Recovery of policing costs for Heathrow and London City Airports

Report: 13
Date: 23 February 2006
By: Commissioner

Summary

This report outlines the legal obligations of airport operators to reimburse Home Office Police Forces for the cost of airport policing. It gives further detail of how negotiations are being conducted with Operators at Heathrow and London City Airports and how these negotiations could be improved. It concludes by highlighting the deficit of recovered costs (£26m of a potential £50m at both airports are currently recovered) and proposing how this balance should be redressed in future years. Further details of this are given in the linked exempt report.

A. Recommendation

That

1. a joint MPS/MPA negotiating body is established to conduct future negotiations with Airport Operators at Heathrow and London City Airports;
2. this body takes over responsibility for high-level negotiations with the British Airports Authority (BAA) for 2006/7 costs; and for 2007/8;
3. consideration is given to applying for ‘designation status’ at London City Airport within the provisions of the Aviation Security Act 1982 thus enabling the MPA recover policing costs; and
4. the Chief Executive, in consultation with the Chair of the Authority, response on behalf of the MPA to the Association of Police Authorities.

B. Supporting information

1. This report informs the Metropolitan Police Authority (MPA) of the recovery of police costs at airports within the MPS (Heathrow and London City Airport). In particular it addresses the following:

• The legal requirements of the Policing of Airports Act 1974.
• Operational costs for financial year 2006/7 and the contribution of the British Airport Authority (BAA) and London City Airport Ltd (LCA Ltd) to them.
• The implications of the Civil Aviation Act 2005.
• The Police Service Agreements required as a result of the Civil Aviation Act 2005.
• An outline of the appropriate negotiating stance for 2006/7 and thereafter.

2. SO18 Aviation Security Operational Command Unit (OCU) provides policing services at both airports. The 2006/7 projected operating costs at Heathrow are £48m and at London City Airport are £7m. The main operational base for the OCU is at Heathrow Police Station where there is an establishment of 429 police officers and 174 police staff (including Traffic Wardens, PCSOs and other Police Staff members). In 2006/7 the complement of police officers is scheduled to expand to 501 officers.

3. The operational base for London City Airport is located at North Woolwich Police Station where there is an establishment of 69 police officers and 19 Police Staff (PCSOs and one member of Police Staff). North Woolwich Police Station is shared with Newham Borough OCU who uses the site to provide front counter service to the public and to locate a small Sector Policing Team. Nearly 90% of Constables, Sergeants and Inspectors within SO18 are Authorised Firearms Officers (AFOs).

4. It is likely that the terrorist threat to all forms of transport networks will be with us for a long time. In a document announcing a recent Parliamentary Select Committee on transport security ‘Travelling without Fear’, the Secretary of State for Transport (SST) warned that the current threat is likely to outlive our children and ourselves. Recent attacks on transport networks, previous attacks on civil aviation and intelligence reporting would suggest that robust protective security policing at both airports must be a sustainable, long-term goal.

The legal requirements of the Policing of Airports Act 1974

5. The 1974 Act (subsequently subsumed into the Aviation Security Act 1982) made provision for the ‘designation’ of certain airports. Designation means the local Home Office Force provides an embedded police presence at the Airport and (through agreement) the Airport Operator pays costs for staff, accommodation and facilities.

6. Nine Airports in the UK became designated in the 1970s (including Heathrow) and, at that time, there was unanimous agreement that this was in the interest of national security. The IRA had started a mainland bombing campaign (including Heathrow) and Palestinian terror groups had committed a number of ‘aviation spectaculars’ including the landing of a hijacked aircraft at Heathrow and blowing up hijacked aircraft in Jordan.

7. In default of an agreement between the Chief Constable [1] and Airport Operators, either party can apply to the SST for settlement (determination). Historically, Chief Constables have not pursued the determination route. Since the legislation was enacted determination has been sought on only three occasions. In 1995 the SST settled in favour of Greater Manchester Police, in 2005 Sussex Police sought determination but subsequently withdrew their application and Essex Police have recently submitted an application for consideration.

