Revenue and capital monitoring report  2007/08 – Period 6

Report: 4
Date: 19 November 2007
By: the Director of Strategic Finance on behalf of the Commissioner

Summary

This report provides an update on the revenue and capital budget monitoring position for 2007/08 at Period 6 (to the end of September). The revenue budget is forecast to underspend by £14.6m (0.5% of budget), which includes £5.6m of estimated additional costs related to Operation Seagram. The Capital Programme as at Period 6 (to the end of September) shows year to date total expenditure of £54.1m. This total represents 30.1% of the revised annual budget. The forecast for the year of £178.0m is £1.8m below the revised budget of £179.8m.

A. Recommendations

Members are invited to:

1. Note the year to date and forecast position for revenue and capital budgets.

2. Approve budget changes to the capital programme as set out in this paper (paragraph 34).

B. Supporting information

Background

1. This paper provides information on the forecast against revenue and capital budgets for the MPA/MPS in 2007/08 based on the position at the end of September.

Revenue Forecast by Business Group

2. Table 1 provides a summary of the revenue forecast and additional cost forecast for Operation Seagram (the response to the vehicle-borne improvised explosive device (VBIED) found in Haymarket at the end of June). Table 2 compares the forecast outturn variances for Period 6 and Period 5 by Business Group.

3. The outturn variance for period 6 is forecast as an underspend of £14.6m. This includes a forecast outturn of £5.6m for the additional costs attributed to Operation Seagram. The period 6 forecast outturn variance excluding Operation Seagram costs is an underspend of £20.2m.

Table 1 – Summary of revenue forecast against budget at period 6 (Appendix 4)

Table 2 - Comparison of Period 6 forecast outturn variance with Period 5 forecast outturn variance. (Appendix 4)

4. The subjective position by Business Group is at Appendix 1. The overall position for the MPS is at Appendix 2. The figures in the Appendices include expenditure on Operation Seagram.

5. Territorial Policing – An underspend of £12.1m – 0.9% of budget.
There has been a favourable movement of £0.8m in the forecast position from that reported at period 5. This principally results from movements in Police Officer Pay (£1.0m) and Police Staff pay (£1.8m) following reviews of the anticipated recruitment profiles. This has been partly offset by an increase in the Police Overtime forecast (£1.8m) as a result of planned initiatives to tackle crime during the Xmas period (Operation Humbug).

6. Specialist Crime – An underspend of £3.4m – 0.9% of budget.
There has been a favourable movement of £2.1m in the forecast position from that reported at period 5. This principally results from movements in Police Officer Pay (£0.6m) and Police Staff pay (£1.4m) following reviews of the anticipated recruitment profiles. Additionally, budget has been allocated from the Investment Board Fund for growth posts relating to the IMPACT Nominal Index (INI) within Met Intelligence Bureau (£0.8m).

7. Specialist Operations – An overspend of £1.6m – 0.8% of budget.
There has been a favourable movement of £1.0m in the forecast position from that reported at period 5. This principally results from a reduction in the Police Officer Overtime forecast within SO15, Counter Terrorism Command.

8. Central Operations – An underspend of £1.3m – 0.5% of budget.
There has been a favourable movement of £1.5m in the forecast position from that reported at period 5. This is mainly within Police Officer Overtime (£0.9m) following a review of the forecast cost of additional aid relating to Operation Hargood and the London Arms Fair. Additionally there has been an increase in the income forecast for the Transport OCU (£0.6m) with additional PCSOs and Traffic Wardens forecast in respect of the Transport for London Contract

9. Operational Services – An overspend of £2.5m – 1.6% of budget.
There has been a favourable movement of £0.2m in the forecast position from that reported at period 5. The overspend is principally related to additional staff costs within Central Communications Command (CCC) to help ensure that the level of service meets operational demands.

10. Strategy, Modernisation & Performance – An underspend of £0.5m – 3.6% of budget.
There has been a small favourable movement of £0.1m in the forecast position from that reported at period 5. The forecast underspend relates to Police Officer pay and Police Staff pay and reflects the current level of vacancies with the Directorate.

11. Directorate of Public Affairs – An underspend of £0.2m – 1.1% of budget.
There has been a small favourable movement of £0.1m in the forecast position from that reported at period 5. The forecast underspend relates to Police Officer pay and Police Staff pay and reflects the current level of vacancies with the Directorate.

