Minutes

Minutes of the meeting of the Finance Committee held on 19 January 2006 at 10 Dean Farrar Street, London, SW1H 0NY.

Present

Members

• Graham Tope (Chair)
• Richard Sumray (Deputy Chair)
• Reshard Auladin
• Richard Barnes
• Elizabeth Howlett
• Bob Neill

MPA officers

• Catherine Crawford (Chief Executive and Clerk)
• Ken Hunt (Treasurer)
• John Crompton (Committee Services)

MPS officers

• Keith Luck (Director of Resources)
• Sharon Burd (Director of Finance)
• Terry Price (Director of Strategic Finance)
• Simon Hart (Director of Business Support)
• Alan Croney (Director of Property Services)
• Anthony Doyle (Director of Procurement Services). 
• Helen Dean (Performance Directorate) and Rachel Musson (Strategic Finance) attended for consideration of agenda item 6
• Nick Chown (Director of Risk Management) attended for consideration of agenda item 7

82. Apologies for absence

(Agenda item 1)

An apology for absence was received from Murad Qureshi.

83. Declarations of interests

(Agenda item 2)

There were none.

84. Minutes of the meeting held on 15 December 2005

(Agenda item 3)

Resolved: That the minutes of the meeting held on 15 December 2005 be agreed and signed as a correct record.

85. Chair and members' update

(Agenda item 4)

There were none. Members indicated they considered that this item was no longer relevant and requested that it should no longer appear on the agenda.

At the conclusion of the meeting the Chair referred to the fact that this would be the last meeting which Terry Price, Director of Strategic Finance, would be attending in this capacity as he was leaving the Metropolitan Police Service. Members joined with the Chair in thanking Terry for his services to the Committee and wished him well for the future.

86. Revenue and capital budget monitoring 2005/06 – period 8

(Agenda item 5)

This report provided an update on the revenue and capital budget monitoring position for 2005/06 at Period 8 (to the end of November). The revenue budget is forecast to underspend by £7.7m (0.3% of budget). This is a significant improvement on period 7, mainly due to an additional Home Office grant of £20m in relation to Operation Theseus and a further improvement, due to actions by the MPS to reduce expenditure, in the core position of £3.5m.

The expenditure to-date for the capital programme as at period 8 (November) is £137.1m, which is 42.5% of the revised budget of £322.4m. Some adjustments and re-phasing of certain projects within the capital programme were submitted for approval.

The Committee noted that the word “overspend” in the first line of paragraph 9 should read “underspend”.

The Committee requested that an explanatory note be circulated which provided a fuller explanation for the variation in transport costs discussed at paragraph 31.

The Treasurer said that as there was now certainty about containing Operation Theseus costs it would be appropriate for the Committee to consider rescinding the decision to temporarily freeze the use of uncommitted balance sheet reserves which had been taken at the Finance Committee meeting on 15 September 2005.

Resolved – That

1. the year to date and forecast position for revenue budgets and the capital programme be noted;
2. the release of reserves be approved; and
3. approval be given to the budget increases to the capital programme as set out at paragraph 40.

87. MPS development of Activity Based Costing

(Agenda item 6)

Since 2003/4, the Home Office has required that all police forces provide Activity Based Costing (ABC) information to agreed definitions and standards as part of the annual data requirement. This report provided the Committee with an overview of the 2004/5 results and plans for the use of the data.

The Chair said that in view of the importance of the subject it would be appropriate for there to be a lead member as suggested in the report. However before a final decision was taken he would wish to discuss this further with the Deputy Chair outside the meeting. In this connection, Richard Barnes indicated that he would be interested in being the lead member

Members considered that the Association of Police Authorities would be a useful forum for the Authority to promulgate its stance on ABC and it was also felt that the Authority should be proactive in setting the Home Office methodology.

Resolved - That

1. the report be noted;
2. it be agreed in principle that a lead member be nominated for Activity Based Costing and that further consideration be given to identifying the lead member; and
3. agree that a strategic ABC plan, together with a supporting action plan be brought to the committee at the earliest opportunity.

