ACPO relocation/removal allowance

Report: 4
Date: 17 October 2002
By: Clerk

Summary

At the inquorate meeting of the Remuneration Sub-Committee in July, members considered a report on the relocation/removal allowance for officers from other forces transferring to the MPS (on promotion or level transfer) at ACPO rank. Members accepted, in principle, a number of the recommendations in the report. This report proposes operating rules for the allowance.

A. Recommendations

That Members agree:

1. to setting the allowance limit at £15,000; the extension of the allowance to include purchase of ‘second homes’; that the changes take effect from 2001/02; and that taxation remains the personal responsibility of the individual claimant;
2. the operating rules for the allowance set out in appendix 2;
3. that the allowance in respect of claims for ‘second homes’ be restricted to 75% of the allowance limit (relocation/removal allowance and incidental removals allowance);
4. the principle that officers should elect at the outset for re-imbursement for ‘full’ relocation or for a ‘second home’ and that claims should be submitted within 18 months of appointment.
5. that the views of the Chief Police Officers Staff Association (CPOSA) are sought on these proposals.

B. Supporting information

1. Members considered at the inquorate meeting on 29 July 2002 a report on relocation/removal allowance for officers transferring to the MPS on promotion or level transfer at ACPO rank (copy of report at Appendix 1).

2. Members recognised that the purpose of the allowance was to recruit and retain ACPO officers from other forces into the MPS. The following recommendations of the report were accepted, in principle:

• that the allowance limit be increased from £10,000 to £15,000;
• that the allowance includes the purchase of ‘second homes’;
• that these changes take effect from financial year 2001/02;
• that taxation (re-imbursement over £8,000) is to the personal account of the individual claimant.

3. The committee asked for proposals for operating rules. These were to ensure that:

• it was clear what officers could claim as re-imbursement under the allowance;
• clear rules existed for re-imbursement for the purchase of ‘second homes’;
• there were rules for recovery of amounts paid under the allowance should claimant’s resign, transfer or otherwise leave the MPS “prematurely”.

4. The proposed operating rules are at Appendix 2.

Second homes

5. Members accepted in principle that re-imbursement for the cost of the acquisition of a ‘second home’ should be included as there are a number of factors that deter officers from re-locating their main family home, including:

• children approaching important stages in their education.
• the conditions prevailing in the London housing market making it financially difficult to acquire an equivalent family home in a suitable location in London.

6. Members indicated that rules for re-imbursement for the purchase of a ‘second home’ should uphold the principle that the purpose of re-imbursement in these circumstance is so the officer acquires a home base in London convenient for meeting operational requirements, and for no other purpose. 

7. The proposed operating rules (see Appendix 2) therefore state that re-imbursement for the acquisition of a ‘second home’ applies when:

• the officer’s existing main family home is more than 150 miles from central London (and therefore not convenient for daily commuting);
• the officer’s existing home continues to be occupied by the officer’s immediate family and is not sub let;
• the officer acquires the ‘second home’ property within 18 months of the date of appointment in the MPS; and
• the ‘second home’ is located within the boundary of Greater London (i.e. the London Boroughs)

Controls, financial etc

8. The proposed operating rules include that claims are must be made within 18 months of appointment.

9. An allowance limit of £15,000 will act as a financial control on this expenditure. The allowance limit for incidental removal expenses, as negotiated through the PNB, will also apply. This is currently £1,608.

10. Claimants must decide at the outset whether they intend to:

• relocate their main home and claim the appropriate allowances; or,
  elect to be supported for acquiring a ‘second home’ (should they satisfy the conditions)

It is proposed either choice must be exercised within 18 months of their appointment (see para 8).

11. To ensure equity for officers claiming this allowance (i.e. between those claiming for total relocation and those claiming for a ‘second home’) it is suggested that the allowance limit for the purchase of ‘second homes’ is restricted to 75% of the allowance limit.

12. This takes into account that the acquisition of ‘second home’ is less costly as it does not involve disposal costs. The acquisition costs will be relatively high as the purchase is likely to be of a centrally located flat in London. In this area capital values are typically in excess of £250,000 and 3% stamp duty applies.

13. It is recommended that for the acquisition of a ‘second home’ the incidental removal expenses allowance is restricted to 75% of the allowance limit.

Recovery

14. Members indicated that the proposals for the scheme rules should include recovery of re-imbursement under this allowance, should the officers leave, retire or resign from the MPS ‘prematurely’

15. Proposals for the scheme rules includes that officer will sign an agreement regarding recovery as indicated should he/she leave at the time indicated:

• 75% recovery within 2 years of appointment
• 50% recovery within 3 years of appointment
• 25% recovery within 4 years of appointment.

16. There are no benchmarks against which to judge the reasonableness of this proposed recovery rate. For comparison, costs for structured/professional training courses are recovered up to 100% should the individual leave within two years of acquiring the qualification.

Incidental removal expenses

17. Officers may claim for incidental removal expenses. This includes for example, fixtures, fittings, decoration materials, installation of telephone / lines etc as indicated in the proposed scheme rules.

18. The acquisition of a’ second home’ is likely to include expenditure for the acquisition of furnishings such as white goods, beds etc as these are not transferred from the existing home. It is recommended that the definition of items that can be claimed under this aspect of the allowance is extended to include general furnishing, white goods etc.

