Radio Communications (Hansard, 11 November 1999)

§ Mr. Baldry
To ask the Secretary of State for the Home Department what is the total estimated cost of the Public Safety Radio Communications Project; and how much of this the Government are going to fund. [96404]

§ Mr. Greenway
To ask the Secretary of State for the Home Department what discussions he has had with police authorities and chief constables regarding the allocation of funding for the Public Safety Radio Communications Project; and what estimate he has made of the project's cost in each of the police force areas in England and Wales. [97233]

§ Mr. Charles Clarke
My right hon. Friend, the Home Secretary, and I have frequent discussions with police authority representatives and chief constables about police resources, including funding for the Public Safety Radio Communications Project (PSRCP). In addition my officials and I have had discussions with the Association of Chief Police Officers and the Association of Police Authorities about the funding of PSRCP.
The Public Safety Radio Communications Project (PSRCP) is still in detailed negotiations on price and contract provision. Therefore, figures could change as contract negotiations are finalised, and so there are commercial sensitivities that limit the amount of detailed information I can provide.
Since 1995 the Police Information Technology Organisation (PITO) has used an indicative figure of £1.5 billion in estimated costs of this project. This figure was intended to be a guide to be revised after the intense two years' study, which has now concluded, to provide firm estimates of price and service quality.
The total cost for the service charge for the Public Safety Radio Communications Service (PSRCS) over the life of the service (15 years for each force) is likely, in today's money value, to be between £1.25 and £1.45 billion, excluding inflation and using standard Treasury accounting techniques. This is equivalent to £2.3 billion in cash terms if the Treasury 6 per cent. discount rate is not applied to the annual cash flows.
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Approximately 80 per cent. of this cost goes to the core service which is to be funded centrally by means of a deduction from total police grant provision. The cost of services additional to the core, which all forces will purchase according to their own requirements, accounts for the remaining 20 per cent. These are net present costs (NPC) calculated employing a standard discounted cash flow technique for a base year of 1999 and using the Treasury's 6 per cent. discount rate.
Separately from the PSRCS charge, forces will need to purchase control room and radio terminal equipment. Based upon our understanding of the police service's overall requirement, we estimate the initial purchase and subsequent replacement costs for terminals to be around £300 million in NPC terms over the PSRCS service contract life. The need to replace terminals is ongoing and expenditure is currently being incurred as forces maintain their existing self-owned systems.
I announced recently that we are providing an extra £50 million of new money for the PSRCP. PITO the non departmental public body managing the PSRCP, has yet to decide, in consultation with the potential PSRCS service provider, BT, how best to use this money to reduce the cost of the service. The Government's intention is for it to be used in a way which reduces the charge in the third and subsequent years thus providing long-term benefit to all forces. PITO estimate that this money could reduce the service charge NPC given above by around £50 to £70 million over the life of the project.
These figures compare with the Government plans for police spending to increase by £186 million in 1999–2000 and further increases for 2000–01 and 2001–02 of £199 million and £290 million respectively. It is a matter for each police authority to set its budget and for each chief constable to decide how to deploy the available resources. The Government have also relaxed the rules on capital receipts from the sales of assets giving Police Authorities the freedom to use proceeds from sales for capital investment.
Since the costs remain to be finalised, for the reasons set out, there are no final figures for the cost of the non-core services to individual police forces. PITO does have estimates but these are subject to negotiation, and are therefore liable to very significant change. Information will shortly be circulated to forces to enable them to calculate their likely potential costs for these non-core services.