NCS/NCIS overhead charges

Report: 06
Date: 16 January 2003
By: Treasurer

Summary

This report sets out the actions taken following the Committee’s decision to pursue further the recovery of overhead charges from NCS/NCIS.

A. Recommendations

Members are recommended to agree that:

1. no further action is taken to recover overhead charges from NCS/NCIS;
2. this conclusion is reported back to APA and ACPO pointing out the continuing subsidy of NCS/NCIS.

B. Supporting information

Introduction

1. The Committee received a report at its meeting on 27 September 2002 setting out the position in relation to the attempted recovery of overhead costs of the secondment arrangements with the National Crime Squad (NCS) and the National Criminal Intelligence Service (NCIS). The Committee agreed to write off the outstanding debt of £4 million relating to previous years up to 2001/02, but agreed that the issue of overhead recovery for the future should be pursued further with the NCS/NCIS service authorities.

Subsequent action

2. I spoke informally to the relevant APA officer who indicated support but was content for the MPA to pursue the matter bilaterally with the service authorities in the first instance.

3. I sought an initial meeting with the service authorities at officer level. They would not agree to a meeting without the Home Office. The meeting which was eventually held on 17 December 2002 therefore included the service authorities, the Home Office and myself with MPS Finance support. In the event the service authorities were led by their chairman.

4. The position of the service authorities was very clearly stated as not being opposed to the principle of meeting the full costs of secondments provided that they received additional funding from the Home Office to cover them. There was no acceptance that they might seek to manage additional costs within their existing funding envelope.

5. We explained the nature of the specific activities which had been identified as appropriately comprising the overhead charge. These had been derived through a rigorous analysis which would stand up to scrutiny. The service authorities were taking steps to establish their own direct arrangements in respect of some of these activities, eg payroll provision and occupational health services. This would clearly reduce the potential overhead charge.

6. The costings of the activities were presented. As reported previously to this Committee they amount to approximately £350-400,000 for NCS/NCIS in total. Grossed up to a national level this would imply a total charge to the service authorities of some £2+ million.

7. The Home Office representative stated that the Home Office would not be prepared to consider a financial adjustment for a sum of that order. Without such an adjustment the service authorities will not agree to pay.

Conclusion

8. In view of the positions now established by the Home Office and the service authorities it would seem that the issue can only be taken further now through a collective consensus of APA and/or ACPO to apply pressure to the Home Office. That consensus would probably be difficult to achieve. Furthermore the sums of money involved do not appear to justify such action.

9. Consideration should also be given to the possible consequences of a dispute with the service authorities in terms of the operational cooperation between the squads and police forces. The secondment arrangements are seen to have mutual benefit and the risks of destabilising the relationship with the service authorities probably outweigh the relatively marginal financial advantage from securing the overhead recovery.

10. It will be necessary to report our conclusions back to the APA and ACPO. There may be some advantage from establishing a recognition that the MPA and other police authorities continue to bear costs which could legitimately be charged to the service authorities. In effect we continue to subsidise the national services.

11. The MPS has strategies in place to manage the number of secondments to NCS and NCIS and it will be important to maintain these in future in order to limit the demand on the MPA’s resources.

12. The issue has been pursued in accordance with members’ wishes but in the light of the views expressed by the Home Office and the service authorities and the size of the financial sums involved I would now recommend that no further action be taken to recover overhead charges from NCS/NCIS.

C. Equality and diversity implications

None

D. Financial implications

The budget does not assume the recovery of overhead charges from NCS/NCIS. If a national financial adjustment was agreed in order to facilitate payment of such charges this would theoretically have an adverse impact on the Authority’s grant entitlement.

E. Background papers

None

F. Contact details

Report author: Peter Martin

For more information contact:

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

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