Upsi police briefing paper no 1 final

Police Funding

(England & Wales) 2011-12 Police Briefing Paper No. 1

UNIVERSITIES’ POLICE SCIENCE INSTITUTE DR. TIMOTHY BRAIN, HONORARY RESEARCH FELLOW M AY 2 0 11

INTRODUCTION When on 13 December 2010 the Minister of State for Justice, Chris Herbert, announced the government grant settlement for the 43 police forces of England and Wales he brought to an end over a decade of sustained growth in police resources.

Nor was this to be a mere blip. The cuts were intended to amount to 20 per cent in ‘real’ terms by 2014-15 and given their scale there could be no doubt about their strategic or political significance. For most of the previous thirty-five years the Police had enjoyed a favoured status in terms of funding under both Conservative and Labour administrations. The Minister’s statement signalled that this ‘special relationship’ was at an end. The cuts were not only seen as necessary in response to the United Kingdom’s high budget deficit, they were intended to be beneficial, bringing about greater effectiveness and efficiency.

DR. TIMOTHY BRAIN Dr Timothy Brain is an Honorary Senior Research Fellow at Cardiff University. He was Chief Constable of Gloucestershire from 2001 to 2010 and was chair of the ACPO Finance and Resources Business Area. His book A history of policing in England and Wales from 1974: a turbulent journey was published by OUP in 2010.

The scale of the cuts, however, is high and the timescale for their introduction short.

The sum total of cuts in cash terms is £1.2 billion out of an overall cash budget of £12.9 billion. While the Government intends for some of this cut to be mitigated by increases in locally raised council tax, the cumulative impact will still be substantial. There has been little time for the 43 forces to phase in the cuts before the start of the financial year 2011-­‐ 12 and the expectation is that the scale of the cuts is such that there will inevitably be reductions in police officer and civilian staff numbers. The latest projections suggest that the total number of personnel to be lost by 2014-­‐15 will be over 30,000.1 Ministers expect the brunt of such losses to fall in the so-­‐called (but hard to define) ‘back office’, but with may be as many as over 13,000 of those posts coming in police officer numbers there is little prospect that the ‘frontline’ will be entirely unaffected.

The truth is that the government has no firm plan or expectation of where the losses will fall. This approach is entirely consistent with the current Coalition Government’s philosophy of reducing central direction and increasing local discretion. It also leaves, however, the problem of implementing the cuts firmly with police authorities and chief constables.

Police funding sources Funding mechanisms for the 43 police forces in England and Wales are probably the most complex of any mainstream public service. There are no less than 20 separate funding elements. In part this reflects the composite governance arrangements for policing, straddling both central and local government, but it also reflects government preferences for targeting specific spending and simple lack

of coordination. Funding is provided by two government departments (Home Office and Department of Communities and Local Government (DCLG)), the Welsh Assembly Government (WAG) and by individual police authorities (council tax).

However, in addition to general grants there are a range of specific grants, such as those for security and public finance initiative projects. Some of the smaller grants are combined under the generic title of ‘Rule 2’. Even after some consolidation this complexity belies any simple analysis.

Council Tax 24% (£3.2bn)

HO Police Main Grant 35% (£4.6bn)

DCLG/ WAG 30% (£3.9bn) Specific Grants 11% (£1.5bn)

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Figure 1: Principal funding sources 2010-­‐11

In total central government, in one form or another, accounts for 76% of police funding while collectively the 43 police authorities account for 24%, a proportion which has doubled since 1995. Specific grants, which have also increased as a proportion in recent years, account for 11% of the total, enabling central government to target its priorities and restrict local discretion. The Home Office grants are distributed by means of a broadly needs-­‐based Police Funding Formula (PFF). The DCLG and WAG elements (Rates Support Grant (RSG) and the police share of the National Non-­‐ Domestic Rates (NNDR)) are distributed by the Standard Spending Assessment (SSA) used for local authorities. Most specific

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grants are distributed by means of the PFF, but some, notably Security and Public Finance Initiative (PFI), are specifically targeted, consequently the Metropolitan Police Service (MPS) receives 63% of the Security grant while only 15 forces have PFI projects.3 It will be noted that two of the funding sources, DCLG and WAG, do not have a constitutional role in the Tripartite Structure established by various police acts yet have a major role in funding forces.

The PFF distribution mechanism produces considerable variations in the proportion of funding authorities receive. At one extreme Surrey receives only 55% of its funding from government sources while Northumbria receives 88%. Conversely Surrey raises 45% of its funding from council tax while Northumbria raises only 12%. The differences are also sharply delineated by comparisons per 1000 population. This demonstrates that Surrey receives £105,988 per 1000 population whereas the MPS receives £337,010.

Taking funding from all sources into account (grant and precept), the MPS is the most well-­‐funded force at £345,312 per 1000 population, whereas Lincolnshire, at £155,174, is the least. The average for England and Wales is £189,470.4

The PFF is a continuing source of controversy. In theory the elements which determine grant distribution reflect need, but since its introduction in the mid-­‐1990s the formula has never operated as intended. At its inception it became obvious that the change over from the previous system to PFF would produce destabilising swings in grant, requiring in some forces either considerable reductions in police numbers or compensating large increases in council tax. Unwilling to see either option, the Conservative government of the day introduced a ‘damping mechanism’ to even out the grant distribution, and while the

subsequent Labour government adjusted the weightings it did not abolish the system. This leaves some forces (eg Northamptonshire) feeling aggrieved that they do not receive their fair share of grant. In 2008 Her Majesty’s Inspectorate of Constabulary (HMIC) recommended abolition of the damping mechanism and the current Coalition is committed to its revision, but the fundamental problem remains of an un-­‐dampened mechanism introducing excessive swings in grant distribution, leading either to new cuts in numbers in some forces or compensating rises in council tax.5 Such is its complexity it may even be beyond significant change.