12. Directorate of Information – An overspend of £1.4m – 0.6% of budget.
There has been an adverse movement of £0.7m from that reported at period 5. This is principally due to an increased demand for evidential analysis services provided by the Directorate.

13. Resources – An underspend of £1.4m – 0.6% of budget.
A minor change from the forecast variance reported at period 5.

14. Human Resources – An underspend of £0.6m – 0.4% of budget.
A minor change from the forecast variance reported at period 5.

15. Metropolitan Police Authority – An underspend of £0.2m – 1.9% of budget.
A minor change from the forecast variance reported at period 5.

16. Centrally Held Budgets – Nil variance. There is no change from the forecast variance reported at period 5.

17. Discretionary Pension Costs – An underspend of £0.4m – 1.4% of budget.
There has been a small adverse movement of £0.2m in the forecast position from that reported at period 5.

Revenue Forecast by expenditure/income type

18. Table 3 compares the forecast variance for Periods 6 and 5 by income/expense type.

Table 3 – Forecast outturn by Income/expense type (Appendix 4)

The main forecast variances from budget are set out below.

19. Police Officer Pay – Underspend of £32.3m – 1.9% of budget.
This underspend is due to workforce levels being below those budgeted within all Business Groups. The forecast underspend has increased by £3.1m since period 5 as Business Groups continue to re-assess their anticipated recruitment profiles. Table 4 shows the police officer strength by Business Group at 30 September against the Budgeted Workforce Total for 31 March 2008.

Table 4 – Police Officer Strength v BWT (Appendix 4)

20. Police Staff Pay - Underspend of £12.3m – 2.2% of budget
This underspend is mainly due to vacancies within Territorial Policing, Specialist Crime, Specialist Operations, Central Operations and Human Resources. The forecast underspend has increased by £5.0m since period 5 due to the re-assessment of anticipated recruitment profiles within Territorial Policing, Specialist Crime and Resources.

21. PCSO Pay - Underspend of £3.4m – 2.5% of budget.
There has been a small increase in the underspend forecast of £0.2m since period 5. The underspend is within Territorial Policing and relates to delays to the planned implementation of changes to the Station Reception Officer role which are to be undertaken by PCSOs. This underspend is offset slightly within Central Operations as the Transport OCU are forecasting to be over strength as they have been recruiting PCSOs instead of Traffic Wardens.

22. Traffic Warden Pay - Underspend of £0.6m – 5.3% of budget.
This underspend is principally due to Transport OCU forecasting to be under budgeted strength as they have been recruiting PCSOs instead of Traffic Wardens. There has been a minor adverse movement of £0.1m since period 5.

23. Police Officer Overtime – Overspend of 19.6m – 15.4% of budget.
There has been an adverse movement in the forecast of £1.0m from that reported at period 5 as a result of planned initiatives to tackle crime during the Christmas period (Operation Humbug). The overspend is principally due to Operation Seagram (the response to the vehicle-borne improvised explosive device (VBIED) found in Haymarket at the end of June), Operation Hargood (Policing of the environmental camp at Heathrow Airport) and other initiatives within Territorial Policing to tackle youth crime issues. There are also forecast overspends relating to additional aid within Central Operations for events at Wembley Stadium.

24. Police Staff Overtime – Overspend of £4.1m – 13.5% of budget.
There has been an adverse movement of £0.4m in the forecast from that reported at period 5 which is principally due to the re-assessment of overtime required to address staff shortages within the Central Communications Command to meet required standards for call handling performance.

25. PCSO and Traffic Warden Overtime – Minor underspend.

26. Employee Related Expenditure – Overspend of £2.5m – 6.6% of budget.
There has been an adverse movement of £0.6m from the forecast at period 5, mainly due to additional expenditure on police officer recruitment within Human Resources and for seconded officers working on Operations Overt/Overamp and Theseus within Specialist Operations.

27. Premises Costs – Overspend of £6.4m – 3.0% of budget.
The forecast overspend relates to higher than anticipated rent and rates and contractual increases in annual service charges.

28. Transport Costs - Overspend of £5.9m – 10.0% of budget.
There has been an adverse movement of £1.3m from that reported at period 5. This is principally due to a review of costs in respect of police travel and subsistence within the Counter Terrorism Command in Specialist Operations. The overspend relates mainly to overseas travel and subsistence costs and vehicle hire connected with Operations Seagram and Overt/Overamp within Specialist Operations. There is also an overspend within Central Operations due to corporate vehicle hire and fuel costs related to the anticipated increased level of aid related to Operation Hargood and events at Wembley, as well as higher than anticipated levels of maintenance within the Air Support Unit.

