PCD 1582 Q2 Budget Monitoring report

PCD 1582 Q2 Budget Monitoring report

The MOPAC/MPS budget was approved in March 2023, revisions to the MOPAC budget were subsequently approved in June reflecting the proposed use of carry forwards from the 2022/23 budget, changes in grant assumptions and a minor adjustment between the MOPAC and MPS budget. Net expenditure remains the same at £3,281.5m.  

As at the end of Quarter Two MOPAC/MPS are forecasting an overspend of £39.7m of which £40.1m relates to MPS budgets offset by an underspend of £0.4m on the MOPAC budgets.  

The Capital Expenditure Forecast for 2023/24 is £335.6m. This represents a forecast overspend of £49.0m against the revised budget of £286.6m. The budget has been revised to take account of a property transaction which is planned for future years. As in previous years, it is planned that the Quarter Two forecasts will become the revised capital budget for Quarter Three and year-end. 

The forecast position on reserves is also set out in the report and shows that earmarked reserves are forecast to reduce from £448.7m at the end of 2022/23 to £211.1m by the end of 2023/24.  The reduction in reserves is £17.4m more than anticipated when the budget was set due a number of reasons including, reprofiling of projects into future financial years requiring funds to be carried forward from both 2022/23 into 2023/24 and also 2023/24 into 2024/25, and changes in planned usage of reserves. 

The Deputy Mayor for Policing and Crime is asked to: 

1. Approve the revised budget for Quarter Two as set out in the report, noting the increase in gross expenditure is funded through a combination of additional grant income and transfer from reserves. 

2. Note the Quarter Two forecast position for the MOPAC/MPS 2023/24 revenue budget is a £39.7m overspend;  

3. Approve the revised capital programme for Quarter Two as set out in the report.  

4. Note the Quarter Two forecast position on the 2023/24 capital programme is a £49.0m overspend;  

5. Approve budget virements with an individual value in excess of £0.5m including additional grant and income, a detailed breakdown is provided at Appendix One and Two; 

6. Approve the transfer to MOPAC earmarked reserves totalling £8.7m. A detailed breakdown is provided at Appendix Three; 

7. Approve the net transfer from MPS earmarked reserves totalling £16.6m, a detailed breakdown is provided at Appendix Four; 

8. Note the MPS are forecasting to deliver £33.3m savings against an approved savings target of £61.4m. 

PART I - NON-CONFIDENTIAL FACTS AND ADVICE TO THE DMPC 

Decision required – supporting report 

1. MOPAC/MPS Revenue Budget 2023/24 

1. In March 2023, the MOPAC/MPS 2023/24 revenue budget was set at £3,281.5m, comprising of a £4,533.1m expenditure budget and a £1,251.6m income budget (this included a £193.6m transfer from reserves). Of this net expenditure £72.7m related to MOPAC, and £3,208.8m to the MPS. 

2. Since the budget was approved further revisions to the MOPAC budget have been approved reflecting the proposed use of carry forwards from the 2022/23 budget, changes in grant assumptions and a minor adjustment between the MOPAC and MPS budget. Net expenditure remains the same at £3,281.5m.  

2. MOPAC/MPS Revenue Budget Forecast 2023/24 

1. As at the end of Quarter Two MOPAC/MPS are forecasting an overspend of £39.7m of which £40.1m relates to MPS budgets offset by an underspend of £0.4m on the MOPAC budgets.  A summary of the variances as at the end of September 2023 is set out below.  

MOPAC Budget 

2. As at Quarter Two MOPAC and the VRU are forecasting a year end underspend of £0.4m. This includes the proposed carry forward of funds totalling £9.0m to align spend to delivery and use of reserves totalling £0.3m the majority of which relates to the costs of the London Policing Board in 2023/24 whilst a longer term funding solution is identified. This is offset in part by a reduction in the budgeted use of reserves.  

MPS Budget 

3. As at Quarter Two the MPS are forecasting a £40.1m overspend.  This is a worsening of the position reported at Quarter One. The gross expenditure forecast for Quarter Two is for an overspend of £81.8m against the MPS revised budget. Of this £42.2m relates to combined Overtime for Officers and Staff offset by an underspend of £12.8m on Police Officer and Staff Pay. In addition, running costs are forecast to overspend by £55.3m, these include training for CONNECT. 

4. The £26.8m overspend on Officer Overtime is a continuing trend from Quarter One, with the pressure falling largely within Frontline Policing and Met Operations and is linked in part to the continuing difficulties in Officer recruitment. This variance includes £12.9m worth of costs for which additional funding will be received, with £4.6m coming from the Home Office and £8.3m from other income and grant receipts.  

5. Overtime resulting from the current situation in the Middle East is not yet reflected in the forecast.  This is an additional risk for the rest of the financial year.  Increased demand for services, particularly across MetCC, Met Detention and Public Order is the main reason for the projected overspend of £15.3m on Police Staff Overtime.   