The council tax element in police funding is also problematical. The PFF means that some forces, regardless of damping, are required to raise more in council tax than others in order simply to get up to the average funding level. Surrey raises £88,346 per 1000 population in council tax compared to Northumbria which raises £25,583. Even so the system still disadvantages some forces. Lincolnshire raises £60,173 in council tax per 1000 population, above the national average of £57,426, but is still the least well-­‐funded force in the country.6 Furthermore, since its inception all local authorities, including police authorities, have generally been subjected to a system of council tax capping by which the responsible Secretary of State (in recent years the Secretary of State for Communities and Local Government) has set a limit to the tax increase which can be levied locally (capping). For only a few years at the beginning of the 2000s have ministers allowed the system to operate as originally intended.

Baseline 2010-­‐11 It is surprisingly hard to determine exactly what is spent on the Police. The Home Office itself does not provide consolidated

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official figures, nether does the DCLG. The most comprehensive, consistent and accurate source are the annual figures provided by the Chartered Institute of Public Finance and Accounting (Cipfa).

However, despite their usefulness, these are available only to subscribers and, as the figures are based on complex force data returns, there is an inevitable delay before even ‘Estimates’ are available. It is almost a year before ‘Actual’ figures are published. Therefore, at the commencement of the financial year 2011-­‐ 12 the best figures available for 2010-­‐11, the baseline year against which government cuts must be assessed, are the ‘Estimates’ provided by Cipfa.

By combining all grants (general and specific) from all government sources (Home Office, DCLG and WAG) and council tax the total funding for the 43 forces of England and Wales was £13.02 billion.7 However, in June 2010, shortly after coming to office, the Coalition government instituted an emergency budget which cut £6.2 billion from most departments. The 43 force revenue share of these cuts was £125 million. This reduced the baseline to £12.9 billion.

At 31 March 2010 police service strength (England and Wales) stood at 244,947 Full Time Equivalent (FTE) personnel, comprising:

• 143,734 FTE police officers of all ranks • 79,596 FTE civilian staff employees of all grades • 16,918 FTE Police Community Support Officers (PCSOs) • 409 FTE Traffic Wardens • 3,840 ‘Designated Officers’ under the Police Act 19968

Personnel related costs represent approximately 80% of police revenue costs, with the remaining 20% spent on non-­‐personnel cost such as vehicles, estate

and equipment. This 80/20 split has remained relatively constant for many years.9

SR 2010 The cuts in public spending announced in the Spending Review (SR) on 20 October 2010 had been long anticipated. Both the Conservatives and the Liberal Democrats in their election manifestos promised action to get the deficit down, but, save for some ideological preferences, were largely unspecific about where the cuts would fall, other than both promised to target waste.

The post-­‐election Coalition agreement signed on 11 May 2010 specifically included a ‘full Spending Review’ to be completed by the autumn. Only health was clearly exempted from the full effects of any cuts.10

The parameters of the Spending Review were set out in the Emergency Budget of 22 June 2010, when it was specified that steps would be taken to eliminate the structural deficit by 2014-­‐15 and that to do so departments, other than the protected health and overseas aid could expect to see ‘average real cuts of around 25 per cent over four years’.11 The police were not included in any protected list, although it was uncertain what the impact of ‘real cuts’ (a combination of actual cash cuts and a calculation for what growth might have been allowing for inflation and growth in the GDP) would mean in practice.

The October Spending Review confirmed the service’s unprotected status. The Home Office emerged as a relative ‘loser’, with a real term cut of 23%, and therefore being one of 12 departments to receive a cut of over 20% in real terms. The police fared slightly better than the Home Office average with a projected real cut of 20%.12 Speaking in the Commons on 20 October the Chancellor announced that police

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spending would fall by ‘4% each year’, although by ‘cutting costs and scrapping bureaucracy’ the aim would be to save ‘hundreds of police man hours’ and ‘avoid any reduction in the visibility and availability of the police in our streets’.13

The detail was revealed in the published Spending Review document. From a baseline of £12.9 billion spending on the 43 forces would reduce to an estimated £12.1 billion by 2014-­‐15, a cash cut of £0.8 billion, or 6.2%.14

However, a closer examination of the figures in the CSR document reveals an even more complex and less certain future.

The overall reduction from £12.9 billion to £12.1 billion was a composite calculation including both central government grants (from all sources) and council tax. The cut in central grants was from a total of £9.7 billion in 2010-­‐11 to £8.5 billion in 2014-­‐ 15, a cash cut of £1.2 billion, or 12.4%. To compensate and arrive at the SR forecast the Chancellor had had to allow for a cumulative cash increase in council tax of £0.4 billion, rising from an estimated £3.2 billion in 2010-­‐11 to £3.6 billion in 2014-­‐ 15, or 12.5%. The table below, simplifying the extrapolations in SR 2010, illustrates the expectations.

2010-­‐ 11 £bn (%)

2011-­‐ 12 £bn (%)

2012-­‐ 13 £bn (%)

2013-­‐ 14 £bn (%)

2014-­‐ 15 £bn (%)

Change

‘Central Government contributions to police’

9.7

-­‐0.4 (-­‐4.1)

-­‐0.5 (-­‐5.4)

-­‐0.1 (-­‐1.1)

-­‐0.2 (-­‐2.3)

-­‐1.2 (-­‐12.4)

Council tax contribution (extrapolation)

3.2

3.3 (3.1)

3.4 (3.0)

3.4 (0)

3.6 (5.9)

0.4 (12.5)

Grants and council tax

12.9

12.6 (-­‐2.3)

12.2 (-­‐3.2)

12.1 (-­‐1)

12.1 (0)

0.8 (-­‐6.2)

£bn (%)

Table 1: Change in government grant and council tax 15 contributions to police funding 2010-­‐11 to 2014-­‐15

It will be noted that in the Chancellor’s plan the cuts are frontloaded in the first two years of the SR period. It will also be noted that the Chancellor was projecting a major shift in responsibility for police force

funding from the central to the local, with police authorities collectively accounting for 30% of force funding by 2014-­‐15 compared to 24% in 2010-­‐11.

