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WPCC30007 – 2020/21 Outturn and reserves transfers

Decision Title: 2020/21 Outturn and reserves transfers

Decision Reference: WPCC30007

Lead Officer: Sara Ansell

Date: 8 June 2021

Status:  Non-confidential


Decision Summary:

Financial Regulations require a year end outturn report to be submitted for consideration and approval by the Police and Crime Commissioner (PCC).  This should also include detail on the use/or transfer of any surplus/deficit on revenue budgets in line with the reserves strategy and the capital outturn and financing.

The PCC is therefore recommended to approve the Q4 reserve transfers outlined below, on the basis that all the reserve transfers recommended in Q1, Q2, and the Q3 Money Matters reports (replicated below for completeness) are also agreed:

Q4 recommended transfers from /(to) reserves as follows:

  • £0.487m from the Transformation Reserve to meet the costs of the Evolve Programme;
  • £0.371m from the Redundancy Reserve to meet exit costs associated with change;
  • £0.195m from the Insurance Reserve to meet a provision for legal costs and settlement.
  • £0.046m from the Safer Roads Partnership Reserve to meet the costs of road safety initiatives undertaken by the PCC, and
  • (£0.573m) transfer to a new National Commercial Vetting Reserve.

And

  • Agree the Transfers between reserves in Table 6.1, column 7, of the Money matters supporting report, and also shown in the reserves table reproduced as part of this decision notice.

Q3 Decisions agreed

  • Capital Programme – amalgamate the £2.303m Technical Debt Project budget into the Evolve Programme, and
  • Capital Programme – Transfer £2.100m of budgets mainly from the Estates Programme into the Evolve Programme.

Q2 Decisions agreed £3.417m transfer from reserves:

  • £1.114m from the Budget Reserve to meet in year overspends in day to day operating costs;
  • £2.244m from the Transformation Reserve to meet the revenue costs of the Evolve Programme, and
  • £0.029m from the Redundancy Reserve to meet the cost of redundancies within Transactional Services.

And

  • that the planned revenue contribution of £0.320m to support the Capital Programme, in lieu of government grant, is not made in 2020/21 in light of the overspend,
  • To replace reserves with borrowing as a source of capital finance to preserve reserves during a period of uncertainty and
  • The corporate risk ‘Good and Balanced Budget’ is reviewed in light of the Q2 Money Matters report. (The corporate risk score has since been reduced in light of the budget and precept decisions taken by the PCC as part of the 2021/22 Budget & MTFP which has resulted in a balanced budget being set with no routine reliance on reserves to fund budget shortfalls, due also in part to savings being achieved prior to the financial year commencing).

Q1 Decisions agreed up to £1.328m transfer from reserves:

  • £0.500m from the Income Reserves to partially offset the shortfall in mutual aid income,
  • £0.328m from the Safer Roads Partnership (SRP) to offset the shortfall in NDORS income and
  • £0.500m from the COVID-19 Reserve to meet pandemic costs.

Of the Q1 reserve approvals outlined above, at the 31 March 2021 it will only be necessary to drawdown £0.258m of the £1.328m, based on the final outturn.


I confirm that I do not have any disclosable pecuniary interests in this decision and that the decision in compliance with the Code of Conduct.  Any interests are indicated below.

Signature: Philip Seccombe

Date:  14  June 2021

 

1. Background Information

The total 2020/21 revised revenue budget was £111.845m.

Government grants remained unchanged during the course of 2020/21 at £57.592m.  The precept and collection fund surplus made up the vast majority of the remaining funding at £50.142m.  This left an approved draw down from reserve, of £4.111m to finance the 2020/21 budget.

The supporting Money Matters report outlines the full detail and variances regarding the outturn revenue and capital position, including reserve transfers and year end balances.

In summary the unaudited year end revenue position is as follows:

Revised Budget 2020/21  £’m Actual 2020/21  £’m Variance 2020/21  £’m
Total funding available (107.734) (107.734) 0.000
Total net force & PCC expenditure 111.845 116.213 (4.368)
Contribution to/from reserves (4.111) (8.312) 4.201
Receipts applied – ESN grant & S106 0.000 (0.167) 0.167

Much of the 2020-21 revenue overspend can be attributed to costs associated with the Evolve transition and transformation programme, including most significantly improvements in ICT, but is also due in part to increased ongoing running costs including costs for police officer pay, overtime and ancillary equipment and support costs for the increased officer numbers.  Vetting income has also shown improvement and supports the budget outturn, mainly through the ongoing development of the national contractor vetting service.  The Money Matters report provides a comprehensive analysis of these variances.

The required use of reserves to support the revenue and capital budget is shown in the table below.  It also includes the anticipated reserve balances over the medium term financial plan period.  Column 8 of the table below identifies the closing reserve balances at the end of 2020-21, totalling £12.688m, which is an improvement compared to previous forecast positions.

The 2020-21 capital forecast outturn is £10.200m against a revised budget of £21.679m. creating an underspend of £11.479m which is mainly slippage, and will be incurred in 2021-22. The estates and ICT programmes account for the majority of the slippage into 2020-21, with further detail on specific projects provided within the outturn report. This is financed mainly through borrowing, with small elements being financed from capital grant and road safety reserves.

The PCC and his staff have discussed and scrutinised the 2020-21 outturn in detail with Chief Officers and the force finance team.

2. Detail of additional information attached

WPCC30007 – Support Document – Money Matters – Outturn WK 2020-21

3. Expected Benefits

The outturn report outlines the final position and financing of the 2020-21 revenue and capital expenditure, the capital slippage into 2021-22 and the reserve transfers and year end balances.  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

Compliance with the requirements under the Local Government and Accounting Regulations (England) would not be achieved.

5. Costs (including any identified savings)

The attached Money Matters outturn report outlines all the relevant revenue and capital costs and provides detail on the 2020-21 transfers to and from reserves and the resulting year end reserve balances.  Approval for these is required from the PCC.

6. Equality Implications

All relevant policies apply to all aspects of the budget and spending.

7. Legal Implications

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, the information contained in the form will be published on the Warwickshire PCC website.

Comments from the Treasurer

All financial detail is included either within this decision notice or within the more detailed Money Matters report, 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 attached outturn report outlines the final position and financing of the 2020-21 revenue and capital expenditure, the capital slippage into 2021-22 and the reserve transfers and year end balances.  The recommendations in this decision notice require approval by the PCC to ensure compliance with the requirements under the Local Government and Accounting Regulations (England) and compliance with statutory financial regulations.

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