Revenue and capital monitoring report 2007/08 - period 8

Report: 04
Date: 24 January 2008
By: 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 8 (to the end of November). The revenue budget is forecast to underspend by £15.9m (0.5% of budget), which includes £5.4m of estimated additional costs related to Operation Seagram.

The Capital Programme as at Period 8 (to the end of November) shows year to date total expenditure of £75.4m. This total represents 42.0% of the revised annual budget. The forecast for the year of £167.7m is £12.1m below the revised budget of £179.8m (£116.5m below the original annual budget of £284.2m).

A. Recommendations

That members note the year to date and forecast position for revenue and capital budgets.

B. Supporting information

Background

1. This report provides an update on the forecast against the revenue and capital budgets for the MPA/MPS in 2007/08 based on the position at the end of November.

Revenue Forecast by Business Group

2. The outturn variance for Period 8 is forecast as an underspend of £15.9m. This includes a forecast outturn of £5.4m for the additional costs attributed to Operation Seagram. The Period 8 forecast outturn variance excluding Operation Seagram costs is an underspend of £21.3m.

3. Table 1 provides a summary of the revenue forecast and additional cost forecast for Operation Seagram. Table 2 compares the forecast outturn variances for Period 8 and Period 7 by Business Group. It should be noted that this report does not include the effect of the recent announcement by the Home Secretary regarding the Police Officer Pay award being staged from 1 December 2007 rather than from 1 September 2007 as had been forecast. Discussions regarding the effect of this decision are on going and an update will be provided to the next Finance Committee.

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.

Table 1 – Summary of revenue forecast against budget at Period 8

Table 2 - Comparison of Period 8 forecast outturn variance with Period 7 forecast outturn variance.

5. Territorial Policing – An underspend of £8.5m – 0.6% of budget.
There has been a favourable movement of £0.2m in the forecast position from that reported at Period 7. The underspend results principally within Police Officer and Police Staff pay due to unfilled vacancies.

6. Specialist Crime – An underspend of £4.5m – 1.2% of budget.
There has been a favourable movement of £0.4m in the forecast position from that reported at Period 7. This principally results from reduced Police Officer Pay and Police Overtime forecasts following reviews of the anticipated recruitment profiles and controls on overtime spending.

7. Specialist Operations – An underspend of £4.4m– 2.3% of budget.
There has been a favourable movement of £3.5m in the forecast position from that reported at Period 7. This principally results from reductions in the police officer pay forecasts following reviews of the expected recruitment profiles and reductions in the forecast cost of seconded officers. A significant element of the underspend relates to vacancies within Counter Terrorism grant funded posts for which a grant deferral is forecast within Centrally Held (see paragraph 16).

8. Central Operations – An underspend of £2.8m – 1.1% of budget.
There has been a favourable movement of £0.8m in the forecast position from that reported at Period 7. This principally results from reductions in the police and police staff pay forecasts following reviews of the expected recruitment profiles.

9. Operational Services – An overspend of £1.1m – 0.7% of budget. There has been a small adverse movement of £0.2m in the forecast position from that reported at Period 7. This results principally from additional costs of legal counsel incurred in respect of the inquest into the death of Princess Diana.

10. Strategy, Modernisation & Performance – An underspend of £0.7m – 4.8% of budget.
There has been a small favourable movement of £0.1m in the forecast position from that reported at Period 7. 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 £0.1m – 2.0% of budget.
A minor change from the forecast variance reported at Period 7.

12. Directorate of Information – An overspend of £1.8m – 0.8% of budget.
There has been a favourable movement of £0.2m from that reported at Period 7. This principally results from reductions in the police staff pay forecasts following reviews of the expected recruitment profiles. The overspend relates principally to the need to recruit technical specialists to cover vacant posts at an additional cost and increased workstation support costs.

13. Resources – An underspend of £2.3m – 0.9% of budget.
A minor change from the forecast variance reported at Period 7. As previously advised, the underspend relates to savings across a range of running costs.

14. Human Resources – An underspend of £0.8m – 0.5% of budget.
There has been a favourable movement of £0.5m from that reported at Period 7. This principally results from the allocation of centrally held budget to cover contractual increases to transport costs.

15. Metropolitan Police Authority – An underspend of £0.3m – 2.9% of budget.
A minor change from the forecast variance reported at Period 7.

16. Centrally Held Budgets – An overspend of £5.6m.
There has been an adverse movement of £5.0m in the forecast position from that reported at Period 7. This relates to an anticipated deferral of Counter Terrorism Grant to 2008/09 in order to meet future Counter Terrorism commitments and is offset by the underspend reported in Specialist Operations.

17. Discretionary Pension Costs – A minor underspend.
A minor change from the forecast variance reported at Period 7.

Revenue Forecast by expenditure/income type

18. Table 3 compares the forecast variance for Periods 8 and 7 by income/expense type.

Table 3 – Forecast outturn by Income/Expense type

The main forecast variances from budget are set out below.

19. Police Officer Pay – Underspend of £34.3m – 2.0% of budget.
This underspend is due to workforce levels being below those budgeted within all Business Groups. The forecast underspend has increased by £4.2m since Period 7 mainly within Territorial Policing following reviews of their expected recruitment profiles. Table 4 shows the police officer strength by Business Group at 30 November against the original Budgeted Workforce Total for 31 March 2008 and the forecast strength for 31 March 2008.