There are, however, some problems with the assumptions which underpin these calculations. First, it is not clear from these calculations how the Chancellor arrived at his estimation of 4% ‘year-­‐on-­‐ year’ cuts. Second, neither the Chancellor nor the Home Secretary is in control of what police authorities set in council tax.

In theory authorities can set their own increase and it is open to them to set a tax below the level calculated in SR 2010.

However, through capping and incentives the Minister with the greatest influence on council tax is the Secretary of State for Communities and Local Government, and it has already been observed this minister has no direct accountability for policing.

Third, while the cash effects of these cuts are significant the ‘real’ effect, ie having taken account of the Treasury’s own estimates for inflation and GDP, is even greater. Using the Treasury’s own ‘deflator’ calculation the ‘real’ effect of the reduction in government grant is £1.9 billion, or 20%, while the net effect after council tax is taken into account is a ‘real’ cut of £1.8 billion, or 14%.

These figures are difficult to reconcile with the Chancellor’s 4% year-­‐on-­‐year reduction. In cash terms they would amount to 3.1% a year, or 5% using the Treasury’s deflator. The closest is the average of 4.6% if the deflator is used and council tax increases by the amount allowed for by the Chancellor. Only by rounding down does the year-­‐on-­‐year figure become 4%.

Although SR 2010 set the direction of travel, the actual impact of the cuts would not be known until the Government announced the police grant settlement in December 2010 and individual police

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authorities completed setting their council taxes during the late winter and early spring of 2011.

Police Grant Settlement 2011-­‐12 In keeping with the overall complexity of police funding the announcement of government police grants on 13 December 2010 came in four instalments:

• A statement by the Minister of Justice to the House of Commons on 13 December (with a corresponding statement in the Lords) • A Home Office written report setting out the core police grant and specific grants for each police authority • A DCLG statement setting out the RSG and NNDR elements for England and Wales • A WAG statement setting out the RSG and NNDR elements for the four Welsh forces16

The announcement also included indicative funding for 2012-­‐2014, although it was emphasised that the DCLG elements for 2013-­‐14 and 2014-­‐15 would be subject to the outcome of a fundamental review of central government grants to local authorities, thereby adding another element of doubt over the Chancellor’s SR calculations.

The headline settlement announced by the Minister of Justice for 2011-­‐12 was £9.3 billion, a cut of £0.4 billion and in line with the 4% Chancellor’s expectation in SR 2010. However, somewhat confusingly the Minister later in the statement added that each force would receive a cash reduction of 5.1%. The difference, he explained, was to be accounted for by the effect of specific grants: ‘When funding for specific grants is added to this, the total cash reduction in core Government funding to the police remains 4% in 2011-­‐12 and 5% in 2012-­‐13, as announced on 20

October.’17 The Minister was correct in respect of the reductions in grant set in CSR 2010, but the 5% in 2012-­‐13 is at variance with the Chancellor’s year-­‐on-­‐ year reduction of 4%.

There are, however, some problems with taking specific grants into account. First, the Home Office published its figures for 2011-­‐12 in a different (albeit more detailed) format from 2010-­‐11, making a like-­‐for-­‐like comparison difficult, especially when some of the specific grants have been consolidated into the main grant (see below). Second, not all specific grants are evenly distributed using the funding formula. To arrive at the more benign 4% rather than the 5.1% headline cut it is necessary to include in the total the Security and PFI grants, a new Police and Crime Commissioners’ (PCC) election grant (£50 million) and a new ‘Council Tax Freeze’ grant from the DCLG for the 39 English forces (WAG did not adopt the grant). However, these grants are not equally available to all forces. Only 15 forces receive the PFI grant, and even that is for specific building-­‐related projects, while the Security grant is overwhelmingly weighted towards the Metropolitan Police.18 The PCC election grant is available in 2011-­‐12 only, and then only for the purposes of meeting election expenses. As for the Council Tax Freeze Grant (set at £75 million for each of the next four years), as its name suggests, authorities were required to freeze their grants at the 2009-­‐10 level. At least, therefore, for its first year of operation it does no more than cancel out a loss of revenue from council tax and thereby further undermines the Chancellor’s CSR 2010 calculations. Therefore, to arrive at the Minister’s assessment of 5.1% cuts it is necessary to take into account only general (Home Office Main, DCLG and WAG) grants and not specific grants.19

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There is, however, a further complication in the figures announced on 13 December, although the detail has to be found in the DCLG not the Home Office grant tables.

Ostensibly ‘to give greater freedom and flexibility over how resources are deployed locally’ the Minister reduced the amount of funding allocated by means of specific grants. Specifically, the ‘Rule 2’, Crime Fighting Fund (CFF) and Basic Command Unit (BCU) grants were all absorbed within the Home Office Police Main Grant. The Neighbourhood Policing Fund (NPF) would continue for another year. However, while this consolidation has unquestionably given forces greater freedom as to how they will use their financial resources, this move also amounted to a net cut of 6.1%, as demonstrated in the table below.

2010-­‐ 11 £m 8,339.9

2011-­‐ 12 £m 8,298.1

Cash difference £m -­‐41.9

-­‐0.5

340.1

340.1

0

0

Crime Fighting Fund

277.4

0

-­‐277.4

-­‐100

Basic Command Unit Grant

40.0

0

-­‐40.0

-­‐100

Rule 2 grants

197.4

0

-­‐197.4

-­‐100

9,194.8

8,638.2

-­‐556.7

-­‐6.1

Total general grants Neighbourhood Policing Fund

Total

%

Table 2: Changes in general and principal specific grants 20 2010-­‐11 to 2011-­‐12 (figures rounded)

There is therefore a layered approach to calculating the effects of the 2011-­‐12 grant settlement. At the highest level, taking into account all forms of central grant, the cut is 4%, in line with the CSR calculation.

