Revenue and capital budget monitoring 2004/05

Report: 05
Date: 7 April 2005
By: Commissioner

Summary

This report provides an update on the performance against the revenue budget as at the end of February (Period 11). The overall forecast for year-end is an underspend of £13.5m. Details of budget movements from the original approved budget are also included.

Also included is an update of monitoring against the capital budget as at the end of February. The forecast for the year at £142.4m is £72.8m below budget.

The report also seeks authorisation by the MPA Finance Committee for a capital budget movement

A. Recommendation

The Committee is invited to:

1. Note the position of the latest revenue and capital forecasts for the year.
2. Approve a capital budget movement exceeding £1m.

B. Supporting information

Background

1. The purpose of this report is to provide an update on the revenue and capital budget position of the MPA/MPS for the financial year 2004/05.

2. The statement attached at Appendix 1 provides a projected revenue outturn position based on actual results and current information available regarding the remainder of the year. The statement at Appendix 2 provides the projected revenue outturn position, by budget book heading, for each of the business groups. The statement at Appendix 3a shows a breakdown of budget movements for the year to date and Appendix 3b a breakdown for the last two months. The full year forecast and year to date position in respect of capital expenditure by business group appears at Appendix 4.

Operational Performance

3. A short summary of key operational performance covering the period from April 2004 to February 2005 is given below to provide a holistic view for members.

• Total notifiable offences are falling; down 3%
• Residential burglary is falling; down 8%
• Robbery is falling; down overall by 5%
• Motor vehicle crime is falling: down 14%
• Homicide is falling: down 8%
• Gun enabled crime is falling: down 10%
• Knife enabled crime is falling: down 14%

Challenges exist where total violent crime has increased by 11% and rape has increased by 4%.

4. Operation Trafalgar which investigates non-fatal shootings in London (excluding shootings connected to Operation Trident) has seen total shooting incidents fall by 25% from 64 to 47 for the period April 2004 to January 2005 compared to the same period last year.

5. Members will be aware that more detailed information regarding operational performance is available from the Government Affairs Unit within the Deputy Commissioner’s Command.

Overall Budget Position – Revenue – Forecast Outturn

6. The forecast year-end position is an underspend of £13.5m (0.5%) on budget compared with an underspend previously reported in February of £6.9m.

7. The main variances from budget and changes from the previous forecast seen by Finance Committee are set out below. The previous variance is shown in brackets.

• Police Officer Pay - £12.3m underspend – 1.0% of budget (£9.7m).
  The main change to forecast occurs within Territorial Policing where the mix and numbers of constable/detective constable ranks forecast for the remainder of the year has changed, resulting in lower average costs. This has been offset to some extent as some Police Pay inflation budget has been allocated to Police Officer Overtime.
• Police Staff Pay - £12.7m underspend – 2.9% of budget (£8.8m).
  The increase in the underspend is mainly within Specialist Crime Directorate (£1.7m) reflecting a reassessment of recruitment between now and the end of the year and the Directorate of Information (£1.8m) reflecting a reassessment of the timing of new starters in MetCall between now and the end of the year which is now in line with current strength figures.
• Police Officer Overtime - £17.6m overspend – 14.8% of budget (£19.1m).
  Whilst there have been increases to forecasts within Specialist Operations, Specialist Crime and Directorate of Information which relate to Operation Bracknell a reassessment of the forecast for the centrally held pay inflation budget has offset the increase. Additionally, a reduction in Territorial Policing (£0.6m) is the result of the allocation of Police Pay inflation budget being partially used to cover Police Overtime Inflation.
• Pensions Income/Costs - £29.0m net favourable variance – 10.2% of budget (£27.2m).
  The pensions expenditure underspend variance has increased by £0.6m, while pensions income and transfer values have both increased by £0.6m.
• Business Group Transport costs - £6.1m overspend – 17.8% of budget (£4.1m)
  The increase in overspend results from additional expenditure on overseas travel and other associated costs relating to Operation Bracknell.
• Business Group Supplies & Services – £6.0m overspend – 3.6% of budget (£6.1m).
  There has been an increase within Specialist Operations (£1.2m) relating to a movement of a forecast previously recorded against Corporate Supplies and Services together with increased weapons purchases. Additionally, an increase within Specialist Crime (£0.9m) results from Operation Bracknell and many other expenditure types in this category. These increases have been offset within the Directorate of Information (£1.8m) reflecting negotiated reductions in consultancy rates and an element of slippage in certain specialist schemes. A reduction in Resources (£0.3m) results from reduced costs of safety equipment for police officers.
• Corporate Employee Expenditure - £3.0m overspend – 12.6% of budget (£2.2m).
  The increase in forecast occurs mainly in Human Resources due to increases to Police Staff advertising and Police Staff premature retirement forecasts.
• Corporate Premises - £3.0m overspend - 1.7% of budget (£4.0m).
  The decrease in forecast occurs within Resources Directorate following rebates on business rates liabilities partly offset by an increase within Territorial Policing due to additional rent charges.
• Corporate Supplies & Services - £15.2m overspend – 7.1% of budget (£9.5m).
  The overspend has mainly increased in the Directorate of Information (£4.8m) following a reassessment of Counter Terrorism related projects, negotiations covering expected software license costs relating to brought forward enterprise projects and essential work on the Traffic Support Unit. The Specialist Crime Directorate forecast has also increased (£3.5m) due to an increase in the number of DNA expansion programme cases, although this is partially offset by additional income (£1.2m) from the Home Office as part of the scheme.
• Business Group Income – Over-recovery of £12.9m – 11.4% of budget (£9.8m)
  The increase in variance mainly follows updated information from Territorial Policing, which has identified additional partnership income. The variance has also increased in Specialist Operations due to increased income relating to Athens Olympics costs, Atlantic Blue, the Palace of Westminster and Sky Marshall training.
• Servicewide Income – Under-recovery of £0.9m – 0.7% of budget (£2.4m).
  The variance has decreased in Specialist Crime Directorate (£1.3m) due to the DNA Expansion scheme, as commented under Corporate Supplies and Services above, Human Resources Directorate (£1.2m) due to additional secondment income following a review of costings and Territorial Policing (£0.6m) due to additional income from TOCU Plus. The variance has increased in Resources Directorate (£2.0m) due to the exclusion of an accounting adjustment concerned with goods receipting of purchase orders.

