PCD 1480 202223 Quarter 4 Budget Monitoring Report

PCD 1480 202223 Quarter 4 Budget Monitoring Report

This report sets out the 2022/23 draft outturn for MOPAC and MPS as at 31 March 2023.  This is the final financial monitoring report for the year and should be considered alongside the published quarterly monitoring report that also sets out key outcomes information.   

In February 2022 the 2022/23 revenue budget was set at £3,186.2m. Subsequent changes to the budget were approved (for example, to reflect additional grant funding, other income and changes to the application of reserves).  

At Quarter Three the net revised budget was £3,185.1m. The Quarter Four budget includes further changes, reflecting additional grant funding of £80.8m and other income of £3.3m and a net reduction in the use of reserves of £27.9m - these changes require DMPC approval under the Scheme of Delegation. The net revised budget remains unchanged at £3,185.1m to the position reported at Quarter Three.  

The revised budget was £3,185.1m and the MOPAC and MPS draft outturn position against this is an underspend of £3.0m.    

At Quarter Two a revised capital budget was approved of £321.8m. The draft outturn is £269.2m, an underspend of £52.6m.  

The draft outturn position on reserves is also set out in the report. Earmarked reserves have reduced from an opening balance of £522.7m to £448.7m at the end of 2022/23.  The reduction in reserves is £49.5m less than anticipated when the budget was set due several reasons including reprofiling of projects into future financial years, and changes in planned usage of reserves.

The Deputy Mayor for Policing and Crime is asked to: 

1. Approve the revised budget for MOPAC/MPS as set out in the report, noting the increase in gross expenditure is funded through a combination of additional grant income, other income and changes to the application of reserves;  

2. Note the draft outturn position for the MOPAC/MPS revenue budget is a £3.0m underspend;  

3. Note the draft outturn position on the revised 2022/23 capital budget is a £52.6m underspend;  

4. 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; 

5. Note the net transfer to MOPAC earmarked reserves totalling £4.7m which are already approved (PCD 1456 refers). A detailed breakdown is provided at Appendix Three; 

6. Approve the net transfer from MPS earmarked reserves totalling £21.7m, a detailed breakdown is provided at Appendix Four; 

7. Note that at the end of 2022/23 the MPS delivered £60.6m savings against an approved savings target of £68.1m.  

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

Decision required – supporting report 

1. Revised MOPAC/MPS Revenue Budget 2022/23 

1. In February 2022, the MOPAC/MPS 2022/23 revenue budget was set at £3,186.2m, comprising of a £4,269.2m expenditure budget and a £1,083.0m income budget (this included a £123.9m transfer from reserves).  

2. Subsequent changes to the budget were approved to reflect additional grant funding, other income and the application of reserves. At Quarter Three the net revised budget was £3,185.1m.  

3. The Quarter Four budget includes further changes, reflecting additional grant funding of £80.8m and other income of £3.3m and a net reduction in the use of reserves of £27.9m. The net revised budget remains unchanged at £3,185.1m to the position reported at Quarter Three. 

MOPAC Budget 

4. In February 2022 the MOPAC budget was set at £64.5m. Subsequent changes were approved to reflect additional grant funding and a reduction in the planned use of reserves. Net expenditure remained unchanged at £64.5m.  

5. At Quarter Four the MOPAC budget has been updated to reflect a transfer in funding from the MPS to MOPAC totalling £0.3m and an additional transfer to reserves totalling £6.1m. Gross expenditure has reduced to £121.2m, and income has reduced to £56.4m (this includes a £1.8m transfer from reserves). Net expenditure has increased to £64.8m, reflecting funds transfer from MPS to MOPAC. These changes and a number of budget virements in excess of £0.5m are subject to DMPC approval. Further detail of the budget virements is provided at Appendix One, with detail of the reserves provided at Section Four and Appendix Three.  

MPS Budget 

6. In February 2022 the MPS budget was set at £3,121.7m. Subsequent changes have been approved to reflect additional grant funding, other income and the application of reserves as at Quarter 3, net expenditure was £3,120.6m.  

7. At Quarter Four the budget has been updated to reflect additional grant funding and other income totalling £84.1m, a £80.9m increase in grants, including £63.6m Home Office Operation London Bridge grant, £4.1m Queens Platinum Jubilee and £5.7m Op Northleigh Home Office special Grant. The budget has also been updated to include a net transfer to reserves totalling £21.7m. Net expenditure is now £3,120.3m reflecting the transfer of £0.3m to MOPAC. These changes and a number of budget virements in excess of £0.5m are subject to DMPC approval. Further detail of the budget virements is provided at Appendix Two, with detail of the reserves provided at Section Four and Appendix Four.  