If only general, rather than specific grants are compared, as the Minister did in the 13 December statement, the cut is 5.1%.

However, that is a selective approach because it fails to take into account the consolidation of the GFF, BCU and Rule 2 grants. In effect, this approach artificially swells the general grant total for 2011-­‐12.

If calculations are made to take account of the effect of grant consolidation the actual reduction experienced by forces, in respect of local policing, is 6.1%.

The Minister also announced that he would leave in place the damping mechanism for at least two years, so that the cut in main grant would apply equally to all 43 forces, thereby aggravating further those forces which felt that they had been disadvantaged by the effect of damping. Given the time available and the circumstances of the cuts, this decision was, however, inevitable.

2012 to 2014 It has already been noted that the 2010 announcements contain indicative settlement levels from 2012-­‐13 until 2014-­‐ 15. Notwithstanding that, by consolidating the principal specific grants into the Home Office Main Grant the police funding landscape is still, to say the least complex, as the summary table below reveals.

Grants Home Office police main grant Capital City grant (MPS only) DCLG (RSG & NNDR) WAG (RSG & NNDR) Total general grants (ex contingency) Specific Grants comprising Welsh top up (Dyfed-­‐Powys and N Wales only) Neighbourhood Policing Fund Counter-­‐terrorism specific grant Council tax (2011-­‐ 12) freeze PCC election grant PFI grants Total specific grants Total local policing grants Total government funding (including contingency 2011-­‐ 12 and 2012-­‐13)

2011-­‐ 12 £m (%) 4,579

2012-­‐ 13 £m (%) 4,251 (-­‐7.2) 189 (-­‐5.5) 3,138 (-­‐6.2) 151 (-­‐6.2) 7,729 (-­‐6.7)

2013-­‐ 14 £m (%) 4,515 (6.2) 185 (-­‐2.1) 3,093 (-­‐1.4) 149 (-­‐1.3) 7,942 (2.8)

2014-­‐ 15 £m (%) 4,429 (-­‐1.9) 183 (-­‐1.1) 3,051 (-­‐1.4) 147 (-­‐1.3) 7,810 (-­‐1.7)

2011-­‐ 2014 £m (%) -­‐150 (-­‐3.3) -­‐17 (-­‐8.5) -­‐294 (-­‐8.7) -­‐14 (-­‐8.7) -­‐475 (-­‐5.7)

13

1 (0)

20 (53.8)

20 (0)

7 (53.8)

340

338 (-­‐0.6) 564 (-­‐0.5) 75 (0) 50 (-­‐) 54 (0) 1,094 (4.3) 8,155 (-­‐6.4) 8,830 (-­‐5.5)

0 (-­‐100) 563 (-­‐0.2) 75 (0) 0 (-­‐100) 60 (11.1) 718 (-­‐34.4) 8,037 (-­‐1.4) 8,660 (-­‐1.9)

0 (0) 562 (-­‐0.2) 75 (0) 0 (0) 79 (31.7) 736 (2.5) 7,905 (-­‐1.6) 8,546 (-­‐1.3)

-­‐340 (-­‐100) -­‐5 (-­‐0.9) 0 (0) 0 (0) 25 (46.3) -­‐313 (-­‐29.8) -­‐808 (-­‐9.3) -­‐795 (-­‐8.5)

200

3,345

161

8,285

567 75 0 54 1,049 8,713 9,341

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Table 3: Indicative police revenue funding summary 21 2010-­‐11 to 2014-­‐15

Although complex it is possible to discern some trends and significant highlights.

• From 2011-­‐12 to 2014-­‐15 there will be 8.5% reduction in funding for the police from all government sources • There will be a 5.7% reduction in funding from government general grant sources (Home Office Main, RSG and NNDR) • There appears to be a 6.2% increase in general grants from 2012-­‐13 to 2013-­‐ 14, however this is caused by consolidation of the Neighbourhood Policing Fund into the Home Office Main Grant; in fact the consolidated total represents a year-­‐on-­‐year cut of 1.6% • The Security Grant (which includes grants for protection duties as well as counter terrorism and, as has been noted is heavily weighted towards the MPS) while relatively protected still decreases by 0.9% from 2011-­‐12 to 2014-­‐15 • There is a general decrease in specific grants of 29.8% from 2011-­‐12 to 2014-­‐ 15, although the year-­‐on-­‐year movement is volatile because of variations to specific grants, ie -­‐ consolidation of the NHP fund into the main grant -­‐ the PCC election grant boosting 2012-­‐13 but dropping out thereafter -­‐ a cash increase of £7 million in the Welsh top up grant (but available only for Dyfed-­‐Powys and North Wales) -­‐ a 46% increase in the PFI, but available only for only PFI purposes and for the 15 forces in the schemes • The Council Tax Freeze grant remains constant throughout the period, which in real terms means it decreases in

•

•

value, and as it only replaces council tax does not represent ‘new money’ The Chancellor in SR 2010 calculated on police authorities raising £400 million in council tax between 2011-­‐12 and 2014-­‐15; the Council Tax Freeze Grant raises only £300 million thereby increasing the financial pressure on forces There is a 9.3% cut in local policing grants (Home Office Main, NNDR, RSG, NHP and Council Tax Freeze)

Over the period from the 2010-­‐11 baseline to 2014-­‐15 the reduction in government grant available specifically for local policing amounts to £1.36 billion (rounded) or 14%. This compares to an overall reduction in central funding of approximately £1.2 Billion (rounded) for all policing. In sum, the provision for local policing has taken the biggest hit.

The notable features of the government funding trend from 2010-­‐11 are, therefore, the scale and speed of the cuts, and their focus on local policing.