19. To operate as financial control and to maintain equity between officers claiming the full allowance and those claiming for ‘second homes’ it is proposed that allowance limit is held to 75% of the total for claims in respect of second homes.

Consultation

20. It is recommended that the views of CPOSA be sought on these proposals.

Value of relocation package

21. Members may wish to note that the total value of the relocation/removal package is £16,608 taking into account the full relocation and incidental removal expenses allowances. It is usual for transferring officers to be provided with accommodation during the first six months of their appointment. Taking into account this benefit in kind the total relocation package is worth £20,000 to £25,000.

C. Equal opportunities and diversity implications

These proposals are designed to afford maximum flexibility to officers in maintaining family and domestic commitments while pursuing their career.

D. Financial implications

The increase in the allowance limit and the extension to cover second homes will increase expenditure. On the basis of recruiting one to two officers from outside the MPS annual expenditure can be estimated at £33,216 (for the new scheme rules) compared to £22,964 if the existing arrangements remained, an increase of £10,252. 

E. Background papers

None.

F. Contact details

Report author: Graham Spencer, HR, MPA.

For more information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

Appendix 1

Report from the Remuneration Sub-committee – 29 July 2002: ACPO recruitment 2002

Appendix 2: Scheme/operating rules

Relocation/removal allowance

Who qualifies?

1. This allowance is payable to ACPO officers who transfer on promotion or level transfer to the Metropolitan Police Service (MPS) from another police force.

2. It does not apply to serving MPS officers promoted to, or within, ACPO ranks.

What is re-imbursed?

3. Where the officer was the owner of their former home the MPA will re-imburse the expenses reasonable incurred by them in connection with:

• the disposal of former home;
• transitional costs; and,
• costs of acquisition of a new home.

OR

4. Where the officer is the owner of their existing home the MPA will re-imburse the expenses reasonably incurred by them in acquiring a ‘second home’ within the Greater London, in connection with:

• transitional costs; and,
• costs of acquisition of the ‘second home’

Timescale for claims

5. Claims for re-imbursement under this allowance must be submitted within 18 months of the officer taking up their appointment in the MPS.

Allowance limit

6. The allowance limit for claims under paragraph 3 is £15,000.

7. The allowance limit for claims under paragraph 4 (‘second homes’) is 75% of the allowance limit (at paragraph 6).

Incidental removal expenses allowance

8. Officers may also claim re-imbursement under the incidental removal expenses allowance. The limit for this is set annually through PNB negotiations.

9. In respect of a claim for the acquisition of a ‘second home’ re-imbursement is restricted to 75% of the allowance limit.

10. All claims must be supported by a receipt indicating the expenditure incurred.

11. A list of the expenses/costs to which this re-imbursement under this allowance applies is at Annex 1.

Taxation

12. Liability for personal taxation, i.e. claims in excess of £8,000, will be the personal responsibility of the individual claimant.

Description of expenses/costs

Disposal

13. Officers will be re-imbursed for costs directly linked to the disposal of their home e.g. estate agents fees, legal fees, and bank charges/transfer fees.

Transitional Costs

14. These are costs incurred in the transfer from the previous home to the new home. These will be:

• costs of removal (of household furniture and fittings)
• storage fees (for household furniture and fittings etc).

15. Other payments made to meet relevant liabilities in respect of the first 26 weeks following the move in circumstances where there is a mismatch in the timing of the sale of the former home and acquisition of the new home e.g.

• cost of a bridging loan
• interest mortgage payments on the former home one home where the sale has not been completed.

Re-imbursement will be for interest payments only and not for capital repayments.

16. Re-imbursement will be made on the basis that all reasonable steps have been taken to reduce these payments. Payments are restricted to the first 26 weeks following the move and extension beyond that at is at the discretion of the Clerk.

Acquisition costs

17. Reasonable cost incurred in the acquisition of a property home, including stamp duty, mortgage arrangement fees, bank transfer fees, legal fees, valuation fee mortgage, bank fees and searches.

Second homes

18. Claims for re-imbursement for costs incurred in acquiring a second home (i.e. there is no disposal of the existing home) will be met in the following circumstances:

• the officer’s existing main home is more than 100 miles from central London;
• the officer’s immediate family occupies the officer’s existing home and it is not sub let;
• the officer acquires the ‘second home’ property within 18 months of his or her date of appointment in the MPS;
• the ‘second home’ is located within the Greater London.

19. The officer may claim re-imbursement in accordance with paragraph 13 and 16 above.

20. The allowance limit is 75% of the usual allowance limit (see paragraph 6 and 7).

Recovery

21. Officers will enter into an agreement with the MPA authorising the recovery of the following proportions of the allowance paid should the officer resign, transfer or otherwise leave the MPS during the stipulated periods:

• 75% recovery within 2 years of appointment
• 50% recovery within 3 years of appointment
• 25% recovery within 4 years of appointment.

22. The amount recovered will be adjusted o take account of the taxable element of the original re-imbursement.

Annex 1

Incidental removal expenses

Examples of expenses cost that can be re-imbursed

• Decoration materials
• Building materials and supplies for renovation
• Fixtures e.g. bathroom suite and fittings, kitchen fittings
• Carpets
• Curtains
• Central heating and plumbing renovations
• Electrical fittings

Second homes only

• Includes the above and:
• White goods
• Furnishings
• Mechanical/electrical cleaning apparatus

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