Overall Budget Position – Revenue – Business Group Forecast Outturn

8. The main variances from budget and reasons for changes to the forecast, in respect of each business group, are set out below. Again, the previous variance is shown in brackets.

Territorial Policing – An underspend of £4.9m – 0.4% of budget (£1.3m overspend).

9. The main areas of reduction in expenditure relate to Police pay and overtime as reported above (paragraph 7) as well as increased income for partnerships and Transport OCU Plus.

Specialist Operations – An overspend of £10.8m – 5.9% of budget (£10.6m).

10. Increased underspends within Police and Police Staff pay have been offset by increased expenditure on weapons purchases and Operation Bracknell.

Specialist Crime Directorate – an overspend of £7.4m – 2.7% of budget (£4.4m).

11. An overall increase of £3.0m mainly relates to additional costs associated with Operation Bracknell, DNA expenditure, pathologists and vehicles for Operation Maxim.

Deputy Commissioner’s Command – An overspend of £0.2m – 0.2% of budget (£1.6m).

12. The reduction in overspend is mainly in Servicewide Supplies and Services due to compensation cases being delayed into next year. Further reductions have resulted from lower numbers of police officers and police staff than previously forecast to year-end.

Directorate of Information – an overspend of £1.3m – 0.6% of budget (£1.2m).

13. Overall little change but reductions in forecasts for Police Staff pay, overtime and Business Group Supplies and Services have been offset by higher Servicewide Supplies and Services as reported above (paragraph 7).

Human Resources (excl. Police Pensions) – an underspend of £1.3m – 0.4% of budget (£0.4m).

14. The reduction in forecast is due to increased secondment income as reported above (paragraph 7).

Resources –an overspend of £4.7m – 1.8% of budget (£2.8m).

15. An increase in overseas travel costs forecast as a result of Operation Bracknell has been offset by a reduction in corporate premises costs following rebates on business rates liabilities. The overspend has decreased due to several small reductions in expenditure forecasts and an adjustment within Servicewide Income as commented above (paragraph 7).

MPA

16. MPA - There has been little change in the projected variance from budget in the MPA.

Budget movements

17. Budget movements: The details of budget movements to date, by Business Group and subjective heading, are summarised in Appendix 3a and budget movements since the last Finance Committee report are detailed at Appendix 3b.