8. Where the funding provided by the Airport Operator (whether as a result of determination or a failure to agree) falls short of providing the resource level felt necessary by the Chief Constable, in the absence of any other funding source, the gap has to be met from the force budget. This is despite the fact that at the time of the legislation was passed the then Home Secretary announced that Police Authorities and council taxpayers would not be liable for the cost of policing airports.

9. The only other option available to the Chief Constables is to withdraw or reduce the police service provided. Currently different approaches are being adopted across the UK. For example Sussex Police reduced the service at Gatwick when BAA declined to pay for additional staff post 9-11, Bedfordshire Police provide an armed presence at Luton without any recompense from the Airport Operator and Essex Police are bearing part of the costs at Stansted following a decision by BAA not to fully fund the policing operation. Any decision to withdraw or reduce policing creates a dilemma for Chief Constables. The Policing of Airports Act, in transferring responsibility for airport policing to the local Chief Constable, makes no provision to absolve them of their responsibility or accountability where the funding provided by the Airport Operator is insufficient to pay for policing levels deemed necessary. The Chief Constable has a statutory duty to provide the effective and efficient policing on behalf of the Police Authority (Police Act 1996) and this includes the area covered by the airport.

Operational costs for financial year 2006/7 and the contribution of the British Airport Authority (BAA) and London City Airport Ltd (LCA Ltd)

10. The estimated operational costs at Heathrow and London City Airport for 2006/7 are £48m and £7m respectively. The costs are prepared in form of an ‘estimate’ and classified against three categories: Operational Human Resources; Operational Infrastructure; and Corporate Overheads. For the last three years BAA have contributed £25.2m (2003 / 04), £25.8m (2004 / 05) £26.1m (2005 / 06) to the policing of Heathrow. London City Airport has never been ‘designated’ within the 1974 legal framework, so no cost reimbursement is received. Financial year 2006/7 is the first year that an ‘estimate’ has been prepared, despite the fact that a full-time operation was established during the heightened threat period of the 2003 Iraq war.

11. BAA has written, indicating that they will pay a contribution towards next years costs. This means that there will be a shortfall between the total cost of policing at Heathrow and the contribution made by BAA. There are three principal reason for this funding ‘gap’:

• Discounts
• Projected Growth in SO18
• BAA’s decision not to increase the funding they provide

Discounts

12. First and foremost, a number of ‘discounts’ have been included in the estimate. A discount of £2.7m has been applied to the overall policing cost because of a grant provided by the Home Office/ACPO (TAM) to fund off-airport armed patrols mandated by the Department of Transport (DfT) in order to provide a deterrent capability across the full range of threats posed to civil aviation.

13. A further discount of £6m has been made to fund the cost of 100 officers, 40 PCSOs and 4 Police Staff that were allocated to Heathrow in 2002 following the 9-11 attacks in the USA. These additional resources were introduced without any dialogue with BAA and have to date been funded from the Counter Terrorist grant to the MPS. BAA has now been notified that it is the intention of the MPS to seek to recover these costs on an incremental basis over a three-year period i.e. 33% of the cost in 2006/7, 66% in 2007/8 and 100% in 2008/9. This phased approach to the recovery of these costs has been taken in order to reflect the timeframe over which these resources were allocated to Heathrow. This has to date formed part of the agreed MPS negotiating position.

14. A third form of discount has traditionally been allowed in annual estimates which relates to the pro-rata contribution to Corporate Services under the MPS’s full absorption costing principles i.e. Corporate Resources, HR, DPA, DPS. This sum amounts to £1.3 in the 2006/7 estimate. It is for this reason that the MPS are seeking to recover £35m of the 2006/7 operating costs and not the full amount of £48m.

