Capital Programme 2001/02 – provisional outturn

Report: 10
Date: 29 May 2002
By: Commissioner

Summary

This report provides details of the provisional outturn position for capital expenditure during 2001/02. An early indication is also given of the level of underspend likely to be required for carry forward to 2002/03. Approval for the eventual level of carry forward will be sought as part of the final outturn review to be submitted to this Committee in July when the 2001/02 final accounts process has been completed.

A. Recommendations

The Committee is invited to note that:

Provisional outturn figures for capital expenditure in 2001/02 are shown in Table 1 (see paragraph 1).

The reported outturn figures are provisional and may change as part of the process for finalising the 2001/02 accounts (paragraph 2). Adjustments are required to achieve consistency of accounting and compliance with the Local Government and Housing Act 1989 as explained in paragraph 3.

B. Supporting information

There is one appendix to this report:

• Appendix 1: Capital Expenditure by Project 2001/02 (see Supporting material)

2001-02 budget, expenditure and forecast

1. A provisional outturn of £66.181 m. is recorded against the 2001/02 revised capital budget of £89.039 m. This represents an underspend of £22.858 m. (25.7 %). Present indications are that £16.400 m. of this sum will need to be carried forward to 2002/03. The £16.400 m. comprises £9.847 m. in respect of the C3i Project and £6.553 m. resulting from the re-phasing of IT schemes. The summary position is set out in the Table 1 below.

Table 1

2. Outturn information is provisional at this stage as the final accounts process for 2001/02 is continuing. The reported position is likely to change reflecting the need for adjustments to bring the final accounts process to a conclusion.

Appendix 1 provides a detailed statement of provisional outturn information based on expenditure during 2001/02 as recorded as at 9 May 2002.

Confirmation of the final expenditure position, together with a detailed summary of progress in respect of capital projects, will be provided to the Committee in July as part of the final outturn review.

3. In order to ensure consistency of accounting between the 2001/02 accounts and those for the previous year, and to ensure compliance with the definitions of capital expenditure contained in the Local Government and Housing Act 1989, an adjustment is required to capitalise the acquisition of equipment (£5.199 m. for Transport and DoI). This adjustment has neutral implications for both revenue and capital funding and is excluded from the figures quoted below.

Property Services Department

4. Four projects were approved by the Committee to be added during 2001/02 to the initial budget for the property element of the capital programme. These were:

• three schemes relating to the refurbishment of accommodation for training and residential purposes in association with the increased recruit intake at Hendon. The schemes are Rowan Drive Hostel Accommodation (£0.888 m.), Mill Hill Residential Accommodation (£0.502 m.), and Farrow House Classroom Conversion (£0.150 m.); and
• initial consultancy fees (£0.300 m.) associated with the refurbishment of Tintagel House.

5. Property Services Department has recorded a spend of £31.123 m. against its revised capital budget of £30.540 m. This represents an overspend of 0.583 m., or 1.9 %. A breakdown of this position for each category of the capital programme is provided in Table 2 below.

Table 2

6. The main building programme consisted largely of alteration and improvement schemes. Budgeted costs for the year were £28.340 m. The outturn shows actual expenditure of £30.455 m., an overspend of £2.115 m. (7.5%). A number of projects proceeded ahead of schedule due to the success of 'partnering' arrangements with the main contractor. Such schemes included

• East London Serious Crime Group Headquarters and Flying Squad accommodation;
• West London Serious Crime Group Headquarters; and
• conversion of the medical centre at Hendon (including additional works) for recruiting purposes.

The overspend was balanced by reductions in respect of

• rescheduling of the front office refurbishment programme due to clarification of the Disability Discrimination Act requirements; and
• delay to the commencement of the Wembley Police Station and Section House Refurbishment Project.

7. The minor works programme and other Property Services Department expenditure had an allocation of £2.200 m. An outturn of £0.668 m. is presently recorded representing an underspend of £1.532 m. This was primarily due to the requirement for a virement of budgetary provision from non-urgent works to major projects to reflect the success of the new partnering contractual arrangements.

