Cost implications of police reform

Report: 12
Date: 3 October 2002
By: Commissioner

Summary

This report, which was requested by the MPA, provides details about the financial implications arising from the Police Negotiating Board (PNB) agreement on police pay and conditions.

A. Recommendations

That

1. The Human Resources Committee is asked to note the content of this report.
2. To receive further update as the financial implications become clearer and the costings are refined.

B. Supporting information

1. At its meeting on 25 July 2002, the HR Committee received a paper from the Clerk providing a summary of the Police Negotiating Board (PNB) agreement on policy pay and conditions. The MPS undertook to provide a report to the next meeting setting out the financial implications of the agreement.

2. This paper, which has been prepared in collaboration with the MPS Finance Directorate, gives an early assessment of the costs arising from each relevant element of the agreement. Over the next few months, these costings will need to be refined to take account of further advice from the PNB giving guidance about implementation and confirmation from the Home Office about aspects of the funding arrangements. Accordingly, it is too early to give details about the processes for administering the agreements or how much those administrative processes will cost.

Costed elements of police reform package

3. There will be a shortening of the pay scales for each of the four federated ranks subject to a minimum increase of £402 per pay point, with effect from 1 April 2003. The increased costs of these payments are set out below:

The estimate is based on an average strength of 28,500 in 2003/04 and 28,600 from 2004/05 onwards and it excludes any growth funded by Mayor, TfL or Home Office for Counter Terrorism in future years as the effect of this change in payscale will be reflected in the costings of additional officers funded by those bodies.

4. Competency related (pensionable) threshold payments of £1,002 per annum will be available to the four federated ranks after 1 year at maximum of payscale. It is anticipated that at least 75% of those eligible will be successful in accessing this payment, which will be made available from 1 April 2003.

The average number of officers at qualifying point is estimated to be:

The estimate below is based on 75% of eligible officers receiving payment:

For comparison purposes the estimate below is based on 90% of eligible officers receiving payment:

These calculations take account of the number of officers expected to reach the maximum of the payscale + 1 year during the period and estimated numbers of officers leaving the “pool”, whether due to leaving the Service or gaining promotion.

5. Special priority payments (SPPs), which are non-pensionable, will be aimed at front line and operational officers. They will not be less than £500 or more than £3,000 per annum, although exceptionally payments of £5000 may be made. The first payments are due in December 2003. In the first year an additional 1% of the annual basic pay bill below ACPO will be spent on the scheme; in the second year at least 1.5% and in the third year, and thereafter, at least 2%. Central funding will be provided to meet these minimum costs.

Based on minimum limits of 1% basic paybill in 2003/04, 1.5% in 2004/05 and 2% in 2005/06 the following costs will be incurred:

Work is currently being undertaken to determine options about the roles and numbers to be selected for SPPs and at what rate. The above calculation assumes that the guideline % of paybill relates to the amount actually paid to officers, so ERNIC is an additional cost. No information is yet available as to whether the Home Office will fund the ERNIC, or allow the % limits to operate such as to include ERNIC.

6. Bonus payments of between £50 and £500 for occasional work of an outstandingly demanding or unpleasant or important nature maybe made. These payments are taxable but not pensionable and may cost in the region of:

This scheme replaces a small number of existing allowances. The MPS is currently developing the criteria, which will be applied to these payments. The figures set out above exemplify the cost if a limit is set at 0.2% of paybill. It is assumed that any additional costs (e.g. as a result of wider qualifying criteria or setting a % link to the paybill) will need to be managed within existing budgets.

7. The agreement allows for a rationalising of allowances and for simplifying the system of regulations and determinations. A list of the allowances affected by this process is attached at Appendix 1. The cost implications are estimated to be:

These figures are based on plain-clothes allowance being halved from 1.4.2003 and abolished from 1.4.2004 and changes to subsistence, refreshment, lodging and removal allowances, which are assumed to be cost neutral.

8. There will be a scheme, which encourages police officers to stay beyond 30 years, and this will be made available to ranks below ACPO where a business case can be made. The proposed scheme is designed to encourage police officers to continue in service beyond 30 years, subject to the agreement of the individual and the Service. The objectives are to help ease recruitment shortfalls, to smooth our recruitment bulges and to retain much needed skills and experience in the Service. The MPS has asked to participate in the pilot subject to Treasury approval and funding. It is too early to estimate the long term costs of this scheme as no information about funding is available.

C. Equality and diversity implications

It is too early to assess the equalities impact of the agreement but we will be putting in place adequate monitoring mechanisms to ensure equality of distribution of payments.

D. Financial implications

A summary of the total cost implications is shown below:

*assumed to be met from existing budgets.

For the purposes of the draft budget submission for 2003/04 the total shown above will be assumed to be fully funded by the Home Office. The extent to which this is a reasonable assumption should become clearer when the provisional finance settlement is announced in late November/early December.

E. Background papers

• Report 11 to HRC on 25 July 2002

F. Contact details

Report author: Michael Shurety, Director of HR Services.

For more information contact:

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

Appendix 1

Regulations which should be deleted

Note: alternative arrangements are proposed for some deleted allowances. 

Allowances which are to be discontinued

• Plain clothes allowance
  From 1 April 2004 – halved from 1 April 2003
• Subsistence, refreshment and lodging allowances
  Future reimbursement for actual expenditure incurred, backed by receipts
• Removal allowance
  Future reimbursement will be for actual expenditure incurred, backed by receipts
• Frozen undermanning allowances
• Firearms users’ standby allowance
  Will become eligible for special priority payment
• Gratuity for fingerprinting dead bodies
  A bonus payment might be appropriate instead
• Recurring escort duty allowance
  To be replaced by same amount allowance under Regulation 50 of the Police Regulations 1995

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