Agenda item

Purpose of the report: each year, as part of the budget setting process, a Medium Term Financial Forecast (MTFF) is prepared to assist with demonstrating whether the Force is financially sustainable in the medium term.

Witnesses:

Lisa Townsend, Police and Crime Commissioner

Kelvin Menon, Chief Financial Officer, Office of the Police and Crime Commissioner

Key points raised during the discussion:

1. A member noted that according to the Medium-Term Financial Forecast (MTFF) paper £3M of the £6M savings required for 2024/25 had been identified and asked where these savings would come from and how they would affect the Force and its capabilities. The Commissioner explained that of the £3m only £250000 had so far been delivered. The rest would flow from a review of contact, fleet and back-office services as well as a longer-term review of Custody. The ambition was to ensure that savings and efficiencies did not impact Force capabilities or the level of service the public received. It may be necessary to use reserves to cover the gap whilst these reviews were taking place. The Commissioner highlighted the importance of the reviews and assured the panel that these were discussed regularly with the Chief Constable who was equally focused on delivering value for money without detriment to the service to residents.  On the possible use of reserves a member asked if there would be a plan to rebuild the reserves if they had to be used.  The Chief Finance Officer explained that the priority was to address the savings needed, and that the reserves provided welcome contingency for this, but that it was intended that reserves would be rebuilt when the finances allowed.

2. A member questioned what assumptions had been made about the level of precept increase required for 2024/25 and over the remaining MTFF period. The Commissioner responded that a decision on the precept would be made at an appropriate time after consultation with the public and the Force. For the medium-term forecast it been assumed that the precept would increase by £10 for 24/25 and rise by 2% after that.  Each additional pound raised £0.5m for the Force. The CFO explained his view that from a financial standpoint the level of precept should be maximised in order to maintain services.  Precept changes were cumulative meaning that an increase not taken in a particular year could not be recovered in future years resulting in a loss of income in every subsequent year going forward. The PCC would have other considerations as well as finance to weigh up in coming to her final precept decision. A member endorsed the comments of the CFO and urged the Commissioner to follow the advice of her Chief Finance officer to request the maximum increase and not to be over cautious. His view was that past precept increases for policing had not caused an outcry in the County and that improved and continued policing services was the priority for Surrey residents. The Commissioner highlighted the importance of the precept consultation with the public in making her decision. Another member reminded the panel that Surrey residents already pay the highest level of police council tax in England.

3. A member asked if the Commissioner was optimistic that lobbying would achieve a change in the Police funding formula which could benefit Surrey. Unless the formula changed Surrey would need to make increasingly high calls on residents through their council tax bills. The Commissioner explained that all PCCs were making representations and had different concerns regarding the review of the formula. However, it was unlikely that a change would occur any time soon. Both the CFO and PCC were pushing hard through various channels.  They were not optimistic that Surrey would do better under a change of Government either. The Chairman highlighted the panel’s past support to the Commissioner on this issue and the letter sent to the Home Office requesting redistribution of the funding.

4. The PCC was asked where Police staff costs could be reduced and what the impact would be on officers. It seemed insanity to boast of smashing recruitment and uplift targets whilst simultaneously proposing savings through headcount reduction.  The PCC explained that officers’ numbers were protected under the Uplift programme. However, with over 80% of costs relating to staffing, Police staff costs were an obvious place for savings to be found. Whilst the focus was on finding efficiencies and service improvements it might be necessary to continue to carry vacancies forward in some staff areas. The CFO again highlighted the work underway to find savings through fleet rationalisation, changes to IT and custody services.  A member asked for a guarantee that officers would not be used to take on the responsibilities of police staff. The PCC replied that this was an operational matter for the Chief Constable. The decision to move a couple of officers into the force contact centre was highlighted and had proved to be beneficial.

5.  The report highlighted the risks associated with rising interest rates and suggested some Capital projects might have to be modified or deferred.  A member asked which Capital projects were most at risk and what the impact of delaying these projects might be in terms of Force efficiency and effectiveness. The PCC explained that any impact would be on the phasing of projects such as IT upgrades, Net Zero and the new HQ building. The projects themselves were not at risk.

6. The PCC was asked what efforts have been made to change ways of working to reduce the impact of staff reductions. Was there any further scope for efficiencies through shared services? The PCC responded that new technology made a big impact on reducing administrative demands and saving time. Surrey and Sussex had already achieved savings through collaboration and may consider further collaborative opportunities where there was potential to provide a better service for the same cost or the same service for a reduced cost.

7. The impact of the closure of borough and district council offices was raised. The PCC explained that his was kept under review. Positive relationships existed between the Surrey Police estates team and officers in each of the Districts and Boroughs. The Commissioner thought there might be further opportunities to work more closely with Districts and Boroughs and to use shared services. The benefit of having the Police sited with council services was clear and could provide value for money for the public. A member commented on the situation in Woking where there was a risk of Woking council offices being closed with a potential knock-on impact on the borough commander and staff. The member asked for the Commissioner’s assurance that Woking was included in any conversations with the force. The Commissioner provided assurance that Surrey Police Estates Office were in contact with Woking Council officers to ensure any changes had minimal impact on local policing and the local policing team.

8. A member asked if there was a risk that Surrey Police might need to consider issuing a section 114 notice.  The Chief Finance Officer explained that the National Police Chiefs Council had undertaken a survey on financial sustainability for policing which concluded that nationally there was a £3billion gap for the sector. In Surrey there was a gap of £15.6M against a £300M budget.  Taken against the wider £3billion context this was not a bad position.  Moreover, Surrey had reserves which could be as a last resort and the decision could also be taken not to fill vacancies. In conclusion the risk to Surrey of having to issue a section 114 was currently assessed as extremely low. This was not the case in other forces where bigger savings were required or there was a larger capital budget.

9. A member asked if there was a Medium-Term Financial Strategy covering the next 5 years, rather than just a budgetary approach as outlined in the MTFF paper. The CFO suggested that the assumptions underpinning the medium-term financial plan provided the strategic approach. The Chief Constable was developing a strategy to capture the change needed to deliver the savings required. This would look at custody, provision of vehicles, usage of assets and changes to IT. As to whether a single strategy document existed, the CFO said there was a strategy to attempt to deliver the savings but that this was not contained in one document.

10. A Member asked about para 9-12 of the report and whether the welcome pay increase which had been awarded to officers had been covered by the government Grant. The CFO had provided a response to this question in writing ahead of the session and it was agreed this should be added to the Minutes. A member noted that the recent pay increase for 2023/4 was covered by the Grant but that subsequent increases were not. The CFO explained that Surrey had the lowest proportion of the formula grant, and these additional grants were shared out using the same proportions. Any steps that could be taken by the Panel to lobby funding formula change on the OPCC’s behalf would be more than welcome.

RESOLVED: The Panel noted the report.