Capital Grant for capital schemes is dealt with separately from revenue and subject to a separate grant. The capital grant is also much smaller, £146.7 million in 2010-­‐11 compared to £9.7 billion for revenue. Even so, the grant has been disproportionately hit by SR 2010. The pattern for 2010-­‐11 to 2014-­‐15 is set out below. In total there is an 18% reduction in capital funding and the years 2010-­‐2014 are marked by extreme volatility in the capital grant year-­‐ on-­‐year.

2010-­‐ 11 £m

146.7

2011-­‐ 12 £m (%) 90 (-­‐38.7)

2012-­‐ 13 £m (%) 130 (44.4)

2013-­‐ 14 £m (%) 120 (-­‐7.7)

2014-­‐ 15 £m (%) 120 (0)

2010-­‐ 2014 % -­‐18.2

Table 4: Home Office Capital Funding 2010-­‐11 to 2014-­‐ 22 15

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The scale of the cut and the volatility of the year-­‐on-­‐year distribution of capital funding until 2014-­‐15 will make it difficult for force planners to get the best from investments to deliver increased efficiencies.

Council Tax 2011-­‐12 Capping limits for all local authorities, including police authorities, are set annually in England by the DCLG and in Wales by the WAG. Usually the limits are announced once most authorities have set their budget and to do so safely they have to play something of a guessing game to avoid capping. Unusually, therefore, in February 2011 the DCLG announced its capping limits before most authorities set their budgets, the essence of which was that most authorities could increase council tax by up to 3%. However, for 2011-­‐12, and the succeeding years of CSR 2010, the DCLG added an incentive for authorities to set an even lower council tax increase by introducing a ‘Council Tax Freeze Grant’.

Under the terms of the grant authorities would be given a compensating grant the equivalent of a 2.5% should they freeze council tax at the 2010-­‐11 level. At first sight this seems below the 3% threshold set by the Chancellor is SR 2010, but the situation is complicated by the increase in council tax base which occurs as houses grow in number across local authority areas. This, it appears, has made up some of the difference. However, the grant itself does not represent an increase in the council tax base, and additionally the grant has not been guaranteed for the years beyond 2011-­‐12, although financial provision has been made for it continuing in SR 2010. It is not therefore clear what will happen in the remaining years of SR 2010, although it seems likely that authorities will be allowed to increase council tax and still avail themselves of the

grant so long as their increase does not exceed proscribed limits, which it may be anticipated will be somewhere in the region of the Chancellor’s projected 3% annual uplift. For the police, provision of the grant itself is fixed at £75 million for the remaining years of SR 2010, so its relative value will decrease in relation to inflation and any growth in the economy.

There are some problems with the application of the Council Tax Freeze Grant. First, it is below the level of increase necessary to close the gap on the cuts delivered through the medium of the cuts in the police main and RSG grants.

Second, it represents a cut in ‘real’ term growth, as recognised, indeed welcomed

by CLG Secretary Eric Pickles, who emphasised in a written answer on 4 April, ‘It represents a cash terms freeze, and a real terms cut in council tax.’ Third, the Treasury is projecting for council tax receipts to fall over the life time of SR 2010 as a result of the freeze’s effect in 2011-­‐12, which is presumably one of the benefits that Mr Pickles sees as being ‘locked in’ as a result of the grant.23 Fourth, there may be some double counting. The £75 million Council Tax Freeze Grant already appears as one of the range of central government grants. It should not, therefore, be counted as a separate element under police authority budgets. It will be necessary to await the publication of Cipfa Estimates later in 2011 before it will be certain what has happened to council tax and its significance in police authority budgets.

The evidence is that the DCLG’s incentive to keep council tax low has worked, with all 39 English police authorities setting within the 2.5% limit and thereby qualifying for the grant.24 The amount set to be raised through council tax for 2011-­‐ 12 is £3,289.3 million, slightly under the Chancellor’s estimated limit for SR 2010 of £3.3 billion, but against which must be set

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the slight increase in council tax base as a consequence of new dwellings.25 The WAG did not follow suit in instituting a council tax freeze grant, but with there being only four Welsh forces, and these small to medium in size, their exclusion has made little difference to the overall council tax deficit created by the DCLG’s new grant.

This leaves the question of what will happen in 2014-­‐15. In theory the government could remove the prop of the Council Tax Freeze Grant altogether, in which case forces will be thrown back to their baseline council tax levels of 2010-­‐11, which would produce a catastrophic financial disruption. For this reason it seems unlikely that the government of the day will allow this to happen, although if the general economy does not pick up in the way expected it could not be ruled out.

Finally, it must be emphasised that even with the Council Tax Freeze Grant SR 2010 still projects a ‘real terms’ cut in the value of police funding. Even if council tax plus freeze grant increases in line with the Chancellor’s forecast then the real term cut is 14%, while the cash value is still 6.2%.

Police numbers With cuts of the scale presaged in SR 2010 and the grant settlement of 2011-­‐12, and in an organisation where 80% of its resources are spent, in one form or another, on personnel, it is inconceivable that there will not be significant staff losses. Indeed, Ministers have expected as much and have simply restricted their observations to an expectation that such losses will not adversely affect ‘the frontline’.

In 2010-­‐11 Cipfa estimated there to be 142,768 police officers and 102,703 civilian staff.26 This equates to £45,787 per FTE.

(This, of course, relates to what FTE units cost not what they are paid.) If all of the cuts of £1.36 billion in local policing was taken in the form of personnel this would equate to an average FTE loss of 29,700.

Under CSR 2010 this loss would have been compensated up to £0.4 billion by increases in council tax. However, £0.3 billion may be accounted for by the effect of the Council Tax Freeze Grant, which is already incorporated into estimates. This means that the FTE effect is likely to be close to the 29,700 calculation.

It must be stressed that these are average extrapolations. Police officer FTEs cost more than civilian FTEs, so if authorities decided to lose more civilians than police officers the numbers of FTEs would increase; conversely if more police officers were lost the overall loss would be lower.

