Revenue and capital monitoring report 2007/08 – period 9

Report: 04
Date: 21 February 2008
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 9 (to the end of December). The revenue budget is forecast to underspend by £27.5m (0.9% of budget), which includes £5.0m of estimated additional costs related to Operation Seagram.

The Capital Programme as at Period 9 (to the end of December) shows year to date total expenditure of £88.5m. This total represents 49.2% of the revised annual budget. The forecast for the year of £164.0m is £15.8m below the revised budget of £179.8m. (£120.2m below the original annual budget of £284.2m).

A. Recommendations

Members are invited to:

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

2. Agree to the transfer of £11.5m to an earmarked reserve pending decisions on the use of these funds following the Government decision to change the implementation date for the police officers pay award.

B. Supporting information

Background

1. This paper 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 December.

Revenue Forecast by Business Group

2. 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 9 and Period 8 by Business Group.

3. The outturn variance for period 9 is forecast as an underspend of £27.5m. This includes a forecast outturn of £5.0m for the additional costs attributed to Operation Seagram. The period 9 forecast outturn variance excluding Operation Seagram costs is an underspend of £32.5m.

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 9

Table 2: Comparison of Period 9 forecast outturn variance with Period 8 forecast outturn variance.

5. Territorial Policing – An underspend of £4.8m – 0.4% of budget.
There has been an adverse movement of £3.7m in the forecast position from that reported at period 8. The movement in the forecast is mainly due a review of operational priorities which has identified a requirement to carry forward additional funding into 2008/09. The forecast underspend relates principally to Police Officer and Police Staff pay due to unfilled vacancies.

6. Specialist Crime – An underspend of £5.2m – 1.4% of budget.
There has been a favourable movement of £0.7m in the forecast position from that reported at period 8. This principally results from a reduced Police Staff Pay forecast following a review of the anticipated recruitment profiles and receipt of additional youth crime project funding. The forecast underspend relates to Police Officer and Police Staff pay and reflects the current level of vacancies within the Business Group.

7. Specialist Operations – An underspend of £5.4m– 2.8% of budget.
There has been a favourable movement of £1.0m in the forecast position from that reported at period 8. This principally results from a reduction in travel costs offset by a small increase in the Police Officer pay forecast. As previously advised a significant element of the forecast underspend relates to vacancies within Counter Terrorism grant funded posts for which a grant deferral is forecast within Centrally Held.

8. Central Operations – An underspend of £3.3m – 1.3% of budget.
There has been a favourable movement of £0.5m in the forecast position from that reported at period 8. This principally results from reductions in the Police Officer and Police Staff pay forecasts following reviews of the expected recruitment profiles. The forecast underspend relates to Police Officer and Police Staff pay and reflects the current level of vacancies within the Business Group.

9. Operational Services – An overspend of £0.8m – 0.5% of budget.
There has been a favourable movement of £0.3m in the forecast position from that reported at period 8. This principally results from reductions in the Police Officer and Police Staff pay forecasts following reviews of the expected recruitment profiles. The forecast underspend relates to Police Officer pay and Police Staff pay and reflects the current level of vacancies within the Business Group.

10. Strategy, Modernisation & Performance – An underspend of £0.9m – 5.7% of budget.
There has been a favourable movement of £0.1m in the forecast position from that reported at period 8. As previously advised the forecast underspend relates to Police Officer pay and Police Staff pay and reflects the current level of vacancies within the Business Group.

11. Directorate of Public Affairs – An underspend of £0.2m – 3.2% of budget.
A minor change from the forecast variance reported at period 8.

12. Directorate of Information – An overspend of £1.3m – 0.6% of budget.
There has been a favourable movement of £0.6m in the forecast position from that reported at period 8. This principally results from a reduction in the forecast for the cost of radios and mobile telephones. As previously advised the forecast 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 £2.5m – 1.0% of budget.
There has been a small favourable movement of £0.2m from that reported at period 8.

14. Human Resources – An underspend of £2.3m – 1.5% of budget.
There has been a favourable movement of £1.6m from that reported at period 8. This results principally from an increase in forecast income relating to sickness benefits and a reduction in Police Officer pay following a review of expected recruitment profiles.

15. Metropolitan Police Authority – An underspend of £0.5m – 4.6% of budget.
There has been a favourable movement of £0.2m from that reported at period 8.

16. Centrally Held Budgets – An underspend of £4.5m.
There has been a favourable movement of £10.1m in the forecast position from that reported at period 8. This principally relates to the Government decision to change the implementation date of the 2007/08 Police Officer pay award from September 2007 to December 2007.

