Agenda Item 10.2 Meeting Date Location COSLA Conference Centre, Edinburgh Title of Paper 2019/20 Budget Progress Report Presented By Chris Brown, Strategic Financial Planning & Budgeting Lead Recommendation to For Noting Members Appendix Attached No PURPOSE This paper provides Members with an update in relation to the development of the 2019/20 draft budget, which will be submitted to SPA Board Members for approval on 28 March 2019. Members are requested to consider and note the information contained within this 1
1 BACKGROUND 1.1 The SPA has a statutory duty to agree its annual budget for the coming financial year (2019/20) before the end of the current financial year (31 March 2019). 1.2 The budget strategy and the budget guidelines, as noted by the SPA Finance Committee on 7 September 2018, provide the control framework for the management of the budget setting process. These documents are informed by best practice and lessons learned from previous years as well as internal and external audit recommendations. 1.3 The Scottish Budget for 2019/20 was approved on Thursday 21 February 2019 and includes the following allocations for the SPA: 2019/20 2018/19 Movement Revenue GiA 1,095.1 1,064.8 30.3 Capital GiA 23.0 35.0 12.0 Revenue Reform 25.0 25.0 0 Capital Reform 4.6 4.6 0 1.4 Throughout the development of the the finance service has engaged with stakeholders across SPA Corporate, Police Scotland and Forensics Services to understand budget bids and the element to which funding was required for statutory, regulatory or mandatory compliance activities. 1.5 As a result of the work undertaken to date, a full proposed draft budget for 2019/20 has been developed and will be presented to the SPA Board for their approval on 28 March 2019. The detailed draft budget will be considered by SPA Resource Committee Members in private as the document is in draft at this stage. 2 FURTHER DETAIL ON THE REPORT TOPIC 2.1 Revenue 2.1.1 The proposed revenue budget requirement for 2019/20 is 1.1bn, 17.0m of which relates to the anticipated additional cost of Brexit. The revenue grant funding totals 1,095.1m resulting in a core operating deficit lower than the forecast deficit in 2018/19, but higher than previously indicated in the Three Year Financial Plan approved by the SPA Board in May 2018. 2
2.1.2 This deficit has increased in comparison to the Three Year Financial Plan due to additional pressures such as the Police Officer pay award and the European Working Time Directive. All measures possible will be taken to minimise this deficit throughout the year by seeking further recurring and non-recurring savings and additional income opportunities. 2.1.3 The costs of Brexit will be monitored separately throughout the year and will not form part of the core operating budget. 2.1.4 The 2019/20 budget sets out the spending plans for the SPA/PSoS incorporating Police Scotland, Forensics and SPA Corporate for the next financial year. 2.1.5 It is proposed that approximately 96.9% of the annual spending is undertaken by Police Scotland, with the remainder incurred by the Forensics Services (2.7%) and the SPA Corporate body (0.4%). 2.1.6 The proposed budget will include a number of challenges and areas of risk which will be detailed in the Draft 2019/20 Budget Report. 2.2 Capital 2.2.1 The capital budget proposals exercise commenced at the meeting of the Police Scotland Capital Investment Group (CIG) held on 19 December 2018. This resulted in an initial proposal which has since been further refined through the CIG, and through engagement with the SPA Chief Executive and the Director of Forensics Services. The proposals that have resulted from this activity will be presented to the and Board for consideration, comment and ultimately approval. 2.2.2 The capital planning exercise has been split into two components as follows: Business as Usual this capital planning exercise focuses on the relevant professional areas of Police Scotland (ICT, Fleet, Estates, Weaponry and Specialist Police Equipment), Forensics and SPA Corporate with reference to evidence based, prioritised asset replacement programmes. Transformational this exercise has focused on understanding the capital requirements to support key transformation projects across Police Scotland, Forensics and SPA Corporate, when funding will be required, and setting out the key benefits that this investment will deliver. 3
2.2.3 For both BAU and Transformational capital bids (see above), prioritisation was made of any bid required for any mandatory compliance activities. 2.3 Revenue reform 2.3.1 Members will already be aware that a priority for the revenue reform budget will be the funding of the year-one costs of the SPRM project, and this is reflected in the proposed budget. This is based on the principle that SPRM will deliver the reform necessary to rationalise staff contracts and address anomalies that existed across the legacy forces that were inherited by Police Scotland on its formation. 2.3.2 The allocation of the remainder of the revenue reform funding has been considered by the CIG, and through engagement with the SPA Chief Executive and the Director of Forensic Services. The proposed budget recommends prioritisation of mobile devices, core policing systems and the contact assessment model. 2.4 Three Year Financial Plan 2.4.1 Alongside the development of a proposed budget for 2019/20, a number of options have been worked up with regards to the medium term financial planning horizon. It is hoped that these will form the basis of a discussion between Scottish Government and the Scottish Police Authority on the issue of financial sustainability. 2.4.2 The Medium Term Financial Plan will be fully refreshed in the second half of 2019/20 once the detail of the Strategic Workforce Plan and other key strategies such as Estates are anticipated to have been published. 3 FINANCIAL IMPLICATIONS 3.1 This paper is not seeking funding. This paper provides an overview of the current position in relation to the 2019/20 budget setting process and the draft 2019/20 budget. 3.2 The 2019/20 budget will, when approved, direct the financial management of the SPA and will be the measure against which financial performance is monitored throughout the period. 4
4 PERSONNEL IMPLICATIONS 4.1 There are no personnel implications directly associated with this 4.2 There may be personnel implications in relation to the funding 5 LEGAL IMPLICATIONS 5.1 There are no direct legal implications associated with this 5.2 There may be legal implications in relation to the funding allocations approved in the final budget, these will be detailed alongside the proposed budget. 6 REPUTATIONAL IMPLICATIONS 6.1 There are no direct reputational implications associated with this 6.2 There may be reputational implications in relation to the funding 7 SOCIAL IMPLICATIONS 7.1 There are no social implications directly associated with this 7.2 There may be social implications in relation to the funding 8 COMMUNITY IMPACT 8.1 There are no community implications directly associated with this 8.2 There may be community implications in relation to the funding 9 EQUALITIES IMPLICATIONS 9.1 There are no direct equality implications associated with this 5
9.2 There may be equality implications in relation to the funding 10 ENVIRONMENT IMPLICATIONS 10.1 There are no environmental implications directly associated with this 10.2 There may be environmental implications in relation to the funding RECOMMENDATIONS Members are requested to consider and note the information contained within this 6