Agenda item

Purpose of the report:  To set out the unaudited financial performance of the Surrey Police Group (i.e. OPCC and Chief Constable combined) as at the year-end 31 March 2024. It compares the Group financial results with the budgets approved by the PCC in February 2023 for the financial year 2023/24.

Witnesses:

Lisa Townsend, Police and Crime Commissioner (PCC)

Kelvin Menon, Chief Finance Officer (OPCC)

Key points raised during the discussion:

1. The Chairman outlined the purpose of the report. The Chief Finance Office provided a brief introduction, noting that the audit was currently being conducted and was on track to be completed by the statutory deadline in February.

2. A member asked how the underspends in ‘Supplies and Services’ and ‘Grants and Income’ (of £1.8m and £5.8m, respectively) were achieved in 2023/24, and if it was anticipated that these would be repeated for 2024/25. The Chief Finance Officer explained that the £1.8 m was an effort to drive savings earlier in the period for use in 2024/25. This meant several centrally held budgets for things like estates were not all used. The £5.8m was made up by things such as additional income for the use of custody cells, due to prison overcrowding. Grants were also awarded in-year for Safer Streets. Although there was an underspend in ‘Supplies and Services’, there would be an overspend elsewhere in the budget, they added, noting that Surrey Police Group had income from mutual aid and counterterrorism, and received a £1.6m refund of business rates which would go towards the Group’s estates programme. He noted that some of these would be repeated in 2024/25, such as additional income for custody cells and mutual aid due to civil disturbance.

3. A member referred to the £0.2m that was underspent by Surrey Police Group and the substantial increase in total reserves which had increased from £30.8m in 2023 to £37.2m in 2024. The member queried if there was a significant revenue surplus, but it had been put into reserves. The Chief Finance Officer confirmed there was a revenue surplus and part of this increase was the £1.6m rates refund. During the year, Surrey Police Group had sold several assets, and this money was put into reserves. He stated that some programmes had slipped in the capital programme, and this money also went into reserves, and that more information could be retrieved from the Force to provide more detail to the Panel.

4. Regarding the additional funding that was secured from the Home Office for recruiting above the uplift target, a member asked if this was financially prudent, given this increase did not cover the future salaries of officers as they were promoted up the pay scale. The Chief Finance Officer explained that the government offered the incentive to recruit above uplift, but Surrey Police Group was not monitored on this target as part of the base uplift figure. Therefore, if the funding was not renewed, Surrey Police Group was no longer obliged to keep to those additional officer numbers and so the overall total could fall back to the uplift total through natural wastage. This meant that Surrey Police Group could recruit ahead of time and get paid an incentive to do so. It was felt this was the right thing to do at the time, but it would need reviewing depending on what the uplift conditions were in future years.

5. The Chairman raised that overtime costs were overspent by £2.7m in 2023/24, but not all of this was due to contact staff vacancies, that were now filled. The Chairman asked how the costs from the other sources, namely Neighbourhood Policing, Specialist Crime and Custody, would be mitigated in future years. The Chief Finance Officer explained that an overtime working group was established which reviewed areas such as shift patterns and handovers. There would always be an element of overtime to cover, for example, special operations, bank holidays and sickness though in the past, there may not have been enough senior officer oversight of where overtime was spent. Therefore, the working group was reviewing working practices to try to minimise the amount of unplanned overtime. It was noted that overtime impacted on officer’s wellbeing as well as cost.

6. A member referred to the June 2024 internal audit progress report, which highlighted limited assurance reports for financial controls in seven different areas. The member noted the written response received and further raised that it would be helpful to understand what the concerns raised by internal audit were. The Chief Finance Officer explained that auditors not only reviewed financial controls but also operational controls and systems. The Chief Finance Officers outlined the different areas highlighted in the report, and what the recommendations related to, including the leavers process and if the correct procedure was being followed. He noted that several vehicle recovery recommendations related to inadequate storage of vehicles seized by police, and that one recommendation was for the armouries related to training records that required updating. Recommendations around business continuity related to several outstanding plans that require testing, he said, while recommendations around redundancy related to instances where redundancy policy had not been precisely followed. He added that the recommendations demonstrated that the auditors had done a thorough job and allowed for actions to improve the areas highlighted. The Joint Audit Committee reviewed the full report, together with the PCC and the Chief Constable, and so managers were then held to account.

7. The Chairman referred to the £1.9m more than what was budgeted for in grants received in 2024, as demonstrated on page 5 of the report. The Chairman asked if this was likely to be repeated in future years, and what would happen if similar amounts were not acquired for future budgets. The Chief Finance Officer explained that the grants were applied for or simply awarded by government. For example, this year grants were awarded for ASB and Safer Streets. Surrey Police Group would like these grants to be repeated and increased in the future. However, if the grants stopped, initiatives would need to reduce or be stopped. Conversely if additional grants were awarded, it would enable the Police to support more initiatives which could include extra policing.

8. A member referred to paragraph 36 of the report, which stated “The Force has benefited financially from a tight labour market in that its inability to recruit Police Staff has enabled it to not only to have a larger vacancy margin than planned […] The Force cannot afford for all these posts to be filled […]”. The member raised that it was not just salary levels that determined retainment of staff, it was also based on whether the Force was a good employer. The member asked if the above passage from the report implied that the Force should not try too hard to retain and recruit staff, as financially it could not afford to fill all vacancies. The Chief Finance Officer outlined that from a purely financial viewpoint the greater the number of unfilled vacancies the more chance there was of balancing the budget. However, this has operational impacts and creates pressures on current staff. This was partly being addressed by putting in several restructures, changing working practices and shift patterns and investing in technology so that reductions in staff can be made permanent. He clarified that Surrey Police Group had to be smarter and more efficient with the resources currently available.

9. A member raised that in the past the Panel had received an update on the relative strength of the Force’s establishment in particular areas and asked if the latest figure could be provided.The OPCC agreed to provide this.

The Committee NOTED the report.

Actions/requests for further information:

• The Chief Finance Officer to provide more detail on the revenue reserves surplus of the force.

• OPCC to provide an update on the strength of the force’s establishment in particular areas e.g. PCSOs.