2. MOPAC/MPS Revenue Budget 2022/23 

1. The MOPAC and MPS draft outturn position is an underspend of £3.0m against the revised budget of £3,185.1m. Within the MPS the net expenditure is a nil balance variance as a result of adjustments in income, grants and reserve transfers to offset the gross expenditure variance. The MPS finished the year with 34,503 officers, recruitment delivery of 3,305 officers in 2022/23, 1,089 short of the year 3 PUP target, resulting in a large underspend in Police Office Pay, and the loss of £30.8m PUP ring fenced grant funding. 

2. Overtime presented a financial pressure in 2022-23 with an overspend of £41.6m. This is after discounting areas which were offset by additional grant and income such as the Queen's Platinum Jubilee and Operation London Bridge. This overspend was managed within the overall budget due to vacancies, but it is not sustainable in the medium term.  

MOPAC Budget 

3. MOPAC’s draft outturn position is an underspend of £3.0m as compared to a forecast underspend at Quarter 3 of £2.6m. The underspend is largely due the reprofiling of programmes due to the late notification of additional funding and the release of funds following clarification of how projects will be funded.  

4. The draft outturn position includes the carry forward of funds totalling £5.4m for Quarter 4 for projects that will now be delivered in future years. The £3.0m underspend will be transferred to earmarked reserves to manage future budget pressures.   

MPS Budget 

5. The MPS draft outturn position is a nil balance variance as a result of adjustments in income, grants and reserve transfers to offset the gross expenditure variance. This represents a decrease of £1.5m to the forecast position reported at Quarter Three. Whilst the draft outturn is net nil, within this there are a number of variances. The main variances are set out below:-  

• Police Officer Pay - The draft outturn position is an underspend of £37.1m relating to a year end officer workforce of 34,503 FTE. This represents a £10.6m increase in the underspend from the position reported at Quarter Three, and is driven in part by the police officer workforce being c300 officers less than forecast at Quarter Three.  

• Police Officer Overtime – The draft Outturn position is an overspend of £29.1m. The majority of the overspend relates to Frontline Policing and Met Ops (£13.0m) due mainly to vacancies and Counter Terrorism and Protective Security (£10.6m) offset by additional grant income.  

• Police Staff Pay – The draft outturn position is a £34.2m underspend largely a result of recruitment delays.  

• Police Staff Overtime – The draft outturn position is an overspend of £12.1m the majority of which relates to Met Ops (£9.8m) primarily as a result of overtime compensating for vacancies and recruitment delays.  

• Running Costs – The draft outturn position is a £9.9m overspend of which £7.1m relates to premises costs and £10.4m transport driven by higher than expected inflation. This is offset by an underspend of £9.2m in Supplies and Services.  

• Capital Financing Costs – The draft outturn position is a £1.0m overspend.  

• Income  - The draft outturn position is £10.1m over recovery. Of this £22.2m relates to internally funded areas and is mainly due to higher than interest receipts on cash balances (£10.6m), over-recovery on recovery of costs for the officer travel scheme (£3.8m) and over-recovery of costs incurred policing events including football matches (£2.9m). This is offset by an under-recovery of £12.1m in externally funded posts, largely due to vacancies and is offset by corresponding reduction in expenditure. 

• Specific grants  - the draft outturn is £26.9m under budget the mainly driven by grant withheld by Home Office  for the ring-fenced Police Uplift Programme due to a shortfall in officer recruitment (£30.8m), offset by an over-recovery of grants protective security and Met Ops. 

6. For 2022/23 the MPS had an approved saving target of £68.1m. Of this,  £4.7m of identified savings were not delivered, and savings of  £2.8m were identified and re-profiled  in future years, leaving  £60.6m of the original savings planned delivered.  

7. Capital Budget 2022/23 

8. The draft capital outturn position is an underspend of £52.6m against the revised budget of £321.8m as compared to a forecast underspend of £48.1m reported at Quarter Three. The main variances are as follows: 

• Property Services – An underspend of £11.7m against the revised budget. This is due to slippage across a variety of investment and business as usual programmes.  

• Transformation – An underspend of £38.6m against the revised budget, of which £31.5m relates to the Command and Control project due to slippage.  

• Digital Policing – An overspend of £3.3m against the revised budget due to slippage in relation to the Command and Control project, Eagle Data Centre activity and the national ANPR programme. This is offset by financial pressures due to global and market factors related to skills shortages and supply chain constraints. 

