Valerie Shawcross _LFEPA_Perhaps I shouldn t actually have given by wuzhenguang


									                                                                                   Appendix 1

The Chair: Item 7, the Monitoring Report, is relevant for the next item as regards LFEPA.

Welcome to Valerie Shawcross and colleagues from LFEPA. Do you want to start by
bringing us up to date on anything, Valerie?

Valerie Shawcross, Chair, LFEPA: As you know, at this stage, we have not yet completed
our budget construction which we are aiming to submit to the Mayor by 14 November. It is
still work in progress. As we said at the last meeting, there are big variables. There is quite
a lot of turbulence this year compared to previous years in the budget; a lot of stress points
and worries.

One big variable is the potential Government grant loss. We were looking at a scenario of
potentially about £29 million being cut from our grant under the new formula
arrangements that were being canvassed. In terms of the response we have had so far from
the Government - and I certainly had a letter back from Nick Raynsford - it does look as
though the Government is attentive to the fact that we have got some very worrying
scenarios, and we have some hope that they will recognise that. I think, not from the figures
we have been given, but from the issues the Government has now recognised, that we might
realistically be looking at something like a loss of £15 million, although I hope we can still
drive that figure in the right direction. The sad and difficult thing is, of course, that we
don’t know how effective our lobbying will have been until late November when the
settlement is announced.

The other big issue, as you are aware, is the national pay claim; the fire-fighters are seeking
a 40% increase in their national basic salary, and the ballot is under way and will be counted
this week, on Friday. I think the chances are that there will be a national strike in support of
that pay claim. That, of itself, throws up financial issues and risks: the possible cost of the
strike. We have yet to get clarification from the Government on exactly who will be
responsible for the costs. The informal advice is that the Government is likely to pay for the
Green Goddess cover but we have less certainty about who will cover the police costs. The
police support, for the period during the strike, is absolutely essential, for example in
providing escort services. Those potential costs could be up to - in a worst-case scenario -
£800,000 a week. But, as I said, we are very hopeful the Government are going to pick up
the MOD costs.

The other issues we are looking at: we have made a London weighting offer to bring London
weighting up to £4,308. We have had no response yet from the Fire Brigades Union and
the main grade staff. That was in the context of a pay claim of £6,000 London weighting.
The fire-fighters’ aspirations were to bring them in line with the police service. The offer
that we have made would add about £2 to the precept annually for the fire service and I am
sure you will want to ask me about that but I won’t go into too much detail at this stage.

On the post-September 11 work that has been going on, nationally and in London, we have
no real news in addition to what we said at the last meeting. I had a meeting yesterday with
the Fire Service Inspectorate. They’ve been advised by the Government that they can
submit a bid to the Capital Modernisation Fund for equipment nationally, which would
include all of London’s requests, and that they can re-submit a bid to the Government for
some revenue costs. There is no timetable and no clarity about how much is available at the
moment. In the meantime, the Fire Authority has had to make some decisions as part of its
Best Value review of non-pumping appliances; we had been taking that review more slowly
than we have on other reviews. It has come to the point where we have to make some
decisions quite simply because our view was that we did not have enough rescue appliances
in London and the non-pumping review recommended, and we have accepted the
recommendation that we put in place two additional heavyweight rescue units in London,
over and above the five that we already have. That procurement is going to have to start

Looking at growth, the service growth we have actually managed to cover by finding
savings. But looking at inflation, London weighting and other essential items on the base
budget, it looks like we’re heading for a base budget increase of about 7% overall and that is
factoring out any grant loss from the Government, which would lead us to a precept
increase of about £5 overall. But any Government grant loss could well lead to a more
difficult situation than that and it comes with the issue of the floor, the fact that the Fire
Authority does not have its own floor, which operates across the GLA as a whole. So any
grant loss is, as you know, covered; it may well be offset by increases to the services heads.

That’s just a look over the issues. I am sure you will want to come back on issues in detail.

You’ve met all my colleagues before, I think. I would like to pass on apologies from the
Chief Fire Officer; the Commissioner is actually taking a week’s leave or he would otherwise
have been here.

The Chair: Thank you very much. Indeed, yes, we do want to pick up most of the things
that you have referred to. Can I just start with a question which is of process rather than
cash? I know that you, personally, feel strongly about information being publicly and easily
accessible. Can I just ask you about LFEPA’s approach to making finance and other panel
papers available publicly? I understand that they are not all available in the same way as, for
instance, the Police Authority and, oddly, TfL, where we have other problems. We’re
concerned to ensure that everything is available very quickly, as soon as it’s being
considered. It’s not only a question of the budget for next year but, obviously, monitoring
what’s going on this year.

Valerie Shawcross (LFEPA): I am a bit confused by that because the Fire Authority’s
papers are publicly available and the ones that are not available are the ones that are of legal,
commercial confidentiality.

The Chair: Does that apply to everything from the Finance Panel?

Valerie Shawcross (LFEPA): The Finance Panel is not an executive body; it’s basically an
internal advisory group and they’re not published on the website and published in the way
that an executive panel would be. But if there was anybody who had had any difficulty
getting hold of that information then we would make it available; it’s not an unreasonable
request. I am not aware of anybody who’s been turned down access to those papers, over
and above the fact that we do sometimes deal with issues, for example, in relation to
industrial relations difficulties.

The Chair: It would be helpful to us if we did know they would be provided regularly
without our having to ask. As I say, I think the issue is broader than that.

Valerie Shawcross (LFEPA): I am confused again because nobody from the GLA, to my
knowledge, has asked for papers and had them turned down,

The Chair: No, but I think we’ve had to ask each time.

Valerie Shawcross (LFEPA): Perhaps you would let us know to whom you would like us
to make them available.

The Chair: Let’s move to current issues.

Eric Ollerenshaw: Can I just check some of the figures? That 7% you referred to, is that
7% of the total GLA precept or the Fire Authority’s section?

Valerie Shawcross (LFEPA): It’s 7% potentially of our base budget. That is not the
precept figure.

Eric Ollerenshaw: What will the precept figure be? Have you got a rough guide?

Valerie Shawcross (LFEPA): At this stage it is a guesstimate because we’re still waiting
for quite a lot of information. We are looking at a potential precept figure for the Fire
Authority of £33.48 on Band D. In the first year of the GLA’s operation it was £28.87.
That would be an increase of 16% over the 3-year period.

Eric Ollerenshaw: And that’s for no increase in service, is it? Because the new costs, you
are saying, are to cover the impact of strikes or potentially a cut in Government grant.

Valerie Shawcross (LFEPA): There will be service increases in the budget and a number
of quite significant ones. But we have sought through the Star Chamber process, where we
look for savings and efficiencies in the budget, to cover them, and by making savings in
other areas. We are making savings of about £1.7 million in the proposed year’s budget and
that is offset by growth of about £1.6 million at the moment.

The kind of service improvements you will see: we have talked about the two additional
rescue units; we are in the process of building and completing the new Command and
Control Centre with the new radio scheme - the old Control Centre is now becoming
technically obsolete and needs to be replaced, so there will be a new and better and more
efficient 999 centre for London; and there are a number of IT developments taking place
within the Authority which are actually, in a sense, rounding up and completing the work
we’ve done on the reorganisation of the service. They are essentially designed to enable us
to collect, analyse and act on information, which means that we will increasingly have the
capacity to target our resources towards resolution of service problems. I don’t know if the
Deputy Commissioner would like to give some examples of what we will be able to do.

Roy Bishop, Deputy Commissioner, LFEPA: An example would be that we would be able
to compare our fire call rates, where incidents are occurring, and link those to our fire safety
regime, our statutory fire safety regime. The end-game is that we will be able to make all
that information available both to the Boroughs to look at where they’re going to target
statutory fire safety regimes and community fire safety. Also, we will be able to transmit
risk information down the line to a fire appliance so that, as crews are attending incidents,
they will have detailed information as to the risk.

Eric Ollerenshaw: That’s capital, isn’t it? We are talking about revenue here and the
revenue increases, not delivering an increase in service.

Valerie Shawcross (LFEPA): I do understand the difference between revenue and capital
but in terms of the quality and effectiveness of the service people receive, I don’t personally
differentiate. What we’re saying is that this investment will deliver a much better use of the
whole mainstream resource application to the Authority. It will certainly put us in a
position to be able to move towards risk-based resource deployment.

One of our key problems at the moment is that we have to have 100% cover under the
existing system, 24 hours a day, 7 days a week, regardless of the level of risk. Actually, by
having the new computer and IT systems, and the information gathering analysis systems,
for the future we will be able to use the resources we’ve got much better than we are at the
moment. We are going to become, and we are becoming, a much more prevention-focused
organisation. The idea is that the link between statutory fire safety, i.e. going into buildings
and giving advice and looking at architecture plans and the like, means that we will be much
more able to build risk of fire out of London and also respond both through social means and
by service delivery means.

It’s about the organisation actually having a brain to think about what London needs and
responding to it. I think it’s a pretty important service improvement.

Eric Ollerenshaw: A couple of questions. This potential increase, does this cover all the
potential impacts of a national strike, and does it also cover the agreed London weighting?

Valerie Shawcross (LFEPA): Perhaps I shouldn’t actually have given you a figure at this
stage because, as I’ve said, our budget work is not completed. However, just to give you a
sense of where I think we’re going, the figure that I threw at you, 7%, factors in the 4% pay
increase which has been offered on the national salaries; it factors in a number of essential
service improvements, including a £700,000 revenue contribution to capital - so there is a
link; and it factors in the London weighting offer which has not yet been taken up. It
doesn’t factor in a massive grant cut, should that happen, and it doesn’t factor in a national
pay level increase over and above the 4% because we are making a hopeful assumption that
the Bain Review, which is looking at the pay claim and the employers’ modernisation
proposals, will lead to a situation where, if any new money is suggested, the Government
would be backing it up.

Eric Ollerenshaw: So, we haven’t got a worst-case scenario here?

Valerie Shawcross (LFEPA): This is not a worst-case scenario but I don’t think the worst-
case scenario would be a realistic one.

Eric Ollerenshaw: This London weighting offer: did this have the backing of the Greater
London Employers because there are a lot of negotiations across London at the moment
with public sector workers on London weighting. It just looks odd that the Fire Authority
has gone for such a big offer outside what the rest of public sector employers are doing. I
just wonder what’s going on here; what’s the motivation behind it?

Valerie Shawcross (LFEPA): It’s a political decision, Eric.

Eric Ollerenshaw: That’s what I’m assuming it is.

Valerie Shawcross (LFEPA): The Fire Authority has always made its London weighting
decisions separate from the rest of the local government system in London. We’re not part
of Greater London Employers. If you think about it, that makes some sense because fire-

fighters are not local government employees; they’re not social workers, they’re not street
cleaners, although I sometimes think they --

Eric Ollerenshaw: Police say that they’re not Fire Brigade, they’re not --

Valerie Shawcross (LFEPA): I think the Fire Authority, the fire service, looks in a number
of different directions for what it’s comparable to. The bid that came in from the Fire
Brigades Union, the £6,000, and it was clearly predicated on an assumption that they feel
that they stand alongside the police as an emergency service. I don’t think that is, strictly
speaking, true. However, you can see that they are working most closely with the police and
the police are present at every incident of any significance that we attend. So they see
themselves alongside colleagues who are receiving £6,000 London weighting.

London weighting is one of the areas of the budget, for the Fire Authority, where it does
have some control. Because there has been a national pay formula for years, the Fire
Authority has not been able to make decisions about salary levels overall, over and above
either making cuts to services or doing things with London weighting. For a number of
years - and I can’t remember how many off the top of my head - London weighting was
frozen for the fire service; there were no increases over a number of years. Last year, under
the new Disputes Procedure, we went to ACAS with the Fire Brigades Union, to look at
London weighting because there has been discontent building up for a long time about
London weighting levels. ACAS recommended an increase last year, and indeed the year
before, but they said very clearly last year that we needed to come to a clearer resolution of
the purpose of London weighting and what its general relationship would be to salaries.
Basically, they said, “Go and get some methodology”. When the Greater London Assembly
report was published, that was --

Eric Ollerenshaw: Excuse me, it was not a Greater London Assembly report at all.

Valerie Shawcross (LFEPA): When the review of the independent panel into London
weighting was published, which was originally instigated by the London Assembly, we
looked at that alongside a number of other issues, as well as things that are going on in the
service in terms of our human resources, and what’s happening to the people in the service,
and what the industrial relations climate is.

