Draft medium term capital programme 2002/03 to 2005/06

Report: 9
Date: 4 October 2001
By: Commissioner and Treasurer

Summary

This report provides details of the draft capital programme for 2002/03 to 2005/06 in keeping with the medium term funding limits for business groups as approved at the July meeting of the Committee. It also provides the revenue implications of the proposed capital programme 2002/03 to 2005/06 and gives information on capital projects which fall to be funded from specific grants and capital receipts additional to the main capital programme. It is intended that the draft programme will become the approved programme following endorsement by the MPA on confirmation of available funding for 2002/03 during the autumn of 2001.

A. Recommendations

The Committee is invited to:

1. note that based on the business group allocations as agreed for planning purposes by the Committee at its July meeting (paragraphs 2 and 3 refer) an indicative capital programme for 2002/03 to 2005/06 has been prepared (paragraphs 4 to 13).

2. note that the Transport Fleet Strategy is presently in draft form and may impact upon the medium term capital programme (paragraph 12).

3. note that the funding assumptions underpinning the medium term capital programme remain unchanged and will be kept under review (paragraphs 14 to 15).

4. note that named capital projects to be funded from sources additional to those of the main programme will be undertaken during the medium term planning period (paragraphs 16 to 20).

5. note that consideration is being given to the establishment of a contingency for opportunity purchases by the Directorate of Property Services and that approval for any proposals will be sought in due course (paragraphs 21 to 22).

6. note that the revenue implications of the proposed capital programme 2002/03 to 2005/06 will be incorporated within relevant operating budgets (paragraph 23).

7. approve the methodology for sanctioning information technology projects for inclusion within the medium term capital programme (paragraph 9).

8. approve the indicative medium term capital programme (Appendices A to C). Note that final approval of the capital programme 2002/03 to 2005/06 will be sought from the Committee in January 2002 following review of detailed proposals by the Estates Sub-committee and the IT Sub-group, and in the light of the local government finance settlement.

B. Supporting information

There are three appendices to this report. They are available from the Supporting material section below.

Appendix A: Draft capital programme 2002/03 to 2005/06 

• A1 - Directorate of Property Services 
• A2 - Directorate of Information 
• A3 - Directorate of Managed Transport Services 
• A4 - Miscellaneous capital projects

Appendix B: Information technology capital projects awaiting approval for inclusion within the draft capital programme 2002/03 to 2005/06

Appendix C: Capital projects 2002/03 to 2005/06 to be funded from specific grants and capital receipts additional to the main programme.

Capital programme 2002/03 to 2005/06

1. At the November 2000 meeting of the Committee a funding limit of £225m for 2002/03 to 2005/06 was agreed for planning purposes. This sum was profiled across relevant financial years as follows:

This process recognised that achieving a sustainable medium term capital programme depended upon (a) the overall available level of funding to support the capital programme and (b) the relative allocations which should be made to support defined categories of asset purchase/enhancement.

2. At the July meeting of the Committee it was further agreed that the medium term capital programme would follow a defined methodology with regard to allocation across business groups. This determined that the vehicle replacement programme should be fully funded. The remainder of the profiled sum would be allocated to business groups (excluding Transport) on their pro-rata share of the 2001/02 capital programme. The allocations for individual business groups that resulted from this process were as follows:

3. The setting of budget limits for individual business groups was adopted to achieve a balance of proposed projects within available resources. Business groups engaged with operational staff throughout the MPS to verify the respective priorities of the various capital projects put forward for consideration. Precedence was necessarily given to (a) those schemes to which the MPA is contractually committed; and (b) projects deemed essential to the delivery of significant efficiency gains. The current and emerging policing plan priorities were also considered.

Directorate of Property Services

4. A sub-committee of the Estates Policy Group was formed to discuss priorities for the property capital programme. Precedence was given to those schemes which (a) were already underway; and (b) were noted as having the highest priority due to (i) supporting operational objectives; (ii) ameliorating inadequate/dilapidated accommodation; and (iii) providing significant revenue savings. Details of those projects to be included within the draft capital programme 2002/03 to 2005/06 are shown at Appendix A1.

5. The contractual position of each project has inevitably had a significant impact on the prioritisation process. For those schemes which could not be accommodated within the medium term plan due to funding constraints nominal commencement dates beyond 2005/06 have been identified. The ability of the MPA to approve such schemes will depend on (a) the available level of funding to support the capital programme during future years and (b) the relative allocations afforded to business groups to support asset purchase/enhancement. 

6. The detailed proposals will now be reviewed by the Estates Sub-committee before this Committee gives final approval to the medium term capital programme in January 2002.

Directorate of Information

7. The Directorate of Information has prioritised against the need to deliver the information strategy. This categorisation incorporates those schemes (a) to which the MPA is contractually bound; (b) that represent ongoing developments; and (c) that directly support efficiency initiatives. The total estimated cost of these projects for 2002/03 to 2005/06 is shown in the table below

Details of the information technology projects classified as essential are noted at Appendix A2

8. For the remainder of the information technology allocation further consideration is needed to identify schemes for inclusion in the draft programme. It is also recognised that slippage in respective of projects delayed from prior years will need to be taken into consideration. The Committee will be aware that the Directorate of Information has given an undertaking to achieve a reduction of £5.4m in the gross value of IT projects to achieve its budgeted allocation for 2001/02. Projects which cannot be accommodated within the 2001/02 programme will need to be given ‘first claim’ on available funding in 2002/03.

