Further detail

High inflation and expectations for 2023-24 pay award has resulted in significant financial challenges for the organisation that require to be managed as part of the annual budget process.

The Head of Finance provides the routine finance report which outlines the year to date and forecast position for the revenue, capital, and reform budgets.

Appendix A provides the detailed quarter one (Q1) finance report.

Revenue
The year-to-date actual position versus budget is an overspend of £3.5m.
The Q1 net expenditure forecast is £24.3m over budget, mainly due to overspends relating to pay; police staff costs, police officer overtime and police officer pensions.
The above overspend is offset by estimated funding £5.4m receivable from Scottish Government as part of the Autumn and Spring Budget Reviews.
It is critical we take action to start delivering the 3.7% savings that are included in the budget, as well as further action to bring other overspends back in line or to identify corresponding savings to ensure delivery of a balanced budget.
Internal discussions are still ongoing to agree the specific measures to be implemented to reduce the emerging overspend.

Capital
The capital forecast at Q1 is £53.7m, £0.7m (fully funded) above the budget position of £53.0m.
Remaining slippage required at Q1 is £28.7m. Finance review suggests further potential slippage of £14.6m leaving £14.1m still to be identified. The overall position will be reviewed at Q2 with the view of prioritising spend as appropriate.
Out of the £53.7m Q1 forecast, the spend profile indicates actual spend (£18.4m), committed orders (£20.9m) and expected capitalisation of staff costs (£3.2m) leaving non-committed spend (£11.2m).
Although there is a year-to-date underspend of £2.7m, the actual spend at Q1 is significantly higher than that in previous years, indicating a shift in the pattern of capital spend.
 
Reform

The reform forecast at Q1 of £25.0m is in line with budget.
The quarter one reform forecast has resulted in the reduction of FY slippage of £8.7m, bringing the total slippage down to £2.7m from the budgeted amount of £11.4m.
As above Q1 FC has already identified significant slippage and will continue to be reviewed.
Out of the £25.0m forecast, the spend profile indicates actual spend (£4.6m) and committed spend (£11.8m) leaving non-committed spend (£8.6m).
The year-to-date reform spend at Q1 is under budget by £0.1m.