Police Funding and Pensions Update Katharine Hammond 5 th October 2010

2 Spending Review 2010 ●Objective: to reduce the budget deficit while protecting the quality of frontline services. ●The Home Office is facing real terms budget reductions over the next four financial years. Ministers have been clear that the police service will be expected to make a fair share of these reductions. ●Size of settlements will be known on 20 October. Force level allocations will be published in early December. ●The settlement will be challenging. Forces will need to maintain service quality with tighter resources. Cutting waste and increasing efficiency will be essential. This means thinking differently. ●Pay restraint (subject to the PNB process) in the first two years of the period should help hold down workforce costs.

3 Spending Review cont. ●Budgets for specific capabilities, including counter terrorism policing, are not immune from the Spending Review process. OSCT believes that efficiency and productivity can be increased in CT policing as well as in mainstream policing. ●The police settlement will continue to include specific funding for counter terrorism policing. This will be informed by the outcome of the Strategic Defence and Security Review (SDSR) – which is proceeding in parallel with the Spending Review.

4 Improving value for money ●Given the scale of the challenge, you need to be taking steps now to prepare ●The Government has already signalled its intentions to help forces realise savings in procurement and IT through the introduction of nationally agreed procurement frameworks ●It no longer makes sense for all elements of policing to be provided in 43 different ways. The approaches to procurement and IT are part of this, but forces will need to collaborate in the provision of other policing services ●The Government has been clear that, while it is for Chief Constables to decide how they should run their force, they will expect forces to bear down on overtime and on the costs of back office functions, such as HR, finance and other administrative posts

5 Improving value for money ●But, making savings will not be the only part of the challenge forces will face in the coming years. The public will expect to see their force continue to provide a high quality level of service ●Decisions Chief Constables take about their workforce and about how it is deployed will determine how far they are able to meet this second challenge ●Shift patterns that reflect the demands for policing better will help improve deployment, but we all have a role in helping get officers out from behind their desks and back on the streets by reducing bureaucracy ●If we are to meet the public’s expectations, the police cannot neglect this aspect of value for money – the public will continue to expect a visible and effective police service.

6 Pay Review ●Launched 1 October ●Led by Tom Winsor; lawyer and former rail regulator ●Terms of Reference in full on the Home Office website; objectives include using remuneration and conditions of service to maximise deployment to frontline roles; being fair and reasonable to both taxpayers, officers and staff, and enabling modern management practices. ●Reviewer must have regard to the tough economic conditions, the deficit, the Spending Review, and the resolution by the Government that the public sector must share the burden of deficit reduction ●Part One of the Review: short term improvements, will report in February ●Part Two: longer term reform, will report in June 2011.

7 Pay Review: Sample Topics ●how officers enter the police service ●the deployment of officers and staff (including overtime and mutual aid pay) ●post and performance related pay (including special priority payments, competency related threshold payments and bonuses at all levels) ●how pay progression up the pay scales could be made fairer to officers, staff and the taxpayer, and whether the typical service length should be made more flexible ●how officers leave the police service (including ill-health retirement and possibly redundancy terms) ●how officer and staff pay and conditions of service are decided (including the structures of the Police Negotiating Board and the police staff council) Please contribute at: (ends 29.10)

8 Local Government Finance Review ●Due to start in summer 2011 and finish in ●No announcement yet on detailed scope. ●Priority is ‘to sort out the public finances and to get on with our agreed programme of delivering radical devolution and greater financial autonomy to local government’.

9 Pensions – Hutton Commission Independent Public Service Pensions Commission ●Interim report: expected early October. Intended to examine scope for short-term savings. ●Final Report: for Budget Intended to focus on reform for long- term affordability. ●Expected to set out principles for future pensions across the public services (including policing and local government schemes) ●Objective is to be “Fair” for workers and the taxpayer

10 Pensions: Other Part of the Pay Review ●Review expected to take pensions into account as part of the reward package and a driver for retention ●Combined with Hutton, potential to point to significant reforms Contribution rates ●As well as Hutton findings, the impact of scheme valuation and future indexation based on CPI will influence contribution rates ●Forces should not assume a reduction in employer contributions in the short-term; depends on the impact of these combined factors Pensions Tax Relief ●New rules from April 2011 – details to be confirmed by HMT ●Could have an impact on career, pensions and retirement choices of officers – particularly in senior ranks

11 Contact details: ● ●Tel: