Official Report (Hansard)

Session: 2008/2009

Date: 24 March 2009

Members present for all or part of the proceedings:

Mr Jimmy Spratt (Chairperson)
Mr Raymond McCartney (Deputy Chairperson)
Mr Alex Attwood
Mr Simon Hamilton
Mr Danny Kennedy
Mr Alan McFarland
Mr John O’Dowd
Mr Ian Paisley Jnr

Witnesses:

Sir Hugh Orde ) The Chief Constable
Mr David Best ) Police Service of Northern Ireland
Mr Mark McNaughten )

The Chairperson (Mr Spratt):

I welcome Sir Hugh Orde, the Chief Constable, David Best, director of finance and support services, and Mark McNaughten, the strategic financial manager of the PSNI. You are all very welcome. To clear up one piece of business before we move any further, I declare that I am a member of the Northern Ireland Policing Board.

Mr Paisley Jnr:

I am a member of the Policing Board.

The Chairperson:

Thank you. There are no other declarations of interest at the moment. Chief Constable, during this session there is a possibility that we may have to leave the meeting in order to vote in the Chamber; if that happens, I apologise, but there is nothing we can do about that. I know that you have time pressures as well, and we will try to deal with that as quickly as possible if it happens.

The Chief Constable (Sir Hugh Orde):

Thank you, Chairman; I will keep my opening comments brief. It will be more useful if I answer the questions of the Committee, rather than say what I think you would like to hear.

The first point I would like to make is that the PSNI has focused on efficient financial management during the six and a half years in which I have had the privilege of commanding the organisation. By way of example, in the last three years over £71 million has been saved through Gershon efficiency, the target being £62 million. We are certainly committed, and hope to make similar savings in the next three years. We are aware of the importance and the high cost of policing in Northern Ireland.

The PSNI has consistently come in on budget in the last six or seven years. Its accounts have never been qualified by its oversight bodies, and, as I said, it has delivered efficiency savings. That being said, we face significant funding pressures this year and looking forward. It is right to point out to the Committee that the funding currently available in the system is not sufficient, in my judgement, to sustain the current level of police numbers — 7,500 — into the future, with the appropriate infrastructure to move towards 2011. We are looking to fully recruit 440 new officers in the next financial year. The year after that it will become difficult. That could, of course, be the first year of devolution — the Committee should be aware of that.

There is no mechanism to further reduce the number of officers other than by natural wastage. There is clearly no more money, and there is clearly no “Patten II”, for want of a better description. We are limited in how quickly we can downsize our organisation, as we anticipate no more than 70-100 officers leaving the service per year.

The current funding is based on all full-time reserve (FTR) officers leaving the service by March 2011. Members will be fully aware of the current threat, which I am on record as declaring to be of major concern over the last 16 months, and which sadly led to three murders recently. That level of threat is currently being reviewed, and we are already in discussions with Government should our assessment be that we need to retain some of those individuals. Any delay, of course, will incur additional costs.

There are significant pressures from legacy issues; in particular, hearing-loss cases, and the Northern Ireland Civil Service equal pay claim. The recent policing budget could only be agreed through the agreement of the Government to set those issues aside in our current budget planning. The hearing-loss cases increase week in, week out; there seems to be a concerted advertising effort among certain firms of solicitors encouraging claims, and they are reaching in excess of 150 per month. That is a significant pressure, continuing into the future, of which the Committee needs to be aware.

On the issue of pension costs, because of the way we are treated with pensions — which, in essence, are uncontrollable — in my judgement there has to be a system whereby our pension liabilities are prevented from impacting on current police expenditure. That would be in keeping with the rest of the United Kingdom, where pensions are collected and paid for centrally.

In addition, the other legacy issues we continue to face in relation to funding of public inquiries and inquiries from outside sources are simply not sustainable. My current focus is on policing the present; policing the past is a significant drain on current police expenditure, which is allocated for service delivery now. In the prevailing security situation there is a direct impact from any costs that I cannot put into front line policing.

As a result of the current increase in terrorist activity, I have been to speak with the Government. We are in discussion over significant additional funding over the next two years to enable us to continue to deliver an effective level of service against, commensurate with, and proportionate to that terrorist threat.

The Chairperson:

Regarding the historic hearing-loss claims that you mentioned, and the pension commutation payments, the current PSNI budget has a deficit of £24·4 million. Do you envisage further scenarios which would have an extreme impact on the budget? In relation to the dissident threat over the past weeks and the horrific murders which have taken place, can you tell us whether there is any indication in monetary terms of any pressure that that may bring?

As regards future pension liability, is the PSNI treated any differently to other police services throughout the United Kingdom? It is important that we get that on record.

The Chief Constable:

As regards the terrorist threat, we have significantly and consistently reduced our overtime budget by around 50% over the past six years, from around 14,000 average daily hours to around 7,000. That is the right thing to do, because we were high on overtime, and we needed to make sure that it was being used appropriately. There is, without doubt, a direct relationship between the situation that we are currently facing, the activity that we are undertaking, and the expenditure on overtime. Overtime is far more flexible; it enables us to disrupt activity. Investigations are working flat out, 16 hours a day to solve these crimes, so there is a spike in overtime at the minute.

We have spoken to the Government, and are looking at a number of areas. We have asked for additional help in relation to helicopter top cover. Of course, we have no military helicopters at all. We have a plan to purchase a new helicopter in the system, about 18 months down the line. That is simply the lead time to purchase it: we have an airframe.

We are looking at additional money for armoured vehicles. We have downsized our armoured fleet quite appropriately, and are now having to review that to give our guys the confidence to go out and deliver community policing in vehicles that look like police vehicles and are not Land Rovers, so it is in a consistent and appropriate style.