A number of things are happening within the staffing of the service. It’s pretty clear that a
large number of our staff are travelling very long distances into London, well over a third
now, we think. It is pretty clear that although we have no difficulties in recruiting staff, we
are losing an increasing number of staff to other fire brigades. The level of net transfers out
is increasing rapidly and we think it’s going to be doubling this year. We are bleeding
trained fire-fighters at about the rate of three full training courses a year, at the moment, out
to other fire brigades because, for a similar salary, they can get a better quality of life
elsewhere. We also have significant problems now in recruiting main grade staff; people
doing things like finance, property and the like.

We are also in a situation where the Fire Brigades Union nationally has, for the first time in
25 years, submitted a pay claim. The pay increases in previous years have been achieved
through a formula process. That’s delivered them an average of about 3.6% increase over
the last 10 years, every year. But it is pretty clear from our own internal opinion research
and from what’s going on in the fire service at the moment that there is a genuine demand
from the fire-fighters to increase their standard of living and to improve their material well-
being. We have control of London weighting and if you ask me, as somebody who is

involved nationally with fire services as well as London, where are the most intense
pressures, they are in London; I think it’s pretty clear that that’s the case.

The pay date for London weighting is July. The claim for £6,000 came in in May and we
needed to resolve the issue before the possible national strike came forward, partly because
we need to resolve the issue for budgetary purposes and we were on a budgetary timetable,
but also because if we were going to make an offer, it seemed much more sensible to make it
in advance of industrial problems in London.

It does potentially look like we might be in for a long and difficult and bruising national
strike and we have to think about what our relationship with the fire-fighters is like, and
how we can organise an orderly return to work in London on the other side of that strike.
The evidence from people who were involved last time in the national fire strike, and the
recent disputes elsewhere, has been that we do need to work quite hard to keep the goodwill
of the bulk of the fire-fighters.

Those are all the kind of factors that went into the discussions that brought us to the
conclusion that we needed to offer a London weighting increase. The fact is I don’t think we
were paying enough London weighting to the fire-fighters. A qualified five-year fire-fighter
in London, at the moment, is earning £24,700. That is below the average salary level for
London and we have offered £1,200 over two years, so it is phased, which would take the
fire-fighter salary in London - if you factor in the 4% national - over the two-year period, to
£26,700. I still don’t think that is a King’s ransom but it is better than where we are at the

We do have to think about the welfare of the fire-fighters. We have got quite high sickness
levels in London and I wonder sometimes if part of that is about the fact that more than 50%
of our fire-fighters have got second jobs. It’s certainly to do with the distances they are
travelling in London. Sometimes you take decisions because it’s the right thing to do and I
think £2 on the precept to increase the London weighting of the fire-fighters in London is a
reasonable and justifiable decision.

Eric Ollerenshaw: As you said, that is a political decision you made to buy some goodwill,
as you explain it. Before you made that political decision, what discussions did you have, if
at all, with the Mayor or the Mayor’s office about this matter?

Valerie Shawcross (LFEPA): The first discussions we had on our response to London
weighting took place in the Fire Authority’s Finance Panel just before the summer. After
that panel I went to meet the Mayor in his Budget Steering Group, with a number of GLA
officers, and we talked about this as well as other issues, New Dimensions being one of the
ones that the Mayor is most concerned about. We then had a Chair’s co-ordinating group,
which is a cross-party meeting, just after the summer where we looked at a number of
options for a response on London weighting, and then the Fire Authority took the decision
two weeks ago at Urgency Committee.

The difficulty we have with having a very open democratic debate about salary levels and
industrial relations issues is, obviously, that you have to maintain some degree of

Eric Ollerenshaw: I am just trying to find out what the Mayor’s position is and was on this
when you made your decision.

Valerie Shawcross (LFEPA): I think you will need to ask that question of the Mayor but
my understanding of the conversations I had with the Mayor was that he felt a London
weighting increase of the level we said, was justified, and he felt --

Eric Ollerenshaw: The Mayor knew all about this beforehand?

Valerie Shawcross (LFEPA): Yes, because I wouldn’t have been in a position to even
broach an offer with the union without having the backing of the majority of the Fire
Authority members, and without knowing that there could potentially be precept support if
we needed it.

Brian Coleman: I’m afraid I think Valerie [Shawcross] is being slightly disingenuous on
the approach to London weighting because, of course, she will recall at the Chair’s Co-
ordinating Meeting in the summer, it was decided we wouldn’t progress London weighting
because there was absolutely no pressure from the union to settle and, indeed, it was quite
common knowledge that the union wished to get the national pay claim out of the way
before they came back to London weighting. I don’t want to rehearse the debate that we
had at the special Authority Meeting when I voted against the offer. I do think Valerie’s
[Shawcross] comments in support of this vast increase in London weighting are not logical
in terms of her and, indeed, our attitude to the national pay claim because you could use the
same arguments on that.

Can I just ask about the sustainability of this London weighting which, I believe, is going to
cost £8 million in a full year - I think that’s the figure, Mr O’Callaghan, isn’t it? And the
sustainability of that on the base line budget. Are you really satisfied that that is

Colm O’Callaghan, Head of Finance, LFEPA: It is £7.3 million next year. The
sustainability is based on us building the item into our budget and looking to ensure that we
have resources sufficient to cover it. If it is built into our budget then it’s sustainable.

Brian Coleman: And the current year?

Colm O’Callaghan (LFEPA): In the current year we will have to use money from our
contingency reserve to cover the cost of it, so we have to take £2.4 million from the
contingency reserve and £400,000 from the general reserve. One of the other issues that
we will be looking at is the overall level of reserves before we finalise the budget.

Brian Coleman: But if we’re faced with a big bill for the strike action, where is that coming
from in the current year?

Colm O’Callaghan (LFEPA): That will come from the general reserve, which we’re
projecting at the moment to be £3.7 million.

Valerie Shawcross (LFEPA): Can I just make a point there about the strike? If there is a
strike, as I said, we are pretty hopeful, although we haven’t had final confirmation, that the
Government will pick up the military costs. The other factor is that we would, of course, be
docking the pay, the salaries, of the striking fire-fighters to --

Brian Coleman: But that is only if there is an all-out strike. If they are taking one-hour
action - which they could do because it’s going to be a discontinuous strike - I think we have
already discussions that we might not dock their pay.

Valerie Shawcross (LFEPA): The national advice is that we should reduce the pay
commensurate with the period of times not worked. I think it’s sensible that we would stay
in line with the national advice. Of course, somebody, the Government, would have to pay
for the Green Goddesses support by the week-block, we would only have to pay for police
escort services as required. If it’s one-hour strikes, then the police service costs go down;
that’s about £80,000 an hour.

Brian Coleman: Can I just explore one further subject that was raised, and that is the Best
Value review of the non-pumping appliances? Are you sure, Mr O’Callaghan, that this is
built in to the base line for next year, because I seem to recall seeing something in the papers
for the Star Chamber which went very wobbly on the non-pumping appliances; these extra
rescue units? Are they built into next year’s base line budget or not?

Colm O’Callaghan (LFEPA): Not yet, no.

Brian Coleman: So the increased services the Chair talks about, in answer to Eric
Ollerenshaw’s question, does not include these extra rescue units that she was previously

Valerie Shawcross (LFEPA): We have made the decision to do it and a specification is
being developed and procurement is being initiated.

Brian Coleman: But the figures are not in the base line budget.

Valerie Shawcross (LFEPA): The training will be there, as well. It will take some time for
the actual cost to kick in and that’s the reason why it’s not in the base line budget at the

Brian Coleman: Therefore, it’s not one of the extra services for your £5 a week.

Philip Portwood, Deputy Chair, LFEPA: Just to say that in terms of the non-pumping
appliances, when we come to you with our detailed budget work, what we will be able to
show is that we, as the Mayor has required, can balance the majority of our growth with
efficiency savings. The scale of the additional costs of the non-pumping appliances is such
that we couldn’t do that and we will be presenting that to this Committee and to the Mayor
for consideration.

Valerie Shawcross (LFEPA): We are waiting for the Government to make its decisions
about New Dimension funding.

Brian Coleman: I am still mystified, like Eric Ollerenshaw, about what the extra services
are for the £5 a week, because it’s not the extra rescue units.

The Chair: We will see the draft budget in due course. Can I just check: the non-pumping
appliances, the figure that I have seen is £2 million.

Colm O’Callaghan (LFEPA): That’s the full-year costs but, depending on the phasing, it
could be quite a lot lower.

The Chair: Clearly, we have to bear in mind the full-year cost as well as the part-year.

Mike Tuffrey: Can I take us to efficiencies and savings, which have already been
mentioned? The point is obvious: before one can come asking Londoners to pay more, one
has to show that there has been an absolute ruthless search for savings. Firstly, can I ask: I
think the target for cash savings in the 2003/2004 budget is something like £2 million.
How far have you got towards finding those because when we last had a medium-term
financial projection it fell well short? Where are you at in terms of overview and, if you
could answer at the same time, where are the main savings identified or lines of enquiry?

Valerie Shawcross (LFEPA): We have had a number of Star Chamber meetings which
have identified savings from the base budget and Phil has been chairing those meetings.

Philip Portwood (LFEPA): We’ve achieved a total of some £1.7 million through that
process of savings identified. There are no big single items in there; it’s a whole set of
smaller issues. We’ve looked at the budget on a line-by-line basis and looked at the areas
where we’ve been underspending, say, for the last couple of years and whether, therefore, we
need that as a budget item at the previous level. Areas where service demands have
changed, we are looking for more efficiency, particularly some benefits that best value would
use. I can give you the schedule but it’s not one big hit; it’s whole sets of £10,000, £20,000,
£50,000, that come up to a total of some £1.7 million in the next year and in subsequent
full years.

Mike Tuffrey: I think it would be useful for this Committee to see that at the appropriate
time because I do think this is central to any case for an increase, certainly when we wear
our different hats in terms of voting for budgets. There is no way we can vote for increases
if we’re not absolutely satisfied that no stone has been left unturned.

I have to say that when I saw that there was a £2 million target on a budget of whatever it
is - £350 million? - it seemed to me that was actually quite a low target. It depends what
one means by target because, certainly. I’m more used to looking for 5% or even 10%
searching exercises, albeit that getting to 10% in one year is nigh on impossible. I am just
concerned that £2 million doesn’t sound vigorous enough.

Can I pursue one other particularly big area which is absenteeism. It seems to me it would
be useful if you could put a cost on that for us - we probably should have given you notice -
but if you can that would be helpful. London has the worst level of absenteeism, I think, in
the entire country. This is one of the things that the Inspectorate found, and that surely has
a huge cost in terms of staffing bills. What are you actually doing on that and what is the
extra cost that Londoners are paying for these really very high absenteeism levels?

Valerie Shawcross (LFEPA): If I can come in on a few of those issues, Chair. In terms of
the savings that we’ve identified - and there are quite long lists of items here - the problem is
that 90% of the budget is tied up in front-line staff and pensions. The scope for savings,
outside of cutting appliances and reducing numbers of fire-fighters, is extremely limited. A
£2 million target is quite a high target in relation to the portion of the budget over which
we have control.

It’s expenditure on hydrants, for example, and fuel efficiency, electricity, gas, utility bills,
where we might be able to find some savings. But 90% of the budget is very tied up and
would involve us in service reductions if we tried to make cuts there.

The sickness levels: they are a continuing problem in the service and - as I am sure Brian
[Coleman, Assembly Member], who chaired the Human Resources Panel for two years but

struggled with this issue, will tell you - it’s an issue that we have tried to make enormous
efforts on. I think the absenteeism level was about 7% and we’ve got it down to 6.4%.
We’re making some inroads to it but it is a real difficulty. As I said, I think some of that is
about the distances that people have to travel into work and some of it is about the fact that
people have other jobs, and sustain injuries in their other jobs and activities.

Some of the service improvements that we are putting in place are to try and reduce the
sickness levels. I will give you one example that comes to mind. One of the procurements
we’re going to make, which is partly why I was talking about capital, is for forced entry
equipment. £108,000 is being spent on hydraulic forced entry - some of it is manual - so
that fire-fighters can break into secure premises, flats, buildings which are increasingly
secured, with equipment that they can use which prevents them using their feet and their
shoulders. We have a significant amount of injuries from fire-fighters trying to get into
buildings quickly to get people out and deal with the fire, and because people are worried
these days about burglaries, they lock themselves in extremely securely. There is wonderful
can-opener type equipment that they can get into doors really quickly. How many injuries
did we have last year?