17. Discretionary Pension Costs – A minor underspend.
A minor change from the forecast variance reported at period 8.

Revenue Forecast by expenditure/income type

18. Table 3 compares the forecast variance for Periods 9 and 8 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 £48.0m – 2.8% of budget.
This underspend is due to workforce levels being below those budgeted within all Business Groups. The forecast underspend has increased by £13.7m since period 8 mainly due to the Government decision to change the implementation date of the 2007/08 Police Officer pay award from September 2007 to December 2007 and reviews of expected recruitment profiles within Territorial Policing and Human Resources. Table 4 shows the Police Officer strength by Business Group at 31 December 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. Discussions are currently taking place on developing options for using the £11.5m resources arising from the change in implementation date for police pay to support in particular the work of officers across the Service. Members are therefore asked to agree to the transfer of these resources into an earmarked reserve pending decisions on the use of these funds.

21. Police Staff Pay - Underspend of £16.8m – 3.0% of budget
A minor change from the forecast variance reported at period 8. The forecast underspend relates to vacancies across a number of Business Groups.

22. PCSO Pay - Underspend of £6.1m – 4.5% of budget.
There has been a favourable movement in the forecast of £1.1m since period 8. As previously advised, 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.

23. Traffic Warden Pay - Underspend of £0.7m – 5.9% of budget.
A minor change from the forecast variance reported at period 8. As previously advised, the underspend is principally due to the Transport OCU recruiting PCSOs instead of Traffic Wardens.

24. Police Officer Overtime – Overspend of £15.3m – 11.7% of budget.
There has been a small favourable movement in the forecast of £0.4m from that reported at period 8. As previously advised the forecast 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.

25. Police Staff Overtime – Overspend of £3.9m – 12.8% of budget.
A minor change from the forecast variance reported at period 8.

26. PCSO and Traffic Warden Overtime – Minor overspend.

27. Employee Related Expenditure – Overspend of £1.8m – 4.7% of budget.
A minor change from the forecast variance reported at period 8.

28. Premises Costs – Overspend of £7.7m – 3.6% of budget.
There has been a favourable movement in the forecast of £0.4m from that reported at period 8. As previously advised the forecast overspend mainly relates to additional repairs and maintenance costs within Territorial Policing and higher than anticipated rent liabilities within Resources Directorate.

29. Transport Costs - Overspend of £6.1m – 10.3% of budget.
There has been an adverse movement in the forecast of £0.4m from that reported at period 8. The forecast overspend relates mainly to overseas travel and subsistence costs and vehicle hire connected with Operations Seagram and Overt/Overamp within Specialist Operations and increases in Fuel costs.

30. Supplies and Services - Overspend of £22.9m – 5.2% of budget.
There has been an adverse movement of £4.0m in the forecast from that reported at period 8. This movement is principally within Territorial Policing as a result of a review of operational priorities which has identified a requirement to carry forward additional funding into 2008/09. There has also been an increase in the forecast for Forensics.

31. Capital Financing Costs – Underspend of £0.6m – 2.9% of budget.
A minor change from the forecast variance reported at period 8.

32. Income - Forecast over-achievement of £19.4m – 6.1% of budget.
There has been a favourable movement in the forecast of £1.1m from that reported at period 8. This movement is principally due to an increase in operational receipts and grants.

33. Budget movements
The major budget movements undertaken in period 9 are shown below in Table 5.

Table 5: Major budget movements actioned in period 9

34. Movements in Reserves
The reserve drawdowns and transfer to reserves carried out in period 9 are shown in Table 6.
 

Table 6: Reserve drawdowns and transfer to reserves carried out in Period 9

Capital Monitoring

35. Appendix 3 sets out the expenditure for the 2007/08 Capital Programme as at Period 9 (December) by programme, which shows a year to date total of £88.5m. This represents 49.2% of the revised budget of £179.8m. The forecast for the year of £164.0m is £15.8m below the revised budget. (£120.3m below the original budget of £284.2m)

36. Property Programme – A forecast underspend of £3.1m (7.9% of budget) (£49.1m 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 (£1.2m); Cobalt Square refit (£0.8m) and Climate Change Action Plan (£0.4m).

37. Information Programme – Excluding C3i – A forecast underspend of £6.9m (10.5% of budget) (£22.0m below the original budget).
This is principally due to the re-phasing of the Cobalt Square refit project and a number of other projects that have been re-phased including MOPI (£0.7m); E Forms (£0.2m); Infrastructure works (£0.6m); and EDRM (Electronic Document Records Management) (£0.7m).

38. 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.

39. 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.

40. 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.

41. 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.

42. 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 November 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
• Previous monitoring reports

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

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