Similarly if more senior officer or senior management grade posts were lost the overall numbers would be reduced.

There is another complication, however.

Unit FTE costs vary considerably across the country, with the MPS costs easily being the highest. Somewhat perversely, forces which are currently more efficient and have lower FTE costs will therefore have cut further than less efficient, higher costing forces.

Estimation of the average FTE loss does, therefore, no more than provide a benchmark against which losses can be gauged. In actuality the cuts appear to be much worse. In early March 2011 ACPO forecast losses of 28,000 personnel, while the Labour party, conducting a post-­‐ budget setting survey of police authorities, forecast a loss 30,000.27 Significantly the Labour party figures were indicating that the bulk of the losses (16,514) would be civilians. It is not clear if these numbers equate to FTEs or individual personnel.

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There is a considerable amount of coalescence between the FTE average calculation and the ACPO and Labour Party surveys. Consequently, there is every probability that the eventual number of posts to be lost over the lifetime of SR 2010 will be between 28,000 and 30,000.

Losing 30,000 FTEs would take overall numbers back to the level of 2004-­‐5. The effect is illustrated in the graphic below.

300,000

All FTEs

250,000

Actuals Forecasts

200,000 150,000 100,000 50,000 0

Figure 2: Changes (actuals and forecasts) in police personnel 1995-­‐2014

There are, however, some further significant qualifications to add:

• The growth in police officer numbers since 2004-­‐5 has been principally to enable neighbourhood, or community, policing; it is likely that it will be in neighbourhood policing where the greatest impact will be felt • There has been a disproportionate growth in civilian staff in recent years, including PCSOs, much intended to free up officers from back office to frontline duties (although excessive centralisation and bureaucracy has negated some of this effect) • The cuts must be implemented with speed, with most occurring in the next two years, giving forces little opportunity to introduce new efficiency schemes by which to mitigate personnel losses, instead relying on the blunt instruments of recruiting freezes, early retirements and compulsory redundancies • Because of differing FTE costs and the differing scope for efficiencies, the

impact of post losses will vary considerably from force to force

The effect of this disruption on morale and service delivery is hard to gauge, but, to say the least, the next few years are likely to prove difficult for most police forces.

Efficiencies There is, however, a high ministerial expectation that efficiencies will minimise the effect on ‘the frontline’ and indeed even drive forward efficiencies. For the Government’s part, the Home Secretary promised to ‘slash’ bureaucracy, but there was, save for scrapping the stop and search form and focusing on reducing crime as the single national target, little to show for the Coalition’s first year in office.

However, in a speech entitled ‘The deal: one year on’, the Home Secretary promised a more vigorous central action programme, the main points of which included:

• returning police discretion for charging minor charging decisions • new health and safety guidance • ‘light touch’ inspections by HMIC • more complaints to be resolved by frontline supervisors • commencing a programme in conjunction with the Ministry of Justice and the Courts to ‘streamline processes across the system’ • streamlining the performance and development review process • simplifying police job descriptions • ‘a more sensible way of managing risks to the public’ • a simplified crime recording process • a review by ACPO of its 600 ‘doctrines’ with the aim of reducing them to around 10028

By these means, although it is not certain how the calculation has been made, the Home Office estimates that 2.5 million

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police hours will be saved, the equivalent of 1,200 posts. It must be recognised, however, that this does not represent a reduction in the number of police posts that will actually be lost as a result of spending cuts; it is simply an estimation of the degree to which the effect of those cuts in numbers might be mitigated.

There can be no doubt that many of these measures are welcome and some over due. It is not, however, certain that they will all deliver efficiencies in the way intended. For example, returning responsibility for charging for minor offences will not necessarily reduce the scrutiny required before a decision to proceed is made. ‘Light touch inspection’ (which has been tried before) may produce less work for HMIC but not necessarily the forces inspected. Even so, the 1,200 posts-­‐ equivalent savings forecast does little more than dent the impact of the overall cut in numbers.

The Home office has put substantial faith in more effective national procurement, greater cross border collaboration, a two-­‐ year public sector pay freeze, and the results of the Winsor Review into police (both officer and civilian) pay and conditions of service.

Winsor reported in March 2011 and his principal recommendations were to:

• reemphasise the application of the two year public sector pay freeze to the police • modify and reduce, but not abolish, overtime compensation arrangements • modify and reduce special priority and bonus payments • freeze annual pay increments for two years

Winsor calculated that the value of these savings over three years would be £484 million and thereby close the funding gap

which he acknowledged would open up in police funding.29

The potential problem with this approach, however, is that it fails to take account of the Council Tax Freeze Grant.

Furthermore, Winsor calculated on these proposals being successfully navigated through the Police Negotiating Board (PNB), which they might not be, and making significant savings in 2011-­‐12, which is unlikely given the speed at which the PNB moves.

The ministerial expectation that all of the savings will be made in the ‘back office’ is straightforwardly unrealistic. There is a fundamental problem in defining what constitutes ‘the back office’. A patrol or response officer might be easily defined as frontline, while a post in pay and accounts might be equally easily identified as ‘back office’. But what of the control room operator, in most case already a civilian post, who receives emergency calls and despatches officers to the scene of incidents? Is such a post back office or frontline? HMIC has attempted some clarification by introducing a new intermediary state of ‘middle office’, but has so far baulked at recommending what the ideal ratios of frontline to middle and back office should be.30 In any case this still leaves the problem of the potentially adverse effect which reducing the ‘middle office’, and even the ‘back office’ might have on the effectiveness and efficiency of the ‘frontline’.

Earlier in 2010 HMIC had raised expectations that cuts could be made without seriously affecting the frontline.

In its report Valuing the Police HMIC estimated that £1.15 billion could be saved if every force simply operated at the cost of the average in its comparator, of ‘family’ group.31 Even so, HMIC recognised that such an approach had inherent limitations

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as individual forces had different contractual arrangements and histories.

