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Meeting Date Location Title of Paper

SPA Board Meeting 27 February 2018 Stirling Court Hotel, Stirling Financial Performance Report Q3 2017/18 Item Number 10.3 Presented By James Gray, Chief Financial Officer Recommendation to Members For Noting Appendix Attached Yes – see appendices A and B

PURPOSE The purpose of this report is to provide the SPA Board with an update on the financial position of the SPA and Police Scotland for quarter 3 (9 months ending 31 December 2017) of the financial year 2017/18, as well as forecasting the full year outturn to 31 March 2018. Members are asked to note the content of this paper.

SPA Board Meeting Financial Performance Report Q3 2017/18 27 February 2018

NOT PROTECTIVELY MARKED 1

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BACKGROUND

1.1

This report presents the financial position of the SPA and Police Scotland for quarter 3 (9 months ending 31 December 2017) of the financial year 2017/18, as well as forecasting the full year outturn to 31 March 2018.

1.2

The detailed financial performance report and supporting appendices are attached to this report.

2.

FURTHER DETAIL ON REPORT TOPIC

2.1

The full year forecast is as follows: 

Revenue – an underspend against budget of £9.4m. The overall SPA budget was set with a deficit of £47.2m and so this projected underspend decreases that deficit to £37.8m.



Capital – an overspend of £1.4m is forecast against the revised funding, which reflects an optimism bias. This has been included to acknowledge slippage in recent capital plans and the organisation will continue to actively manage the capital plan. Should there be no slippage in year, budgets will be actively managed to meet the forecast out turn position.



Reform - The underspend for the year is forecast at £13.2m, with the expenditure to date comprising irrecoverable VAT of £14.6m revenue, £1.2m capital; and Corporate Services transformation costs of £8.0m (transformation resources, VR VER costs and Policing 2026 costs).

2.2

Further detail on the year to date and forecast outturn positions are contained within the monitoring report and supporting appendices attached to this report.

3.

FINANCIAL IMPLICATIONS

3.1

The financial implications for the financial year 2017/18 are set out in this report.

4.

PERSONNEL IMPLICATIONS

4.1

There are no direct personnel implications associated with this report.

5.

LEGAL IMPLICATIONS

5.1

There are no direct legal implications associated with this report.

6.

REPUTATIONAL IMPLICATIONS



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There are no direct reputational implications associated with this report.

7.

SOCIAL IMPLICATIONS

7.1

There are no direct social implications associated with this report.

8.

COMMUNITY IMPACT

8.1

There are no direct community impact implications associated with this report.

9.

EQUALITIES IMPLICATIONS

9.1

There are no direct equalities implications associated with this report.

10

ENVIRONMENTAL IMPLICATIONS

.

10.1 There are no direct environmental implications associated with this report. RECOMMENDATION: Members are asked to: 

Note the year to date and forecast financial position for the SPA and Police Scotland.



Agenda Item 5

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Financial Review 2017-18 Quarter 3 For presentation to SPA Board 27 February 2018 SPA Board Meeting Financial Perfomance Report Quarter 3 2017/18Q3 Financial Review Appendix A 27 February 2018

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Contents 1. Executive Summary…………………………………………………………………………………………………………………3 2. 2017-18 Budget Analysis………………………………………………………………………………………………….………..7 3. Budget Assumptions Risk Assessment……………………………………………………………………………….………....34

Appendices Appendix A

2017/18 Police Scotland Revenue Budget by Service Division

Appendix B.1

Reconciliation of Movement in Police Scotland Forecast Outturn

Appendix B.2

Reconciliation of Movement in Total SPA Forecast Outturn

Appendix C.1

Salary Forecast Check (Police Officers)

Appendix C.2

Salary Forecast Check (Police Staff)

Appendix D

Temporary Promotions (Police Officers)

SPA Board Meeting Financial Perfomance Report Quarter 3 2017/18Q3 Financial Review Appendix A 27 February 2018

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Executive Summary 1.1

This reports sets out the financial performance of the SPA and Police Scotland for quarter 3 (9 months ending 31 December 2017) of the financial year 2017/18, as well as forecasting the full year outturn to 31 March 2018. The overall SPA budget was set with a revenue deficit of £47.2m and the current forecast is an overall underspend of £9.4m against that budget. Therefore the projected variance against budget at quarter 3 decreases the forecast in-year deficit to £37.8m. On a recurring basis, after taking account of one-off cost reductions and efficiencies, the deficit stands at £46.7m. The revised revenue forecast at the end of the quarter two was a deficit of £36.6m (an underspend against budget of £10.6m). Therefore the position at quarter 3 represents a deterioration in the financial position since quarter 2 of £1.2m. The latest reported revenue forecast at the end of period 7 was a forecast deficit of £36.9m, (an underspend against budget of £10.3m). Therefore, quarter 3 shows a deterioration in the projected financial position of £0.9m when compared to the forecast at period 7. Note: there was no finance report scheduled to be presented to the SPA for period 8. Forecast Variance (Over) / Underspend

Police Scotland Forensics SPA Corporate Total Revised Operating Deficit

Period 6 Quarter 2 £m 10.4 0.0 0.2 10.6 36.6

Period 7

Movement in Forecast

10.1 0.0 0.2 10.3

Period 9 Quarter 3 £m 11.0 -1.8 0.2 9.4

36.9

37.8

£m

Period 7 to 9

Q2 to Q3

£m

£m 0.9 -1.8 0.0 -0.9

0.6 -1.8 0.0 -1.2

-0.9

-1.2

Appendix B shows the movements in forecast outturn from quarter 2 to 3.


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Revenue Budget 1.2

The table below sets out the year to date and forecast outturn position (excluding VAT) against the approved revenue budget for the 2017/18 financial year of £1,069.6m. Revenue

Year to Date Actual

Budget

Variance

Full Year Forecast Forecast Variance

Budget

(Over) / Underspend

£m Police Scotland Forensics SPA Corporate Total Expenditure (excl VAT)

£m

£m

(Over) / Underspend

768.6

754.9

13.7

£m 1,039.1

£m 1,028.1

£m

20.3

20.4

-0.1

26.8

28.6

-1.8

2.6

2.6

0.0

3.7

3.5

0.2

791.5

777.9

13.6

1,069.6

1,060.2

9.4

1,022.4

1,022.4

0.0

47.2

47.2

0.0

1,069.6

1,069.6

0.0

11.0

Funded By Grant in Aid Operating Deficit Total

1.3

This reports outlines the variances against the budget in detail. The high level variances are: 

Police Scotland The overall forecast is a £11.0m underspend against budget. The key variances, explained in greater detail later in this report, are Police Officer costs (£1.1 over); Police Staff costs (£3.6m under); TOIL/ annual leave costs (£1.0m over); non-pay costs (£7.4m under) and income (£2.1m favourable). This £11.0m underspend sees an improvement of £0.6m on the forecast reported at period 6 (£10.4m underspend) and a £0.9m improvement on the forecast reported at period 7 (£10.1m underspend). These changes are mainly related to increases in income and underspends in ICT costs partially offset by overspends in third party payments.


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

Forensics There is a forecast overspend of £1.8m in comparison to the previously reported break even position. A business case was approved by the SPA Board on the 28 November 2017 to enable service levels within the biology function to improve. Forensic services will outsource biology casework at a forecast cost of £1.8m during quarter four of the current year in order to allow biologists to further focus on Police Scotland investigative casework whilst continuing to meet the judicial time frames required by COPFS. This programme of work is aligned to the Forensic 2026 Strategy.



SPA Corporate There is a forecast underspend of £0.2m mainly due to gapping of vacant posts.

Capital Plan 1.4

The year to date position on capital is expenditure of £9.8m and capital receipts of £4.8m. The forecast spend on the capital programme is £36.8m; a decrease of £1m from the previous forecast of £37.8m.

1.5

Within funding, capital receipts of £4.8m have been secured to date (an increase of £0.2m from that reported at quarter 2) against a full year budget of £10.0m. The income to date mainly relates to a £3.2m receipt in respect of the sale of Chambers Street. The budgeted receipts will not be realised in full due to a delay in the disposal of the Pitt Street site. This means that the associated proceeds will now slip into financial year 2018/19 with the loss of the associated revenue savings incurred in the current financial year.

1.6

This revised forecast funding of £35.4m compared with the forecast expenditure of £36.8m results in an overspend of £1.4m. Optimism bias is applied to reflect experience of slippage in the capital plan.

Reform Budget SPA Board Meeting Financial Perfomance Report Quarter 3 2017/18Q3 Financial Review Appendix A 27 February 2018

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1.7

The Scottish Government has allocated a total Reform budget to the SPA of £59.5m. This is being provided through the Police Change and Transformation Fund (Reform) to support ‘the delivery of a police service capable of meeting the changing demands of crime and society over the next ten years’.

1.8

The year to date position is total expenditure of £23.8m as at the end of quarter 3. This spend comprises irrecoverable VAT of £14.6m revenue, £1.2m capital and Corporate Services transformation costs of £8.0m (transformation resources, VR VER costs and Policing 2026 costs). The full year forecast spend is expected to be £46.3m, which represents a forecast underspend of £13.2m.

Autumn & Spring Budget Reviews 1.9

The purpose of the Autumn Budget Revision (ABR) and Spring Budget Review (SBR) is to amend the Budget (Scotland) Act 2017, which authorises the Scottish Government's spending plans for the financial year 2017/18, and to seek parliamentary approval for these amendments. These changes can include: restructuring of Government portfolios; funding changes; technical changes, transfers between Scottish Government portfolio budgets and transfers from the UK Government.

1.10 Following the ABR a revised budget allocation letter was issued from the Scottish Government in November 2017. This revision formally provides additional funding of £0.2m for VISOR (Violent & Sex Offenders Register). A further transfer in respect of reform funding for Commercial Excellence (£1.1m) and VAT funding (£26m). 1.11 The SBR is currently being undertaken by the Scottish Government and it is expected that this will transfer the balance of approved reform funding projects. In addition, other funding will transfer in respect of three specific grants (£0.2m). These transfers had been expected and the expenditure has previously been included in the forecast.


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2.

