Independent report

Security Industry Authority: Public Body Review 2025

Updated 24 March 2025

Published 17 March 2025

Foreword

It has been a privilege to lead this independent review of the Security Industry Authority (SIA) as part of the Cabinet Office Public Bodies Review programme. The programme is an important component of public body reform which seeks to ensure all our public bodies are delivering their vital services to the UK efficiently and effectively. I have valued this insight into the important work the SIA does for the UK’s world-leading private security sector and the expertise and dedication the organisation brings to safeguarding the UK public.

The SIA welcomed the review as an opportunity to consider where improvements could be made. Like some other fee funded public bodies, the SIA has typically been able to plan resource delegation (RDEL) on the basis of budgeted costs, resulting in a limited need to actively seek out efficiencies and cost reductions. The SIA now has the chance to explore further these unexploited efficiency opportunities.

During the review I found a well-run organisation with a good reputation, doing good work. The Chair and CEO, both of whom have been in post for less than four years, work closely together to develop the organisational culture and strengthen its impact on public security. They are supported by a team of senior executives. The SIA’s cultural shift, initiated by the Chair and CEO, is moving the organisational focus more towards public safety. This has already delivered tangible results and further work should be done to align the whole of the organisation with this shift.

The SIA is committed to finding more than 5% RDEL efficiency savings and it has the ambition to save more. The SIA has developed a set of transformation and efficiency initiatives and now needs to focus on strengthening its implementation planning to ensure it realises those benefits. I believe most of these opportunities are realisable within three years and the SIA must pursue them as its top priority. In doing this, the SIA should build a rigorous culture around spending control and organisational efficiency. This is an essential precursor to any further development of their operations.

The review’s scope allowed me to assess the SIAs existing plans and to investigate where further areas of efficiency and cost reduction might be found. However, the review did not provide a mandate or timescales for running a full feasibility study or complete financial due diligence, or to create new delivery plans for the organisation. The recommendations therefore illustrate an efficiency journey which builds on the foundation of the SIA’s current ambition. The review recommends exploring other opportunities in several different areas, including in the SIA’s relationship with the Home Office, which will ultimately support more efficient and effective working methods.

It is my opinion that the SIA can create a sustainable efficiency culture which will deliver savings in the long-term, in addition to those it has already identified.

I recommend the SIA remains in its existing form. The SIA must remain focused on its role as a public body, established by the Home Office, run by public servants and funded by public money through fees. It must also continue to consider the broader context within which it operates, as part of an ecosystem of public protection.

Looking to the future, the SIA should press forward with the cultural and organisational changes begun by the Chair and CEO. It needs to progress these at pace, going further and deeper where necessary, to ensure it can realise and sustain genuine efficiency savings over the long term.

I finish by thanking the SIA and the Home Office for their full cooperation with this review, which I hope will be useful for their future work.

Cristina Bizzi, Independent Lead Reviewer

Executive Summary

The SIA is the regulator of the private security industry in the UK. The organisation plays an important role in supporting Home Office priorities of reducing terrorism, preventing and tackling crime, and improving public safety. The review found the SIA to be a well-run organisation with a Board, Executive and staff committed to improving public security.

This review focuses on identifying efficiencies that the SIA can sustain as it continues to mature. The report should not be read as a comprehensive assessment of all aspects of the SIA’s performance. The recommendations are, inevitably, about matters where the review has identified potential improvements and do not present a complete picture of the SIA’s many existing strengths.

The SIA has challenged itself to increase efficiency to contain the cost of its operations. It has begun a transformation journey to modernise its systems and service delivery. The SIA has prioritised reducing the licence fee for its regulated community. Despite this ambition, historic factors led to the accrual of a significant surplus which the SIA is repaying through a rebate scheme applied to its current fees. It aims to avoid increasing the fee once the rebate scheme comes to an end but notes that recent increases in inflationary pressures and other challenges do create a level of risk.

The SIA is however well placed to achieve at least 5% efficiency savings over three years by implementing the recommendations of this review. The SIA has identified and is targeting a total of 7.53% savings over three years. The 7.53% efficiency savings have not been fully evidenced on the information provided to the review, and this report outlines the risks to their delivery. The SIA now needs to develop a full and comprehensive plan to achieve these efficiency aspirations and implement it, rigorously monitoring delivery and enabling Home Office assurance of its progress.

Some of the efficiency savings, particularly in digital and transformation, are partially dependent on capital funding by the Home Office. The availability of any such funding is decided annually based on a range of factors and cannot be guaranteed, particularly in the current economic context of fiscal restraint.

There is scope for the SIA to raise its level of ambition yet further in cost reductions. The report asks the SIA to modernise its approach to workforce planning and better understand and articulate the relationship between its costs and outputs. In its transformation plans the SIA must pursue further opportunities to increase the automation of its processes, seeking to integrate its transactional support functions and align them with those of the Home Office.

A prerequisite for efficiency at the SIA is clarity about the scope and purpose of the organisation, and alignment of risk appetite with its sponsoring department. Such clarity would support the SIA to tighten its priorities for resource allocation, including further opportunities to reduce expenditure in favour of reducing the cost of licences. The department must ensure that Ministerial priorities are regularly set out to inform the SIA’s planning and resource allocation decisions and that those priorities are reflected in the SIA’s Key Performance Indicators.

There are strong and positive relationships between both components of sponsorship at the Home Office – policy and corporate^{[footnote 1]} - and into the department’s functional areas. The SIA needs to progress at pace towards a more modern way of operating, and the Home Office is crucial to enabling this through sharing functional expertise. This should include sharing expertise on digital and Artificial Intelligence (AI) challenges, and specialist advice to help the SIA improve the quality and scope of its planning and its financial capability. It should also include alignment of risk tolerance and risk methodology with the department, including open discussions about the risks presented to the department by the SIA, as well as the ways in which the SIA mitigates risks on the department’s behalf.

The public body reform agenda encourages Arm’s Length Bodies (ALBs) to look at best practice elsewhere and make sure those examples are being learned from and emulated where possible. The SIA is part of a broader ecosystem of public protection and is active in outreach across its sector. Public bodies are an important part of the conversation about potential threats and challenges over the next decade. The SIA should ensure it is considering its approach over that strategic horizon.

The recommendations of this review aim to ensure efficiency across the SIA from operational delivery to functional support, and they also aim to ensure consistency and collaboration with the department. When implementing these recommendations, the SIA and the Home Office must ensure they are considered as a coherent package and sequenced appropriately.

The SIA is an important delivery partner for Government. It performs a vital role in regulating the UK’s private security industry to protect and safeguard the public. The review agrees that the functions of the SIA should continue to be delivered by the SIA in its current form as a Non-Departmental Public Body (NDPB), albeit with the efficiency recommendations and improvements outlined in this report. Private security operatives should be proud of the work they do to protect the UK and should continue to work with the SIA as an expert and authoritative regulator that is punching above its weight to encourage the highest standards in the profession.

Public Body Review Programme

Public bodies play a vital role in providing services on behalf of His Majesty’s Government. Their responsibilities and functions must be clear and necessary, and public bodies must be accountable and transparent in the interests of effective democratic debate.

The Cabinet Office Public Bodies Review Programme promotes the government’s vision of public bodies that are accountable, effective, efficient, and aligned to the government’s priorities. This review is mindful of Cabinet Office Guidance which emphasises:

• Reducing the financial burden on UK citizens and businesses.

• Creating a culture of efficiency and transparency by charging the Boards of public bodies to embed that culture throughout their organisations.

Reviews are carefully scoped^{[footnote 2]} to avoid unnecessary expense, while providing assurance for the public and government that public bodies are effective and efficient.

Review Scope

This review seeks recurring efficiency savings on the SIA’s Resource Departmental Expenditure Limit (RDEL) of at least 5% against its 2022/23 agreed spending budget approved by the Home Office Safeguarding Minister. These efficiency recommendations should deliver savings by August 2027.

The review considered opportunities for efficiencies in areas including digitisation and automation, shared services and estates. The review also considered what would best support the SIA to deliver sustainable efficiency savings in the long term. This included the SIA’s financial management processes and performance metrics for the tracking and delivery of efficiencies.

The review also looked at the SIA’s ability to deliver its mission efficiently in the longer term with appropriate governance and accountability. The SIA’s approach to continuous improvement and its transparency in its use of public capital funding and licence fee income were reviewed. The review also touched on the balance between the SIA’s role as a delivery partner for government and its operational independence, alongside the effectiveness of accountability arrangements between body and sponsoring department.

Methodology

The review was conducted on behalf of the Secretary of State for the Home Office by Cristina Bizzi, a senior official with the Cabinet Office, who is independent of the body and the sponsorship function. The review was supported by the Home Office public body review team which is independent of the department’s policy and corporate sponsorship functions.

Oversight and guidance were provided by an Advisory Group drawn from senior leadership within the Home Office. The Advisory Group provided support and challenge in the development of the review and recommendations. The group is independent of the review secretariat, the SIA and the Home Office sponsorship function.

