2001/02 approved budget

Report: 8
Date: 20 February 2001
By: Treasurer and Commissioner

Summary

This paper reports the final outcome of the budget process for 2001/02. Further decisions are required by the Authority to balance the final budget and recommendations are made accordingly.

A. Recommendations

1. To note the final budget proposed by the Mayor and approved by the GLA Assembly.

2. To recommend that the Authority agree final amendments to balance the budget detail as set out in paragraph 10 above

3. To require the Treasurer of the MPA and the Director of Resources of the MPS to present to the next meeting of the Committee proposals for delivering the programme of monitoring and scrutiny set out in paragraph 11 above.

B. Supporting information

Approval process

1. At its meeting on 14 December 2000 the Authority approved its draft budget which was then incorporated as the police component of the Mayor’s consolidated budget for consultation. After consultation the Mayor presented his budget proposals to the GLA Assembly on 24 January 2001. One change in respect of the police budget was reflected in the figures presented to the Assembly, namely a reduction of £7 million following the Home Secretary’s decisions on the NCS and NCIS budgets as reported to the last meeting of this Committee.

2. A note of the proceedings at the Assembly on 24 January was circulated to all members of the MPA immediately following the meeting. A package of amendments to the Mayor’s budget was approved by the Assembly including an increase of £9.2 million in the efficiency savings in the police budget. That amendment was incorporated into the Mayor’s revised proposals put to the Assembly meeting on 15 February 2001.

3. The Mayor’s final budget was passed without amendment. The MPA budget for 2001/02 is therefore £2,040.1 million at cash limit, i.e. before deducting specific grants, or a budget requirement of £1,980.1 million (net of specific grants). This is a 10.7% increase at cash limit, 8.2% at budget requirement. The council tax for police services is £118.85 at band D, an increase of 30.6%, or 54p per week, over the current year. Excluding the impact of council tax benefit subsidy limitation, the council tax increase is 28.1% or 49 p per week.

Approved budget

4. The budget as now approved reconciles with the draft submission agreed by the Authority on 14 December 2000 as follows.

5. The make up of the final budget can be summarised in the following table.

Savings requirement

6. As was reported to the last meeting of the Committee, the total of the individual budget growth items approved by the Authority on 14 December exceeded the agreed budget option by £2.3 million. The Authority needs to identify a budget reduction to eliminate this difference and bring the final budget into balance.

7. The total requirement for cashable efficiency savings is now £18.5 million. Specific savings of £3.7 million have so far been identified, leaving a balance to be found of £14.7 million. Thus, together with the £2.3 million reduction required to balance the total budget, the Authority has still to identify savings amounting to £17 million.

Proposals to balance the budget

8. Since the draft budget was prepared for the MPA it has become clear that responsibility for executing warrants has transferred to the Courts with a consequent reduction in expenditure by the MPS next year of £3 million. This saving will contribute to the overall reductions required. Notification of new national insurance contribution rates has also confirmed that the MPA benefits from adjustments designed to offset the impact of the climate change levy, reducing the budget requirement by £2 million.

9. The remaining reduction requirement should be achieved through efficiency savings. In the absence of specific measures identified by the MPS it is proposed that the reduction should be met in three ways:

• A reduction in the provision for price inflation by £3.5 million. This is approximately half the provision currently included. Budget managers will have to make savings at a local level to live within the reduced provisions for supplies and services.
• A reduction of £3 million (approximately 1.5%) in the base provision for civil staff pay. In part this would recognise that recruitment, however successful, will not fully restore staffing levels within a year. It could also be a first step towards acknowledging the potential to deliver the required service with fewer posts once the investment in improved pay has been made.
• It is reasonable to leave a remaining balance of savings of £5.5 million (0.25%) to be found, given the initiatives set out in the following section of this report.

10. The budget balancing reductions of £17 million would therefore be found as follows:

Management of the budget

11. At the meeting of the GLA Assembly on 14 February, the Chairman of the MPA spelt out how the Authority will take a more proactive role in monitoring and scrutinising the management of the budget next year in order to ensure that the budget objectives are delivered, that base spending is effectively scrutinised and that required savings are being identified and delivered. The following activities will contribute to this role.

• Monitoring expenditure against budget on a monthly basis, requiring adequate explanations of variances
• Receiving regular progress reports on the delivery of key budget objectives, ie
  • police officer recruitment and retention
  • civil staff pay measures and their impact on staff numbers, including release of police officers from civilian posts
  • progress of IT programme and spend
• Receiving regular reports on the identification and implementation of efficiency savings
• Carrying out a programme of systematic scrutiny of individual budget headings in greater detail to establish the appropriateness and necessity of expenditure
• Managing, in conjunction with the Mayor and the Commissioner, a comprehensive programme of independent efficiency and effectiveness reviews (see agenda item 12)
• Driving through the programme of Best Value reviews
• Monitoring performance against Policing Plan targets
• Carrying out a review of income generation
• Ensuring the clarification of financial and budgetary controls and requiring evidence of compliance with them
• Developing medium term financial planning to provide a framework within which to manage future commitments and to secure a sound basis for future years’ budgets.

12. Subject to Members’ views we will establish the processes and a programme to deliver these activities, reporting back to the next meeting of the Committee.

Review arrangements

13. The programme of monitoring and scrutiny will provide regular opportunities for review throughout the year.

C. Financial implications

The final budget sets the overall parameters for expenditure in 2001/02. Further measures will have to be identified and implemented during the year to achieve a final balance.

D. Background papers

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

E. 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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