6. The significant pressure against Running Costs (£55.3m) relates to a £28.3m overspend against Supplies and Services, arising from increased cost of CONNECT (£7.1m), structural pressures and increased operational demand across the People & Resources (£10.0m) and Operations & Performance (£9.4m) business groups.  In addition, transport costs are forecast to be £14.6m over budget due to higher maintenance, leasing and fuel costs (£4.6m) and frontline policing (£4.1m). Other Income is forecasting £19m more than the budget largely due to higher than anticipated interest income from cash investments.   

7. The reserve drawdown has increased to £192.9m. 

8. The MPS approved savings and efficiencies target for 2023/24 is £61.4m. Of this, £32.3m has been fully delivered as at the end of Quarter Two, with c£28.1m considered no longer deliverable. The MPS is considering alternative options to deliver £12.2m of the non-deliverable savings, with the £15.9m balance remaining a pressure for this financial year. 

9. Capital Budget 2023/24 

10. The Capital Expenditure Forecast for 2023/24 is £335.6m. This represents a forecast overspend of £49.0m against the revised budget of £286.6m. The budget has been revised to take account of a property transaction which is planned for future years. The main variances are as follows: 

• Transformation Directorate – A forecast overspend of £43.2m against the revised budget of £62.6m.  The increased forecast is driven primarily by CONNECT project delays combined with the additional CONNECT activity resulting in additional forecast expenditure of £26.8m. Also forecast is a £12.2m overspend on Command and Control due to project resource requirements, and £2.4m overspend against the Met CC Improvement Programme.   

• Data, Digital and Technology (DDaT) – A forecast overspend of £12.4m against the revised budget of £55.7m, driven by £26m budget adjustments to account for over programming and a £4.8m overspend on investment in laptops for frontline officers. This is offset by £11.4m underspend on core IT infrastructure which includes networks, hosting, infrastructure maintenance and applications and service upgrades and £7m slippage into future years of Home Office programmes such as Emergency Services Network (ESN) and National ANPR Standards (NAS). 

• Property Services – A forecast overspend of £2.2m against the revised budget of £61.8m.  The overspend is driven by £4.5m of Net Zero Carbon funded works across the Estate, £0.6m of accelerated works on operational refurbishments including Skills House, Chadwell Heath and Front Counter Redecorations, £0.3m of accelerated works on BCU refurbishments, offset by £3.2m reduction in the Central Estate Programme.  

• Operations and performance – A forecast underspend of £3.4m against the revised budget of £8.8m. The increased underspend is driven by Digital Physical Forensics programmes being re-profiled into 2024/25 due to delays in the Estates strategy. 

• CTPHQ – A full year underspend of £2.9m against the revised budget of £56.4m. This is due to programme delays and a reduction in forecast expenditure within the Data projects (IDSET and Strategic Case Management Solution).  

• Fleet – A full year underspend of £2.5m on externally funded areas.  

4. Full details can be found in the Q2 Performance Report: MOPAC Q2 Report 2023-24 | London City Hall  

5. Reserves 

1. Earmarked reserves of £448.7m were available from 1 April 2023 and the budget approved in March 2023 included the proposed use of reserves totalling £193.6m.  The budget was subsequently updated to reflect the proposed use of carry forwards from the 2022/23 budget, increasing the proposed used reserves by £9.5m to £203.1m.  

2. As at Quarter Two the planned use of reserves is forecast to increase by £7.9m to £211.1m as a result of the reprofiling of projects and changes in planned usage of reserves, of which £16.6m relates to the MPS offset by a planned decrease in the use of reserves in MOPAC of £8.7m.  

3. The general reserve remains at £46.1m, the level of general reserves will be continually reviewed to ensure they remain realistic and are sufficient to cover potential risks within the overall financial strategy should they crystallise. 

4. Financial Comments 

5. The report sets out the forecast position for 2023/24 as at Quarter One. Risks will continue to be monitored closely throughout the year in particular recruitment, planned use of reserves and the capital programme which continues to see significant slippage.  

6. Legal Comments 

1. There are no direct legal implications arising from this proposal. 

2. MOPAC/MPS as statutory bodies must only budget for activities that fall within its statutory powers. Under the Scheme of Delegation and Consent the DMPC must approve any budget movement for £500,000 or above.  Under Financial Regulations all decisions in relation to the transfer in and out of reserves will be made by the DMPC. 

3. GDPR and Data Privacy  

1. GDPR matters have been discussed with the Data Protection Officer, who has confirmed that no Data Protection Impact Assessment (DPIA) is required for this area of spend. However, the personal details of any individuals or organisations with whom contract is made for the purposes of the engagement will be managed in accordance with MOPAC’s wider Privacy Notice. 

8. Equality Comments 

1. MOPAC is required to comply with the public sector equality duty set out in section 149(1) of the Equality Act 2010. This requires MOPAC to have due regard to the need to eliminate discrimination, advance equality of opportunity and foster good relations by reference to people with protected characteristics.  The protected characteristics are: age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation.  

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