Governance arrangements for annual pay awards

Report: 9
Date: 1 March 2007
By: Director of Human Resources on behalf of the Commissioner, and the Treasurer

Summary

The report outlines that it is appropriate to establish clear governance for dealing with the annual MPS pay round. A standard operating procedure is recommended.

A. Recommendations

That members

1. Agree the standard operating procedure for governance arrangements of annual police officer and police staff pay awards, and any other aspects which have cost implications.

B. Supporting information

Introduction

1. In the past, the annual police officer and police staff pay awards have been agreed within budgetary provision. (For police officers, the effective date of any increase is 1 September; for the majority of police staff the effective date is 1 August, although for senior police staff it is 1 April.

2. Police officer pay for all ranks is negotiated nationally at Police Negotiating Board (PNB), subject to approval of the Secretary of State for the Home Department. Following the 2006 award, police pay determination is the subject of a review by Sir Clive Booth looking at the current arrangements for determining police officer pay for 2007 and seeking views on the effectiveness of the negotiating machinery for the police service. The results of the first part of that review are due shortly, but the important point is that there is no discretion for the Metropolitan Police Authority (MPA) to implement an award other than that agreed nationally.

3. For police staff nationally, other than for a small number of forces including the Metropolitan Police Service (MPS), pay is negotiated at the Police Staff Council (PSC) where the Association of Police Authorities (APA) is represented. Within the MPS, police staff pay negotiations, excluding senior police staff (i.e. broadly ACPO level) are based on an incremental system and negotiated between the MPS Human Resources Directorate on behalf of the Authority and the four recognised trade unions, namely Amicus, Association of First Division Civil Servants (FDA), Public and Commercial Services (PCS) and Prospect. Normally there is a single pay claim submitted by the four unions on behalf of their members. This year (2006-7) the unions failed to reach agreement and each union submitted its own pay claim. The pay claim or claims invariably include other aspects of terms and conditions, e.g. more annual leave entitlement, reductions in the working week, increases to allowances etc, some of which may have cost implications. For senior police staff, i.e. band 4 and above, the Authority’s Remuneration Sub Committee has, to date, agreed the level of the annual increase, which is dependent upon individual assessments.

4. For pay negotiations in 2006-07 pay awards for police staff were negotiated at 3% and imposed for police officers at 3%, although the provision for inflation was 2.5%. This brought into sharp focus the need to ensure the Authority is properly sighted early in the pay determination process, both in terms of meeting its statutory responsibilities and understanding the MPS’s approach, specifically in relation to police staff pay. Nevertheless it is not the role of the Authority to ‘direct’ police staff pay negotiations as this would encourage the trade unions to negotiate directly with the Authority, thereby usurping the Commissioner’s ability to negotiate in this respect. However, if the budgetary provision for police staff pay increases is likely to be exceeded the Authority would expect early notification as it may be necessary to identify budget virements.

5. In coming to a view about future budgetary provision, the Authority clearly has a legitimate interest in pay negotiations and settlements and their future impact. In particular the Authority will wish to take account of the Treasury’s guidance on public sector pay and inflation targets, the anticipated trends in pay settlements and, most importantly, affordability.

6. The affordability of pay awards settled from August, for the majority of police staff, and September, for police officers, will have an impact both in the current year and to a greater extent in future years when the full year effect will be felt. However, neither Standing Orders nor the scheme of delegations address governance arrangements to enable the respective responsibilities of the Authority and the MPS to be clearly articulated.

7. The current rules for virement state in paragraph 9 of the Financial Regulations that “The Commissioner has authority to commit expenditure or to vire between budget headings within the overall approved budget to meet the policies and objectives agreed with the Authority and reflected in the Policing and Performance Plan. The Finance Committee will approve budget virements over £1 million. Virements below £1 million will be reported to members through the budget monitoring mechanism. Budget virements should only be made when permanent shifts of priorities or resources are planned.”

8. The proposed governance and Standing Operating Procedures (SOP)are attached at Appendix 1.

C. Race and equality impact

None specifically identified at this stage

D. Financial implications

The effect of every additional 1% from the summer 2007 pay award settlement in 2007/08 and in a full year is as follows:

E. Background papers

None

F. Contact details

Report author: Martin Tiplady Director of Human Resources, MPS and Ken Hunt Treasurer, MPA

For more information contact:

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

Appendix 1

Proposed Governance and Standard Operating Procedure (SOP)

1. Governance arrangements for agreement of pay awards for police officers and police staff need to reflect a fast moving timetable, a need to keep the Authority informed, and in some cases, the need to act urgently. The procedure to be adopted is set out below:

2. Proposals from the MPS about each year’s pay negotiation strategy should ideally be developed by April each year. This will set the parameters within which the MPS approaches these negotiations.

1. A confidential report on the MPS’s approach to the current year’s pay negotiations for police staff including any proposals for changes to terms and conditions which have cost implications (e.g. harmonisation of other police staff terms and conditions towards the more modern arrangements for Police Community Support Officers (PCSOs)) and overall costs, to be taken to CoP in April. The MPA’s approval will be required. The report will focus on police staff, but include an assessment of the likely level of the police officers’ award in the current year.

3. The trade unions either individually or collectively will submit their pay claim or claims. It will probably take one or two negotiating meetings before there is any clarity around the likely level of settlement and for some estimates to be made of the final cost of any negotiated settlement, e.g. this year the pay claims were 6% or more at the outset but negotiations rapidly focused around the inflation figure

1. Once negotiations have commenced it will be necessary for the MPS to keep the Chair of the Authority and lead member informed about the pay and other aspects of the claim which have a pay or cost implication as this can be a fast moving situation. If the proposed pay increase is higher than the agreed budgetary provision an exempt paper to CoP or Finance Committee may be necessary or (more likely) the urgency procedure may need to be invoked, to agree any final offer for police staff and identify any budget virements that may be needed.

4. Agreement of next year’s pay inflation provision which is to be included in the medium term financial plan. This is important because it will condition thinking around the following year’s pay round. The MPA has promoted much earlier financial planning and it is appropriate to have consideration of the pay inflation provision for the following year (in this case for the August / September 2008 award) as early as possible, e.g. April 2007 for the 2008-09 pay awards. This should be reviewed in October 2007 before the Budget is submitted to the Mayor.

1. A formal report to CoP in April outlining the proposed pay inflation provision for the next financial year. The report should include any Treasury guidance on public sector pay and inflation targets, together with an outline of the anticipated trends in pay settlements The report will focus on police staff pay, but include assessment of the likely level of the police officers’ award for the next financial year. A review by the MPS to confirm the validity of the inflation pay provision in October. The review to be presented informally to the Chair of the Authority and lead member. If considered necessary by the Chair or lead member , a formal report shall be taken forward to CoP or Finance Committee.

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