• CTPHQ – An underspend of £7.7m against the revised budget due to supply chain issues in labour and resources and the re-profiling of certain construction work.  

• Fleet Services – An underspend of £0.5m primarily a result of supply chain constraints in the global semiconductor chip market having knock effects for the supply of vehicles. 

• Met Ops – An overspend of £7.9m against the revised budget due to procurement of a variety of assets, including infrastructure, technology, cameras and other equipment, and covert vehicles in line with approved business cases.  

4. Full details can be found in the Q4 Performance Report (Link to be added) 

5. Reserves 

1. Earmarked reserves of £522.7m were available from 1 April 2022 and the budget approved in February 2022 included the proposed use of reserves totalling £123.9m.  At Quarter Three the budget was updated to reflect the planned use of reserves £108.7m as a result of the reprofiling of projects into future financial years and changes in planned usage of reserves.  

2. The draft outturn position includes the use of reserves totalling £74.4m of which £79.1m relates to the MPS offset by a net contribution to reserves of £4.7m for MOPAC. This represents a significant reduction in the planned use of reserves of £28.2m to that reported at Quarter Three, of which £6.5m represents a reduction in the planned use of reserves within MOPAC and £21.7m a reduction in the planned use of reserves within the MPS.  

3. A summary of the changes in MOPAC’s planned use of reserves are set out below, a more detailed breakdown is provided at Appendix Three: 

• Carry Forward – Transfer to reserve for projects where delivery has been reprofiled into 2023/24 - £5.4m 

• Budget resilience – Transfer of underspend - £3.0m 

• Reduction in planned use of reserves - £1.9m 

4. A summary of the changes in the MPS planned use of reserves is set out below, a more detailed breakdown is provided at Appendix Four. 

• New transfer to reserves - £19.6m 

• Increase in the proposed use of reserves - £1.7m 

• Reduction in the planned use of reserves - £3.8m 

5. The general reserve remains at £46.1m. In light of the economic climate and the uncertainty over inflation and the potential impact on pay awards, 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. 

6. Financial Comments 

1. The report sets out the draft outturn position for 2022/23 which is subject to external audit. Risks identified in 2022/23 in particular inflation and recruitment will continue to be monitored in 2023/24 long with close monitoring of 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. 

PCD 1480 202223 Quarter 4 Budget Monitoring Report

This report sets out the 2022/23 draft outturn for MOPAC and MPS as at 31 March 2023.  This is the final financial monitoring report for the year and should be considered alongside the published quarterly monitoring report that also sets out key outcomes information.   

In February 2022 the 2022/23 revenue budget was set at £3,186.2m. Subsequent changes to the budget were approved (for example, to reflect additional grant funding, other income and changes to the application of reserves).  

At Quarter Three the net revised budget was £3,185.1m. The Quarter Four budget includes further changes, reflecting additional grant funding of £80.8m and other income of £3.3m and a net reduction in the use of reserves of £27.9m - these changes require DMPC approval under the Scheme of Delegation. The net revised budget remains unchanged at £3,185.1m to the position reported at Quarter Three.  

The revised budget was £3,185.1m and the MOPAC and MPS draft outturn position against this is an underspend of £3.0m.    

At Quarter Two a revised capital budget was approved of £321.8m. The draft outturn is £269.2m, an underspend of £52.6m.  

The draft outturn position on reserves is also set out in the report. Earmarked reserves have reduced from an opening balance of £522.7m to £448.7m at the end of 2022/23.  The reduction in reserves is £49.5m less than anticipated when the budget was set due several reasons including reprofiling of projects into future financial years, and changes in planned usage of reserves. 

The Deputy Mayor for Policing and Crime is asked to: 

1. Approve the revised budget for MOPAC/MPS as set out in the report, noting the increase in gross expenditure is funded through a combination of additional grant income, other income and changes to the application of reserves;  

2. Note the draft outturn position for the MOPAC/MPS revenue budget is a £3.0m underspend;  

3. Note the draft outturn position on the revised 2022/23 capital budget is a £52.6m underspend;  

4. 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; 

5. Note the net transfer to MOPAC earmarked reserves totalling £4.7m which are already approved (PCD 1456 refers). A detailed breakdown is provided at Appendix Three; 

6. Approve the net transfer from MPS earmarked reserves totalling £21.7m, a detailed breakdown is provided at Appendix Four; 

7. Note that at the end of 2022/23 the MPS delivered £60.6m savings against an approved savings target of £68.1m.  

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

Decision required – supporting report 

1. Revised MOPAC/MPS Revenue Budget 2022/23 

1. In February 2022, the MOPAC/MPS 2022/23 revenue budget was set at £3,186.2m, comprising of a £4,269.2m expenditure budget and a £1,083.0m income budget (this included a £123.9m transfer from reserves).  

