Further Detail on Report Topic

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

Appendix A provides the detailed quarter three (Q3) finance report and Appendix B provides budget revisions for approval, including the additional capital and revenue allocations noted above.
Revenue
• The Q3 net expenditure forecast is £2.5m over budget, funded by a contribution from Reform to support overall pay award pressures.

• There are a number of significant offsetting variances that form part of the Q3 forecast.

• The main overspends (£32.3m) relate to pay award pressures (£20.5m), an increase in expenditure (£7.0m) relating to bids approved by the Revenue Investment Group (RIG) predominately supporting overtime, staffing divisional uplifts, workforce modernisation, learning training & development, and other items; and additional non-pay costs (£4.8m - third-party payments £3.2m and supplies & services £1.6m).

• Against the above overspends, the main underspends (£29.8m) relate to one-off benefits (£8.9m), Police Staff pay costs (£7.2m) and Police Officer pay costs (£7.1m) as both are running below the budgeting assumptions; over-recovery of income (£4.3m) and reduction in other costs (£2.3m).

• The forecast position will be closely monitored along with any threats and opportunities that materialise throughout the remainder of the financial year.

• The year-to-date actual position versus budget is an underspend of £10.0m, explained by underspends in police staff costs (£3.9m), non-pay (£2.7m) and police officer costs (£0.7m) and an over-recovery of income (£2.7m).
Capital
• The capital forecast at Q3 (excluding IFRS16 transactions) is £65.3m. When combined with IFRS16 capital, the overall position is a £3.3m forecast overspend against budget.

• This forecast overspend is fully funded and primarily compensated by an increase in capital receipts (£2.4m) and other capital grants receivable (£0.9m).

• Business as usual capital expenditure increased by £11.4m (net) mainly due to additional capital bids of £18.7m (fleet, airwave and tasers) approved through Capital Investment Group (CIG) and other items (£0.1m) offset partially by an underspend within Estates (£7.4m).

• Against these increases, change capital expenditure decreased by £7.2m, namely Digitally Enabled Policing Programme (DEPP) £5.6m and other change projects of £1.6m; and movement in the slippage allocation due to overprogramming £3.7m.

• IFRS16 right of use (ROU) assets £2.8m over mainly due to extension of current leases and anticipated new leases. IFRS16 ROU assets represent technical accounting adjustments required at year end.

• CIG previously approved an overallocation of investment to be managed across financial years to mitigate the potential risk of slippage. This has been reflected in the Q3 forecast where appropriate. These actions will allow effective management of slippage over the remaining months of the financial year.

• Committed and uncommitted spend will continue to be monitored throughout the year and tracking of these is highlighted in Appendix A.

• The year-to-date capital spend at P9 is under budget by £12.0m (net of slippage).
 
• The underspend of £12.0m is mainly due to: estates (£9.7m) - £6.7m due to delays with external suppliers and transformation type spend £3.0m; digital division (£3.8m) under due to various timelines extending including mobility, laptop refresh and storage; DEPP (£3.1m) under due to budget being higher than needed for COS phase 3 / DSEG and Body Worn Video; offset by Divisional Division airwave (£2.6m) over in line with previous commitment to support airwave replacement and other items (£2.0m, net of slippage).

Reform
• The reform forecast at Q3 is £0.2m over budget position (fully funded).

• The Q3 forecast includes £2.5m to support organisational pay award pressures.

• Full year slippage of £5.5m has been achieved due to policing in a digital world training and capability (£2.1m) due to changing project plans for Action Fraud and Training; Estates transformation (£2.0m) due to focus on Estates masterplan in year; transformation resource (£1.1m) due to slippage in recruiting timescales; Enabling Policing for the Future (£1.1m) due to realignment of costs to transformation resource line and an underspend on E-financials; DEPP (£0.7m) due to delays in body worn video and other items net (£0.8m).

• Committed and uncommitted spend will continue to be monitored throughout the year and tracking of these is highlighted in Appendix A.

• The year-to-date reform spend at P9 is under budget by £0.4m (net of slippage).