The methods relied on for this review were a combination of desk research, observations, interviews, and workshops. Presentations from the SIA, reports and documents were examined to understand the SIA business and services. The review team observed and spoke with operational staff in the SIA office to understand the complexity of work and the knowledge processes that support SIA services.

Interviews were conducted with key senior stakeholders and staff in the SIA, the private security industry, Home Office policy, finance and commercial staff, including Senior Sponsors, the Head of the Home Office Sponsorship Unit and lead sponsors.

The review team also considered relevant legislation to assess the legal remit of the SIA and ensure that it was still operating within those powers, together with issues raised by the SIA regarding potential efficiency savings that could be achieved with legislative changes.

Summary of Recommendations

1. The SIA must finalise a comprehensive financial efficiency plan which covers the full value and breadth of identified efficiency opportunities, including those currently held in other documents such as its digital and data transformation plans. To be completed by April 2025.

Subject to the mitigation of the relevant risks, the savings identified in this plan should enable the amount paid by the licence payer to remain as low as possible when the rebate scheme ends, with the ambition of not exceeding the current level payable. The SIA should prioritise lowering the fee further as it continues to seek value for money for the licence holder in line with Managing Public Money.

The SIA is encouraged to take advantage of Home Office finance expertise in finalising its financial efficiency plan. The SIA must focus on its delivery, subject to the availability of the necessary capital grants from the Home Office.

2. The SIA must put robust internal governance in place to ensure delivery of its financial efficiency plan as part of its strategic planning lifecycle.

This must include processes to regularly review and approve changes, risk management and realistic periodic reporting. The SIA should report progress against its financial efficiency plan to the Home Office Sponsorship Unit at least quarterly. Assurance process to be in place by April 2025.

3. The Chief Executive of the SIA should review and assure themselves that the executive team has the right leadership skills and expertise to deliver the financial efficiency plan. This should be carried out by April 2025. The whole organisation should reflect a public service ethos, where the operational scope is continuously aligned with the Home Office and in coordination with other public security responsible bodies.

4. The SIA should apply demand management principles to restrict operational costs only to what is necessary and directly impacts its core delivery. Ensuring clarity and transparency in accordance with Annex 6.1 of Managing Public Money will support this. Recommendation 10, which asks the Home Office to provide a clearer articulation of the SIA’s core delivery and priorities, is an enabler for this recommendation.

This is a long-term process, but the SIA should complete a review of this element of its operation by April 2025 and work with the Home Office Sponsorship Unit to develop metrics for ongoing assurance.

5. The SIA should reverse the recent growth in non-delivery staff by increasing efficiency in its supporting and functional areas, and review whether the unfilled posts in its transformation directorate remain necessary. It should continue to contain its consultancy / contingent labour costs and aim for further reductions in future. This ongoing ambition should be planned for and articulated in the strategic workforce plan at recommendation 6.

6. The SIA should create a strategic workforce plan to align with its business planning cycle. This must include all suggestions the SIA plans to incorporate from the recent consultancy review. The SIA should engage closely with the Home Office HR function while developing its strategic workforce plan, tapping into Home Office expertise in the recruitment pipeline methodology. To be completed by the end of August 2024.

7. The SIA must keep the occupation rate of its offices at Canary Wharf under review and further decrease its footprint, including pursuing opportunities for Government Property Agency (GPA) to re-let vacated space. The SIA must adhere to the principles set out in its estates strategy that deliver its commitments under Places for Growth and promote the levelling up agenda, without increasing costs to customers through licensing fees. This should be delivered in conjunction with a cohesive resource plan, with reference to recommendation 5, and no later than the timescales agreed with Home Office Ministers.

8. The SIA should coordinate with the Home Office and GDS to ensure GOV.UK OneLogin is implemented and adopted by Q4 2024/25, and progress at pace its work to digitise and automate more of its verification processes. It must also ensure it is being risk-based and proportionate in where it chooses to apply a manual over an automated process.

9. The SIA should begin to align with Home Office policies in Finance and HR to better enable process convergence and seamless systems integration. This should be pursued in conjunction with the Government’s single system solution roll out. The SIA should consider adopting an integrated systems solution to bring together its transactional functions as part of its efficiency planning. The SIA should be able to demonstrate concrete progress towards this ambition by the end of the reporting period for this review, April 2027.

10. The Home Office must set out a clear strategic direction for the SIA based on Ministerial priorities for the body and the wider sector. This must include the timely provision of an annual Chair’s letter of priority from the responsible Minister or Principal Accounting Officer (PAO). The priorities agreed in this letter should then be reflected in stretching KPIs used by the Home Office to assess the SIA’s performance as part of its regular assurance.

The Home Office Sponsorship Unit (HOSU) should prioritise the following capabilities of the Sponsorship Code to support this: Agreeing strategy and setting objectives, Outcome Assurance. A Chair’s letter should be issued to the SIA within the next six months, and on an ongoing basis be provided in the autumn of each year ahead of the SIA’s annual business planning cycle.

11. The SIA must take an overall view of its sets of proposals for new powers, considering their interactions with one another and alignment with the strategic direction established by the Home Office. It should work with the Home Office to define the cost benefit analysis for any expansion of powers and legislation. Progress to be demonstrated by April 2027.

Overview of the SIA

The SIA was established under the Private Security Industry Act 2001 (PSIA). It is a Non-Departmental Public Body (NDPB) sponsored by the Home Office, and its relationship with its sponsoring department is set out in a framework document.

The SIA regulates the private security industry in the UK, carrying out licensing, approval and decision-making activity for the regulated private security sector in the interests of public safeguarding and protection. Its statutory functions are set out in section 1 of PSIA and are summarised below:

a) licensing and approvals conferred on it by PSIA.

b) keeping under review the provision of security industry services and other services involving security operatives.

c) monitoring the activities and effectiveness of those providing such services to protect the public.

d) carrying out inspections it considers necessary of the activities and business of:

i. persons engaged in licensable conduct, and

ii. persons registered by it as approved providers of security industry services.

e) to set or approve standards of conduct, training and levels of supervision for adoption by:

i. those providing security industry services or other services involving security operatives; and

ii. those who are employed for the purposes of such businesses.

f) making recommendations and proposals for the maintenance and improvement of standards in security industry services and the activities of security operatives.

g) keeping the operation of this Act under review.

Licensing of Regulated Activities

Individuals must be licensed by the SIA to carry out certain activities within the private security industry. This is to ensure that those working in such roles are fit and proper to do so. Activities currently subject to SIA licensing are:

• cash and valuables in transit.

• close protection.

• door supervision.

• public space surveillance (CCTV).

• security guarding.

• key holding.

• vehicle immobilisation (Northern Ireland only).

The SIA establishes minimum competency requirements that individuals must meet before their application for a new or renewed licence can be granted. It also applies criteria including relating to identity, right to work and criminality to the applications it receives.

The SIA also conducts inspections and carries out enforcement activity (including prosecution) against those who carry out and supply security roles without the necessary licence.

Certain classes of individuals do not require a licence, and this largely depends on whether they are providing licensable activities under a “contract for services”. For example, individuals working on a voluntary unpaid basis do not need a licence, and neither do some individuals directly employed by a company “in house”, such as security guards employed by supermarket chains or shopping centres. Door supervisors at licenced premises require a licence whether they are contracted or directly employed.

Training and Qualifications

Licence-linked qualifications for individual applicants

Individuals must demonstrate their knowledge and skills with a “licence-linked qualification” to obtain or retain, or in the case of door supervisor, security guarding or close protection licences, to renew a licence. The requirements differ for different licensable activities. The qualifications are either Level 2 or 3 for England, Wales and Northern Ireland and Level 6 for Scotland. Licensees holding a door supervisor, security guarding or close protection licence must keep their qualification(s) up to date to ensure their knowledge remains current. Awards sit under different examining authorities and a wide range of competing providers offer training towards them.

This market-driven approach has led to considerable diversity across the security training and qualification landscape which can be complex for prospective licensees to navigate. They must work out which qualifications are required for the work they wish to be licensed for and then select a training provider. Training providers vary in terms of cost, offering and quality, which increases complexity for operatives wishing to renew qualifications. A less expensive “top up” qualification is required for renewing a licence in some instances.

SIA’s website attempts to clarify^{[footnote 3]} licence-linked qualification requirements for prospective applicants and provides a search function for training providers. The SIA has no powers to vet or approve these training providers and cautions applicants to “be wary of any training provider claiming to be ‘SIA approved’”.

Qualification regulators, such as Ofqual in England, approve Awarding Organisations which in turn approve and monitor commercial training providers. The delivery of training is not directly regulated by qualification regulators and is not part of the Ofsted inspection regime.

The SIA reports that 466,825 active licences were held by 412,198 individuals working in private security in its 2022/23 Annual Report and Accounts.

Voluntary Approved Contractor Scheme

PSIA requires the SIA to hold a register of approved contractors^{[footnote 4]} and it has established the Approved Contractor Scheme (ACS) for businesses providing regulated security services.

Seeking ACS approval is voluntary. It is, however, a criminal offence for a company that does not have such approval to claim that it does, including by displaying the ACS accreditation mark.

