Police Scotland forecast to produce £11.5 million overspend

Revenue costs, which cover day-to-day expenses such as staff costs, are expected to run £21 million over budget by the end of 2016/17.

This would be even higher than the £18 million revenue overspend in 2015/16.

The force said it will mitigate this with bigger-than-expected cuts to its capital expenditure, fixed assets such as buildings which provide a one-off budget boost when disposed of.

READ MORE: U-turn as Police Scotland chief constable Phil Gormley's financial interests are published

The capital budget is expected to be £9.6 million under-budget, about the same as the final capital underspend in 2015/16.

First Minister Nicola Sturgeon announced an £18 million uplift in the police budget for 2016/17 to combat terrorism but this does not appear to have stemmed the force's cashflow problems.

James Gray, Police Scotland's interim chief financial officer, said: "The main reasons for the forecast revenue overspend are a combination of overspends against budget on both police officer and police staff costs, which is now being managed down, as well as an overspend on non-pay costs, as a result of not being able to realise the level of savings that had been targeted from these budgets.

READ MORE: U-turn as Police Scotland chief constable Phil Gormley's financial interests are published

"A significant exercise has been undertaken by Police Scotland to analyse all non-pay budgets on a line-by-line basis to identify where quick savings could be delivered in-year.

"This has resulted in £5 million of savings being identified, which has been factored in to the forecast outturn.

"However, these are not sufficient to meet the budget requirement, contributing towards the overall forecast overspend.

"At present, the organisation is facing an overspend against budget for the year.

"Further work is now required to manage this forecast downwards over the coming months to bring expenditure back in to line with the budget."

READ MORE: U-turn as Police Scotland chief constable Phil Gormley's financial interests are published

The SPA's finance and investment committee also approved the sale of a 100-year-old police office in Edinburgh's Old Town.

The building, near the National Museum of Scotland on Chambers Street, has had no operational function for five years and costs £100,000 a year to run.

It four-storey building is currently occupied by three police officers with a small number of staff and is used as an equipment store.

The sale of the £3.75 million former Strathclyde Police HQ on Pitt Street in Glasgow is also expected to be finalised by May 2017.

The committee asked for the sale to be accelerated if possible at a previous meeting in May.

It was declared surplus to requirements in November 2014 and costs about £1 million a year to run.

READ MORE: U-turn as Police Scotland chief constable Phil Gormley's financial interests are published

An SPA spokesman said: "The financial monitoring reports considered by the SPA today show that further work is required to ensure that policing spends within its means this year.

"Over the three months of the financial year, more money has been spent by Police Scotland on both police officers and staff than was budgeted for.

"The SPA today sought assurance from Police Scotland that action will be taken by management in Police Scotland to bring this into line, and reduce the impact on the overall budget through the remainder of the year."

Calum Steele, general secretary of the Scottish Police Federation, said: "It is not clear how much confidence is allied to the budget deficit but it is obvious to anyone who cares to look that what we are experiencing so far is but the tip of a very large iceberg.

"Whilst it is easy to concentrate on the finances, we have to look beyond the numbers and see what that means in reality; in our communities and for the victims of crime.

"The service is already enduring death by a thousand cuts and it is clear that the quality of police service being delivered to Scotland's communities is suffering as a consequence."

Labour justice spokeswoman Claire Baker said: "Before the election, the SNP promised to protect the police budget, today the accounts show that to be nothing more than a pre-election soundbite.

"Police Scotland aren't able to invest in capital and infrastructure because they aren't getting the resources they need from the SNP government to pay for staff and officers.

"No wonder officer levels are at their lowest since 2010 whilst civilian staff posts have been slashed."

Liberal Democrat justice spokesman Liam McArthur said: "These papers suggest that officers and staff could soon be in the firing line unless the Scottish Government admits its savings targets are impossible.

"Barely a day goes by without reports of the harm caused by the SNP's centralisation of the police, from officers paying for cleaning products out of their own pocket to the loss of valuable services such as local control-rooms. The national force is being squeezed until the pips squeak.

"It is time for SNP ministers to plug the black hole in the police's budget before officers, staff and communities pay an even heavier price for their disastrous reforms."

Police Scotland deputy chief constable Iain Livingstone said the budget statement "highlights the challenge that Police Scotland faces to make savings".

"We have been scrutinising costs which has already resulted in the identification of significant savings; this work continues in conjunction with the SPA," he said.

"Police Scotland is committed to delivering a local policing service to our communities.

"All future decisions will continue to put this requirement at the forefront whilst ensuring that specialist services are maintained to address the changing demands on a modern police service."

A Scottish Government spokeswoman said: "The Scottish Government is committed to protecting the police revenue budget in real terms for the entirety of this Parliament, delivering an additional £100 million of investment over the next five years, in addition to £55 million of reform funding in 2016-17.

"As set out in the 2016-17 Budget, we are retaining police officer numbers at 1,000 higher than in 2007 while working with the SPA to consider the implications of changing demands on Scottish policing.

"The SPA remains the only police authority in the UK unable to recover VAT which is liable to an annual cost of around £25 million.

"HM Treasury introduced a new section into the VAT Act to ensure central government-funded academy schools in England could recover VAT.

"We will continue to press the UKG to bring the VAT status of Scottish Police and Fire services into line with all other British and Northern Irish forces."