9. A list of information technology schemes not classified as essential and seeking inclusion within the draft medium term capital programme is attached at Appendix B. To be incorporated within the programme it is expected that projects will be ratified by the Information Management Steering Group prior to being approved by this Committee in January 2002. 

10. The IT programme should be subject to member scrutiny through the IT Sub-group before final approval by this Committee.

Directorate of Managed Transport Services

11. As agreed by the Committee, the Directorate of Managed Transport Services allocation is based on the assumption that a like for like replacement programme will continue. With the exception of a small allocation for replacement boats, the allocation for year 2003/04 and beyond has not been analysed across cars, vans and/or motorcycles. This is because any restructuring of the fleet will be contained within the overall allocation. Transport figures are listed at Appendix A3.

12. The Transport Fleet Strategy is presently in draft form. It will be necessary to review the planning assumptions for the draft capital programme when the implications of the Strategy have been assessed. The Transport Fleet Strategy will be subject to scrutiny by Management Board and the MPA prior to implementation.

Other miscellaneous capital projects

13. Details of other miscellaneous capital projects are shown at Appendix A4.

Funding

14. In preparing this report funding assumptions on police capital grant and supplementary credit approvals (SCAs) over the medium term remain unchanged. Allocations of capital grant and SCAs for 2002/03 will be announced by the Home Office as part of the local government finance settlement due at the end of November. It is not anticipated that these will differ significantly from the assumptions incorporated in the current funding projections. However, the programme will be reviewed in the light of the settlement details and the Committee will be asked to give final approval to the capital programme 2002/03 to 2005/06 at its meeting in January 2002. Progress on the development of a new prudential code for capital finance will continue to be monitored but it is unlikely that this will be implemented for 2 - 3 years.

15. It should be noted that in 2001/02 additional capital receipts of £13m - arising from the resumption of the sale of residential properties - are presently forecast. Whilst some of this increase has been utilised to fund £1.3m of property schemes in 2001/02 the remainder will increase the projected level of capital reserves as at 31 March 2002. The Committee has agreed that these additional resources will continue to be held pending urgent unforeseen capital requirements.

Capital projects funded from additional sources

16. Capital expenditure on implementation of the C3i Project is presently estimated over the medium term at £154.3m. A bid of £147.5m has been made to the Home Office to meet capital expenditure requirements. The shortfall is expected to be bridged by use of the £10m. contingency sum for the C3i Project within the 2001/02 programme.

17. The forecast capital receipts which have been used to determine the total funding available for the 2002/3 to 2005/06 capital programme do not include the planned sale of Trenchard House. Of the expected proceeds elements have been earmarked to meet refurbishment costs at (a) Tintagel House; (b) Maurice Drummond Section House; (c) Norman Kendall Section House; and (d) Resolve 2 (temporarily funded in 2001/02 from capital receipts) Funding of the proposed improvements to locker and shower room accommodation will be considered during the Autumn and before final approval for the capital programme is sought from this Committee in January 2002.

18. Implementation and running costs for Airwave (The National Police Radio System) are expected to be funded by special capital and revenue grants to be provided by the Home Office.

19. Details of capital projects to be funded from specific grants and capital receipts additional to the main capital programme 2002/03 to 2005/06 are shown at Appendix C.

20. The MPA is a partner in the private finance scheme involving the replacement/ refurbishment of the Repository at Hayes. It is expected that development costs will be borne by the private sector without a capital contribution from the MPA. However, should it prove necessary to disengage from the formal discussions a conventional procurement route may be indicated. No provision for this eventuality has yet been made in the draft medium term programme.

Other budgetary pressures

21. The Public Finance Initiative (PFI) continues to be recognised as the main method for provision of new/replacement police buildings. Nevertheless, private venture interest in development projects in certain areas of London is small and should opportunities arise to purchase suitable land it is regarded as prudent to resume in-house building schemes. The MPA Treasurer is also about to commence a review of the use of PFI in the MPS.21. 

22. Accordingly, consideration is being given to the inclusion within the programme of a contingency sum for opportunity purchases. Discussions are being conducted with the Directorate of Property Services on how this could best be accommodated within the resources available and proposals will be reviewed by the Estates Sub-committee. This Committee is asked to note that consideration is being given to this issue and that approval for any resulting proposals will be sought in due course.

23. Appendices A and B provide full details of the revenue costs associated with implementation of the listed capital projects. Such information has been incorporated within the revenue programme.

C. Financial implications

Financial implications are discussed in the main body of the report.

D. Background papers

• Background papers Corporate Finance - Draft medium term capital programme 2002/03 to 2005/06

E. Contact details

Report author Bob Alexander, Head of Finance, MPS.

For information contact:

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

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