Decision Title: 2021/22 Budget monitoring position including the forecast outturn position as at quarter 1 and also at period 5
Decision Reference Number: WPCC3-0029
Lead Officer: Sara Ansell, Treasurer
Date: 20th October, 2021
Status: Partly Confidential
The supporting documentation is is deemed confidential as some details in the full Money Matters reports may contain information which is exempt under S.31(1) Prevention and Detection of Crime.
Decision summary
This Decision Notice provides formal approval for the reported forecast outturn as outlined at the end of quarter 1 and updated again as at period 5, along with the necessary reallocations of capital funding and reserve transfers as detailed in both of the comprehensive Money Matters budget monitoring reports that he has received and discussed with the Chief Constable.
I confirm that my register of interests declaration is up to date and that none of my interests preclude me from making this decision.
Signature: Philip Seccombe
Date: 22 November 2021
Supporting information
1. Background information
The PCC receives regular budget monitoring reports and updates on financial performance including the forecast outturn for the current year for revenue and capital spending, along with the impact this will have on reserves. He discuss this with the Chief Constable either at the weekly holding to account meeting or at the monthly Force Governance Board meetings. Following discussion of both of these reports he provided verbal approval, which is now formalised in this decision notice.
The 2021/22 approved budget included total funding of £115,350m, and net revenue expenditure of £114.233m, thus requiring a transfer to reserves of £1.117m, (£0.778m Budget & Transformation Reserve and £0.339m Collection Fund Reserve). The PCC has noted the reports and made the following approvals as at quarter 1 and period 5 based on the report recommendations and further discussion with the Chief Constable.
Q1 Recommendations:
Capital Programme – transfer £4.165m (budget) to fund the Evolve Programme from other projects as the set out in the detailed Money matters report in Table 5.1.
Reserve Transfer – PCC transfer from the safer roads reserve to fund initiatives to improve road safety of £0.165m.
Reserve Transfer – Approve to transfer the quarter 1 operating surplus to the Infrastructure Reserve – £0.247m, although this will be kept under review as the year progresses and would be reversed in the event of an overspend.
Period 5 recommendations:
Transfer a further £1.848m (budget) to the Evolve Programme from slippage in Estates, Vehicle Replacement and Plant & Equipment programmes as set out in column 12 of Table 5.1
Increase the Capital Programme by up to £1.549m to complete the final phase of the Evolve Programme. In lieu of other sources of funding this will be financed by borrowing.
Transfer £0.125m from the SRP Reserve to meet the cost of works required to accommodate the SRP in Rugby in the even this move takes place. This drawdown will only be made once the costs have been incurred.
Up to a maximum of £1.895m is required to underwrite the West Mercia Police hosted ICT infrastructure and applications until 31 March 2022 (£1.152m) and to meet the one-off revenue cost of the Evolve Programme over and above the £1m budget(£0.325m). Both of these transfers, if required, would be from the Budget & Transformation Reserve. However, as at period 5 only £0.390m of the £1.895m is required, and the required transfer will only be determined at year end when the outturn is known.
Transfer £0.223m from the Pension & Redundancy Reserve to meet the cost of redundancies and pension strain as a consequence of transitioning out of ICT and forensic services.
The period 5 reporting position, compared to budget and also to quarter 1 is summarised as follows: Forecast outturn net expenditure as at period 5, after income, is £114.650m (Q1 £113.790m), which is £0.700m (Q1 £1.560m) less than the £115.350m core funding, consisting of government grant, including the one-off local council tax support grant and collection fund grant, as well as the precept. The £0.700m consists of agreed (budgeted) transfers to and from reserves, and other budget variations. and compares to a revised budgeted contribution to reserves at year end of £0.952m, after allowing for the £0.165m of reserve usage to meet road safety projects. This creates a net £0.252m overspend, made up of an operating surplus of £0.361m on safer roads (earmarked), meaning that the required transfer from reserves at year end is £0.223m from the redundancy reserve to meet the in year redundancy costs, and a further £0.390m from the budget reserve to meet the remaining balance of forecast expenditure, as per the recommendations to the PCC. The position is relatively complex, but, the net forecast remains as a slightly reduced transfer to reserves than budgeted at year end of £0.700m, compared to £0.952m. The main variations of spend are included within the confidential reports.
