Further detail on report topic

The Authority approved the 2023-24 annual budget on 23 March 2023. This budget sets out the spending plans for Police Scotland, Forensic Services and SPA Corporate regarding revenue, capital, and reform for the coming financial year.

The Authority received a core revenue funding increase of £80m (6.4%) in 2023-24. Although this uplift is not as severe as the flat cash position indicated by the Resource Spending Review, it still represented a real terms reduction in funding when set against the additional cost of 2022/23 pay award (£37.0m), leaving only £43.0m to fund unavoidable pay and non-pay pressures for 2023/24.

In order to live within the budget settlement and deliver a balanced budget, over £50m of savings have been proposed in the 2023/24 budget. Plans included reducing the workforce through a reduction in officer and staff numbers and options to reduce non-pay expenditure.

Pay award budgeting was in line with Public Sector Pay Strategy (PSPS). Pay awards through negotiation at both Police Negotiating Board (PNB) and Trade Unions were agreed in September. As part of the pay negotiations, the additional funding required (£18.3m) to support the process was underwritten by the Scottish Government. A budget adjustment has been proposed for approval to reflect this change in the 2023/24 revenue budget- see Appendix B.

A flat capital funding allocation of £53m (including capital receipts) has been confirmed for 2023-24 and reform funding to support change and the transformation has been baselined at £20m, representing a 20% reduction in reform from previous years. As a result, in the reduction of reform funding from £25m to £20m, it was agreed by the Board to contribute £5m of core revenue budget funding to reform to support change and transformation.

FURTHER DETAIL ON THE REPORT TOPIC

A number of financial risks were highlighted as part of the budget approval process, some of which have materialised in the first half of the financial year causing significant pressure on the 2023-24 revenue position.

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.

Due to significant financial challenges the Scottish Police Authority are facing this year, mitigating actions been agreed by Police Scotland Force Executive to bring the revenue and reform budgets collectively back to a break-even position. These specific actions will be monitored on a weekly/fortnightly basis, with regular monthly reporting to the Police Scotland Executive and SPA Resources Committee members, to provide assurance to the Authority of oversight of progress against delivery of the above plans.

Appendix A provides the detailed quarter two (Q2) 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 and savings are being managed and delivered through our Policing Our Communities programme to bring spend back in line with the funded position.

The Q2 forecast has been updated to take account of all known movements since Q1, including updates to the cost reduction and savings plans, providing a net Q2 forecast overspend of £0.9m. This is offset by a £0.9m forecast underspend in Reform resulting in an overall breakeven position.

The Q2 position is very challenging. It is critical that the mitigating plans included in the forecast, some of which are out with the organisation’s control, are delivered in full over the remainder of the financial year to ensure a balanced position in line with funding.

Achieving this position will require a continued significant effort across the organisation.

The year-to-date actual position versus budget is an overspend of £7.7m.

Capital

The capital forecast at Q2 is £52.9m (fully funded), £0.1m under the budget position of £53.0m, but still requires slippage of £17.3m to be managed across the remainder of the financial year.

The year-to-date actual position versus budget is an overspend of £1.4m.

As at Period 6 and Q2, £57.8m is spent or committed to date, which is £4.9m higher than the £52.9m funding available. As a result, no further capital commitments will be made in 2023-24 and the overall position will be actively managed across the remainder of the financial year.

Reform

The Q2 forecast highlights that reform funding has reduced to £20.0m as a result of the decisions and mitigating actions agreed to help balance the 2023/24 revenue position.

The Q2 forecast is an underspend of £0.9m against this funding. This is offset by a £0.9m forecast overspend in Revenue resulting in an overall breakeven position for the Police Authority against a funded position.

The Reform position will continue to be monitored, alongside the revenue position, over the remainder of the financial year.

The year-to-date actual position versus budget is an underspend of £0.1m.