2003/04 draft budget submission

Report: 6
Date: 14 November 2002
By: the Treasurer and Commissioner

Summary

The Committee has to approve the final draft budget submission to the Mayor. Following the meeting of the full Authority on 31 October 2002 final agreement is required to the list of savings to be reflected in the submission. Proposals from the MPS Management Board are included with this report. It is intended that specific recommendations will be circulated following an informal member meeting on 8 November 2002.

A. Recommendation

1. The Committee is recommended to approve the final 2003/04 draft budget submission including the final composition of the savings total of £25.4 million in the light of recommendations to be circulated following an informal member meeting on 8 November 2002.

B. Supporting information

Introduction

1. At its meeting on 31 October 2002 the full Authority approved the 2003/04 draft budget submission on the basis of the recommendation of the Finance Committee, subject to final review by this Committee before submission to the Mayor on 15 November 2002.

2. In particular the Authority agreed that the MPS bring forward options for achieving the required savings total of £25.4 million for approval by the Finance Committee following an informal member discussion on 8 November 2002, and that, in considering its approval, the Committee should have regard, inter alia, to:

1. the requirements under the PNB agreement to achieve savings against police overtime,
2. the potential perverse results of further savings against civil staff pay, and
3. a review of the assumptions underlying the provision for price increases.

3. The final draft submission is enclosed with this agenda for members. It comprises four discrete documents:

• Towards a Safer City. This will be provided in its original published form and is not circulated with this agenda.
• Equalities Policy and Budget.
• 2003/04 Revenue Budget and Medium Term Financial Projections.
• Five Year Capital Spending Plan

Draft revenue budget 2003/04

4. The approvals required following the Authority meeting relate exclusively to the 2003/04 revenue budget submission. Presentational amendments have been made to this submission in order to clarify the analysis of the budget proposals.

Savings

5. The principal area requiring the Committee’s agreement is the final composition of the efficiency savings, that have to total £25.4 million in order to achieve the agreed bottom line which retains a funding gap of £10 million. Savings of £17.2 million have already been identified and approved by the Authority leaving a remaining requirement of £8.2 million.

6. Options to contribute to this requirement have been put forward by the MPS Management Board and are set out in Appendix 1. There will be an informal member discussion on 8 November 2002 and specific recommendations will be formulated following that meeting.

7. The Authority’s resolution asked the Committee to have specific regard to three areas and these are considered in the following paragraphs.

Police overtime

8. The PNB agreement on police pay and conditions as part of the police reform programme includes a requirement for a 15% reduction in police overtime over the next three years. Guidance has only recently been received from the PNB on the interpretation of this reduction upon police authorities. However, the basis for calculating the reduction is still unclear, with many local factors to be considered in arriving at the target for the MPS. An estimated saving for 2003/04 is considered to be £2.5 million.

9. Further savings have also been identified from the Accenture review of overtime under the efficiency and effectiveness programme but these relate to the change in police regulations to require receipted claims for subsistence. At this stage, there is still no clarity on the impact of this change, or indeed whether a saving would in fact be achieved.

Civil staff pay

10. A reduction of £10 million was made against civil staff pay in the 2002/03 budget. This appears to have contributed to an increase in the number of police officers covering administrative roles, most notably in Territorial Policing.

11. It is likely that further reductions in civil staff numbers, unless targeted on functions that can be discontinued or in areas not directly supporting police officers, will also lead to officers being withdrawn from operational duties. This would be contrary to the MPA’s policy and the Mayor’s objectives.

Provision for price increases

12. The draft budget has built in an assumption of 2.5% for price increases on non-pay headings. The underlying rate of inflation (RPI excluding mortgage interest payments) has been running between 1.5% and 2.5% over the last twelve months with an average of 2%. The past is not necessarily a good guide to the future and inflationary pressures may impact more heavily in some areas. There may, however, be scope to consider a reduction in the current budget assumption and this should be reviewed after the grant settlement has been announced, provided a satisfactory list of savings is approved to balance the submission on the agreed basis.

Conclusion

13. The Committee is asked to consider the options set out in Appendix 1 in the light of the recommendations to be circulated following the informal member meeting on 8 November 2002.

14. There will be a further review of the 2003/04 draft budget in December following the announcement of the grant settlement.

C. Equality and diversity implications

These are specifically addressed in the equalities section of the budget submission.

D. Financial implications

The budget submission forms part of the process for determining the Authority’s budget for 2003/04.

E. Background papers

• MPA/MPS Budget Files

F. Contact details

Report author: Peter Martin, MPA.

For more information contact:

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

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