Revenue and capital monitoring report 2005/06 – period 9

Report: 04
Date: 16 February 2006
By: Commissioner

Summary

The report provides an update on the revenue and capital budget monitoring position for 2005/06 at Period 9 (to the end of December). The revenue budget is forecast to underspend by £9.8m (0.4% of budget).

The expenditure to-date for the Capital Programme as at Period 9 (December) is £154.9m, which is 48.1% of the revised budget of £322.4m. The forecast for the year of £273.7m is £48.7m below the revised budget.

A. Recommendations

Members are invited to:

1. Note the year to date and forecast position for revenue budgets and the capital programme.
2. To note the MPA Finance Committee recommendation to transfer £7m of the underspend to the General Reserve to be utilised to balance the 2006/07 budget.

B. Supporting information

Background

1. This report provides an update on the forecast against revenue and capital budgets for the MPA/MPS in 2005/06 based on the position at the end of December.

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 8 and Period 9 by business group excluding expenditure relating to Operation Theseus and Operation Bracknell. Table 3 provides a summary of the forecast outturn comparison between Period 8 and Period 9.

Table 1 – Summary of revenue forecast against budget at period 9

Table 2 – Comparison of period 8 forecast outturn variation with period 9 forecast outturn variation (excluding Operations Theseus & Bracknell)

Table 3 - Summary of Period 8 Forecast Outturn with Period 9 Forecast Outturn

3. In overall terms the forecast position has improved by £2.2m of which £0.1m is in the core MPS budget and £0.4m in the Pensions budget. The Operation Theseus forecast has improved by £1.7m.

4. The continuing reduction in core expenditure reflects the fact that the MPS has taken action to produce a balanced budget in line with the wishes of the MPA Finance Committee. Key messages have been given to the business through the savings plan and service review and this has helped produce the favourable forecast position that currently exists. The MPS is taking steps to continue the improvement in financial management throughout the business that has been achieved in recent years and to increase levels of efficiencies throughout the organisation via the delivery of the Modernisation Programme.

Operational Performance

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

• Total notifiable offences are falling: down 2.8%
• Homicide is falling: down 18.9% (excluding those killed on the bus in the terrorist attacks on July 7th).
• Gun enabled crime is rising: up 9.0%
• Knife enabled crime is rising: up 2.5%
• Residential burglary is rising: up 2.9%
• Robbery is increasing: up overall by 14.8%
• Rape is rising: up 12.0%
• Motor vehicle crime has seen little change.

6. 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

7. The current forecast for this operation is £55.8m of additional costs as compared to a forecast of £56.9m at Period 8. The figures in Table 4 include £30m in grant received from the Home Office and £0.6m from other sources.

Table 4 – Estimated costs of Operations Theseus

Revenue Forecast by Business Group

8. The forecast outturn position for the MPS is an underspend of £9.8m (0.4% of budget). The subjective position by Business Group is at Appendix 1. The overall position for the MPS is at Appendix 2.

Territorial Policing

• An overspend of £27.5m – 2.5% of budget.

9. Forecast additional expenditure on Theseus and Bracknell has increased by £0.1m to £15.7m. Excluding such expenditure, there is a forecast overspend of £11.8m. The principle reasons for this overspend are Police Overtime (£5.4m) on street crime and other operational commitments and Police Pay where there is a forecast of 113 officers above budgeted workforce totals (BWT) at the year end (£3.1m). Also, there are overspends within Supplies and Services costs such as Forensics, IT consumables and desk top support, Scenes of Crime Equipment, Public Order Clothing and Interpreter fees. These overspends are partially offset by an underspend on the Police Community Support Officers (PCSO) budget. The forecast overspend has increased by £5.5m from Period 8 principally due to increased forecasts for Police Pay (£2.7m) and running expenses (£0.5m). Additionally, a number of units that are operating at a surplus and were previously classified as Territorial Policing have now been transferred to Funded Units. This is a presentational issue only and does not affect the overall MPS position.

Specialist Operations

• An overspend of £23.0m – 12.8% of budget.

10. Forecast additional expenditure on Theseus and Bracknell has increased from £15.9m to £16.3m. Excluding such expenditure, there is a forecast overspend of £6.7m. The principle reasons for this overspending remain as overseas travel (£1.7m) and subsistence costs (£6.5m). The forecast overspend has reduced by £0.5m from Period 8.

Specialist Crime

• An overspend of £9.1m – 3.1% of budget.