Roy Bishop (LFEPA): We did an analysis: we had 74 injuries in total from people breaking
into premises, 9 of which were quite significant ones. One ended up with someone being
permanently unfit. That’s over a number of years rather than one year, so there is a
significant issue there. In the pilot scheme where we used the new equipment at four fire
stations, what we found was that fire-fighters used it on 41 occasions in quite a short period.
They were into the premises in under a minute and occasioned no injuries at all. Whereas in
the same period, there were 13 injuries in other non-pilot stations. So it is a quite significant

Along with that, in terms of guidelines, there are other issues around manual handling, for
instance, which are not only requirements from the Health and Safety Executive
examination of the London Fire Brigade. We’re hoping that changes to the methods and the
nature of the stowage on fire appliances, coupled with greater training in manual handling,
will reduce the number of muscular-skeletal injuries which are a substantive proportion of
our long-term injuries. So there is a range of issues on those service improvements that are
designed to come at the other end of the absence control problem, by reducing the number
of injuries we get.

Mike Tuffrey: That’s clearly very welcome and, in terms of budget, we would like to see
that feeding through to savings to pay for the grades. I think my concern is precisely
because so much of the budget is tied around staffing that I’ve latched on to absenteeism,
and splitting the absenteeism which is, as it were, genuinely due to sickness which we
absolutely understand and are sympathetic about, and stuff that is more related to what you
were implying around jobs and travel. Without labouring the point this morning, as we go
into the process, I would put out a marker that I , personally, and I think the Committee as a
whole, will want to see what is really being done to get this very significant extra cost that
London is carrying.

Philip Portwood (LFEPA): A bit of a health warning on that. It is important to get
absences down but there is not necessarily a direct collectable financial saving from all of
that. There are savings but more in efficiency terms, having more people around at various
time for example. There are some saving clearly in terms of stand-by costs and ultimately in
the forced retirements that Roy has talked about. A lot of the gains we get from that

wouldn’t be simple cashable savings, they would be efficiency gains, so one should be wary
of building them into a budget strategy, important though it is to reduce absence.

Mike Tuffrey: I understand that but, nonetheless, we will keep asking the questions.

The Chair: I understand the point about there being relatively few budget lines where you
can look for efficiencies. I think it was you, Phil, that mentioned the Mayor’s Guidance this
year, which said if you want any growth you’ve got to find efficiencies to pay for it. What
was the discussion that you had with the Mayor about the limits that are on you in this

Philip Portwood (LFEPA): In terms of the Mayor’s Guidance, as I understand it, there is a
separation in there from those who regard growth as inflation and those who regard it as
developmental growth. London weighting, for example, is regarded as inflation, albeit
somewhat higher than the current RPI. What we looked at is keeping that commitment
there, that we match our developmental growth, at least, with savings. And that will go in.
We’re putting forward some £1.64 million on that kind of developmental growth which
includes issues like the forced entry equipment, the manual handling work and some other
issues around IT, accommodation changes, and so on. And that will be matched by some
£1.7 million of savings. We will actually, in 2003/2004, be generating more savings than
we need to cover the Mayor’s requirements for our growth and that saving would increase
in future years. Much of the growth next year is one-off. So, for example, in 2004/2005 we
would be still making the same savings, but with lesser growth, so we would have £500,000
of net savings there.

The Chair: One-off would be paying for capital-type items?

Philip Portwood (LFEPA): Equipment, staff items for example. Some of our combination
monies we’re putting in are to advance getting out of some buildings which would then
generate savings in future years. The other area that we haven’t put into that pattern is the
issue around New Dimensions. I think Valerie [Shawcross] has already talked about that.
And linked to that, the non-pumping review and the scale of growth required there, we
couldn’t really conceivably match efficiency savings given the constraints. Valerie
[Shawcross] has said that only about 10% of our budget is genuinely flexible and

Valerie Shawcross (LFEPA): New Dimensions work: I don’t know if I have told you this
but it is proposed that a revised bid goes into the Government within three weeks time. We
may have some more news about that by the end of November, I hope.

The Chair: And as we’ve mentioned the Government, the issue of the new formula funding
and the floors.

Len Duvall: Can you just tell us what is the update of the latest calculation of the
Government funding envelope for 2003/2004 as compared to 2002/2003?

Colm O'Callaghan (LFEPA): In the current year we get grants of £256 million and the
examples in the Formula Review showed losses of between £22 million and £29 million.
Since that document came out there have been further exemplifications done by the
Government, basically at the request of authorities, and there have been some done
effectively jointly between ourselves and the GLA, and those have shown losses down to
about £4 million. The problem is that the people asking for exemplifications are asking for

things that benefit themselves so, just because an exemplification has been done showing a
£4 million loss, doesn’t mean that’s likely to happen because that’s almost the best case we
can choose.

Having said that, during the process we have raised some points with the Government
around the way pensions were treated and, to some extent, density of population which - I
wouldn’t say we had been given any confirmation that they have been accepted - but I think
there is an indication that things might move slightly.

Even on the Government’s side there have been exemplifications that show us losing about
£17 million or £18 million. My hope is that we will roll back at least £10 million of the
loss, and maybe £15 million.

Len Duvall: Which would put us where?

Colm O'Callaghan (LFEPA): If it’s £256 million, we would be at about £245 million for
next year. You take the loss off and then there will be an inflationary unit as well.

Valerie Shawcross (LFEPA): We don’t know what the control totals will be yet, either, do

The Chair: Again, this being the subject that you’ve discussed with the Mayor, given that
the floors are going to affect the whole of the GLA family, he’s presumably going to have to
look at in a realistic fashion.

Valerie Shawcross (LFEPA): The Mayor and the Mayor’s office and staff are fully aware
of this and we have had some discussions but we haven’t come to conclusions as to how the
GLA would handle the issue of floors

The Chair: Any other questions?

Eric Ollerenshaw: On efficiencies, one would have expected with the new GLA that we
would have got efficiencies of scale. Where are you - and it’s been asked every single year -
on joint working with, say, the Police to produce efficiencies? I have just picked up a
question Tony Arbour [Assembly Member] asked the Mayor on 20 December 2000 about
the Metropolitan Police which indicated to the Mayor that the Police would be happy to
look at a joint fire patrol service on the Thames. The Mayor said he would ask you, Valerie
[Shawcross], to consider that in your role as Chair of the Fire Authority: that is from 20
December 2000. I want to ask what happened to that specifically, and also what has been
suggested about future property developments where both sides could gain some efficiencies.
I just wonder where we are with all those things.

Valerie Shawcross (LFEPA): There are number of things that we are doing jointly with
the other services. For example, we have just talked about the forced entry equipment. The
training for people to use that is going to be happening at Hendon, at the police college. We
do have good working relationships.

I think you need to understand, Eric, that one of the reasons why the industrial relations
issues, at the moment, are quite so important for us - this is not just about money - is
because there are major blockages to finding efficiencies and better service delivery in the
fire service because of Fire Brigades Union policy.

One of the key areas where the Fire Brigades Union has nationally blocked development is
in joint working with other services. They have blocked developments around the country
on premises sharing; they have blocked developments on joint working with ambulance
services; they have blocked a wide variety of cross-service projects. At the moment, until we
have got this whole modernisation package agreed and endorsed by the Government and
accepted by the union, there are enormous difficulties in radically re-engineering service
provisions in the fire service. That’s why the employers have been so keen to make sure
their modernisation agenda is pursued.

Eric Ollerenshaw: For example, with these river boats, the fire brigade has blocked that?

Valerie Shawcross (LFEPA): We haven’t even gone there.

Philip Portwood (LFEPA): The previous Authority, just before its abolition, had done a
major review of the river service and got rid of the ancient, rather slow boats and brought in
a new set of fast boats so it would be a while before the new Authority would be looking at
revisiting river fire-fighting strategy.

Eric Ollerenshaw: So it hasn’t been looked at?

Philip Portwood (LFEPA): I don’t know, but the conclusion would be that you don’t dump
brand new kit.

Eric Ollerenshaw: It’s just that the Mayor said it was being looked at in December 2000
and, obviously, it hasn’t been followed through.

Roy Bishop (LFEPA): Just before that period, there was a review of the fire-boat service.
At that time, we entered into consultation with the Metropolitan Police about a provision of
service. What we found was that we couldn’t, at that time, guarantee that we could meet
our statutory requirements in terms of the fire-boats and fire-fighting on the Thames,
through a joint working project with the Police. At the same time, we had the report
coming out after the Marchioness tragedy and there were significant improvements around
the river in terms of --

Eric Ollerenshaw: It is the RNLI.

Roy Bishop (LFEPA): In terms of rescue, yes, indeed. There was a transitionary period
but we have approached the police at a previous time, just when we bought the new fire-
boats, to see if it could work and, at that time, it could not.

Brian Coleman: How many fires have they put out in the last 12 months?

Valerie Shawcross (LFEPA): The other point you need to understand is that the crewing
is shared with the Lambeth Fire Station. The fire-boat crew are not going up and down the
river all the time.

Eric Ollerenshaw: I didn’t want the technical details, I wanted to know if what the Mayor
said had happened and, from what you’ve said, it hasn’t happened.

Valerie Shawcross (LFEPA): It is an important detail, Eric: the fire-fighters are actually
also staffing Lambeth fire appliance.

Eric Ollerenshaw: What you were saying is that the Fire Brigades Union is preventing
this joint working.

Valerie Shawcross (LFEPA): There is a general block in that area.

Eric Ollerenshaw: This is the Fire Brigades Union to which you have taken a political
decision to give the biggest increase in London weighting.

Could I ask you then who owns and controls the fire stations which have all these banners
out at the moment saying, “Support the Unions” and so on? Is that you or is it that the
trades unions are now in control of the fire stations?

The Chair: That’s the last non-budgetary question.

Eric Ollerenshaw: I assume it is the union because it may well be that slinging up these
banners is taking fire-fighters off duty.

Valerie Shawcross (LFEPA): I think the point is that aggressive politician’s bombast is
not necessarily the right prescription for dealing with sensitive industrial relations issues.
We want to win this modernisation.

Brian Coleman: We are actually managing the fire service or we are not.

Valerie Shawcross (LFEPA): The fact is that the industrial relation dispute - as I think I
said to you, Eric - in some senses is about the right to manage, not just the pay claim, it’s
also fire authorities around the country saying that we want to have --

Eric Ollerenshaw: Has the Authority given permission to the unions to sling these banners
up? I don’t know of any other industrial dispute where that is allowed.

Valerie Shawcross (LFEPA): The Commissioner’s judgement was that it would do more
damage than good to instruct the banners to be taken down. If the Fire Authority wants to
change that view, it can be taken. My judgement is that the Fire Commissioner and his
senior colleagues are best placed to judge how to play the industrial relations issue on the

Eric Ollerenshaw: I assume, as usual, throughout this whole meeting, you will be
consulting the Mayor on that before you make a move.

Valerie Shawcross (LFEPA): I don’t discuss non-strategic issues with the Mayor.

Brian Coleman: She just discusses them with the London Region of the FBU directly.

Philip Portwood (LFEPA): Eric raised property as a joint working issue. There are two
sides to our property strategy currently. One is that we have taken the decision that we
want to move away from central London location for our headquarters and Command and
Control Centre; there is no rationale for being there. We are doing that at the moment and
a new Command and Control Centre, with new technology, new generation of equipment, is
currently being installed over in Docklands. That will save us substantial costs; we are
currently based on the Albert Embankment.

We are currently in the process of getting together a marketing package for the buildings
we own on the Embankment so that we can go out to another headquarters, and part of that
is part of our growth bid which is works to advance getting out of the leased buildings on
the Albert Embankment.

We have looked a bit at the potential for joint collaboration with others but the issue is
getting ourselves out of not needing to be in central London which the police and others
may well see that they should be.

On the other part, though, where there is a potential for some joint working, we have got a
corporate property project which is looking at the potential for taking some real financial
gains out of the property portfolio across London. We have 112 fire stations - lots of them
are ill-designed on their site, so there’s lots of potential for building above and around.
We’re looking at getting together a big package which is currently being pioneered at a
couple of central London stations, where we can go into partnership with potentially the
private sector, but also parts of the public sector, including other parts of the GLA family, to
get some real savings.

Eric Ollerenshaw: I am pleased about that. There are a lot of areas of London where you
find a police station right next to a fire station.

Philip Portwood (LFEPA): That’s part of our drive and there are also stations near
ambulance stations and that’s the other area we are looking at. We have currently got two
shared facilities with London Ambulance Service and there’s a potential for going further.
The nature of a lot of the fire stations is that they were developed as part of the civic growth
at the end of the last century. Also there are a lot of council buildings next to fire stations,
so there is real potential there for development.