Projected growth in SO18

15. Police numbers within SO18 are to be increased following the application of the national airport-policing framework. The application of the framework at Heathrow identified that a further 74 police posts were necessary. Principally the growth is required to sustain armed patrols to counter the threat from international terrorism. Not all of the increase in expenditure is associated with the growth in the numbers of police officers. An increase in £2.7m has been included in the 2006/7 estimate for the installation and ‘start up’ of Airwave.

16. The national airport-policing framework is being used both to support legal processes with the SST (Essex) and by Forces to determine airport policing operations for 2006/7. Furthermore, the framework which objectively cross references police activity with the Codes of Practices on the Police Use of Firearms, NIM, the Civil Contingencies Act and the professional judgment of Chief Officers.

17. The framework has been developed by the police to provide an empirical and consistent approach to determining staffing requirements at airports and has formed the ACPO (TAM) contribution to the DfT designation-working group. This group was established as a result of an earlier review of airport security conducted by the Rt. Hon. John Wheeler MP in 2002 who concluded that the ‘designation’ concept was outmoded and needed revision. Regrettably, the working group was unable to agree an alternative ‘designation’ mechanism. Airport Operators put forward a case that costs should be ‘shared’. However, ACPO’s position was that commercial profit-making organisations must pay for police services but acknowledged that the 30-year-old ‘designation’ process needed overhauling.

18. The framework will form the back bone of ACPOs contribution to the current national review of airport policing. The Association of Police Authorities alerted authorities to this Independent review into Airport Policing led by Stephen Boys-smith. The review is sponsored by the Department of Transport. The terms of reference for the review are attached at Appendix 1 and the extended deadline for submissions is now the 24 March 2006.

19 To ensure a consistent and coordinated approach on behalf of the police service, Michael Todd, Chief Constable of Greater Manchester Police and ACPO TAM (Terrorism and Allied Matters) lead for Transport is preparing a national response. This work is currently underway and will be made available to the MPA as soon as the response is prepared. Key themes are likely to include:

• Designation is no longer fit for purpose
• That where a permanent police presence is required at an airport the costs should not fall to local taxpayers
• A mechanism that can provide for the long term funding of airport policing, reflects changes to air travel and takes account of the terrorist threat faced by aviation is necessary.

Whilst the police view is being formulated it is suggested that the Chief Executive be given delegated authority to prepare, in consultation with the Chair, the MPA response to the Association of Police Authorities.

BAA’s decision not to increase the funding they provide

20. The third reason for the funding gap is because BAA has declined to increase funding to pay for the projected growth and for inflation (they are offering the same contribution in 2006/7 as they are currently paying for 2005/6).

21 Taking full consideration of the discounts outlined in paragraphs 13, 14 and 15 and the resolve of the MPS to secure, in incremental stages, full cost recovery by 2008/9 (see paragraph 13) the ‘estimate’ for next year has been set to recover £35m.

22 The ‘estimate’ for London City Airport seeks to recover £7m discounted to £5m for financial year 2006/7. The discounts are primarily for the provision of off-airport armed patrols which have an alternative funding stream provided by the Home Office/ACPO (TAM) (see paragraph 12.

23. On legal advice, no immediate plans are in place for the MPS to apply to the SST for the ‘designation’ of London City Airport. The main reason for this that the SST is unlikely to come to any decision concerning designation whilst the current national review of airport policing is proceeding. (This is the response that Bedfordshire Police has received from the DfT when enquiring about the prospect of the ‘designation’ of Luton Airport.)

24 Nevertheless, the ‘estimates’ have been presented to LCA Ltd. Their initial verbal response was that the ‘company is not prepared to pay whilst they don’t have to pay’. A formal response from LCA Ltd is awaited.