We are also looking at overtime in order to bridge the funding gap so that we can provide the right level of cover to our guys in order that they can deliver an effective service and an effective investigation in these particularly horrific and complicated crimes. You will be aware that one person was charged last night, and I am confident that we will make further progress. However, prisoners are expensive, and have to be looked after — quite properly — in accordance with relevant legislation and human rights principles, which is also hugely expensive.

In dealing with the terrorist issues over the next two years, a conservative estimate of costs would be in the region of £50 million.

Mr David Best (Police Service of Northern Ireland):

If you include the FTR, that comes to around £76 million over two years.

The Chairperson:

What does the reduction of 14,000 average daily hours to 7,000 equate to in monetary terms? I know that that is a difficult question because people are on different pay scales, but can you give us a ballpark figure?

Mr Best:

One thousand average daily hours equates to over £6 million per annum.

The Chief Constable:

I think that it is absolutely right that we made those significant cuts. Overtime had almost become institutionalised to some extent. Devolving the budget — over 80% of our budgets are devolved — has allowed us far more local control and inventive and sensible use of resources.

In facing this type of issue, you have to be realistic, and there may be some shift backwards. I do not see the situation going back to the way it was in 2002, with 14,000 average daily hours of overtime. Bizarrely, it was a lot quieter then than now. I think that we can prove that we can make savings — what we need now is the right amount to deliver against the current threat.

Mr Best:

The area of claims for hearing loss is very difficult. Last year, we were receiving between 20 and 30 a month. At the start of this financial year, the figure jumped up to 60, and during the summer and the autumn there were about 150 a month. In the last couple of months, the figure has grown further; we received 346 claims in January and 187 in February. The figure for March is likely to be in the region of 250. When we issued our budget a couple of months ago, we made an assumption that we would receive 150 claims a month and allocated £98 million for that purpose over the next two years. We will probably have to revise that figure upwards. If we made an assumption of 250 claims a month, which is possible, our provision would have to rise to about £68 million per annum. The issue is very difficult.

A question about class action was asked. Our legal people have consulted on that issue and, to date, have advised us not go down that route, because it would give every police officer an entitlement; 7,000 officers could potentially claim. We have taken legal advice on the issue, and that is our current position. As claims rise, that position will be reviewed, and class action is a potential option.

The main issue with regard to pensions is that we are treated differently from other police services. That has been raised with the Policing Board over the last two years. If we have an overspend on elements of our pensions, or an actuary does a valuation in response to a change in the financial markets, there could be an extra liability or a credit. If there is an extra liability, that can hit our main police grant budget, which would not happen with any police service across the water. We are in discussion with the NIO and the Policing Board and hope to reverse that situation, but there is a potential cost. The latest figure is £64 million per annum. Therefore, it is very important that that additional funding is secured. In other words, if the actuaries change their figures, the Government should pick up the bill as they do for the Northern Ireland Civil Service and all the police services in the United Kingdom.

Last year, the Home Secretary announced a change in pension commutation, providing for an entitlement to a lump sum when an officer retires from a police service. There was an additional liability of £11 million for each of the next two years. Last week, the outcome of a judicial review led to that period being extended backwards, and we now have a potential additional liability of £20 million. Those are a couple of pressures that we need to take on board as we look over the next couple of years.

The Chairperson:

During the evidence from the Policing Board, a figure of about £100 million for hearing loss and for the Civil Service pay claim was mentioned. You are talking about a figure of about £100 million for hearing-loss claims, and my understanding of what you said was that that figure had almost doubled from your previous estimate.

Mr Best:

The Policing Board got figures from us about a month ago. We have revised those figures, and the cost of hearing-loss claims is now estimated at £98 million over the two years. The cost for Civil Service equal pay is now estimated at £50 million, which is the result of a recent valuation that included some other staff, including EO2 officers. That is new information that the Policing Board would not have had, because it is so recent. Therefore, the figure for both over the next couple of years is about £150 million and rising.

Mr McCartney:

You were in the Gallery when I asked about the hearing-loss claims. Does the projected cost of £98 million include legal fees?

Mr Best:

Yes, it does include legal fees.

Mr McCartney:

From the PSNI side or —

Mr Best:

From both sides.

Mr McCartney:

OK. Sir Desmond listed four categories of legacy issues: the Historical Enquiries Team (HET), the hearing claims, public inquiries and pensions. If those costs were removed from your projections, how would you appraise the pressure on your budget as a result?

The Chief Constable:

It would make my budget manageable, in the sense that it would be predictable. The big problem that we have with pensions is that if an actuary gets out of bed on the wrong side, we may find ourselves potentially £30 million overspent and with no way of catching up.

On the legacy issues, individual judges run public inquiries as they choose, which is entirely in keeping with the legislation under which they operate. As all inquiries are different, they require a bespoke response, and finding the information that the retired judges need is hugely labour-intensive; I cannot control it, in that sense. I also have to provide legal representation to all past and serving officers at those inquiries, including for example, from the RUC or independent investigators such as the Chief Constable of the Avon and Somerset Constabulary. That runs to tens of millions of pounds, which, again, I cannot really control.

The HET is slightly different. We secured a red-circled amount of money — £32 million, if I remember correctly — to run that over five years. That is a predictable spend, and we have that money. The problem with that was there was a dispute, or a discussion, with the NIO about previous years in which we came in underspent and the NIO said that we could use that money to fund the HET. It is a complicated argument akin to robbing Peter to pay Paul, but it can contribute to the unpredictability of trying to run a budget in a professional way.

Pensions are the biggest problem, simply because of volume. The hearing-loss claims are out of my control, in that I cannot constrain people who have a right to take an organisation to litigation. We have a right to defend where we can do so, and we examine robustly every single case; that is the right approach. When we settle, we settle at a figure that is as low as it properly can be. However, some cases are hard to defend. If I could get rid of all those issues, I would have a lump of money that I knew could be used to deliver policing in Northern Ireland, and I could be held to account by the Policing Board for that expenditure.