The Chair: Can I come back to the perennial question of pensions? I know you have been
doing a review of the projections and the figure that I saw was that you expect expenditure
to increase by £7.14 million next year. Is that still the case and how are you going to meet
the cost? Will it be out of pension reserves or are you expecting that to be part of precept?

Colm O'Callaghan (LFEPA): The pensions increase will be met by the pension reserve
this year but that is partly because it won’t be as high as £7.14 million. We think it will be
more like £3 million to £4 million, subject to the major proviso that we will have to do
some scenario planning around the results of the eventual pay award. If there is a significant
pay increase, it’s likely that people who have a choice of when they retire - we have about
200 people at the moment who can retire with one week’s notice - may choose to wait to
have 12 months of higher pay to count towards their pension. We think it will be more like
£3 million to £4 million but we are going to plan around what the different options are
around that and we will use the pension reserve as cover against that.

Valerie Shawcross (LFEPA): We have had difficulties getting accurate actuarial
assessments and even the best have been wildly inaccurate because the dynamics are
changing. It is becoming more difficult, and the peak that we know is going to have to
happen, at some point, in retirements, is constantly retreating because fire-fighters are
enjoying better health and welfare and not wanting to retire so soon.

Brian Coleman: There is a suggestion that if there is industrial action, a substantial
number of fire-fighters who could retire at a week’s notice, rather than face the hassle of a
long drawn-out dispute, will, in fact, choose that option and get out.

Len Duvall: Future changes on the horizon on pension issues, how will you cope with an
emergency rush?

Valerie Shawcross (LFEPA): We do have £15 million in our pension reserve.

Colm O'Callaghan (LFEPA): We had £17 million at the end of the year.

Valerie Shawcross (LFEPA): We have been assiduous in putting away underspends on
pensions because we know it’s only deferred expenditure; it’s not expenditure that isn’t
going to happen. We have kept a healthy pensions reserve which is directly matched to
claims that will come eventually on it. We could deal with a rush to the door.

I think the problem would be around re-staffing. We have already, as I think I said last
year, got the training college above capacity. Some of the growth that is in here is actually
about keeping the training college above capacity to deal with retirements and loss to other
brigades. That is a significant cost.

The Chair: We have been critical of you in the past about whether the pensions provision
was too high. It sounds as if it’s coming down slightly. Is that right?

Philip Portwood (LFEPA): We are coming up to the peak, which we previously
advertised, which is 30 years on from the big intake in 1974 when they changed shift
patterns. So we were planning for a big spike anyway in 2004.

Valerie Shawcross (LFEPA): What we need is for the Government to deal with real
pension costs rather than notional pension costs, in our RSG. That’s the crux of the issue;
who pays for it and whether or not it’s a tax on our services or it’s dealt with centrally.

The Chair: It’s an issue that is not unique to fire authorities though. Are you discussing
this with the MPA? Have there been any joint approaches recently?

Colm O'Callaghan (LFEPA): At officer level there have been some discussions. We are
aware of Government work that talked about one option, and the favoured option being a
notional pension scheme which is similar to what teachers have, where central Government
held the pot and employers’ contribution was made by police and fire authorities. That
would give the advantage of stability but we would still bear the cost of pensions and
therefore there would be an incentive element around numbers of retirements. That was
something that was being discussed by the civil service in the earlier part of this year but, as
far as we are aware, it has not come forward.

The Chair: The impression one gets from the outside is that the Home Office and the
Treasury, no doubt, would like this to go away; they have had it in their in-trays for years.

Barbara Riddell, Director of Finance and IT, LFEPA: The Home Office review was
initiated nine years ago.

The Chair: You have talked about the New Dimensions work. I don’t think we have heard
from you an assessment of the likely on-going costs of that. Have you got a figure?

Valerie Shawcross (LFEPA): The figure depends on what level of risk and what services
you think you will need to have in place. Earlier in the year, we put in a bid to the

Government for about £20 million which was split, capital/revenue, 50:50. Some of those
costs have been eroded nationally because the national New Dimensions project has had
some money put in for some services. However, we still have a significant amount of
potential growth which is not yet funded. We need to have a big review within the Fire
Authority of where we go with it now.

The Chair: Have you got a figure for the significance?

Valerie Shawcross (LFEPA): It is also about the phasing. The issue is about whether or
not we have got it right in terms of how much we should spend to deal with whatever level
of risk. Clearly, risk levels are not going down at the moment, as we see from the weekend’s
events. Colm [O’Callaghan] is doing some work on re-phasing what we might wish to
spend on New Dimensions.

Colm O'Callaghan (LFEPA): £8 million to £9 million next year, maximum.

The Chair: When we get the figures for next year, where you are doing work on re-
phasing, can we say now that we will want to know full-year costs and future implications?

Valerie Shawcross (LFEPA): I think, politically, the point has come where we actually
have to make a decision in London whether or not we are going to take Londoners’ public
interest in our own hands or not. We have been spun on for well over a year now by the
Government only making small, partial decisions, and not deciding expenditure on the big
issues. All of the project planning, the arrangements for mutual aid, and the incredible
amount of work done, nationally, getting ready for procurement, buying new equipment -
but the button will need to be pressed very soon as to whether or not money is spent and the
Government is not forthcoming. Part of the problem has just been the lack of clarity from
the Government about this. We will have to take a decision as to whether or not, in
London, we want to go it alone.

The Chair: At the risk of re-energising the Committee, can I ask about the likely budgetary
implications of congestion charging?

Colm O'Callaghan (LFEPA): There are seven fire stations within the charging zone and
we think the cost will be about £240,000 a year if we have to bear it; the total cost.

Valerie Shawcross (LFEPA): Emergency vehicles are obviously dealt with but there are
non-essential vehicles that we may well have to pay for - I am not sure where the school
liaison officers stand at the moment - but things like the Schools Liaison Service, which is
not an emergency response, we would be paying for. If there was one factor that the fire
service generally would see as an issue, it is that the fire-fighters at those stations are
incredibly worried about having to pay £750-£1,000 a year in congestion charging on their
own incomes. That was one of the factors driving the London weighting issue because there
have been threats of industrial action around congestion charging by the fire-fighters in
inner London.

Eric Ollerenshaw:     So the Mayor tells you to pay them extra to pay his congestion

The Chair: Not unrelated, I suppose: affordable housing. Is there anything that you would
like to say about that?

Philip Portwood (LFEPA): One of the options around this corporate project I have talked
about, about making use of spare space in and around fire stations or developing fire station
sites, would be to create some affordable housing. There used to be much more
accommodation built into fire stations than there is now. That is one area where we could
make a contribution ourselves.

A large proportion of fire-fighters live outside of London, often quite far away; given the
shift pattern, it is possible to live quite far away, and a lot of them have to on cost grounds.
It is certainly an issue that is raised consistently with us from fire-fighters and their
representatives. The property project may be a means of doing something about that but,
obviously, its principal driver is efficiency and financial gain for us. Anything that happened
about affordable housing would have to be subsidised by the appropriate funding agency.

Barbara Riddell (LFEPA): In addition to that, with the Authority’s approval, we started
some partnership discussions, for example, with NHS estates, and we have agreed that we
can have access to their accommodation for fire-fighters. We are starting discussions with
housing associations, on the basis that we don’t become a landlord ourselves, to go into
these kind of partnership arrangements.

Brian Coleman: One issue that I am loath to raise is the on-going Fire House scandal. As
Members will know, the Fire House is still not operational and I think the capital costs are
now up to about £18 million. I am wondering what increased costs that has given to the
Fire Authority this year and going on to future years. Are we absolutely certain that it will
be operational by the start of the next financial year?

Val Shawcross (LFEPA): It is not an issue in the budget this year. The current projected
cost is £18 million; costs are not growing at the moment. It’s in the commissioning phase
so any delay at the moment is the sort of delay you might find anyway during the period in
which a building with these technical facilities is being started and tested and the like. The
project is almost finished now and it’s only the last minute technical glitches that are being
dealt with. I wouldn’t want to say any more because we’re not here under the protection of
legal privilege and, as you know, Brian, the Authority’s solicitors and external legal advisors
have been saying to us that in order to protect the Fire Authority, we should be careful of
the conversations we have.

The Chair: Thank you very much indeed.

                                                                                 Appendix 2

The Chair: Thank you to the representatives of the MPA for coming. We always ask if
there is anything that you would like to say by way of introduction.

Can I start then by asking about the £60 million savings target that was identified for the
current year? Can you tell us how you have got on with that, and, in respect of the savings
you have identified, how do they compare with what you thought you were going to be
looking at to make efficiency savings, and what the operational impacts are?

Toby Harris (MPA): The simple answer to the question, and other people can expand on
that, is that, broadly speaking, the savings target has been achieved, or is in the process of
being achieved. Not without difficulty and not in precisely the same way in every instance
as was originally identified. I think it would be wrong to assume that there were absolutely
no operational implications, because I think at local level there often have been operational
implications, but, by and large, it has not affected operational performance. Would that be a
fair summary?

Ian Blair, Deputy Commissioner, Metropolitan Police: I think so, but it also significant
that after those savings targets were identified, the Met [Police Service] also received a
considerable amount of extra funding for counter-terrorism. A number of the proposed
savings actually came off the overall budget but were replaced by money from central
Government, so some of that operational activity is expected to be preserved.

The Chair: Perhaps we could have a note from you, after this meeting, unless it’s
something that really trips off the tongue, of where the differences are in the items of where
the savings have been made.

Ian Blair (MPS): There isn’t really a difference in the sense that the Mayor, as you
remember, gave us an overall target of £64 million but we only had to get to £60 million
and within that envelope I think it would be fair to say that we achieved what we set out to
do, and are achieving what we set out to do.

One or two issues have proved very difficult. We discovered that there was a real shortage
of a market for second-hand helicopters so that stopped, and a number of items were shown
to be double-counted.

The Chair: I think at the time of the draft budget last year, you had a list of what might be
used to get to the £60 million or £64 million.

Peter Martin, Treasurer, MPA: Can I seek to extend the answer a little bit? The list of
£63.8 million worth of savings was published with our budget, and it is exactly those items
which have been pursued and from which the £60 million is being achieved. We have
identified a short list of items within that £63.8 million which cannot be delivered in this
year and probably not be delivered at all. We have reported those to the MPA Finance
Committee, and the Finance Committee has agreed that those particular items should not be
pursued. Deleting those items still leaves the list of savings that are being pursued
marginally above £60 million: £60.6 million. All the information is available in a published

The Chair: I am not suggesting you are withholding anything.

Peter Martin (MPA): We are very transparent!

The Chair: We just need to know where to look. As I understood it from the Deputy
Commissioner, some of this has been met by Government money coming in. What I think
would be helpful and, as I say, I don’t want to prolong this unduly, is to see where there
have been real cash savings. We’re all on the same side looking for efficiencies and it’s going
to be an exercise that’s repeated next year, I have no doubt.

Toby Harris (MPA): I think there are two points to make. One is, clearly you are
interested as to what extent these are recurring items which will continue in future years,
and I am sure we can present that information.

The second is that it is worth saying that the exercise which went on last year was a
substantial one. Because of the constraints that, in practice, have been worked to, which
limit reductions so that they don’t affect police pay and pensions and long-term contractual
commitments - that only leaves about 30% of the total budget against which savings can be
made. The effect of last year’s reductions was to save about 10% against the available
budget. I think it needs to be borne in mind that that is not an exercise that can be repeated
in the same way, to the same extent, each year.

The Chair: On the same theme, can I ask about the progress of the Accenture reviews? I
understand that you have the results of half-a-dozen now with identified savings of between
£33 million and £65 million but, as I understand it, haven’t yet identified where you will
actually make reductions based on those reviews.

Toby Harris (MPA): There is now clear agreement as to what the savings figures are and
what can and shouldn’t be double-counted. Some of those are issues which will take a while
to implement. For example, there are a number of elements in which the additional benefit
won’t be delivered until 2004/2005 or even later, for example, the £1.7 million saving on
forensic medical examiners is probably not going to kick in until around that time. In other
areas, there are major changes which are necessary, not all of which are immediately under
the control of the MPS, and these are going to take a certain while to feed through.

The Chair: Can you just run down the list of them - there are only the six - as to what you
have agreed the savings are?

Peter Martin (MPA): This is a statement that has been agreed between the MPA, the MPS
and GLA officers, and it has been endorsed by Accenture, who are the consultants. So this is
now an agreed position which will be reported to the MPA’s Finance Committee in a
fortnight’s time so, again, it will be publicly available.

