The capital budget was revised and approved in-year by both COMB (12th September 2022) and the PCC (13th September 2022).
The revised capital budget for 2022/23 is £39.574m (£39.403m approved at COMB plus in year transfers from revenue) and as at September 2022 we are forecasting an outturn capital expenditure of £37.635m. Currently only 24% of the budget has been spent by the end of September 2022, due mainly to the Zenith project and IT, and experience from 2021/22 suggests that the current outturn forecast for capital may reduce by year end. Detailed tables are provided below.
The final point to note is we have capital receipts forecast of £6.6m (Budget £3m). The difference between capital spend and capital receipts will have to be funded through borrowing and will become a revenue budget pressure in the future, above that already built into the Medium Term Financial Plan (MTFP).
2022/23 Revenue Budget
The revenue budget was agreed and set at £373.2m, and the forecasted full year revenue as at P6 is £373.7m, which would result in a full year overspend of £0.5m, which is a favourable (£0.8m) movement in the month.
Key Revenue Assumptions
Our current forecast uses our best estimate at this point in time as to where we will finish the year, but it is accepted there will be movement and the risk and opportunities log reflects our understanding of what could move the forecast going forward.
Both the £1,900 pay award and additional £500 South East allowance are in September actual and forecasted to year end.
Police officer attrition is 152 in 6 months against a budget of 144 and is forecast going forward as per the below profile. Work will remain ongoing between HR and Finance to establish a profile going forward for both leavers and joiners and this will be updated each month as the picture becomes clearer. This is a fast-moving environment currently with the impact of the Met initiatives still uncertain in terms of both quantity and timings. We anticipate a large change in respect of these assumptions in the next month as HR are working on a revised profile in respect of the transfers out to the Met.
Fcst Police leavers
Aug Act / Fcst
The average annual cost of a Police leaver (including on-costs) for the first 6 months is £59,789. In September the average annual cost of a leaver was £55,302, and the current forecast is set at £57,828 against a fixed budget of £56,256.
It is interesting to note the average annual cost of leaver in August of only £37,000 represented a significant change from what we have seen before and since. Having largely bounced back to previous levels this month, August seems to be a one-off anomaly, but we will monitor it over the next few months in case it is a new trend.
It should be noted that even if it averages back to £55k, that would be lower than the £56k budgeted and for next year, across a projected 288 leavers would add a significant cost to the budget also
The recruitment profile for Police staff forecast is (prior month forecast in brackets) Oct 120 (120), Jan 120 (120) and Mar 119 (118).
Total FTE for Police staff at the end of the year is forecast to be 4,159 (4,163) compared to a budgeted establishment of 4,145. This is in line with aiming to be over establishment to get additional funding from the Home Office.
Nothing has been included for this additional income on PUP, but it is listed as opportunity – and will be recognised within the forecast when more certainty around its achievability is known.
The full year PCSO pay forecast has been set with vacancies climbing to 48% at year-end (currently 34%), which represents a reduction of PCSO’s to 175.
PSE (excluding PCSO’s) vacancies are currently at 13.8% and are forecast to fall to 12.5% October to December and settling at 11.7% between January and March 2023. There is potential that due to difficulty recruiting or recruitment delays that this changes and this profile will be updated each month. Should it be at a higher rate, that will generate further savings and visa versa applies also.
The table below summarises the vacancy factor actual as of September and forecast going forward:
Expenditure on electricity and gas is based on estimates and market intelligence at the current time following implementation of the price cap increases. The 6 month business package implemented by the government does not benefit us as the rates we had secured were already at comparable levels.
Costs have been included for PFI as we know they are going to be incurred, but the potential benefit of the unitary charge deductions have so far been left as an opportunity until there is more certainty. It is unlikely any benefit from the PFI will be seen in the current financial year due to ongoing negotiations.
Full Year Revenue Forecast Movement in Month
The forecast at P5 was £374.5m and at P6 it is £373.7m, which is a favourable movement of (£0.8m).
