Capital Programme Monitoring 2003/04 – second quarter

Report: 07
Date: 20 November 2003
By: Commissioner ant the Treasurer

Summary

This report provides forecasts of capital expenditure for 2003/04 as at the end of the second quarter. Also provided are details of (a) actual expenditure on capital projects from 1 April to 30 September 2003; and (b) proposals for utilising £5.490m placed in earmarked reserves to be used for Estate improvements.

A. Recommendation

The Committee is asked to note the report.

B. Supporting information

1. There is one appendix attached to this report:

Appendix 1 – Actual and forecast capital expenditure 2003/04.

2003/04 budget

2. A revised capital budget for 2003/04 of £156.608m was approved by the MPA Finance Committee at its meeting on 15 September 2003. This followed notification in respect of the C3i programme of timing changes associated with key deliverables e.g. new radios and related equipment, and the need to reprofile expenditure of £40.879m into future years.

3. A summary of the programme, with initial and revised budgets as at the 30 September 2003, is provided at Appendix 1.

Forecast and expenditure

Summary Position as at 30 September 2003

4. At the end of September 2003 capital expenditure of £50.636m was recorded. This represents 32.33% of the revised budget figure of £156.608m.

5. Invoices in respect of major construction/amelioration projects are customarily presented by the contractor at agreed payment milestones. It is recognised that during the course of a financial year the recorded level of expenditure will lag behind the actual value of work undertaken. The profile for capital expenditure historically peaks in the final three months of the financial year. As noted at paragraph 4, expenditure as at the end of September 2003 represents 32.33% of the revised budget figure of £156.608m. This compares very favourably with the level of expenditure recorded at this stage of the financial year in 2001/02 and 2002/03. This is illustrated at Table 1 below.

Table 1: Comparison of Spend at 6 months with Annual Expenditure and Budget

6. The capital programme is presently forecast to underspend by £0.130m, or 0.08%, against the revised budget of £156.608m. The underspend is accounted for by an anticipated saving in respect of transport replacement costs of £2.1m balanced by forecast overspends in a number of areas. This in year saving would be available for virement to other capital schemes.

7. An in-year overspend of £1.45m on the C3i programme is forecast. £1.03m of this results from increased building costs arising from higher consultants fees in respect of all three call centres. It is expected that this overspend will be contained within overall budgeted building costs over the lifespan of the C3i Programme. Some reprofiling of expenditure between 2003/04 and 2004/05 in respect of the Airwave Project is also forecast (£0.42m). The in-year overspend of £1.45m will be met from the specific grant funding provided by the Home Office with budgets being suitably adjusted for future financial years.

8. A small overspend of £0.331m is forecast in respect of land and building projects. Delays in schemes such as Acton Front Office Custody Suite (£0.942m) and Dagenham Custody Suite Amelioration (£0.754m) are offset by a variety of projects devoted to improvements at other local police stations (additional cells, custody suites, etc) as well as work associated with the relocation of the Directorate of Information Technical Support Unit.

9. A small overspend is also forecast in respect of the Directorate of Information (£0.189m). This results from the large number of projects initiated during 2003/04. However, the Directorate expects that it will be able to manage these projects within its present allocation such that no overspend will be recorded against budget by year-end.

Sale of Hounslow Heath Public Order Training Facility

10. The capital programme for 2003/04 to 2007/08 anticipated that the sale of Hounslow Heath Public Order Training Facility would realise a capital receipt of £16m. This allowed for £8m beyond that required under the PFI arrangement to be used to bolster the capital programme following the poor capital settlement for 2003/04. The actual sale figure of £17.250m has resulted in an additional £1.250m of capital resources being available. The payment of £8m has now been made to the PFI provider and this will be reflected in future capital expenditure monitoring reports.

Premises improvement fund

11. At the Finance Committee on 23 October 2003 members approved two bids to be submitted to the Home Office in respect of the Premises Improvement Fund 2003/04. Details on the outcome of these bids have now been formally received. Phase 4 of the Front Office Refurbishment Programme has received part funding with £0.2m being awarded from the Fund.

Use of earmarked reserves

12. Deliberations on those projects deemed suitable for utilisation of monies for Estate improvements have been undertaken. A total sum of £5.490m is available. This comprises

• £4m placed in an earmarked capital reserve from the 2002/03 revenue underspend to address the need to enhance and expand the MPA Estate; and
• £1.490m from capital reserves representing the unapplied underspend from the capital programme for 2002/03.

13. New/revised costings for a number of major schemes have been received and are listed as follows:

• Otis House – fitting out of remaining floors (£2.16m)
• Edinburgh House – central office refits (£0.5m – following contribution from owner)
• Additional accommodation for security officers (£0.4m)
• Hendon – registry facilities (£0.8m)
• Technical Support Unit: Evidential laboratories – increased costs (£0.8m)
• Nottingdale Police Station – ground floor and basement refurbishment (£0.8m)

It is proposed that these projects are added to the capital programme and noted as using monies previously set aside for Estate improvements.

C. Equality and diversity implications

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

D. Financial implications

Financial implications are discussed in the main body of the report.

E. Background papers

• Corporate Finance – 2003/04 Capital Budget Files

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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