Agenda item

13.1  Consideration was given to a report of the Chief Finance Officer relating to the budget monitoring for the first quarter of the 2015/16 financial year. 

13.2  The PCC had approved a net revenue budget of £240M for 2015/16.  This was the amount financed by Government grant and Council Tax income.  The precept set by the PCC represented an increase of 1.95%; the level of Government grant fell by 4.7% compared to the amount for 2014/15.

13.3  Currently the budget monitoring was forecasting an approximate £3.8M overspend.  The most significant issues behind the projected overspend were:-

-          Costs of Police Officers, Police staff and Police pensions – forecast underspend of £6M partially offset by the cost of severance payments forecast to amount to approximately £3M

-          Costs associated with the investigation of child sexual exploitation allegations – potential overspend of approximately £7M

-          Provision of National Police Air Service – forecast to exceed budget by £0.7M

-          Hillsborough Inquests costs – currently exceeded grant funding by approximately £0.4M

-          Financial Reserves

13.4  South Yorkshire was dealing with a set of challenges and difficulties not experienced by any single force or Police and Crime Commissioner elsewhere in England and Wales.  There were considerable uncertainties that could mean that the final outturn for 2015/16 was significantly different from that currently forecast.

13.5  Decisions of the Home Secretary in respect of Special Grant applications submitted by the Police and Crime Commissioner would be crucial in providing a degree of certainty about funding but would not be known until later in the year.  Also the use of a “1% rule” may only have a marginal impact on the final outturn.

13.6  There were indications that the level of Government funding for Policing could be cut by up to 8% per annum from April 2016 as a result of the 2016/18 Finance Settlement due to be announced in December, 2015.  This was greater than the 5% reduction assumed in the Medium Term Financial Strategy.  If this were to be the case, there would likely be one-off costs that would require funding in 2016/17 from reserves including the potential for further severance/redundancy costs.

13.7  Dr. Billings, Police and Crime Commissioner, placed on record his thanks to the Home Secretary who had listened to the additional representations that had been made and had increased the amount she was prepared to give South Yorkshire for the first 2 years of the Hillsborough Inquiry.  Although the Special Grant for the reimbursement of costs incurred in 2015/16 had been limited to £1M, she had also said she would be prepared to listen when applications were made for Special Grant funding.

13.8  Issues raised following the presentation included:-

-          The new local policing model was being rolled out across South Yorkshire, following the pilot in Doncaster from which there would be lessons to be learnt, and the whole culture of the Police Force had to change.  The new model brought together all uniformed Officers, Neighbourhood Teams and Response Officers together into one team requiring them to have a local neighbourhood focus and manage all matters within their own local policing team working to a common shift pattern.  There would be new technology used which would enable them to stay in the neighbourhoods longer rather than having to go back to the Police Station.  It would remove a lot of Officer costs but overall numbers were falling so all had to be managed carefully.  This was one of the consequences of the continuing pattern of austerity and the fact that the Police was no longer a protected service with difficult choices having to be made. It was a coincidence that at the same time as South Yorkshire was moving to the new policing model it also had to reduce numbers. 

-          There had to be a move away from thinking about the four areas of South Yorkshire but 1 Police Force that responded to the needs wherever they were with the resources deployed appropriately. 

-          Based on the information available at the present time, the £11M Insurance Reserve set aside for potential Child Sexual Exploitation claims was at the correct level.  However, it would be kept under review and revised accordingly.

-          Members of staff, including civilians, had had to submit an expression of interest in redundancy.  In order to minimise the impact on the 2016/17 revenue budget, given the very difficult nature of the challenges to be faced, it was considered to make the cost self-financing for the 2015/16 financial year.  Two rates of redundancy payment had been looked at and the enhanced rate selected due to the urgency.    Not all expressions of interest had been successful.

-          Hillsborough – a cost review exercise had been commissioned by the Commissioner of the law firms involved as well as auditors to look at the charges.  The OPCC had been satisfied, as well as the auditors, that everything charged was legitimate and reasonable given the level of the Inquiry process.  Once that external assurance had been received the Home Office had agreed to release funding.    The eight Officers concerned had approached their own solicitors through their own staff associations.  The Chief Constable’s costs were separate and he secured his own representation and liaised with the Commissioner.

-          Posts not being filled and the possible loss of expertise in particular areas was always a problem for the management for any organisation when downsizing.  This was an operational matter for the Chief Constable.

-          The Commissioner and Chief Constable had issued a joint statement calling for an end to the recent right wing protests that had taken place in Rotherham.  Rotherham in particular was being hit on a frequent basis and at huge cost to the Force and highly disruptive to the people of Rotherham.  The Force was seeking specialist legal advice to explore all options around the protests.  The Home Secretary had recently stated that she would provide some of the costs to cover the EDL marches for the last year but would be subject to the 1% rule.  £148,000 had been received but, given the difficult financial position faced by the Home Office and the Special Grant funding, it was unlikely that further grant money would be received particularly when there were the issues associated with the Hillsborough Inquiry.  There may be potential funding towards the end of the financial year but would be dependent upon underspends elsewhere in the Home Office.

-          Due to it being so early in the current financial year, the £3.7M projected overspend did not reflect the actions that had been taken by managers or the OPCC to bring expenditure back into line with budget.  It was hoped that the position would improve but there was a range of very difficult issues that made the accurate forecast of the outturn position very difficult.  South Yorkshire was facing a very difficult scenario financially for the next few years and could be much worse given the Spending Review.

Action:  That the Panel note the projected financial position on the revenue budgets

Action:  That the OPCC submit a report as soon as possible on the costs associated with the Hillsborough Inquiry to enable a full understanding of the actions being taken in an attempt to mitigate any future impact on the Police budget

Action:  That the OPCC submit the Capital Programme to the October Panel meeting.

Action:-  That the OPCC submit a report to the October Panel meeting on the 2 different redundancy payment rates and the rationale for choosing the enhanced scheme.