MPA Efficiency Plan 2004/05

Report: 06
Date: 22 April 2004
By: the Treasurer and Commissioner

Summary

This report sets out the financial aspects of the MPA’s Efficiency Plan for 2004/05.

A. Recommendation

Members are asked to approve the plan and note the process for providing in-year updates.

B. Supporting information

Introduction

1. The purpose of this report is to present the 2004/05 Efficiency Plan, attached at Appendix 1. Following discussions with HMIC it was agreed that the Plan would be more formally approved and monitored at Authority level.

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 and demonstrate that performance has been 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.

4. The MPA’s Efficiency Target for 2003/04 is £43.84m, and at the third quarter inspection the HMIC judged that the service was likely to achieve both the financial and operational aspects of performance and thus achieve an ‘A’ score.

2004/05 target

5. The 2% Efficiency Target for 2004/05 is £47.3m being 2% of net revenue expenditure (excluding specific grants) of £2,367m. Under Home Office rules this target will, however, change marginally to reflect actual net expenditure in year.

Cashable savings

6. The exercise to balance the revenue budget for 2004/05 identified £61.3m of savings and additional income, and of this £37.6m can be counted towards our efficiency plan. We evidence this saving by demonstrating a reduction in budgets and by managing within those reduced budgets throughout the financial year.

Non-cashable savings

7. These efficiency gains are the result of better utilisation of existing resources and are based on our ability to increase outputs and productivity without impacting on the budget position. The nature of these savings can make them difficult to identify, quantify and monitor as compared to cashable savings.

8. Full year effect of C3i Civilianisation – This saving of £7.8m represents the full year effect of those savings achieved in 2003/04. This saving is already within the 2003/04 Efficiency Plan and as the civilianisation has already taken place no additional evidence will be needed by HMIC to validate this saving.

10. Best Value and other initiatives – The 2003/04 efficiency plan had a target savings figure from best value and other initiatives of £8m, and we forecast that we will exceed this target by £0.7m. It is proposed that we include a similar target figure in the 2004/05 plan as this provides flexibility and encourages creativity. A number of areas that should be delivering efficiency gains are being investigated in order to put a value on the gain being achieved. Some of these areas are listed below and will be included either in next year’s or future plans as appropriate:

• Step Change – efficiency saving in overhead activities
• Civilianisation – C3i, Step Change, Accenture
• C3i - economies of scale
• Bureaucracy Task Force
• Reduced Police Officer sickness

11. There is a need for Finance to work closely with Corporate Development Group in DCC to identify, quantify and monitor these efficiency gains.

Summary 2004/05 Efficiency Plan

12. Appendix 1 shows the 2004/05 Efficiency Plan. It can be seen that we have identified potential savings of £53.44m which is £6.14m in excess of the 2% target.

Efficiency planning in the medium term

13. The MPS and MPA have made significant progress in developing financial planning over the medium term. This has lead to a number of benefits including improved credibility and increased stability over financial planning. Efficiency planning remains an annual exercise and this is to the detriment of creative and forward thinking in this increasingly high profile area. With the support of the Treasurer we will be looking to develop a three year rolling efficiency plan starting in 2005/06. This will also require the close involvement of Corporate Development Group and the support and active participation of managers throughout the service.

Future reporting

14. Following each quarters HMIC inspection, an update paper will be provided to RAC and the Finance Committee of the MPA.

C. Race and Equality impact

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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