Finance Committee Annual Report

Report: 05
Date: 24 May 2004
By: Treasurer

Summary

The report summarises the work of the Finance Committee for the year 2003/04.

A. Recommendation

Members agree the report as representing the Committee’s work over the last year for submission to the Authority.

B. Supporting information

Introduction

1. The Authority requires each committee to produce an annual report on its activities. The reports are intended to give a general indication of member performance. They will also provide material for incorporation into the Authority’s published annual report.

Meetings and membership

2. The Committee has met nine times during the year. There are nine members of the Committee. Graham Tope has been Chair for the year and Nicholas Long Deputy Chair (to 31/03/04). Other members have been Reshard Auladin, Richard Barnes, Elizabeth Howlett, Eric Ollerenshaw, Sir John Quinton, Richard Sumray and Rachel Whittaker.

Responsibilities

3. The Finance Committee oversees the preparation and management of the revenue and capital forward plans and annual budget, making recommendations to the Authority as appropriate. The Committee also discharges the Authority’s responsibilities in relation to treasury management, insurances, the efficiency and effectiveness review programme and any other significant non-audit financial matters. In addition, the Committee considers strategic issues in respect of the estate and other resource functions, financial and strategic issues relating to the provision of information systems and technology, and major contract matters as required by the Authority’s contract regulations.

Budgets

4. The Committee has considered financial plans, budgets, expenditure and outturn as appropriate in the annual cycle as follows:

• 2002/03. The final revenue and capital outturns were reviewed and final adjustments agreed. The resulting final accounts received an unqualified opinion from the external auditor for the first time since the Authority’s inception.
• 2003/04. The Committee has received regular monitoring reports on both revenue and capital budgets and has considered provisional outturns. A revenue underspending during the year was deliberately managed so as to support the 2004/05 budget.
• 2004/05. The Committee has considered the draft budget, including at a special meeting in October, and made recommendations to the Authority with regard to the submission to the Mayor. The 2004/05 revenue budget was approved as submitted and allows for implementation of the initial phase of the Step Change programme with the introduction of 96 neighbourhood-based policing teams. Medium term financial projections to 2006/07 and a five year capital programme have also been approved.

Other financial matters

5. The Committee has dealt with a number of significant financial matters in addition to budgets, including:

• Efficiency and effectiveness review programme. Progress reports have been received and implementation of recommendations has been monitored.
• Efficiency plan. The Committee has monitored the successful delivery of the efficiency plan for 2003/04 and approved the 2004/05 plan.
• Police overtime. The Committee has raised issues around the management of police overtime as part of the monitoring of expenditure against budget. It has now established a member-led review into the subject.
• Treasury management. The Committee has received monitoring reports and a strategy report for 2004/05.
• Prudential Code for capital finance. The Authority has approved prudential indicators for 2004/05 in accordance with the requirements of the Code. The Committee has agreed arrangements for monitoring the indicators during the year.
• Risk management. The committee has considered a draft risk management strategy and recommended it for adoption by the Authority.
• Insurances. Revised insurance arrangements were agreed during the year, which provide substantially improved catastrophe cover.
• Budget devolution. The Committee has monitored progress in extending budget devolution within the MPS.
• Activity based costing. The Committee has received an update on progress in implementing activity based costing in the MPS.
• Police pensions. The Committee has agreed a response to a Home Office consultation on new arrangements for financing police pensions.
• Special services agreements. The Committee has kept under review the arrangements for special service agreements including agreeing updated rates. The Committee has approved the renewal of the agreement for the policing of the Palace of Westminster.
• Prisoners Property Act Fund. The Committee has agreed arrangements for the administration of disbursements from the fund in accordance with criteria agreed by the Coordination and Policing Committee.
• Financial Management Strategic Programme (FMSP). The Committee has received a final report on the FMSP, which shows most of the actions to be substantially complete, thereby demonstrating significant improvement in financial management in the MPA’s finances and MPS financial management. A new financial improvement programme for the next four years will be presented to the Finance Committee in July.

Estate

6. The Committee has received regular update reports from the MPS Director of Property Services on a range of current estate issues. It has also considered reports relating to specific property transactions and proposals, approving action as appropriate. The Committee has approved proposals for sitting a number of mobile telecoms aerials on police property, all subject to local planning approval. Participation in the Key Workers Living Programme has been approved. The Committee has agreed revised rents and charges for residential accommodation.

IT/IS

7. The Committee has approved various contracts in pursuance of the MPS information strategy.

Procurement

8. The Committee has approved a procurement strategy. It has monitored progress on the outsourced contracts retendering programme and has approved contract action in support of that programme. It has also received information on the routine forward contracts programme.

Next year

9. In the forthcoming year the Finance Committee will review the final outturn for 2003/04, monitor expenditure against budget in 2004/05 and develop the budget submission for 2005/06 together with the medium term financial plan. Revenue and capital plans will both need to take account of the implications of new public expenditure plans under SR2004 and Mayoral priorities following this year’s election. Work will be progressed on developing a capital strategy and asset management planning in order to provide a strategic framework for decisions about capital investment, in accordance with good practice endorsed by the Prudential Code.

10. The Committee will be asked to endorse a new financial improvement programme. Specific areas of development in which the Committee will continue to take an active interest include budget devolution and activity based costing.

11. Proposals relating to property will be assessed in the context of the estate strategy. The Committee will continue to monitor and facilitate the MPS information strategy. The implementation of the procurement strategy should see continuing improvement in the quality of the procurement process and improved value for money in contracts the Committee is asked to approve. Major decisions will be required in the next year on the retendering of outsourced contracts.

C. Race and Equality impact

The Committee addresses equalities aspects if and when they arise in relation to its business.

D. Financial implications

The cost of the Committee’s activities is met within the MPA’s directly managed budget.

E. Background papers

Finance Committee agenda 10/07/03, 15/09/03, 13/10/03, 23/10/03, 20/11/03, 18/12/03, 19/02/04, 22/04/04, 24/05/04.

F. Contact details

Report author: Peter Martin, Treasurer, MPA.

For more information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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