Agenda item

Report of the Commissioner of Police.

Members considered a report of the Commissioner regarding Revenue and Budget Monitoring to September 2018 and the following points were made.

·         The Chairman highlighted the significant increase in the in-year and medium-term financial deficits, which would require further work on mitigations before a Medium-Term Financial Plan could be agreed.

·         The Commissioner of Police noted that he would go into greater detail on some elements of the report once the Committee was in non-public session. Part of his non-public update would be regarding proposed mitigation actions to achieve savings against the identified outturn overspend.

·         A Member noted that the projected outturn overspend should never have arisen and requested that the Commissioner provide Members with reassurance that the issue would not recur.

·         A Member noted that the table within the report was not in the format that had been requested by the Committee at previous meetings, and this meant it was difficult to gauge how historicthe identified financial issue was.

·         A Member requested reassurance from the Commissioner that appropriate financial controls were now in place; more clarity on the reasons for the £6.28m outturn shortfall in the Business Support Directorate; and noted that, in his view, the content of the report following paragraph 10 was not detailed enough to give Members the information they needed to appropriately scrutinise the Revenue and Budgets.

·         The Chairman concurred with these points and added that more clarity on reasons underpinning budget variances would be welcome.

·         The Commissioner reassured Members that the issues presented to Members were the ‘tail’ of a problem that was being proactively addressed. The Commissioner had reviewed in detail the reasons for the identified issues having first arisen. In short, the total unit cost of police staffing had proved to be higher than predicted which had masked an underlying error in income and revenue figures. The Chamberlain highlighted in his report the significant variances on the pay bill, overtime and use of agency staff which were driving the overspend. The Commissioner was chairing a weekly officer-level meeting which included the Chamberlain and Town Clerk to monitor the organisational response to the issue. Moreover, he was currently recruiting a Chief Operating Officer and a Finance Director to provide his finance teams with greater resilience.

·         The Commissioner summarised his position, noting that the reasons for the projected outturn overspend having arisen had been thoroughly reviewed and understood; and he was recruiting senior finance staff to provide greater resilience going forward. He was scheduled to attend the City of London Corporation’s Audit and Risk Management Committee in January 2019 to answer that Committee’s questions on the issue. He emphasised that he was not at a point where he proposed writing off any debts held by the City of London Police. Lastly, he noted that some of the figures laid out within the report differed slightly from figures within the Medium-Term Financial Plan report at Item 12 given the latter report had been drafted at a later stage using more up to date figures. He agreed to issue a note to Members setting out the substantive differences.

·         A Member noted that he was not satisfied the Committee had been given a satisfactory explanation, in public session, for the scale of the identified deficit. For example – why was the Outturn Risk for the Business Support Directorate so much worse than that of other Directorates. If the underlying error was due to a pay assumption, this would suggest the position would be spread equally across all Directorates rather than just one. The Commissioner agreed to issue a briefing note to Members outside of the meeting to explain the position. He reassured Members that an action plan was in place to deal with all the recommendations made by the Audit and Risk Management Committee.

·         In response to a request from a Member the Commissioner agreed to provide Appendix 2 within the report in the same format as the appendices within Item 12 (Medium Term Financial Plan).

·         A Member noted that the reason for requesting the quarterly outturn figures to show current quarter actual and budget, and YTD actual and budget was to see trends but also to have a better understanding of the forecast for the rest of the financial year.

·         In response to a question from the Chairman, the Commissioner replied that that in his view the full extent of the problem had been identified. The Chamberlain added that he could only give Members a cast iron assurance when robust financial controls were in place, following the implementation of the audit recommendations, and sufficient mitigation steps taken to ensure a sustainable Medium-Term Financial Plan.  Further work was also needed on providing assurance around the initial in-year mitigations.

·         Members agreed that a Working Party of Members should be formed to provide additional Member scrutiny of the Medium-Term Financial Projections which would inform the Plan, its members including the Chairman, Deputy Chairman, Andrew Lentin, Nick Bensted-Smith and Tijs Broeke.

·         Members agreed to advise Finance Committee that the Medium-Term Financial Plan showed a significant structural deficit over the course of the next five years, and that while there would be significant member involvement over the next few months, the Finance Committee needed to understand that, even with significant efficiencies, the structural deficit would be substantially more than £10m, and that a full report would be sent to them in the first quarter of 2019.

·         Members therefore resolved to issue a resolution to the Finance Committee to alert that Committee to the forecast outturn overspend of £5.3m in the City of London Police’s Chief Officer Cash Limited Budget, with offsetting mitigations of £3m identified (subject to assurance). Members of the Police Committee noted that the Commissioner of Police had undertaken steps to address some of the identified overspend, but that further work was needed on both the in-year position and medium-term projections to inform the discussion at RA Sub-Committee in January 2019. 

·         The Chamberlain noted that, irrespective of the identified £3m mitigations, there was a risk of further deterioration in the in-year position which would be worked on during the next financial cycle.

RESOLVED, that

·         The report be received.

·         A resolution regarding the forecast outturn overspend of £5.3m in the City of London Police’s Chief Officer Cash Limited Budget and the Force’s response to the forecast overspend be issued to the Finance Committee.