Revenue budget monitoring 2003/04

Report: 05
Date: 15 September 2003
By: Commissioner

Summary

This report sets out the income and expenditure for the MPA/MPS to the end of July 2003 (Month 4) and provides an update to the projected financial outturn for the year.

A. Recommendation

Members are asked to note the contents of this report

B. Supporting information

Introduction

1. The purpose of this report is to provide an understanding of the revenue budget position of the MPA/MPS for the financial year 2003/04.

2. The statement attached at Appendix 1 reflects the year to date position for income and expenditure to July 2003 (Month 4) and provides a projected outturn position based on these actual results and current information available regarding the remainder of the year. The statement at appendix 2 provides the projected outturn position against the annual budget for each of the business groups.

Overall position

3. The summary position is shown at Appendix 1. The statement shows an underspend of £0.3m for the year to date and a forecast underspend for the year of £5.2m.

Headline issues

Police pay

4. This budget line shows an underspend of £0.8m for the year to date, with a projected marginal underspend of £1.5m for the year. Since last reported the projected annual spend has reduced by about £2m; this is a relatively small shift on the overall police pay budget and results from minor changes in local assumptions about unit costs and deployment. The corporate calculation of police pay is broadly in line with that provided from the business but it is closer to budget. Human Resources remain of the view that the MPS is on target to achieve its overall recruitment target.

5. The forecast does not yet reflect the proposed pay settlement of 3% which is lower than the 3½% assumed in the budget. Forecasts will reflect this when there is greater certainty over the final settlement.

Civil staff pay

6. Civil staff pay is showing a year to date underspend of £1.7m and a forecast underspend of £5.8m. Commentaries provided by budget holders indicate that the Service is still encountering recruitment difficulties in some areas.

Police overtime

7. The position on police overtime is of concern. The year to date position and forecast show significant overspends of £8.5m and £11.0m respectively. These amounts exclude any overtime to be funded by additional specific funding such as Street Crime Initiative and through partnerships. In view of the current position it is unlikely that the MPS will achieve the budget reduction required under the PNB agreement. To do so, overtime would need to underspend against budget by £8.5m over the remainder of the financial year.

Pensions

8. We are not reporting a year to date or forecast variance for police pensions. This is to reflect the potential need to use any underspend to strengthen the Pensions Smoothing Reserve to help manage future peaks in pensions expenditure. Currently the underlying forecast underspend in police pensions is £6.3m.

Running expenses

9. The only major area of budget variance is the payment to ATOC for free rail travel for police officers plus an estimate of the MPS increased tax liability which is still under negotiation with the Inland Revenue. In view of this £6.8m of non-pay inflation has been retained centrally to cover this cost. Other running expenses forecasts are in line with budgets.

Income

10. Business Group income is showing a forecast over recovery on budget of £2.3m which is mainly due to increased recovery of additional expenditure from third parties for the provision of additional services. Service wide income is forecast to over achieve the budget by £9.9m. This is mainly due to favourable projected receipts for investment income of £2m and pension contributions and transfer values of £5m.

11. The extent to which income budgets could be increased to assist with next year’s projected funding gap is being actively considered.

Budget savings in 2003/04

12. As part of the exercise to balance the 2003/04 budget the MPA/MPS identified savings of £25.8m. These savings were reflected in reduced budgets. Table 1 shows the forecast level of achievement against plan by business group and table 2 shows those areas in which the MPS is not anticipating achieving the savings.

Table 1 – Progress against savings targets

Table 2 – Savings targets not forecast to deliver

Additional high priority growth in 2003/04

13. The MPA approved growth in a number of high priority areas in 2003/04 of £10.2m. The MPS is broadly on target to achieve growth in these areas and additional budgets will be fully spent. The MPA is anticipating a small underspend in the elements approved for recruitment of a number of posts as these have been vacant for longer than anticipated.

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 Services, MPS.

For more information contact:

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

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