The total position is that savings and benefits already delivered amount to
£21.2 million, and the savings identified, that can be incorporated into the 2003/2004
budget, in addition to those savings already delivered, is about £3.6 million with
£22 million potentially beyond 2003/2004. That, of course, is only from the first tranche of
a programme which is extending over three years, so there are two further review
programmes still to be completed, and those consequences will be assessed.

I am not sure that the document in front of me immediately totals the amount against each
individual review because some of the reviews have a number of recommendations, and what
I have is a list of the individual recommendations. I can clearly provide that document to

The Chair: Staffing: I know that there have been difficulties in recruitment and retaining
staff. You started from a very difficult position a couple of years ago. Is the MPS is any
better equipped now to manage its resources than it was at that time, in terms of staffing?

Toby Harris (MPA): You’re talking about accountancy staffing, primarily?

Keith Luck, Director of Resources, MPS: In terms of accountancy staff, yes, you’re
correct, the position at April 2001 was that we had 22 qualified accountants. With the
support of the Police Authority, we embarked on a period of rapid growth and we now have
40 qualified accountants within Financial Services and, of course, there are a number of
qualified individuals in Internal Audit within the Police Authority. That has been
significant - almost doubling the number of accountants. Most of that support has gone
within Accountancy Services that provides direct support to the business groups.

We have had some 14 posts filled by external individuals and have just completed an
exercise to recruit a further 14 posts. I think, of this weekend, we will see 3 of the senior
finance posts - the Director of Finance, the Head of Corporate Finance and the Head of
Exchequer Services - being advertised with the support of our consultants. I think we have
made considerable progress and the MPA has been keen to support us in that activity.

The Chair: Two questions: firstly, how far short are you of your optimum establishment in
the Finance Services; and secondly, am I right in thinking that senior staff, heads of service,
have been recruited but have left? What conclusion have you drawn from their departure, if
that is the case, about any changes that need to be made, or were you just very unlucky?

Keith Luck (MPS): There are probably two or three aspects to that question. There are,
within the Finance Division, probably about 40 posts where we don’t have permanent full-
time staff; probably about 20 of those are covered by temporary staff and contractors and
interim managers, with another 20 or so that we are still trying to fill. So we do have
something of a shortfall, even today.

At some of the senior levels, individuals have joined us but have gone on to other things.
The Director of Finance was recruited, or, in effect, head-hunted by the Health Service, and
despite our best efforts to retain him, he was made an offer that, frankly, he couldn’t refuse
given that his background was in health. We had lost also the Head of Corporate Finance
and we currently have an interim manager in post there. Without talking about specific
details, people within the finance function have found it a very challenging environment to
be in and I think the adverts coming out this weekend make reference to the fact that people
should be under no illusions that working in the organisation that we are - with the Police
Authority, with the Assembly, with the Mayor - it is a very complex environment. If you
have come from an organisation where perhaps that layering and scrutiny hasn’t been as
heavy, you can sometimes find that it’s not entirely for you.

Toby Harris (MPA): I am sure the simple message you are trying to get through is that
the Assembly is there to help.

Keith Luck (MPS): On the other hand, some people try to thrive on it.

The Chair: Let’s move on to what’s happening on the ground: devolution.

Eric Ollerenshaw: Where we are in terms of the devolution to the seven Boroughs and
what lessons are we getting and what financial controls we’ve got?

Toby Harris (MPA): The position is that there are two Boroughs engaged in the fullest
version of the pilot and the others are engaged in lesser versions; it’s being very closely
monitored. One of the Boroughs has put forward specific proposals in terms of switching
between police officers and civilian staff so as to maximise police operational time, and that’s
something which I’m sure we will all want to watch very closely to see exactly how that
develops and how it’s perceived locally as well the results which it achieves.

Ian Blair (MPS): I think one of the things here is the great irony that if you wish to
devolve, the experience around the country is that managers will seek to employ more
civilians and less police officers. That’s why we’re developing what we’re describing as the
operational policing measure which will provide a figure for workforce in contact with the
public, which is a much more interesting figure than police officer numbers. Almost all of
what we’re going to say today will have the same message across it, which is that if you
concentrate solely on police officer numbers - and I think the Accenture report on
civilianisation, which is currently in draft, will say this - you are likely to spend money
unwisely because those officers will be unsupported and will be inefficient. I think we will
probably reach, very quickly, a level that we can’t devolve any further unless we can unlock
this issue around officer numbers.

Eric Ollerenshaw: Who is going to make that political decision when all the political fight,
as we know, is for extra numbers of police officers?

Ian Blair (MPS): That’s why this operational policing measure is the right answer. If you
can get into the debate about workforce availability then you can move that officer number
debate. If we can’t move that officer number debate, then we are really in a great deal of

Toby Harris (MPA): I think we all have a responsibility as Police Authority members, and
indeed Assembly Members, to try and ensure that national politicians or Mayoral aspirants,
understand the figures in rather more detail. First of all, we, as a Police Authority, need to
be satisfied that we have got a measure which looks at the right things and delivers the right
information. Beyond that, we then have to educate the other politicians and those
externally, as to the value of looking at that sort of figure rather than crude officer numbers.

Eric Ollerenshaw: It sounds very nice but we have a Mayor committed to 1,000 extra
police officers per year, haven’t we?

Toby Harris (MPA): I’m not sure what he’s committed to. Sometimes it’s a higher figure
than that and, indeed, at a recent meeting he said he would be happy to finance whatever
budget was needed to deliver as many police officers as could be physically trained.

Eric Ollerenshaw: If the seven Boroughs which are going to be devolved carry out what
happens in terms of this, then how it will impact on the overall police numbers figure?

Toby Harris (MPA): I think the one Borough which has put forward proposals at the
moment is talking about possibly a switch of 26 posts.

Eric Ollerenshaw: So if 7 boroughs switch 20 posts, that would be …

Toby Harris (MPA): 140, and if you add the other 6, then it’s 182.

Eric Ollerenshaw: So that would be 10% off the Mayor’s target roughly.

Ian Blair (MPS): The other element is to look at growing in other forms. The people that
are walking round the centre of London, at the moment, the Police Community Support
Officers, are a very visible presence to the public and that may be one of the other growth

Eric Ollerenshaw: If we substitute them for real policemen under these targets -

Ian Blair (MPS): I am saying we have two growth patterns; one growth pattern is police
officers and one growth pattern is Police Community Support Officers. They actually
provide the visible presence. If you walk round Westminster, you can’t miss it.

Toby Harris (MPA): At this stage, it is one Borough which has come forward with a set of
proposals, which are currently being looked at. I think the Police Authority would want to
assess how that had worked and whether the judgement that had been made locally can be
seen to have delivered locally, and then that’s a question of taking it forward.

If it turns out that the Mayor has misdirected himself in terms of the target that he’s set, no
doubt he will want to learn from the experience and set more suitable targets in the future.
At this stage, to speculate about what targets he might set in the subsequent years, on the
basis of an experiment which has yet to take place, seems to me to be slightly otiose.

Eric Ollerenshaw: It doesn’t to me because I thought the Mayor had set real targets and he
was committed to the 1,000 extra but, again, I may have misread different things.

The Chair: The Mayor’s Guidance is for an extra 1,500 officers, subject to Hendon’s

Toby Harris (MPA): For this coming year?

The Chair: Yes. While we are on that, can I ask what discussion you have had with the
Mayor about the practicability about that target, given the issues that have been touched on.
We have got the Community Support Officers, we’ve got the whole issue of civilianisation,
which we’ll come to later, but presumably when this target was set, you had a discussion
with the Mayor as to what was a practicable and appropriate target.

Toby Harris (MPA): We had two discussions with the Mayor. A very brief discussion,
prior to him issuing his guidelines, but more recently a discussion in which he has been told
that his target is achievable. What is being assumed in terms of recruitment capacity next
year, assuming there is a recruitment capacity of 3,000, is that there is a wastage of 1,600
officers during the course of the year, broadly consisting of what we are seeing at the
moment; that there would be scope for an addition of 200 to make up the total number of
police officers in the context of civilianisation around C3i; potentially another 200 for a
further special services agreement with TfL; and 1,000 additional officers on top of that,
making 3,000.

Eric Ollerenshaw: To do with that, and also to do with the previous discussion, we have
now had two Chairs of Functional Bodies who have commented on their meetings with the
Mayor and the Mayor’s statements, which are always given verbally. Shouldn’t there be

recorded minutes of these meetings in this transparent Authority? It seems to me odd that
we constantly being told verbally the impressions of one side of what happens at these
meetings between the Chairs of Functional Bodies and the Mayor. I don’t know where that
fits constitutionally, or perhaps it might suit Labour and Liberals to have it like that, I don’t

Toby Harris (MPA): I am completely relaxed about having the meetings minuted. No
doubt it is a matter which could be raised with the Mayor. I would make another point,
which is a constitutional point, that one would not want the Mayor to get involved in such
detailed discussions that he was, in essence, trying to direct the Functional Bodies.
Therefore, one would hope that he would restrict himself to the current broad-brush
approach that he tends to take on these matters.

Eric Ollerenshaw: I think he is very good at broad-brush.

The Chair: It is a question for the Mayor, and there is another constitutional point which
is, at which point are discussions not really discussions but they are advice, and how far that
is to be taken?

Eric Ollerenshaw: To be fair, Chair, we heard the Chair of the Fire Authority saying she
had got the okay to make a pay increase in London weighting, we’ve now had the Chair of
the Metropolitan Police Authority talking about police numbers.

The Chair: I am not trying to protect the Mayor, I’m just reminding you of another factor
in what’s not always a straight forward position.

Eric Ollerenshaw: I would like to know where we stand in this organisation.

The Chair: I do want to pursue this further, for a moment, to ask whether you think that it
is appropriate to have a target which is just limited to uniformed officers, given the complex
employment pattern of the MPS?

Toby Harris (MPA): I think the preference would be for a target which related to
whatever operational policing measure is eventually agreed. That measure has got to be one
which commands general support and I suspect the only way that that will happen is if it is
seen as something that is running in parallel to people monitoring police numbers and
looking at those figures. It probably is helpful if it is done at a time of general expansion,
rather than otherwise.

We have, at what I assume was an un-minuted meeting which we have just had with the
Mayor, made the point that the Mayor will in future need to be much more explicit as to his
expectations, both in respect of police numbers or whatever measure is taken of that, and
also in terms of other staff and, in particular, the Police Community Support Officers. There
is clearly an expectation that those will also be deployed increasingly in Boroughs, and the
Mayor will need to focus on all the aspects of staffing and not simply police numbers.

The Chair: I would think that that is something that this Committee will want to come
back to and likely to be sympathetic to that point of view.

We are not only looking ahead to next year’s budget but also looking at the monitoring of
the figures that we’ve got so far, and so could we turn to the outturn for the first four

Bob Neill: What I am interested in is some explanation of these underspends. Territorial
policing: the Mayor and the Authority have talked very much about the importance of
reassurance, visibility, and so on. This is what the 1,000 extra officers was about. But there
is a £21 million underspend on Territorial Policing: how do you match that up with the
greater visibility in the boroughs?

Ian Blair (MPS): They are in the training school, which accounts for the large overspend in
the HR [human resources].

Bob Neill: I don’t think the Boroughs will be very impressed with that. What is being
done to explain that to people?

Ian Blair (MPS): We are putting more people through Hendon than has ever been seen in
its history. We are on double shifts of training; the intakes are 350 rather than 80, as it was
2 years ago; and if you provide budget for the last six months of the year, in the sense that
you provide a half-year cost, then in that half-year, they are going to be in the training
school because they take 18 weeks to pass through that training school. Until they are in
the Boroughs, it is unfair to provide the budget to the Boroughs. That is, effectively, an
accounting matter. None of this diminished, at all, the significance of getting the Boroughs
up to strength as soon as possible.

We were somewhat overtaken by the events of September 11 last year and the requirement
to strengthen the counter-terrorist and other specialist operations because of the money that
we were provided to do just that.

Bob Neill: £21 million is allocated to the budget for Territorial Policing. It is not
unreasonable, therefore, for people in the Boroughs to think this is money that is going to be
translated into presence on our streets. You are telling me it’s not because they are in the
training school. Which budget head is that coming from?

Keith Luck (MPS): It is within HR. The Holding Branch, as it’s called, is part of the HR
business group; those individuals are in the training school. In allocating the budget for this
year, we had put the budget in Territorial Policing [TP]. Frankly, that is an accounting
matter; we could put the budget in HR and, in fact, there would be no variance on either TP
or HR.