Mr Best:

The issue of the FTR could also be brought into that debate. Given that we have not provided for any FTR expenditure beyond 2010-2011, if we were to retain half of the FTR beyond that point, we would have a liability of £10 million a year. If they all stayed, we would have a liability of £20 million a year — if the security situation required it.

There were a number of questions about police stations in the discussion of legacy issues. Station closures can be expensive, because some stations were built with a great deal of infrastructure. In the current market we could lose money by closing a station, because the sale value is low. In addition, we have put a lot of costs into some of those stations, and they are sitting on our balance sheet. To write down those costs, if we sell stations, is an additional cost. It is driven by operational need, but there are financial implications that influence whether a station is closed or not.

Transferring the policing budget to the Assembly does have risks. Policing has risk attached, such as the occurrence of disorder. For example, the Chairman referred to the high overtime in 2002-03. We put in a bid for approximately £30 million in overtime in that year. We have had a couple of good years recently in which we have lived within our overtime budgets. However, things can go wrong; hearing-loss claims and other legacy issues can arise. The pressures can come and go quite quickly, and that is a risk that must be managed.

Mr McCartney:

Sir Desmond and Barry Gilligan both referred to issues regarding the impact of the legacy costs, including modernising the police estate. It is not within the remit of the Committee to go into the length of detentions — and I do not want to go there this morning. However, criticism has been made about the holding centres in the police estate. What impact will that have on the future?

The Chief Constable:

In a general sense, the problem with the police estate is that we wish to invest in what we want to keep and we want to lose what we do not want to keep, and Des made that point. Toome is an example. It is costing us a substantial amount of money. If we sold it, it would have a negative impact on our balance book. Therefore, it would be crazy to sell it because we would be costing ourselves real money.

I do not want to get into the detail of certain observations made by an individual on the radio this morning. As a custody suite, Antrim is not in the plan for refurbishment, because it is one of our most modern suites. I was there and spoke to all the staff the Sunday before Professor McWilliams visited it. It is one of the holding centres that would be seen as very much fit for purpose in the current sense of the word. If there were recommendations for refurbishment or something similar, it would be a very expensive operation and would increase the costs. For example, if I wanted to rebuild the custody suite at Antrim, it could cost around £10 million to £15 million, which is a substantial amount of money.

Mr McCartney:

Would that be the case even if you were only to make adjustments?

The Chief Constable:

It is hard to adjust such a building. By definition, it is there to deal with extremely serious crimes. That is why it was built. It was built in 2003 to the highest specification available at the time. If people are now saying that it needs to be refurbished, then that is a debate we would take back to the Policing Board and put into our budget projections for future years.

Mr McFarland:

I have three points. The first refers to the Eames/Bradley Consultative Group on the Past’s report and the legacy issues. The sense one got from that was that the historic cases needed to be packaged up and left with the NIO. Have you had any indication of whether that is likely to happen? Clearly, if the past were to be taken out of your budget and you could police the present, it would make quite a difference to your budget. Where are we on that issue as regards discussions with the NIO?

The Chief Constable:

I am unsighted on where the debate on the Eames/Bradley group report has gone. [Interruption.]

The Chairperson:

The Committee will suspend for about 10 minutes. We will resume with Mr McFarland’s question.

Committee suspended for a Division in the House.

On resuming —

The Chairperson:

I reiterate to everyone to turn off their mobile phones, because they interfere with the recording equipment. That includes Ian Paisley Jnr, of course.

Chief Constable, I am sorry that your evidence was interrupted. The best thing to do is to start again. Alan, will you put your question again?

Mr McFarland:

What discussions have you had around the Eames/Bradley group recommending that past issues should be bundled up and perhaps left with the NIO?

The Chief Constable:

I am unsighted with regard to any developments on the Eames/Bradley group’s report, apart from the fact that the £12,000 idea is no longer in the thinking. I have said on record that I have no difficulty with the HET moving into the proposed structure under the three-commissioner system recommended by the Eames/Bradley group, provided that there is no drop in service to victims. The HET was a PSNI idea, which was supported by Government, and we are very proud of what it has achieved.

The financial issue will not really affect us in the sense that it is a red-circle budget. Having said that, even if it does move across, it will not remove the responsibility from my organisation to search for material and to do all the research work, which we sometimes still have to do, even for the Historical Enquiries Team. Therefore, in essence, there is a transfer cost.

We think that we have recovered most of the material in relation to murders, but Eames/Bradley group report goes far wider than that. It is a one-stop approach; victims of the Troubles can come and see the commission to find out where the best solution lies for them. However, inevitably, there will still be a cost on my organisation to supply whatever we can to bring some form of resolution to those families, so, notwithstanding the move to implement the proposals of the Eames/Bradley group, there will still be an impact on the policing budget.

Mr McFarland:

Presumably that is unquantifiable, given that it depends on how many people come forward.

The Chief Constable:

Absolutely. It is utterly dependent on demand.

Mr McFarland:

My second question relates to the police college. As I recall, the original business case contained a clawback, in that the college was going to be used by international police services that would fly in to use our state-of-the-art college, which would pay for a chunk of it. What is the situation with the incoming money from the sale and use of the police college when it is built?

The Chief Constable:

I will ask David to deal with that question. The bigger picture is that there is still huge interest in what has been achieved in policing in Northern Ireland. Only last week, I spent a whole 36 hours in America, and some key officials are very interested in the way that this organisation has worked towards the resolution of a difficult conflict. There is still a likelihood that they will seek training and other things here — people will be looking to here as a centre of excellence. It is unquantifiable, but I think that it may be small money compared to the overall cost of running the college. It will be an add-on, rather than something we can predict.

Mr Best:

The business case prepared for PSNI made no assumptions about income from that source. There is an expectation, but we do not want to anticipate it. Who knows where the security situation will be? Hopefully, it improves as time passes, but no assumptions have been built in.