11. Forecast additional expenditure on Theseus and Bracknell has increased from £5.8m to £6.4m. Excluding such expenditure, the forecast overspend is £2.7m. The principle reasons for this overspend are 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 forecast overspend has reduced by £1.2m from Period 8 in several areas of expenditure, including police overtime which reflects the introduction of tight controls in this area.

Central Operations

• An underspend of £2.2m – 1.1% of budget

12. Forecast additional expenditure on Theseus and Bracknell has increased from £1.8m to £1.9m. Excluding such expenditure, the forecast underspend in Central Operations is £4.0m. The principle reason for the underspend continues to be the under-achievement of the deployment plan in the Firearms section, vacancies within various sections and additional income from various sources. The underspend has increased by £1.3m from Period 8 although this relates mainly to a movement of a unit with a deficit (the Disclosure Service) previously classified as Central Operations to Funded Units. Again, this is a presentational issue only and does not affect the overall MPS position. The remaining improvement relates to a review of vehicle leasing costs and the allocation of income relating to the G8 summit.

Deputy Commissioner’s Command

• An underspend of £0.3m – 0.3% of budget.

13. Forecast additional expenditure on Theseus and Bracknell has remained constant at £0.9m. Excluding such expenditure, the forecast underspend is £1.2m. The reason for the underspend primarily relates to Police Pay where there is a forecast of 53 officers below BWT following delays in recruiting officers with the appropriate experience. This underspend is partially offset by higher insurance premiums and compensation payments. The forecast has reduced by £0.3m since Period 8.

Directorate of Information

• An underspend of £2.6m – 1.0% of budget.

14. Forecast additional expenditure on Theseus and Bracknell has remained constant at £2.3m. Excluding such expenditure, there is a forecast underspend of £4.9m. The principle reason for the underspend is reduced running expenses associated with various projects that have been rephased. The forecast underspend has increased by £2.4m since Period 8 resulting from a review of forecast commitments, particularly in relation to the C3i project.

Human Resources (excluding Police Pensions)

• An overspend of £2.0m – 2.3% of budget.

15. Forecast additional expenditure on Theseus and Bracknell has remained constant at £0.4m. Excluding such expenditure there is an overspend of £1.6m. The budget pressures in respect of police staff premature retirements and secondment income are offset to some extent by underspends in Police Pay and Police Staff Pay due to vacancies. The forecast overspend has increased by £1.0m since Period 8 as a result of increased Police Staff premature retirement costs (each case is now reviewed/approved by central Human Resources Directorate (HR) not the individual’s Business Group) and an increase in recruitment numbers for the final intake of 2005/06.

Resources

• An underspend of £4.3m – 1.8% of budget

16. Forecast additional expenditure on Theseus and Bracknell has reduced from £6.6m to £4.6m following a thorough review of costs incurred, particularly within Property Services. Excluding such expenditure, the forecast underspend in Resources is £8.9m. This is principally due to the reduction in the expected tax liability on free rail travel following discussions with the Inland Revenue, additional income for service charges at Lambeth from the Forensic Science Service and increased investment income. There has been a minor adverse movement within the Resources Directorate of £0.9m since Period 8 following a review of the expected level of repairs and maintenance.

Metropolitan Police Authority and Internal Audit 

• An underspend of £0.2m – 1.7% of budget.

17. The underspend position principally results from unanticipated income relating to internal audit work on fraudulent claims by interpreters (£0.3m).

Pensions

• A favourable variance of £29.6m – 10.2% of budget.

18. A small increase in variance of £0.4m since the Period 8 forecast which relates to an increase in transfer values received forecast.

Centrally held budgets

• A favourable variance of £34.4m.

19. The forecast additional expenditure on Theseus has reduced from £10.1m to £9.1m. The forecast also includes £30m of Home Office grant contribution to the cost of Operation Theseus.

Funded units

• An adverse variance of £2.1m

20. The budget for funded units assumes income will exceed expenditure by £3.9m, the forecast suggests that only £1.8m of this will be achieved, a variance of £2.1m. The shortfall includes £0.6m of Catering resources being diverted to Operations Theseus, Bracknell and G8 which are not reimbursable by customers. Other adverse variances relate to the Disclosure Service (£0.7m) and DNA Expansion (£1.1m).

Provisional Revenue Outturn by expenditure/income type

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

Police Officer Pay

• Overspend of £1.2m – 0.1% of budget.

22. The forecast includes £12.9m additional costs relating to Mutual Aid provided to the MPS and NI payable on overtime payments resulting from operations following the terrorist attacks in London and Operation Bracknell. Excluding such expenditure, there is a forecast underspend of £11.7m. This underspend is due to workforce numbers being less than budgeted through the year despite the forecast over strength position in Territorial Policing. The forecast underspend has reduced by £2.4m from Period 8 following an increased forecast within Territorial Policing.