ACS approval applies to specific activities rather than the company as a whole, so a business may have ACS accreditation for some elements of its security offering and not others. The ACS is granted on a pass/fail basis only and does not support customers of security services in differentiating on the grounds of quality.

The SIA is currently reviewing its ACS and is scoping out a new Business Approval Scheme, the first phase of which is out for public consultation. The refresh of the ACS may include changes to the processing system which would reduce costs. The review cannot provide a definitive view on this efficiency opportunity at this early stage but is pleased to note the SIA is considering efficiencies as part of its ACS improvements.

The review notes that the Inquiry^{[footnote 5]} into the Manchester Arena tragedy recommended that consideration be given to whether contractors who carry out security services should be required to be licenced. The Manchester Area Inquiry and related policy decisions are outside the scope of this review.

The SIA reports holding 792 approved contractors on its ACS in its 2022/23 Annual Report and Accounts.

Compliance and Enforcement

PSIA created several offences including: carrying out licensable conduct without an SIA licence; providing security services through unlicensed security operatives; incorrectly claiming to be registered as an approved contractor; and making false statements to the SIA. The SIA also considers broader offences under the Fraud Act, Forgery and Counterfeiting Act and Identity Documents Act.

It seeks compliance through a programme of inspections, intelligence gathering and by enforcement activity. SIA compliance and inspection teams visit and inspect venues that provide and supply licensed security to test adherence to licensing requirements and to raise awareness of topical issues such as spiking. Matters not resolved by advice, guidance, or formal warnings are referred to the SIA’s criminal investigation function and, where appropriate, for prosecution. The SIA’s financial investigation capability enables it to obtain confiscation orders against convicted offenders under the Proceeds of Crime Act 2002.

The SIA works closely with local and national police forces, local authority licensing partners, security providers, buyers, and venue owners to understand, identify and mitigate a broad range of public protection and safeguarding risks.

Other activities and objectives

There are also relatively broad provisions under PSIA to enable the SIA to carry out “anything that it considers is calculated to facilitate, or is incidental or conducive to, the carrying out of any of its functions” (s1(3) and (4) refer).

In recent years the SIA has sought to expand its focus from tick-box compliance activities to a broader and more strategic approach to supporting public security and safeguarding. This includes initiatives to tackle terrorism, violence (including against women and girls), drugs and spiking, serious and organised crime, modern slavery, labour exploitation, and child sexual exploitation and abuse. The SIA aligns this with the Home Office priorities of reducing terrorism, preventing and tackling crime, and ensuring people feel safe in their homes and communities.

The SIA supports the increasing professionalisation of the sector to improve public confidence and the attractiveness of the profession as a long-term career path. These contributions are too numerous to list here, and are outside the strict remit of this review, but include initiatives within the Protect, Prepare and Pursue counter-terrorism pillars, strong network management and increased regulatory visibility across the sector, and promoting achievement and diversity within the sector, publicising the considerable public value delivered by security operatives.

Finances

The SIA is funded by fee payers for individual licences and for the Approved Contractor Scheme. It also receives a small annual capital grant from the Home Office for capital expenditure. For 2022/23 the initial grant was of £1.5m, which was subsequently raised to a total of £1.68m following a successful application for an overspend.

SIA fees are charged on full cost recovery basis in line with the requirements of Managing Public Money and are reviewed every year. The individual licences are issued for a period of three years and the SIA has a three-year financial cycle which aligns with this. There was high demand for licences in the first two years of the regime and this peak in demand was replicated three years later when renewals fell due. This pattern of two peak years followed by one trough year has been broadly persistent and is still discernible today.

Only some of the SIA’s costs vary with licence demand, which means the actual cost of issuing a licence is higher in trough years than peak years. However, most public sector organisations require a strict annual approach to balancing expenditure and receipts. This difference in the cost of processing an application based on whether it is made in a peak year or a trough year could be seen as inequitable for SIA customers. HM Treasury agreed with the Home Office that aggregating expenditure and income over a three-year cycle was therefore appropriate for the SIA in the interests of customer fairness.

There are inherent risks faced by an income-generating organisation which seeks to recover full cost, in contrast to non-fee funded public bodies with little or no control over their resource allocation. Insufficient attention may be paid, by the body and/or the sponsoring department, to ensuring costs are controlled to the minimum necessary. There is also a risk that expenditure not directly related to the activity to which the fee relates grows to levels which may be unsustainable or inefficient in future years.

The SIA and the Home Office must therefore continue to maintain regular engagement on reviewing multi-year licensing demand forecasts within financial years, reviewing forecast licensing volumes alongside associated income forecasts which are currently reviewed on a monthly basis, to ensure that variations in licensing income are made transparent at the earliest opportunity.

Review findings and recommendations

Efficiency: Findings

The target outcome of this review is to “identify where savings to Resource Departmental Expenditure Limits (RDEL) of more than 5% in nominal terms of the 2022/23 budget can be made, and go further where possible.”

The SIA’s 2022/23 RDEL budget was £31.76m, which would require an associated 5% RDEL saving of £1.59m. The SIA’s actual expenditure for 2022/23 was over budget by £1.41m (this overspend was agreed with the Home Office). The primary causes of this overspend were higher than expected IT costs due to supplier failure, and staff costs, partly driven by use of contingent labour in IT roles. Therefore, savings of no less than £3m against 2022/23 actual expenditure must be identified to meet the targeted efficiency outcome.

To meet the targeted 5% efficiency saving, the SIA would need to hit no more than £30.17m average annual expenditure in the next three-year cycle (from 26-27), assuming licence demand is as expected over the same period. As the SIA has an additional requirement to break-even over each of its three-year cycles, it would need to generate a corresponding amount in average annual income.

Individual statutory licence fees make up around 94% of the SIA’s whole RDEL income. The current statutory fee is set at £204 but an instant rebate of £20 is applied, making the net amount paid by applicants £184. This rebate scheme was agreed with the Home Office and His Majesty’s Treasury to erode surpluses accumulated by the SIA prior to 2020. The SIA has delivered continued reductions in the fee payable from a high of £245 in 2007, including a 3% reduction in April 2023. The SIA estimates that without these reductions the inflation adjusted fee level would currently stand at £350.

The Approved Contractor Scheme (ACS) is intended to operate on a full cost recovery principle. The SIA’s review of the ACS is likely to change its associated expenditure base level of fees, but the work is in too early a stage to provide workable assumptions of income. The review has considered the income from the ACS as it currently stands, as budgeted as a flat £1.99m p.a., equivalent to about 6% of the SIA’s total RDEL income.

Given these assumptions, if the statutory licence fee at the end of the rebate scheme were to match the current £184 per licence paid by applicants, this would require an average of 153,128 licence applications to be made over the next three-year period. That is less than the level of demand predicted over the current, and experienced in the preceding, three-year period. A reduction of £20 in the statutory licence fee set from £204 (currently) to £184, would be a 10% reduction.

Therefore, resetting the licence fee at or near the amount the applicant currently pays (£184) at the end of the rebate scheme is a deliverable aim. Further reductions in the licence fee should be prioritised by the SIA in the interests of its customers, and the review considers this potential below.

Current organisational financial approach

All public bodies need to appropriately embed a culture of a public service, funded by public money. Bodies that charge fees – which are financial barriers to market entry - must embrace this culture and ensure they do not miss opportunities to reduce fees and encourage economic activity, in line with their Growth Duty^{[footnote 6]} under s108 of the 2015 Deregulation Act.

The SIA presents as an organisation keenly aware of its responsibilities to spend wisely. Its literature refers regularly to its primary source of funding being fees charged to security operatives, who are among the lowest paid workers in the UK. It also demonstrates good understanding of its Managing Public Money (MPM) obligations.

The SIA aims to be financially conscientious; being mindful of financial planning which delivers increased value for money over time. It shared a draft of its medium-term financial strategy with the review team, which sets out areas of the SIA which it has self-assessed as able to deliver efficiencies. This is done in the context of the National Audit Office (NAO)’s Efficiency Quadrant Model, shown below:

1. Markets and competition

• New entry competition / market creation
• Intelligent outsourcing
• Strengthened incentives
• Cost benchmarking

2. Service redesign / alternative delivery mechanisms

• Reconfiguring services
• Involving users in service design
• Prevention / early detection
• Front line service integration

3. Organisation and workforce

• Shared services
• Organisational structure
• Capability and leadership
• Sharing best practice

4. Technology, data and targeting

• Effective use of IT and data
• Technological advances
• Targeted spend reductions
• Effective use of digital services

The SIA identified £1.7m of efficiency opportunities across the quadrants as: £1m owing to service redesign, £0.5m owing to organisation and workforce and £0.2m owing to technology, data and targeting.

There are numerous measures identified as contributing to this saving, some of which are of individual value as low as £50,000. The lower value savings are regarded as tactical rather than strategic in nature, as their delivery does not necessitate fundamental changes to the SIA’s operations.

By contrast, there are other areas which could present opportunity for efficiency but are not considered. For example, 58% of the SIA’s cost base relates to staff costs, but the strategy notes the SIA’s intention is to maintain its workforce at its current size, despite staff costs having increased substantially within the last financial year (2022-23) by 17% on the previous year.