18. Major items included in the budget movements since the last report are:

• The allocation of £5.8m from centrally held budgets relating to special priority payments paid in December.
• The allocation of £6.0m from reserves to help cover costs expected from the additional bank holidays in 2004-05.
• The movement of £2.0m from centrally held non-pay inflation budgets to cover an accrued cost of forensics back charges.
• The movement of £2.0m from Directorate of Information to Territorial Policing in relation to Communications Officers overtime expenditure.
• A movement within Territorial Policing of £1.0m police pay inflation budget to police overtime.
• The allocation of £0.74m centrally held non-pay inflation to Directorate of Information regarding contract price rises.

19. Reserves: Net movements (to)/from reserves of £8.4m carried out since the last Finance Committee report are listed below:

• Additional Bank Holidays £6,000,000
• Integrated Borough Operations £1,450,000
• Unused body armour reserve (£500,000)
• High Tech Crime Unit £414,825
• Lord Laming Enquiry re Climbie £254,878
• CBRN Kit £235,300
• Devolved Carry over – TP Pan London £200,000
• Morris Enquiry Legal Expenses £170,000
• Legal Fees re Interpreter’s fraud £130,000
• Use of part 2003-04 devolved carry over £50,000

Overall Budget Position – Capital

20. The revised capital budget for the year, as shown in Appendix 4, totals £215.2m.

21. Members are asked to approve a budget movement of £2.0m in respect of Property Services for a further contribution to the ODPM for the Key Home Buy Scheme.

22. Appendix 4 also shows the expenditure to date and the latest forecast for the year as at the end of February (Period 11).

23. Expenditure in the year to date totals £113.0m, which represents 52.5% of the revised budget figure of £215.2m.

24. The forecast for the year has reduced by £33.4m from the last report and now totals £142.4m, which is £72.8m below budget.

25. The main changes in the forecast are indicated below at business group/project level. Previously reported variances are shown in brackets.

Property Services – underspend of £25.4m (-£4.8m)

26. The reduction in the forecast for Property Services is mainly attributable to slippage in the following projects. It is envisaged that where there is slippage this will be carried forward to the 2005/06 programme:

• £8.3m is the budget for the acquisition and fitting out of freehold development in Stratford. The project has been delayed due to protracted negotiations with the freehold owner.
• A £2m slippage has occurred on the Central London Office Refit following delays in finalising user requirements and planning consent.
• A £1.9m slippage for the perimeter works and security gates project at Hendon.
• Slippage in the Front Office Refurbishment programme of £1.3m, where work is continuing into the next financial year.
• A £0.7m adjustment in forecast to the Cell Refurbishment programme.
• Slippage of £0.9m for Tintagel House, where work is continuing into the next financial year.

27. These are partially offset by an increase in the forecast for the Criminal Justice Accommodation and Lambeth capital programme, in-line with the trend of expenditure to date.

28. There has also been slippage on a number of other projects (all under £0.5m, but totalling £3.7m), which have been delayed due to operational site related matters.

Central London Estates Strategy – overspend of £2.5m (£2.5m)

29. There has been a reduction to the forecast due to a reduction in fit out and Stamp Duty costs, this is matched by a corresponding reduction in the appropriate budgets.

Directorate of Information (Excluding C3i project) – underspend of £9.7m (-£1.0m)

30. The reduction in forecast for the Directorate of Information (excl. C3i project) is due to the changes in respect of the following:

• The bulk of the reduction is due to the entire forecast of £5.0m for Technology Refresh being taken out. Expenditure within the refresh programme will now take place in 2005/06.
• Slippages in projects within the Infrastructure Programmes, reducing the forecast by £1.7m.
• Slippages in projects within the Information Strategies Programmes, reducing the forecast by £1.7m.

C3i Programme – underspend of £26.5m (-£26.2m)

31. The reduction in forecast for the C3i programme is primarily due to the rollout of the hand held radios being suspended for this year. This rollout will recommence next year.

Step-Change Programme – underspend of £13.8m (-£8.9m)

32. Slippage on the Step-Change Programme resulting from delays on security clearance for the contractors and in legal completion on the new properties.

33. The forecast for capital receipts has not changed from previous reports (£27.0m). Receipts to date total £13.2m, with £8.0m of this having been received since December. The forecast includes receipts in respect of a major project totalling £13.5m received in March 2005.

C. Race and equality impact

There are none specific to this report.

D. Financial implications

The financial implications are those set out in this report.

E. Background papers

• Previous 2004/05 monitoring reports.

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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