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 Q1 forecast originally presented to SPA Resources Committee on 08 August 2023 highlighted net unfunded pressures of £18.9m, mainly due to overspends relating to pay; police staff costs, police officer overtime and police officer pensions.

Mitigating actions of £18.9m have now been agreed by Police Scotland Force Executive and results in a revised Q1 net expenditure forecast of £1,333.6m which is in line with the funding receivable.

The Q1 FC assumes anticipated funding of £5.4m receivable from Scottish Government as part of the Autumn and Spring Budget Reviews.

It is critical that the mitigating plans included in the forecast are delivered in full to ensure a balanced position in line with funding.

The year-to-date actual position versus budget is an overspend of £3.5m.

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 £22.0m is £3.0m under budget, compensated by a reduction in the revenue budget contribution of £3.0m.

The quarter one reform forecast has resulted in the reduction of FY slippage of £5.7m, bringing the total slippage down to £5.7m from the budgeted amount of £11.4m.

Out of the £22.0m forecast, the spend profile indicates actual spend (£4.6m) and committed spend (£11.8m) leaving non-committed spend (£5.6m).

The year-to-date reform spend at Q1 is under budget by £0.1m.