Toby Harris (MPA): The Police Authority is quite clear that these officers are going to be
deployed in the Boroughs and we will be receiving reports in the next few days, which will
demonstrate to us how that is going to be achieved.

The intervention of the Police Authority was despite your extremely ill-informed comments,
Eric [Ollerenshaw], on the radio when, as a member of the Police Authority, you should
know better.

Eric Ollerenshaw: It upset you, did it?

Toby Harris (MPA): No, I thought it demonstrated the shallowness of your thinking.

The Chair: Let’s get back to financial questions.

Bob Neill: You referred to the overspend, Mr Luck, on Human Resources; that’s £14.1
million. Is that what we’re talking about, the same thing?

Keith Luck (MPS): In policing pay, it is an overspend of £18 million, in the HR
directorate - and, yes, the bulk of that is for those new recruits - and the underspend on
police pay within Territorial Policing is £19.7 million, so almost exactly the same £18
million. It’s purely an accounting adjustment and the report to the Finance Committee on
27 September had the analysis broken down by business group and by expense line.

The Chair: Can I just check the figures we have got in the monitoring report [Item 7 on
the agenda for the meeting] for the period to the end of July - the £14.1 million Human
Resources and underspend on territorial at £21 million. Those are full year’s figures. But
there has been further work done since then which is in the latest figures.

Keith Luck (MPS): We monitor this every month and, therefore, the August figures went
to 27 September Committee and, later this month, the figures for last month are due out.

Bob Neill: There is a small balance then on the underspend on Territorial Policing. Can
you help me with what that is?

Keith Luck (MPS): There is an underspend on civil staff pay within Territorial Policing
and I think that reflects a number of factors, but, certainly, there was a moratorium on at the
beginning of this year in order to make sure that we would achieve the £10 million
reduction required as part of the £60 million. It is also true to say that we have struggled,
even with the enhanced pay rates for civil staff, following the Hay Review, because we are
not quite up to the market rate. But we do attract civil staff into those areas. Where
Borough Commanders have any flexibility, it is probably the only budget they have any
flexibility over in order to meet overspend or variances in any of their other Boroughs. So
the            civil          staff           pay           budget            is         about
£2.5 million of that underspend. There is an underspend of a third of a million on police
overtime and a third of a million on civil staff overtime.

Peter Martin (MPA): There is also an underspend against total police pay because the pay
award from September came out at 3%, rather than 3.5%, and the bulk of that will obviously
be in Territorial Policing because that’s where most of the police officers are.

Bob Neill: It does perhaps demonstrate, doesn’t it, just how limited in reality the
devolution to Borough Commanders is, because there is precious little room for manoeuvre
in lots of other areas. We have seen elsewhere in our papers that you could have a scenario
where some central unit requests overtime but it’s billed up against the Borough. Are there
plans to change that because that doesn’t seem to be an incentive to efficiency?

Ian Blair (MPS): That has been changed and I found that a very odd arrangement. There
is now a public order reserve against which this is costed, so that process will not appear

Bob Neill: The final point on underspend is the MPA and Internal Audit. MPA, I assume,
has been a lean and efficient organisation, has it? Internal Audit might trouble us a bit more
if we thought there were difficulties with doing an internal audit.

Toby Harris (MPA): This is the holdback, the £10 million holdback?

Bob Neill: That is the holdback. So we are clear we’re talking about the same things.

The Chair: The holdback that was actually given out pretty quickly, is that right?

Peter Martin (MPA): It has not yet been given out. The Police Service has been told to
plan on the assumption that they will receive it but they cannot commit that money until the
Authority has made a decision. The Authority will make a decision next month in the light
of the six-month review of expenditure against budget.

Bob Neill: Is the Authority seriously going to say, “No, you can’t have it” in the light of all
that’s been said?

Toby Harris (MPA): That’s a matter for the Authority, isn’t it?

Bob Neill: It would be interesting to know since, ultimately, it comes from the council tax-
payers or the precept. It would be interesting to know how serious this is.

Toby Harris (MPA): If I recall, there was a lot of pressure from the Assembly that the
holdback should be more than £10 million.

Bob Neill: It’s an odd holdback where you’re told almost immediately, “Don’t worry, lads,
you’ll get it sooner or later anyway”.

Toby Harris (MPA): Provided we are satisfied the progress has been made on other areas,
for example, in terms of delivering the savings. Again, these were conditions that were
debated at length.

Eric Ollerenshaw: If I remember, it was a Labour move to do it to cover up the fact that
they were agreeing to another great hike in the council tax.

The Chair: Am I right in thinking that the £10 million included a figure for overtime?

Peter Martin (MPA): £2 million in overtime, which almost exactly matches the current
overspending on overtime. Once that is allocated, assuming that it is allocated, then
overtime is running very close to budget.

Bob Neill: You told me that the holdback was serious: what circumstances are there where
you might be thinking of increasing that holdback next year?

Toby Harris (MPA): That’s an issue we will consider in the course of the remaining
elements of the budget-making process. One of the motivations for having the holdback last
year was the unexpected degree of overspend which emerged during the course of the
financial year. That is not a factor which is present in this year’s spend, so far.

Bob Neill: In coming to that decision, are you going to have a service analysis of your year-
to-date figures to help you?

Toby Harris (MPA): I’m not quite sure why you’re asking that.

Bob Neill: Have we now got one?

Toby Harris (MPA): Something was late being submitted.

The Chair: The monitoring information that we have got says that the information isn’t
currently available.

Keith Luck (MPS): Certainly the 27 September report showed the breakdown by business

Bob Neill: I want to move on to the way things have panned out and the way income has
been generated. In the last three financial years, there has been an underestimate of income
- about £11 million or so, in broad figures - each year. Why? How has that happened

Toby Harris (MPA): I think that is an issue of some concern, which is one of the purposes
of one of the Accenture reviews. The concern of the Police Authority is that possible
sources of income are not pursued as vigorously as they should be, both in terms of where
there are legitimate expectations of that income, in terms of agreements already reached,
and those areas where perhaps new agreements could be reached.

Bob Neill: What proposals are in hand to implement that; to bring on stream the results of
those Accenture reviews?

Peter Martin (MPA): I think we have covered that while you were out.

Bob Neill: If it has been met then I am happy to read it in the minutes.

Peter Martin (MPA): We do have an agreed statement between the MPA, the MPS, GLA
and Accenture, on how those recommendations will be implemented and in what sort of time
scale they can be implemented.

The Chair: It isn’t just a question of what extra income can be generated but the forecast of
the income. There have been quite substantial differences between the budget and the actual
income: £11 million, as Bob [Neill] has said, £13 million in 2001 and 2001/2002 was
almost £34 million.

Peter Martin (MPA): I think we would readily agree that the control of income has not
been good in the past, that there has not been good knowledge within the organisation
about income sources; where income is coming from; what expenditure it relates to. Very
often, the income is matching expenditure, it is reimbursement or it is funding specific
additional cost under crime and disorder partnership arrangements.

Last year’s experience, particularly, brought that to the fore, that we needed to know better
and to understand better and, therefore, to control better the income lines in the budget. I
know that the Finance Department have put specific resource into doing that for this year.

Bob Neill: How much do you think you are on top of it now?

Keith Luck (MPS): As the Accenture report showed, there is a considerable way to go and
I think we have also been giving the message very clearly to the business, over the past
couple of years, that we should recover all our costs, recharge where appropriate, identify
those new sources, as the Chair described, and it is pleasing to see that coming through.
The analysis of quite where that comes through and what expenditure that relates to is
where we are currently at.

However, the Accenture review also proposed quite a strong business case for increasing the
income generation and sponsorship unit and, indeed, the report is currently with the Police
Authority to be considered at the Finance Committee at the end of the this month. It
effectively shows how we can increase that team. The proposal is to go up to something like
13 officers. We currently only have 2 in the organisation. In fact, one has just returned
from an extended period of illness, possibly related to some of the workload that he carries,
so there is a strong business case, supported by the Accenture review, for increasing
resource in that activity. We await the outcome from the Authority on the report.

Bob Neill: This may be purely semantic: you said ‘officers’; are we talking about uniformed

Keith Luck (MPS): No, these are civilian staff.

The Chair: I made a mistake a moment ago which nobody picked me up on: I am so used to
reading the differences between budget and actual as being bad news, but here it is good
news. I should make that clear.

It is quite useful to underestimate income because it provides a nice cushion. Is the figure
for 2003/2004, which we have got as £262 million, likely to be revised upwards in the light
of the Accenture report?

Peter Martin (MPA): No, because the Accenture recommendations for 2003/2004 are
already reflected in the latest budget figures for 2003/2004.

The response to whether there is any deliberate underestimation of income is that, if we
knew more about it then we might be able to do it, but I don’t think we know enough about
it to deliberately underestimate. We are not that sophisticated yet.

Keith Luck (MPS): I would just point out that some of the savings, so-called, £60 million
in the current year, do involve increasing income in some areas. Not all of those increases
which did reach the Police Authority were supported, but, nevertheless, in closing the
budget gap, we don’t just look at savings; we are actively encouraging people to look at
income as well.

Andrew Pelling: After the different requirements that take up a number of the additional
police officers that we will have for the service next year, there were 1,000 officers left to
deploy. Operationally, where do you think that they will be spread around the service?

Toby Harris (MPA): Are you talking about the current year?

Andrew Pelling: No, I am talking about next year.

Toby Harris (MPA): I don’t think we’ve made final decisions on that. It will clearly be a
matter which will be discussed between the service and the Authority.

Ian Blair (MPS): Most of it, we hope, will go to Boroughs but there is a significant pressure
reported by Her Majesty’s Inspectorate for Constabulary, for the third year, around the
homicide units. They are operating at a level of pressure which we are fully aware of, which
is unmatched anywhere in the country. They have too high a case-load to be considered safe

in that sense. That is one pressure but the murders happen on the Boroughs so that’s part of
the support to Boroughs.

Andrew Pelling: It is good that the Budget Committee has been involved so early in the

I want to ask about the IT Strategy; £9 million have been provided for in the 2003/2004
budget. One of the reasons why the IT Strategy was put into place was to secure savings;
what are the expectations of any savings that are going to be secured, and efficiencies that
are going to be created? The Accenture report also highlighted the inevitable difficulty that
any organisation is going to have in terms of new IT systems being used effectively. What
provision is there for training to ensure that we do get the fullest usage out of the new IT
systems, and what type of additional efficiencies can we get in terms of the amount of time
that officers have to be out there policing as a result of such training?

Ian Blair (MPS): I have the responsibility for Information Strategy and I would go back to
the comment made to this Committee either last year or the year before, that the Met’s IT
systems were from the dark ages. We have a very clear Information Management Strategy,
which has been agreed by the Authority. I chair an Information Strategy Management
Board, which has been praised by Accenture. On the Accenture review, they said they had
no findings to make as to the way forward because of what had already been achieved by the

The first task is the infrastructure renewal, to actually provide an infrastructure for the
MPS - and we’ve spent £24.5 million of capital and £8 million of revenue on that - this was
allowing the Metropolitan Police to use Outlook. We were previously on a system called
Teamware which, as far as we knew, only us and the Finnish Police used, and it was helpful
to be able to find that we could talk to the outside world and to each other.

There are some quantifiable cost savings. We expect something between £2 million and
£3 million a year, but that is small beer against the overall savings. Part of that is getting
rid of the different terminals. All of the systems of the Met will work through the same
terminal so we can get rid of this terminal population.

Beyond that is the Information Strategy itself, which is involved with the big programmes
that we’re putting through. Some of these are national and we’ve had huge delays in the
products being produced by the Police Information Technology organisation. Every single
one of them has a benefits analysis. Most of it is very difficult to quantify because we’re
talking a few minutes here and a few minutes there, but also, overall efficiency. It is a
statement of the blindingly obvious that when somebody has to put the same information
into four systems which don’t talk to each other, by the time they get to number four,
they’ve stopped putting it in with detail that’s useful to the intelligence systems.

I am very comfortable, and I hope the Authority is, saying we’ve got a real way forward,
we’re moving from the dark ages to at least the 20th century, if not the 21st, in a way that is
very measured and appropriate.

Andrew Pelling: I would like to come back on the point that I asked about ensuring that
both existing and, particularly, new systems, are going to be fully utilised by officers. Has

sufficient provision of planning been undertaken to ensure that officers will fully use new
systems as they come online?

