Efficiency plan monitoring – as at 3rd quarter 2003/4

Report: 10
Date: 19 February 2004
By: the Treasurer and Director of Finance Services

Summary

This report sets out the forecast position against the MPS’s Efficiency Plan as at the 3 rd quarter and provides an update on the meeting with HMIC to discuss the Plan.

A. Recommendation

Members are asked to:

1. Endorse the variation to the efficiency plan to include compensation savings of £5 million under the cash releasing savings; and
2. Note the result of the 3rd quarter inspection with HMIC scoring the plan as ‘A’.

B. Supporting information

Introduction

1. The purpose of this report is to provide a monitoring update on the MPS’s Efficiency Plan and to provide feed back from the 3rd quarter HMIC review. (i.e. to end December 2003)

Background

2. As part of their annual policing plan, all police forces and authorities are required to demonstrate efficiency savings equivalent to 2% of their annual budget with performance also being maintained or improved. HMIC monitor police authorities achievement through quarterly inspections.

3. These inspections cover both financial and operational performance. Failure to meet the annual efficiency target may result in a reduction to funding in particular the Crime Fighting Fund. The HMIC’s 3rd quarter inspection took place on the 27 January 2004.

Overall position

4. The statement attached at Appendix 1 reflects the 3rd quarter position for efficiency savings, and provides a projected savings outturn position based on actual results to date and currently available information regarding the remainder of the year.

5. The position as shown at Appendix 1 shows forecast efficiency savings for the year of £48.37m compared to an original plan of £42.8m. The original HMIC target was £40.7m (which has now been revised to £43.84m following correspondence between HMIC and the Treasurer) –but the forecast out-turn figure is well above both of these targets. The projected savings for the year are showing an over achievement of £7.2m for cash releasing savings and an under achievement of £1.63m on the original non cash releasing target of £22m for the year.

Cash releasing savings

6. The original target for cash releasing savings is £20.8m. This has been taken from the savings of £25.8m necessary to balance the 2003/04 budget build and excludes increased income of £5m which does not qualify for efficiency savings plans under Home Office rules. From this £20.8m the main areas which are not likely to achieve their savings target are police overtime (£2.5m) and supplies and services (£0.90m)

7. HMIC confirmed that they were happy that the non pay inflation was also included as a cash releasing saving (rather than a non cash releasing saving) as suggested at the 2nd quarter inspection.

8. At the 3rd quarter, £5m additional savings in compensation was also included as a cash releasing saving as it is a permanent reduction and forms part of the budget savings for 2004/05. The MPS is currently awaiting confirmation from HMIC whether this saving will be accepted. The Audit Commission were content in that it met the guidelines.

HMIC inspection

9. As at the 2nd quarter, HMIC scored the Plan as a “C” which means that we were unlikely to achieve the plan. HMIC have confirmed that as at the 3rd quarter the scoring will change to an “A “ which means that we are likely to achieve the plan.

10. The Audit Commission reviewed the budget build process to verify that the cash releasing savings have been cut from the base budget on the 9 February 2004. They will report back to HMIC and the Committee will be updated following the final quarters inspection.

11. HMIC were content with the improvements in reporting processes and the raised profile of the Efficiency Plan.

PNB Return

12. The 3rd quarter PNB overtime progress report has been submitted to HMIC. As previously reported, at this stage the MPS is not on course to achieve this year’s PNB reduction in overtime of £2.5m. We have, however, informed HMIC that the MPS is still committed to achieving the 15% reduction under the PNB agreement and have included both this years reduction of £2.5m and a further reduction of £2.5m in the police overtime budget for 2004/05.

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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