2017-18 Budget Analysis Revenue Budget

2.1

Police Scotland – Summary Revenue Budget Revenue - Police Scotland Budget

Year to Date Actual Variance

Full Year Forecast Budget Forecast Variance

(Ove r) / Unde rs pend

£m Salaries & On-costs

£m

527.0

£m

(Ove r) / Unde rs pe nd

£m

526.1

0.9

£m

716.1

£m

Prior Year Draft Variance ( 17 / 18 P ro je c t le s s Outturn 16 / 17 O ut t urn) £m

715.4

0.7

£m

701.2

14.2

Overtime

11.1

11.9

-0.8

15.5

17.9

-2.4

14.9

3.0

Allowances

14.0

13.8

0.2

19.0

18.9

0.1

19.6

-0.7

Injury & Ill Health

15.4

13.5

1.9

20.6

20.1

0.5

18.7

1.4

Total Police Officer Costs

567.5

565.3

2.2

771.2

772.3

-1.1

754.4

17.9

Salaries & On-costs

114.8

111.5

3.3

154.6

149.8

4.8

154.4

-4.6

-1.0

0.0

-1.0

-2.1

0.0

-2.1

0.0

0.0

VR VER Saving Overtime Allowances Special Constables Total Police Staff Costs

1.5

1.2

0.3

2.2

2.1

0.1

1.7

0.4

10.4

9.8

0.6

13.8

13.0

0.8

13.4

-0.4

0.0

0.0

0.0

0.8

0.8

0.0

0.5

0.3

125.7

122.5

3.2

169.3

165.7

3.6

170.0

-4.3

TOIL & Annual Leave Costs

0.0

0.0

0.0

-1.0

0.0

-1.0

-3.7

3.7

Other Employee Costs

1.1

1.1

0.0

1.4

1.7

-0.3

9.1

-7.4

Premises

47.5

44.9

2.6

59.6

56.5

3.1

60.6

-4.1

Transport

16.9

16.6

0.3

23.2

22.4

0.8

23.1

-0.7

Supplies & Services

25.8

25.2

0.6

36.2

35.9

0.3

39.3

-3.4

ICT

12.6

11.3

1.3

18.1

15.1

3.0

19.8

-4.7

Administration

4.0

3.5

0.5

5.9

5.3

0.6

7.1

-1.8

Third Party Payments

6.9

7.0

-0.1

14.7

15.4

-0.7

13.3

2.1

Capital Financing

3.3

3.3

0.0

4.4

4.4

0.0

0.2

4.2

-0.5

0.0

-0.5

-0.5

-1.1

0.6

1.1

-2.2

Total Non-Pay Costs

117.6

112.9

4.7

163.0

155.6

7.4

173.6

-18.0

Income

-30.9

-34.5

3.6

-42.7

-44.8

2.1

-62.1

17.3

1,059.8

1,048.8

11.0

1,032.2

16.6

-20.7

-20.7

0.0

-19.9

-0.8

13.7 OFFICIAL1,039.1

1,028.1

11.0

1,012.3

15.8

Other Costs

SPA Board Meeting(incl VAT) Net Expenditure 779.9 766.2 13.7 Financial Perfomance Report Quarter 3 2017/18Q3 Financial Review Appendix A Less: VAT (Reform Funded) -11.3 -11.3 0.0 27 February 2018 Net Expenditure (excl VAT)

768.6

754.9

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2.2

Variance Analysis

2.2 (i) Police Officer Costs Year to date (£2.2m under) Salaries, On-Costs & Allowances (Year to date underspend £1.1m)



The main reason for year to date underspend of £1m (an increase of £0.3m from quarter 2) relates to the timing of the intakes of new recruits on 18 December 2017. As per the previous intakes in June and September, the December intake was later in the month than that assumed in the budget. Therefore, the underspend is due to a full month budget for new recruits in June, September and December, when in fact they joined later in the month (26 June 2017, 25 September 2017 and 18 December 2017) resulting in a reduced salary cost compared with budget.



Officer salary costs are further underspent, by £0.4m in the year to date (compared to the year to date underspend of £0.2m at quarter 2) largely as the result of reduced maternity and sick pay being lower than the level budgeted.



The overspend of £0.3m in the year to date (year to date overspend of £0.1m at quarter 2) relates to an under-budgeting for salary increments related to probationer Police Officers.

Overtime Costs (Year to date overspend £0.8m)

There are two elements to this adverse variance – an overspend on core police overtime costs (£1.4m) and an underspend on non-core police overtime costs (£0.6m). 

Core overtime reflects all routine Officer overtime costs within the mainstream revenue budget (i.e. supported through Police Scotland’s grant-in-aid funding). The reason for this overspend is as previously reported (additional overtime incurred in responding to the increased terrorism threat level and the incidents in Manchester (£0.8m) and London (£0.3m)). A claim has been submitted in respect of these costs under the Hertfordshire Agreement, however, only £0.1m of the total costs is now expected to be reimbursed by the Home Office.



Historic claims for held in reserve payments (further detailed is provided later in this report) are being evaluated and claims of £1.0m have been paid or accrued to date.


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

These costs are offset by an underspend in the centrally held overtime contingency budget (£0.4m). This budget is expected to be required to meet the forecast cost of held in reserve overtime payments.



There are other net underspends in core overtime (£0.3m).



Non-core overtime reflects overtime costs funded from externally generated income or grants (i.e. not from Police Scotland’s grant-in-aid) and is underspent by £0.6m in the year to date (compared to a year to date underspend of £0.4m at quarter 2). The main reasons for this underspend are as previously reported i.e. the cancellation of one nuclear decommissioning movement in relation to Operation Ailey (£0.3m) and a reduction in the number of abnormal load movements (£0.3m). These do not represent delays but true cancellations/reductions and so these activities will now not occur in this financial year.

Ill Health & Injury Pension Costs (Year to date underspend £1.9m)

The budget for ill health retirals assumed that there would be approximately 78 retirals at the end of quarter 3 (an average of 8.7 per month). However, in the year-to-date, there have been 57 approvals, representing an average of only 6.3 per month. The forecast has been amended to reflected this and a full year underspend is now anticipated. There is also an underspend of £0.3m on pension admin costs relating to the timing of payments to the SPPA. This year to date underspend is due to timing and is forecast to be fully spent by the end of the financial year. Full year projection (£1.1m overspend) Salaries, On-Costs & Allowances (Forecast underspend £0.8m)

The full year forecast underspend of £0.8m on salaries, on-costs and allowances has increased from the previous period by £0.2m mainly due to further savings arising on service breaks and maternity pay/sick pay and savings on movement of officers greater than previously forecast. The reasons for the forecast underspend are set out below. 

An underspend arising due to the timing of new recruit intakes which were assumed within the budget to take place at the beginning of the months of June, September and December. The recruits joined much later in the month (26 June 2017, 25 September 2017 and forecast 18 December 2017 respectively) resulting in reduced salary costs forecast of £1m.


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

A net underspend of £0.6m (compared to previous forecast underspend of £0.4m) is due to the cost of staff on service breaks and maternity pay/sick pay being lower than budgeted.



A net additional cost of probationers salaries (£0.8m) due to an under budgeting of probationer increments. The budget was based on the entry point and increments assumed as being applied annually. However, increments are in fact due after 31 weeks of service.

It should be highlighted that the budgetary provision of £4m for the anticipated cost pressure expected to arise from CHIS Handler’s payments (following the Court of Appeal ruling in relation to the Allard case) is forecast to be spent in this financial year. A prudent approach has been taken as work continues to assess the full extent of the financial implications. Claims are being assessed, as are methods of deriving a formula to be applied in determining the potential settlement value of claims. There will be consultation with the Scottish Police Federation in February to discuss options around the settlement model.

Overtime Costs (Forecast overspend £2.4m)

The main elements of this overspend are as previously reported (the forecast overspend has increased from that reported in quarter 2 when it stood at £0.8m). The key factors are set out below. 

additional overtime incurred, related to the increased threat level and the support provided following the incidents in Manchester and London (£1.1m). As described above, claims have been submitted to recover this additional overtime cost however it is now anticipated that only £0.1m will be recovered from the Home Office in this regard. (The anticipated income has never been included in the forecast income outturn position);



additional overtime related to the backfill of Officers into custody suites (£0.2m). This is a short term measure to provide resilience to the custody Division and is being addressed through the planned changes to custody, including the recruitment of additional PCSOs;



a recent legal ruling which found against the service in relation to a dispute over the requirement to pay ‘held in reserve’ overtime for Royal Court duties and other historic claims (£1.3m based on the 9,196 claims submitted and assessed as described below); and



reduced non-core overtime costs mainly due to fewer abnormal loads movements (£0.2).

The increasing costs from quarter 2 reflects mainly the cost of historic held in reserve claims (increasing by £1.0m) and the custody backfill (£0.2m). SPA Board Meeting Financial Perfomance Report Quarter 3 2017/18Q3 Financial Review Appendix A 27 February 2018

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It should be noted that £1.2m of the total Officer overtime budget is held centrally and managed by the DCC Designate. From this budget, £0.2m has been released to date to meet approved overtime pressures. At this stage, the remaining budget is forecast to be fully utilised in the year, primarily in relation to the forecast historic held in reserve claims. This position is being continually assessed given the requirement to balance service delivery with the unfavourable overarching financial position. Held in Reserve Overtime Payments The Lady Wise judicial review clarified the criteria whereby Officers are deemed to be ‘held in reserve’ and so due additional overtime payments (further there is an historic entitlement with a five year legal time limit on claims). Police Scotland established the revised criteria for ‘held in reserve’ as well as a claims process by which historic overtime claims could be submitted (the submission deadline for retrospective claims was 30 November 2017). To date, 9,169 claims have been submitted. Cases are currently in the process of being assessed. A single case can include multiple individual claims and the value of claims can vary significantly. Based on the experience of the claims submitted to date, the value attaching to the outstanding claims is estimated at £1.0m. Once these historic overtime claims have been settled, there will also be a recurring overtime cost which is being considered as part of the budget setting process for 2018/19.

Ill Health & Injury Pension Costs (Forecast underspend £0.5m) The budget assumed 104 ill health retirals in the year (an average of 8.7 awards approved each month), however, the actual year to date is 6.3 retirals per month (57 year to date). In the last quarter, it is forecast that 37 awards (i.e. an average of 12.3 approvals in each month of the final quarter) will be made based on the expected pipeline of Officers going through the ill health evaluation process. This would result in total approvals in the year of 94 and result in a forecast year underspend of £0.5m.

