Financing Operation Theseus

Report: 05
Date: 20 October 2005
By: Treasurer

Summary

The report updates members on the latest position on financing the costs of Operation Theseus

A. Recommendation

That members note the latest position.

B. Supporting information

1. At its meeting on 15 September the Committee was informed of the latest cost projection for Operation Theseus (instigated in response to the terrorist attacks on 7 July) and Operation Aethra/Vivare (instigated in response to the attempted attack on 21 July) and Operation Severus (relating to the high visible patrols specifically deployed on the London transport system).

2. Members agreed to temporarily freeze spending against earmarked reserves pending resolution of Home Office special grant considerations. In order to prepare in an orderly fashion for a contribution to the overall costs the Authority instructed the MPS to plan for a managed underspend of up to £27 million. Both of these actions have now been put in place. The joint Finance/PPRC Committee at its meeting on 10 October received an update on progress of the achievement of the revenue budget underspend.

3. The estimated total for costs for Operation Theseus (encompassing all the three operations referred to in paragraph 1 above) are £76.9M between 7 July and 6 October 2005. £40.4M of the estimate is in relation to opportunity costs – these are not additional costs, rather, the officers assigned to these duties would otherwise have been assigned to other policing duties or operations. £36.5M is estimated additional costs of which £21.7M is overtime and £14.8M relates to support costs.

4. The estimated ongoing cost of the operation, if deployment levels remain constant, is £285,200 per day. £131,300 of the estimate is in relation to opportunity costs, £153,900 is estimated additional costs of which £43,500 is overtime and £110,400 relates to support costs. The rate of expenditure on these additional costs has declined from the figure of £296,900 reported in September. This has brought the overall forecast additional expenditure down from £83.1M to £52.6M (as reported in the period 5 budgetary control).

5. The Home Secretary has replied to the Chair of the Authority’s request for financial support and agreed an interim payment of special grant in the sum of £10M. He also noted that the daily costs are falling as the operation is progressively scaled down and would be reluctant to endorse an assumption that costs will continue at the present rate for many months. The letter also indicates the Home Office would usually set a benchmark of 1% of force net revenue expenditure before assessing special grant, but that it is appreciated that the Authority faces a number of pressures this year, so the Home Secretary would not wish to set a figure now, but when fuller figures are known a significant contribution to the cost will be expected. In this respect it was noted that it would be helpful to review the position at the end of November. To progress matters, following receipt of this letter, the Treasurer and Director of Resources met with Home Office officials to reinforce the Authority’s case and provide more information.

6. Clearly the marked decline in the rate of additional spend which has halved from the £0.3M reported to members in September to £0.154M is welcome, reducing the monthly spend from some £10M to £4.6M. However, while this is welcome, extremely close attention will still need to be kept on the Authority’s overall financial position, particularly as government support is still uncertain. It is therefore not proposed to relax the restriction around the Authority’s reserves at the present moment.

C. Race and equality impact

There are no direct equality and diversity implications arising from this report.

D. Financial implications

These are shown above.

E. Background papers

None

F. Contact details

Report author: Ken Hunt, Treasurer, MPA.

For more information contact:

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

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