Ian Blair (MPS): I very much believe so. We have an IT training school. The reason the
infrastructure is so important is because it uses Access and Outlook, and most of the people
coming through our doors are extremely familiar with this. We have gone away from the
convoy system that everybody has to be trained at the same speed, to accept that most of our
people are pretty familiar with this work themselves.

Mike Tuffrey: On overtime: we don’t need to rehearse the problems with overtime, it’s a
huge sum of money, over £100 million. It has gone up by leaps and bounds in recent years.
We are already, in the first thee months, overspent by £2.1 million, and yet we have a
national target, in terms of Government police performance, to bring it down by 15%. This
is a considerable worry and we would appreciate being told what exactly is going on,
starting with the Accenture reports, where they have identified very considerable potential
savings: up to £20 million without any change in regulations and a further £32 million
with changes in regulations. Could we be told where you are up to with implementing the
Accenture recommendations on overtime?

Toby Harris (MPA):          One point that should be made is that the Accenture
recommendations, or the savings that they anticipated, were in relation to what they
regarded as the likely spend on overtime, which already incorporated substantial overspend.
I think the first £10 million of their savings would be designed to reduce the level of
overspend before it reduced anything which was in the budget.

Peter Martin (MPA): £10.4 million is already reflected in the current year but it is
reflected in a way of reducing the level of expenditure from its historic levels, because it was
overspending - it is not just that the figures have been high - the issue has been that it has
exceeded budget. It has exceeded budget by some £20 million in the last two years at least,
if not three. The budget for this year included an increase in the overtime budget of £10
million but that required a reduction in the current levels of expenditure of £10 million, and
that is being achieved through taking forward the Accenture recommendations.

There is a further saving of £2.2 million on overtime, again arising from the Accenture
report, being reflected in the budget for next year.

There are then about £13 million of savings on overtime which could be achieved if there
were changes to the regulations. Clearly, there are opportunities to argue for those changes
and to support those changes in national negotiations. At this stage, we could not
implement those.

That level of implementation is reflected in this paper that I have already referred to, which
has been accepted by Accenture as being a reasonable statement of what can be delivered
from their recommendations. They certainly started off by saying that between £14.5
million and £20 million could be achieved without changes to regulations. I think they
have accepted, through further discussion with the MPS, that some of their original
proposals could not be achieved in the way that they had originally set out. They have
endorsed this statement of what has been delivered out of their report.

Can I just reiterate what I said earlier, that, yes, it does show an overspend of
£2 million on the Monitoring Statement for the current year but we have held back

£2 million of that budget. If we decide to hand that budget back, then the expenditure is, in
fact, very closely in line with the budget in the current year.

Ian Blair (MPS): I would like to make two or three preliminary comments. If we exclude
the work-life balance issue for the moment, it is worth remembering that overtime does not
go sick, it doesn’t need training, it doesn’t take rest days - it’s a very efficient method of
working and if we didn’t have significant levels of overtime, we would see far greater
abstractions from the Boroughs to do work around, say, the Diplomatic Protection Group,
the firearms teams, the murder squads and so on.

The most important and significant issue is that London is the epicentre of public order. If
we look at the month of September: we had the Notting Hill Carnival, followed by the
largest march in British history, the Countryside Alliance, followed by the most significant
anti-war demonstration we’ve seen in the last ten years. We are arguing with the
Government at the moment. We are putting the argument to the Government that that
15% reduction should only impact on the overtime over which we have real control. We
don’t have control over bank holidays, which accounts for £30 million of that expenditure.
We have to be putting a position that this is a national issue, that is London to which people
come, and if we don’t pay our officers overtime to do it, we will have to employ them on
ordinary working days on which they will not be available to do the work that Londoners
want them to do.

It is quite a complex argument and the great question is: if the amount of work was finite,
you could say that more officers equals less overtime, but as the work is not finite, more
officers probably equal more overtime.

Mike Tuffrey: I am not clear what your argument is; whether you are arguing that
overtime is a good thing - leaving aside the question of budgeting and overcosts and control
- whether you are saying that overtime is a good thing because it’s cheaper than employing
people, as it were, properly, in which case that line of argument takes us to people’s ordinary
working hours and terms and conditions and so forth. It seems an extraordinary way to run
any service on the basis of an employer holding people under certain terms and conditions,
and then saying, “We’re going to rely on built-in extra hours”. I’m not talking about
unpredictable things but rely on that as a routine way of running the service. It doesn’t
make sense to an outsider.

Ian Blair (MPS): I think it is very difficult to deal with public order, in particular. It’s
almost inconceivable to deal with public order without significant levels of overtime.

Toby Harris (MPA): I think there are two categories of issue here. One is the issue around
peaks and troughs, and the peaks which are most sensibly met by overtime, for example,
policing of major public order events. Then there are specific categories of work where
substantial overtime is routinely worked. You could argue that that is one way you can
make an adjustment but, given the nature of the training involved and the investment
involved, that may not be the most cost-effective way of doing so. I think the point you raise
about work-life balance is one where, clearly, there has to be a lot of discussion with the
officers who are involved in that sort of work, as to the level of overtime they want to do.
For many of them, they see that as part of the income, part of the attraction of doing those
particular roles.

Mike Tuffrey: There is a point about the length of notice and the planning of this. That’s
both a work-life balancing and a costing because, as I understand it, the cost goes up

significantly if the thing is not properly planned. Where are we with addressing those

Ian Blair (MPS): I would say that we are doing everything we know how. In terms of
cancelled rest days - and this is the key issue here - first of all, the Police Reform programme
will reduce the period from eight days to five days, which will be the significant payment
point. Secondly, it is incumbent upon us to make sure that our central units push out the
notice for public order, and football and all the rest of it, in good time and that that is
distributed properly.

Some overtime is much less predictable. Murder units and kidnappings, and so on, are not
within the levels of control.

Mike Tuffrey: Are you confident that the position is now where you would want it to be?

Ian Blair (MPS): I think we are well on the way to it. I think the Authority and the
Assembly have been quite correct in indicating that, in previous years, there was a fairly
cavalier attitude to some of this. That has very much ceased and the controls are very much
in place and the planning is very much in place, to the extent that one of the ironies is that
Borough Commanders are now complaining more that their officers are being abstracted for
whole days, to go away from the Borough, to go and do the work in their ordinary rostered
time, and that has an implication.

Mike Tuffrey: Are you saying that you have now addressed this issue about who incurs
overtime and who pays for it?

Ian Blair (MPS): Yes, very much so.

Mike Tuffrey: Going back to where I started, which is the overspending and what is the
right level of budget and whether we have got that under control, rather than pursuing
numbers across the table this morning, I think it would be helpful to pursue this outside this
meeting - a clear account of the budget as originally foreseen, this question of holding back
and not holding back, and where we are with the Accenture non-regulation savings, so that
we can see what’s going on.

Can I pursue the point about changes in regulations? If you accept the Accenture findings
that very considerable further savings can be made with changes in regulations, can you tell
us what those are and what you’re doing about implementing those?

Ian Blair (MPS): The changes in regulations would require changes to, firstly, the notice
period, which I think is now on the way; the second one is a much more difficult one - which
is not proceeded through the Police Negotiating Board but which the Met pressed for very
heavily - it is an extension of the scheme by which the personal protection officers, who
clearly are required to go with their principals whenever their principals want them to, don’t
claim overtime but get a specific allowance for that. We pressed the Home Secretary
towards extending that to those officers involved in surveillance duties, undercover duties,
kidnappings, and so on, and that has not been received with any particular warmth. I am
not sure that much more is going to happen, given the extent of the reform package that’s
already gone in, there is not much enthusiasm. Martin Tiplady may know more about that.

Martin Tiplady (MPS): The only other area to mention is the whole question of expenses,
which goes hand-in-hand with overtime and payment of allowances, where the plan will be

to introduce a more extensive expenses plan in the future rather than the current allowance
arrangement. We are not absolutely convinced as to the likely success, or otherwise, of that.
That’s a regulation change that we need to do.

Mike Tuffrey: Those issues total £32 million a year potential savings?

Peter Martin (MPA): I think you should remember the timing of the Accenture report. It
was published before the conclusion of the negotiations on the police reform pay package,
and there were certainly much more radical proposals on the table for changing rates of
overtime, which have not been pursued, and the decision is that they will not be pursued.
That was part of the agreement in the PNB between employers, the police side and the
Home Secretary.

Ian Blair (MPS): You may recall a number of police officers going to Westminster to
explain their displeasure at that suggestion.

Mike Tuffrey: These are regulations, basic terms and conditions, in terms of how much
you get for overtime.

Toby Harris (MPA): The national regulations.

Mike Tuffrey: It’s a question of Regulations, with a capital ‘R’ in the sense of regulation
advice to me, as an outsider; administrative issues and fine print rather than the basic, “How
much do people get paid for doing these things?”

The Chair: Can we move on to pensions, which we raised with the Fire Authority earlier,
quite apart from the long-term continuing issue of facing up to the Home Office, and facing
up to the problems which Mr Martin mentioned.

Trevor Phillips: I know this is something that you have been anxious about, Peter
[Martin], because you have talked about this twice this year. On the issue of officers
making pension contributions above the age of 50: I think you said to us before that you
were thinking about an arrangement by which they could stop paying in once they reached a
maximum level. Where are you on that?

Peter Martin (MPA): I think I have been misreported because I wasn’t thinking about it
and it wasn’t in my gift, or in the Authority’s gift. There are proposals being developed and,
indeed, piloted, to enable police officers, once they have completed their 30-years service - at
which stage they are entitled to a full pension if they retire - to enable them to retire and
take their commuted lump sum, but then to be re-employed and, in their re-employed state,
they would not pay pension contributions.

That is a national proposal which is currently being developed and piloted. There is a
potential financial issue for us around that because, if a substantial number of officers were
able to do this - Martin Tiplady is probably closer to this than I am - there would
undoubtedly be criteria for selection of officers to be able to do this. If there were a
substantial number, we would probably not have the resources to pay the lump sums. We
already have a large number of officers who have completed 30 years and who can, therefore,
go at a month’s notice, at their discretion. We already have a current liability to meet the
lump sum commutations of those officers. The latest estimate of that liability is £50
million. In our accounts, that are about to be published and have been approved by the
Authority for 2001/2002, the estimate is £50 million. We have been able to increase the

provision very substantially but it still only represents 55% of that liability. If a significant
majority of the officers in that group were able to take advantage of this arrangement, we
would simply not have the money to pay them.

Martin Tiplady (MPS): If I could give a little more detail on it. The initial pilot of the
scheme will be taking place in West Midlands. We did apply for the pilot in the Met but we
were not taken up on that offer. We have, in principle, been accepted into the second phase
of the pilot, which will be run next year. It is an un-funded scheme and it’s likely that 20 or
30 officers, maximum, will be able to benefit from it. The whole scheme is premised on the
basis of taking a tax-free lump sum, being re-engaged at former pay levels and not being
adversely affected by the previous pension abatement rules.

Once that pilot has been fully undertaken - it’s going to be in five police services during next
year - the next stage of the phase will be, subject to Treasury provision, a funded scheme
which will be looking to retain nationally 700 officers from the year 2005/2006. We are
very active in trying to get the fine print on this scheme; we are moving with the Home
Office in terms of trying to get those to suit the Met. We hope that we will be able to accept
the un-funded scheme next year and introduce it.

Trevor Phillips: This is actually another way of running the retention issue, isn’t it?
There is a cost but there could be quite a big win here.

Ian Blair (MPS): It’s more than that because they tend to be the most experienced officers.
It’s an absurdity for a profession to have its most experienced people walking out of the door
at the age of 48, 49 and 50, often to go and work for people in a competitive industry, in the
sense of private security.         The idea that our most experienced, say, detective
superintendents, walk out of the door when they are the height of their powers is ridiculous.

Trevor Phillips: Is there anything from Government on this? Presumably they are aware
that your pensions might be running at £100 million a year extra from the year 2014. We
could be where we are with the Fire Authority, only catastrophically so.

Peter Martin (MPA): We have shared with this Committee before the fact that we had
done an analysis about 18 months ago which highlighted the potential financial implications
of the likely pattern of retirements over the next ten years. We know, on the basis of the
work we did then, that there are two peaks coming down the track. One is around 2005, and
that relates to an increase in recruitment of 30 years previously, which took place during an
economic recession, a period when, traditionally, the public services have been able to recruit
more effectively than at other times. There is another peak in 2009/2010, and 30 years
prior to that was the Edmund Davies report on police pay, which substantially increased
police pay and then index-linked it evermore.