I listened to the earlier discussion with the Policing Board. Some £90 million is set aside, £52 million of which is in the current CSR period, but £38 million falls into a future CSR period. We need to make sure that that funding is clearly identified in the future period. I wish to confirm, with respect to Barry Gilligan’s comments, that there will be additional running costs for the police college. The figure of £4 million to £5 million is the best estimate that we have.

Mr McFarland:

My third question is about the part-time reserve that was to form the final 10% of the Patten issue to raise it from 30% to 40% of the current population. That was clearly diverted early on. We then had the plan to bring in the police community support officers (PCSOs). Can you update us as to where we are with that, with respect to costs, personnel, people and changes?

The Chief Constable:

The harsh reality is that we do not have the money for PCSOs. That is a shame as I think that it would have been a real step forward. We wanted only 400, and they were to be focused on the very front end of community policing, with no mission-creep, which some forces have been guilty of. They would have been working to local sergeants to deliver community policing. It is a shame because it was an opportunity that we would like to have taken up.

As long as we have an establishment of 7,500, our flexibility is limited. However, I recognise that there is no more money. Part-time officers are down to about 500, which is not what Patten envisaged at all. Those 500 are absolutely embedded in neighbourhood policing. We saw the 400 PCSOs as a critical add-on to that, but it is not happening because of lack of finance. The only way to move on is to look at our overall budget and the mix of sworn officers, PCSOs and support staff. At the moment, we are committed to 7,500 for all sorts of very good reasons, but, as I said in my opening comments, after next year we will recruit to full capacity. After that, it becomes hugely difficult. To achieve that, we will have to do something else within the current structure.

Mr McFarland:

You will recall that, early in the Policing Board’s life, we had a visit to Chicago. There, they use 1,000 volunteers on a voluntary basis — often retired officers. Do you see something like that being brought in to cope with rising costs?

The Chief Constable:

Sadly, I did not go to Chicago. That must have been a Policing Board trip, rather than a police trip.

Lots of forces do that. In Sussex and Surrey, they open police stations on a volunteer basis. I have no issue with looking at all such ideas, but to add service, rather than to provide essential service, and although it would be nice to have, it cannot be predicted. Continuity and health and safety issues all have to be considered. However, I have no difficulty in having a serious debate about the matter. It is not something that we have dealt with, quite frankly. We get huge support from volunteers for policing generally, but not for opening stations, and so on.

Mr Paisley Jnr:

Thank you for your presentation, Chief Constable. In your letter to the Committee of 6 February 2009, you indicated that, in order to achieve the breakdown plan in the current financial year, it was necessary for the Police Service to implement budget cuts totalling £15∙3 million in the last three months of the financial year. To achieve that, the NIO had to transfer £9∙1 million from the budget allocation of future years. You say, quite rightly, that that is not a sustainable solution. You used the phrase “robbing Peter to pay Paul” in your presentation. The bottom line is that this cannot go like this for much longer, and we accept that.

I have checked my hearing of what we were told earlier. Mr Best said that there are four pressures, respectively totalling £70 million, £60 million, £50 million and, potentially, £20 million. You are essentially telling us that, in order to continue to deliver policing as it is and address the relevant pressures, you need a budget comprising what you currently get plus an additional £150 million for every year of the current spending round. If the NIO granted us that sort of settlement — and that is a huge “if”— could we deliver policing?

The Chief Constable:

We will deliver policing with whatever budget we get; it is a question of how effective that policing will be. As an organisation, we must ensure that we provide value for money and drive all possible efficiencies out of the money that we are given. The chairman and the deputy chairman of the Policing Board talked about how we are held to account in that regard, and it is right and proper that that is the case. As w touched on in our opening remarks, we can deliver savings without impacting on front-line services.

The NIO has been very fair in trying to resolve issues such as hearing-loss and equal-pay claims, but those pressures are not to deliver policing but to deal with legacy issues. My frustration is that the money that we are allocated, through all the bidding processes, to deliver policing now is being eroded by trying to deal with things that are outwith my control. I cannot refuse to provide information to a public inquiry; that is a civil offence followed by a criminal offence under the Inquiries Act 2005, and I would not want to commit that offence. I have to put huge effort, resource and expertise into doing work that is not built into the budgetary base. Hearing-loss claims, equal-pay claims, and so on are nothing to do with us, but they impact on our budget. We received some very helpful correspondence about hearing-loss and equal-pay claims from the permanent secretary, and I am hopeful that those issues will be dealt with, and likewise the pensions issue.

I would like all the things that we should not be dealing with in the first place to be taken out of our budget. That would give us a sensible bidding process so that, through the Policing Board, we can come to the Assembly with our proposed budget. Then we can deliver policing. David may be able to talk about the figures in more detail.

Mr Paisley Jnr:

You have set out the numbers very clearly this morning. Your settlement has been described as a generous settlement, and, realistically, it is a generous settlement. However, the fact of the matter is that the NIO has not distinguished between legacy costs and policing costs and has lumped those costs together. You have to make calculations of service delivery on the basis of how it is handed to you, and you do not choose the cloth to be cut that way.

If any of us successfully persuade the NIO to separate legacy costs from policing costs, we could consider a reduced settlement because the NIO would be responsible for settling legacy issues. However, rightly or wrongly, legacy issues are currently contained within policing costs. Would £150 million in each year of the current spending round and the succeeding spending round be sufficient to deliver policing and meet those pressures?

The Chief Constable:

Given all the pressures, including the bid that has been made for extra funding from Government to deal with the rise in terrorism, the short answer to that question is no. A settlement of £150 million each year would be at the bottom end of an estimate. Rather than £300 million over two years, the amount of money required is probably more likely to be somewhere between £300 million and £400 million.