The SIA could show greater efficiency ambition by looking to reverse some of this growth in staff costs, rather than only limiting further growth.

The SIA’s draft financial strategy document does not yet cover the full breadth of the efficiency measures it is considering. The SIA has identified efficiency opportunities greater than the £1.7m the document outlines, and of different composition. It has also identified potential savings against which it is not yet able to fully identify associated costs. The SIA has assumed receipt of additional investment from the Home Office to pursue some of these options; particularly those delivered via their transformation programme. The review report reflects these potential savings as efficiencies which are fully deliverable by the SIA to ensure that any financial risk arising from inaccurate measurements of costs and benefits is not carried by the Home Office.

Proposed efficiencies.

The table below sets out the efficiencies identified during the Review:

Table 1: Savings Profile across the SIA’s current three-year cycle

Item	Savings Profile 2023-24	Savings Profile 2024-25	Savings Profile 2025-26	Total saving to 25-26 (£m)
Estates strategy; reduced rent expenditure	0.3	0.5	0.5	1.3
Various – contract renewals etc.	0.2	0.2	0.2	0.6
Reduced CCL[footnote 7] costs		0.25		0.25
Reduced recruitment budget		0.05	0.1	0.15
Reduced IT consumption [Azure optimisation]	0.02	0.03	0.05	0.10
Reduced IT licensing & software	0.03	0.03	0.03	0.10
Reduced training budget		0.05	0.05	0.10
Reduced T&S/events		0.02	0.03	0.05
Effective workforce planning			0.10	0.10
Transformation programme: re-design of digital services			0.48	0.48
Transformation programme: re-build of SIA internal business applications			0.34	0.34
Transformation programme: support for field-based staff			0.24	0.24
Total	0.55	1.13	2.12	3.81

The total saving delivered across the current three-year cycle of £3.8m represents an 11% reduction against 2022/23 expenditure. After consideration of the extent to which that mitigates the approved 2022/23 overspend of £1.41m, the saving delivered against 2022/23 RDEL budget would be £2.39m.

This would equate to delivering a 7.53% saving against 22/23 budget over the current three-year period; exceeding the 5% targeted by the Review.

Risks

There is risk attached to these ambitions, on the basis that more than half of the targeted savings are forecast within the last financial year of the current three-year cycle and are subject to capital investment being made available. As such, any slippage in implementation risks the SIA’s ability to meet the targeted efficiency. Specifically, with £1.06m of targeted savings dependent on the implementation of a transformation programme, slippage in delivery of that programme is likely to mean the targeted 5%+ efficiency will not be met.

Efficiency: Recommendations

Recommendation 1

The SIA must finalise a comprehensive financial efficiency plan which covers the full value and breadth of identified efficiency opportunities, including those currently held in other documents such as its digital and data transformation plans. To be completed by April 2025.

Subject to the mitigation of the relevant risks, the savings identified in this plan should enable the amount paid by the licence payer to remain as low as possible when the rebate scheme ends, with the ambition of not exceeding the current level payable. The SIA should prioritise lowering the fee further as it continues to seek value for money for the licence holder in line with Managing Public Money.

The SIA is encouraged to take advantage of Home Office finance expertise in finalising its financial efficiency plan. The SIA must focus on its delivery, subject to the availability of the necessary capital grants from the Home Office.

Recommendation 2

The SIA must put robust internal governance in place to ensure delivery of its financial efficiency plan as part of its strategic planning lifecycle.

This must include processes to regularly review and approve changes, risk management and realistic periodic reporting. The SIA should report progress against its financial efficiency plan to the Home Office Sponsorship Unit at least quarterly. Assurance process to be in place no later than April 2025.

Efficiency considerations in recommendations 1 and 2

Delivering the identified efficiencies would result in a 7.53% saving against the 2022/23 budget over the current three-year period. Regular review will support the SIA in ensuring it covers the full costs and benefits of the identified efficiency opportunities, and fluctuations of income and expenditure. Robust governance will support accountability and delivery at pace.

Sustainable future efficiencies: Findings

We have assessed the impact of planned SIA efficiencies on its net forecast, and the subsequent impact on its ability to erode its surplus. As at the end of FY 2022/23, the balance of the historic surplus ringfenced for the rebate scheme stood at £8.8m. There is anticipated / budgeted year-on-year changes to the SIAs cost base within the current three-year cycle in addition to those directly resulting from efficiency plans. These are^{[footnote 8]}:

• an annual reduction in cost of £347,000 in FY 23-24 vs 22-23; owing to reduced depreciation due to extended life of an asset [SteP system].

• an increase in cost of £778,000 from 23-24 to 24-25 which is largely driven by increased licence cost based on predicted application volumes.

• a reduction in cost of £126,000 from 24-25 to 25-26 based on a predicted reduction in licence volumes and associated cost exceeding increases in other costs.

Total annual costs can therefore be modelled as 22/23 outturn, plus budgeted change in spend, plus impact of efficiency initiatives.

The SIA submitted a demand forecast as at July 2022 which illustrates forecast licence applications, as shown in table 2 below:

Financial Year	23/24	24/25	25/26	26/27	27/28
Application volume	157,297	167,954	140,057	162,636	156,355

Approximate income can also be modelled, applying the amount currently paid by applicants per licence [excluding consideration of any discount applied to licence holders with multiple licence types on which data is not available] of £184 to predicted application volumes and adding the £1.99m budgeted income from the approved contractor scheme, which the SIA assumes to be flat in budgeting. Using £184 for modelling purposes on that basis allows an assessment of the SIA’s ability to prevent increases to the licence fee payable once the rebate scheme ends and simultaneously erode reserves by the end of the current three-year cycle. The result of such assessment is shown below:

Table 3

	22/23	23/24	24/25	25/26
Total Cost	33.20	32.30	31.95	29.70
Total Approximate Income	30.50	30.94	32.90	27.76
Approximate Net Cost	2.70	1.37	-0.95	1.94
Reserve	8.80	7.43	8.38	6.44

The result above suggests the SIA will still have a sizeable reserve at the end of the current three-year period and therefore, in line with MPM, further reductions in the licence fee, taking it below £184, may well be deliverable in the current three-year period. Whilst the historical surplus is reserved for the rebate scheme and cannot be drawn down in a general way, the feasibility of maintaining or reducing the current licence fee payable is substantiated by the SIA’s recovery of licence costs averaging 109% in the last three-year period [at 119% / 115% / 94%] with licence demand predicted to fall by only 3% in the current three-year period compared to the last. The deliverability of maintaining or further reducing the licence fee based on this analysis is dependent on both licence demand materialising to the extent forecast, or greater, within the current three-year cycle and the SIA’s ability to deliver internal efficiencies which are calculated to fully materialise as currently planned. However, this is a positive indicator in terms of the SIA’s ability to sustain efficiencies over the longer term.

Leading and embedding an efficiency culture

The SIA is at the beginning of its journey in continuous RDEL reduction, and this is reflected in the type of initiatives it is currently focusing on, which seek to make current activities more efficient, rather than considering what it could reduce or stop in order to reduce expenditure. The SIA has noted the importance of improving its allocative efficiency once current efficiency initiatives have been fully exploited. There is not, however, current evidence to show how the costs and benefits of different activity choices are determined across the business.

These decisions require comprehensive awareness of work and data flows throughout an organisation to assess the impacts across the business of making changes in any one area. The SIA must continue to develop its capability here, building on the strong work put in train by the current Chair and Chief Executive. This is essential if the SIA is to deliver sustainable efficiencies in future.

The Review notes the SIA has a dedicated team to deliver its transformation programme. This programme carries a significant proportion of the SIA’s targeted efficiency savings. The transformation programme has yet to clearly establish a holistic overview of the SIA’s operations and future needs across the piece, which suggests a step back might be beneficial. The SIA should prioritise this in light of recommendation 3, below.

The Chief Executive and Chair have led change within the SIA from a focus on industry, and compliance processes, to a focus on public security. This is supported by the Home Office. This has required an organisational cultural change which is yet to be embedded everywhere within the SIA, and the scale of this challenge should not be underestimated. The review team notes from its informal discussions with industry that the SIA enjoys the support of the sector in making this change. There is a good story here which the SIA should be confident in articulating.

The Chief Executive should ensure the culture of the executive team, and the organisation as a whole, reflects a public service ethos. The SIA’s operational scope should be continuously aligned with the Home Office and in coordination with the other public bodies operating in the public security space. This culture should ensure efficiency and effectiveness are at the heart of everything the SIA does. There should be evidence of rigorous examination of RDEL efficiencies throughout the SIA at all levels.

The SIA is deeply engaged in its sector and works closely with partner regulators to deliver good outcomes for the UK. The SIA should ensure it is making the best use of the experience and expertise of other public bodies, including those outside the sector, who may have successfully undertaken the kinds of efficiency saving exercises the SIA is planning. The Home Office has access to expertise within a range of different bodies and the Home Office Sponsorship Unit must continue to proactively push such support out to the SIA to ensure it is aware of and able to easily access that expertise.