Key movements are as follows:
(£0.1m) net reduction in Police pay due to the impact of increased attrition with 5 additional officers leaving above previous forecast over September and October
(£0.7m) net reduction PSE pay due to a combination of higher levels of PCSO attrition and a revision to the vacancy factor percentage forecast going forward to reflect the actuals we are seeing.
Last month 3 PCSO leavers were forecast for September, but actual was 17, going forward an average of 7 per month is now included from 3 per month previously forecasted. This change is based on the local HR intelligence report provided to us and taking a mid-point of that.
The vacancy rate was previously forecast at 11% for Q3 for PSE’s (excluding PCSO’s) and 10% for Q4. This has now been revised to 13% for Q3 and 12% for Q4. This change is based on the actual vacancy factor we have at the moment which stands at 14%.
Full Year Revenue Forecast Summary
As at P6, the forecasted total revenue overspend is £0.5m. The main reasons behind this are:
£1.9m is the net impact for the 7 months from 1st September 2022 of the £1,900 pay award to Police Officers and Police Staff less police officer funding.
£1.2m is the impact of the £500 increase in South East allowance for all eligible officers from 1st September 2022.
(£2.6m) saving on police officer pay due to:
(£0.7m) saving from high levels of police officer attrition in Q4 21/22 which left us under establishment, but not under PUP target, at the beginning of the year
(£0.4m) net saving due to higher than budgeted police officer attrition in the first 6 months plus officers leaving at a higher salary than budgeted offset by the increase to joiners as they are adjusted to take into consideration higher levels of attrition
(£0.2m) National Insurance savings on new police recruits aged 21-24 joining through the PCDA route
(£0.3m) saving due to there being more police officers opting out or leaving the pension scheme than budgeted
(£1.0m) due to changes in assumptions since budget setting in September 2021. Part of this is linked to attrition but part is also linked to assumptions about dates, scale points, allowances and pensions. Part of the work at Q2 was to compare those assumptions made in September 2021 to the reality of them and this has generated an improved position.
(£5.2m) saving on PSE pay. The PCSO vacancies are climbing to 48% by year end. There is potential for this to increase should the actual rate continue to be higher than the amount forecast as set out here and this will be reviewed as part of Q3. This is listed as an opportunity below. All other PSE vacancies were set at 9% for the year whilst the average between Apr-Sep was 12% and forecasted PSE vacancies falling to 13% October to December and settling at 12% between January and March 2023.
£0.3m cost pressure on Police overtime (table 2). This is mainly due to divisional overspend caused by vacancies and high demand from VIT with remand prisoners.
£0.8m cost pressure on PSE overtime (table 3) mainly due to the Force Control Room (FCR) which has extended the overtime incentivisation programme. FCR however have significant savings due to a high vacancy factor and that is included in the saving under the PSE vacancy factor above.
£0.6m other cost pressures in non-pay. This includes:
£0.7m of cost included for professional and legal fees in respect of the North Kent Headquarters PFI
(£0.1m) net reduced cost for various other reasons including:
Increased cost associated with immediate detriment payments, hosting costs for data centre and general increased IT costs
Reduction of estates costs due to programme delays
Additional income from Met funding for gang and county lines, interest on investments and increased revenue from sale of seized vehicles
£3.1m cost pressure due to unachieved savings. However, part of this is already built into the vacancy factor above and once roles have been permanently delimited, this unachieved savings will reduce to circa £2.2m (vacancy saving will reduce accordingly so net nil difference to the forecast). This remaining pressure is more than mitigated through the additional vacancy factor savings above, but it does indicate pressure for the 2023/24 financial year as we don’t aim to have a vacancy rate as high as it currently is (in particular in the FCR).
£0.4m additional transfer to Reserves for a revised Minimum Revenue Provision (MRP) (cost of capital) calculation as spend moved mainly from Estates to IT which has shorter repayment period at an average of 5 years.