Temporary Promotions Details of temporary Officer promotions to date are shown at appendix D. Against prior year spend (£17.9m higher) This is due to the effect of an increased pay base (due to the 1% pay award, increments and the introduction of the apprenticeship levy). SPA Board Meeting Financial Perfomance Report Quarter 3 2017/18Q3 Financial Review Appendix A 27 February 2018

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2.2 (ii) Police Staff Costs Year to date (£3.2m underspend) This total underspend relates to salaries, on-costs and allowances which is underspent by £3.9m, an underspend on overtime £0.3m and an under-recovery of planned savings from VR VER savings of £1.0m. This underspend is mainly due to the number of budgeted vacant posts exceeding the budgeted vacancy factor (i.e. the turnover saving assumed within the budget base). The budget includes the full annual budget for vacant posts. The budget was approved on 22 March, following which these approved vacancies had to progress through internal governance followed by the recruitment process itself. Therefore, the full budget is not required in full, creating a year to date and full year underspend.

a)

b)

83 FTE leavers on VR VER. This is comprised of 50 FTE leavers from C3 and 33 FTE leavers from other business areas. The budget from C3 leavers was retained within the C3 Division to fund the uplift in posts elsewhere in the Division. The budget for the remaining 33 FTE leavers has been removed as a VR VER saving.

Police Staff Numbers ‐ Budget v Actual / Forecast 4,950 4,900 4,850 4,800

FTE

The position in relation to staff numbers in ‘business as usual’ (BAU) posts in the year to date has been a continually reducing one (i.e. numbers have fallen every month). The budgeted FTE for the year is 4,906 FTE (comprising 4,721 FTEs in post and 185 FTE vacant posts at the start of the year). The number of staff in post has reduced from 4,721 FTE at 1 April 2017 to 4,541 at 31 December 2017, a total reduction of 180 FTE. The position at 31 October was 4,582, representing a fall in the 2 month period to 31 December of 41 FTE (a broadly consistent average monthly position across the year to date).This reduction is shown in the graph and is due to:

4,750 4,700 4,650 4,600 4,550 4,500

97 FTE net reduction in staff. This is the overall net reduction in staff i.e. the net effect of starters and leavers.

Original Budget Revised Budget (removing VR VER leavers and approved budget savings) Actual / Forecast FTE adjusted by Strategic Planning


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This reduction in staff posts is partly due to controls put in place over the recruitment of posts given the financial position of Police Scotland. However, there has been active recruitment in relation to roles associated with the on-going transformation programme. The cost of these transformational roles is not monitored within the base BAU expenditure (as referenced above) in this revenue budget but is managed separately within the reform budget (per paragraph four). Many transformation posts have been filled by existing Police Scotland employees which has had the effect of generating additional turnover savings in the BAU revenue budget. The key reasons for the year to date underspend are as follows: £m Under/ (Over)

Explanation (salaries, on-costs and allowances) The year to date level of vacancies including turnover generates savings of £5.3m. This represents a saving over and above the budgeted 2.3% vacancy factor (£2.4m).

2.9

Dual running costs (non-recurring) budgeted as part of the C3 restructuring in the North not required (new operating model now in place)

0.7

Greater number of staff on half or nil pay than level budgeted (i.e. nil or half pay whilst on maternity, paternity or sick leave) and budgetary provision for posts where staff left the service between the budget build exercise and the finalisation of budgets

0.7

Additional agency staff expenditure

(0.1)

Reduction in capitalisation of ICT staff costs

(0.3)

Total

3.9

Supernumerary Pool The supernumerary budget was established based on those staff in the pool at the time the staff budget was set. The value of the annual budget in this regard is £0.7m. At 31 December 2017, the year to date cost was £0.6m.


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Full year projection £3.6m underspend There is a £5.6m forecast underspend on staff costs (salaries, on-costs and allowances) and a £0.1m underspend on staff overtime which is partially offset by the under-recovery of planned staff savings from VR VER of £2.1m. The total forecast underspend on staff costs of £5.6m is due to the level of budgeted staff vacancies as outlined above. The forecast is based on an assumption of when each vacant post will be filled (approximately three months from an employee leaving the organisation to a replacement new start joining). The forecast also assumes a general attrition rate based on the actual turnover rate for the year to date. The forward forecast of staff numbers is also shown in the previous graph. This shows a steadying of staff numbers from December to the end of the financial year with little movement in the overall net staff FTE position. The reason for the forecast underspend on staff salaries, on-costs and allowances can be explained by the following factors: £m Under/ (Over) £m

Explanation (salaries, on-costs and allowances) The forecast level of vacancies including turnover generates savings of £6.8m. This represents a saving over and above the budgeted 2.3% vacancy factor (£3.2m).

3.6

Dual running costs (non-recurring) budgeted as part of the C3 restructuring in the North not required (new operating model now in place) and budgetary provision for posts where staff left the service between the budget build exercise and the finalisation of budgets

1.4

Greater number of staff on half or nil pay than level budgeted (i.e. nil or half pay whilst on maternity, paternity or sick leave)

1.1

Additional agency staff expenditure

(0.1)

Reduction in capitalisation of ICT staff costs

(0.4)

Total

5.6

This forecast assumes a forward recruitment plan based on finance business partners working with budget holders. If there is any changes to staff recruitment strategy or turnover rate this will have a consequent impact on the forecast.


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Against prior year spend (£4.3m higher) This is due to the effect of an increased pay base (due to the 1% pay award, increments and the introduction of the apprenticeship levy). VR VER Savings The original budget approved a full year saving from staff leaving on VR VER of £3.0m. As staff leave the service on VR VER, their salary budget is removed from the particular Division / Department and offset against the savings target. In the year to date there has been 33 FTE leavers on VR VER, excluding C3, which have realised savings of £0.5m to date with forecast savings in 2017/18 of £0.9m. At this stage there are no detailed plans in place around staff efficiencies that will enable the delivery of this saving in full. The overall financial impact in 2017/18 is an under achievement of £2.1m against the planned saving. TOIL & Annual Leave Costs Annual leave and time off in lieu (TOIL) entitlement due but untaken at the end of the financial year must be accounted for in that year and so a financial value is attached to this for accounting purposes, in accordance with accounting standards.. Where the total untaken balance increases between one financial year end and the next, the accrual correspondingly increases representing a cost to the revenue budget. However, where the balances decrease, the level of accrual reduces generating a credit (or benefit) to revenue in the year (assuming that the TOIL has been managed down through time off rather than payment). In the 2017/18, the budget includes an assumption that the TOIL/ annual leave balance at 31 March 2018 will be less than that at 31 March 2017 with an associated credit balance being released to revenue of £1m. As described in detail in previous reports, Police Officers electing to take TOIL are required to take time off within a period of no more than three months from the time the overtime was incurred. If TOIL is not taken within that timeframe, then this converts to payment. However, this rule applies only to TOIL claimed after 1 April 2015. To clear the accumulated historic balances pre April 2015, Police Scotland has taken the decision to buy out these balances. This cost will be funded in full by the release of the associated accrual. Therefore, although this does not result in a cost to revenue, neither does it generate the budgeted saving. HR representatives have held discussions with staff associations on this matter and formal communication was issued to Officers. The remaining historic balances will be bought out in March 2018 if balances are not utilised by 28 February 2018.


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The net effect of this is that the forecast saving of £1m will not now be made. There are currently no plans in place that enable a reduction in TOIL (at no cost to the organisation) or annual leave balances to achieve the savings target. Therefore the assumption at this stage is that this saving will not be realised.

2.2 (iii) Non-Pay Costs Year to Date (£4.7m underspend) & Full Year Projection (£7.4m underspend) The following table provides analyses non-pay variances by cost category along with explanations for both the year to date and full year positions. Year to Date Variance £m

Full Year Variance

Explanation

£m

Other Employee Costs

0.0

No issues to highlight.

Premises

2.6

The key variances which comprise this underspend are in relation to:

Explanation

-0.3

There is a £0.2m overspend relating to staff welfare including counselling services, flu vaccines as well as other smaller value costs in relation to employee wellbeing. There are other overspends of £0.1m on training and subsistence.

3.1

The key variances which comprise this underspend are the forecasts in relation to:



underspends on non-domestic rates (NDR) (£1.2m); property maintenance costs (£1.7m); utilities (£0.6m) and lease dilapidations (£0.3m); and



underspends on non-domestic rates (NDR) (£1.2m); property maintenance costs (£1.9m); utilities (£0.7m); lease dilapidations (£0.2m); and



overspends on cleaning and domestic supplies (£0.3m) and premises efficiency saving (£0.9m).



overspends on cleaning and domestic supplies (£0.3m) and premises efficiency saving (£0.5m).

The current underspend on NDR of £1.2m arises due to: a non-recurring saving of £0.3m from a successful rates appeal in relation to radio masts in the Highlands and Western Isles and £0.6m of vacant/rural property appeals and an overestimate of the West Lothian Civic centre costs reducing the actual cost in comparison to budgeted amount. A further review of the forecast has identified savings of £0.3m from vacant and rural property relief.

The forecast underspend on NDR of £1.2m arises per the reasons outlined in the year to date underspend.

The current underspend on property maintenance costs (£1.7m) is due to delays in the mobilisation of the new contract associated with vetting required for staff and sub-contractors which in some cases has led to the

Utilities costs are forecast to be underspent by £0.7m. This follows a critical review of utilities costs by estates staff based on recent usage and price data. The SPA buys utilities from a collective Government buying arrangement which purchases supply in advance and there is no

The forecast underspend on property repairs and maintenance is £1.9m. This is explained in the year to date variance position. This rate of underspend is forecast to reduce as delays in vetting have been mostly overcome and a fuller programme of work is able to be undertaken.


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OFFICIAL Year to Date Variance £m

Full Year Variance

Explanation

£m

indication of forecast price changes for the remainder of the financial year.

replacement of some subcontractors. These delays have been due to the volume of vetting requests and delays in obtaining all information from applications. In addition, there have also been a number of vacancies within the estates department. These posts have been key to the management and delivery of maintenance works. Transport

0.3

This underspend is primarily due to underspends in vehicle fuel (£0.5m) offset by overspends in accident damage (£0.2m).

Explanation

0.8

Primarily relates to a £0.4m forecast underspend in vehicle servicing and maintenance costs. The budget was increased due to increasing vehicle maintenance costs, however, the additional capital investment in fleet towards the end of last financial year means that this cost pressure will not materialise. In addition, a full year underspend is forecast on vehicle fuel (£0.6m). These underspends are partially offset by a projected overspend on accident damage repairs (£0.3m). There are other non-material underspends of £0.1m.

Supplies & Services

0.6

The key variances which comprise this underspend are in relation to:

0.3

The key variances which comprise this underspend are the forecasts in relation to:



underspends on: firearms costs (£0.2m); investigative expenses (£0.2m); medical fees & reports (£0.1m); interpreters & translators (£0.2m); telecoms (£0.3m); health and safety costs (£0.1m); other non-material underspends (£0.1m); and



underspends on: specialist operational equipment (£0.2m); firearms costs (£0.1m); investigative expenses (£0.2m); medical fees & reports (£0.2m); interpreters & translators (£0.2m); detainee welfare costs (£0.1m); other non-material variances (£0.1m); and



overspends on clothing & uniforms (£0.3m); mortuary costs (£0.3m).



overspends on clothing & uniforms (£0.5m) and mortuary costs (£0.3m).