Implications of the Civil Aviation Act 2005

25. The stated intention of the legislative amendment to the Aviation Security Act is as follows:

1. To clarify the role of the SST if Airport Operators and Police Forces cannot agree levels of policing and cost recovery.
2. To ensure that Chief Constables are aware of the role of ‘directed parties’ so that police activity will complement other security activity (‘directed parties’ are private sector organisations that are compelled though DfT secondary legislation to implement security measures e.g. Airport Operators, Airlines, Caterers, Freight Forwarders).
3. To instigate review of Airport Policing, contrasting it with policing other modes of transportation and to establish if the ‘designation’ mechanism is still fit for purpose.
4. To introduce a three-party basis for agreeing Airport police costs i.e. the Airport Operator, the Chief Constable and the Police Authority.
5. To introduce formal consultation with ‘directed parties’ before such cost agreements are reached.
6. To introduce an arbitration process if ‘three-party’ cost agreements cannot be reached. This involves the appointment of a single independent expert or an expert for each of the ‘three-parties’ if agreement on the single expert cannot be reached. The SST can instruct the ‘expert’ and his/her decisions are binding. There is an avenue for appeal to the High Court.
7. ‘In-year’ agreements can be challenged through the same expert arbitration process in (vi).

26. The most far-reaching aspect of this legislative change for Police Authorities and Police Forces will be the governance of policing at Airports that places greater prominence in the role of the SST.

27. Hitherto, Police Authorities (notably Sussex Police Authority in relation to the current dispute at Gatwick Airport) have maintained on Counsel’s advice that the SST has no role in determining police levels. The appointment of an ‘expert’ by the SST (see paragraph 4.1 (vi) above) in cases of dispute appears to change this position and could ‘cap’ the level of police resources that will be funded by the Airport Operator. This will leave the Chief Constable having to decide whether to ‘top up’ the airport police operation from the force budget or maintain the operation at a level less than in accordance with his or her professional judgement.

The Police Service Agreements required as a result of the Civil Aviation Act 2005

28. The MPS welcomes the introduction of formal consultation with other interests about the adequacy of police operations (paragraph 24 (v) . The ‘Directed Parties’ the legal amendment refers to are Airport Operators, Airlines etc that are obliged to implement the ‘directions’ of the DfT. This consultation is designed to lead to the establishment of a Police Service Agreement suited to all parties. In particular the inclusion of Airlines who are responsible for the safety of their passengers, as opposed to Airport Operator alone, is encouraging.

29 The MPS is also optimistic that the ‘Police Service Agreement’ required by the legislation will bring more clarity to what the police do at Airports, why they do it and how much it costs. The national framework for airport policing (see paragraph 3.6) delineates police activity into five domains of Protective Security, General Policing, Crime Requirements, Civil Contingencies and Police Staff support. The framework can be directly transposed into a ‘Police Service Agreement’ and will respond to SST’s comments seeking assurance that ‘Chief Constables are aware of the role of Directed Parties so that police activity will complement other security measures’ (see paragraph 24 (ii) .

C. Race and equality impact

The contribution of Airport operators to the cost of airport policing has few implications for equality and diversity. Securing additional resources from airport operators will enable additional staff to be re-deployed elsewhere in London and so boost our commitment to safer neighbourhoods and protecting all Londoners against the threat of terrorism.

D. Financial implications

An outline of the appropriate negotiating stance for 2006/7 and thereafter

1. The MPS have set out their intention to recover £35m of the total operational costs of £48m from BAA next year.

2. In financial years 2007/8 and 2008/9, the MPS have also announced their intention to reclaim other ‘un-recovered’ subsidies being granted to BAA. The national framework should be used each year to calculate the particular operational requirements not least because of the rapid expansion associated with the opening of Terminal 5 and future plans for a third runway.

3. The costs of the police operation at London City Airport should be considered at the conclusion of the national review. The review will include the consideration of the future ‘designation’ of airports which will have an important bearing on the MPS/MPA position in relation to this Airport.

E. Background papers

None

F. Contact details

Report author: Jerry Savill, Ch Supt SO18 (Aviation Security).

For more information contact:

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

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