Trevor Phillips: It was Geoffrey Howe, wasn’t it?

Peter Martin (MPA): If we have to attribute it to somebody, I think it was actually
determined under a Labour administration and I think it was the first thing that Margaret
Thatcher signed when she became Prime Minister in 1979. So, a shared responsibility.
And, of course, the Liberals were engaged in that administration is some way, so you can all
put your hands up to that one.

We have engaged, as in the way the fire service have done in recent years, actuaries to look
at this issue for us and we are, at this moment, going through various iterations of their

draft report which I hope we will be able to share with the Authority in November. That
should, I hope, give us a better handle on the potential future costs.

What we need to try and do about it, one strategy we should consider, is to establish a
reserve to help us to meet those costs. But that will have to come out of current funding so
there are clearly difficulties in seeking to do that. The other strategy that we need to do,
coming back to your question, is that we need to make sure that Government does know,
and that Government is making effective provision nationally. This is not just a
Metropolitan Police issue; it is a national police issue and we need to make sure that this
information is well understood by Government and reflected in Government figures.

Ian Blair (MPS): And, if anything, the national position will break first because we are a far
younger force than most of the rest of the country and, therefore, other forces will hit a
much more serious pension problem earlier than we do, and ours is bad enough.

The Chair: So our first peak is 2005, though it really is an issue now.

Ian Blair (MPS): It is an issue now, absolutely. The Home Secretary has, within his
drawers, a report which was commissioned by Michael Howard.

The Chair: The trouble is, it’s stayed in that drawer.

Ian Blair (MPS): Exactly.

The Chair: Can we move on to civilianisation?

Len Duvall: I was a bit confused here. Here’s one for the Mayor’s staff in the audience: “In
the near future, the civilianisation of admin posts, in the police service, would release police
officers back into active service” - that’s September 2001, and that was from the Mayor.
John Stephens said to this Committee: “If we are to increase the number of officers and their
effectiveness, we need to be able to provide the support staff and the infrastructure that goes
with it”

And then an MPA report that tells me: “In short, the impact on the boroughs [this is some
action you have obviously taken on the operational side] has been to create a process of de-
civilianisation of some civil staff roles”

What’s our policy on this? Have I got something to worry about or is this just a bit of

Toby Harris (MPA): I think all the statements that you have got there are factually
correct. To put a context in it, I think, although I can’t source in my mind the 2001
statement from the Mayor’s office, but I think that partly relates to the implementation of
the new Command and Control System, C3i. The agreement which has been reached with
the Home Office on that as part of a deal for getting £140 million of Home Office capital, is
that, yes, posts within the control rooms will be civilianised but, yes, the Police Authority is
going to ensure that we don’t see a net reduction of police officers. Those police officers will
be redeployed or replaced by police officers on direct operational duties.

The second point about the importance of support back-up and the Commissioner’s
statement in support of the principles of civilianisation, remains essentially the Authority’s
and the service’s policy. I suspect that although we have made substantial progress on

improving civil staff terms and conditions, there may well be more to do if we are to achieve
all the objectives that we would like. There are some areas where, although the appeals
process is not yet finished, there do seem to be some issues around recruitment and
retention which will have to be addressed.

The third statement is a consequence - and you can call it short-termism - but it is a
consequence of some of the reductions that were implemented last time. It is a cause of some
concern to the Authority that the way in which some of the civil staff reductions took place
was not as we had expected. We had understood, from briefings that we received, that many
of the posts that would be deleted would be those that were not filled, would not be filled,
were never likely to be filled, and were essentially just there on the establishment.

Quite clearly, as things have panned out, there have been some posts which it has not been
possible to fill, because vacancy factors have been managed to achieve the budgetary savings,
that have had a consequence which has meant that some police officers have been carrying
out duties which could be carried out by civilian staff.

Is that an unfair summary of what is happening?

Ian Blair (MPS): No, I think that is broadly right. If we go back to this figure of
£600 million as the available amount of money on which £60 million could be found,
something in the region of £300 million of that is civilian staff, you cannot go down this
£60 million route without finding savings in civilian staff.

We looked for £10 million, we thought we could get most of that £10 million and I think
we have got most of that £10 million from posts that weren’t filled. But there have been
difficult areas and we have had to manage the vacancy level.

I think the other issue that comes is, we have no redundancy system, so the vacancies land
where they fall and that is very difficult. What we would like to do is to manage that in a
process and, at the moment, we have no funding for that process at all. Next year it becomes
more difficult because more savings may mean more civilians because there is no other way
of producing them.

Len Duvall: So it’s okay that, of 1,000 extra policing, we have between 160-200 extra
policemen doing civilian jobs?

Ian Blair (MPS): No, it’s not okay.

Peter Martin (MPA): I think that was a reference to police officers being allocated to HR.
They are doing jobs that only police officers can do; they are training other police officers.
That is part of the recruitment.

Len Duvall: No doubt you can provide us with the increased figures about who is doing
civilian jobs in the Boroughs, as in terms of police officers.

Ian Blair (MPS): It is about 100 officers at the moment.

Len Duvall: My case still stands: out of 1,000 extra policemen, we are satisfied that of 100
trained police officers, it is appropriate for them to do civilian jobs.

Ian Blair (MPS): The answer is, it’s not, but at what point, and where do you find the
money, to pay the civilians when the money has been taken out of the budget?

Len Duvall: So I should be concerned - because I want to quote you something else, and
this might point us to it: “The ad hoc nature of these reductions meant that most specific
functions were targeted and the impact was felt across a variety of functions. The
significant consequence of this approach has been an increase in police officers undertaking
the roles previously filled by civil staff. Clearly this undermines the impact of the welcome
increase in police numbers.”

This report, in the MPA, is indicating that there is an approach being taken here and you’re
saying, “How can we step back from that?” but if you’re not targeting specific functions, and
you do it on a blanket issue, then there is going to be a problem. Why can’t you target and
start to do some of your reviews, which you’re quite good at, it seems, that start to get to
grips with some of the issues to try and maybe minimise the 100 officers that are doing

Toby Harris (MPA): I think that is exactly why that report was requested by the Police
Authority because those are precisely the points that the Police Authority wished to pursue.

Martin Tiplady (MPS): In fact, the way in which the reduction, the £10 million reduction,
was enacted across the organisation was to do that that you have outlined; it was to try and
take out functions, in the first instance, that ceased to carry on having a need to do. The
effect of that was to take out of the organisation the equivalent of something equal to about
260 roles from the MPS. The balance, which you have heard already is around vacant roles,
was where there was a feeling that we could not take out those roles from the organisation
without causing damage to it. Therefore, the introduction of a controlled and managed
vacancy factor was introduced.

In introducing that, we made sure that none of the 260 roles that were taken out were from
Boroughs; they were all from central parts of the organisation and specialist operations.
The vacancy factor was introduced across the entire organisation, a factor equivalent to
something like 5.5%-5.6%, which we felt to be a manageable vacancy factor. The fact that in
boroughs there were then further areas that needed to be ring-fenced because of particular
operational circumstances - communications you’ve heard about, and C3i and work in the
CJUs is another area - meant that that vacancy factor actually hit over a much smaller
budget than it was originally intended to. That is where the reference in the report that
you’re reading from, that the ad hoc nature of those reductions meant that no specific
functions were targeted, was simply to realise that what was left, one could not cease to do
those activities. Therefore, there really needed to be a very robust management of a vacancy
factor within those boroughs in order to achieve the necessary savings. That paragraph is
then outlining what some of the impacts of that are.

Len Duvall: If you can’t get out of this situation, when do you stop pursuing this strategy
which takes highly-trained police officers out of the jobs that we want them to do; what’s the
bottom line?

Martin Tiplady (MPS): We are trying to manage the strategy in such a way that we do
not get into that. This report is highlighting that there are one or two areas where we are
genuinely concerned about the impact that is having, and trying to find a way in which we
might get through that.

Len Duvall: So we may see a revision of these cuts when you come to look at the details?
Let’s move on.

Operational policing measures: could someone explain that to me because that may be a

Ian Blair (MPS): The operational policing measure is an idea to divide the workforce up
into a series of categories. So it is those people who are uniformed in contact with the public
first; then some non-uniformed who are in contact with the public; then it’s the group who
are in contact with the public but only by telephone, they’re not physically available; then
you get into the admin support. The administrative support needs to be divided in half.
Some of it is literally administrative support, that all organisations need, the other is issues
like intelligence units and surveillance units; people who are completely invisible but are
necessary to the organisation.

What we are trying to do is to say that, if we know how the organisation divides up into
these categories, then if we can show by altering support in one place we put more people
out into access with the public, then we can get away from this officer number. The classic
one is, if you deploy prisoner processing teams - you withdraw from the total number of
officers available to X Borough, people who will not be visible to the public but they will be
inside the charge rooms - you can then minimise the length of time that an arresting officer
spends inside the charge room, and out they go again. That’s the measure.

Len Duvall: Does this not provide one way where we could provide a formal incentive of
moving police officers away from some of the civilianisation jobs?

Ian Blair (MPS): Absolutely.

Len Duvall: What are the time scales for this piece of work?

Ian Blair (MPS): This piece of work is going to be rolled out across the organisation by
December, with results in April. Then there are some big political decisions. One of the
decisions will be that you don’t need as many police officers. You’re back to this argument.
I think we are probably 12-18 months away from something that can be defended in a very
political arena because we will be moving, in a year’s time, into a very political arena in
London around police officer numbers. I think this is the only way forward and everybody
seems to be very interested in it - the Audit Commission, HMIC, and so on - are very
interested in this piece.

Toby Harris (MPA): This is back to the exchange we had earlier on with Eric, in terms of
trying to wean those who make policy statements, always talking in terms of crude police
numbers rather than what they are actually doing.

Len Duvall: We might want to turn to this issue again. I am a supporter of police numbers
but, in terms of promoting the debate of effective policing issues, we cannot continue on this
spiral of decline, in terms of taking trained people out of operational circumstances - that’s to
say that all desk jobs are not operational, but those that can be undertaken by civilians, you
must get back on track. Maybe if we could think about how we do that, Chair, when we
come to our Budget Report, but also in terms of further questions we might wish to ask of

Peter Martin (MPA): Could I just clarify one point which, I think, is helpful? We had a lot
of discussion 12 months ago about the cost of a police officer. I don’t want to re-open the
discussion but that was all about identifying what additionally you need to provide to basic
police pay, in order to maintain the effectiveness of the police officer. The cost of a police
officer, as we reflect it in our budgets and how it is reflected in the 2003/2004 budget
proposals, includes an element for maintaining civil staff support, proportionately to the
increase in the police officers.

That is another way in which we are trying to prevent the perverse result of officers being
sucked back into back-office functions.

The Chair: It is clear to me that we are going to need to look at the use of uniformed
officers in civilian posts, by which I mean posts which the MPS agrees don’t require
uniformed officers, and have designated them in that way; uniformed officers doing work
where there might be a debate about whether uniformed officers are required - we have
touched on HR, I don’t want to get into the debate now; I think it is common ground that
there could be a debate about it; and thirdly, the Mayor’s blunt target of an increase to pay
for uniformed officers, and whether that translates into the delivery of the most effective

Toby Harris (MPA): On using police officers in HR, if it is about training, about specific
policing skills, then there is quite a strong case for it being police officers who are currently
engaged in those tasks. There might be a case, in some limited circumstances, of recently-
retired police officers but the skills degrade and the skills cease to be relevant if it’s people
who are not currently involved in it. There are good grounds for looking at that.

Equally, there are good grounds for looking at the way in which training has traditionally
been delivered and I know that, for example, there are a number of boroughs where
probationers are going, and are using the probationers in a different way and providing
them with their street duties training, in a different format from that which has previously
been provided which delivers a service to the local population, and at the same time,
probably achieves a better standard of training.

The second point is that there is absolute common ground with the Police Authority about
the need to target the use, particularly on borough commands, of police officers on duties
which could be carried out, if such civil staff were available and could be paid, by other staff.
The analysis, which can be made available, gives details of officers used for other functions,
including jailing functions, across the borough. Those can clearly be carried out in a
different way but, equally, if there is nobody there to carry out the jailing function,
somebody has to do it because it’s clearly important.

There are a number of areas of that sort on which we will want to focus in more detail and
to focus on why some boroughs don’t seem to have problems and others do. That may be
about their allocation of civil staff and how that’s been arrived at; it may be purely
accidental; or it may be about the way in which the operations are managed there.

The Chair: Thank you very much indeed.


To top