The forecast budgeted contribution of £0.700m to reserves at year end will increase them from £12.688m as at 1st April 2021 to £13.263m, based on the reserve transfers mentioned earlier. Reserve levels continue to be monitored closely, the general reserve is held at £5m and is reviewed as part of the budget process each year. The total forecast reserve position as at 31st March 2022 (£13.263m) compares very favourably to the MTFP position as per Februarys budget where reserve balances at the end of March 2022 were forecast to be £11.823m.
The forecast capital outturn as at period 5 is £19.258m compared to a revised budget of £17.980m, after allowing for the £0.125m of road safety relocation/ICT cost approved by the PCC to improve the effectiveness of the team. The PCC has approved a reallocation of capital budget from estates, fleet and ICT equipment and replacement (£1.848m) to Evolve to progress the project, as per the recommendations outlined above, but this leaves a forecast shortfall in funding or overspend of £1.549m. This overspending position will be monitored through future reports and discussion but to ensure that adequate financing is in place to deliver the capital programme the PCC has accepted the recommendation and approved that a further £1.549m of capital funding will be underwritten from borrowing in the absence of other capital funding at year end.
Full details on the revenue budget and forecast outturn as at the 31st August 2021 (P5)
The PCC and Treasurer will continue to receive regular budget monitoring updates and they will also continue to report this on to the Budget Working Group of the Police and Crime Panel and the Joint Audit and Standards Committee who are both kept fully informed of the position through reports at their respective meetings. This process will continue throughout the year.
2. List of additional information attached as appendices
Money Matters report to the PCC as at the end of quarter 1 – exempt
Money matters report to the PCC as at the end of period 5 – exempt
3. Expected benefits
This report and the confidential reports received by the PCC, outline the forecast outturn position and financing for 2021/22 revenue and capital expenditure, and the anticipated reserve transfers and year end balances. Further reports will be received during the course of the year and decisions may need to be taken accordingly. The budget supports the effective delivery of the policing service in Warwickshire, including the ongoing transition and transformation of services, and its approval will ensure that the Local Government Capital Finance & Accounting Regulations (England) are complied with.
4. Impact of not approving the application
The transfers to and from reserves to support service delivery would not be approved and service delivery would have to be managed within the original revenue and capital approved budget for 2021/22.
5. Costs (including any identified savings)
All cost information is included within this report, and in more detail within the confidential supporting information.
6. Equality implications
All relevant policies apply to all aspects of the budget and spending
7. Legal comments
The PCC is required to set a balanced budget and requires the force to operate within it. The 2020-21 outturn has seen increased levels of spending, which have had to be financed through additional reserve transfers approved by the PCC. Governance arrangements are in place to ensure that this occurs and the PCC continues to meet regularly with the Chief Constable and the Chief Officer team to monitor the budget.
8. Publication
Information in this form is subject to the Freedom of Information Act 2000 (FOI Act) and other legislation. Unless the information provided is covered by an exemption and stated to be either confidential or partly confidential, the information contained in the form will be published on the OPCC website.
Comments from the Treasurer
Forecast outturn budget monitoring information is critical and will continue to be received and used to Hold the Chief Constable and the force to account.
All financial detail is included either within this decision notice or within the more detailed Money Matters report (confidential), which supports this decision. The content of the supporting report has been scrutinised and it is essential that the recommendations are approved to ensure compliance with statutory financial regulations.
Comments from the Chief Executive and Monitoring Officer
The process for monitoring and forecasting the budget is comprehensive and subject to ongoing scrutiny by the Commissioner and other professionals.