Delivering future efficiencies: Recommendation

Recommendation 3

The Chief Executive should review and assure themselves that the executive team has the right leadership skills and expertise to deliver the financial efficiency plan. This should be carried out by April 2025. The whole organisation should reflect a public service ethos, where the operational scope is continuously aligned with the Home Office and in coordination with other public security responsible bodies.

Efficiency considerations in recommendation 3: it is an essential enabler for the efficiencies above.

Costs and transparency: Findings

Transparency

The SIA’s use of fee income from individual applicants and the ACS must be transparent, both internally and externally. It is not clear on what basis resources from licence fee income or from ACS membership fees are used to fund enforcement work. The SIA should provide full transparency on these figures in future. Annex 6.1 of MPM lists enforcement costs among the items that should not be included when measuring the cost of an activity for which a charge is to be made. At the next fee review the SIA should ensure that the costs included in calculating fees are fully compliant with this requirement of MPM.

SIA staff should be clear about the sources of income that fund their areas of work, and the Home Office would benefit from more details about how the SIA uses the money it receives. Business cases made to the Home Office would be enhanced by a more rigorous grounding in RDEL efficiencies and clear and robust cost benefit analyses.

Demand management

Continuous improvement through the principles of demand management should be part of the SIA’s culture of efficiency. The SIA demonstrated to the review team that it operates strong procurement governance and processes, and its procurement function seeks the best value for what is demanded of it. The SIA must in turn ensure it is continuously managing its demands, and challenging every line in its expenditure to ensure it is proportionate and necessary, including printing, events, meetings and travel arrangements. This demand management culture should also expand to the expenditure for contact services for licence holders and applicants, implementing automation and rigorously interrogating service levels, with a view to relaxing these where appropriate.

The SIA is maturing its organisational processes, and the support of the Home Office is a crucial part of this journey. The SIA must establish a more comprehensive and accurate forecasting pipeline. It must be able to clearly demonstrate that it can reconcile the costs of applications to the costs of process and operations. Transparency about how income from applications is used throughout the business is part of this, and agreeing productivity metrics with the Home Office would also help clarify the relationship between the SIA’s budget and its output.

As noted elsewhere in this review, the Home Office should ensure that the SIA has a clear understanding of the activities that constitute its core delivery functions. This will enable the SIA to scale back less essential activities with confidence.

Costs and transparency: Recommendation

Recommendation 4

The SIA should apply demand management principles to restrict operational costs only to what is necessary and directly impacts its core delivery. Ensuring clarity and transparency in accordance with Annex 6.1 of Managing Public Money will support this. Recommendation 10, which asks the Home Office to provide a clearer articulation of the SIA’s core delivery and priorities, is an enabler for this recommendation.

This is a long-term process, but the SIA should complete a review of this element of its operation by April 2025 and work with the Home Office Sponsorship Unit to develop metrics for ongoing assurance.

Workforce distribution and strategy: Findings

The SIA is proud of the contributions its employees make to the UK’s public protection objectives^{[footnote 9]}. In common with many public bodies, it notes increased recruitment and retention challenges for specialist skills, particularly in data and digital^{[footnote 10]}. The SIA may be able to amend the scale of its labour market demand as part of a more strategic workforce planning approach.

The SIA’s staff costs are the largest category of expenditure in its accounts. It currently plans to maintain its workforce at its current size for the next three years and realise further efficiency savings in staffing over the medium to long term.

Table 4: SIA staff breakdown (staff in post) as at Sept 2023

Key: Underlined font on the bottom row is the Chief Executive and back-office. Bold font is delivery/ front line.

There is a 66%:33% split between delivery staff and non-delivery staff according to the SIA’s own data. We have classified non-delivery staff as those reporting to the Chief Executive, those providing corporate services, or those who are part of the transformation directorate. At one third of the total workforce this appears to be a relatively high proportion.

A common basis for comparison between organisations is the ratio of non-delivery staff to total organisation staff. SIA’s ratio is 1 HR team member per 27 staff (1:32 on budgeted posts). This is a higher ratio than the published Civil Service ratio of 1:49 but closer to the average (mean) for small public bodies. The SIA has a comparatively high ratio of communications staff to total staff. Finance staffing is similar to other small regulators and for estates and facilities management the SIA has a lower ratio of functional staff than comparable bodies.

For digital staff, a high ratio to total staff is considered to indicate a more efficient organisation with higher automation. The SIA is in line with other small regulators, but lower than the average for all regulators.

The Home Office HR professionals consulted by the review note there is a balance to be struck when seeking efficiencies in supporting and functional areas, to avoid undermining the delivery of front-line operations which depend on them. The Home Office HR function is happy to work with the SIA to share its learning and experience in tackling this challenge.

The SIA’s Transformation Directorate includes functions that might more typically sit in corporate services such as facilities management, estates and corporate information. There is a clear rationale for locating these functions within the transformation directorate during the life of the programme. The dedicated transformation resource should be time-limited with a clear plan for wind-down. The review notes that 13 of the 44 transformation posts are vacant (30%) and that a rigorous review to check these unfilled posts remain necessary would be beneficial.

Strategic workforce plan

The SIA intends to produce a strategic workforce plan for 2024/25 – 2026/27. Access to accurate and timely data on current establishment, vacancies carried and forecasting against budget is key to this. The SIA must develop and embed capability for data-driven forward planning for its workforce needs.

As part of its internal audit programme for 2023-24, the SIA commissioned a consultancy review on strategic workforce planning which reported to the SIA Board in August 2023. This report is not in the public domain but has been shared with this review and with relevant Home Office officials. The report provides suggestions that will enable the SIA to fully integrate its strategic workforce aims, and the SIA plans to implement all the suggestions. These changes will enable the SIA to deliver an effective workforce strategy and, ultimately, delivers efficiency savings, as well as supporting the continuous improvement of the SIA’s capability in this area.

The SIA should also engage closely with Home Office HR recruitment expertise when developing its strategic workforce plan, in particular Home Office experience in the recruitment pipeline methodology. This methodology supports better forecasting of workforce needs against legislative, policy, operational or process change. This will also feed into the SIA’s capability in Human Resources Government Functional Standard 6.2.3: succession planning. The Home Office HR function has deep and broad experience of improving workforce planning capability and is happy to share this learning with the SIA.

Workforce distribution and strategy: Recommendations

Recommendation 5

The SIA should reverse the recent growth in non-delivery staff by increasing efficiency in its supporting and functional areas, and review whether the unfilled posts in its transformation directorate remain necessary. It should continue to contain its consultancy / contingent labour costs and aim for further reductions in future. This ongoing ambition should be planned for and articulated in the strategic workforce plan at recommendation 6.

Recommendation 6

The SIA should create a strategic workforce plan to align with its business planning cycle. This must include all the suggestions the SIA plans to incorporate from the recent consultancy review. The SIA should engage closely with the Home Office HR function while developing its strategic workforce plan, tapping into Home Office expertise in the recruitment pipeline methodology. To be completed by the end of August 2024

Efficiency considerations for recommendation 6

A strategic workforce plan will provide a financial model for recruitment spend against budgets that is jointly understood across HR and budget holders within the SIA. It will support the development of the SIA’s capability to forecast the impact on resources of legislative, operational priority or process changes which is important for efficiency savings. It will support and inform the SIA’s planning for its estates’ requirements, below.

Estates and Levelling Up: Findings

The UK Government aims to move 22,000 public sector jobs out of London by 2030 as part of its levelling up^{[footnote 11]} initiative. The SIA has developed an Estates Strategy which responds to the Places for Growth and levelling up agendas, in addition to the wider push for efficiency within its office estate.

This includes plans to reduce rent liability in its Canary Wharf offices. The current lease for the Canary Wharf property extends to 2032. The SIA has commenced plans to surrender 50% of this space and enable the Government Property Agency (GPA) to reallocate it to others. 21% of former SIA office space has already been occupied by other public bodies and the SIA is working with the GPA to identify further arrangements to meet its target. The SIA predicts delivery of an estimated £3.9m reduction over the life of the lease. These plans are factored into the 2023/24 budget and three-year forecast, where they are expected to represent a £1.25m saving over that period.

There should be further opportunities to reduce the office estate at Canary Wharf with minimal business impact, subject to GPA identification of alternative tenants for the space the SIA vacates. Home Office Ministers have approved the SIA’s proposals under the Places for Growth initiative and are keen for them to proceed at pace. The Places for Growth initiative aims to deliver long term efficiency savings.

In line with levelling up requirements the SIA is also looking at opening access in the Midlands/North of England in the medium term to expand its options and increase its presence outside London and the southeast. It has joined other public bodies in an initiative run by the Department for Levelling Up, Housing and Communities to work together to consider potential locations for regional hubs and opportunities for sharing office space.

Estates and Levelling Up: Recommendation

Recommendation 7:

The SIA must keep the occupation rate of its offices at Canary Wharf under review and further decrease its footprint, including pursuing opportunities for GPA to re-let vacated space. The SIA must adhere to the principles set out in its estates strategy that deliver its commitments under Places for Growth and promote the levelling up agenda, without increasing costs to customers through licensing fees. This should be delivered in conjunction with a cohesive resource plan, with reference to Recommendation 5, and no later than the timescales agreed with Home Office Ministers.

