Agenda item

This report sets out the financial performance of the Surrey Police Group (i.e., OPCC and Chief Constable combined) as at the 31 August 2022 with a forecast to the 31 March 2022.

Witness:

Kelvin Menon, Chief Finance Officer (Office of the Police and Crime Commissioner)

Key points raised in the discussion:

1.    The Chief Finance Officer (CFO) clarified typographical errors in the report, explaining that there was an underspend of £2.2 million at the end of August which was largely related to staffing. There were a large number of vacancies with police staff and the timing of recruitment of uplift police officers. The Force were unable to attract candidates in specialist areas, such as IT, due to being unable to compete with private sector salaries. A number of capital schemes had been delayed, such as IT schemes, which contributed to the projected underspend. In the recent budget announcement the Government confirmed that the spending review, which was announced in 2021, would be honoured, however, any additional funding would go to fund police officer uplift. No new funding was announced to cover inflation and the referendum limit of £10 for the precept was not increased. Surrey had approximately £20 million of reserves, and it was likely to remain around that figure by the end of 22/23 financial year. The level of reserves was towards the lower end when compared with other Forces.

2.    A Panel Member enquired if the value of the Leatherhead site was included in the capital figures. The CFO explained that the table in paragraph five showed the capital expenditure for the year and the Leatherhead site was purchased a few years ago and so was on the balance sheet as an asset. The Panel Member asked about the increase in expected funding gap for 2023/4 compared to 2022/23 and 2024/25. The CFO explained that it included an assessment of inflation and wage increases. It had been assumed that inflation would fall back and a wage cap would be established in later years although this may have to be revised.

3.    A Panel Member questioned whether the CFO was comfortable with the level of reserves. The CFO explained that he would like to have more reserves, however, this was not possible in the current financial envelope as there was not enough surplus resources. There was a balance to be struck between a having a good level of reserves whilst not needing to making cuts to services to maintain or increase them.

4.    A Panel Member asked whether the Force was likely to be in the same situation next year in terms of struggling to recruit staff and therefore have an underspend. The CFO explained that the savings at the moment through vacancies were unplanned rather than being part of a strategic plan these savings were not sufficient to cover the funding gap and the Force would need to reduce staff numbers with a targeted approach. The Panel Member queried whether the Panel could expect to see a detailed analysis of staffing reductions in the budget paper. The CFO shared that it was a legal requirement to present a balanced budget and any reductions in staff would be included in the report.

5.    In response to a question on expected borrowing for the redevelopment of Mount Browne Police Headquarters, the CFO explained that the original financial assessment included £40 million from capital receipts and £35 million from borrowing. The financial model was being reviewed. The focus would remain on affordability and this could mean a smaller scheme and hence less borrowing or a different phasing.

6.    A Panel Member asked how many more recruitments were

needed to reach the police officer uplift target for the current year and how many reclaims were expected. The CFO would find out the number following the meeting but assured the Panel that the Force tracked the uplift recruitment carefully. As a result no grant reclaims were anticipated although these could be quite substantial. Missing the target by 1 officer would result in the loss of £175k. Missing the target by 25% of the requirement (26 Officers) would see all of the funding (£1.75m) forfeited.

7.    A Panel Member questioned whether the borrowing in respect of the Leatherhead site would be repaid or put into reserves. The CFO responded that the Public Works Loan Board (PWLB) loan was entered into for 25 years; it would be retained as part of the Mount Browne funding. A Panel Member asked whether the Force was subject to the same restrictions as Local Authorities in respect of borrowing for investment and had led to some Government enquiries. The CFO explained that PWLB rules were recently changed to make it more difficult to borrow solely for commercial investment. However, the borrowing for Mount Brown would be for operational investment and so would not be caught by this restriction. 

Actions/requests for further information:

1.    R22/22 – The Chief Finance Officer to provide the number of recruitments required for the end of the financial year to meet the uplift target.

2.    R23/22 – The Chief Finance Officer to provide the original budget for the redevelopment for Mount Browne and the amount spent so far.

RESOLVED:

The Panel noted the report.