Note of position in respect of transport costs

ps/16/06
2 March 2006
MPA briefing paper

Author: MPS Finance Services

This briefing paper has been prepared to inform members and staff. It is not a committee report and no decisions are required.

Summary

1. At Finance Committee on 19 January 2006, members asked for more information about the forecast overspend on Transport costs. The position, i.e. the forecast at Period 8 (November 2005), indicated an overspend of £15.4m in relation to Transport costs. This represents 30.5% of the annual budget.

2. Of this amount £4.4m relates to Operation Theseus (July 2005 terrorist attacks) and £0.9m to Operation Bracknell (Tsunami response). Grant funding towards the cost of these Operations has been received from the Home Office and the Foreign and Commonwealth Office. However, this funding is presented as additional income within the budget monitoring reports rather than being offset against specific expenditure items such as transport costs.

3. Excluding such expenditure, there is a forecast overspend of £10.1m. As previously reported, the majority of the forecast overspend relates to overseas travel and subsistence costs which result from increased security and protection duties within Specialist Operations.

4. Additionally, there are budget pressures relating to increased fuel costs, vehicle hire and maintenance transition costs as the MPS moves to a new provider for vehicle maintenance services. It should be noted payment of the transition costs for moving into the new contractual arrangements will be made in this current financial year, 2005/06, (the first year of operation) rather than being spread over the life of the vehicle maintenance contract which would be a more expensive option in the long run. There is no specific budget provision for these costs, which are currently forecast to be at least £1.6m.

5. A number of the budgets for which there is currently a forecast overspend are devolved. Therefore, Business Groups are taking steps to ensure overspends in Transport costs are compensated by underspends in other locally managed budgets.

6. A number of budget headings for which there is a forecast overspend in 2005/06, were in an overspend position in 2004/05. In particular, there were overspends in the areas of vehicle hire (£5.4m) and overseas travel and subsistence (£5.7m). The Director of Resources, supported by Finance Services, continues to draw Management Board’s attention to these overspending budgets, most recently at last month’s Investment Board.

7. Budget holders are current allocating resources to individual devolved budget headings as part of the detailed budget build for 2006/07. Attempts will be made to ensure that the appropriate level of resource is allocated to those budget headings that have been in an overspend position in the past, where underlying demand factors substantiate the case for a larger budget.

Appendix 1

At Finance Committee on 19 January 2006, members asked for more information about the forecast overspend on Transport costs. The position, i.e. the forecast at Period 8 (November 2005), indicated an overspend of £15.4m in relation to Transport costs. This represents 30.5% of the annual budget.

Of this amount £4.4m relates to Operation Theseus (July 2005 terrorist attacks) and £0.9m to Operation Bracknell (Tsunami response). Grant funding towards the cost of these Operations has been received from the Home Office and the Foreign and Commonwealth Office. However, this funding is presented as additional income within the budget monitoring reports rather than being offset against specific expenditure items such as transport costs.

Excluding such expenditure, there is a forecast overspend of £10.1m. As previously reported, the majority of the forecast overspend relates to overseas travel and subsistence costs which result from increased security and protection duties within Specialist Operations.

Additionally, there are budget pressures relating to increased fuel costs, vehicle hire and maintenance transition costs as the MPS moves to a new provider for vehicle maintenance services. It should be noted payment of the transition costs for moving into the new contractual arrangements will be made in this current financial year, 2005/06, (the first year of operation) rather than being spread over the life of the vehicle maintenance contract which would be a more expensive option in the long run. There is no specific budget provision for these costs, which are currently forecast to be at least £1.6m.

A number of the budgets for which there is currently a forecast overspend are devolved. Therefore, Business Groups are taking steps to ensure overspends in Transport costs are compensated by underspends in other locally managed budgets.

A number of budget headings for which there is a forecast overspend in 2005/06, were in an overspend position in 2004/05. In particular, there were overspends in the areas of vehicle hire (£5.4m) and overseas travel and subsistence (£5.7m). The Director of Resources, supported by Finance Services, continues to draw Management Board’s attention to these overspending budgets, most recently at last month’s Investment Board.

Budget holders are current allocating resources to individual devolved budget headings as part of the detailed budget build for 2006/07. Attempts will be made to ensure that the appropriate level of resource is allocated to those budget headings that have been in an overspend position in the past, where underlying demand factors substantiate the case for a larger budget.

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