The other option is for us to be treated like other forces and for pressures such as pensions to be taken out of my budget. We have far more pensioners than serving officers, and a police force that did have 13,500 officers is now being funded by the pension contributions of 7,500 serving officers who only pay either 8% or 11%. More police officers are retiring early, so pensions are an ever-increasing pressure on our budget. Pension payments take up about 36% of my budget, and another 45% of my budget goes towards paying serving officers. There is pressure on me to save money, but that is only relevant to a very small amount of money; the rest of my budget is predetermined expenditure that pays current and retired police officers.

I would be much happier to have a smaller budget that recognised that pensions and legacy issues are not our responsibility. That would mean that we could be held to account for the money that we are given to deliver policing. There would then be interesting debates about how many police officers, PCSOs, part-time officers and police stations we want to have. It would mean that we could control the business; I cannot control a business in which so many things are simply outside my influence.

Mr Paisley Jnr:

Do you agree, however, that it is not realistic to talk about reducing police numbers in the current policing climate? Do you accept that?

The Chief Constable:

One can certainly have a conversation about the policing mix. If you want to build community confidence through community policing, there is a serious debate to be had on the value for money of, say, a community officer versus 1·6 PCSOs who are utterly focused on delivering community policing with the local sergeant. Frankly, that debate must be had.

Mr Paisley Jnr:

That is at the micro level. At the highest level, there are 7,500 officers. Let us be honest; it is not realistic for politician in this room to go out and advocate that 1,000 fewer police officers are needed in the current climate.

The Chief Constable:

Politically, advocating a drop in police numbers is probably —

Mr Paisley Jnr:

Suicide.

The Chief Constable:

It would not be seen as a good thing.

Mr Paisley Jnr:

It is like asking to cut the number of nurses.

The Chief Constable:

That said, from a professional basis, I will deliver policing with whatever number of officers I have to the maximum of my ability. We are unique in the sense that we have this notional establishment. Every other force turns on and off the recruitment tap in order to manage expenditure. Many forces are currently turning off the recruitment tap because budgets are going in the wrong direction.

Mr Paisley Jnr:

If you did that, you would upset the 50:50 balance. Is that right?

The Chief Constable:

No, it would not. If numbers are cut, the 50:50 balance will be maintained. Patten’s view of 30% was his top end of optimism. We will achieve 30%, even if recruitment stops. That does not add up, simply because the retiring officers would be skewed in one direction and the number of new officers — however many come into the force — will be 50:50. The debate is about what is the best policing mix to deliver effective community policing.

The harsh reality — which I referred to at Stevie’s funeral and, last night, when I spoke to my colleagues in the Police Superintendent’s Association of England and Wales — is that if you respond in London to a call about criminal damage, as that officer was doing, the maximum number of officers that you will send is two, instantly, even in the tough areas of London. In the same situation, we had to send a minimum of five officers, and that still did not work. The increased cost of policing in the current environment is, therefore, very high. We can deliver that. We can also deliver it in different ways.

The numbers argument, therefore, is a red herring. What I want is clarity on what my budget is, and certainty that I can influence that budget and that nothing will suddenly appear from 20 years ago that I will have to fund. That is where the pressures are. It was hearing loss this year, and — notwithstanding the support from the NIO — all of a sudden, claims go up. The potential impact of that on our budget in 2009 is another £3 million. In essence, had we not had that support from Government, that £3 million of notional money — because it will never be spent in 2009 — would have gone into my balance book. I cannot pay it, so I must claw it back from real money in 2010. That is £3 million out of overtime. That is no way to run a business.

Mr Paisley Jnr:

That is a crazy way to run a business.

A couple of weeks ago, Forensic Science NI made a helpful presentation to the Committee about the modern requirements of forensic evidence and about how its facilities are almost at tipping point. It urgently requires a new facility. Are there any pressures as regards storage of forensic materials which place an additional pressure on policing?

The Chief Constable:

None that has been brought to my immediate attention. We have reviewed all our property storage. The forensic laboratory, quite rightly, needs be an independent organisation and institution. I understand that there have been plans to rebuild it. Conversations have taken place in that regard. In essence, we probably supply 98% of its business.

Mr Paisley Jnr:

I will put it another way: is there any pressure on the police with regard to storage of forensic material?

The Chief Constable:

Nothing has been brought to my attention that we cannot cope with. I am happy to come back to the Committee if there is something specific.

Mr Paisley Jnr:

In you submission, to which you referred earlier, you have highlighted that as a pressure:

“To achieve the shortfall of £38.5m in capital budgets, a number of planned developments were delayed, including Cookstown, Ballymoney, Downpatrick, Armagh, Castlereagh, and the purpose built Call Management facilities and new facilities to store forensic exhibits.”

I do not ask in order to trip you up, Sir; I ask because Forensic Science told us that if they do not get that facility, that will affect their ability to deliver forensic science in a way that lawyers cannot pick apart — which, if they do, lets guilty people go free. They will have huge problems unless that matter is addressed. I wonder whether you have started to feel that pressure, not necessarily in a financial sense, but from a practical point of view.

The Chief Constable:

Put it this way: new facilities would, certainly, enhance capacity. In recent cases, exhibit storage in the past has been severely criticised. That was many years ago. Just last Sunday, as I have mentioned, I visited the murder investigation unit. No one brought to my attention any concern about storing the mass of exhibits that relate to current inquiries. The issue is about enhancement and the right way of going. I am not sighted. I will get back to the Committee if there is a specific issue causing a problem between us and Forensic Science. I happen to be going there next Tuesday to discuss current cases. I will seek clarification and get back to the Committee.

