Finance Committee Annual Report 2006/07

Report: 5
Date: 19 July 2007
By: Treasurer

Summary

The report summarises the work of the Finance Committee for the year 2006/07.

A. Recommendations

That Members agree the report as representing the Committee’s work over the last year for submission to the Authority.

B. Supporting information

Introduction

1. The Authority requires each committee to produce an annual report on its activities. The reports are intended to give a general indication of member performance. They will also provide material for incorporation into the Authority’s published annual report.

Meetings and membership

2. The Committee has met eight times during the year. There are eight members of the Committee. Graham Tope has been Chair for the year and Richard Sumray Deputy Chair. Other members have been Reshard Auladin, Richard Barnes, Elizabeth Howlett, Bob Neill, Aneeta Prem and Rachel Whittaker. There were also two joint meetings on budget matters with the Planning Performance and Review Committee.

Responsibilities

3. The Finance Committee oversees the preparation and management of the revenue and capital forward plans and annual budget, making recommendations to the Authority as appropriate. The Committee also discharges the Authority’s responsibilities in relation to treasury management, insurances, the efficiency plan and any other significant non-audit financial matters. In addition, the Committee considers strategic issues in respect of the estate and other resource functions, financial and strategic issues relating to the provision of information systems and technology, and major contract matters as required by the Authority’s contract regulations.

Budgets

4. The Committee has considered financial plans, budgets, expenditure and outturn as appropriate in the annual cycle as follows:

• 2005/06. The final revenue and capital outturns were reviewed and final adjustments agreed. The resulting final accounts again received an unqualified opinion from the external auditor for the fourth time since the Authority’s inception.
• 2006/07. The Committee has received regular monitoring reports on both revenue and capital budgets and has considered provisional outturns. The Budget and Police Overtime Group also carried out a detailed scrutiny of the monthly monitoring reports.
• 2007/08. The Committee has considered the draft budget, (including joint working at two special meetings in September and November with the PPR Committee), and made recommendations to the Authority with regard to the submission to the Mayor. The 2007/08 revenue budget was approved, after a final requirement to identify a further £8M savings and allows for full implementation of the Safer Neighbourhoods programme. Medium term financial projections to 2009/10 and a five year capital programme have also been approved.

Other financial matters

5. The Committee has dealt with a number of significant financial matters in addition to budgets, including:

• Efficiency plan. The Committee has monitored the successful delivery of the efficiency plan for 2006/07 and approved the 2007/08 plan.
• Police overtime. The Committee has raised issues around the management of police overtime as part of the monitoring of expenditure against budget. A member-led review (under the auspice of the Budget and Police Overtime Group) into the subject has continued to scrutinise overtime and has commissioned a range of detailed management information from the MPS.
• Treasury management. The Committee has received monitoring reports and a strategy report for 2008/09.
• Prudential Code for capital finance. The Authority has approved prudential indicators for 2007/08 in accordance with the requirements of the Code. The Committee has agreed arrangements for monitoring the indicators during the year.
• Insurances. Revised insurance arrangements were agreed during the year.
• Annual Review of Fees and Charges. The Committee has kept under review the arrangements for special service agreements including agreeing updated rates. A further report was called for on the methodology of the calculation of fees (paper is submitted on the current agenda).
• Activity based costing. The Committee has received update on progress in implementing activity based costing in the MPS.
• Financing Operation Overt. The Committee has agreed a policy on the approach to dealing with the additional unbudgeted costs of Operation Overt, and carefully monitored this during the course of the year. The outcome was successful with a small budget underspend at the end of the financial year, after transfers to reserves.
• Cost Implications of Public Order Events. The Committee has kept under review the policing costs associated with major public order events that occurred during 2006.
• Police Property Act Fund. The Committee considered the PPAF 2005-06 annual accounts, grants made in 2006-07 and considered arrangements for the disbursements from the fund in accordance with agreed criteria in 2007-08.
• Financial Management Strategic Improvement Programme (FMSIP). The Committee reviewed the FMSIP which is designed to secure continual improvement in the financial management in the MPS.
• Personal Insurance Indemnity Policy. The Committee agreed to continue MPS personnel being indemnified by the Authority in certain tightly defined situations where their own personal life and accident insurances do not provide an indemnity. This included situations where life and accident insurances are invalidated through non disclosure of material information relating to high risk duties that cannot be disclosed to their insurers for operational security reasons.
• Formula Grant Consultation. The Committee received a report on the 2007/08 consultation paper on formula grant changes and agreed an appropriate response to government.
• New Financial Framework. The Committee agreed the approach to the new financial planning framework for 2008/09 and future years and received a report setting out the financial envelope.
• Revenue Reserves. The Committee reviewed revenue reserves as part of the 2007/08 budget submission and confirmed the existing policy on general reserves calculation after considering a risk based assessment.

