Revenue budget monitoring 2003/04

Report: 05
Date: 20 November 2003
By: Commissioner

Summary

This report sets out the income and expenditure for the MPA/MPS to the end of September 2003 (Month 6) and provides an update to the projected financial outturn for the year.

A. Recommendation

1. Members are asked to note the contents of this report.
2. Members are asked to approve the virement of £1.290m as set out in paragraph 17 of the 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 September 2003 (Month 6) i.e. the mid year point, 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 £6.2m for the year to date and a forecast underspend for the year of £8.4m.

Reinstatement of overtime

4. As previously reported Finance Services undertook a review to determine the reasons why some business groups reduced their devolved overtime budget as allocated during the local budget setting stage. The outcome of the review was that the reductions made during the allocation of devolved budgets to cost centres needed to be reversed.

5. In order to make this reversal as transparent as possible the monitoring statement now starts from the budget as approved by the GLA on 12 February and all movements from that budget to the revised budget are shown. The revised budget for police overtime is now £112.7m and includes the reversal of changes made at the start of the year of £8.6m and the allocation from Street Crime Initiative of £7.7m and the inclusion of £700,000 of overtime to be funded under Phase 2 of the TfL agreement to fund the Transport OCU. This movement has inevitably changed the previously reported variance position on other areas of spend, in particular the underspend on police officer pay and police staff pay has decreased and the overspend on police staff overtime has increased.

Headline issues

Police Officer pay

6. This budget line shows an underspend of £800,000 for the year to date, with a projected underspend of £1.5m for the year. The forecast underspend has reduced by £4.1m due to the movement of budget back into overtime as set out in paragraph 5 above.

Police (Civil) staff pay

7. Civil staff pay is showing a year to date underspend of £4.2m and a forecast underspend of £8.0m. The Director of Resources has requested a report to the Resources Allocation Committee on 2 December on the reasons for the underspend and difficulties in recruitment within business groups. Initial indications still point to delays in security clearances being a major cause of the continuing underspend. Such recruitment difficulties are also impacting adversely on police staff overtime and on MPS income (as reported in paragraph 12 below)

Police overtime

8. Having reversed changes made to the overtime budget during the process of setting local devolved budgets, the position on police overtime has improved significantly from that reported previously. The year to date position and forecast show overspends of £6.8m and £4.9m respectively. Commentaries from the business groups attribute this overspend to various operational pressures including need for increased security and protection levels. A more detailed report on police overtime appears elsewhere on this agenda.

Pensions

9. We are not reporting a year to date or forecast variance for police pensions expenditure. 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 £8.8m.

Running expenses

10. Running expenses as a whole are forecast to overspend by about £10.8m. This includes additional supplies and services costs of £7.6m, transport costs of £3.0m and premises costs of £1.6m. Some overspends such as Payments to Civil Service Occupational Health Scheme (CSOHS) are matched by additional income.

Income - update

11. Business Group income is showing a forecast over recovery on budget of £4.7m which is mainly due to increased recovery of additional expenditure from third parties for the provision of additional services. These include additional Immigration Service receipts of £0.8m and reimbursements of £1m from Home Office and F&CO that had not previously been forecast. Unbudgeted income from forfeiture amounts to £1m.

12. Service wide income is forecast to over achieve the budget by £8.4m. This is mainly due to favourable projected receipts for investment income of £2.1m and pension contributions and transfer values of £7.5m. Other areas where income is exceeding budget have been offset by deficits on vehicle removal income caused by delays in building Charlton Car Pound and reduced income for Criminal Records Bureau due to police staff recruitment difficulties in that department. This reduction is of course matched by a similar underspend on police staff expenditure in CRB.

Budget savings in 2003/04

13. 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. There are a few areas in which the MPS is not anticipating achieving the savings; these are police overtime, air travel and external consultancy. Also the MPS is likely not to achieve income targets for the Income Generation Unit due to legal obstacles and Mutual Aid recharges. We are, however, over achieving on additional investment income by £2.1 million giving a net under achievement of £2.25 million.

Additional high priority growth in 2003/04

14. 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.

In-year budget pressures

15. There are a number of in-year budget pressures such as NIM Implementation etc which need to be funded in this financial year. Work is still on-going by Finance Services to resolve the funding of these. An update will be reported next month now that the main budget submission has been completed.

Delivering a managed underspend

16. In order to provide funding for one-off budget pressures in 2004/05 the MPS is seeking to deliver a managed underspend of £12.8m. At present an additional underspending of £4.4m needs to be achieved and this requirement has been communicated to Management Board members and all business groups.

Virement request

17. The 2003/04 budget includes a sum of £1.290m for Infrastructure Workstream costs. This budget was originally included under the Servicewide Premises heading but the costs incurred to date have been charged to the Servicewide Supplies and Services heading. The Committee is requested to approve a virement of this budget noting that there is no change to the intended use of the budget.

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

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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