Mr O’Dowd:

I apologise for being absent from the meeting for a while; I had to attend another meeting, which, thankfully, did not last too long. Chief Constable, I want to return to a point that my colleague raised with you earlier about the Antrim detention centre and your forecasts for future budgetary matters. Given the concerns raised this morning by Monica McWilliams, the Human Rights Commissioner, and the concerns raised by other groups and political parties, including Sinn Féin, about 28-day detention — which in itself is a debate for another day, and you are aware of Sinn Féin’s opposition to it — if the British Government and the PSNI continue to use that legislation, surely you will have to plan for and provide humane, adequate detention centres. The Antrim centre was built for 7-day detention, which itself is an abnormality in domestic law. You are now holding people in that centre for 28 days, and it does not have adequate facilities. Surely, you will have to plan for proper facilities in the future.

The Chief Constable:

As a matter of record, nobody has been held for 28 days. I had a conversation with the Human Rights Commissioner this morning, and a number of points spring to mind. Monica rang me last night and I gave her instant access, within an hour of her request; she did not rely on any legislation to get access. Her observations this morning relate, in part, to her organisation’s objection to 28-day detention, which, as you say, is a debate for another day. As police officers we will use the legislation that is enshrined in United Kingdom law, which we are entitled to use, subject to massive judicial oversight. That was evidenced by one of the hearings before the judge, which lasted for 12 hours and ran to 1.30 am. I do not think that there was any debate around whether the detention was lawful.

There is a debate to be had about the conditions, and I await with interest her report on that this afternoon. She told me — and stated publicly — that no prisoners had complained about the way in which they were being treated or the compliance with human rights legislation by officers. Those officers are independent from the investigation. It is inappropriate to link an objection to current enacted legislation to particular cases where my officers are charged with investigating three of the most brutal murders in the unfortunate history of Northern Ireland. It is a complicated mix.

I have no difficulty with looking at any report that comes out from any organisation — be it the Humans Rights Commission, lay visitors or my own officers — that says that detention facilities need to be enhanced. That proposal would go into the bidding process, and we would look at it. If a decision was reached that a new build was required — as I suspect would be the case — we would build it. We could come back to the proposed costs. There is nothing to benchmark it against, because we have the most modern facility in the United Kingdom.

Mr O’Dowd is right in that the law was different when the Antrim centre was built. However, that does not mean that I have any intention of keeping people in custody a day longer than they should be in custody. That has been evidenced by the way in which the recent cases have been dealt with to date. People have been charged; some have been released, and some are being retained, subject to judicial oversight.

I am happy to have that debate. If it means that we have to build something else, it will have to become part of the bidding process. The Committee will want to reflect on how that could be done. Perhaps it would have to come from schools or hospitals, or something else, if it was within you overall budget allocation. I think that that is how it would work: it would go into the bidding process.

Mr O’Dowd:

I acknowledge that Monica McWilliams did state —

The Chairperson:

John, I am reluctant to allow —

Mr O’Dowd:

I am not going to go into it too much.

The Chairperson:

We are here to examine the financial implications and issues.

Mr O’Dowd:

One of the questions —

The Chairperson:

I have given you some flexibility.

Mr O’Dowd:

We always ask witnesses whether they are going to return to us in the future and tell us of costs that are required for some project or other. That is why I am exploring this issue. I acknowledge that the Human Rights Commission stated that there are no complaints against any of the officers involved in the Antrim centre. The Chairperson has told all witnesses that, if they come back in the future saying that there is £6 million that they thought they might have to spend, but did not tell us about, that will be looked on dimly. If there are concerns, we need to acknowledge them and we need to plan for them into the future.

The Chief Constable:

On the recommendation of the Police Ombudsman, we routinely respond to concerns about detention and find the necessary money from with the budget. The ombudsman was concerned, for example, about ligature points — that certain parts of police cells could be used by someone in custody to hang themselves. We are finishing our refurbishment of every single cell to remove that risk. We always respond to such issues, but we do so within our budget and our allocation for capital expenditure.

Part of the pressure on our capital stems from legacy issues — as members know, some buildings in the police estate are in an awful state of disrepair. Also, there is no longer any additional money available from Patten. Over time, we will have to manage certain legacy issues by selling what we do not need and keeping what we do. The other day, we were offered £60,000 for one building because of the current economic climate — that is crazy.

Some buildings have a book value of several million, simply because of their security infrastructure, but that is worthless to anyone else. To sell those buildings, we would hit our bottom line to the tune of £1 million, £2 million or £3 million and would, therefore, have to find another £3 million. We are in negotiations with central Government to get that pressure removed. The unique situation here means that is not sensible to penalise my organisation by stating that the book value of a certain building is £5 million when its real value to anyone, even in the current economic climate, is probably 20% of that.

Mr Hamilton:

It is clear that the current budget within which you operate is, in many respects, crippled by —

[Inaudible due to mobile phone interference.]

That is not my mobile phone.

Mr Paisley Jnr:

Guilty!

The Chairperson:

I always look in one direction, and I just happened to be looking in your direction.

Mr O’Dowd:

Action should be taken.

Mr Paisley Jnr:

There is the man to do it.

The Chief Constable:

Section 44 is always available to us in these circumstances. [Laughter.]

Mr Hamilton:

Your budget is clearly crippled by costs relating to legacy issues and policing the past, and you have outlined some of those issues in detail. At present levels, what percentage of your budget is being spent on legacy matters and the policing of the past?

The Chief Constable:

That is an extremely good question, and quite hard to answer.

Mr Best:

A couple of significant issues have arisen recently, and a figure of between £300 million and £400 million to fix those up has been mentioned. The big ones have come recently. The legacy costs, including the HET investigations, are projected to be £15 to £20 million per annum, over the past couple of years and projected forward. However, if members study the new figures for the next couple of years, there is a bigger problem, and the figures mentioned are a fair reflection of that.

Mr Hamilton:

Upwards of £400 million out of £1·2 billion represents approximately one third of your budget.