2. Subsequent changes to the budget were approved to reflect additional grant funding, other income and the application of reserves. At Quarter Three the net revised budget was £3,185.1m.  

3. The Quarter Four budget includes further changes, reflecting additional grant funding of £80.8m and other income of £3.3m and a net reduction in the use of reserves of £27.9m. The net revised budget remains unchanged at £3,185.1m to the position reported at Quarter Three. 

MOPAC Budget 

4. In February 2022 the MOPAC budget was set at £64.5m. Subsequent changes were approved to reflect additional grant funding and a reduction in the planned use of reserves. Net expenditure remained unchanged at £64.5m.  

5. At Quarter Four the MOPAC budget has been updated to reflect a transfer in funding from the MPS to MOPAC totalling £0.3m and an additional transfer to reserves totalling £6.1m. Gross expenditure has reduced to £121.2m, and income has reduced to £56.4m (this includes a £1.8m transfer from reserves). Net expenditure has increased to £64.8m, reflecting funds transfer from MPS to MOPAC. These changes and a number of budget virements in excess of £0.5m are subject to DMPC approval. Further detail of the budget virements is provided at Appendix One, with detail of the reserves provided at Section Four and Appendix Three.  

MPS Budget 

6. In February 2022 the MPS budget was set at £3,121.7m. Subsequent changes have been approved to reflect additional grant funding, other income and the application of reserves as at Quarter 3, net expenditure was £3,120.6m.  

7. At Quarter Four the budget has been updated to reflect additional grant funding and other income totalling £84.1m, a £80.9m increase in grants, including £63.6m Home Office Operation London Bridge grant, £4.1m Queens Platinum Jubilee and £5.7m Op Northleigh Home Office special Grant. The budget has also been updated to include a net transfer to reserves totalling £21.7m. Net expenditure is now £3,120.3m reflecting the transfer of £0.3m to MOPAC. These changes and a number of budget virements in excess of £0.5m are subject to DMPC approval. Further detail of the budget virements is provided at Appendix Two, with detail of the reserves provided at Section Four and Appendix Four.  

2. MOPAC/MPS Revenue Budget 2022/23 

1. The MOPAC and MPS draft outturn position is an underspend of £3.0m against the revised budget of £3,185.1m. Within the MPS the net expenditure is a nil balance variance as a result of adjustments in income, grants and reserve transfers to offset the gross expenditure variance. The MPS finished the year with 34,503 officers, recruitment delivery of 3,305 officers in 2022/23, 1,089 short of the year 3 PUP target, resulting in a large underspend in Police Office Pay, and the loss of £30.8m PUP ring fenced grant funding. 

2. Overtime presented a financial pressure in 2022-23 with an overspend of £41.6m. This is after discounting areas which were offset by additional grant and income such as the Queen's Platinum Jubilee and Operation London Bridge. This overspend was managed within the overall budget due to vacancies, but it is not sustainable in the medium term.  

MOPAC Budget 

3. MOPAC’s draft outturn position is an underspend of £3.0m as compared to a forecast underspend at Quarter 3 of £2.6m. The underspend is largely due the reprofiling of programmes due to the late notification of additional funding and the release of funds following clarification of how projects will be funded.  

4. The draft outturn position includes the carry forward of funds totalling £5.4m for Quarter 4 for projects that will now be delivered in future years. The £3.0m underspend will be transferred to earmarked reserves to manage future budget pressures.   

MPS Budget 

5. The MPS draft outturn position is a nil balance variance as a result of adjustments in income, grants and reserve transfers to offset the gross expenditure variance. This represents a decrease of £1.5m to the forecast position reported at Quarter Three. Whilst the draft outturn is net nil, within this there are a number of variances. The main variances are set out below:-  

• Police Officer Pay - The draft outturn position is an underspend of £37.1m relating to a year end officer workforce of 34,503 FTE. This represents a £10.6m increase in the underspend from the position reported at Quarter Three, and is driven in part by the police officer workforce being c300 officers less than forecast at Quarter Three.  

• Police Officer Overtime – The draft Outturn position is an overspend of £29.1m. The majority of the overspend relates to Frontline Policing and Met Ops (£13.0m) due mainly to vacancies and Counter Terrorism and Protective Security (£10.6m) offset by additional grant income.  

