Annex 3
SUMMARY OF BUDGETS AND INVESTMENTS
Following the inception of the BTPA in July
2004, the Authority commenced a three year improvement programme
to address the legacy issues remaining from the BTP Committee.
This document is a summary of the key points. This information
is set out in detail in the Strategic Plan, and a briefing produced
for all PSA holders, both of which we are happy to provide if
the committee would find them helpful. The Strategic Plan is also
available at www.btp.police.uk.
SUMMARY
This paper outlines the following key points:
— The increase in the 2005-06 budget
was predominately unavoidable expenditure, with new money to address
the legacy issues.
— Following representations from the
industry, the Chief Constable was asked three times to reduce
and re-phase his budget.
— The Chief Executive & Clerk took
the initiative to approach DfT for a loan to reduce the call on
the industry
— At the behest of the industry, the
Authority developed a new model for engaging and consulting with
the industry and allowing them to input into the process.
— PSA holders were provided with an
opportunity to feed back on the costed, draft Strategic Plan.
— The Strategic Plan sets out the priorities
and associated costs for the next three years.
— Other forces are receiving money
from the Government to fund the "new normality" in the
aftermath of 7/7 bombings.
— In response to representations from
the industry, the 2006-07 budget has been reduced from an increase
of £36,054 million to £30,916 million. Of this, all
but £6.1 million is unavoidable expenditure.
2005-06 BUDGET
— The 2005-06 budget was initially
presented to the Authority on 18 January 2005. This set out the
Chief Constable's assessment of what needed to be addressed over
the three years, and the associated costs. It was agreed that
the budget would be "front-loaded", ie a big hit in
2005-06, followed by two smaller hits (See table 1 below).
Table 1
BUDGET PRESENTED 18 JANUARY 2005
| | |
| | |
|
Baseline |
Inflation | Other
Increases
|
Total |
% Increase
|
| | |
| | |
| 2004-05 | 105,596 | 3,167
| 16,363 | 125,126 | 18.5
|
| 2005-06 | 125,126 | 4,052
| 39,924 | 169,102 | 35.1
|
| 2006-07 | 169,102 | 5,481
| 6,165 | 180,748 | 6.9
|
| 2007-08 | 180,701 | 5,814
| 3,702 | 190,265 | 5.3
|
| | |
| | |
| | |
| | |
— PSA holders were written to on 2 February 2005.
This letter set out the draft Strategic Plan, the estimated costs
and asked for responses.
— As a result of the responses received to the above
letter, a reduced budget was re-presented on 1 March 2005. The
percentage increases for the three years were now 29.4%, 9.7%,
5.1% (see Table 2 below). This was achieved by deferring some
projects into year 2, hence increasing the year 2 budget. As a
result of representation made by the industry at this meeting,
the Chief Constable was again asked to look at the phasing.
— ATOC commissioned Ernst & Young to review
the Force's bids and process. They were given complete access
to all relevant information. They provided useful advice regarding
a technicality which reduced the budget by £250K, but otherwise
found the bids and the process the bids had gone through to be
sound.
— All PSA holders were written to on the 4 March,
to inform them that the decision had been deferred to allow further
time to discuss with the industry. The letter set out the latest
budget position.
— Following further meetings with the industry,
the Authority met again on 23 March 2005. A reduced budget was
again presented (see Table 2 below). The revised budget bids were
circulated, showing how they related to the Strategic Plan and
the Risk Register, how they had been costed and re-phased.
Table 2
SUMMARY OF VARIANCE FOLLOWING CONSULTATION WITH THE INDUSTRY
Date
presented |
18/01/05
|
1/03/05 |
23/0305
|
Variance |
| £000
| % | £000 |
% | £000 | %
| £000 |
| 2005-06 | 43,976 | 35.1
| 37,019 | 29.4 | 29,941
| 23.8 | (14,035) |
| 2006-07 | 11,646 | 6.9
| 15,854 | 9.7 | 18,054
| 10.7 | 6,408 |
| 2007-08 | 9,515 | 5.2
| 9,168 | 5.1 | 12,574
| 7.0 | 3,059 |
Year 3 Total | 65,137
| 52.1 | 62,041 |
49.5 | 60,569 | 48.4
| |
| | |
| | | |
|
— The overground budget was finally set at £155,555
million for the Force, plus £1.6 million for the Authority.
The loan from DfT reduced the bill to PSA holders to approximately
£147 million.
— Of the £29.9 million increase, £14 million
was new money for growth; the remainder was unavoidable expenditure,
including loss of VAT status.
STRATEGIC PLAN
— The Strategic Plan was published in April 2005.
Due to the lead in time for print, the figures setting out the
cost of the Plan used the figures for the three years presented
to 1 March meeting (25%, 11.6% and 7.2%). It also showed the priorities
for the Force and how these would be achieved. This was circulated
to the industry.
— Reducing crime by working with partners and the
railway community to tackle the causes of crime, as well as dealing
with crime incidents.
— Investigating crime in an efficient, effective
and timely manner, in order to increase the number of detections
and the number of offenders brought to justice.
— Promote public safety and assurance by working
in partnership with others to make the railway environment safe
for all.
— Respond to incidents in a way that meets the needs
of our railway community and the travelling public, and takes
into account local priorities.
— In a letter dated 5 April 2005 to the Chair of
the Authority, the Secretary of State endorsed the Authority's
plan.
