Efficiency planning

Report: 8
Date: 20 March 2001
By: Commissioner

Summary

This paper provides information on efficiency savings for the current financial year and demonstrates how cashable efficiency savings will be needed to cover the budget gap for 2001/02.

The paper reflects the need to refocus the MPS approach to efficiency savings to meet the requirements of the MPA and GLA, recognising that efficiency planning to date has had to meet only the HMIC/Home Office requirements.

A. Recommendations

The Committee is asked to note the efficiency plans at Appendices 1, 2 and 3.

B. Supporting information

Current year out-turn

1. The MPS is forecasting £37.6m savings for 2000/01: see Appendix 1 (see Supporting material). These savings exceed the overall 2 per cent target required by the Home Office under the traditional guidelines that exclude a variety of efficiency and effectiveness measures e.g. improved contracts arrangements. It should be noted that efficiency savings and the MPS performance assessment are subject to audit by HMIC and District Audit before we can formally state that the efficiency target has been met. Appendix 1 includes a below the line figure of £2m from the PSD outsourcing contract which HMIC have indicated that they may not recognise. This has not therefore been counted in the latest forecast total.

2. District Audit, on the other hand, have reviewed the figures and have not raised any objections. During a recent meeting with the HMIC (one of their quarterly scrutiny meetings), their current interpretation of the guidelines appeared to change the emphasis of recording non-cashable efficiency gains. Instead of costing the efficiency savings identified by specific projects, the focus has moved to outputs, i.e, the initiatives which have been funded by the savings. These issues are being clarified with the HMIC and any necessary changes will be made to the final outturn figures and to MPS planning and data collection processes.

3. The MPS expects to meet the target against either interpretation of the guidelines. Savings continue to be reinvested towards national and local policing plans. Examples of some of the new initiatives that have been funded from within existing funds include Operation Trident and the recruitment of additional crime analysts.

2001/02 plan

4. A draft plan is attached at Appendix 2 (see Supporting material). The plan is based on forecasts of savings which are likely to be achieved next year. It is fair to say that many of the savings in the cash releasing category are not yet underpinned by specified projects and initiatives. These will need to be identified and assigned in due course. Experience has also shown that efficiency savings targets may need to be revised as the year progresses. For example, police sickness has unfortunately risen this year and so savings projected earlier in the year have not been realised.

5. There is a requirement in the MPA's approved budget to achieve £18.5 million cashable savings. In addition expenditure approvals exceeded the funded budget total by £2.3 million which, when added to the efficiency savings requirement, produces a total savings target of £20.8 million. The MPS has currently identified £3.71 million of specific efficiency savings and the Authority on 8 March approved a reduction of £3.5 million in the price inflation provision as a means of enforcing efficiency savings on individual budget holders. Other proposals to balance the budget were not accepted by the Authority as counting towards the efficiency savings target. Therefore at this stage only £7.2 million (£3.7m + £3.5m) has been identified towards the total savings target of £20.8 million leaving a further £13.6 million to be found – see Appendix 2 (see Supporting material).

6. The cashable target of £20.8 million will be an extremely challenging one to achieve because of the high proportion of the budget that is linked to police and civil staff pay, and because most of the easier targets have been included in previous plans.

7. Officers from the Corporate Development Group and Finance will be working closely to assist the business groups to identify and cost emerging initiatives. Efficiency planning will also form part of the performance review process for cluster commanders, reporting monthly to the Resource Allocation Committee within the MPS and to FPBV.

Accenture

8. Accenture has been commissioned to conduct the first phase of an Efficiency and Effectiveness Review to assist the MPS in looking for medium and long term savings. The review is scheduled to report at the end of March and is likely to include examination of existing efficiency gains as well as proposing previously unidentified projects and activities. Accenture has not been set any specific target for proposed efficiency savings but are expected to consider efficiency and effectiveness measures that are not covered by the existing Home Office rules.

3-year efficiency plan

9. At Appendix 3 (see Supporting material) is a provisional forecast of the three year Mayoral and Government efficiency plan targets. This projection also identifies possible sources of efficiency savings but realistic figures are not available for most elements at this stage and are therefore not included.

10. Over the next three years, efficiency savings will continue to be made across a wide range of initiatives including both corporate-led and borough-based activities. Some savings will mirror previous efficiency savings e.g. more effective use of IT which releases staff and resources for operational duties. Other savings will be the result of newer initiatives, for example, Best Value reviews, where the emphasis on the delivery of continuous improvement in all service areas should deliver efficiency savings. The three year plan assumes that in most cases the savings related to the review will not be realised until the year following completion of the review.

11. In future years the MPS will increasingly have to look at those areas of efficiency and effectiveness that have not traditionally been allowed under the Home Office guidance such as income generation, sponsorship and improved corporate contract arrangements. These new areas together with the savings generated by Best Value reviews and the work of the Bureaucracy Team will form the core of future plans.

C. Financial implications

As outlined.

D. Background papers

• Finance, Planning and Best Value - 2001/02 Approved budget - 20 February 2001

E. Contact details

The author of this report is Mick Debens.

For information contact:

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

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