Revenue and capital monitoring report 2005/06 – period 6

Report: 05
Date: 17 November 2005
By: Commissioner

Summary

The report provides an update on the revenue and capital monitoring position for 2005/2006 at period 6 (to the end of September i.e. the mid-year point). The revenue budget is forecast to overspend by £20.3m (0.7% of budget), which includes £53.5m of estimated costs related to Operation Theseus. The Core Metropolitan Police Service (MPS) forecast (i.e. excluding Operation Theseus and Bracknell) is an underspend of £2.8m. This is increased further by a forecast underspend on Police Officer Pensions of £28.3m and additional income for Bracknell of £2.1m.

The expenditure to date for the Capital Programme is £104.9m, which is 32.4% of the revised budget of £323.7m. Some adjustments to the capital programme are submitted for approval.

A. Recommendation

The members are invited to:

1. Note the year to date and forecast position for revenue budgets and the capital programme.
2. Approve the release of reserves.
3. Approve budget increases to the capital programme as set out in this paper.

B. Supporting information

Background

1. The purpose of this report is to inform members of the anticipated outturn against revenue and capital budgets for the Metropolitan Police Authority (MPA)/MPS in 2005/2006.

A summary of the position is given in the tables below:

2. Table 1 provides a summary of the revenue forecast and additional cost forecast for Operations Theseus and Bracknell by Business Group. Table 2 compares the forecast outturn variances from period 5 and period 6 by Business Group excluding expenditure relating to Operation Theseus and Operation Bracknell. Table 3 provides a summary of the forecast outturn comparison between period 5 and period 6.

Table 1 – Summary of revenue forecast against budget at period 6

Table 2 – Comparison of period 5 forecast outturn variation with period 6 forecast outturn variation (excluding Operations Theseus & Bracknell)

Table 3 - Summary of Period 5 Forecast Outturn with Period 6 Forecast Outturn

3. The main reasons for the improvement in the forecast between period 5 and period 6 are:

• Efforts to reduce expenditure on Operation Theseus.
• The inclusion of an additional £10m of Home Office grant as an interim contribution towards the cost of Operation Theseus.
• The reduced costs of the tax liability associated with free rail travel.
• Business Group’s revisions to their forecast.

In overall terms the forecast position has improved by £32.3m of which £17.0m is in Operation Theseus and £15.9m is in the core MPS budget. Within the core position the improvement relates to the Home Office Grant of £10m that is a one-off receipt, and the reduced tax liability that will be on-going and has been accounted for within the 2006/07 budget build. There has been a marginal adverse movement in the pension forecast.

The core MPS period 6 forecast shows an underspend of £2.76m. If the Home Office special grant (£10m) and the reduced costs for the tax liability associated with free rail travel (£5.95m) are excluded the core budget is still overspending by £13.19m. Action is still firmly being undertaken to get the expenditure within the approved budget by 31 March 2006.

Operational performance

4. A short summary of key operational performance targets is reproduced below to provide a holistic view for members. Comparing operational performance in April to September 2005 with the same period last year:

• Total notifiable offences are falling: down 2.4%
• Homicide is falling: down 11.7% (excluding those killed on the bus in the terrorist attacks on July 7th).
• Gun enabled crime is rising: up 13.5%
• Knife enabled crime is falling: down 4.4%
• Residential burglary is rising: up 1.7%
• Robbery is increasing: up overall by 17.0%
• Rape is rising: up 16.9%
• Motor vehicle crime is falling: down 0.8%

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.

Operation Theseus

6. The current forecast for these operations is £53.5m of additional costs as compared to a forecast of £70.4m of additional costs at Period 5. The forecast may reduce further as operational requirements become more clearly defined.

7. The Home Office have indicated that the MPA will be expected to meet some of these additional costs from its reserves but have made an interim payment of £10m based on estimates of the additional costs. This has been reflected in the forecasts.

8. Additionally the MPS is considering the level of commitments against earmarked reserves to identify any flexibility that may exist. The efforts to mitigate the cost pressure resulting from the terrorist activity are therefore on going and these will be reported to Members in future reports.

Table 4 – Estimated costs of Operations Theseus

Revenue Forecast by Business Group

9. The forecast outturn position for the MPS is an overspend of £20.3m (0.7% of budget). The subjective position by Business Group is at Appendix 1. The overall position for the MPS is at Appendix 2.

