Capital programme monitoring 2003/04 – third quarter

Report: 07
Date: 19 February 2004
By: the Commissioner and Treasurer

Summary

This report provides forecasts of capital expenditure for 2003/04 as at the end of the third quarter. Also provided are details of actual expenditure on capital projects from 1 April to 31 December 2003.

A. Recommendation

The Committee is invited to note the report and approve the necessary adjustments to the capital budget in respect of Edinburgh House, accommodation for security officers and IBOs (paragraphs 2 and 11 refer).

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. At the Finance Committee meeting on 20 November 2003 approval was given for the capital programme to be adjusted by the allocation of £5.5m from earmarked reserves for Estate improvements. Of the listed major land and building schemes, notification has now been received from Property Services that £1.5m will be required during 2003/04 in respect of the fitting out of Edinburgh House and the purchase of accommodation for security officers. £0.6m of the sum needed for the refurbishment of Edinburgh House comes from a contribution made by the landlord. A revised capital budget for 2003/04 of £158.108m is derived.

3. A summary of the programme, with initial and revised budgets as at the 31 December 2003, is provided at Appendix 1.

Forecast and expenditure

Summary Position as at 31 December 2003

4. At the end of December 2003 capital expenditure of £88.218m was recorded. This represents 55.80% of the revised budget figure of £158.108m.

5. The capital programme is presently forecast to underspend by £9.784m, or 6.19%, against the revised budget of £158.108m. The underspend is primarily accounted for by slippage in a number of refurbishment projects. Property Services senior management has advised that funds relating to the timing difficulties are still required to meet overall forecast expenditure. Therefore, it is intended that monies will be carried forward through reserves to be reallocated to named projects during 2004/05. The opportunity to utilise the underspend by bringing forward projects shown within future years of the capital programme has been explored. However, it does not appear at this stage that it will be possible to anticipate any future expenditure due to the long lead time required to initiate major land and building projects. Should a project be brought forward, it would be expected that any monies utilised would be ‘paid back’ to the project experiencing slippage as soon as possible. This would ensure that the capital programme remains in equilibrium.

6. An underspend of £10.367m for Property Services is forecast. As noted, in the preceding paragraph, this arises due to timing problems experienced in respect of major refurbishment projects. These schemes include:

• Acton Front Office and Custody Suite (£1.75m)
• Hendon – Croft Gym (£1.26m)
• Dagenham Custody Suite Amelioration (£1.24m)
• Hendon – Perimeter Works (£1.2m)
• Hendon – Security Gates (£1m)
• Serious Crime Group – South East London Accommodation (£1m)
• Front Office Refurbishment Programme (£0.78m)

7. A small overspend of £1.227m is forecast in respect of IT projects. This results from the large number of projects initiated during 2003/04. However, the Directorate of Information 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.

8. An in-year underspend of £0.594m for the C3i Programme is forecast. This reverses the position shown at the end of the second quarter and arises due to uncertainties surrounding the provision of appropriate national Airwave fallback services. No national contract has yet been signed so the MPS has to make its own arrangements to ensure operational policing is properly supported.

9. It has previously been noted that there was an anticipated saving of £2.1m in respect of vehicle replacement costs. This does not now arise following the decision taken by the MPA Finance Committee at its meeting on 20 November 2003 to approve the purchase of public order carriers to replace the present leased vehicles.

10. As in past years, an analysis of revenue expenditure on the IT Infrastructure Renewal Programme is underway to identify those areas of outlay where items that have been purchased more correctly fall within the technical accounting definition of capital expenditure. Present indications are that circa £5m of revenue expenditure will be subject to capitalisation. This will not have a detrimental effect on the capital or revenue budget, as upon capitalisation it would be expected that a revenue contribution to capital outlay (RCCO) of equivalent amount would be undertaken. In making this adjustment the opportunity will be taken this financial year to ensure that additional capital Airwave grant to be paid in 2004/05 can be utilised for revenue purposes as intended. This matter is referred to within the separate report on the 2004/05 revenue budget that is on the agenda for today’s meeting of the MPS Finance Committee.

Integrated Borough Operations

11. Funding for the initial tranche of the construction of operational command rooms for the IBO function has been set at £2m and is to be found from forecast revenue underspend against Deputy Commissioner’s Command cost centres during 2003/04. Monies will be ring-fenced for the Property Services construction programme with any expenditure occurring during 2003/04 covered by a revenue contribution to capital outlay (RCCO) and the remaining element of the earmarked £2m being carried forward through reserves to be reallocated to the project in 2004/05. The virement of funds will be formally notified to the Finance Committee for approval as part of the regular monitoring report on revenue expenditure 2003/04.

12. Spending on the IBO function has been integrated within the revised capital programme 2004/05 to 2008/09. This matter is a separate agenda item for today’s meeting of the Finance Committee.

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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