88. Personal insurance indemnity

(Agenda item 7)

The Committee gave provisional approval to a Personal Insurance Indemnity Policy in December 2004. This progress report was submitted following its operation for 12 months to inform a decision on final approval.

Members indicated that they were generally satisfied with the proposals as set out in the report but would prefer that they be given the opportunity to continue to review the continuation of the policy every 12 months. Accordingly, it was

Resolved – that-

1. subject to annual review by the Finance Committee the indemnity policy should now operate for an indefinite period subject to termination by the MPA on not less than two months notice at any time (such termination to be without prejudice to claims arising before the date of termination);
2. the Authority receives an annual report from the Commissioner on the performance of the indemnity and any proposed changes in its terms or operation in the light of experience or the assessment of risk (paragraph 13, first bullet point);
3. an insurance indemnity fund be created (paragraph 10 );
4. the various revisions to the indemnity policy be noted (paragraph 13);
5. the results of a communications exercise and the use of the indemnity policy in specific instances over the last 12 months be noted; and
6. progress regarding a Central Government indemnity in relation to ‘unaffordable’ claims be noted.

89. Budget submission update

(Agenda item 8)

The report summarises the contents of the 2006/07 provisional local government finance settlement as they impact on the MPA. The financial effects are explained and a requirement for additional £7 million corporate savings is proposed.

The Treasurer provided an update to his report by stating that the latest information he had was that the remaining counter terrorism grants would be announced on 23 January. The meeting also noted that the next meeting of the London Assembly to consider the budget was due to be held on 25 January, although this might be put back, with the final precept being set on 15 February.

With regard to reserves, the Treasurer said that from information he had seen from other police authorities it would appear that the Authority held a noticeably smaller proportion of its net expenditure in reserves. He would recommend that the Authority should seek to increase the General Reserve above the present 1% as and when conditions allow. In this connection, he advised that a report would be submitted to a future meeting on the use of reserves, which would discuss some long term financial planning issues

Following discussion it was agreed that the budget requirement be reduced by £7 million, to be financed from reserves anticipated to be generated from the expected 2005/06 underspend. The MPS were instructed to identify savings of a corresponding amount, which would be implemented during 2006/07.

The Treasurer reported that with regard to capital settlement the indication was that there would be a reduction in the grant. Full details would be reported to the Committee at its next meeting.

Resolved -That

1. the initial conclusions of the impact of the provisional grant settlement in the context of the draft budget submission be noted ;
2. the MPS be commissioned to bring forward to the next appropriate meeting of the Authority/Finance Committee a paper on the recruitment and staffing consequences of the draft budget incorporating an assessment of the effects of the safer neighbourhoods and counter terrorism bids ;
3. the updated advice on the reserves and robustness of the estimates be received;
4. a policy of increasing the General Reserve from 1% to a higher percentage of net revenue expenditure as and when conditions allow be agreed;
5. the budget requirement be reduced by £7 million, to be financed from reserves anticipated to be generated from the expected 2005/06 underspend; and
6. the MPS be asked to identify savings of a corresponding amount, which would be implemented during 2006/07

90. Estates update

(Agenda item 9)

This report provided an update on the latest information on estate and Property Services matters. Members thanked the Director and Deputy for the very useful workshop on estate matters which they had given earlier in the week.

In reply to a question, the Director of Property Services said that despite the advanced introduction of the full roll out of Safer Neighbourhoods, generally speaking, accommodation would be found for all of the teams. In some cases, this might initially have to be of a temporary nature.

Resolved- That the update be noted.

91. Exclusion of press and public

(Agenda item 10)

Resolved - That under section 100A(4) of the Local Government Act 1972 the press and public be excluded from the meeting for the following items of business on the grounds that they involved disclosure of exempt information as detailed in paragraphs 8 and 9 of Schedule 12A to the above Act.

Summary of decisions made on exempt items

Minute 92 agenda item 11 exempt appendices to estate update
The information was noted.

Minute 93 agenda item 12 - Outsource Services Programme update
The information was noted.

Minute 94 agenda item 13 - Keyholder Database
Report withdrawn.

Minute 95 agenda item 14 - exempt minutes of the meeting held on 15 December 2005
Agreed and signed as a correct record.

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