Digital infrastructure and automation: Findings

The SIA’s Data & Digital Strategy aligns with the Government Digital Strategy and is designed to accelerate transition to modern trusted platforms, facilitating collaboration and knowledge sharing with government and industry partners. Key areas of focus are digital identity services and ‘smart’ licence cards.

The SIA has recently transitioned its digital services to a cloud-based platform and improved its own network infrastructure in support of business resilience and continuity. The SIA has also enhanced its cyber security capabilities, underscoring its commitment to safeguarding sensitive information. The SIA reports that these changes have improved operational efficiency, stating it can now process a higher volume of licence applications with a reduced workforce.

The SIA plans to upgrade to CRM 2016 and Microsoft Dynamics 365 to modernise processes for licensing, compliance and inspections, and to support improvements to the ACS and its replacement. It is also planning new portals needed for GOV.UK OneLogin for individual and business customers, the former via reimplementation of its existing “STeP” portal. The expected reduction in service requests for password resets and account administration issues would improve efficiency and the customer experience. Based on the information provided to it, the review has been unable to quantify the savings these changes are expected to deliver against the costs incurred by the transformation.

Identity verification

The SIA’s identity verification process must be efficient, secure, and accessible to a diverse range of users, including those for whom English is not a first language. It must be scalable to cope with increasing application volumes and able to support the variety of identification documents held by the SIA’s international applicants.

The SIA is working with Government Digital Service (GDS) to incorporate GOV.UK OneLogin. OneLogin meets the medium confidence standard set out in the GPG 45 Good Practice Guide for validating the identities of UK applicants, and applicants based overseas with chipped passports.

The SIA refers all applications for a standard criminal record check from the Disclosure & Barring Service (DBS)^{[footnote 12]}, or as appropriate Disclosure Scotland or Access NI. DBS requires a higher confidence level for these checks than OneLogin’s standard offering. GDS has advised the review that it will be able to provide the SIA with a version of OneLogin that meets the confidence level DBS requires, should funding be available.

The review is pleased to note the proactive and constructive approach taken by the SIA in its work with GDS and would encourage it to engage more broadly with Home Office digital, automation and AI expertise^{[footnote 13]}.

The SIA’s commitment to stringent checks and high standards is crucial to maintaining the integrity of the licensing and approval process and public confidence. The SIA must ensure it is carefully targeting its more detailed or manual verification processes to those applications which data suggests present a higher risk. This will allow the SIA to ensure the cost burden on applicants is justified by the value and relevance of the information obtained, in support of recommendation 4^{[footnote 14]} of the 2017 triennial review of the SIA.

The Home Office and the SIA should ensure they have a common understanding of where the risk bars for manual verification are set, and how these align with the SIA’s risk appetite.

Integrating GOV.UK OneLogin and the new digital ID portals into its STeP and customer support systems will reduce manual data entry and duplicate data handling for applicants. This simplified customer experience is predicted to reduce telephone queries received by SIA customer contact agents about the process.

Most importantly, improving the SIA’s digital ID capability will allow it to reduce the volume of identity checks it currently outsources to third party suppliers. The largest of these contracts currently costs £900,000 per year. Cashable savings cannot be accurately quantified at this time and estimates^{[footnote 15]} will be validated through the formal Service Design phase of the SIA’s transformation programme. The cost of the new Digital ID service must of course be offset against these savings. The successful implementation of the new portals also depends on SIA achieving its full capital delegation, and Cabinet Office funding of the GOV.UK OneLogin/Digital ID programme development.

The Review notes that verification of licences in the field can be challenging for SIA inspectors to automate, particularly at venues where Wi-Fi or mobile data is patchy. The SIA is exploring solutions to this which it should progress at pace, as a less time-consuming process that is not reliant on pen, paper and telephone calls would save time for the licence holder and inspector alike.

Digital infrastructure and automation: Recommendation

Recommendation 8

The SIA should coordinate with the Home Office and GDS to ensure GOV.UK OneLogin is implemented and adopted by Q4 2024/25, and progress at pace its work to digitise and automate more of its verification processes. It must also ensure it is being risk-based and proportionate in where it chooses to apply a manual over an automated process.

Efficiency considerations for recommendation 8: GOV.UK OneLogin is a key component of the 5% plus efficiency savings available to the SIA, savings that cannot be realised without relevant funding to progress its adoption. The reduction or elimination of third-party ID verification costs has the potential to deliver significant savings, and reducing service requests and customer contacts will also improve efficiency. A data-driven, risk-based and proportionate approach to verification will help prevent unnecessary manual checks.

Shared Services: Findings

The SIA does not currently integrate its back-office operations through an Enterprise Resource Planning (ERP) solution or through external process integrators. Its current suite of individual platforms is as follows:

Table 5

System	Annual cost	Contract expiry date
Purchase Ordering	£15,000	July 2024
Payroll	£43,000	March 2025
HR	£81,500	April 2025
Finance	£39,000	June 2026

Integrating separate systems to generate a fully integrated procurement-HR-finance environment could deliver long-term savings by automating transactional activities. Moving to an ERP system can be complex and resource intensive, but the SIA should keep an open mind about the benefits. Government ambition is for all public bodies to be brought into a single system along with their sponsoring departments, which would realise considerable efficiency savings. This long-term project is being rolled out in clusters, and the SIA is engaged with the process.

In the meantime, the SIA should consider moving its transactional processes for HR, finance and procurement into closer alignment with those of the Home Office. This would lead to efficiencies over time, although there would be associated implementation costs in terms of technical and business change, and potential non-cash efficiencies. Closer alignment would also contribute to overall coordination and reporting transparency within the Home Office system.

The 2017 triennial review of the SIA recommended^{[footnote 16]} merging back-office functions and collaborating on substantial projects with other similar ALBs, a recommendation the Home Office fully supports. This review has previously noted the wealth of expertise available to Home Office sponsored bodies. The Home Office should continue to actively push out this help to the SIA and encourage it to take advantage of these opportunities.

The SIA has led initiatives to share support services with other public bodies on a full cost recovery basis. It has piloted the provision of legal services to the Sports Grounds Safety Authority (SGSA) since November 2022 and the feedback has been extremely positive. The SIA’s General Counsel and Principal Legal Advisers provided around 50 billable hours to the SGSA while continuing to meet performance indicators and budget goals. Both bodies look forward to moving this arrangement onto a business-as-usual footing. The SIA is extending a similar service to the Office of the Immigration Services Commissioner and is actively seeking further opportunities to share functions with other public bodies.

The SIA sees such collaborations as opportunities to broaden its prosecution expertise and knowledge of the sector and retain prosecuting teams within its Legal Services department.

The review also commends efforts by HOSU to support the co-ordination of sharing back-office functions among its ALB landscape to realise efficiencies, as a complement to the longer-term cross-Whitehall shared service programme.

Shared Services: Recommendation

Recommendation 9

The SIA should begin to align with Home Office policies in Finance and HR to better enable process convergence and seamless systems integration. This should be pursued in conjunction with the Government’s single system solution roll out. The SIA should consider adopting an integrated systems solution to bring together its transactional functions as part of its efficiency planning. The SIA should be able to demonstrate concrete progress towards this ambition by the end of the reporting period for this review, April 2027.

Efficiency considerations for recommendation 9:

The government’s shared services strategy will help deliver better service through modern systems at a lower cost. Bodies not joining a shared service centre in the immediate future are expected to progress with alignment to global processes and standards^{[footnote 17]}.

Legislative framework and use of statutory powers: Findings

Current inspection activity

The SIA carries out compliance activity including receiving and analysing reports and intelligence, and conducting inspections and visits, some of which are undertaken in collaboration with partners. The SIA is transparent about these activities and the review discusses what the figures show in more detail in annex A.

Figures provided in the SIA’s annual reports and accounts indicate that from 2018/19 the rate of compliance found at random inspection has been between 98.1% and 99.4%. The SIA’s annual report and accounts for 2022/23 notes an approximate doubling of the number of staff engaged in inspections and enforcement and a 250% increase in inspection activity.

The SIA also carries out compliance activity in respect of the ACS. Figures for 2022/23 show that over half the businesses visited were fully compliant. About 10% of businesses visited were either removed from the scheme or referred for compliance action following visits.

The key questions from an efficiency perspective are:

• what has been achieved with the extra resources, in terms of outputs and outcomes, particularly given the high rates of existing compliance found; and

• was this an effective allocation of the available increase in resources across the SIA’s business.

Current prosecution activity

Offences that the SIA prosecutes include those created by the PSIA, and other offences under the Fraud Act, Forgery and Counterfeiting Act and Identity Documents Act. Since 2019/20 the number of prosecutions averages 50 per year. Cases under investigation and progressed toward prosecution rose sharply in 2022/23, potentially increasing the number of future prosecutions. The success rate has been consistently high, between 85% and 93% per year against a target of 80%.

