Provisional MPS/MPA efficiency plan 2008/09 - 2010/11

Report: 05
Date: 17 April 2008
By: the Director of Finance Services on behalf of the Commissioner

Summary

This report sets out the financial aspects of the provisional MPS/MPA Efficiency Plan for the period 2008/09 – 2010/11.

A. Recommendations

That members are invited to:

1. Note the provisional plan (Appendix 1)

2. Note the process for providing in-year updates.

B. Supporting information

Introduction

1. This report presents the MPS/MPA Efficiency Plan for the period 2008/09 – 2010/11. As well as being a Home Office requirement, the Plan also forms part of the MPS Productivity Framework. Although the MPS has a record of continuing improvement within the Home Office Police Performance Assessment Framework, the Service has been unable to demonstrate that value for money and improving productivity is an integral part of delivering its policing agenda. The Efficiency Plan (Appendix 1) seeks to capture improvements in MPS productivity and efficiency, and to present this information in a quantified financial format. In this way the Plan will assist with the MPS Productivity Framework’s aim of demonstrating transparently how the organisation manages its money, business and resources. The Efficiency Plan is therefore a key part of the MPS Service.

Improvement Plan.

Previous planning regime (Gershon Review Period 2005/06 – 2007/08)
2. In the period 2005/06 – 2007/08, the Home Office required Police Forces to produce Efficiency Plans on a 3 year rolling basis. The savings target during this period was 3% of net revenue budget, of which a minimum of 1.5% was to be cashable. The Metropolitan Police Service successfully met the required target in each year.

Draft Efficiency and Productivity Strategy 2008 – 2011

3. Following the 2007 Comprehensive Spending Review (CSR), the Home Office issued a Draft Efficiency and Productivity Strategy for the Police Service 2008 – 2011. Key points in the strategy are:

• the target for cashable savings is to be increased to 3% per annum (previously it was 1.5%).
• the target is to be based on the gross budget and not the budget net of income as in the previous planning system.
• the paper puts productivity and efficiency into a wider context and a more strategic framework.
• the paper sets out best practice areas for efficiency as developed by forces, including those developed by the MPS.

4. In previous years, it was a requirement that a copy of the Efficiency Plan should be sent to the Home Office by the end of March. The new draft guidance indicates that this will no longer be the case, and instead greater emphasis will be laid on the inclusion of an effective Efficiency Plan within the MPS/MPA Business Plan.

5. The process will be monitored by HMIC inspections, which cover both financial and operational performance. The Home Office guidance also states that, as previously, failure to meet the annual efficiency target may result in a reduction to funding, in particular the Crime Fighting Fund.

Three year target

6. Home Office guidance states that the value of the target is compounded, cumulative net cashable efficiency or productivity gains worth 9.3% of 2007/08 Gross Revenue Expenditure (GRE) to be achieved by the end of 2010/11. GRE covers all the revenue spending commitments of the MPS (in previous years the target has been based upon Net Revenue Expenditure – with income and specific grants netted off). Home Office guidance states that forces should use the initial budgeted GRE figure for planning, which gives a target for the three-year period of £309.8m. However, this figure will be subject to adjustment, and the final target will be the finalised audited outturn GRE for 2007/08.

Savings relating to the MTFP process

7. The exercise to balance the revenue budget for 2008/09 has identified £71.8m of savings and additional income, and of this £65.7m can be counted towards the MPS efficiency plan, in accordance with the latest draft guidance. We evidence the MTFP related savings by demonstrating a reduction in budgets and by managing within those reduced budgets throughout the financial year.

8. In addition, surplus cash savings of £45.6m are expected to be achieved in 2007/08, and Home Office guidance states that surplus savings from the Gershon Review period can be carried forward into the 2007 CSR period (inflated to £46.8m following Home Office guidance).
9. It should be noted that any carry forward of cashable savings represents measures already taken to balance the budget. The carry forward is not available as a future benefit to balance a budget gap.

Additional Efficiency Gains

10. These efficiency savings are the result of better utilisation of existing resources. Areas identified so far for 2008/09 include:

• Savings arising from the MPS Climate Change Action Plan.
• A further increase in the number of Special Constables.
• Procurement efficiencies and savings
• Efficiencies relating to the use of Automatic Number Plate Recognition technology.
• Various other projects and initiatives.

11. A list of the currently projected savings/gains is included within Appendix 1. Additionally, some further savings are currently under review by managers within the relevant business groups, who are analysing the potential benefits. These include savings/gains relating to the Single Sign On project within DoI (a project which allows officers and staff to avoid repeatedly having to sign on to different IT systems, thus saving a great deal of time which can then be used for more productive purposes), and further environmental savings managed by Property Services. When information has been fully collated, these savings will be included in-year, and reported as part of the quarterly monitoring process. Draft guidance suggests that there will no longer be a need to evidence a budget reduction in order to define a saving as cashable. Under the new, broader definition, it is likely that all savings within the Efficiency Plan will be regarded as cashable.

Contribution to performance

12. Home Office guidance requires the MPS to consider, for items over £1m, whether there are any risks to performance by implementing the savings. Strategic Finance may need to consult separately with Business Groups on these aspects.

Summary 2008/09 Efficiency Plan

13. Appendix 1 shows the provisional 2008/09 – 2010/11 Efficiency Plan. It can be seen that the current forecast indicates savings of £280.9m in 2008 - 2011, against a 3 year target of £309.8m. Further savings and efficiencies will be found in 2009/10 and 2010/11 to meet the £28.9m deficit. Changes will be reported in the first quarterly update report during 2008/09.

Efficiency Planning in the Medium Term

14. The new draft Home Office guidance requires savings to be planned for and monitored over a 3-year period. As in previous years, Strategic Finance has worked with Business Groups to develop a plan that looks at future years in as much detail as possible.

15. The Home Office view that the Efficiency Plan should not be seen as a separate exercise to policing business plans supports work already underway within the MPS to rationalise and embed its efficiency, productivity and Met Modernisation programmes into its main business planning framework. A further report will be submitted in the near future with proposals on the overall service improvement plan.

Future Reporting

16. Forces will be required to report progress to the Home Office at the end of the second quarter of each year. This return will provide details of the actual gains achieved to date, and the forecast gains for the remainder of the financial year. Update papers will continue to be provided to the MPA Finance Committee on a quarterly basis.

Capturing future savings in support of the MPS Productivity Framework

17. The MPS Productivity Framework makes clear that the Service’s objective must be to integrate business planning and the budgeting process, and to embed value for money into business as usual. The MPS/MPA Efficiency Plan is an opportunity for all areas of the organisation to demonstrate in financial terms the ways in which they are driving forward this objective, to create efficiencies and savings. Savings may be reported to Strategic Finance at any time. They will then either be included in the current year’s savings plan as an ‘in year’ saving, or be reported in the following year’s plan. All savings will contribute to the cumulative 3 year savings target.

C. Race and equality impact

There are no equality and diversity implications arising from this report.

D. Financial implications

The financial implications are those set out in this report.

E. Background papers

• Home Office guidance papers, MPS Productivity Framework.

F. Contact details

Report author(s): Simon Hart, A/Director of Finance, MPS

For more information contact:

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

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