8. As previously notified to the Committee, schemes additional to the initially agreed budget will be funded from increased capital receipts arising from the resumption of the sale of specific properties. For Farrow House, a revenue contribution to capital was agreed by the Committee at its January meeting.

9. Expenditure in respect of the second phase of the redevelopment of Rowan Drive Hostel was brought forward from 2002/03 to 2001/02. This was required in association with the ongoing recruiting campaign for additional police officers. Expenditure was initially met from capital reserves but will be replenished during 2002/03 by a corresponding shortfall in the take up of the Property Services Department allocation for that year.

10. For the purposes of this report, consultants' fees, as recorded within the 'provisional outturn' column of Appendix 1, are included within individual project figures and not shown as separate items.

Transport Services Department

11. Transport Services Department spent £10.897 m. This represents an underspend of £0.409 m. (3.6 %) on a revised budget of £11.306 m. Additional expenditure on station vans brought about by a delay in the purchase programme has been more than compensated for by a reduction in the replacement of cars. The outturn reflects (a) a saving of £0.100 m. arising from a review of the specifications of the Thames Fleet; and (b) savings agreed through the MPS Star Chamber in the revenue and capital transport budgets for 2001/02.

Directorate of Information

12. The approved capital budget for IT Projects is £46.799 million which includes two projects approved for addition to the 2001/02 original programme. These were:-

• Resolve 2, which relates to the provision of an upgrade to the back-up facility for the Information Room (£1.200 m.); and
• the implementation and development of the National Intelligence Model (£0.999 m.);

13. The headline outturn for the Directorate of Information records expenditure of £23.420 m.. This represents an underspend of £23.379 m. However, after excluding sums included within the allocation in respect of the C3i Project the underspend reduces to £13.532 m. against an allocation of £35.099 m. as shown in Table 3 below.

Table 3

14. Of the contingency sum of £10.000 m. held within the Directorate of Information's budget for the C3i Project only £1.709 m. was spent. With the recent Home Office announcement regarding C3i funding, the remaining £8.291 m. is still required to enable the project to be fully funded at the current projected cost. A budget of £1.700 m. was also allocated during 2001/02 to meet ongoing liabilities, but of this only £0.144 m. was spent. Accordingly, a formal recommendation will be placed before the Committee in July - as part of the final capital outturn report - to carry forward the remaining balance (currently £9.847 m.) to be available for the C3i Project in 2002/03.

15. The underspend in respect of the IT development programme was attributable to (a) management negotiations with suppliers over specification issues; and (b) the MPS Star Chamber's remit to find substantial revenue savings. The latter objective was achieved through a deliberate 'slow down' in the capital works programme that enabled savings to be made in areas of revenue expenditure that are driven by capital development (e.g. consultancy support and low value equipment purchases).

16. The medium term capital programme for 2002/03 to 2005/06 was submitted for approval by the Committee on 18 April. Within this report it was noted that sums arising from the re-phasing of projects would be required to be carried forward to be reallocated in 2002/03. Present calculations indicate that £6.553 m. of the £13.532 m. noted in the concluding sentence of paragraph 13 will be required in this way. Approval to this course of action will be sought as part of the final outturn review to be received by the Committee in July.

Other capital budgets

17. Other capital budgets, held by a variety of business groups, recorded an overspend of £0.347 m. against a budget of £0.394 m. This overspend is largely accounted for by the purchase of photographic equipment by SO3 Branch. It is understood that a specific grant from the Home Office has facilitated the purchase of specialist processing and printing equipment beyond the allocated budget.

Capital receipts

18. The outturn for capital receipts in respect of the sale of land and buildings was £31.026 m. This is £5.926 m. in excess of the revised budget figure of £25.100 m. and arises from changes in market conditions together with the resumption of the sale of specific properties.

C. Financial implications

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

D. Background papers

Corporate Finance – 2001/02 Capital Budget Files.

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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