MPA budget monitoring to February 2001

Report: 5
Date: 20 March 2001
By: Treasurer and Commissioner

Summary

This report sets out the current position against budget, the forecast outturn for the year and highlights key issues.

A. Recommendation

That the information presented in the attached appendices and the explanations for some of the key variances presented be noted.

B. Supporting information

1. The following appendices set out the financial position in respect of the MPA Budget for 2000/01:

• A Budget and forecast full year outturn
• B1Budget and actual expenditure (subjective basis) year to date
• B2 Budget and actual expenditure (functional basis) year to date

Overview

2. There has been a significant movement in the projection of the revenue outturn position of the Authority due to a number of factors, which have been uncovered as a result of further investigations on the run-in to the end of the financial year. The position forecast for the end of the year is an overspend of £5.1m or 0.3 per cent over budget.

3. This is as a result of movements in the levels of income and expenditure forecast and the impact of a correction to the way in which Crime Fighting Fund Grant is reported.

4. Clearly such a movement so late in the financial year raises a risk over the Authority's ability to breakeven in the year especially given that this will be the first time that accounts will be formally prepared on an accruals basis. There is however a continuing uncertainty surrounding some areas of expenditure and effort is underway to contain expected spend and to scrutinise key areas of uncertainty.

Income

5. Members will see from Appendix A that the level of Crime Fighting Fund applied against expenditure in the "Specific In-Year Home Office Grant" section shows £1.5m compared with the figure of £10 million which has been consistently reported since last November. Whilst £10m does represent the total sum that the MPS is expected to receive under this initiative, £8.5m had already been taken into account when constructing the original budget requirement at the beginning of the year. Consequently presentation in earlier reports of £10m as in year income constituted a double counting of funding and masked the accurate financial position.

6. Members will also see that £600k is now forecast as being receivable from the Home Office in respect of costs incurred during the May Day event. The original claim was based on additional costs of £3.5 million. The Home Secretary had indicated that he would pay £1 million. This sum has been further reduced by the Home Office offsetting unrelated financial adjustments. MPS officers are pursuing the matter with Home Office officials.

7. There has also been a reduction in the projections of income from both policing services and other sources (especially rents receivable). Reductions in police service income appears to relate predominantly to failing to take account of services that are no longer provided. This will be an area that the anticipated review of fees and charges will cover.

Expenditure

8. There continues to be a high level of forecast movement in certain expenditure areas. The net effect however has been to reduce the impact of the significant income corrections referred to above.

9. The forecast for Police Pay whilst still showing a significant overspend has been reduced to reflect the position as at February. Provision continues to be made on a prudent basis for the tax liability associated with the Free Travel initiative for police officers (£1.1m) and the backpay for underpayments /over-contribution in respect of part time working and maternity (£1.2m). In addition the liability for the rectification of the Pay lead anomalies now agreed by PNB has been included in the Police Pay forecast (£2.5m awaiting ratification by the Home Secretary).

10. The underspending in respect of civil staff remuneration has also Increased slightly. Compensation claims are showing a forecast underspending for the first time this year. Pensions expenditure continues to demonstrate volatility with an increase in projected underspend by £3m.

11. Forecasts in respect of Transport have increased as difficulties in separating expenditures against local and devolved budgets are being resolved and increases in fuel supply costs. Operational Supplies and Services which include the important demand led services such as DNA testing, Forensic Medical Examiners and vehicle removal continue to project significant overspends.

12. Further monitoring reports will be submitted to future meetings of the Committee.

C. Financial implications

The forecast outturn position has changed since being reported to the February committee and net current expenditure is now forecast to be £5.1m or 0.3 per cent over budget.

D. Background papers

None.

E. Contact details

The author of this report is Bob Alexander, Head of Finance MPS.

For information contact:

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

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