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Report 7 of the 21 July 2005 meeting of the Finance Committee and provides the outturn position against the capital budget for 2004-05. The outturn for the year at £152.7m is £80.1m below the revised budget figure of £232.8m.

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Capital outturn 2004/05 and revised capital programme 2005/06

Report: 07
Date: 21 July 2005
By: Commissioner

Summary

This report provides the outturn position against the capital budget for 2004-05. The outturn for the year at £152.7m is £80.1m below the revised budget figure of £232.8m. The report also seeks approval to carry forward £67.2m of projects to 2005/06 and provides the revised capital programme for that year.

A. Recommendation

That members are requested to:

  1. Note the outturn position against the capital budget 2004/05.
  2. Note that the outturn figures may change slightly as the accounts are still subject to audit.
  3. Approve the carry forward requests totalling £67.2m from 2004/05 to provide for slippage and re-phasing of certain projects into the 2005/06 programme.
  4. Approve the revised capital programme for 2005/06..

B. Supporting information

Provisional Capital Outturn

1. The information below indicates the outturn position for the Capital Programme in 2004/05.

2. The revised capital budget for the year, as shown in Appendix 1, totals £232.8m. This figure now includes the adjustments for the revenue contribution to capital (RCCO) of £15.0m, which supports funding to the various projects within the programme. Details of the RCCOs are shown in respect of each business group below and in a separate column in Appendix 1.

3. The actual outturn was £152.7m, which represents 65.9% of the revised budget figure of £232.8m and slippage of £80.1m against the revised capital budget.

4. Members are also asked to consider the requests from business groups regarding carry forwards of funding into 2005/06. The details of these requests are shown below and in Appendix 1 of the report.

5. It is recognised that steps need to be taken to improve the level of planning and governance around the Capital Programme particularly around the planned phasing of projects through their life cycle. It is intended that the new MPS Investment Board will pay a key roll in ensuring that this takes place.

Commentary on programme areas

Property Services – slippage of £28.6m (45.4% of budget)

6. The Property Services programme is broken down under two headings; the original budgeted programme (£40.9m) and the additional projects added within the year (£21.8). The outturn expenditure for each element of the programme was £21.6m and £12.8m respectively.

7. There has been re-programming and re-phasing across a number of projects within the budgeted Capital programme for Property Services for 2004/05. £19.7m relates to building projects that have been re-phased into 2005/06, whilst a further £8.3m relates to delays in the acquisition of one specific property.

8. In total Property Services has requested that £28.0m (£13.3m for originally budgeted projects and £14.7m for additional financed projects approved in-year) to be carried to 2005/06.

Central London Estates Strategy – slippage of £2.3m (8.7% of budget)

9. The budget of £24.1m was added to the programme in June 2004 and the slippage can be attributed to the fit out costs for Empress State Building, which will not be fully achieved within 2004/05, with some re-programming into 2005/06.

10. Property Services has requested that £5.9m be carried forward into 2005/06. This is in addition to the £2.3m for the alteration and extension of the catering facilities which was approved by the MPA Full Authority in March 2005 to be added to the 2005/06 programme.

Directorate of Information – (Excluding C3i project) – slippage of £8.5m (20.9% of budget)

11. The Directorate of Information programme is also shown under two headings; the original budgeted programme (£37.2m) and additional funded projects within the year (£4.7m). The outturn expenditure for each part of the programme was £27.0 and £6.3 respectively.

12. The budget has been adjusted to include the additional financing through RCCO (£9.9m), (subjectively broken down as £7.6m for budgeted projects and £2.3 for additional financed projects).

13. £10.1m has been requested as a carry forward to 2005/06, of which £5.0m is specifically for IT refresh projects, where no funds were utilised during the year. The balance is for various projects within the programme where slippage and re-phasing has occurred.

Transport Services - overspend of £0.9m – (4.3% over budget)

14. The small overspend relates to expenditure outside the main programme for Transport Services and comprise projects that are funded by other areas of the business. However, there is an underspend of £0.1m against the budgeted projects that were in the original programme.

There were no carry forward requests submitted by Transport Services.

C3i Programme – slippage of £26.7m – (44.1% of budget)

15. The budget was reduced from £82.3m to £56.7 during September 2004, due to known slippage at the time. Further slippage has occurred later in the year mainly due to the need to change contractors for the integrated communication platform and some consequent delay in other elements of the programme.

16. In total £22.7m has been requested to be carried forward, although it is still forecast that the programme will remain within the overall funding envelope (including the sum received from the previous contractor).

Step-Change Programme (Phase 1) – slippage of £14.7m (80.2% of budget)

17. The original budget of £22.7m was reduced by £4.5m to £18.3m in September 2004. Actual expenditure incurred during the year totalled £3.6m giving slippage of £14.7m compared to the revised budget. A number of projects have slipped due to delays in security clearance for the contractors and in legal completion on the new properties.

18. The 2005/06 programme for Phase 1 was increased from £347k to £14.5m in February 2005 to reflect this known slippage so no further approval is now required.

Capital Receipts 2004/05

19. Capital receipts generated during the year were £27.2m against an original budget of £12m (including £2m for the Key Home Buy scheme). The additional receipts have been carried forward through capital reserves to fund projects carried forward into 2005/06, mainly in the Property Services programme.

Revised Capital Programme 2005/06

20. The original Capital Programme for 2005/06 was approved by MPA Full Authority on 31 March 2005 and totalled £215.8 (including two additional schemes approved at the meeting in respect of alteration and extension of catering facilities at Empress State Building (£2.368m) and replacement of the Aquarius System (£0.9m).

21. The programme has now been revised, incorporating these two schemes plus the proposed sums to be carried forward for approval by this committee totalling £67.2m. (which compares to the total slippage of £80.1m for 2004/05 as reported in paragraph 3 above) The revised programme, which is attached at Appendix 2, has thus increased from £215.8m to £283.0m.

22. The revised programme (once approved) will be monitored on a monthly basis and actual expenditure to date and forecast outturn figures included within the regular budget monitoring reports to MPS Investment Board and this committee.

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.

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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