Mr Best:

The Policing Board referred to the cost of reinstating overtime. Potentially, if one includes the bid that was submitted recently in response to the current security situation, a large part of which was to reinstate overtime, those figures will be accurate.

Mr Hamilton:

That is fairly sizeable — [Inaudible due to mobile phone interference.]

The Chairperson:

Will everyone check their phones again to ensure that they are switched off? It is interfering, as you can hear.

Mr Paisley Jnr:

I think it is Eamonn Mallie.

Mr Hamilton:

Before the interruption, I was expressing shock about how one third of the budget is being taken up.

The Chief Constable:

So much of this is unpredictable. On hearing loss, we do not know how many cases will be settled and how many will go to court each year, how many will be contested or uncontested, or how many we will win. Similarly, we do not know when, or if, we will have to pay out on the equal-pay claims. It is in there somewhere. It is foreseeable, so it is right that it appears in our accounts, and we are obliged to include it.

The figures are, to some extent, projections, and that is what makes it so difficult for me, as Chief Constable, to manage the budget. One minute my budget looks good, and suddenly I am looking at a £15 million overspend, or whatever it is. That amount of money cannot be clawed back in the last six to eight weeks of a budgetary year.

Mr Hamilton:

The figure of £50 million was mentioned in relation to the current dissident threat. What duration does that amount cover?

The Chief Constable:

Two years.

Mr Best:

It covers a two-year period. It is £49 million plus FTR, plus some close protection unit (CPU) projected costs because the CPU is going to be retained longer. Therefore, it is £50 million plus.

Mr Attwood:

I apologise to the Chairperson and to Sir Hugh; I had a meeting upstairs which meant that I could not be here for the Policing Board’s presentation. I hope that I am not going back over issues that may have been covered in the opening submission. However, I would like some clarification. I think that the Secretary of State adjusted his position somewhat on the Eames/Bradley proposal to make a financial acknowledgement of people. He made a comment — I think that it was in a parliamentary answer during Northern Ireland Question Time — in which he opened the door for that possibility. You may want to check that.

You said that you got a letter from the permanent secretary which was quite helpful. Was it helpful because he gave you some reassurance in respect of the additional costs around pensions, hearing loss, legacy issues and so on? Or did he reassure you that those costs may be separated out from your annual budget and dealt with under separate budgetary arrangements outside the PSNI’s annual framework? What reassurance are you getting?

Mr Best:

We have been reassured that the PSNI, the Policing Board and the NIO will agree to set the sums of money aside. Currently, there are no guarantees as to where that funding will come from. There is the potential that all those costs will still have to be recovered from the police budget.

Mr Attwood:

Those are just the current pressures that you are talking about. You have been reassured that the pressures which have arisen will be met. However, we do not yet know where the funds are coming from.

Mr Best:

Currently, we do not know where they are coming from.

The Chief Constable:

Without that letter, we could not have balanced the books this year.

Mr Attwood:

Is the permanent secretary giving you any reassurance around the demands which you might anticipate over the final two years of the CSR period?

Mr Best:

One of the big pressures referred to earlier was pensions. If we were to move to a similar scheme, there is a potential pressure of £64 million each year over that two-year period. That is under discussion at the moment.

Mr Attwood:

Potentially, therefore, there is some reassurance for this year. Somebody said that they hoped to have the financial arrangements around the devolution of policing and justice confirmed by the end of the financial year. Given that there are still issues around pressures over the next two years of the CSR period, are you in a position to say that you have been reassured in respect of those matters? Are you telling the Committee that that reassurance has not materialised?

Mr Best:

Certainly, from the perspective of the PSNI, at this point in time, we have not received assurances on those issues. Those issues are under discussion.

Mr Attwood:

My second question is on a slightly broader point, but it does arise from what you said, Sir Hugh. There is a debate to be had around police numbers. Are you currently having that conversation with the NIO, subject to, and mindful of, the security situation that has now arisen? In general terms, given what the NIO and Her Majesty’s Inspectorate of Constabulary (HMIC) recommended in respect of overall police numbers, has there been a conversation over recent months concerning the longer term?

The Chief Constable:

I think that that is a discussion for the Policing Board, in the sense that we have to produce a balanced budget for the board’s approval. However, we have reassured the board that next year, we are committed to recruiting 440 people, which will keep the numbers at around 7,500, give or take the normal churn. The HMIC’s report on police numbers — which came up with, I think, the figure of 6,026 — made a number of assumptions which have not been met. Indeed, if one looks at the Patten programme, some of his assumptions around normalisation have not been met. It is a debate that currently rests between us and the Policing Board, and that is the right place for it to be. We have to look at our budget and make those hard decisions. We are clear that next year we can balance the books; however, I think that the year after that, there is still a debate to be had.

Mr Attwood:

I agree that the HMIC assumptions were flawed on a lot of the criteria, but, prior to the recent situation that has arisen, had the NIO asked you whether it is time for you to say that we can get to fewer than 7,500 officers within two, three or four years?

The Chief Constable:

As I said in my opening remarks, and as I have also told the Policing Board, we cannot fund 7,500 officers next year or the year after. It is unlikely that we can deliver that with the available funding. Likewise, as you pointed out, there is no plan or mechanism to reduce numbers more quickly than natural wastage. When the severance scheme ends in 2011, we predict that the natural wastage will be somewhere between 70 and 90 officers a year. That is assuming the current economic climate. People might stay longer, so it will be a very slow process in terms of legal obligations. We cannot make officers redundant. That is not a situation that I want to be in, and it is not one that is available to me in law anyway.

Mr Best:

My understanding is that the NIO’s position is that 7,500 officers will be retained for 2009-2010 and 2010-11; after that, it will be subject to further debate.

The Chairperson:

Final question, Mr Attwood. Before you came in, it was indicated that the Chief Constable has time pressures. We are beyond our time, and Danny Kennedy has not got in yet.

