Financial Reporting 2017/18 - Quarter 2

Reference code: 
PCD 297
Date signed: 
05 December 2017
Authorisation name: 
Sophie Linden, Deputy Mayor, Policing and Crime

Executive summary

DMPC is asked to note the current year to date financial position, the Quarter 2 2017/18 forecast position and to approve a number of budget and reserve movements.  In summary, there is a forecast underspend of £17.7m. The forecast underspend consists of a £4.8m in underspend related to Total Pay and Overtime, £23.3m Running Costs overspend, and £36m overachievement of Total Income. 

As at Quarter 2, the officer pay actual underspend is £9.5m, with a full year underspend forecast at £26m. Officer pay has been reported on budget, based on the assumption that where relevant, the underspend will be transferred to reserves, although this will only take place following quarterly approvals from DMPC.

We recommend that DMPC approves at Quarter 2, the year to date police officer pay underspend of £9.5m is approved to be transferred to reserves via a budget transfer, to protect the officer pay budget for the medium term while addressing the wider funding position. This takes into account the £6m approved at Q1 as a reserve transfer.

It is intended that this principle is followed for the remaining quarters and will be monitored on a quarterly basis to determine the final amounts to be transferred.  

Capital investment is forecast to be £218.4m, against an approved budget of £268m. 

The paper also seeks approval for the publication of the Quarterly Performance Report- attached. 
 

Recommendation

The DMPC is asked to;
1.    Approve the publication of the Quarterly Performance Report (Quarter 2)
2.    Note the 2017/18 revenue and capital financial position and forecast.
3.    Approve the budget movements and transfer to reserves set out in paragraph 2.6

Non-confidential facts and advice to the Deputy Mayor for Policing and Crime (DMPC)

1.    Introduction and background

1.1.    As part of MOPAC’s and MPS corporate governance arrangements regular monthly and in-depth quarterly monitoring processes are in place to track spend against budget, forecast outturn and monitor the achievement of planned savings and income targets.  

1.2.    In line with the Scheme of Delegation and Consent the DMPC is responsible for the approval of all MPS proposed budget movements and virements in excess of £500,000 which are highlighted on a monthly basis as part of the monthly budget monitoring report, and approval of all transfers to and from reserves.

1.3.    During 2017/18 there are planned improvements to the presentation and publication of financial and performance information.  These quarterly update reports represent part of this. 

2.    Issues for consideration

Revenue 

2.1.    The second quarter forecast year end revenue position is a reported underspend of £17.7m. 

2.2.    As at Quarter 2, the year to date officer pay actual underspend is £9.5m. It is proposed the £9.5m is transferred to reserves via a budget transfer, in order to protect this budget and the officer numbers during the uncertain medium term funding. This takes into account the £6m approved at Q1 as a reserve transfer.

2.3.    It is intended that this principle is followed for the remaining quarters and will be monitored on a quarterly basis to determine the final amounts to be transferred.  

2.4.     Further detail of forecast under and overspends is set out in Annex 1 from pages 37-44.

Capital 

2.5.    Capital investment is forecast to be £218.4m in 2017/18 against an approved budget of £268m.  The major variances are in delays in delivering the MPS property and the National Counter Terrorism Policing (NCTP) programmes. Further detail is set out in Annex 1.

Budget Movements 

2.6.    Reserve budget movements are set out in Appendix 1 of the attached Annex to;
•    Approve the transfer of £9.5m of police officer underspend pay budgets for Q1 and Q2 to   reserves
•    Approve the increased use of reserves of £7.2m related to the net position of providing for costs arising from termination of contracts with Lockheed Martin UK and spend relating to the Command and Futures  Programmes, as well as other minor drawdowns of £0.1m
•    Approve the increased application of grants and income and the corresponding increase in the expenditure budget, of £5.4m.
•    Approve the housekeeping budgetary changes to re-align budgets to forecast spend

3.    Financial Comments

3.1.    As this is a financial report the financial implications are contained within the body of the report.

4.    Legal Comments

4.1.    Under section 3 (6) of the Police Reform and Social Responsibility Act, MOPAC is under a duty to secure the maintenance of an efficient and effective police force. Under paragraph 7 of schedule 3 of the 2011 Act MOPAC may do anything which is calculated to facilitate, or is conductive or incidental to, the exercise of its functions. Under section 79 of the Act, MOPAC must have regard to the Policing Protocol when exercising its functions. The Policing Protocol provides that PCCs (including MOPAC) as recipient of all funding, must determine how this money is spent. 

4.2.    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.

5.    Equality Comments

5.1.     There are no equality or diversity implications arising from this report.

6.    Background/supporting papers

Appendix 1 – Quarterly Performance Update Report – Q2 2017/18
    Appendix 2 - Revenue and reserves