Revenue budget monitoring 2002/03

Report: 05
Date: 10 April 2003
By: Commissioner

Summary

This report sets out the income and expenditure for the MPA/MPS to the end of February 2003 (Month 11) and provides an update to the projected financial outturn for the year.

A. Recommendation

That the Committee notes the contents of the report.

B. Supporting information

Introduction

1. The purpose of this report is to provide members with an update of the revenue budget position of the MPA/MPS for the financial year 2002/03. The statement attached at Appendix 1 reflects the year to date position for income and expenditure to February 2003 (Month 11) and provides a projected outturn position based on data collated in February.

2. Members will be aware that at the time this report is discussed, the 2002/03 financial year will have been concluded and work underway for the year end closure of accounts. The March accounting period will be kept open whilst the accounts are being closed and a further forecast based on Period 12 is not practicable. The final outturn will be reported to the July 2003 Finance Committee.

Overall position

3. The summary position is shown at Appendix 1, with a business group summary at Appendix 2. The year to date position at the end of February 2003 shows expenditure £27.7m below budget and income of £8.4m in excess of budget at the end of February 2003. This gives a net year to date underspend of £36.1m.

4. The forecast to the year-end shows expenditure remaining below budget by £13.3m. The reduction in the underspend on total expenditure reflects an increase in the rate of spending towards the year-end. Whilst this represents a normal general pattern of expenditure, the significant increase reflected in the forecast indicates a possibility that some of this expenditure will fall in the next financial year. The forecast for income also remains in excess of the budget with an overachievement of budget by £10.7m.

5. Overall there is a net under spending forecast of £24.0m. This is an increase of £4.1m from the previously reported forecast of a £19.9m underspend. The movement is primarily explained by additional income being forecast. There is also a reduction in the police pay forecast offset to some extent by an increase in the forecast spend on supplies and services.

Police pay

6. The forecast for expenditure on police pay shows a reduction from the last report and the forecast underspend for this item now amounts to £22.6m (£19.2m). This accounts for the bulk of the underspend in the overall forecast. The underlying reasons for reduced level of expenditure have been previously reported to this Committee. Appendix 3a sets out the progress in meeting the police officer recruitment target towards the overall budgeted level of 28,412 by 31 March 2003.

7. The extent of the increase in the forecast underspend suggests that some local budget managers are having difficulty producing an accurate forecast for police pay. This will need to be a focus for next year’s monitoring processes and it is likely that measures to strengthen reporting in this area will be needed.

Civil staff pay

8. This budget continues to show an underspend on the year to date as the effect of the recruitment freeze last financial year slowed the recruitment process in the early part of 2002/03. Whilst recruitment has since accelerated, factors such as enhanced security clearance for new staff continue to have an effect and the forecast underspend of £5.4m has increased from that previously reported (£4.0m).

9. Appendix 3b sets out an update on the number of civil staff posts that are formally filled by police officers. In addition police officers are also engaged in covering staff duties where this is required to complete essential tasks. As previously reported, information on numbers of these posts is not accessible but overall is likely to be of the same order as the posts formally identified.

Police overtime

10. The police overtime budget is projected to overspend by £0.5m. The pattern of expenditure on overtime is volatile and influenced by a number of factors, in particular additional demands arising from both planned and unplanned ‘stop the war’ demonstrations.

Police pensions

11. This forecast incorporates additional provision for the pilot scheme for payment of the commuted lump sum to officers with 30 years service, whilst they remain employed in the police service but otherwise is forecast at the full budget allocation. Members should be aware that, in agreement with the Treasurer, any underspending on pensions would be used to supplement the police pension provision. This strategy also applies to underspends on third party liabilities and will strengthen those areas in which the current under funding has led to the accounts being qualified by the District Auditor.

Service wide premises costs

12. Previous reports have identified additional costs in respect of Tintagel House, increased rates and expenditure to establish Charlton car pound. The forecast also allows for expenditure on backlog maintenance that was approved by the MPA to be met from the overall underspending in the current financial year.

Supplies and services

13. The forecast overspend reported for supplies and services have increased from the last report and this reflects the cumulative effect of local decisions to utilise devolved budgets in this area.

Income

14. The expected overachievement of business group income has increased to £6.8m (£4.9m) following agreement from the Home Office to fund a particular Special Branch operation (£0.5m), the inclusion of recently devolved income for receipts from the detention of illegal immigrants (£0.9m), and an agreement from the Palace of Westminster to reimburse backdated pay costs. Additionally, the anticipated overachievement of servicewide income has increased by £2.8m reflecting increased forecasts of receipts from money market investments and police pension contributions.

15. The Service has been exceptionally successful in generating income and although significant improvements in the way income is monitored and reported have been made, it is clear given the movement in the forecast that further improvements are still needed. This will be another area of major focus for monitoring and reporting in the new financial year.

Overall financial position

16. The full year forecast reflects a relatively satisfactory position with expenditure slightly below budget enhanced by an overachievement on income. This produces a total variation of a little over 1% of the full year budget. This forecast underspend, together with the additional resources likely to be available within the pensions and third party liability budgets, are expected to enable the Authority is to address significantly, if not entirely, the issue of the inadequacies of provisions which has resulted in the qualification of the accounts by the external auditor.

17. There are in addition a number of issues for which additional funding is required especially in relation to investment in the estate. Any surplus available beyond the sums required to remove the qualifications of the accounts could assist in addressing those issues. The overall position of the adequacy of reserves and provisions in the accounts will be considered further in consultation with the Treasurer as part of the year- end closure of accounts.

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 report.

E. Background papers

None

F. Contact details

Report author: Sharon Burd, Director of Finance, MPS.

For more information contact:

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

Appendix 3b

Police Officer Recruitment and Retention Summary

Appendix 3b

Police Officer in designated civil staff posts

Send an e-mail linking to this page

Feedback