29. Supplies and Services - Overspend of £12.5m – 2.9% of budget.
There has been a favourable movement of £2.9m in the forecast from that reported at period 5. This movement is principally due to the allocation of budget funded by Home Office grant within Specialist Operations and a reduction of forecast costs in forensic charges and local purchases within Specialist Crime.

30. Capital Financing Costs – Underspend of £0.6m – 2.7% of budget.
Minor underspend.

31. Income - Forecast over-achievement of £16.0m – 5.0% of budget.
There has been a favourable movement of £1.3m from the forecast presented at period 5. This movement principally relates to income from local authorities for the use of PCSOs within Territorial Policing.

Budget movements

The major budget movements undertaken in period 6 are shown below in Table 5.

Table 5 – Major budget movements actioned in periods 6 (Appendix 4)

32. Movements in Reserves
The reserve drawdowns and transfer to reserves carried out in period 6 are shown in Table 6.

Table 6 – Reserve drawdowns and transfer to reserves carried out in Period 6 (Appendix 4)

33. Capital Monitoring

Following discussions at the Capital Programme Review Board on 17 August and the formation of the seven-year Capital Programme that is being presented today, Members are asked to approve the following amendment to the 2007/08 Capital Programme:

• Revise the Capital Budget in 2007/08 for the Property Programme to £39.9m to reflect re-phasing of the programme into future years. A total of £26.0m is requested for re-phasing into future years.
•  Revise the Capital Budget in 2007/08 for the Safer Neighbourhoods Programme to £14.5m to reflect re-phasing of the programme into future years. A total of £12.9m is requested for re-phasing into future years.

35. Appendix 3 sets out the expenditure for the 2007/08 Capital Programme as at Period 6 (September) by programme, which shows a year to date total of £54.1m. This represents 30.1% of the revised budget of £179.8m. The forecast for the year of £178.0m is £1.8m below the revised budget.

36. Property Programme – Nil variation
It is proposed that the budget for the Property Programme is revised to £39.9m to reflect re-phasing of works into future years.

The main programmes of work being re-phased are as follows:

• Re-phasing of works into future years of the planned rollout of the estate strategy (such as Custody Centres and Patrol Bases)
• Eagle Data Centre (fees) - awaiting detailed scope and approved Business Case from DoI
• SC Accommodation - resources have been focused on delivery of MIB, Forensics and Witness Protections Schemes which are being progressed
• CO Accommodation - progress is dependent on the outcome of finalising the SCD location requirements
• Stables - due to lack of a suitable site
• Heathrow - Discussions ongoing with users and BAA / HAL
• The local bases schemes are intended to “tie in” with the wider estate modernisation and with the Safer Neighbourhood programme, to deliver best value. The re-phasing of Safer Neighbourhoods Programme has a direct delaying impact.

37. Information Programme – Excluding C3i Programme – £0.3m Overspend (0.5% of budget).
Minor variation.

38. MPA Information Technology – Nil variation.

39. Transport Projects – Nil variation.

40. Other Plant & Equipment Expenditure – £1.1m overspend (43.1% of budget). This primarily relates to additional forecast expenditure on aircraft and associated support equipment.

41. Directorate of Information – C3i Programme - £2.3m underspend (7.8% of budget). The forecast underspend relates to the Heathrow Special Scheme which will now be funded from the 2007/08 Revenue Budget.

42. Safer Neighbourhoods Programme (Phases 1 to 3) - £0.9m underspend (6.6% of budget).
It is proposed that the budget for the Safer Neighbourhoods Programme is revised to £14.5m to reflect re-phasing of works into future years. The Safer Neighbourhoods Programme has been delayed due to a review of the procurement process. The review has now been completed and the Finance Committee in July 2007 agreed the procurement framework for Phase Two of the Safer Neighbourhood Property Programme. The re-phasing of Phase Two of the Programme affects spend on both Information Technology and Property projects.

 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

Background Papers:

• 2007/08 Budget Book
• Previous monitoring reports

F. Contact details

Report author: Anne McMeel, Director of Strategic Finance

For more information contact:

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

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