Review of budget priorities 2001/2

Report: 13
Date: 19 June 2001
By: Treasurer

Summary

The report identifies a number of unbudgeted priorities but suggests that the financial position for the current year is too uncertain to allow any to proceed at this stage.

A. Recommendation

It is recommended that no new commitments are entered into at this stage in respect of Policing Plan priorities not included in the original budget for 2001/02, but that the position be reviewed again in October.

B. Supporting information

Introduction

1. Following the approval of the 2001/02 budget by the Mayor and Assembly in February 2001, the Committee decided that there should be a review of how funding might be made available for priority items in the policing plan for which no additional provision had been made in the budget. This review was requested for this meeting.

Unbudgeted priorities

2. The following development items which were included in Appendix D to the budget report considered by the MPA on 14 December 2000 have been identified which might be considered in this context if funding were available:

• Consultation (£1m)
  The findings of the Best Value review were not accepted at that stage and therefore no additional resources were provided in the budget. Subsequently there is a wish to pursue some changes on a pilot basis and a proportion of the development bid would enable these to be funded.
• Rape havens (£0.75m)
  Rape is specifically included under 'hate crimes' in the plan's priorities. This would fund developments to support that priority. A separate report on this issue appears elsewhere on this agenda.
• Accommodation improvements to support Borough-based policing (£2.865m)
  This was one of two headings that the MPA identified should benefit from any additional resources that might become available during the budget process.
• Funding for partnerships (£1.3m)
  The second heading supported by MPA members for additional funding if possible.

Potential funding

3. Funding to enable any of these unbudgeted priorities to go ahead in the current year would have to come from savings elsewhere in the budget. At its meeting on 8 March the MPA set aside a sum of £5 million, comprising savings from court warrants execution (£3m) and employers national insurance contributions (£2m), as a contingency under the control of the MPA. The Authority on 19 April agreed a commitment of £0.9m (£1.5m in a full year) against the contingency in respect of the Finance Dept restructuring. This was seen as urgent and a necessary precondition for the essential improvement of financial management in the MPS. This suggests that there is £4.1 million still available in the contingency for the current year, £3.5 million on an ongoing basis.

4. However any review of available funding must take place in the context of the overall financial position. There are already a number of known budget pressures in 2001/02 as follows:

• Housing allowance anomalies (£3.3m)
  Additional payments were agreed by PNB to address this issue. There is no budget provision for this.
• Tax liability on free rail travel (£1.1m)
  Again there is no budget for this commitment.
• Interest on balances
  Owing to less favourable cash flow and falling interest rates it is likely that investment income will fall short of the budget by £1-2 million (see the report on Treasury Management on this agenda)
• Vehicle removal contract
  Action is taking place to recover control of this contract. Even so the budget is likely to be exceeded in the current year by several million pounds.
• Vehicle maintenance and repair contract
  A number of contract variations are being claimed by the provider following changes in the mix and composition of the MPS fleet. These would require funding if the claims are found to be valid.
• Efficiency savings
  A substantial proportion of the £18.5 million target for efficiency savings has still to be identified.
• Budget headings which were overspent in 2000/01 must be at risk in the current year
  This would include police overtime, DNA, FMEs, interpreters, IT.

5. Although some budget headings may have a potential to underspend it is too early in the year to quantify them with any certainty.

Conclusion

6. At this stage of the year there are significant risks that the budget will be overspent rather underspent. It would therefore be imprudent to enter into new commitments however desirable. It is suggested that this issue should be revisited in October when it can be considered in the light of a better understanding of last year's outturn, monitoring information on the current year and in the context of next year's budget planning.

C. Financial implications

None.

D. Background papers

• Report to Full Authority - Budget 2001/02 - 14 December 2000

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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