Table 4 – Police Officer Strength v BWT

Note: Based on current recruitment plans the overall strength at 31 March 2008 is expected to be 31,593.

20. Police Staff Pay - Underspend of £16.8m – 3.0% of budget
There has been a favourable movement in the forecast of £2.2m since Period 7, mainly within Operational Services and the Directorate of Information following re-assessment of anticipated recruitment profiles.

21. PCSO Pay - Underspend of £5.0m – 3.7% of budget.
There has been a favourable movement in the forecast of £0.9m since Period 7. 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.

22. Traffic Warden Pay - Underspend of £0.8m – 6.4% of budget.
There has been a small favourable movement in the forecast of £0.1m since Period 7. The underspend is principally due to the Transport OCU recruiting PCSOs instead of Traffic Wardens.

23. Police Officer Overtime – Overspend of 15.7m – 12.1% of budget.
There has been a favourable movement in the forecast of £3.1m from that reported at Period 7 mainly following a review of the cost of additional aid within Central Operations and timing differences relating to the allocation of budget funded by additional income from policing Wembley stadium.

24. Police Staff Overtime – Overspend of £3.8m – 12.7% of budget.
There has been a small favourable movement of £0.1m from that reported at Period 7.

25. PCSO and Traffic Warden Overtime – Minor overspend.

26. Employee Related Expenditure – Overspend of £1.7m – 4.4% of budget.
There has been an adverse movement of £0.2m in the forecast from that reported at Period 7, mainly due to additional expenditure within Human Resources on the police officer recruitment campaign.

27. Premises Costs – Overspend of £8.0m – 3.8% of budget.
A minor change from the forecast variance reported at Period 7. As previously advised, the forecast overspend relates to higher than anticipated rent and rates and contractual increases in annual service charges.

28. Transport Costs - Overspend of £5.7m – 9.6% of budget.
A minor change from the forecast variance reported at Period 7. As previously advised, the overspend relates mainly to overseas travel and subsistence costs and vehicle hire connected with Operations Seagram and Overt/Overamp within Specialist Operations.

29. Supplies and Services - Overspend of £18.8m – 4.3% of budget.
There has been an adverse movement of £4.3m in the forecast from that reported at Period 7. This movement is principally within Territorial Policing and reflects additional initiatives that are to be funded from underspends elsewhere within the Business Group. There has also been an increase within Operational Services resulting principally from additional costs of legal counsel incurred in respect of the inquest into the death of Princess Diana.

30. Capital Financing Costs – Underspend of £0.7m – 3.1% of budget.
A minor change from the forecast variance reported at Period 7.

31. Income - Forecast over-achievement of £18.3m – 5.6% of budget.
There has been an adverse movement in the forecast of £2.5m from that reported at Period 7. This movement is principally within Central Operations and relates to timing differences between the allocation of budget and receipt of additional income from policing Wembley stadium.

32. Budget movements
The major budget movements undertaken in period 8 are shown below in Table 5.

Table 5 – Major budget movements actioned in Period 8

33. Movements in Reserves
There were no reserve drawdowns or transfer to reserves carried out in Period 8.

Capital Monitoring

34. Appendix 3 sets out the expenditure for the 2007/08 Capital Programme as at Period 8 (November) by programme, which shows a year to date total of £75.4m. This represents 42.0% of the revised budget of £179.8m. The forecast for the year of £167.7m is £12.1m below the revised budget (£116.5m below the original budget of £284.2m.)

35. Property Programme – A forecast underspend of £2.1m (5.3% of budget) (£48.1m below the original budget).
The main programmes of work have decreased overall due to the re-phasing of projects into future years. The main projects that have been re-phased are Patrol Bases (£0.5m), Cobalt Square refit (£0.8m) and Climate Change Action Plan (£0.4m).

36. Information Programme – Excluding C3i – A forecast underspend of £4.1m (6.3% of budget) (£19.3m below the original budget).
As a result of the re-phasing of the Cobalt Square refit in the Property Programme, the related work (£3.0m) in the Information Programme has also had to be re-phased.

37. MPA Information Technology – £0.1m underspend (35.3% of budget) (£0.1m below the original budget).
The underspend relates to the re-phasing of the Connect Programme into future years.

38. Transport Projects – A forecast underspend of £3.7m (13.6% of budget) (£3.7m below the original budget).
This is due to a forecast underspend on boats and equipping for service of TSG carriers. The contract for the replacement of two rigid inflatable boats is now expected to be awarded next financial year. The underspend on equipping for service is due to the ongoing TSG carrier replacement programme, of which two thirds will now be built next financial year.

39. Other Plant & Equipment Expenditure – A forecast overspend of £1.1m (43.2% of budget) (£0.1m above original budget).
This primarily relates to additional forecast expenditure on aircraft and associated support equipment.

40. Directorate of Information – C3i Programme – A forecast underspend of £2.4m (7.7% of budget) (£2.4m below the original budget).
The forecast underspend relates to the Heathrow Special Scheme which will now be funded from the 2007/08 Revenue Budget.

41. Safer Neighbourhoods Programme (Phases 1 to 3) – A forecast underspend of £0.8m (5.7% of budget) (£43.1m below the original budget).
This is unchanged from October 2007 and shows a small underspend against the current year budget allocation.

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

• 2007/08 budget book

F. Contact details

Report author: Simon Hart, Acting Director of Finance Services, MPS

For more information contact:

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

Send an e-mail linking to this page

Feedback