The forecast overspend on clothing & uniforms (£0.5m) relates to the specialist uniform associated with the uplift in armed policing and public order numbers. ICT

1.3

ICT maintenance costs are underspent by £1.2m. This is as described in the forecast variance.

3.0

ICT maintenance costs are forecast to be underspent by £3.0m. As previously reported, there is an underspend following the review of ICT accruals and prepayments that has generated a one-off accounting adjustment of £2.1m.


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Full Year Variance

Explanation

£m

Explanation In addition, a joint review of budgets was undertaken in November and December that has identified £0.7m of budgeted contract spend that will not be required. There are other non-material underspends of £0.2m.

Administration

Third Party Payments

0.5

-0.1

Printing and stationery costs are underspent by £0.3m which is forecast to continue to the end of the financial year. There are other non-material underspends of £0.2m. There is an underspend of £0.5m on other third party payments. This mainly relates to the air weapons licensing project (destruction of air weapons following the amnesty). The cost of destruction of air weapons is £0.4m less than budgeted. In addition, there is also an underspend is costs related to the national intelligence unit (£0.1m).

0.6

This position is due to forecast underspends in printing and stationery costs (£0.4m). There is also a forecast underspend of £0.1m on photocopiers. There are other non-material underspends of £0.1m.

-0.7

Per the year to date narrative there are underspends in relation to air weapons destruction (£0.4m) and the national intelligence unit (£0.1m) that are forecast to continue. There is also a forecast overspends related to the national negotiator CT uplift programme (£0.1m) and operation Border Riever (£0.2m) which is funded from income. This is offset by a forecast overspend in liability claims of £0.8m. This forecast is based on a detailed legal register of all outstanding claims in progress. Against each claim is an estimate of estimated settlement sum and the likely timing of when the claim will be settled.

This is offset by a £0.5m overspend related to liability claims. This relates to various legal claims made and where compensation costs have been agreed. This spend is increasing since the adoption of a self-insured approach (in place since the inception of Police Scotland with legacy insurance policies covering claim costs for the pre 1 April 2013 period). Capital Financing Other Costs

Total Non-Pay

0.0 -0.5

There are other net overspend of £0.2m.


0.0


Efficiency targets were allocated to individual budget holders and savings plans were received. Total approved savings of £4.5m have been identified against the £5.0m target leaving £0.5m yet to be identified which shows as an overspend.

0.6

The efficiency savings target is forecast to be overspent by £0.5m per the year to date variance.

4.7

This is offset by a forecast £1.1m gain on disposal which had not been included within the budget. This gain relates almost entirely to the sale of Chambers Street.

7.4


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Against prior year spend (£18.0m lower) The reduction in spend from the previous year is partly due to the new treatment of reform funding in the current year. Within ‘Other Employee Costs’, VR VER costs of £7.7m were incurred in financial year 2016/17. In the current financial year, this will be accounted for separately and will not be reported against the revenue budget (per paragraph 2.7). In addition, the 2017/18 forecast includes £4.6m of efficiency savings targets and non-pay cost reductions of approximately £6m which reduces the cost base from that of the prior year.


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2.2 (iv) Income Year to Date (£3.6m favourable) & Full Year Projection (£2.1m favourable) The following table provided an analysis of the variances by income category which describe the reasons for the year to date and full year positions. Year to Date Variance £m Grant funding

1.1

Full Year Variance

Explanation

£m

Additional income is being received from the Home Office related counter terrorism, negotiators and planning exercises (£1.0m). In addition, there is additional grant funding of £0.2m from campus Officers plus £0.2m of other grants within Local Policing.

1.6

0.3

The key variances which comprise this favourable position are in relation to:

Additional income is being received from the Home Office related counter terrorism, negotiators and planning exercises (£1.3m). In addition, there is additional grant funding of £0.2m from campus Officers plus £0.4m of other grants within Local Policing. This is offset by reduced income from safety camera partnerships (£0.3m) which is matched by reduced expenditure.

This is offset by reduced income from safety camera partnerships (£0.2m) which is matched by reduced expenditure. Fees & Charges

Explanation

-0.1

The key forecast variances which comprise this favourable position are in relation to:

•

favourable variances on public fees (£0.6m); rental income (£0.1m); services of police (£0.3m); mutual aid (£0.5m); and

•

favourable variances on public fees (£0.4m); fees & charges (£0.3m); services of police (£0.2m); mutual aid (£0.7m); and

•

adverse variances on seconded officers (£1.2m).

•

adverse variances on seconded officers (£1.7m).

Public fees income (£0.6m favourable). This additional income relates mainly to the new air weapons license fees. Services of police (£0.3m favourable). This is due to £0.8m additional income received (football policing, concerts, events and filming). This is offset by £0.5m adverse variance related to a reduction in the number of abnormal loads movements compared with the budget. Mutual aid income (£0.5m favourable). This relates to work undertaken for the Police Service of Northern Ireland (£0.1m) and Metropolitan Police (£0.4m). Seconded Officers and staff (£1.2m adverse). Budget assumption that 24 Officers would be on Home Office secondment, however, there are currently only 13 Officers seconded to this project resulting in a £0.5m adverse variance. In addition, there is a £0.7m adverse variance in relation to charges from various

Public fees income (£0.4m favourable). This additional income relates to the new air weapons license fees reduced by a lower number of firearms licenses fees. Fees & charges (£0.3m favourable). The favourable variances relates to additional grant income awards by the Scottish Government to provide training. The original grant for Malawi training has been expanded to cover areas of Rwanda and Zambia increasing the grant by £0.3m. Mutual aid income (£0.7m favourable). This relates to work undertaken for the Police Service of Northern Ireland (£0.1m) and Metropolitan Police (£0.6m). Seconded Officers and staff (£1.7m adverse). Budget assumption that 24 Officers would be on Home Office secondment, however currently only 13 Officers seconded to this project resulting in a £0.7m forecast adverse variance. This is offset by additional


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Full Year Variance

Explanation

£m

external agencies. This under recovery is expected to continue and is explained further in the full year variance.

Explanation income received relates to secondments for the European Championships planning team (£0.1m). In addition, there is a forecast adverse variance of £1.1m from charges to external agencies. This is a net pressure comprised of a number of movements. Income is lower by £1.2m due to secondment ending and £0.4m lower due to secondments being lower than budgeted. This is compensated by £0.3m of new secondments and £0.2m of increased charges.

Other Income

2.2

Income of £1.8m has been recognised as the VAT element of the i6 compensation. This income has been included in the budget and phased later in the financial year. This variance is therefore not shown as a full year variance.

0.6

This relates to the recognition of deferred income in relation to the C3 transformational works that have now been completed (£0.3m). There are favourable variances of £0.1m each, in respect of the disposal of productions and cost recovery from the Crown Officer per the year to date position.

Income greater than budget has been received from the disposal of productions (£0.1m) and a further £0.1m above budget has been received as cost recovery from the Crown Office in relation to the transportation of deceased persons.

There are other non-material variances of £0.2m.

There are other non-material variances of £0.2m. Total Income

3.6

2.1

Against prior year spend (£17.3m lower) - due to i6 compensation received in the previous year.


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2.3

Forensics & SPA Corporate

Revenue Forensics & SPA Corporate

Year to Date Budget Actual Variance

Full Year Forecast Budget Forecast Variance

(Over) / Underspend

£m Forensics

£m

£m

(Over) / Underspend

£m

£m

£m

Prior Year Draft Variance t le s s Outturn ( 1716/ 18/ 17P Oroutjetcurn) £m

£m

20.9

21.0

-0.1

27.8

29.6

-1.8

27.7

1.9

2.7

2.7

0.0

4.0

3.8

0.2

10.6

-6.8

Net Expenditure (incl VAT)

23.6

23.7

-0.1

31.8

33.4

-1.6

38.3

-4.9

Less: Forensics VAT

-0.6

-0.6

0.0

-1.0

-1.0

0.0

-0.9

-0.1

Less: SPA Corporate VAT

-0.1

-0.1

0.0

-0.3

-0.3

0.0

-0.3

0.0

Net Expenditure (excl VAT)

22.9

23.0

-0.1

30.5

32.1

-1.6

37.1

-5.0

SPA Corporate

Variance analysis Forensics Year to date (£0.1m overspend); full year forecast (£1.8m overspend) and against prior year (£1.9m higher) A business case was approved by the SPA Board on 28 November 2017 to enable service levels within the biology function to improve. Forensic services will outsource biology casework at a forecast cost of £1.8m during quarter 4 of the current year in order to allow biologists to further focus on Police Scotland investigative casework whilst continuing to meet the judicial time frames required by COPFS. This programme of work is aligned to the Forensic 2026 Strategy. SPA Corporate Year to date (break-even); full year projection (£0.2m underspend) and against prior year (£6.8m lower) The forecast underspend is mainly related to vacant staff posts. These posts will not be considered for recruitment until a conclusion is reach on the future SPA operating model. The reduction in spend from the previous financial year is due to £6.8m of loan charges and PFI interest costs. The costs have been moved to the Police Scotland finance department in the current year. SPA Board Meeting Financial Perfomance Report Quarter 3 2017/18Q3 Financial Review Appendix A 27 February 2018

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2.4

Revenue Budget by Business Area The table below sets out the Police Scotland budget by DCC/ DCO business area. Revenue Police Scotland

See Paragraph

Year to Date Budget

Actual

Full Year Forecast Variance

Budget

Forecast

(Over) / Underspend

£m

£m

£m

Variance (Over) / Underspend

£m

£m

£m

DCC Local Policing

2.5

43.8

39.9

3.9

60.0

56.6

3.4

DCC Crime & Operational Support

2.6

50.0

48.6

1.4

73.7

72.0

1.7

Deputy Chief Officer

2.7

143.3

135.5

7.8

187.9

181.3

6.6

DCC Designate (incl Officers salaries)

2.8

544.1

543.0

1.1

739.8

739.9

-0.1

-1.3

-0.8

-0.5

-1.6

-1.0

-0.6


779.9

766.2

13.7

1,059.8

1,048.8

11.0

Less: VAT (Reform Funded)

-11.3

-11.3

0.0

-20.7

-20.7

0.0


768.6

754.9

13.7

1,039.1

1,028.1

11.0

Other Business Areas

The tables (2.5 to 2.8) below set out the Police Scotland year to date actual against budget, and forecast projected outturn by DCC / DCO business area. Table 2.9 provides further detail of the Forensic services position.


