Agenda item

Purpose of the report: This report sets out the financial performance of the Surrey Police Group (i.e., OPCC and Chief Constable combined) as at the 30^{th of} September 2024 with a forecast to the 31^{st of} March 2025.

Witnesses:

Kelvin Menon, Chief Finance Officer (OPCC)

Key point raised during the discussion:

1. The Chief Finance Officer outlined that the report set out Surrey Police Group’s finances as of 30^th September 2024 and clarified typographical errors in paragraph one of the report (in the ‘2024/25 Forecast Outturn’ column which should state £0.8milion (m), not £1.3m) and the first sentence of paragraph 2 (which should refer to £0.2m rather than £0.8m).

2. A member raised that increases in areas such as Wages and Salaries, Premises and Capital Financing and Reserve was offset this year, largely by increased Grants and Income, the forecast for which rose by £3.3m. The member asked if this was likely to be repeated in future years, and what it would mean for the Surrey Police Group’s finances if not. The Chief Finance Officer noted it was difficult to predict future funding, that the Surrey Police Group had some of the 2.5% pay increase funded by the government. The overspend in Wages and Salaries was mainly due to overtime, they added, and a group was in place to help manage the cost of this, while additional staff were placed in areas such as the Contact Centre. They also noted that disorder earlier in the year had generated a mutual aid income, and, if there was no additional income, Surrey Police Group would need to find more savings or use reserves.

3. The Vice-Chairman outlined that last year’s report projected a positive £5.5m variance in Wages and Salaries, and a positive Grants and Income variance of £6.6m, double what it was for mid-year 2024/25. The Vice-Chairman asked what the reasons were for these changes. The Chief Finance Officer clarified that last year’s report was for the whole year, up to 31 March 2022. The variance in Wages and Salaries was due to the timing of uplift, where it was possible to receive all funding upfront, but recruitment was phased over the year. This meant there could be an underspend against the grant. This was not possible in the current year as uplift was no longer linked to recruitment, they clarified, noting that, if Surrey Police Group did better on income, it was expected to go towards the capital programme.

4. The Vice-Chairman asked if the Chief Finance Officer was expecting that the year-end results were going to reflect a better picture than current projections. The Chief Finance Officer hoped it would but could not give an exact prediction.

5. A member asked how the overspend in the Premises budget would be impacted by planned works to the Mount Browne Headquarters (HQ). The Chief Finance Officer explained that it should not affect Mount Browne and clarified the overspend related to the cost in moving the Force to Wray Park. Mount Browne’s costs are factored into the Medium-Term Financial Strategy, they clarified.

6. Regarding paragraph 6 of the report, a member asked why only £0.3m of the £21m estates budget was spent so far, and if this affected the Estates budget forecast for the end of 2024/25. The Chief Finance Officer explained that most of the money which had not been spent related to Mount Browne. There were some delays to the works planned for Mount Browne, such as in planning and finalising the contract with the developers, they added, before ensuring members that Surrey Police Group wanted to ensure the specification for Mount Browne was correct for operational use. They added that some of the forecasted spend was expected to roll into next year and potentially the year after next.

7. The Chairman asked for clarification regarding the cost to Surrey Police Group finances from the move from Reigate Station due to the discovery of reinforced autoclaved aerated concrete (RAAC). The Chief Finance Officer stated it was around £700,000, which was the cost of moving, fitting out, making Reigate Station Safe, and the rent and service charges of using Wray Park.

8. A member asked why the transfers required in the Financing and Reserves area were unbudgeted, and how this could be prevented in future years. The Chief Finance Officer outlined that Surrey Police Group would make an estimate for transfers to reserves - for areas such as insurance and ill-health, professional advisors would assess what the level of claims was likely to be, and a transfer was made for this - transfers were also made for in-year capital expenditure. If more money was needed in various change initiatives, this would come from the general budget, they added.

9. A member asked if officers could explain the figure of 2,222 for ‘average of employees FTE’ (full-time equivalent) on page 3 of the report. The member referenced that this appeared to be below the uplift baseline and previous planned figures. The Chief Finance Officer shared that there had been difficulty ascertaining the exact correct figure, and suspected that this was because the figures in the report, supplied by the OPCC’s Finance department, referred to a number of full-time equivalents (FTEs), while uplift is measured by headcount. They were assured by the Force that they would achieve the required uplift total at year-end, but noted however that this was becoming more challenging.

10. A member asked if there had been a change in approach to financing and reserves, referring to the outcome for 2022/23, which conveyed an identified surplus which was then allocated to reserves. The member noted that this now seemed to be happening mid-year. The Chief Finance Officer explained there was not necessarily a change in approach. If Surrey Police Group had a recalculation, such as the insurance reserve in the year, they would try to transfer it. Additionally, If Surrey Police Group had an underspend, they would try to put this into capital. They clarified that, as Surrey Police Group does not receive capital funding, they would prefer to fund from revenue or reserves, rather than borrowing.

11. The Vice-Chairman raised that the chart on page 5 of the report showed £16.4m of as yet unidentified savings were required by the close of 2028/29. The Vice-Chairman asked what the Commissioner felt would be the most likely source of those savings, and what frequency of requested increase to the precept was likely. The Vice-Chairman also asked what pre-referendum precept had been used to calculate those figures. The Chief Finance Officer confirmed that the 2% precept was used to calculate the figures and that the frequency of precept increases would be annual. 80% of Surrey Police Group’s costs arise from staffing, and the Chief Constable’s new operating model and vision focusses on driving efficiencies and savings by working better, rather than impacting frontline services. Therefore, they stated, fewer people would be required to do the same amount of work, which meant savings would result from reductions in headcount, as well as from changes in areas like procurement and joint-working.

12. A member asked for an update on the nature of the audit disclaimer found in paragraph 10 of the report, and how much confidence the Panel could have in the 2022/23 accounts. The Chief Finance Officer stated the Panel could have confidence in the accounts. The last set of accounts the Surrey Police Group had audited were the 2021/22 accounts, and auditors were in the process of auditing the 2023/24 account, they added, before clarifying that the auditors did not have time to complete the 2022/23 accounts, and thus issued a disclaimer, in accordance with a recent change in statute. They noted that they had recently been informed that there is presently a backlog of 580 sets of such accounts across the country that are overdue their audits.

The Vice-Charman raised that on Tuesday 19 November, the Home Secretary made a range of announcements about the future of British policing, including the creation of a new Police Performance Unit, the Neighbourhood Policing Guarantee and a National Centre of Policing. The Vice-Chairman asked if the PCC had been made aware of any funding arrangements associated with the new measures. The PCC clarified that she had not yet been told how forces will be expected to fund the Neighbourhood Policing Guarantee’s 13,000 extra neighbourhood officers, what Surrey Police Force’s commitment would be, and how many officers the Force was supposed to receive. The Home Secretary had stated in a speech at a recent joint APCC and NPCC conference that an extra £500m would be provided for policing, £260m of which would go to police forces, though it was not known if this would fund this year’s or next year’s pay increase. She stated that she had written to the Home Secretary about the National Insurance costs in Surrey in relation to police salary.