• Police Staff Pay – The draft outturn position is a £34.2m underspend largely a result of recruitment delays.  

• Police Staff Overtime – The draft outturn position is an overspend of £12.1m the majority of which relates to Met Ops (£9.8m) primarily as a result of overtime compensating for vacancies and recruitment delays.  

• Running Costs – The draft outturn position is a £9.9m overspend of which £7.1m relates to premises costs and £10.4m transport driven by higher than expected inflation. This is offset by an underspend of £9.2m in Supplies and Services.  

• Capital Financing Costs – The draft outturn position is a £1.0m overspend.  

• Income  - The draft outturn position is £10.1m over recovery. Of this £22.2m relates to internally funded areas and is mainly due to higher than interest receipts on cash balances (£10.6m), over-recovery on recovery of costs for the officer travel scheme (£3.8m) and over-recovery of costs incurred policing events including football matches (£2.9m). This is offset by an under-recovery of £12.1m in externally funded posts, largely due to vacancies and is offset by corresponding reduction in expenditure. 

• Specific grants  - the draft outturn is £26.9m under budget the mainly driven by grant withheld by Home Office  for the ring-fenced Police Uplift Programme due to a shortfall in officer recruitment (£30.8m), offset by an over-recovery of grants protective security and Met Ops. 

6. For 2022/23 the MPS had an approved saving target of £68.1m. Of this,  £4.7m of identified savings were not delivered, and savings of  £2.8m were identified and re-profiled  in future years, leaving  £60.6m of the original savings planned delivered.  

7. Capital Budget 2022/23 

8. The draft capital outturn position is an underspend of £52.6m against the revised budget of £321.8m as compared to a forecast underspend of £48.1m reported at Quarter Three. The main variances are as follows: 

• Property Services – An underspend of £11.7m against the revised budget. This is due to slippage across a variety of investment and business as usual programmes.  

• Transformation – An underspend of £38.6m against the revised budget, of which £31.5m relates to the Command and Control project due to slippage.  

• Digital Policing – An overspend of £3.3m against the revised budget due to slippage in relation to the Command and Control project, Eagle Data Centre activity and the national ANPR programme. This is offset by financial pressures due to global and market factors related to skills shortages and supply chain constraints. 

• CTPHQ – An underspend of £7.7m against the revised budget due to supply chain issues in labour and resources and the re-profiling of certain construction work.  

• Fleet Services – An underspend of £0.5m primarily a result of supply chain constraints in the global semiconductor chip market having knock effects for the supply of vehicles. 

• Met Ops – An overspend of £7.9m against the revised budget due to procurement of a variety of assets, including infrastructure, technology, cameras and other equipment, and covert vehicles in line with approved business cases.  

4. Full details can be found in the Q4 Performance Report (Link to be added) 

5. Reserves 

1. Earmarked reserves of £522.7m were available from 1 April 2022 and the budget approved in February 2022 included the proposed use of reserves totalling £123.9m.  At Quarter Three the budget was updated to reflect the planned use of reserves £108.7m as a result of the reprofiling of projects into future financial years and changes in planned usage of reserves.  

2. The draft outturn position includes the use of reserves totalling £74.4m of which £79.1m relates to the MPS offset by a net contribution to reserves of £4.7m for MOPAC. This represents a significant reduction in the planned use of reserves of £28.2m to that reported at Quarter Three, of which £6.5m represents a reduction in the planned use of reserves within MOPAC and £21.7m a reduction in the planned use of reserves within the MPS.  

3. A summary of the changes in MOPAC’s planned use of reserves are set out below, a more detailed breakdown is provided at Appendix Three: 

• Carry Forward – Transfer to reserve for projects where delivery has been reprofiled into 2023/24 - £5.4m 

• Budget resilience – Transfer of underspend - £3.0m 

• Reduction in planned use of reserves - £1.9m 

4. A summary of the changes in the MPS planned use of reserves is set out below, a more detailed breakdown is provided at Appendix Four. 

• New transfer to reserves - £19.6m 

• Increase in the proposed use of reserves - £1.7m 

• Reduction in the planned use of reserves - £3.8m 

5. The general reserve remains at £46.1m. In light of the economic climate and the uncertainty over inflation and the potential impact on pay awards, 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. 

6. Financial Comments 

1. The report sets out the draft outturn position for 2022/23 which is subject to external audit. Risks identified in 2022/23 in particular inflation and recruitment will continue to be monitored in 2023/24 long with close monitoring of 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.