Since 2019/20, just under half of prosecutions each year were for offences under the PSIA and just over half for other offences. The SIA has not identified a clear policy decision underpinning its shift from pursuing almost exclusively PSIA offences to the present position. Whether and how to investigate or prosecute a particular case is an operational decision for the SIA to make independently. Such decisions should however be taken within an overall strategy which sets out a clear rationale for, and comparative benefits of, pursuing prosecution under PSIA or under other legislation.

Prosecution costs are significant, and it is not clear to the review how the SIA decides to allocate these resources. The SIA should maintain a clear audit trail of the decision-making process. It should ensure it can demonstrate how it has meaningfully considered alternative uses for such resources, including reduction of the licence fee.

An essential prerequisite for the SIA to make appropriate resource allocation decisions is a clear understanding of Ministerial priorities and expectations, and awareness of its specific role within the government’s framework of public protection delivery. It is not apparent that these priorities and expectations have been regularly and clearly articulated to the SIA on a strategic level. The review notes that the Home Office issued a Chair’s priority letter to the SIA in 2023 and that it is refining the timing and content of the letter for future years. The priorities in the Chair’s letter should be reflected in the annual KPIs that are monitored by HOSU on behalf of the Home Office.

The Home Office and the SIA must work together to identify and agree risks and mitigations and ensure their risk methodologies and tolerances are aligned. The Home Office must provide clarity about whether the department or the SIA is carrying any particular risk and enable open discussions about any risks it feels the SIA may present, as well as those it mitigates. This is an ongoing process necessary for truly responsive, relevant and agile regulation, and to give the SIA confidence to tighten its remit to the areas in which it can make the greatest impact.

Priorities, accountability and the Sponsorship Code of Good Practice

A shared sense of mission between department and ALB is essential for a mature sponsorship relationship. The ALB Sponsorship Code of Good Practice (the Code) states that great sponsorship is delivered across six key capabilities:

• relationship management

• agreeing strategy and setting objectives

• outcome assurance

• financial oversight

• risk management, and

• governance and accountability

The Home Office and the SIA should prioritise improving the maturity of their relationship within the second and third capabilities: ‘Agreeing priorities and setting objectives’, and ‘Outcome Assurance’. The ‘financial oversight’ capability would also be a valuable area of focus to support the maturation of the sponsorship relationship beyond assuring key deliverables across the financial year. Departments should feel confident in expecting their ALBs to align with their interpretation of value for money and the prioritisation of resources as a key part of their sponsorship role.

The importance of the Chair’s priority letter is noted in the Code. Annex B explains the Home Office’s sponsorship structure in more detail. Creating a Chair’s letter is an opportunity for policy and corporate sponsors within a sponsoring department to work together to develop and then articulate a common understanding of Government priorities for the ALB, and how those will be measured by the department over the coming year.

The SIA has a strong and commendable sense of mission and is active in seeking opportunities to add value for the public good. The Home Office can better harness this energy in the direction desired by Government by continuing to work on a mutual clear understanding of the SIA’s purpose within the public protection ecosystem, in line with the Code^{[footnote 18]}.

Proposals for legislative change

One of the SIA’s statutory responsibilities is to make recommendations and proposals for the maintenance and improvement of standards in the provision of security industry services^{[footnote 19]}. The SIA argues it could play a greater role in prevention, disrupting serious and organised crime, and in increasing public confidence in support of the UK economy and the wellbeing of its citizens.

Licensed security operatives are often “first responders^{[footnote 20]}” to shoplifting, public order issues, human trafficking and money laundering. They are attractive targets for exploitation by organised crime, particularly for laundering the proceeds of crime and tax evasion. The SIA works well as part of the UK’s intelligence capability to mitigate these risks.

The SIA’s unique perspective on the sector it regulates enables it to provide valuable intelligence and expertise into Government, along with evidence from the front-line. As discussed above, it is for Government to determine how it wants to address these matters within the overall threat landscape, and for the Home Office as sponsoring department to provide the SIA with a clear and strategic response about its scope and remit on behalf of Government.

The Home Office is considering several SIA proposals for legislative change, many of which the SIA believes are essential to enable it to deliver sustainable efficiencies in the long term. This review has focused on the SIA in its current form, with its current power base, and the SIA should ensure its compliance and enforcement strategies continue to do the same.

ALBs rarely enjoy sufficient certainty about the likelihood and timeliness of new powers to use them to underpin planning assumptions. The path to obtaining such powers is long and unpredictable, and each request must be considered within the broader perspective of the desired scope and remit of the ALB.

Both the SIA and Home Office should regularly take a step back from case-by-case considerations of legislation and look at the SIA’s suite of powers as a whole, and what these say about the shape and direction the SIA is taking. Decisions about powers should be taken with awareness of the financial impacts on other parts of the system, such as the cost of activities being undertaken elsewhere, and the mitigation against financial risks that effective regulation provides.

Legislative framework and use of powers: Recommendations

Recommendation 10

The Home Office must set out a clear strategic direction for the SIA based on Ministerial priorities for the body and the wider sector. This must include the timely provision of an annual Chair’s letter of priority from the responsible Minister or Principal Accounting Officer (PAO). The priorities agreed in this letter should then be reflected in stretching KPIs used by the Home Office to assess the SIA’s performance as part of its regular assurance.

The Home Office Sponsorship Unit (HOSU) should prioritise the following capabilities of the Sponsorship Code to support this: Agreeing strategy and setting objectives, Outcome Assurance. A Chair’s letter should be issued to the SIA within the next six months, and on an ongoing basis be provided in the autumn of each year ahead of the SIA’s annual business planning cycle.

Efficiency considerations for recommendation 10

This will enable the SIA to operate within a clear set of priorities and ensure it is only spending money on work that is necessary to the delivery of its mission.

Recommendation 11

The SIA must take an overall view of its sets of proposals for new powers, considering their interactions with one another and alignment with the strategic direction established by the Home Office. It should work with the Home Office to define the cost benefit analysis for any expansion of powers and legislation.

Annex A: the SIA’s compliance and enforcement activities

Since 2018/19, the rate of compliance found at random inspection has been between 98.1% and 99.4%^{[footnote 21]}, although the number of inspections has varied from year to year. There were 8 random inspections in pandemic affected 2020/21, rising to 32 in 2021/22 and 48 in 2022/23.

Random inspections may help to deter non-compliance, but it is not evident what contribution an increased number of random inspections makes to compliance with the Private Security Industry Act 2001 (PISA), since the chances of any licence holder being inspected remain low. The total number of licences checked at all inspections, random and intelligence-led has averaged about 0.5% of total licences each year, rising to 1.5% in 2022/23.

The total number of inspections and visits carried out by SIA more than doubled between 2018/19 and 2022/23 (429 to 1,094), as did the number of licences checked at inspection (3,229 to 6,845). The number of licences revoked was broadly constant from 2018/19 to 2021/22 at around 1,000 per annum (just under 0.25% of active licences). The number rose by a quarter in 2022/23 to 1,265 licences revoked. Revocations do not flow solely from inspection activity, neither are they the only output from inspections.

The data suggests that inspections targeted through intelligence or threat assessment uncover matters meriting intervention more frequently than random inspections. It is also apparent that while more revocations flow from inspections targeted through intelligence or threat risk and harm assessment, the number of revocations has risen at a slower rate than the number of inspections.

SIA should properly consider, using appropriate data, whether its current allocation of resources to inspections could be made more efficient.

Annex B: Public Body Reform and Home Office Sponsorship

This review is part of the HM Treasury and Cabinet Office Public Body Reform Programme, which comprises five priority workstreams:

1. a new strategy for public bodies.

2. improved gateways for establishing and reviewing public bodies.

3. enhanced departmental sponsorship and boards of public bodies.

4. improved data collection and the use of data to change behaviours.

5. identifying greater efficiencies.

The Sponsorship Code of Good Practice sets out Government’s strategy for public bodies and articulates the characteristics of good departmental sponsorship. Government Functional Standards are a key component of public body reform, and the Review commends the SIA for its thorough approach to these.

Home Office sponsorship is delivered through a hybrid model. The Policy sponsor acts as senior sponsor, and is typically a senior civil servant from the policy area most relevant to the work delivered by the ALB. The Corporate sponsor role is conducted by the HOSU, a centralised division which is responsible for the relationship between department and ALB and undertakes most of the day-to-day contact. This structure requires strong communication between policy and corporate sponsors to ensure ALBs experience coherent engagement with their department.

Home Office sponsorship of the SIA:

Policy Sponsorship	Corporate Sponsorship
Ministerial priorities	Objectives, Targets and Performance Monitoring
New policy requirements	Governance, Annual Reports and Accounts, Reviews
Relationships with policy teams in Home Office and other government departments	Relationships with Government functional areas and professions such as Finance, HR, Commercial and Digital

The Review found that the Home Office is managing the day-to-day activities of sponsorship effectively through this model, but that there are some areas which would benefit from greater clarity around the setting and monitoring of the strategic direction for the SIA. The Review encourages greater collaboration between policy and corporate sponsorship and the functional areas of the Home Office, in line with The ALB Sponsorship Code of Good Practice.

Annex C: Extracts from the Sponsorship Code of Good Practice

Capability 2: Agreeing strategy and setting objectives

Emerging

1. The responsible minister (or PAO, if delegated) does not communicate priorities to the ALB, for example via an annual chair’s letter or direct communication.

