Efficiency plan monitoring – as at 2nd quarter 2004/05

Report: 7
Date: 7 December 2004
By: Treasurer and Commissioner

Summary

This report sets out the forecast position against the MPS’s Efficiency Plan as at the end of the 2nd quarter.

A. Recommendation

Members are invited to note the position against the efficiency plan as at the end of September (period 6).

B. Supporting information

Introduction

1. The purpose of this report is to provide a monitoring update on the MPS’s 2004/05 Efficiency Plan.

Background

2. As part of their annual policing plan, all police forces and Authorities are currently 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.

Overall position

4. The statement attached at Appendix 1 reflects the 2nd quarter projected efficiency savings outturn position based on the currently available information regarding the remainder of the year.

5. The overall efficiency target is £53.44m, this exceeds the HMIC target of £47.30m in order to provide a safety margin. The forecast for the year is showing an under achievement of £8.46m for cash releasing savings and an over achievement of £16.00m on non-cashable savings. On the latest forecast the MPS is projecting an over achievment of £7.54m against the MPS plan target and £13.68m against the HMIC target.

Cash releasing savings

The overall target for cash releasing savings is £37.64m. This was taken from the savings of £61.3m necessary to balance the 2004/05 budgets. It excludes increased income, which does not qualify for efficiency savings plans under current Home Office rules. The latest information indicates that the following areas are unlikely to achieve the savings targets:

Non cash releasing savings

7. The original target for non-cash releasing savings was £8.00m As a consequence of the uncertainty surrounding the achievement of the cashable savings the MPS has increased the non cashable element by incorporating the efficiency saving from the reduction in police sickness over the past three years (reduced from an average 12.2 days to 8.2 days per annum) of £16.65m. Whilst its inclusion may result in an over achievement of the target the MPS will be able to carry forward any excess saving into future years.

HMIC review and future developments

8. A meeting with HMIC to review 2nd Quarter performance took place on 11th November 2004 at which time feedback was provided for the Quarter 2 report. The meeting was regarded as successful and the Inspector provided verbal assurance that he was happy with the methodology used and the figures presented. Written confirmation of this is due imminently but officers are anticipating that an ‘A’ will be given on financial aspects of the review.

9. As mentioned in previous reports to Committee, from 2005/06 the efficiency target will be increased to 3% of annual budget and there are plans to review the efficiency plan targets and rules under which they are constructed. Currently ACPO, APA and the Home Office are discussing how the rules will be amended to make gathering efficiency data and savings more transparent, the outcome of these discussions will be reported as soon as they are concluded.

C. Race and equality impact

There are no equality or 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 information contact:

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

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