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2.5

Revenue – DCC Local Policing Year to Date

Police Officer Costs

Budget

Actual

Variance

£m

£m

£m

Full Year Forecast Explanation

6.3

6.3

0.0


Police Staff Costs

31.5

30.4

1.1

Non-pay Costs

12.7

11.5

Income

-6.7

-8.3

Budget

Forecast

Variance

£m

£m

£m

8.9

9.5

-0.6

Due to vacant posts as explained earlier in the report

42.5

41.2

1.3

Due to vacant posts as explained earlier in the report.

1.2

Year to date underspend in fuel costs (£0.4m); stationery costs (£0.2m); timing of spend in relation to supplies and services (£0.2m); third party payments (£0.2m) and additional savings identified above the efficiency target (£0.1m).

17.5

16.6

0.9

Largely relates to the fuel underspend (£0.5m); printing & stationery underspend (£0.3m) and over net savings (£0.1m).

1.6

Additional grant income (£0.4m). This includes £0.2m for additional campus Officer posts plus £0.2m of other additional grants.

-8.9

-10.7

1.8

Additional grant income £0.7m. Per the year to date position this includes additional campus Officer posts (£0.2m) plus £0.5m of various other lower value additional grants.

Additional year to date income from football and other events (£0.8m) and income from transfer of deceased person from the Crown Office (£0.2m). There are other income increases of £0.2m. Net Expenditure

43.8

39.9

Explanation

3.9

Overtime overspend due to: £0.1m of costs related to Operation Mantleline and unbudgeted cost to provide essential backfill cover to custody suites (£0.2m). In addition, there are costs of £0.4m for held in reserve claims. There are other net underspends of £0.1m.

Additional income from football and other events (£0.8m); income from transfer of deceased person from the Crown Office (£0.1m) and additional income from productions disposals (£0.1m). 60.0

56.6

3.4


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2.6

Revenue – DCC Crime & Operational Support Year to Date


Budget

Actual

Variance

£m

£m

£m

4.2

5.3

-1.1

Police Staff Costs

46.8

45.0

1.8

Non-pay Costs

14.8

14.8

0.0


Budget

Forecast

Variance

£m

£m

£m

Overtime costs incurred assisting with the incidents in Manchester, London and the increased threat level (£1.0m). In addition, there are costs of £0.8m in respect of held in reserve payments. This is offset by underspends in non-core grant or income funded overtime (£0.5m) plus other underspends of £0.2m on core overtime.

Explanation

5.4

7.1

-1.7

Overtime costs incurred assisting with the incidents in Manchester, London and the increased threat level (£1.0m). In addition, there is a forecast cost of held in reserve overtime (£0.9m). This is offset by other underspends of £0.2m on core overtime costs.

Due to unfilled vacant posts with the majority related to C3.

62.5

60.3

2.2

Due to unfilled vacant posts with the majority related to C3. There is also a change to the C3 staff operating model.

Overspend in clothing and uniforms (£0.4m) and third party payments (£0.3m). These overspends are offset by an over achievement of the DCC efficiency savings target (£0.6m). There are other non-material savings of £0.1m.

26.1

26.2

-0.1

Overspend on clothing and uniforms mainly related to specialist firearms and public order units (£0.5m). Overspend on accommodation costs £0.3m related to various operations and provision of firearms Officers to the North. This is offset by an over-recovery against the DCC efficiency savings target of £0.9m.

Income

-15.8

-16.5

0.7

Additional grant income (£0.6m) mainly related to reimbursement of costs from the Home Office and fees and charges (£0.1m)

-20.3

-21.6

1.3

Additional grant income (£1.0m) related to the reimbursement of costs from the Home Office (£1.2m) offset by reduced recovery from safety camera partnerships (£0.2m). There is also additional income of £0.3m related to the recognition of deferred income for C3 transformational works that have now been completed.


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26

OFFICIAL Net Expenditure

2.7

50.0

48.6

1.4

73.7

72.0

1.7

Revenue – Deputy Chief Officer Year to Date Budget £m 15.5


Actual £m 13.6

Variance £m 1.9


This underspend is mainly due to a large underspend in ill health retirement awards (£1.5m). The budget has assumed approximately 8.9 approvals each month (78 year to date), however, the actual year to date average is approximately 6.3 per month (57 year to date).

Budget £m 20.6

Forecast £m 20.2

Variance £m 0.4

Explanation This underspend mainly relates to ill health retirements. In the last quarter, it is forecast that 37 awards will be made based on the expected pipeline of Officers going through the ill health evaluation process. This will reduce the current underspend but is forecast to result in a forecast year underspend of £0.5m.

There is also an underspend of £0.3m on pension admin costs relates to the timing of payments to the SPPA. This year to date underspend is due to timing and is forecast to be on fully spent by the end of the financial year. Police Staff Costs

TOIL / AL

46.0

45.7

0.3

Underspend reflects savings on overtime (£0.1m); underspends on salaries and oncosts (£1.2m) offset by £1.0m of budgets savings from VR VER that have not be achieved.

62.3

62.2

0.1

0.0

0.0

0.0


-1.0

0.0

-1.0

Underspend on salaries and on costs (£2.2m) as previously described. This is offset by £2.1m of budgeted savings from VR VER that are forecast to not be achieved.

There was a budgeted £1m saving from the reduction in TOIL and annual leave accrued balances. There are no detailed plans in place for the reduction of TOIL or annual leave balances.


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27

OFFICIAL Year to Date

Non-pay Costs

Budget £m 87.9

Actual £m 84.3

Variance £m 3.6


a) Premises costs (£2.6m under). Due to and underspend in non-domestic rates (£1.2m under), utilities (£0.5m under); property repairs costs (£1.7m under) and lease dilapidations (£0.3m) as previously explained. This is offset by an overspend in cleaning and domestic supplies (£0.4m over) and the nonachievement of the premises efficiency saving (£0.9m over).

Budget £m 116.4

Forecast £m 109.6

Variance £m 6.8

b) Vehicle servicing and maintenance forecast underspent by £0.4m as a result of the purchase of new vehicles at the end of the last financial year.

c) Supplies and services costs (£0.8m under). This relates to savings in the occupational health contract (£0.2m under); telecoms (£0.3m under) and other underspends (£0.3m).

c) Supplies & services costs forecast underspend by £0.8m £0.2m related to occupational health costs following a contractual review. Other forecast underspends includes: specialist operational equipment (£0.2m); other supplies and services (£0.2m); and health & safety costs (£0.1m). d) ICT costs forecast (£2.9m underspent). This is primarily related to a non-recurring accounting adjustment on ICT maintenance of £2.1m plus £0.7m of budget that will not be required. e) Admin costs (£0.2m under) – this includes a £0.1m underspend on photocopiers provision removing a number of devices.

e) Admin costs (£0.3m under). No issues to highlight f) Third party payments (£0.3m under). Relates to a credit note in respect of a historic disputed charge (£0.2m) and other variances.

f) Third party payments (£0.2m under) – per the year to date position. g) Savings not achieved (£1.5m over)

g) Savings not achieved (£1.2m over)

Net Exp

-6.1

-8.1

2.0

143.3

135.5

7.8

a) Premises costs (forecast £3.0m under). Due to underspend in non-domestic rates (£1.2m under), utilities costs (£0.7m under) and property repairs costs (£1.9m under) as previously explained. Lease dilapidation costs are under by £0.2m due to minimal dilapidations now forecast to occur in the current financial year. This is offset by an overspend in cleaning and domestic supplies (£0.3m over) and the non-achievement of the premises efficiency saving (£0.5m over).

b) Transport costs – there is a £0.2m overspend on vehicle servicing and maintenance and relates to the timing of expenditure.

d) ICT costs (£1.3m under), mainly related to ICT maintenance costs as previously described in detail.

Income

Explanation

h) Forecast gain on disposal of assets (£1.1m favourable).

Relates to the phasing of the i6 VAT income.

-10.4

-10.7

0.3

187.9

181.3

6.6



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28

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2.8

Revenue – DCC Designate Year to Date


Budget

Actual

Variance

£m

£m

£m

541.5

540.0

1.5


Under of £1.0m due to a full month budget for new recruits in June, September and December, however, these recruits joined towards the end of the month.

Budget

Forecast

Variance

£m

£m

£m

736.2

735.5

0.7

A net underspend of £0.4m due to the cost of staff on: service breaks, suspensions, reduced maternity pay and reduced sick pay being lower than budgeted.

A net additional cost of probationers salaries (£0.8m) due to an under budgeting of probationer increments. The budget was based on the entry point for a probationer and budgeted for an annual increment, however, the increment after 31 weeks of service was not budgeted for.

There is also an underspend of £0.4m on Officer overtime related to the centrally held contingency. 1.1

1.1

0.0

Non-pay Costs

1.5

2.0

-0.5

Income

0.0

-0.1

0.1

544.1

543.0

1.1

Net Expenditure

Underspend of £1.0 related to the recruit intakes per the year to date explanation. The next intake will be in 26 March 2018. A net underspend of £0.6m is due to the cost of staff on: service breaks, suspensions, reduced maternity pay and reduced sick pay being lower than budgeted.

A net additional cost of probationers salaries (£0.3m) due to an under budgeting of probationer increments. The budget was based on the entry point for a probationer and budgeted for an annual increment, however, the increment after 31 weeks of service was not budgeted for.

Police Staff Costs

Explanation


1.5

1.6

-0.1


Overspend relates to liability claims (£0.5m).

2.3

3.0

-0.7

This is offset by a forecast overspend in liability claims of £0.8m. This forecast is based on a detailed legal register of all outstanding claims in progress. Against each claim is an estimate of what the claim may settle for and the likely timing of when the claim will be settled.

-0.2

-0.2

0.0

739.8

739.9

- 0.1




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2.9

Revenue – Forensics Year to Date

Police Officer Costs Police Staff Costs

Non-pay Costs

Income

Budget

Actual

Variance

£m

£m

£m


0.0

0.0

0.0

n/a

16.9

16.9

0.0

There are savings in salaries and on-costs (£0.1m) due to vacant posts which is being offset by increased overtime costs (£0.1m).

