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1 Meeting SPA Board Meeting Date and Time 31 March 2016 Location Stirling Court Hotel Title of Paper Police Scotland Revenue Budget 2016/17 Item Number Presented By John Foley, Chief Executive, SPA For Approval / Information FOR APPROVAL Appendix Attached: No PURPOSE The Scottish Police Authority has a statutory obligation, before the beginning of each financial year, to provide to the Chief Constable details of how it intends to allocate the financial resources it expects to have available to it in respect of that financial year. This paper sets out the funds which are available to the Authority for 2016/17 in order to deliver the policing service in Scotland. This paper is presented in line with the Scottish Police Authority / Police Scotland scheme of administration, section 19, and is submitted for approval to the Full Authority. 1. BACKGROUND 1.1 The Scottish Police Authority ( the Authority ) is required to set an approved budget within the allocation provided by the Scottish Government and prior to the beginning of the financial year provide to the Chief Constable details of how it intends to allocate the financial resources it expects to have available in respect of that financial year. In addition, the Authority is accountable to Scottish Ministers for the functions which the Authority is directly accountable for, including Forensic Services and Independent Custody Visiting. FURTHER DETAIL ON REPORT TOPIC 2. Funding Allocation 2.1 On 16 December 2015, the Deputy First Minister and Cabinet Secretary for Finance, Constitution and Economy, presented the Scottish Government s Draft Budget for financial year 2016/17. 1

2 2.2 Scottish Government has described the 2016/17 budget as one for growth and reform and announced real terms protection for the Authority budget for each forthcoming year of the Scottish parliamentary term. Table one highlights the change in funding between current and next financial year. This shows an increase in revenue funding of 17.6m (1.8%). Scottish Government Funding 2015/ /17 Movement m m m % Revenue , % Non Cash Revenue Capital % Expenditure Outside DEL (ODEL) Total 1, , % Police Reform / Police Change % Total Funding (up to) 1, , % Table 1: Scottish Government Funding 2.3 Revenue funding represents budget for current expenditure such as staff costs and goods and services. 2.4 The revenue cost of employers pensions contributions for Police Officers are not included in the Authority s funding. This budget is held and managed by the Scottish Government itself, as part of the Police Central Government (PCG) funding. The Authority is required to meet the cost of Officers ill health retirement and injury pensions only. The administration of Police Officers pensions is carried out by the Scottish Public Pensions Agency (SPPA). 2.5 Non-cash revenue funding represents ring-fenced funding for non-cash accounting charges which includes: depreciation, impairments and provisions. If actual depreciation, etc., is greater than the budget allocated, then the shortfall has to be met from the revenue cash funding. However, if the actual depreciation is lower than the budget set, any surplus cannot be transferred to another budget line. 2.6 Capital funding represents finance for new investment. The Authority is also permitted, subject to Scottish Government approval, to use disposal proceeds to reinvest in further capital expenditure. 2.7 In addition to the above funding, the Authority also has specific funding for expenditure outside DEL (ODEL). This is specific funding for loan charges on borrowing by Local Authorities pre Police Reform funding was available for the last three financial years to meet the initial costs of the creation of the single national service. This 2

3 funding has ended and has been replaced with the Police Change fund. Funding of up to 53.8m is available for the next phase of change and transformation of policing. This funding will be required to meet the costs of: VAT, replacement of airwave (ESMCP) and police pension s administration. Further use of this budget requires the approval of the Scottish Government prior to the release of funds. Applications for the use of Police Change fund monies require prior approval by the SPA Chief Executive before submitting to Scottish Government. 2.9 The Authority is responsible for ensuring that service delivery is managed within overall budget availability and to manage the impact between competing revenue and capital budget pressures. 3. Revenue Budget 3.1 The revenue budget construction has been a collaborative exercise undertaken over a number of months with the engagement of: budget holders; finance staff; SPA staff; Members and the Scottish Government. 3.2 The cost of the current service model has been developed based on the following budgeting assumptions: payment of pay progression (increments); payment of a 1% pay award for Officers and Staff from 1 September 2016; budgeting for 17,234 Police Officers; commitment to no compulsory redundancies. 3.3 Work to construct the cost of the current service has been undertaken to review all budget assumptions and budget scenario planning workshops have been undertaken throughout the service to identify savings options. 3.4 There is a financial risk if any assumption proves to be inaccurate which must be monitored. 3.5 The Authority will exercise appropriate governance and scrutiny over budgetary management through established mechanisms. The risk attached to the delivery of all efficiency options will be continuously reviewed from 1 April 2016 onwards. 3.6 The Authority has developed a long term financial strategy which will outline measures to ensure that policing is financially sustainable over the medium and longer term. 4. Capital Budget 4.1 The Scottish Government funding for 2016/17 includes capital funding of 16.2m. The Authority potentially has at its disposal further anticipated resources of 5.8m from the sale of assets. 3

4 4.2 A separate report has been prepared in respect of the Capital Budget proposals and is subject to separate consideration. 5. FINANCIAL IMPLICATIONS 5.1 Whilst significant efficiencies have already been included within the 2016/17 budget there remains an ongoing financial challenge which must be met. The development of a long term financial strategy assists with identifying and addressing such challenges. 6. PERSONNEL IMPLICATIONS 6.1 Full consultation will be undertaken in connection with any personnel issues 7. LEGAL IMPLICATIONS 7.1 Full consultation will be undertaken in connection with any legal issues 8. REPUTATIONAL IMPLICATIONS 8.1 Full consultation will be undertaken in connection with any reputational issues 9. SOCIAL IMPLICATIONS 9.1 Full consultation will be undertaken in connection with any social issues 10 EQUALITIES IMPLICATIONS 10.1 Full consultation will be undertaken in connection with any equalities issues RECOMMENDATIONS Members are requested to: (a) (b) (c) (d) note the total budget allocation of 1,075.0m provided by the Scottish Government in 2016/17 of which 1,003.4 is revenue funding; note the capital funding of 16.2m provided by the Scottish Government in 2016/17; note the availability of a Police Change Budget of up to 53.8m held by Scottish Government of which up to 50.2m is available to the Authority; Approve the revenue budget allocation of 972.9m to the Chief Constable for 2016/17 4

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