Police Staff Pay

• Underspend of £2.1m – 0.4% of budget

23. Forecast expenditure on Theseus and Bracknell has increased marginally to £0.3m. Excluding such expenditure, there is a forecast underspend of £2.4m. The forecast underspend has increased by £1.1m from Period 8, mainly within the Directorate of Information following further review of the recruitment profile of Police Staff for the remainder of 2005/06.

PCSO Pay

• Underspend of £6.6m – 11.1% of budget.

24. The forecast underspend is principally due to vacancies and variations in pay averages compared to those budgeted. The forecast underspend has reduced by £0.2m from that reported in Period 8.

Traffic Warden Pay

• Underspend of £1.6m – 12.9% of budget.

25. This forecast assumes that staff for the new car pound at Perivale will be starting during January 2006 which is later than anticipated when the budgets were originally set. Clearance and recruitment lead times may have an impact on this. Several adverts have been placed in the press and interviews were held during October/November. The forecast underspend has increased by £0.2m from Period 8 following continuing reviews of vacancies within the Transport OCU.

Police Officer Overtime

• Overspend of £34.5m – 29.4% of budget.

26. Forecast expenditure on Theseus and Bracknell has increased marginally by £0.1m to £26.0m. Excluding such expenditure, there is a forecast overspend of £8.5m. The major cause of the remaining overspend continues to be operational commitments within Territorial Policing relating to street crime. The forecast overspend has increased by £0.7m from Period 8, principally due to an increased forecast within Territorial Policing.

Police Staff Overtime 

• Overspend of £6.1m – 23.6% of budget.

27. Forecast expenditure on Theseus and Bracknell has increased marginally to £1.2m. Excluding such expenditure, there is a forecast overspend of £4.9m. 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 reduction of £0.5m in the forecast overspend since Period 8.

PCSO Overtime 

• Overspend of £0.3m – 39.0% of budget.

28. As previously stated this overspend relates almost entirely to the cost of operations following the recent terrorist attacks in London, estimated at £0.3m. There has been minimal change in the variance from Period 8.

Employee Related Expenditure

• Underspend of £3.2m – 9.4% of budget.

29. Forecast expenditure on Theseus and Bracknell is £0.4m. Excluding such expenditure, there is a forecast underspend of £3.6m. This is principally due to the reduction in the expected tax liability on free rail travel following discussions with the Inland Revenue. There has been a reduction of £0.6m in the forecast overspend since Period 8.

Premises Costs

• Overspend of £1.7m – 0.9% of budget.

30. Forecast expenditure on Theseus and Bracknell is £1.4m. Excluding such expenditure, there is a forecast overspend of £0.3m. There has been minimal change in the variance from the Period 8 position.

Transport Costs

• Overspend of £15.6m – 30.9% of budget.

31. Forecast expenditure on Theseus and Bracknell is £5.3m. Excluding such expenditure, there is a forecast overspend of £10.3m. 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 forecast overspend has increased marginally by £0.2m from the Period 8 position.

Supplies and Services

• Overspend of £18.8m – 4.7% of budget.

32. Forecast expenditure on Theseus and Bracknell is £11.2m. Excluding such expenditure, there is a forecast overspend of £7.6m. As previously advised, the main causes are DNA testing and external and legal consultancy. The forecast overspend has reduced by £3.9m since Period 8 principally within the Directorate of Information following a review of forecast commitments, particularly in relation to the C3i project .

Capital Financing Costs 

• Underspend of £2.5m – 14.3% of budget.

33. 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 forecast underspend since Period 8.

Income

• Forecast over-achievement of £43.2m – 14.6% of budget.

34. As previously reported, the income forecast includes a contribution of £30m from Home Office in respect of Operation Theseus, receipt of the MPS contribution to Operation Bracknell of £6.3m, income of £4.7m for policing the G8 meeting and an additional £1.8m from Transport for London following a transfer of police officers from Territorial Policing to the Transport Operational Command Unit (OCU). These are all one-off income streams and do not therefore affect the budget build for 2006/07. The forecast also reflects income of £3.1m for service charges at Lambeth. The forecast over-achievement has reduced by £1.0m since Period 8 following a decision to carry forward funding for Designated Detention Officers into 2006-07.

Funding

• Forecast under-funding of £1.1m – 0.1% of budget.

35. 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.

Budget movements

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 December are at Appendix 3b. The major budget movements in Period 9 relate to the allocation of centrally held budgets to Business Groups for Special Priority Payments paid to Police Officers in December.