4.1

4.2

-0.1

-0.1

-0.1

0.0

Budget

Forecast

Variance

£m

£m

£m

Explanation

0.0

0.0

0.0

n/a

22.6

22.7

-0.1

There are savings in salaries and oncosts (£0.1m) due to vacancy and maternity leave management which is being offset by increased overtime costs (£0.2m). The additional overtime cost is also partly due to an increased workload in Biology and Scene Examination.

There are no issues to highlight.

5.3

7.0

-1.7

A business case was approved by the SPA Board on 28 November 2017 to enable service levels within the biology function to improve. Forensic services will outsource biology casework at a forecast cost of £1.8m during quarter four of the current year in order to allow biologists to further focus on Police Scotland investigative casework whilst continuing to meet the judicial time frames required by COPFS. This programme of work is aligned to the Forensic 2026 Strategy. There are other non-material variances (£0.1m under).


-0.1

-0.1

0.0



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20.9

21.0

- 0.1

27.8

29.6

- 1.8


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3

Capital Plan

3.1

The annual capital budget approved by the SPA Board on 22 March 2017 amounted to £42.4m. The funding to support this investment comprised £20m of capital grant from Scottish Government, capital receipts of £10m and an allocation from Reform in the sum of £12.4m (£6.4m to support irrecoverable VAT and £6m for transformational capital investment).

3.2

In line with Police Scotland’s new Investment Governance Framework, business cases are required to support capital investment and capital projects can only progress once the required approvals are in place.

3.3

The year to date position on capital is gross expenditure of £9.8m, which has been incurred on ICT (£4.6m), Fleet (£4.1m), Estates (£0.7m) and other (£0.4m). In the year to date, total capital receipts of £4.8m have been secured (net of selling costs). This includes £3.2m in respect of the sale of the former police office in Chambers Street, Edinburgh.

3.4

The receipts level anticipated when the budget was set will now not be realised in full as the result of the delay in the disposal of the Pitt Street site. This means that the associated proceeds will now slip into financial year 2018/19 and loss of the associated revenue savings.

3.5

Scottish Government must approve all elements of Reform Capital funding. In year, amounts have been rejected by the Scottish Government and the budget revised accordingly (including VAT adjustments) such that overall Reform Capital funding has reduced by £2.9m

3.6

The forecast spend on the Capital Plan is shown in the following table at paragraph 3.9. The revised forecast spend on the Capital Programme is now £36.8m; a decrease of £1m from the previous forecast of £37.8m. This revised forecast results in an overspend of £1.4m against the revised forecast funding, due to a change in available funding to support the programme.

3.7

The forecast overspend on capital reflects an element of optimism bias. This has been included to acknowledge slippage in recent years on the Capital Plan and the organisation will continue to actively monitor and manage the Capital Plan. Should there be no slippage in year, budgets will be actively managed to meet the forecast out turn position.

3.8

The table at paragraph 3.10 presents the Capital Plan across alternative headings which will be used in future reports:    

Capital Reform – Projects to be funded from Reform. Annual Programmes of Work – Approved BAU budgets to be managed by relevant professional department. Approved Non Reform Projects – Approved Projects, not seeking Reform funding. Anticipated Non Reform Projects - Anticipated Projects, not seeking Reform funding.


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3.9

The following table shows the budget and forecast spend on the Capital Plan in the format provided in previous financial monitoring reports.

Capital Expenditure

Airwave Replacement Pegasus Roadside Breath Screening Devices Asset Maintenance Program EDMRS Total Category One – Statutory (A) Fleet Replacement Infrastructure Modernisation (incl intranet/ Internet Capability) National Intelligence System Child Protection Video Interview Equipment Replacement Weaponry Total Category Two – Stay in Business (B) Telematics C3 / THRIVE Cybercrime Cyber Defence Custody ANPR Unicorn Payroll Water Safety SEARCH DSU Vehicles 400 Telephones - ACC Crime Tasers (X2) Priority Projects Armed Policing Digital ICCS Tasers (STOs) Total Category Three – Transformation/ Policing 2026/ BAU Improvements (C) Total Police Scotland (A) + (B)+ (C) = (D) Total SPA / Forensics (E) Total Expenditure (D) + (E) = (F) Scottish Government grant Capital receipts Reform - VAT Reform - Transformational Capital Total Funding (G)

Budget £m

1.8 0.2 0.1 5.9 0.3 8.3 5.6 12.6 0.5 0.6 0.0 19.3 3.2 3.5 4.0 2.8 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 14.0 41.6 0.9 42.5 20.0 10.0 6.4 6.0 42.4

Forecast £m

Variance £m

5.5 0.2 0.1 5.9 0.0 11.7 5.9 7.7 0.0 0.0 0.3 13.9 0.4 1.1 3.6 0.0 0.0 1.2 0.2 0.3 0.2 0.0 0.4 0.1 0.0 1.8 0.1 0.4 0.3 10.1 35.7 1.1 36.8 20.0 6.0 5.0 4.4 35.4

-3.7 0.0 0.0 0.0 0.3 -3.4 -0.3 4.9 0.5 0.6 -0.3 5.4 2.8 2.4 0.4 2.8 0.5 -1.2 -0.2 -0.3 -0.2 0.0 -0.4 -0.1 0.0 -1.8 -0.1 -0.4 -0.3 3.9 5.9 -0.2 5.7 0.0 4.0 1.4 1.6 7.0

Further Detail

Para 3.9

Slippage in ESMCP requires additional devices to be purchased to support interim period. Business Justification Case approved Business Justification Case approved Business Justification Case approved No longer in 2017/18 Capital Plan

3 3 3 2 n/a

Business Justification Case approved Business Justification Case approved No longer in 2017/18 Capital Plan - Now part of COS project. Capital project completed in 2016/17, no 17/18 spend Reflecting a change in capitalisation policy to ensure consistent treatment of expenditure

2 1 / 3 n/a n/a 2

Business Justification Case approved Ongoing capitalisation of ICT staff. Approved in line with Phase 2 of Cybercrime Infrastructure Project. No longer in 2017/18 Capital Plan No longer in 2017/18 Capital Plan Full Business Case approved Business Justification Case approved Full Business Case approved Business Justification Case approved No longer in 2017/18 Capital Plan Business Justification Case approved Business Justification Case approved

1 n/a 3 n/a n/a 3 3 1 3 n/a 4 4 4 4 3 1 3

17 approved priority projects as identified through the Capital Bid process in August / September.

Business Justification Case approved Business Justification Case approved Business Justification Case approved

Chambers St receipt of £3.2m, slippage on Pitt St into 2018/19. SBR confirmed figures from SG SBR confirmed figures from SG


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Variance (F) – (G)

3.10

1.4

Optimism Bias - Whilst forecast expenditure is £36.8m, optimism bias is applied to reflect recent experience in the capital plan slipping.

The table below presents the Capital Plan categorised between Capital Reform Projects, Annual Programmes of Work, Approved Non Reform Projects and Anticipated Non Reform Projects. 2017/18 £m Capital Reform (1) National Network ADEL Telematics Payroll Armed Policing Digital ICCS Tasers (STOs)

0.4 3.0 0.4 0.3 0.4 -

Capital Reform Total

4.5

Annual Programmes of Work (2) Fleet Replacement Building Maintenance Weaponry

5.9 5.9 0.3

Annual Programmes of Work Total

12.1

Approved Non Reform Projects (3) National Cyber Crime Unit ICT Modernisation Alliance ANPR Airwave Replacement Minor Approved Business Justification Cases Armed Policing (Microwave Downlink) Tasers (STOs)

3.6 3.0 1.3 1.2 5.5 0.7 0.1 0.3

Approved Non Reform Projects Total

15.7

Anticipated Non Reform Projects (4) DSU Vehicles 400 Telephones - ACC Crime Tasers (X2) Priority Projects

0.4 0.1 2.9

Anticipated Non Reform Projects Total

3.4

SPA / Forensics

1.1


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Total Proposed Capital Plan

36.8

Optimism Bias

(1.4)

Capital Plan

35.4


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4

Reform Budget

4.1

On 15 December 2016, the Cabinet Secretary for Finance & the Constitution presented the Scottish Government’s Draft Budget for 2017/18 which included a Reform funding allocation of £34.5m to the SPA. In addition to this, a further £25m of funding was announced by the Scottish Government on 2 February 2017 bringing the total Reform budget to £59.5m. This is being provided through the Police Change and Transformation Fund (Reform) to support ‘the delivery of a police service capable of meeting the changing demands of crime and society over the next ten years’.

4.2

In line with Police Scotland’s new Investment Governance Framework, business cases are required to support the investment sought and must demonstrate that it is reforming spend. Further to this, these business cases also require the approval of the SPA and then Scottish Government prior to funding being released. The use of this funding is being separately monitored and reported as a distinct funding source (i.e. separate from the revenue and capital budgets).

4.3

A summary of the Reform budget as approved by the SPA at its Board meeting of 22 March 2017 is shown below. Capital £m

Total £m

Initial allocation

34.5

Additional funding announced (02/02/17)

25.0

Funding Available to the SPA

59.5

Irrecoverable VAT

6.4

22.0

28.4

Corporate services transformation

0.0

10.0

10.0

Operational policing transformation

0.0

6.2

6.2

Other Transformational Expenditure

6.0

8.9

14.9

12.4

47.1

59.5

Total Applied

4.4

Revenue £m

The year to date position is total expenditure of £23.8m as at the end of quarter 3. This spend comprises irrecoverable VAT of £14.6m revenue, £1.2m capital and Corporate Services transformation costs of £8.0m (transformation resources, VR VER costs and Policing 2026 costs).