Territorial Policing – A forecast overspend of £29.0m – 2.7% of budget

10. Forecast additional expenditure on Operation Theseus has reduced by £9.4m to £15.3m. Excluding Theseus and Bracknell expenditure, there is a forecast overspend of £13.6m. The principal reasons for this overspending remain as police overtime on street crime and other operational commitments; Police Pay as Territorial Policing expects to be 302 officers above budgeted workforce totals at the year end; Supplies and Services costs such as Forensics, Information Technology (IT) consumables and desk top support, Scenes of Crime Equipment and Public Order Clothing. The overspends are offset somewhat by an underspend on the Police and Community Support Officer (PCSO) budget. The forecast overspend has increased by £1.1m from period 5 due to forensics expenditure where Burglary Support Teams are generating a greater level of forensics activity.

Specialist Operations – An overspend of £20.8m – 11.5% of budget

11. Forecast additional expenditure on Theseus has reduced from £18.2m to £15.4m. Excluding Theseus and Bracknell expenditure, there is a forecast overspend of £5.1m. The principal reasons for this overspending remain as overseas travel and subsistence costs. The overspend has reduced by £1.8m from period 5, mostly following a review of the overtime forecast.

Specialist Crime – An overspend of £16.4m – 5.8% of budget

12. Forecast additional expenditure on Theseus has reduced from £5.7m to £4.7m. Excluding Theseus and Bracknell expenditure, the forecast overspend is £10.8m. The principal reasons for this overspending remain within Supplies and Services and relate to forensics expenditure and budgets held on behalf of the service such as DNA Expansion, Telephone Investigation Unit and Police National Computer (PNC) charges. The overspend has increased by £0.5m from period 5 following a review of anticipated income.

Central Operations – An overspend of £3.7m – 2.0% of budget

13. Forecast additional expenditure on Theseus has reduced from £3.1m to £2.3m. Excluding such expenditure, the forecast overspend in Central Operations is £1.4m. The principal reason for the overspend is expenditure on corporate vehicle hire on public order aid. The overspend has reduced by £1.5m from period 5 and results mainly from a review of Police Officer numbers where it is now forecast that most units will not achieve budgeted workforce levels.

Deputy Commissioner’s Command – An overspend of £1.7m – 1.8% of budget

14. Forecast additional expenditure on Theseus has reduced from £1.9m to £0.7m. Excluding such expenditure, the forecast overspend is £0.9m. The principal reason for the overspend is within supplies and services and relates to external consultancy costs where the Deputy Commissioner’s Command hold a budget saving on behalf of all business groups, together with the increased cost of insurance premiums. The forecast has increased by £1.3m since period 5 mainly due to a reclassification of an amount of police pay expenditure, previously forecast as Theseus related. Additionally the forecast for accident damage claims has increased by £0.2m following settlement of some large claims during September.

Directorate of Information – An overspend of £0.4m – 0.2% of budget

15. Forecast additional expenditure on Theseus has remained constant at £1.7m. Excluding such expenditure, there is a forecast underspend of £1.4m. The principal reason for the underspend is within running expenses following various project slippages detailed below. The forecast has reduced by £2.5m since period 5, mainly from a thorough review of Police Staff recruitment and a forecast based on a revised recruitment profile. There has also been slippage in various projects including Enterprise Access Platform, Securities, MetTime, Mobile Data Terminals and Business Change, partly offset by an under recovery of recharges for telephone rental and call charges which is being investigated with the supplier.

Human Resources – An overspend of £0.3m – 0.3% of budget

16. Forecast additional expenditure on Theseus has remained constant at £0.3m. Excluding such expenditure there is a small underspend of £0.1m. Although budget pressures remain in respect of police staff premature retirements and secondment income, these are offset by underspends in Police Pay and Police Staff Pay due to vacancies. The forecast has reduced by £0.7m since period 5 and the main cause of the reduction results within Police Pay where the number of recruits planned to attend Hendon in the last 4 intakes has been reduced.

