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Changes to SFO funding arrangements

19 April, 2018 | Statements

Following publication of the Main Estimates today, the SFO can confirm changes to its funding arrangements.  The changes are cost-neutral but will enable the SFO to manage its budget more flexibly and efficiently, with a significantly reduced call on the reserve.

For 2018-19 there will be:

  • A fiscally-neutral increase in the SFO’s core funding from £34.3m (planned for 2018/19) to £52.7m, with sums requested from the reserve reduced accordingly.
  • New arrangements for “blockbuster” funding.  Instead of applying for separate funding for the full cost of any case forecast to cost more than 5% of the core funding, blockbuster funding will cover spend in excess of £2.5m on any single case in a given year.  Modelling this arrangement indicates there are likely to be few cases which will qualify for this (and the amount of blockbuster funding as a percentage of total budget will be markedly less).
  • Significantly for the SFO, the new arrangement eliminates the internal ring fences for resource allocation around blockbuster cases.  The SFO will not need to manage two separate funding streams, will be able to focus on substantially reducing reliance on temporary personnel and will be able to reallocate staff between cases as the work requires. 

Chief Operating Officer, Mark Thompson, said:

“This is a welcome consolidation of the SFO’s funding position which will enable us to manage our casework and our resources more efficiently.”

Notes:

  1. These changes are subject to formal Parliamentary approval.
  2. The previous blockbuster funding arrangement operated from 2012.  It was put in place to enable the SFO to take on very large cases which could not have been predicted or budgeted for in advance.  The SFO caseload comprises a small number of cases, some of which require substantial resource to progress. The Director of the SFO, David Green, has said that he has never turned down a case which was in the public interest to pursue because the organisation could not afford to take it on.  In practice the blockbuster element of the SFO’s funding was a significant, if variable, proportion of the total budget as can be seen from the table below.
  3. The changes address a recommendation from HM Chief Inspector of the CPS in his 2016 report, Serious Fraud Office governance arrangements (May 2016): “Further consideration should be given to pursue a change to the funding model in order to build future SFO capability and provide better value for money.”

Year

Core funding (voted in Main Estimate)

£000

Additional funding¹

£000

Income²

£000

Gross budget³

£000

Gross spend³

£000

2017-18 (as of March 2018)

35,700

22,900

900

59,500

2016-17

35,700

17,930

1,112

54,742

52,937

2015-16

33,800

28,000

900

62,600

61,200

2014-15

33,200

24,500

1,700

59,400

56,400

2013-14

29,600

24,000

400

54,000

52,100

2012-13

33,400

7,400

2,900

43,700

40,900

2011-12

33,900

(700)

7,000

40,100

38,500

2010-11

34,100

2,800

4,400

41,300

39,900

2009-10

35,100

6,000

3,300

44,600

43,000

¹An element of the additional funding has been provided as part of the Main Estimates since 2013-14, the total funding for the year is voted in the Supplementary Estimates.

²Up to 2013-14, the SFO received a proportion of the sums recovered from confiscation orders and civil recovery proceedings under the Asset Recovery Incentivisation Scheme (ARIS). However, because this income stream was extremely difficult to manage – consisting of infrequent and highly unpredictable sums – the SFO agreed with HM Treasury that from April 2014 all ARIS receipts on SFO cases would go to central funds, with a fixed sum added to the SFO’s core funding. This amount covers the approximate cost of running the Proceeds of Crime Division.

³Excludes Annually Managed Expenditure (certain spend on items which will be paid for in future financial years) and Capital Expenditure (for example, spending on IT software and equipment). For further information see our Annual Reports and Accounts.

The totals for 2016-17 are subject to audit.