2. There is limited engagement between the department and ALB on what success looks like, how it can be delivered and how it is measured.

3. The senior sponsor has limited engagement with the ALB in the production of its annual business plan and multi-year corporate strategy and is unable to influence its direction.

4. The ALB is insufficiently responsive to departmental priorities, to change delivery through lack of awareness or inability to flex resources.

5. The ALB’s plans to deliver ministerial objectives are not clearly articulated in an annual business plan and multi-year corporate strategy.

Maturing

6. The responsible minister (or PAO, if delegated) clearly articulates the priorities for the ALB.

7. Senior sponsor engagement on the business plan and corporate strategy is limited to final review.

8. A vision of what success looks like, how it can be delivered and how it is measured is clearly articulated by the department to the ALB, but may be over- or under-stretching and not properly reflect ministerial priorities and/or the reality of the ALB’s operating context.

9. Priorities for the ALB from the department change frequently and can at times be inconsistent with the longer-term strategic direction and/or any statutory underpinning.

Advanced

10. The priorities for the ALB are set out in documents such as an annual chair’s letter issued by the responsible minister (or PAO, if delegated) sets SMART objectives for the ALB to deliver.

11. Outputs provide a stretching but realistic target that drives continuous improvement in effectiveness and efficiency for the ALB.

12. The department and the ALB engage collaboratively on an annual business plan that sets out how these SMART outputs will be delivered, underpinned by key performance indicators that are informed by timely management information. There is a constructive yet challenging dialogue between individuals at all levels that underpins this work.

13. This document makes up the first year of a multi-year corporate strategy that sets out how the ALB’s annual outputs contribute to the delivery of longer-term impacts.

Capability 3: Outcome assurance

Emerging

1. There is a lack of understanding of what good delivery [operation] should look like for the ALB throughout the department. The department has limited discussions and opportunities to review and challenge the outcomes delivered by the ALB.

2. The processes implemented by the department to ensure the outcomes delivered by the ALB are not sufficiently effective or broad enough to understand its operational delivery.

3. Management information (MI) provided to the department is limited, scrutiny is cursory and unsupported by relevant functional expertise, or lacks timeliness.

4. The ALB’s MI is not available to the department, or it is not scrutinised appropriately.

5. Functional support is not sought and/or provided to help scrutinise outcomes by the department and the application of functional standards is limited and not considered appropriately.

6. The department makes frequent and/or unnecessary changes to the MI that it requires from the ALB.

Maturing

7. There are discussions between the ALB and department at working level and with the senior sponsor on performance. However, there is no ‘join up’ between the ALB’s outcomes and the department’s wider governance and delivery system.

8. MI is provided to the department in a timely manner, but assurance is process driven and not undertaken collaboratively or in order to drive continuous improvement at all levels.

9. The department and the ALB agree MI reporting arrangements at the beginning of the year and minimise in-year changes to those requirements.

Advanced

10. Discussions take place at all levels, including active constructive challenge on the outcomes the ALB has delivered. These outcomes flow into the department’s wider governance and are discussed by the departmental board. The department facilitates the ALB discussing its outcomes with bodies that constitute any wider delivery system they are part of.

11. MI is widely used to inform decision making and to drive continuous improvement at all levels. It is presented in an accessible manner and the department and the ALB consider the same versions of the ALB’s MI.

12. MI is considered at regular formal accountability meetings between the responsible minister and the ALB’s chair and between the senior sponsor and the ALB’s chief executive, as well as at working level.

13. The department and the ALB keep the effectiveness of reporting arrangements under active and critical review and agree changes in a spirit of partnership where clear gains to the quality of the accountability and feedback loop can be achieved.

Capability 4: Financial oversight

Emerging

1. There is a limited relationship between the ALB and departmental finance teams - interactions only take place through the minimum required processes.

2. The PAO or relevant budget holder does not provide the ALB with a delegated authority letter at an appropriate time, hampering the ALB’s business planning.

3. The ALB goes beyond the delegated limits and budget allocations set out in the delegated authority letter and there is limited discussion on justification.

4. In-year assurance of the ALB’s financial position by the department is inadequate, either through the absence of timely and accurate financial data being provided by the ALB, or through the department not having effectively scrutinised and acted upon that data.

5. An excess of controls and approval processes: the department adds additional financial controls over the ALB, impacting on the ALB’s operational freedom and effectiveness.

6. There is a lack of engagement or information on the ALB financial position and therefore issues are not visible to the department.

Maturing

7. There are relationships at a working level between the ALB and departmental finance teams - but this does not extend to senior or board levels. Suspicion remains within the relationship about expenditure and/or the sharing of relevant data, though there is a degree of in-year spending assurance.

8. The delegated authority letter from the department to the ALB AO fails to provide the ALB with an appropriate degree of operational autonomy or the department with an appropriate degree of control.

9. The department (and Cabinet Office/ HM Treasury where applicable) sets an appropriate spending approval framework, but does not consistently deliver service standards, for example in relation to business case turnaround times, hampering the ALB’s operational delivery.

Advanced

10. There is a well-established and trusting but constructively critical relationship between the ALB’s finance team and the department’s finance team at all levels. Both the ALB and the department act as ‘one team’ when it comes to significant expenditure requests, or any proposals that need to be submitted to the Centre.

11. The PAO delivers a timely and comprehensive delegated authority letter to the ALB’s AO, balancing the ALB’s need for operational autonomy with the department’s need for control.

12. Regular ‘open book’ engagement between the department and the ALB provides both parties with assurance that the ALB’s expenditure is affordable, sustainable, and within agreed limits and allocations.

13. The ALB has a good understanding of and operates in accordance with Managing Public Money and with Cabinet Office spending controls.

1. Annex B explains how the Home Office sponsors the SIA through this hybrid model ↩

2. The SIA and Home Office Sponsorship Unit completed the Cabinet Office’s self-assessment model (SAM). No areas of concern about the SIA’s delivery of its mission were highlighted. The SAM was a key element in determining the terms of reference of this review and its focus on exploring efficiency. ↩

3. Check what training you need to get an SIA licence (www.gov.uk) ↩

4. s14 PSIA refers ↩

5. Manchester Arena Inquiry: recommendation at para 8.106. “I recommend that consideration is given to amending the SIA legislation to require that companies which carry out security work which may include a counter‑terrorism element are required to be licensed”” Better Regulation Principles recommend alternatives to prescriptive regulation where possible. ↩

6. Growth Duty: Statutory Guidance (publishing.service.gov.uk) ↩

7. Contract and Contingent Labour ↩

8. Figures from fee reduction model as at July 2022 as submitted to Home Office. Updated forecasts will be included in the next annual fee review. ↩

9. SIA strategic plan: 2023 to 2026 ↩

10. The SIA notes that civil servants with data and digital expertise cannot retain their continuity of service if they accept employment at an NDPB, which they are concerned is a deterrent. Public servants are likely to have more modest remuneration expectations that their private sector counterparts and the SIA would like to become a more attractive part of the civil service career path for these specialists. ↩

11. Levelling Up the United Kingdom - GOV.UK (www.gov.uk) ↩

12. The SIA obtains checks from the DBS in line with the Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975. It requests over ten times the number of checks than another other UK public body and is the only public body in the DBS top twenty Registered Public Bodies. ↩

13. The Home Office digital, automation and AI outreach strategy for ALBs included a session at the 2023 Home Office ALB conference which was attended by the Home Secretary. The review understands that almost all ALBs contacted the Home Office experts following this session and we would encourage the SIA to join them to share learning about the risks and opportunities of this rapidly developing technology. ↩

14. 2017 triennial review Recommendation 4: Risk based approach – The SIA should improve its risk-based approach to PSI regulation, focusing its efforts on those sectors, operators, or purchasers where the greatest risk exists. ↩

15. Current SIA estimates put FTE savings of the new portals at £184,000 per year and savings from third-party suppliers at £1,180,000 per year. ↩

16. Recommendation 11 Efficiency: “There is scope for greater efficiencies within the SIA which will in turn reduce burdens on the industry. The SIA should focus on reducing accommodation and staff costs and consider the merger of both back-office functions and development of major projects with other similar ALBs” ↩

17. Para 63 of the Review Guidance states “ALBs not joining the Shared Service Centre in the immediate future, for example, due to contractual commitments, are expected to progress with alignment to Strategy workstreams in preparation for joining their Centre. These workstreams include alignment to global processes and standards, data convergence, process transformation and quality and performance.” ↩

18. Relevant extracts at Annex C ↩

19. s1(2)(f) PISA ↩

20. O2 Academy Brixton Decision for Licensing Sub-Committee, 11/09/2023. The review notes the findings of the O2 Academy licensing decision in September 2023, following the Brixton Academy tragedy on 15 December 2022. To satisfy itself on public safety and the prevention of crime and disorder the committee ruled that the venue cannot reopen without a prescribed ratio of SIA licensed operatives with specific sets of skills. ↩

21. SIA Annual Reports and Accounts, 2018/19 to 2022/23 ↩