2001/02 budget update

Report: 7
Date: 22 January 2001
By: Treasurer & Commissioner

Summary

The report clarifies the decisions made on the draft 2001/02 budget by the MPA at its meeting on 14 December 2000. The Home Secretary's decision regarding the National Crime Squad and National Criminal Intelligence Service (NCS/NCIS) levies is reported with the consequences for the MPA budget. The latest position on efficiency savings is set out. The approach to developing a manpower deployment plan for 2001/02 is described. Information is provided on the provision for equalities within the draft budget. Decisions for members are identified as appropriate.

A. Supporting information

Introduction

1. On 14 December 2000 the Authority approved a draft budget for 2001/02 for submission to the Mayor as the police component for inclusion in his consolidated budget. The consolidated budget is subject to consultation before being presented as a draft to the Assembly of the GLA on 24 January 2001. At that stage the assembly may approve or amend the draft budget before returning it to the Mayor. The Mayor will then present his final draft to the Assembly on 15 February.

Decisions by the Authority

2. The Authority agreed to submit its draft budget in accordance with Option F in the 14 December report. This was based on a 60p per week increase in the precept, in line with the Mayor's publicly stated preference, which would result in a cash limit of £2,056.3 million.

3. The Authority's decisions in relation to individual expenditure proposals are summarised in the following table.

4. The provision for extra officers (line 2) is derived as follows:

5. The £20 million provision for civil staff pay (line 3) is the estimated requirement to improve the location allowances and the pay of the main recruitment grades. The provision of £13 million at line 5 is intended to address a combination of two items in the high priority development bids: IT investment, which amounted to £10.75 million excluding the amount already counted with the cost of the new officers, and initiatives arising out of the civil staff grading structure review (£10 million). There is therefore a minimum of £2.25 million available for the latter purpose.

6. The provisions at lines 6 and 7 are net of additional officer requirements which are subsumed in the provision for 1,050 new officers.

7. Members will note that there is a discrepancy of £2.4 million between Option F and the total of the Authority's decisions. Rectifying this position should be the first call on any budget flexibility.

8. The Authority was aware that there remained a number of uncertainties in the budget figures and identified reserve items for inclusion if subsequent adjustments to the budget detail allowed, namely:

• Accommodation and building enhancements to support Borough based policing (estimated at £2.8 million).
• Additional funding for Crime and Disorder partnerships (£1.3 million or £40,000 per Borough).

NCS/NCIS levies

9. The budget submission includes a real terms increase of £10 million in the levies which the MPA has to pay to the national service authorities (NCS and NCIS) that represents a 33 per cent increase. £5 million was provided in the continuation budget and a further £5 million as a separate contingency. The authorities' budget proposals submitted to the Home Secretary would have required an increase in the MPA's payments of 50 per cent.

10. The Home Secretary announced his decision on the service authorities' budgets on 10 January 2001. In the event he has substantially reduced their proposals such that the increase in our levy payments will be just 12 per cent that will release approximately £7 million of the current budget provision.

11. Although the decision in relation to levies has proved favourable in the context of the draft budget there are other potential changes which may be adverse, eg: the special grant funding for the increased London pay lead. Ideally all such changes would be considered at the same time. In practice the Authority needs to determine its view of the priorities for dealing with additional resources identified at this stage bearing in mind:

• The need to balance the budget as currently drafted (see paragraph 4 above).
• The reserve items identified by the Authority (see paragraph 5 above).
• Concerns about the level of precept increase.

Efficiency savings

12. The draft budget includes provision for 0.5 per cent cashable efficiency savings (£9.2 million). At this stage only £3.74 million cashable savings have been identified leaving a gap in balancing the budget of about £5.5 million. Any shortfall in the achievement of the cashable efficiency savings target will have to be offset by a corresponding reduction in specified growth provisions included in the budget or across the board cuts achieved for example by reducing inflation provisions. The Committee is asked to confirm the requirement to achieve 0.5 per cent cashable efficiency savings or an alternative way of balancing the budget.

Manpower deployment

13. In approving the general provision for an increase of 1,050 police officers in 2001/02 the Authority requested that the Commissioner should provide a manpower deployment plan which should reflect the Authority's priority for placing resources into front line policing.

14. Work has begun on this deployment plan. Some early output was presented to MPA Members at the recruitment and retention briefing on 11 January. This work is being led by personnel with finance and operational input. A longer term model will be developed which can be updated to reflect actual levels of recruitment, retention and postings to give a clear indication of where police officers are deployed.

Equalities

15. In his letter of 1 December 2000 the Mayor said that he would like to see equalities related expenditure highlighted and that there should be sufficient resources to:

• Enhance staff development initiatives (including relevant targets) to deliver an increase in the representation of ethnic minorities and women at all levels in the Metropolitan Police Service
• Undertake a best value review on equalities.

16. In November 2000 the Deputy Commissioner together with the MPA Treasurer presented details of the MPS budgeted financial commitments for equalities initiatives in 2000/01 to an Equalities Budget Steering Group chaired by Lee Jasper, the Mayor's senior policy adviser on equalities. This information is set out in Appendix 1 (see Supporting material).

17. The budget provisions in Appendix 1 (see Supporting material) have been repeated in the 2001/02 budget. Additional sums have been included in the draft budget which take the 2001/02 equalities budget provision to nearly £40m. Figure 1 shows how this estimate has been calculated. It should be noted that this does not include all predicted spend in the MPS on equalities since many areas of spending will have an equalities related element which cannot be separately costed. Examples include the opportunity costs of Personnel Managers and Occupational Health Officers giving advice and guidance on related issues; costs associated with consultative groups; research for projects such as C3I which included seeking the views across a range of society.

Figure 1: The MPS' Equalities Budget Provision for 2001/02

Note: Figures include direct staff costs and operating expenses (where appropriate) but not indirect such as accommodation and IT infrastructure. They also exclude senior management and non-branch support but make no allowance for inflation/pay rises etc.

18. At its last meeting the Committee agreed a revised best value review programme that includes a review of equalities and diversity in 2001/02. That review will address, amongst other things, the effectiveness of staff development initiatives to deliver an increase in the representation of ethnic minorities and women at all levels in the MPS.

B. Recommendations

1. To note that the Authority's decisions on individual budget items on 14 December 2000 have over-committed the budget by £2.4 million compared with Option F.
   1. To note the Home Secretary's decisions in relation to the NCS/NCIS levies;
   2. To agree to rectify the over-commitment in 1 above as a first call on the reduced requirement for the levy payments;
   3. To determine the MPA's view on the use of the remaining flexibility.
   4. To confirm the continuing requirement to achieve efficiency savings of £9.2 million in 2001/02; or
   5. To agree alternative means of balancing the budget.
2. To agree that the information presented on the equalities provision within the draft budget for 2001/02 be forwarded in response to the requirements of the Mayor's letter of 1 December 2000.

C. Financial implications

The budget provides the financial framework for expenditure in 2001/02.

D. Review arrangements

The final budget for 2001/02 will be confirmed to the Authority after it has been set by the Mayor and/or Assembly.

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

• MPS Finance Department Budget Files
• MPA Treasurer's Budget Files

F. Contact details

The author of this report is Peter Martin

For information contact:

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

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