DFT LOAN
— The Chief Executive & Clerk took the initiative
to approach DfT to explore the possibility of a loan to reduce
the call on the PSA holders.
— This was successful, and DfT provided a loan of
£10 million to be repaid in two tranches. This reduced the
bill to the industry from around a 25% increase to around 15%
(the actual Force budget remained at a 25% increase).
— The fact that the loan needed to be repaid over
2006-07 and 2007-08 was communicated in writing to PSA holders
on at least three occasions.
REVISED PROCESS
— The industry had raised concerns about the process
the Authority had used to consult and engage with them. The Authority
therefore developed a revised, more formal process (see Figure
1 over).
— The workshops were attended by a number of operators,
and the minutes circulated to the Authority prior to its first
2006-07 budget discussions in September 2005. It was further an
opportunity for the Force and Authority to outline the operational
and budgetary pressures it was facing, and for the industry to
outline its own pressures and priorities.
— Further workshops were held in November 2005.
The results of these workshops were submitted to the Authority
prior to their budget discussions in January 2006. The budget
position at that time was presented.
— Following evaluation of the first year of this
process, ATOC are keen for the Secretary of State to issue a direction
to the Authority to follow this model. The Authority is pleased
to have been able to reach agreement with the industry on this,
but has concerns that once a direction has been made, the model
cannot be updated or improved without a further direction being
made.
2006-07 BUDGET
— The first discussion about the 2006-07 budget
took place in September 2005. Members were provided with minutes
and a report on the PSA holder workshops over the summer. The
following budget was presented:
Table 3
FIRST DRAFT OF BUDGET PRESENTED 6 SEPTEMBER 2005
| £000 |
|
| Baseline | 155,555 | [13]
|
| To reinstate loan cover in the baseline |
10,000 | |
| To repay the first tranche of the loan |
5,000 | |
| Inflation | 5,096 |
|
| Additional depreciation costs as result of increased capital funding
| 1,500 | |
| Base line impact of 2005-06 growth | 5,316
| |
| 2006-07 growth to address unavoidable commitments and the second year of the Strategic Plan
| 6,142 | |
Total increase | 33,054
| |
| Total budget | 178,609
| [14]
|
| | |
As can be seen, £6.1 million of this is new growth money—the
rest is committed expenditure.
— This figure did not take any account of the "new
normality", as it was not possible to sufficiently assess
the situation at that point. The "new normality" refers
to the general increase in police visibility and specialist response
in the aftermath of 7/7 bombings. It must be noted that all other
Forces are receiving Government money to fund this.
— A revised budget was presented to the Strategy,
Budget & Performance Monitoring (SB&PM) Committee in November.
The increase was £36,054 million, which was the £33,054
million above plus £3 million to fund the new normality requirements.
The total proposed budget was therefore £181.6 million.
— A further SB&PM meeting was held in December
2005. Three further budget options were presented, all of them
a decrease on that presented to the November meeting.
Option 1: Revised calculation for inflation and reduction
in new normality requirements. This represents a reduction of
£1.6 million from November and a total budget of £180
million.
Option 2: As Option 1, but including £1.6 million
efficiency savings (reduction of £3.1 million), and a separate
(non-PSA) funding for the new normality. Total budget of £178.4
million.
Option 3: As Option 2, but re-phasing the Strategic Plan
over four years to fund the new normality requirements (reduction
of £5.1 million, total budget of £176.4 million.
In Option 3 above (which is currently the option under discussion),
all but £6.1 million (£4.2 million growth and £1.9
million new normality) is unavoidable expenditure. The £4.2
million growth for 2006-07 will address the requirements of the
Strategic Plan, and will specifically include:
— New crime recording facilitates and processes,
which are designed to deliver both cashable and non-cashable savings.
— Investment in Criminal Justice systems to address
the remaining legacy issues and baseline criticisms and to meet
new Government requirements.
— Additional support for London South to focus on:
— Improvements to intelligence and forensics, resulting
in better targeting of patrols and increased detections.
— Additional PCSOs for reassurance, visibility and
counter-terrorism.
— IT developments, including better information
management systems and project management for the control rooms
project.
— Better procurement practices, resulting in cashable
and non-cashable efficiencies.
— Apollo HR database, to improve management and
payroll systems.
— This new growth, and the continuation of projects
started in 2005, is necessary to meet the HMIC's criticisms and
to enable efficiencies to be made. In summary, Option 3 is a budget
increase of 13.4%, requiring a funding increase of 19.9%. This
includes efficiency savings, and re-phasing the Strategic Plan
to fund the (reduced) costs of the new normality.
— At the January Police Authority meeting, it was
pointed out in a written paper by the Chief Executive & Clerk
that there was "widespread concern about the likely increase
. . . and the issue of affordability had been made very strongly."
The SB&PM Committee had indicated that an increase of 15%
might be desirable. The only way in which this could be achieved
would be to defer the £5 million loan repayment, which would
bring the funding requirement down to £26 million (16.5%).
— The budget will be finalised at the Authority
meeting of 7 March 2006.
13
BTP budget only, not including the BTPA budget. Back
14
The £156 million includes £10 million from DfT-the
£10 million requested here is therefore to maintain the baseline
and not additional money. Hence the total budget is £156
million + £23 million, not £33 million. Back
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