Resources – An underspend of £7.3m – 3.1% of budget

17. Forecast additional expenditure on Theseus has reduced from £2.2m to £0.4m. Excluding Theseus and Bracknell expenditure, the forecast underspend in Resources is £9.5m. Although budget pressures remain as previously reported in relation to building works, this is offset by additional income for service charges at Lambeth and other rents receivable, increased investment income and other miscellaneous receipts. The forecast has reduced by £6.1m since period 5, which results principally from a reduction in the expected tax liability on free rail travel following discussions with the Inland Revenue.

Metropolitan Police Authority and Internal Audit – An underspend of £0.4m – 3.6% of budget

18. Little change to the position previously reported. The underspend position results from unanticipated income relating to internal audit work on fraudulent claims by interpreters.

Pensions – A favourable variance of £28.3m – 9.8% of budget

19. A small decrease in variance of £0.5m since the period 5 forecast which relates to a review of the forecast for widows pensions.

Centrally held budgets - A favourable variance of £17.9m

20. Forecast additional expenditure on Theseus has remained constant at £12.8m. Also included is £10m of Home Office grant, which is an interim contribution to the cost of Operation Theseus.

Funded units – An adverse variance of £1.8m

21. Although budgeted income is expected to exceed budgeted expenditure by £4.1m, the forecast suggests that only £2.3m of this will be achieved, a variance of £1.8m. The shortfall is primarily due to resources being diverted to Operation Theseus for which we cannot therefore charge the customers i.e. Transport for London, Northern Ireland Office, British Airports Authority etc.

Provisional revenue outturn by expenditure / income type

22. The main forecast variances from budget are set out below.

Police Officer pay - Overspend of £10.0m – 0.7% of budget.

23. The forecast includes an additional cost relating to Mutual Aid provided to the MPS and NI payable on overtime payments resulting from operations following the recent terrorist attacks in London. Without such expenditure, Business Groups forecast that an underspend of £6.3m will occur as workforce numbers will be less than budgeted through the year. The forecast overspend has reduced by £3.8m from period 5 following a reduction in the number of recruits expected to attend Hendon in the last four intakes of 2005/06.

Police Staff pay - Underspend of £3.4m – 0.7% of budget

24. The corporate view for the MPS is that an underspend of £3.4m would be expected principally due to delays in the filling of vacant posts. The forecast underspend has reduced by £4.9m from period 5. The forecast has been revised in light of the most up to date information available from the Workforce Planning Unit concerning the recruitment profile of Police Staff for the remainder of 2005/06.

PCSO pay - Underspend of £6.1m – 10.1% of budget.

25. The forecast underspend is principally due to vacancies and variations in pay averages compared to those budgeted. The forecast underspend has increased marginally from £5.7m in period 5 and reflects continuing vacancies.

Traffic Warden pay - Underspend of £0.7m – 5.8% of budget

26. The forecast assumes staff for the new car pound at Perivale will be starting during the period November 2005 to January 2006 which is later than anticipated when the budgets were originally set. The forecast underspend has increased marginally by £0.1m from period 5.

Police Officer overtime - Overspend of £37.9m – 33.4% of budget

27. The cost of operations following the recent terrorist attacks in London accounts for £27.0m of the forecast overspend. A major cause of the remaining overspend continues to be dedicated security patrols within Specialist Operations and operational commitments within Territorial Policing relating to street crime. The forecast overspend has reduced by £13.8m from period 5, mainly following reduced Operation Theseus activity but also following a review of activity levels within Specialist Operations.

Police Staff overtime - Overspend of £6.5m – 25.7% of budget

28. The cost of operations following the recent terrorist attacks in London, accounts for £1.1m of the forecast overspend. As previously advised, a significant element of the overspend relates to costs associated with Communication Officers. There has also been an impact within Specialist Operations where the increase in officer numbers has required additional support by Police staff. There has been a minor increase of £0.2m in the overspend since period 5.

PCSO overtime - Overspend of £0.4m – 51.7% of budget

29. This overspend relates almost entirely to the cost of operations following the recent terrorist attacks in London, estimated at £0.3m.

Employee related expenditure - Underspend of £6.5m – 19.2% of budget

30. The underspend and change in the forecast position from period 5 (a £1.2m overspend) is principally due to a reduction of £6.1m within Resources Directorate relating to the tax liability on free rail travel following discussions with the Inland Revenue. This reduction is expected to continue for future years and has therefore been reflected in the 2006/07-budget build.

