Budget devolution and disaggregation

Report: 9
Date: 15 May 2001
By: Commissioner

Summary

This paper updates the Committee on progress made by the MPS in further devolving of budgets in 2001-02.

A. Recommendations

Members are asked to note:

1. the progress with budget devolution and disaggregation outlined in this report;
2. a further update will be produced in July.

B. Supporting information

1. The MPS is committed to achieving best value for money in terms of resources deployed and seeks to accomplish this through the devolution of financial management, control and accountability to the lowest level. To date the MPS has devolved 19.25 per cent (£415m) of its gross expenditure budget. It is recognised that it may not be practical to devolve some elements of the budget (e.g. pension payments).

2. Devolution is about placing the control of resources as close to people who control the service as possible. It is not about moving responsibility from the centre with inadequate funding and no authority to act.

3. Devolution is an evolutionary process and may entail a transitional phase before a budget is fully devolved to users in order to build up an adequate expenditure history or supporting information systems. It is therefore proposed that there be 2 categories of devolution; disaggregated and devolved budgets.

4. Disaggregated budgets are those viewed as being ultimately devolvable but currently lacking in terms of an adequate expenditure history or processes to produce appropriate information for local financial management (e.g. telephone call charges do not currently have call charge information by handset). In such instances it is proposed that the costs for these budgets be reported at the lowest appropriate level (ie: disaggregated).

5. Devolved budgets are those that are fully devolved and the responsibility of the local budget holder to manage.

6. Not all budgets will be suitable for devolution because of the nature of the expenditure. These should be excluded upfront in any consideration of the percentage of resources being devolved. It is suggested that the following budgets will not be suitable for devolution in the foreseeable future:

Police & civil staff pensions

£368m

Premature retirement/redundancy

£2m

Housing/rent allowance & compensatory grant

£108m

Levies for the National squads

£32m

Loan Charges

£16m

Total

£526m

7. This means that in reality the MPS currently has a devolvable budget in the region of £1630m and that the organisation has therefore currently devolved 26 per cent. All other percentages quoted in this paper will be against this revised devolvable total.

Police pay

8. At its seminar in November 1999, Management Board agreed that police pay should be devolved in 2000-01. Because of the considerable turbulence that was expected as the MPS changed to a two-tier organisation, a six-month moratorium was imposed to allow the budgetary position to be resolved. This was subsequently extended to the end of the financial year following the September Review.

9. For 2001-02 the intention remained that police pay should be devolved. However, in agreeing the 2001-02 budget, Members included a primary objective of increasing police officer numbers. The additional funding has been granted on the basis that it is used only for this purpose. This means that, despite the intention of the MPS to devolve, in order that the organisation can account for its use of the funding there can realistically be no local flexibility around police officer numbers or police pay budgets in 2001/02. If the MPS did devolve police pay it would amount to 51 per cent of gross devolvable expenditure.

Telephony and IT

10. Following the introduction later in 2001/02 of more detailed management information from the outsourced contractor budgets for telephone services charge (per handset), telephone moves and changes, telephone call charges and desktop support charges (by terminal) are to be devolved. Depreciation charges for asset items will be disaggregated.

Transport

11. The budget for hire of corporate vehicles (i.e. Coaches/vehicles for public order events) will be devolved to the Public Order OCU, as the main agent for the service.

12. It is not considered feasible, at present, to devolve the budget for vehicle supply and maintenance, because this covers a range of costs (depreciation, equipping, repairs and the cost of the TSD) with an insufficient expenditure history. Repair costs depend on where the vehicle is repaired (by the outsourced contractor or in-house), and such information may be commercial-in-confidence. Further research is therefore required before these budgets can be considered.

FSS charges/DNA testing/Forensic Medical Examiners (FMEs)/interpreters and translators

13. All these costs are driven by demand, but in many instances can still be influenced locally. It is proposed to pilot devolution of FMEs and interpreters & translators fees on a number of BOCUs in 2001-02. This will test the validity of devolving these items and the degree of local flexibility actually available in terms of decision-making. Expenditure on FSS charges and DNA testing will be disaggregated to all units to make cost transparent and in prepare for possible devolution.

Other budgets

14. A review of smaller corporate budgets currently held within Support Departments is being carried out to identify budgets that can be devolved.

Other developments

15. Work is continuing in conjunction with the MPA Treasurer to clarify the framework within which devolved budgets are managed. A Scheme of Devolved Budget Management will be developed which will cover:

• respective responsibilities;
• accountabilities;
• essential controls;
• scope of managerial discretion;
• budget development and management;
• flexibilities;
• monitoring;
• management information requirement;
• support arrangements;
• training.

C. Financial implications

There is no impact on the budget, but the above proposals will increase total devolved budgets to £466.5m, or 29 per cent of gross devolvable expenditure. The total disaggregated budget for the MPS (ie: reported locally at unit level) will be over 80 per cent.

D. Background papers

• Report to Finance Planning & Best Value - 2001-02 Approved Budget - 20 February 2001

E. Contact details

The author of this report is Craig Watkins.

For information contact:

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

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