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4.5

The full year forecast spend is shown in the following table. This forecast as presented recently to SPA Board showed that available Reform funding was unlikely to required, with a forecast underspend of £13.2m. Reform Plan by Category Capital Irrecoverable VAT Other Transformational Expenditure Total Capital (A) Revenue Irrecoverable VAT Corporate Services Transformation Commercial Excellence Programme Sub-total

Budget

Forecast

Variance

£m

£m

£m

Further Detail

6.4 6.0 12.4

5.1 4.5 9.6

1.3 1.5 2.8

22.0 10.0 0.0 32.0

22.0 7.2 1.1 30.3

0.0 2.8 -1.1 1.7

Approved by SG Based on roles approved roles through Police Scotland's TRCG Full Business Case approved by CFIB, SPA & SG

5.7 0.1 1.0 0.0 -0.6

0.0 0.0 0.0 0.0 0.0

5.7 0.1 1.0 0.0 -0.6

Plans in development - expected 2018/19 Rejected by SG Under review Rejected by SG Adjustment to match approved budget

Total Other Policing Transformation

6.2

0.0

6.2

Other Transformational Expenditure VR/VER Leavers Professional services (Pay Harmonisation) Staff survey Recruitment project Wellbeing – small change fund Intranet / social media Payroll P2P Professional services Total Other Transformational

8.5 0.1 0.1 0.2 0.0 0.0 0.0 0.0 0.0 8.9

3.5 0.1 0.0 0.0 0.0 0.2 0.3 0.2 2.0 6.3

5.0 0.0 0.1 0.2 0.0 -0.2 -0.3 -0.2 -2.0 2.6

47.1 0.0 59.5

36.6 0.1 46.3

10.5 -0.1 13.2

Other Policing Transformation C3 THRIVE/Mental Health Nursing Support Armed policing National CCTV Capability Review Tasers Offset Required

Total Revenue (B) SPA (C) Total Planned Expenditure (A+B+C)

Approved by SG As per capital plan

Business Justification Case completed Work Complete Forecast spend in 2018/19 Forecast spend in 2018/19 Forecast spend in 2018/19 Business Justification Case completed Business Justification Case completed Business Justification Case completed Evaluation activities and ITT development ongoing

Forecast £13.2m underspend


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5

Budget assumptions risk assessment

5.1

The table below sets out the key financial assumptions in the original budget and the current forecast outturn for 2017/18. This highlights where budget assumptions have changed.

5.2

For each one, an assessment over the scale of the risk has been assessed, and the potential impact that this could have on the budget if the actual situation differs from the forecast. Budget area

Assumption

Police Officers’ salaries

The budget was set based on 17,234 Police Officers. There is no change to this assumption.

Risk

Impact on forecast outturn if risk materialises

Risk Owner

L

£0 - £2m

DCC Designate

Police officer salaries are forecast based on HR’s projected number of police officers for the current financial year. If attrition rates and forecast intakes of new probationers were to change from the forecast, it would require finance to revise the projection.


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Budget area

Assumption

Police Officer Overtime

Significant recent incidents have resulted in increased Officer overtime costs in relation to the incident in London and Manchester. There has also been a need to increase the police presence across key public sites and during events. A claim for reimbursement of this overtime cost has been submitted, however, we now only expect to receive £0.1m.

Risk


Risk Owner

M

£0m - £1.0m

All DCC’s

Overtime savings were agreed in the approved budget. Within the budget an overtime contingency budget has been held by the DCC Designate of £1.2m is forecast to be required to meet the cost of historic held in reserve claims. The remaining risk attaches to potential incidents that may arise in the final quarter of the year with no available remaining budget.


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Budget area

Assumption

Police Staff Pay

The actual current number of staff in post have been budgeted using payroll data, and 185 vacancies have been added to the base. However, the service has been slow to recruit these posts and staff numbers have been reducing.

Risk


Risk Owner

L

£1.0 - £2.0m


H

£0.0 - £2.4m


The budget assumed a turnover savings or vacancy factor saving of £4m for Police Staff which has increased above this level generating underspends. There is a risk that the vacancy factor does not remain the same as budgeted. The actual vacancy factor varies throughout the service but on average it is forecast to be higher than the budgeted factor. Pay Award

The budget assumed a pay award from 1 September 2017 in line with the public sector pay policy. The Police Officer pay award for Police Officers agreed at 1% in line with the available budget (will be paid in November). The police staff pay award is still subject to SPA approval prior to engaging with staff associations. Financial risk attaches to this should the pay award not be agreed in line with the available budget.


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Budget area

Assumption

Risk


Risk Owner

Pay Progression

The budget assumption is based on the payment of pay progression (increments) in line with contracts. All increments are being paid in line with agreed contract for Officers and Staff.

L

£0.0


VR VER

There is a budget assumption of no compulsory redundancies and a budgeted release of Police Staff posts to achieve in year saving of £3.0m. The saving forecast against this is £0.9m, leaving an adverse variance of £2.1m.

L

£0 - £0.5m


The service has a poor record of delivery in this area and so the forecast assumes that this saving will not be achieved. The forecast Reform expenditure for associated release costs has been revised at Q3 to reflect the absence of firm release plans. This has resulted in a decrease to the forecast spend of £3m for the position at Q2 and Period 7. The forecast now more realistically captures the likely full year position and so the risk rating has been amended accordingly.


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Budget area

Assumption

Risk


Risk Owner

Uniforms

The uniform budget has been fully devolved to budget holders for the first time, based on an allocation model to reflect the number of Officers in each Division. At this stage in the financial year there is limited risk that the demandbeyond the level reported will create further pressure on the budget.

L

£0.2 - £0.5m


i6 compensation – income

There is a £1.8m i6 compensation payment related to the reimbursement of VAT. In order to retain this it will be necessary to seek approval from HMRC.

L

£1.8m


L

£0 - £0.5m

All DCC’s / DCO

VAT has not been paid by Accenture to HMRC and there have been no further conditions or issues raised following the legal agreement. Grant funded income

The budget assumed the continuation of income received in 2016/17 by way of grant funding from local authorities or other partner organisations (unless formal notification had been received to the contrary). The forecast has been adjusted to reflected grant income that will not be received. At this stage in the financial year the risk attaching to further loss of grant funding is considered low, with the overarching position on income a favourable one


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Budget area

Assumption

Efficiency savings

The Board approved a total DCC/DCO efficiency savings budget (£3.8m) plus a further DCO central efficiency savings budget (£1.2m).

Risk


Risk Owner

L

£0 - £0.5m

All DCC’s / DCO

H

£0 - £20.0m


Efficiency savings have been identified and applied to budgets as at quarter 3. Savings of £4.5m have been identified and applied against the target saving of £5m. Capital expenditure

The Police Scotland year to date capital expenditure is £9.8m against a full year budget of £42.5m. The forecast expenditure for the year is £35.4m. There is a risk that capital expenditure may not be fully incurred if existing spend plans are not realised with limited opportunity at this stage in the financial year to take corrective action.


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Budget area

Assumption

Reform expenditure

The budget assumed that the cost of irrecoverable VAT would be funded from reform. There is no change to this assumption.

Risk


Risk Owner

H

£0 - £20m


A significant amount of reform funding was earmarked at the budget approval for transformational spend related to the Policing 2026 project. Business cases for the use of reform funding require to be completed and ultimately approved by the Scottish Government. There is a risk that reform funding will not be spend in year if there is slippage in the 2026 projects.


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Appendix A

2017/18 Police Scotland Revenue Budget: Analysis by Service Division (to ACC/ Director Level) Revenue - Police Scotland Budget £m

Year to Date Actual Variance £m £m

Full Year Forecast Budget Forecast Variance £m £m £m

ACC Local Policing North ACC Local Policing East ACC Local Policing West Criminal Justice & Custody Other DCC Local Policing

10.0 6.3 11.1 16.3 0.1 43.8

9.2 5.1 9.6 16.0 0.0 39.9

0.8 1.2 1.5 0.3 0.1 3.9

13.4 9.0 15.2 22.2 0.2 60.0

12.7 8.0 14.0 21.9 0.0 56.6

0.7 1.0 1.2 0.3 0.2 3.4

ACC Crime ACC Service & Protection ACC Operations & Justice Other DCC Crime & Op Support

7.9 3.0 38.7 0.4 50.0

8.8 2.1 37.8 -0.1 48.6

-0.9 0.9 0.9 0.5 1.4

16.5 3.9 52.4 0.9 73.7

17.6 2.9 51.6 -0.1 72.0

-1.1 1.0 0.8 1.0 1.7

Director of P&D Director of ICT Chief Financial Officer Head of Commercial Services Head of Corporate Comms ACC Strategic Change Other DCO Deputy Chief Officer

33.5 38.1 7.2 56.3 2.0 7.6 -1.4 143.3

31.0 37.1 5.0 53.9 1.8 7.3 -0.6 135.5

2.5 1.0 2.2 2.4 0.2 0.3 -0.8 7.8

45.7 52.2 7.3 71.6 2.7 10.1 -1.7 187.9

44.3 51.2 7.0 68.6 2.5 9.8 -2.1 181.3

1.4 1.0 0.3 3.0 0.2 0.3 0.4 6.6

DCC Designate (incls Officers) Projects External Agencies

544.1 0.6 -1.9

543.0 0.3 -1.1

1.1 0.3 -0.8

739.8 0.9 -2.5

739.9 0.4 -1.4

-0.1 0.5 -1.1


779.9

766.2

13.7

1,059.8

1,048.8

11.0

Less: VAT (Reform Funded)

-11.3

-11.3

0.0

-20.7

-20.7

0.0


768.6

754.9

13.7

1,039.1

1,028.1

11.0

SPA Board 27 February 2018

NOT PROTECTIVELY MARKED


Appendix B.1 Reconciliation of Movement in Police Scotland Forecast Outturn: Breakdown By Cost Category Revenue - Police Scotland

Full Year Forecast Q2 Budget Forecast Variance

Full Year Forecast Q3 Budget Forecast Variance

(Over) / Underspend

(Over) / Underspend

£m

£m

£m

£m

£m

£m

Budget

Movement Forecast

Variance (Over) / Underspend

£m

£m

£m

Salaries & On-costs Overtime Allowances Injury & Ill Health Total Police Officer Costs Salaries & On-costs VR VER Saving Overtime Allowances Special Constables

716.1 15.5 19.0 20.6 771.2 154.8 -2.3 2.2 13.8 0.8

715.7 17.0 18.8 20.6 772.1 149.8 0.0 2.0 13.1 0.8

0.4 -1.5 0.2 0.0 -0.9 5.0 -2.3 0.2 0.7 0.0

716.1 15.5 19.0 20.6 771.2 154.6 -2.1 2.2 13.8 0.8

715.4 17.9 18.9 20.1 772.3 149.8 0.0 2.1 13.0 0.8

0.7 -2.4 0.1 0.5 -1.1 4.8 -2.1 0.1 0.8 0.0

0.0 0.0 0.0 0.0 0.0 0.2 -0.2 0.0 0.0 0.0

0.3 -0.9 -0.1 0.5 -0.2 0.0 0.0 -0.1 0.1 0.0

-0.3 0.9 0.1 -0.5 0.2 0.2 -0.2 0.1 -0.1 0.0

Total Police Staff Costs

169.3

165.7

3.6

169.3

165.7

3.6

0.0

0.0

0.0

-1.0 1.4 59.6 23.2 36.2 18.1 5.9 14.7 4.4 -0.5

0.0 1.6 56.3 22.7 36.1 16.3 5.3 14.3 4.4 0.0

-1.0 -0.2 3.3 0.5 0.1 1.8 0.6 0.4 0.0 -0.5

-1.0 1.4 59.6 23.2 36.2 18.1 5.9 14.7 4.4 -0.5

0.0 1.7 56.5 22.4 35.9 15.1 5.3 15.4 4.4 0.0

-1.0 -0.3 3.1 0.8 0.3 3.0 0.6 -0.7 0.0 -0.5

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

-1.0 -0.1 -0.2 0.3 0.2 1.2 0.0 -1.1 0.0 0.0

1.0 0.1 0.2 -0.3 -0.2 -1.2 0.0 1.1 0.0 0.0

0.0

-1.1

1.1

0.0

-1.1

1.1

0.0

0.0

0.0

163.0

155.9

7.1

163.0

155.6

7.4

0.0

0.3

-0.3

Income Net Expenditure (incl VAT) Less: VAT (Reform Funded)

