Further detail

Pay award budgeting was originally based on Public Sector Pay Policy (PSPP). Pay awards through negotiation at both Police Negotiating Board (PNB) and Trade Unions were agreed in August and October respectively. As part of the pay negotiations, the additional funding required (£37.0m) to support the process was underwritten by the Scottish Government. A budget adjustment has been made to reflect this change in the 2022/23 revenue budget.Capital and reform funding allocations were proposed as flat cash for 2022-23. Given the current impact of inflation, this represented a real terms reduction in funding. When combined with capital receipts, the capital allocation was £52.6m for 2022-23 which has been eroded by inflation and pays for significantly less. The Scottish Government originally allocated reform funding up to £25m to support change and the transformation of policing. However, as part of the Spring Budget Revision (SBR) transfer process, Reform funding was reduced to £21.3m, with £2.8m of the funding re-directed to support capital expenditure investment.

IFRS 16 Leases is effective from 1 April 2022 in the public sector. The standard provides a single lessee accounting model and, under the latest Financial Reporting Manual (FReM) requirements, requires a lessee to recognise assets and liabilities for leases which last over 12 months, but not including low value leases. The standard will have the effect of largely eliminating the current “off-balance” sheet treatment of operating leases. Technical accounting adjustments during financial year 2022/23 were required that impacted both Resource Departmental Expenditure Limits (RDEL) and Capital Departmental Expenditure Limits (CDEL) budgets, which saw a reduction in RDEL and an increase in CDEL but with minimal overall impact on funding. A budget adjustment has been made for both capital and revenue to reflect the impact of IFRS 16.

This report sets out the provisional net outturn for SPA/ Police Scotland for the year ended 31 March 2023. The figures are still subject to finalisation and external audit.

Appendix A provides the detailed provisional outturn finance report.

Revenue

The provisional outturn revenue position for the year ended 31 March 2023 currently shows a net expenditure of £1,299.2m.

Of this net expenditure, £1,282.8m relates to the core revenue budget which has broken even on a fully funded recurring basis. There are a few significant offsetting variances (underspend in Police Officer costs due to lower FTE than budgeted offset by increased Police Officer overtime and unavoidable non-pay pressures (i.e., legal costs and inflation) that have been managed across the year as part of the quarterly reforecasting process, which broadly nets to zero.

A further £1.0m of net expenditure relates to non-core revenue budget and is £3.8m lower than budget primarily due over recovery of income offset by specific initiatives fully funded by Scottish Government. This allowed the Police Authority to return non-recurring COVID related funding of £3.8m, together with a reduction in Reform resource expenditure £0.9m, to the Scottish Government, as part of the Spring Budget Revision (SBR), to support their objective to find savings to meet increased costs of public sector pay, while balancing public finances.

The remaining £15.4m of net expenditure relates to operational costs (Operation Unicorn) associated with the passing of Her Majesty the Queen (HMTQ) which was covered in full by His Majesty’s Treasury (HMT) and has been dealt with as part of the Spring Budget Revision (SBR).
Capital

The full year provisional outturn capital spends of £61.0m and funding of £61.1m resulting in an underspend of £0.1m.

Overall total expenditure is £3.2m higher than budget mainly due to additional investment in fleet, which was primarily funded by £2.8m of revenue reform funding transferred to capital reform as part of the Spring Budget Revision (SBR) process.

Reform

The full year outturn revenue reform spends of £21.4m and funding of £21.5m resulting in an underspend of £0.1m.

Overall total expenditure is £3.6m under budget, mainly driven by lower levels of spend associated within transformation resource, delays and programme amendments within Enabling Policing for the Future (EPF), Policing in a digital world, Modern Contact and Engagement (MC&E) and other programmes.

As part of the Spring Budget Revision (SBR) process, £2.8m of revenue funding was transferred to capital reform and £0.9m returned to the Scottish Government because of robust in-year forecasting processes.