Movements in Reserves

The following reserve movements have been carried out in Period 9:

• Previously reported: £6,374,464
• Operational Costs Black Police Association: £340,000 (Territorial Policing)
• Operational Costs Modernising Operations: £150,000 (Territorial Policing)
• Operational Costs Partnership Reserve: £20,000 (Deputy Commissioner’s Command)
• Total: £6,884,464

Key Deliverables

38. This is the third 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

39. We now have 259 teams across London funded by the MPS with 26 teams funded externally and a further three likely to be in place before the year end. In addition, a number of boroughs have purchased additional PCSOs and police officers to boost the size of existing teams.

Police Officer and Staff Growth in Specialist Units

40. Within Specialist Crime 9 officers are in post with 46 more awaiting posting and a further 16 officers are currently being being recruited. Of 30 posts within Central Operations, 16 were in post by 3 January with the remaining officers due to complete training shortly. All 7 posts within Deputy Commissioner’s Command are expected to be filled by August 2006. All Police Staff have been recruited and are now in post.

Progress Towards MPS Workforce Targets

41. The proportion of officers from black and minority ethnic communities stands at 7.26% against a target of 30% whilst proportion of female officers is 19.58% against a target of 25%. These are both slight improvements against the first quarter figures reported which were 7.15% and 19.41% respectively.

Civilianisation of Police Officers

42. As previously advised, due to the delay in Airwave implementation, the resulting civilianisation has been delayed until 2006/07.

Increase Police Visibility

43. The most recently published data for December 2005 shows an increase of 2.0% as shown in the table below.

Visibility Measure December 05 

Improve Public Confidence and feelings of safety and security

44. The results of the second quarterly survey are due to be published in February 2006. As previously stated, 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.

45. 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

46. There have been several key pieces of work that have taken place in the third quarter of the year within the Racial and Violent Crime Task Force. Domestic Violence detections have increased with 26% of all perpetrators either being charged or cautioned. A further 34% of Domestic Violence offences were detected using the Home Office (HO) counting rules. The arrest rate for Domestic Violence offences where a power of arrest exists has increased across the MPS.

On the 30 November 2005 the MPS ran an Athena day, targeting Domestic Violence and sexual assault perpetrators, in which all 32 MPS boroughs participated. There were 273 arrests, the best return yet for an Athena day. This operation received significant press coverage in both written and broadcast media.

In early December the MPS launched a Domestic Violence advertising campaign aimed at targeting male perpetrators of domestic violence and perpetrators from same sex relationships. This advertising campaign included both print and radio media and was fully supported by our partners. The campaign release was set to coincide with Christmas holiday period when there is a rise in domestic violence incidents.

Croydon Borough saw the launch of the Family Assistance Centre at the beginning of December. Croydon Community Safety Unit are fully committed to this joint multi-agency project with police officers moving out of police stations and working from non-police buildings with other agencies. This project ensures Domestic Violence victims get a level of service as yet unseen within other areas of London

Full time borough Lesbian, Gay, Bi-sexual and Transgender (LGBT) liaison officers have been introduced. This has seen an increase in the intelligence flow ensuring a more responsive approach to LGBT crime and increasing awareness of other LGBT publicity events.

Capital Monitoring

47. The Finance Committee on 19 January 2006 approved a revised Capital Programme for 2005/06 of £322.4m.

48. Appendix 4 sets out the expenditure for the 2005/06 Capital Programme as at Period 9 (December) at business group, which shows an overall total of £155.0m. This total represents 48.1% of the revised budget. The forecast for the year of £273.7m is £48.7m below the revised budget. The position in respect of each business group is set out below.

Property Programme

• £10.6m underspend (8.3% of budget).

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

Information Programme – Excluding C3i Programme

• £1.8m underspend (3.5% of budget).

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

Transport Projects

• £1.1m overspend (7.7% of budget).

51. The forecast overspend is due to the purchasing of vehicles on behalf of other business groups that were not included in the capital budget. Funding for this expenditure will come from within the various business groups and work is on going to secure this.

C3i Programme

• £37.2m underspend (43.4% of budget).

52. The forecast underspend is due to the planned re-profiling of expenditure into later years for the subscriber terminals and Integrated Communications Control System (ICCS) contract payments; and the expenditure on the Airwave project being below budget.

53. Appendix 4 also shows the funding received to date as -£155.0m, which is 48.1% of the revised funding figure of -£322.4m. At this time the forecast for funding is expected to match expenditure for the year.

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 2005/06 monitoring reports.

F. Contact details

Report author: Sharon Burd, Director of Finance Services

For more information contact:

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

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