Premises costs - Overspend of £9.5m – 5.0% of budget

31. The overspend is principally due to budget pressures within Property Services associated with works such as custody clusters, backlog maintenance, legal and consultancy costs. The variance has increased by £3.9m since period 5 and results from additional expenditure on maintenance and repairs and increases in electricity costs.

Transport costs - Overspend of £10.2m – 20.6% of budget

32. The cost of operations following the recent terrorist attacks in London account for £1.5m of the forecast overspend. As previously reported, the majority of the forecast overspend relates to overseas travel and subsistence costs which result from increased security and protection duties within Specialist Operations. There are also budget pressures relating to increased fuel costs, vehicle hire and maintenance. The variance has increased marginally by £0.2m from the period 5 forecast.

Supplies and services - Overspend of £23.8m – 6.1% of budget

33. The cost of operations following the recent terrorist attacks in London account for £7.4m of the forecast overspend. As previously advised, the major pressures fall within the areas of forensics (£8.0m), DNA testing (£4.9m) and external and legal consultancy (£5.1m). The forecast variance has increased by £4.2m since period 5 following a review of the forecast for telephone charges and rental costs (£2.4m increase) and increased activity around forensics and medical examiner fees (£1.4m).

The MPS will continue to actively monitor expenditure in relation to Premises, Transport and Supplies and Services to ensure that any overspending is kept to a minimum and that members are kept informed of the situation.

Capital financing costs - Underspend of £2.8m – 16.3% of budget

34. As previously advised, it is estimated that there will be reduced capital financing costs due to the Minimum Revenue Provision being lower than budgeted as capital expenditure in 2004/05 was lower than originally anticipated. There has been no change to the variance reported at period 5.

Income - Forecast over-achievement of £31.0m – 10.6% of budget

35. The income forecast now includes an interim contribution of £10.0m from Home Office in respect of Operation Theseus, receipt for the MPS contribution to Operation Bracknell of £5.8m and income of £4.7m for policing the G8 meeting. Also, the transfer of police officers from Territorial Policing to the Transport OCU, for which Transport for London will provide funding, is expected to generate an additional £1.8m. These are all one-off income streams and do not therefore affect the budget build for 2006/07. The forecast also reflects an invoice of £3.1m for service charges at Lambeth. The forecast variance has increased by £19.0m since period 5, which reflects the interim income for Operation Theseus, the income for G8 and increased rental income following the purchase of Marlowe House.

Funding - Forecast under-funding of £1.1m - (£nil).

36. As previously advised, the forecast for Home Office funding for London Allowance is £1.1m less than that budgeted as a result of there being fewer officers who qualify for the payments.

Increase to Tasking budget

37. The Tactical Tasking process has been operating since May 2005. At Finance Committee on the 23 June, members agreed to use £4 million of the 2004/05 underspend to fund central tasking in the Central Operations Group. The largest element of the Tasking budget has been allocated to Territorial Support Group, which is directed to targeting street crime, gun crime and robberies. Members are asked to agree a drawdown of £0.8m from the Tasking reserve to cover the current level of expenditure.

Budget movements

38. Details of the budget movements made by Business Group from the beginning of the year are at Appendix 3a and details of movements for the month of September are at Appendix 3b. The major budget movements in period 6 relate to the allocation of centrally held budget to all Business Groups in respect of the Police Pay award that was effective from 1 September.

Movements in reserves

39. Movements from reserves carried out in period 6 are listed by Business Group below:

Key deliverables

40. This is the second quarterly update on progress towards the MPA’s key deliverables as set out in the Mayor’s consolidated budget for 2005/06, where a more detailed description of these issues can be found. The deliverables and progress to date are detailed below:

Implementation of community based policing

We now have 256 teams across London, which is eight per borough. We also have additional teams within Tower Hamlets (the only borough to have full rollout - funded by the local authority) and additional teams are being recruited for Islington, Hammersmith and Enfield.

Police Officer and staff growth in specialist units

Recruitment of both police officers and police staff has been completed and selection is now underway. All posts are expected to be filled by December.

Progress towards MPS workforce targets

The proportion of officers from black and minority ethnic communities stands at 7.15% against a target of 30% whilst proportion of female officers is 19.41% against a target of 25%. These are both slight improvements against the first quarter figures reported, which were 7.03% and 19.26% respectively.

