Agenda item

Members to be provided with an update on the Police and Crime Commissioners review of the Medium Term Financial Plan.

Members of the Panel received a report updating on the Medium Term Financial Plan (MTFP) and advising on the current context, assumptions, and underlying risks in relation to the MTFP.

The Police and Crime Commissioner Rupert Matthews (PCC) introduced the report and reminded Members of the statement he made on 24 June 2021 in which he set out his concerns about the long term sustainability of the Police budget and the forecast large deficit for financial year 2024/25.

The PCC explained that where his predecessor was prepared to take a legitimate risk in terms of forecasting, this PCC had a more cautious approach and was not prepared to take those same risks. The PCC informed that there were different indications from the government now that might materially affect the medium term forecast and he was therefore bringing matters to the panels attention as it may be necessary to adjust some targets at a later point.

The Chief Finance Officer Paul Dawkins presented the report, explaining the position of the MTFP as it was at the panel’s meeting on 27^th January 2021 and set out the key financial risks identified in the budget report presented at that meeting, assuring members that those risks remained unchanged.

The Chief Finance Officer also set out the key assumptions that outlined the financial challenges medium term as presented at the meeting on 27^th January 2021.

Members of the Panel noted the budget report had explained the spending planned for 2021-22, the former PCC’s commitment to increase overall police officer numbers and the position on how those additional officers would be funded in terms of the national uplift programme and the local precept.

The Chief Finance Officer then provided details of the Budget Equalisation Reserve (BER) and the General Reserve and how those were being utilised.

It was noted there was no minimum level of reserve recommended or legislated for but there was a general accepted level that an organisations general reserve level should not fall below a 2% threshold. It was at the discretion of the PCC and the s151 Finance Officer as to how that was set out. Auditors had been consulted who confirmed there was no minimum reserve level and the level was set around risk, perception of risk and management of that risk.

Assurance was given that the former PCC had appropriately used those reserves during his tenure and abided by the rules. The Panel were reminded that at beginning of 2019 the government minister had written to the former PCC about the level of reserves being maintained on balance sheets and challenged how those would be used; part of this MTFP was also to show how reserves would be put to use and part of the decision of the former PCC was to put reserves towards growing the police establishment and that was effectively the position arrived at in the January meeting.

The Chief Finance Officer moved onto outline the position regarding efficiency savings and the effect of efficiency programmes in recent years. The panel noted that the process of achieving the £0.5m efficiency savings for this financial year had been very much started and achieved before the arrival of the new PCC.

The position following the January meeting was then set out including the significant changes which impacted upon the MTFP and how matters would be taken forward.

Members noted it was a priority area of work of the PCC to develop a detailed strategy and efficiency plan for the establishment to mitigate risks and it was recognised that there may be pressures moving forward. 

The Chief Finance Officer assured Members that it was not unusual to recognise the challenges faced across the public sector such as austerity and public funding and it was not unusual to see gaps in future years. These details were all in the public domain and it could be seen through the work of the panel and auditors that Leicester, Leicestershire and Rutland were one of the highest performing OPCC when it came to managing risk. The inspectorate also noted and spoke highly of that too.

The PCC informed the panel that the Home Office would be sending officers to assist, review books and the financial plan although they had not yet been advised of their terms of reference but that would be reported to the panel in due course.

Members welcomed the overall holistic overview given although there was some disappointment in the suggestion the report to the panel in January 2021 did not consider all of the financial risks and implications.

The ensuing discussion included the following comments:

The previous PCC challenged the Chief Constable to achieve £0.5m efficiency savings and it was suggested those stated in the MTFP were perhaps “accidental savings” arising from the Covid 19 situation which had impacted in several ways. There was an expectation to see more pro-active efficiency savings not accidental ones and assurance was sought as to what level those would be absolutely embedded for the next 3-5 years.

In response it was acknowledged that Covid 19 had impacted and there were different ways of working as a result, the savings achieved were set out in the report and those funds had been removed from the budget so the Force would have to manage those in future and avoid creep back.

In terms of staff working from home, it was queried how their working environments would be compensated and whether there were funds for people to have appropriate measures such as Display Screen Equipment (DSE). It was advised that the office was in the process of phasing returns to work and for those working from home (albeit in a part time way), risk assessments were being undertaken to identify if equipment was needed and to provide that.

Concern was expressed at the PCC’s announcement that the Home Office had been invited to undertake a review and that such a significant decision may have been taken without the Chief Constables involvement. It was queried whether that was initiated by the PCC or Home Office and whether it was with the knowledge of the Chief Constable.

The PCC confirmed the review was at his suggestion following conversation with the Home Office between the PCC, Chief Finance Officer and Deputy Chief Constable. The Chief Constable had been made aware of this recently. The PCC gave assurance that the terms of reference of the Home Office review and the results of their review would in due course be reported to the Panel. The PCC also confirmed that there was no suggestion of financial mismanagement or activity at any time.

Assurance was sought in terms of police numbers and following through on the intention of the previous PCC to recruit additional officers. The PCC advised that he welcomed the current plans to increase police officers, however the general effectiveness of policing was not solely about police officer numbers but also the training they have and other staff e.g. those involved in the Violence Reduction Network.

The PCC made the point that the business of setting a budget was for one year only and that had been correctly done, however the MTFP was a longer forecast and that was where his view diverged from the previous incumbent. The PCC explained he was keen to avoid an approach where officers were recruited then in years to come to address a funding gap their number had to be cut. The PCC commented that it was preferable to recruit police numbers that they could be certain of retaining into the future.

It was suggested there was clearly a different approach to the previous PCC and enquired whether other PCC’s were more inclined to this PCC’s cautious approach. The PCC acknowledged his approach was more prudent and as to other PCC’s, he indicated they shared concerns that revenue was consistently propped up by reserves which was not sustainable into the future.

In terms of reserve levels, it was noted that this varied across forces and was impacted by local spending decisions however at this moment in time there was an adequate level of reserves in LLR.

It was commented that partnership working was fundamental, and the Home Office visit should be seen in a positive light as a critical friend to provide an objective view.

Despite earlier comments there remained some concern that there may be an intention to reduce police numbers as well as concern about senior relationships and communication. The PCC responded that different people would make different assumptions and draw different conclusions, however no final decisions had been made about anything and emphasised his keenness was to address risk. The PCC commended the Chief Constable, assuring that he had great faith in him, and looked forward to working with him during his term of office.

Drawing discussion to an end the Chair commented that although the panel was here to hold the PCC to account, assumptions were being made that might not be correct and it may be helpful for the Home Office to review the finances and if the review found a better way of doing it that was a positive. The Chair expressed her support for the PCC, the Chief Constable and the teams around them.

The Chair thanked the Chief Finance Officer for a thorough run through of the report.

RESOLVED:

1.    That the contents of the report be noted,

2.    That the Terms of Reference of the Home Office review and the outcomes of that review be reported to a future meeting.