Financial Reporting 2017/18 - Quarter 1

DMPC is asked to note the current year to date financial position, the first 2017/18 forecast position and to approve a number of budget and reserve movements. In summary, there is a forecast underspend of £32m. The forecast underspend is made up of a £23m in underspend related to police officer pay and £9m underspend being a net position of Police Staff and Running Costs underspend, Overtime overspend and overachievement of Total Income.

As at Quarter 1, the officer pay actual underspend is £7.1m, with £1.1m of this underspend on activities funded by specific grant or 3rd party income. It is proposed that £6m of the officer pay underspend (the amount not receiving specific funding) is transferred to reserves, to protect this budget for the medium term while addressing the wider funding position.

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 £268m, against an approved budget of £366m.

The DMPC is asked to

1. Note the 2017/18 revenue and capital financial position and forecast.

2. Approve the budget movements set out in paragraph 2.4-2.5

3. Approve the transfer to reserves set out in paragraph 2.6

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.

2. Issues for consideration

Revenue

2.1. The first quarter forecast year end revenue position is a reported underspend of £32.2m. Of this, it is forecast £23.4m relates to police officer pay.

2.2. As at Quarter 1, the officer pay actual underspend is £7.1m, with £1.1m of this underspend on activities funded by specific grant or 3rd party income. It is proposed that £6m of the officer pay underspend (the amount not receiving specific funding) is transferred to reserves, to protect this budget for the medium term while addressing the wider funding position.

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 35-41.

Capital

2.5. Capital investment is forecast to be £268m in 2017/18 against an approved budget of £366m. 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. Revenue budget movements are set out in Appendix 1 of the attached Annex to

• Approve the net increased use of reserves of £10.9m related to the net position of deferral of planned use of reserves in Major Change programme and firearms uplift, and the use now of reserves not used in 2016/17 in relation to back office transformation,

• Approve the increased application of grants and income and the corresponding increase in the expenditure budget, of £1.2m,

• Approve the housekeeping budgetary changes to re-align budgets to forecast spend;

2.7. Capital budget movements are set out in Annex 1, and in summary are re-profiles

• Property Services - to re-profile the approved Capital Plan for 2017/18 from £159.3m to £85.3m, and to re-profile the capital receipts budget for 2017/18 from £71m to £32m

• Fleet Services - to re-profile the approved Capital Plan for 2017/18 from £33.5m to £31.4m and then increase 2018/19 from £32.8m to £34.4m

• NCTPHQ - approval to reduce the approved Capital Plan for 2017/18 from £62m to £28.5m

Reserves

2.8. Approve £6m of the Quarter 1 police pay underspend to be transferred to reserves, in order to protect this funding for medium term officer recruitment plans.

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 – Q1 2017/18

Appendix 2 - Revenue and reserves