-42.7 1,059.8 -20.7

-44.3 1,049.4 -20.7

1.6 10.4 0.0

-42.7 1,059.8 -20.7

-44.8 1,048.8 -20.7

2.1 11.0 0.0

0.0 0.0 0.0

0.5 -0.4 0.0

-0.5 0.4 0.0


1,039.1

1,028.7

10.4

1,039.1

1,028.1

11.0

0.0

-0.4

0.4

TOIL & Annual Leave Costs Other Employee Costs Premises Transport Supplies & Services ICT Administration Third Party Payments Capital Financing Other Costs - excl asset sales Other Costs - Gain on Asset Disposal Total Non-Pay Costs

SPA Board Q3 Financial Review Appendix B 07 February 2018


1


Appendix B.2 Reconciliation of Movement in Total SPA Forecast Outturn: Explanation of Movements Budget £m Police Scotland Forensics SPA Corporate Reported Position at Quarter 2

Forecast £m

Variance £m

1,039.1 26.8 3.7 1,069.6

1,028.7 26.8 3.5 1,059.0

10.4 0.0 0.2 10.6

0.0 0.0 0.0 0.0 0.0 0.0

-0.3 0.4 0.5 -0.5 -0.3 -1.2

0.3 -0.4 -0.5 0.5 0.3 1.2

Movements in Police Scotland Police Officers - reduced cost from Officers on half/ nil pay Police Overtime - cost of custody backfil and initiatives approved from DCC contingency Police Overtime - held in reserve cost Police Pensions - reduction in number of ill health reitrments Reduction in fuel costs Reduction in ICT maintenance costs following a review of contracts. Increase in third party payments related to additional spend on national training exercises. These are partly funded from income. Increase in liabiltiy claims based on legal estimates of the likely settlement costs. Net additional income Other movements (net) Total Movements in Police Scotland

0.0

0.5

-0.5

0.0 0.0 0.0 0.0

0.7 -0.5 0.1 -0.6

-0.7 0.5 -0.1 0.6

Movements in Forensics Increase related to the outsourcing of biology casework as approved by the SPA. Total Movements in Forensics

0.0 0.0

1.8 1.8

-1.8 -1.8

Movements in SPA Corporate Total Movements in SPA Corporate

0.0 0.0

0.0 0.0

0.0 0.0

Overall Movement

0.0

1.2

-1.2

1,039.1 26.8 3.7 1,069.6

1,028.1 28.6 3.5 1,060.2

11.0 -1.8 0.2 9.4

Analysed as: Police Scotland Forensics SPA Corporate Reported Position at Quarter 3 - per paragraph 1.2

SPA Board Q3 Financial Review Appendix B 07 February 2018


2


Appendix C Salary Forecast Check Police Scotland Police Officer Forecast (Salaries and NI ‐ incl Apprenticeship Levy)

Payroll

Pay‐run details

Central Pay Northern Pay Strathclyde Pay Lothian & Borders Pay Grampian Pay Tayside Pay Dumfries & Galloway Pay Fife Pay Apprenticeship Levy Other items Total Payrun Costs Income from DLA Scotland

Monthly, pay period is 1st to end of month Monthly, pay period is 1st to end of month Monthly, pay period is 1st to end of month Monthly, pay period is 16th to the 15th of the following month Monthly, pay period is 1st to end of month Monthly, pay period is 1st to end of month 4 weekly in arrears 4 weekly in arrears

Total Police Officer Costs

Actual Cost (P1 to P9)

Accrual adjustment

£m

£m

26.0 23.3 258.5 84.5 48.1 38.1 14.4 30.4 2.5 0.3 526.2 ‐0.1 526.1

4.9

0.2 1.3

6.3

6.3

Payroll cost on accruals basis £m 26.0 23.3 258.5 89.4 48.1 38.1 14.6 31.6 2.5 0.3 532.5 ‐0.1

Explanation of accrual adjustment

Pay run covers relevant month, no accrual required Pay run covers relevant month, no accrual required Pay run covers relevant month, no accrual required 9 months pay = 275 days, actual pay to date is 260 days Pay run covers relevant month, no accrual required Pay run covers relevant month, no accrual required 9 months pay = 275 days, actual pay to date is 272 days 9 months pay = 275 days, actual pay to date is 264 days

532.4 YTD per report is £526.1m (including Apprenticeship Levy)

Uplift to Annualise (YTD / 9.04 x 12) ‐ base salary costs CHIS Handlers / Allard Ruling

710.9 4.0

Increments due (P9 ‐ P11) ‐ in arrears for Forecast Purposes Savings on movement in Police Officers (P10 ‐P12) Other ‐ additional costs of Probationers (P10 ‐ P12) Adjusted Full Year Position

Increments are awarded throughout the year for Officers based on 0.7 the anniversary of their last start or promotion date. ‐0.6 This saving is not in the ytd actual but has been budgeted 0.4 715.4

Forecast per Quarter 3 Report (Salaries and NI) Difference:

715.4 0.0

SPA Board Q3 Financial Review Appendix C 07 February 2018


1


Appendix C Salary Forecast Check Police Scotland Police Staff Forecast (Salaries, NI, Superannuation & App Levy)

Payroll

Pay‐run details

Central Pay Northern Pay Strathclyde & SPA Lothian & Borders Pay Grampian Pay Tayside Pay Dumfries & Galloway Pay Fife Pay Apprenticeship Levy Total Payrun Costs Agency staff & other invoices Less capitalisation of staff Pay Award Accrual (Sep 1 to Dec 31) Total Police Staff Costs

Monthly, pay period is 1st to end of month Monthly, pay period is 1st to end of month Monthly, pay period is 1st to end of month Monthly, pay period is 1st to end of month Monthly, pay period is 1st to end of month Monthly, pay period is 1st to end of month Monthly 15th of each month in arrears 4 weekly in arrears

Actual Cost (P1 to P8) £

Actual Cost Actual Cost (P9) (P1 to P9) £

2.7 2.9 63.5 12.3 5.5 5.4 2.1 3.9 0.4 98.7 0.4 ‐0.5 0.6 99.2

Accrual adjustment

£ 0.3 0.4 7.9 1.5 0.6 0.7 0.3 0.5 0.0 12.2 ‐0.1 0.0 0.2 12.3

£ 3.1 3.3 71.5 13.8 6.2 6.0 2.4 4.3 0.4 110.9 0.3 ‐0.5 0.8 111.5

0.2 0.2 0.1 0.4

0.4

Payroll cost Explanation of accrual adjustment on accruals basis £ 3.1 Pay run covers relevant month, no accrual required 3.3 Pay run covers relevant month, no accrual required 71.5 Pay run covers relevant month, no accrual required 13.8 Pay run covers relevant month, no accrual required 6.2 Pay run covers relevant month, no accrual required 6.0 Pay run covers relevant month, no accrual required 2.6 9 months pay = 275 days, actual pay to date is for 259 days. 4.5 9 months pay = 275 days, actual pay to date is for 261 days. 0.5 111.4 0.3 ‐0.5 0.8 112.0 YTD per report is £111.5m (including Apprenticeship Levy)

Total Police Staff Costs YTD (excluding Pay Award) Uplift to Annualise Period 10 ‐ 12 base salary costs (Dec Actual Costs x 3 excluding Pay Award) Uplift to Annualise (YTD/4*7) ‐ pay award Additional Pension Contributions Estimated Forecast of Current vacant posts Attrition adjustment Other Adjusted Full Year Position (includes VR/VER Leavers)

111.2 36.3 1.4 0.6 0.7 ‐0.4 0.1 149.8

Forecast per Quarter 3 Report (Salaries, NI Superannuation and Apprenticeship Levy) Difference:

149.8 0.0

SPA Board Finance Committee Q3 Financial Review Appendix C


2

Appendix D Officer Temporary Promotions 1) Temp Promotion to a Permanent Assistant Chief Constable / Establishment Post


Chief Superintendent

Superintendent

Chief Inspector

Inspector

Sergeant

Total (end of Q3)

Total (end of Q2)

Budget

0

0

7

31

128

246

412

412

Actual

0

2

2

16

129

267

416

412

Variance 0 ‐2 5 15 ‐1 ‐21 ‐4 0 Temporary promotions to a permanent establishment post arise where an officer is filling a vacant establishment post. This promotion is, therefore, within the agreed rank establishment and does not create an additonal cost to the organisation.

2) Temp Promotion to a Supernumery Post

Assistant Chief Constable


Superintendent

Chief Inspector

Inspector

Sergeant

Total (end of Q3)

Total (end of Q2)

Budget

0

1

1

6

14

27

49

49

Actual

0

0

3

4

26

38

71

61

‐22

‐12

Variance 0 1 ‐2 2 ‐12 ‐11 Temporary promotions to a supernumerary post relate to those short term promotions (e.g. to address the short therm needs of the business ‐ generally on projects).

3) Temp Promotion to a Non Establishment Post

Assistant Chief Constable


Superintendent

Chief Inspector

Budget Actual

Inspector

Sergeant

0

2

1

5

8

2

1

1

5

10

Variance ‐2 1 0 0 ‐2 Temporary promotions to permanent non establishmen posts relate to longer term project or wor that is not part of the core police structure or business.

Note: There are no temporary promotions at ranks higher than Chief Superintendent Financial Implications As temporary promotions to establishment posts are within the budgeted rank establishment, there are no additional financial implications arising In terms of category 2 and 3 temporary promotions, the budgetary provision is £0.317m. Although the numbers in these categories have increased in the period from the previous quarter, this measurement is at a point in time only There is no material budget pressure anticipated from these promotions.

SPA Board Committee Q3 Financial Review Appendix D 27 February 2018


Total (end of Q3)

Total (end of Q2)

5

21

21

7

26

27

‐2

‐5

‐6