The Committee’s work has been supported by the informal Budget and Overtime Group, chaired by Graham Tope. This has looked at a wide range of budget and grant matters in addition to the overtime scrutiny work previously mentioned.

Estate

6. The Committee has received regular update reports from the MPS Director of Property Services on a range of current estate issues. It has also considered reports relating to specific property transactions and proposals, approving action as appropriate. The Committee has approved proposals for contract award for the Facilities Management Contract. Approval was given to new patrol bases and custody centres. The Committee has agreed revised rents and charges for residential accommodation. During the year the Committee received regular updates on the progress of the Central London Estate and the residential estate. The Committee also agreed the property procurement strategy for the delivery of construction projects and associated services. The Committee has been assisted by the work of the informal Estates Oversight Group chaired by Aneeta Prem.

IT/IS

7. The Committee has approved various contracts in pursuance of the MPS information strategy. The Committee also received a report on the Application Hosting 2 project. Members agreed a report on the Airwave radio multi-programming. The Committee also considered a report on the funding for a central Management of Police Information (MOPI) team. The committee agreed a technical procurement framework and also considered the re-launching of Project Metafor. The committee is supported by the informal IS/IT Oversight Group which is chaired by Reshard Auladin, which examines IS/IT issues.

Procurement

8. The Committee approved a sustainable procurement policy. It has monitored progress on the outsourced contracts retendering programme and has approved contract action in support of that programme. It has also received information on the routine forward contracts programme.

9. Transport. The Committee agreed that the MPS could bid for all or part of the Transport for London London-wide vehicle removal service contract which had been issued by TfL.

10. Environment and Sustainable Development. The Committee has approved an Environment and Sustainable Development Return to the GLA.

Next year

11. In the forthcoming year the committee will be developing work around the new planning framework and working to the Mayor’s timetable around his budget guidance. The Finance Committee will monitor expenditure against budget in 2007/08 and develop the budget submission for 2008/09. Consultation with stakeholders on the 2008/09 budget will be undertaken. Revenue and capital plans will both need to take account of the continuing implications of public expenditure plans under SR07 and Mayoral priorities. Work will be progressed on reviewing the capital strategy and asset management planning in order to provide an improved strategic framework for decisions about capital investment, in accordance with good practice endorsed by the Prudential Code. The Efficiency Plan will continue to be monitored carefully.

12. The output from the current Met Modernisation Review will need to be carefully considered. Key decisions will need to be taken to enable a balanced budget to be presented to the Mayor in the extremely tight timescale required.

13. The Committee will be asked to consider progress on the financial improvement programme. Specific areas of development in which the Committee will continue to take an active interest include budget devolution, internal control, capital budgeting and activity based costing.

14. Proposals relating to property will be assessed in the context of the estate strategy and the residential estate strategy. The Committee will continue to monitor and facilitate the MPS information strategy. The implementation of the new procurement strategy should see continuing improvement in the quality of the procurement process and improved value for money in contracts the Committee is asked to approve. It is hoped that member representation will be agreed for the new Procurement Oversight Group. Major decisions will be required in the next year on the retendering of contracts and also to ensure improved compliance with procurement rules and achieve better internal control.

C. Race and equality impact

The Committee addresses equalities aspects if and when they arise in relation to its business.

D. Financial implications

The cost of the Committee’s activities is met within the MPA’s directly managed budget.

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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