Work force modernisation

Due to the delay in Airwave implementation, the resulting changes have been delayed until 2006/07.

Increase police visibility

The most recently published data for September 2005 shows an increase of 2.87% as shown in the table below

Visibility Measure September 05

Improve public confidence and feelings of safety and security

The results of the first quarterly survey show that 47% of respondents rate the MPS as “good” or “excellent” in response to the question “Taking everything into account, how good a job do you think the Police in London are doing as a whole”. This will be used as the base for comparison to the remaining quarterly surveys.

To the question “Would you say you feel more safe or less safe in this neighbourhood than you did 12 months ago?”, the survey reported that 73% felt “about the same” or “safer”.

Improve women’s safety in the capital

The Diversity and Citizen Focus Directorate continues to lead on so me aspects of the women's safety agenda and The Women and Policing Group is a forum that is used to explore the issues and share information. Following the events of 7/7, the MPS has arranged and hosted a number of high profile listening exercises devised to canvass the opinions of London's communities. The first of these events in July involved men and women, although we have since held further focus groups devised solely to engage women from each area of London. The feedback from these recent events will be collated during November and disseminated appropriately. We have a team of consultant criminologists and crime analysts preparing a pan-London problem profile. This has been a long term piece of work involving a thorough scrutiny of all crime reported to the MPS in a single given day. The work involves collating previous and current relevant academic research on the subject and conducting searches of data entered on the Crime Report Information System (CRIS) system. Once this phase is concluded the findings will be put into the context of the Women and Policing Group remit and the other corporate control strategies. The final report will include findings and recommendations that will inform the direction of our future work in this area.

Capital monitoring

41. The Finance Committee members approved a revised Capital Programme for 2005/06 of £320.3m on 10th October 2005.

42. Included in the latest budget is a further £1.3m for work on Eagle House, Kingston for which funding will be found from additional receipts. This was previously approved in April, in an exempt paper presented to the MPS’ Resource Approval Committee.

43. A further £2.1m has been included to support work being carried out at the car pounds in Charlton and Perivale.

44. Assuming these two adjustments are approved, this will revise the capital budget in 2005/06 to £323.7m.

45. Appendix 4 sets out the expenditure for the 2005/06 Capital Programme as at period 6 (September) at business group level, which shows an overall total of £104.9m. This total represents 32.4% of the revised budget. The forecast outturn of £290.4m is £33.4m below the revised budget. The position in respect of each business group is set out below.

Property Services - £5.0m underspend (4.0% of budget)

46. The forecast underspend is due to planned re-phasing of various committed projects into future years.

Directorate of Information – Excluding C3i Programme - £4.1m overspend (8.8% of budget)

47. The forecast overspend is primarily due to non-budgeted expenditure on National Strategy for Police Information Systems (NSPIS) Case and Custody. It is anticipated that income for this will be received from the Police Information Technology Organisation (PITO), although this income has not yet been included in the figures for reasons of prudence.

Transport Services - £1.1m overspend (8.1% of budget)

48. The overspend shown on Transport Services is due to the purchasing of vehicles on behalf of other business groups that were not included in the capital budget. It is expected that funding for this expenditure will come from within the various business groups and work is on going to secure this.

Directorate of Information – C3i Programme - £33.4m underspend (38.8% of budget)

49. The reduction in the 2005/06 spend relates to the re-profiling of expenditure into later years in relation to subscriber terminals and Integrated Communications Control System (ICCS) contract payments. Also, expenditure on the Airwave project is forecast to be below budget.

50. Appendix 4 also shows the funding received to date as -£104.9m, which is 32.4% of the revised budgeted funding figure of -£323.7m. The forecast funding, which currently excludes income from PITO, will match forecast expenditure for the year.

List of abbreviations

MPA

Metropolitan Police Authority

MPS

Metropolitan Police Service

PCSO

Police and Community Support Officer

PNC

Police National Computer

BOCU

Borough Operational Command Unit

PITO

Police Information Technology Organisation

NSPIS

National Strategy for Police Information Systems

ICCS

Integrated Communications Control System

C. Race and equality impact

21.There are none specific to this report.

D. Financial implications

The financial implications are those set out in this report.

E. Background papers

• Previous 20054/065 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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