However, HMIC seriously underestimated the difficulties of implementing its recommendations. The problems are inherent in the basis of its calculations.

HMIC had estimated its £1.15 billion of savings on the basis of costs per 1000 population. Costs per 1000 population is a perfectly valid basis for making comparisons between forces, but the resultant values do not constitute actual ‘cash’ that could be saved or spent.

Furthermore, the ‘family’ groupings which HMIC uses to make its comparisons possess internal flaws which limit their credibility. For example, in one family group Avon and Somerset and Thames Valley are compared. Avon and Somerset and Thames Valley might be realistically compared with each other, but it seems surprising therefore that in another group Dorset, a much smaller force than either, is compared with Thames Valley but not Avon and Somerset. Such a process may be valid in making performance comparisons (although the system has always had its critics) but is wholly inappropriate when it comes to properly identifying cash savings. In sum, HMIC’s methodology in Valuing the Police is far from sound yet it has gained wide currency in ministerial circles.

Efficiencies can be made although it cannot be assumed that every force has the same capacity to make savings. Some are simply more efficient that others.

Perversely the more efficient forces, therefore, have the more difficult task in the current circumstances as they have to make the same degree of savings as less efficient forces which have more scope to cut back without damaging service delivery.

Considerable faith is placed in collaboration between forces. However,

HMIC has described progress since 2006 as ‘patchy’.32 The inference from HMIC is that many forces (and, by implication, police authorities) have been tardy in making progress in this area. However, in making these assumptions the practical difficulties in collaboration tend to be downplayed while the potential for saving is talked up. There has, in reality, been little central drive or direction for collaboration, with the Home Office and HMIC content to allow forces to do their best locally and then criticise them when they do not think it is enough. There is a woeful lack of central data, which accurately records the genuine progress that has been made and truly identifies the practical opportunities for further financial savings. However, under any circumstances it is unlikely that collaboration will generate sufficient savings to do more than partially mitigate the cuts’ worst effects.

Continuing controversy The anniversary of the Coalition’s first year in office coincided with the Police Federation’s annual conference. The Police Federation had been initially slow to wake up to the prospect of severe cuts, some what downplaying the first warnings in July 2010. However, by September 2010 they too warned of losses in the region of 40,000 posts. By their spring conference of 2011 they were fully seized of the scale of real rather than potential losses, with Federation chairman Paul McKeever going so far as to accuse the Government of a ‘revenge’ attack on the police for defeating the Sheehy recommendations of 1993.33 The Home Secretary in her response was not, at least to first appearances, to be phased by the vigour of this riposte to her policies: the cuts were the necessary price of macro-­‐economic recovery; change, in the form of the Winsor report, was equally essential; the planned cuts in bureaucracy would be beneficial. In any case the cuts

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were not as serious as they at first seemed: ‘A lot of numbers have been talked about, but let’s consider the actual amount that police force budgets are likely to fall by. In four years time, if all areas increased the local precept in line with independent estimates, then forces will have on average 6 per cent less cash than they do now.’34

As we have seen above, the Home Secretary is correct in stating that, according to the forecasts of SR 2010, the cash cut to be experienced collectively by the 43 forces is 6% (rounded). However, that figure is contingent on three crucial factors. First, this forecast is entirely dependent on the value of council tax increasing by 12.5% over four years. This outcome is not, however, entirely certain.

Local factors may ensure that individual authorities may decline to increase council tax while simply availing themselves of the DCLG Council Tax Freeze Grant, the cash value of which is flat lined at £75 million until 2014-­‐15. Additional uncertainty will be created by the introduction of elected Police and Crime Commissioners from 2012-­‐13, especially as they will have to come to some accommodation on precept levels with the new Police and Crime Panels comprising of representative councillors from the constituent local authorities of the force area.

Second, according to the SR 2010 forecasts, even if council tax rose by the required amount in real terms (the Treasury’s own calculation) this would still amount to an effective cut of 14%.

Without the council tax increase it would be 20%.

Finally, the Home Secretary’s inference is that a 6% cash cut is manageable. This still represents, however, £0.8 billion and would still result in the personnel losses projected by ACPO and the Labour Party.

It also does not take into account the

exaggerated effect of the targeting by the Home Office of the remaining specific grants on national rather than local priorities. Despite the increasing evidence that cuts in personnel numbers, both officers and civilians will be extensive and unavoidable, the Home Secretary has persisted in emphasising that responsibility for the cuts in numbers lies with chief constables and police authorities and not the government. Speaking in answer to an opposition debate on policing held on 24 May 2011 the Home Secretary emphasised: ‘Decisions on the size and make-­‐up of the police work force are a matter entirely for chief constables to take locally in conjunction with their police authority and, from May 2012, with their police and crime commissioner’.35

More controversy of this quality, with the interpretation and re-­‐interpretation of estimates and data, can be expected for the remainder of the Coalition’s lifetime.

In this case, however, the facts are clear: the Home Secretary’s ‘cash’ estimate was accurate, but she also used a forecast that has taken limited account of both Treasury inflation and growth forecasts and the unpredictable financial consequences of her government’s proposed constitutional changes.

Conclusion There can be no doubting the significance of the cuts announced first in SR 2010 and followed up with the Grant Settlement of December 2010. Together these not only brought to an end a prolonged period of general growth in police resources but have commenced a process of absolute (cash) and relative decline.

The impact on local policing is likely to be greater than that allowed for by either the Chancellor of the Exchequer in CSR 2010 or the Justice Minister in the grant announcement of December 2010. By

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cutting general grant levels, absorbing specific grants targeted on local policing, then cutting them and finally protecting to some degree other priorities (Security, Welsh top up, PCC election, PFI and MPS capital city grants) the effect has been concentrated on local policing grants. The Council Tax Freeze Grant has further accentuated the overall effect.