Mr Attwood:

I will be very quick. Given what John O’Dowd said about future accommodation costs in respect of Antrim police station, and subject to what you might hear from Monica McWilliams, do you feel that the accommodation facilities at Antrim are fit for purpose, regardless of whether they are for a detention period of seven days, 14 days or 28 days?

The Chairperson:

I am not going to allow that question. That answer has already been given to Mr O’Dowd. We are discussing purely financial issues here. I made that clear earlier.

Mr Attwood:

It is a financial issue.

The Chairperson:

I am sorry, but I am not going to allow that question. You can read the transcript of evidence.

Mr Kennedy:

I welcome the Chief Constable and his colleagues. I apologise for my unavoidable absence, which might be welcomed by others.

Mr McCartney:

It is.

Mr Kennedy:

With regard to the question of ongoing pressures on police resources due to the current level of threat, is it prudent to restrict personal protection weapons (PPWs) to current or former members of the security forces? There seems to be a widespread campaign. It might have a benefit in one sense, but, in another sense, surely it will increase the costs of providing adequate cover to people who feel more vulnerable as a result of that threat. Do you have any comment on that?

Secondly, the Policing Board told us earlier that the closure of police stations was in no way connected to saving money. Do you share that view?

The Chief Constable:

There is no financial implication to the PPW issue. Deputy chief constable Paul Leighton is reviewing some of the issues around that policy, but, frankly, the biggest danger a PPW has is to its owner. Sadly, since I have been here, more owners of PPWs have committed suicide using them than have died from shots fired in anger or protection, and it is a matter that we are looking at.

With regard to the closure of police stations, we have a huge police estate. It is about 170% of the size of that of any comparable police service. However, much of it is in disarray, falling down, not compliant with health and safety, and needs to be got rid of. In the more recent past, selling it gave us a financial benefit, and we could invest that in the police stations that our officers worked in. Frankly, if police officers are working in inadequate and squalid conditions, it is not the best environment from which to expect them to go out and provide a high-quality service. That is a really important debate.

The reason for closing a police station relates to whether it is needed to provide an effective policing service. There is an inevitable economic benefit to so doing, and common sense dictates that I can only invest in a certain amount of estate. Therefore, there is an economic element to it, but the primary reason is whether we need a particular station to provide a front line service to community policing. The frank answer is that we have far too many police stations.

The Chairperson:

I have a couple of final points. In relation to parading, which has not been touched on, there is evidence in your submission of a downward trend in the cost of policing parades. We are thankful for that and hope that that trend continues. However, do you project some stability in the cost of policing parades, or will it continue to be a volatile item in relation to the budget?

The Chief Constable:

That is very hard to predict. The challenge of policing in Northern Ireland — certainly during the parades season — is unlike any other policing practice. I have experience of policing the Notting Hill carnival: predictably, year on year, disorder dropped from 1977 onwards. It went from a public-order situation to a public-safety situation in a clear, definable trend. The 2007 marching season was an extremely bad year, but it was preceded by a good year, and the past two years have been good.

All other things being equal, and with the amount of engagement that I am getting, things are looking good. However, developments can move very quickly. Consequently, planning is unpredictable. My current best guess is that I think that we will be OK this year. Public support for policing is increasing and the amount of community engagement is increasing. The responsibility of the leadership shown around loyalism in relation to the current attacks, from top to bottom, suggests that there is an increasing grip that can be used in other ways. All other things being equal, I would like to think that this marching season will be very peaceful. However, I am not in the business of second-guessing the situation this far down the line. Sadly, it will run to the wire.

The Chairperson:

Everyone who has given evidence to the Committee has been asked about value added tax (VAT). Does the PSNI currently pay VAT and, if it does, is it reclaimed and retained within the budget?

Finally, there is another question that everyone has been asked — and John O’Dowd has mentioned it already. Are there any other issues that you are aware of that could have a material or inescapable consequence on the budget in the future? Is there anything hurtling down the tracks that could cause alarm and that might well have financial implications in the future? If there is, this is an opportunity to give the Committee some idea of what it might be.

The Chief Constable:

I will ask Mark McNaughten to deal with the technicalities of VAT. As regards anything else that could happen, there is nothing that I can think of, currently. However, to be frank, I did not see the hearing-loss issue coming. You may remember the post-traumatic stress class action that was won by the organisation. At the time, I was far more concerned about that, because it was costed at hundreds of millions of pounds. The hearing-loss issue was a different issue, and I did not see it. Is there anything else like that? Heaven only knows. I cannot see anything huge or out of the ordinary as regards the routine issues that could suddenly hit us and knock us sideways.

By way of reassurance, we will deliver policing with whatever budget we are given. We will deliver efficiency savings with whatever budget we are given, and we will do our best to maximise front line service to the communities and drive the efficiencies out of that. My biggest worry is the uncontrollability of legacy issues that impact on our current policing budget.

Mr Mark McNaughten (Police Service of Northern Ireland):

We pay VAT as a service, but we also reclaim it, so there is no net cost to the service.

The Chairperson:

Quite a number of areas have not been covered, because we have not had the time in this session. As with other witnesses, we have several questions that we will send to you before close of play today. We would be grateful if we could have answers to some of those questions before the Secretary of State gives evidence next week. I understand that there may be pressures, but, if it is possible, we would appreciate it if we could have answers to some of those questions, even though you may have to come back to the Committee at a later stage with more details.

Thank you, Chief Constable, and your colleagues for giving evidence to the Committee today. We will be talking to you again.

I remind members that the media has had access to both the visual and audio feeds from the Committee’s proceedings today and the session in the Chamber. We have no plans to issue a press release. I remind members of their responsibilities when issuing press releases or giving interviews on what has been discussed with the witnesses here today. Thank you very much.

The Chief Constable:

Thank you.

List of amendments (pdf)

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