New funding arrangements for National Criminal Intelligence Service and National Crime Squad

Report: 9
Date: 20 July 2000
By: Treasurer

Summary

At present, the National Criminal Intelligence Service (NCIS) and the National Crime Squad (NCS) (“the Squads”) are financed by levies on police authority budgets apportioned pro rata to their central government funding. The Home Secretary is seeking views on new funding arrangements and has indicated that his preferred option is to replace the present arrangements by direct grant funding from the Home Office. He also seeks views on the implications of new funding arrangements for the membership and functions of the Service Authorities for the Squads. Primary legislation would be required to give full effect to new arrangements, which could not begin until 2002-03 at the earliest. The Committee are invited to agree a response to the Home Office supporting the proposal for direct grant funding, suggesting a way of introducing it by administrative means pending primary legislation and pressing for continued Metropolitan Police representation on the Service Authorities.

A. Supporting information

1. The Home Secretary’s proposals are set out in the attached letter of 12 June (Appendix A).

Funding

2. Under the Police Act 1997 which created the national Squads, they are funded by levies on the police authorities in England and Wales. (NCIS also has some funding from Scottish and other sources.) The levies are apportioned between authorities pro rata to their central government funding.

The levies are set annually by the Home Office on the basis of proposals from the Service Authorities and following consultation with the Association of Police Authorities and other interests. In the event, the Service Authorities have each year proposed percentage increases in the levies exceeding the increases in overall funding for the territorial forces in England and Wales and, although the Home Office has trimmed back the proposals, the levies have therefore increased as a proportion of police authority budgets. In the absence of changed funding arrangements for the Squads, this trend is likely to continue.

3. The Home Office has put forward two alternative options for consideration:

1. A direct grant from the Home Office to NCS and NCIS.
2. Top-slicing the NCS/NCIS funding from police grant.

4. Option b) is, in financial terms, the same as the existing arrangements. All that would change is that the levies would be paid direct to the Squads by the Home Office and that the 43 territorial forces would not be invoiced for their shares. Since authorities’ shares of the levies are determined pro rata to their general funding allocation and the reduction in grant as a result of the top-slicing would impact also in proportion to the formula allocations, their funding would be reduced by the precise amounts that they would have to pay under the existing arrangements. This result would be replicated each year with authorities’ grant entitlements continuing to be squeezed by the prior decision about funding of NCS/NCIS.

5. Option a) - direct grant - would not necessarily bring any immediate benefit to police authorities. In the first year of new arrangements, the “pot” for territorial policing would probably be reduced by an amount equal to the amount of central funding for the Squads. Thereafter, however, proposals for increasing Squad expenditure would compete against other Home Office programmes and not just against the territorial policing budget. There would therefore be no direct link between NCS/NCIS funding and the resources available for police authorities. This proposal would therefore be preferable to top-slicing.

6. Ministers also prefer the direct grant mechanism. However, it requires primary legislation which may take time to implement. If Ministers are committed to this approach it would be appropriate for them to seek to achieve the same effect in advance of legislation. This could be done if the Home Office were to top up from other Home Office programmes the control total for police grant by an amount equal to the amount by which the increase in the Squads’ levies exceeded the increase in the amount of grant distributed by the principal formula.

Service Authority membership

7. At present, the NCIS Service Authority has 19 members and the NCS Service Authority 17. It is understandable that the Home Office might wish to reduce their numbers. If, however, there is to be continued representation of territorial police interests, then it would be appropriate for the Metropolitan Police to continue to have a seat on each. This is because the disparity of size between the MPS and the other territorial forces means that APA and ACPO have difficulty in reflecting MPS interests and because the MPS, because of its national and international role, has a greater involvement with the Squads’ activities than other forces.

B. Recommendations

That the Authority responds to the Home Office supporting the direct grant funding option, suggesting that it be introduced by administrative means pending primary legislation and seeking continued MPA representation on the Service Authorities.

C. Financial implications

None in the short term. In the longer term, expenditure which has been rising faster than the overall MPA budget will cease to be a charge on that budget.

D. Review arrangements

Not applicable.

E. Background papers

• Letter of 12 June 2000 (attached) from Home Office Organised and International Crime Directorate to:
  • ACPO
  • APA
  • Police Authority chairs in England and Wales
  • Chief Officers in England and Wales
  • The Commissioner, MPS
  • The Chairman of the NCIS and NCS Service Authorities
  • The Director General of NCIS
  • The Director General of NCS HMCE
  • HM Treasury
  • DETR
  • Scottish Executive
  • Northern Ireland Office
• New funding arrangements for the National Criminal Intelligence Service (NCIS) and the National Crime Squad (NCS)

F. Contact details

The Author of this report is J S Parker.

For information contact:

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

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