basis.

E. Background papers

The following is a statutory list of background papers (under the Local Government Act 1972 S.100D) which disclose facts or matters on which this report is based and which have been relied on to a material extent in preparing the report. These are available on request to either the contact officer below or to the Clerk to the Police Authority at the address indicated on the agenda.

• MPS Finance Department Capital Budget Monitoring Files

F. Contact details

If you require any further information relating to this report, the author is Bob Alexander.

For information contact:

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

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