Revenue monitoring 2002/03

Report: 07
Date: 27 September 2002
By: Commissioner and Treasurer

Summary

This report sets out the actual income for the MPA/MPS to the end of July 2002 (Month 4) and provides an update to the projected financial outturn for the year.

A. Recommendations

That

1. Members note the contents of this report.
2. That the revised presentation of the Summary at Appendix 1 be endorsed for use in future reports.
3. Approval is given to cease seeking savings from the areas identified at paragraph 19.

B. Supporting information

Introduction

1. The purpose of this report is to provide members with information on the revenue budget position of the MPA/MPS for the financial year 2002/03. This is the first revenue monitoring report for this year, and includes the additional funding notified after the budget had been approved. To this end the presentation has been varied to enable a trail back to the original Budget Book figures.

2. The expenditure associated with the additional funding of £60.091m, as set out in the footnote of Appendix 1, has been analysed and a revised budget established. It is proposed that forecasts for the year be measured against this revised budget. Members are asked to endorse this approach.

3. The statement attached at Appendix 1 reflects the actual position for income and expenditure to July 2002 (Month 4) and provides a projected outturn position based on these actual results and current information available regarding the remainder of the year.

Overall position

3. The summary position is shown at Appendix 1, with a Business Group summary at Appendix 2. These statements show a forecast underspend of £7.3m (0.3% of the Net Revenue Budget), and an underspend of £4.8m for the year to date.

Headline issues

Police pay

4. This budget line shows an overspend of £0.4m for the year to date, with a projected underspend of £1.9m for the year. This underspend for the year recognises the effect of the PNB agreement of a 3% increase for police officers, where 3.5% had been budgeted, a £2.4m saving against the 2002/03 budget.

Civil staff pay

5. While the Civil Staff Pay budget has been reduced by £10m as part of the 2002/03 savings target the budget line is showing an underspend of £2.4m for the year to date, projected to £4.8m for the year. A major contribution to this underspend is the recruitment freeze which was in place at the end of May.
6. Members will note that this freeze together with the application of a vacancy factor for 2002/03 (to meet savings target) has led to the spread of this underspend between Business Groups being disproportionate. Business Groups with fundable vacancies are actively recruiting.

Police overtime/MPA holdback

8. As part of the budget allocation process for 2002/03 £10m was held back and not made available to the MPS. This holdback (see Table 1 below) includes £2m for Police Overtime. The agreement between the Treasurer and the MPS is that the MPS should continue to plan on the basis that this £10m will be released, and reflect this in the forecasts. When considering the reported £1.9m overspend forecast for Overtime, this needs to be done within the context of the £2m holdback, i.e., a £1.9m overspend on release of this holdback will revert to a minor underspend.

9. This position for holdback also applies to other budget lines. The makeup of this holdback is set out in Table 1 below:

Table 1 – MPA holdback 

10. The release of this holdback will be reviewed in the light of the forecast position after six months. The forecasts by Business Groups reflect a positive outcome to these considerations. The corresponding (matching) forecast for the holdback can be seen at the base of the ‘Running Expenses – Service Wide’ section of the statement (Appendix 1).

Housing/rent allowances

11. The forecast overspend of £2.3m is currently under review within the MPS to validate this position. This will be reported on further at the next meeting of this Committee.

Employee related expenditure

12. This variance of £1.6m reflects in the main increased officers seconded on national activities. This increased cost is fully match funded in the service wide income reported towards the bottom of the statement. (Appendix 1.)

Service wide premises costs

13. The main drivers for this overspend are the estimated additional revenue costs for Tintagel House (£2m 2002/03), the impact of the MPA holdback (£2m see 9 above), and the cost of establishing Charlton Car Pound (£1.5m). This latter overspend is forecast to be met from other savings in the Vehicle Removal and Recovery Team budget and are included against other budget lines elsewhere in the statement.

Income

14. The forecast for income is being given greater attention this year. The outturn position for 2001/02 indicated that there was insufficient understanding and rigour in relation to Income.

15. The revised presentation at Appendix 1 highlights the forecast partnership income (£6.9m), and the associated planned spend. Overall income is showing an over achievement by £4.1m excluding the effect of partnerships (£6.9m). Together partnerships and other activities are forecasting in excess of £11m additional income for the year. Members are reminded that income forecasts should be treated with caution.

Budget priorities update

Police officer recruitment and retention

16. Detailed reports on recruitment and retention are to be submitted to Human Resources Committee. Table 2 below sets out a summary of the current position:

Table 2 – Recruitment and retention summary

Budget savings

17. The Budget Change Team has been monitoring the individual savings themes formally approved by the MPA the latest predictions show savings of £59.067m being achieved. Work continues to ensure the target of £60m is realised. 

18. Although the savings target is £60m work continues to pursue all themes to create a safety zone. Much time, however, is being expended upon themes that are either unlikely to deliver, or would have direct impact on the operational efficiency of the service. Some of the delivering themes may actually over-achieve, e.g., pension transfer payments and possibly HMIS recharge.

19. Following discussion at the Budget Group (chaired by Graham Tope) the following items were recommended for no further action this year:

1. Air Support Unit theme - £1.073m due to the operational impact. A detailed assessment has been made determining the impact would far outweigh the available savings.
2. Cancellation of rental of sites for aerials theme - £750k, the MPA policy position means that this cannot generate savings in the actual year. If the theme is approved for progressing then additional income to be brought into 2003/04 budget consideration.
3. Cancel the theme to terminate Charter Line - £39k – proposals were already incorporated into the savings on civil staff.
4. Cancel the theme to cut/realign internal consultancy - £276k - proposals were already incorporated into the savings on civil staff.
5. Reducing the target for increasing rents to staff from £400k to £171k – rent increases approved by the MPA of 4.47% will only realise savings of £171k. If further savings are to be made it will require an additional increase in staff rents.

Reducing the target on the traffic wardens theme by £865k from £5.312m to £4.447m. The original total savings had included on costs that could not be saved in practice.

20. When considering these changes to saving themes Members are reminded that the original target was set at £63.8m, providing cover for slippage in some areas. These affect of these amendments reduce the total identified savings from £63.8m to £60.6m.

C. Equality and diversity implications

There are no equality and diversity implications arising from this report.

D. Financial implications

The financial implications are those set out in this paper.

E. Background papers

• The MPA Budget Book 2002/03

F. Contact details

Report author: Kevin Geeson, Head of Corporate Finance.

For more information contact:

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

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