There remains some scope for efficiencies to mitigate some of the effects of the cuts, but the frontloading in 2011-­‐12 and 2012-­‐ 13 reduces the scope for phased reductions and increases the pressure to introduce relatively blunt mechanisms such as recruitment freezes, early retirements and redundancies, with likely adverse consequences for morale and service delivery.

Reductions in police personnel, both police officer and civilian employees, are inevitable and benchmarking suggests that ACPO and Labour Party estimates of cuts of 28,000 and 30,000 FTEs are highly credible. These would take personnel levels back to those of the early-­‐mid 2000s. The speed with which the cuts would have to be implemented is likely to be highly disruptive. Increased efficiencies, including collaboration, may mitigate some of the effects, but the degree to which this might happen has almost certainly been overestimated by Ministers and the Inspectorate of Constabulary.

The challenge posed by SR 2010 and the subsequent police grant settlement to the Police Service is, therefore, considerable.

What is plain, however, is the overwhelming complexity of police funding. There are simply too many sources and too little accountability. A joint accountability between the Home Office and local police authorities is reasonable given the hybrid nature of

police governance. What seems unjustifiable is the continued responsibility for almost a third of funding to rest with the DCLG and WAG, neither of which has a statutory responsibility for policing.

Furthermore, if the Government is serious about ‘the big society’ and the greater involvement of local people in local issues, such as policing, it must reconstruct the complexity of police funding and make figures for police funding from all sources comprehensively available in an accessible, intelligible and comparable format. The current arrangements simply obfuscate responsibility.

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References 1

Labour Party, Police cuts (http://www.campaignengineroom.org.uk/police-­‐map [accessed 11 April 2011]) Chartered Institute of Public Finance and Accounting (Cipfa), Datasets Browser, Public Protection, Police Estimates (2010-­‐11) (http://www.cipfastats.net/ [accessed 3 January 2011]), 2010-­‐11 3 Cipfa Estimates 2010-­‐11 4 Cipfa Estimates 2010-­‐11 5 Home Affairs Committee, Police Finances: sixth report of session 2010-­‐11 (House of Commons, London, 2011), 17-­‐20 6 Cipfa Estimates 2010-­‐11 7 Cipfa Estimates 2010-­‐11 8 Home Office, Police Service Strength England and Wales, 31 March 2010 (homeoffice.gov.uk’rds’pdfs10/hosb1410.pdf [accessed 3 January 2011]) 9 In 2009-­‐10 the split was 81% personnel and 19% non-­‐personnel. See Cipfa Actuals 2009-­‐10 10 Conservative Liberal Democrat negotiations Agreement reached 11 May 2010 (http://www.conservatives.com/News/News_stories/2010/05/Coalition_Agreement_published.aspx [accessed 16 April 2011]), 1-­‐2 11 HM Treasury, Budget 2010 (TSO, June 2010) 17 12 HM Treasury, Spending Review 2010 (TSO, 2010) 10 13 Parliamentary business, 20 October 2010, Comprehensive Spending Review (http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm101020/debtext/101020-­‐ 0001.htm#10102049000003 [accessed 28 December 2010]) 14 CSR 2010, 10 15 CSR 2010, 10; author’s extrapolation 16 Home Department , Police Authority Grants (England and Wales), 13 December 2010 (http://www.theyworkforyou.com/wms/?id=2010-­‐12-­‐13a.72WS.4 [accessed 7 January 2011]), cited as Ministerial Statement; Home Office, Provisional Police Grant Report (England and Wales) 2011/12 (http://www.homeoffice.gov.uk/publications/police/police-­‐finance/provisional-­‐grant-­‐report-­‐2011-­‐12 [accessed 7 January 2011]); Communities and Local Government, Local Government Finance Settlement 2011/12 (http://www.local.communities.gov.uk/finance/1112/grant.htm [accessed 7 January 2011]); Minister for Social Justice and Local Government, Welsh Assembly Government, Written Statement -­‐-­‐ Provisional Police Settlement 2011-­‐12 (http://wales.gov.uk/about/cabinet/cabinetstatements/2010/101213police/;jsessionid=nLQbNJLQSrTnjQrPBq hcnzqzQ2kTXtY2gXYpGxNlcVkc5b7QmlZ2!-­‐1746883796?lang=en [accessed 7 January 2011]), cited as WAG Statement 17 Minister’s Statement 18 See Cipfa Actuals 2009-­‐10 19 Ministerial Statement, Cipfa Estimates 2010-­‐11 and WAG Statement; author’s extrapolations 20 DCLG, Local Government Finance Settlement 2011/12 (England) (http://www.local.communities.gov.uk/finance/1011/specgrants.htm [accessed 21 December 2010]) and Cipfa Estimates 2010-­‐11; author’s extrapolations 21 Data from Ministerial Statement, 3; author’s calculations and extrapolations 22 Home Office, Allocations of grant to police authorities in England and Wales, 13 December 2010, [4] and Proposals for revised funding allocations for police authorities in England and Wales for 2010/11, 27 May 2010, [1] (http://www.merpolfed.org.uk/homeoffice.pdf [accessed 17 January 2011]); author’s calculations 23 Secretary of State for Communities and Local Government, written answer 4 April 2011 (http://alpha.gov.uk/government/speeches/council-­‐tax-­‐freeze-­‐2011-­‐12DVmgUvGY/ [accessed 21 May 2011]) 24 Author’s survey of all police authority, England and Wales, budgets 2011-­‐12 25 Author’s budget survey 26 Cipfa Estimates 2010-­‐11 27 A Stevenson, ‘“Tough” police pay deal amid job fears’, 8 March 2011, politics.co.uk (http://www.politics.co.uk/news/policing-­‐and-­‐crime/-­‐tough-­‐police-­‐pay-­‐deal-­‐amid-­‐job-­‐fears-­‐$21387633.htm [accessed 27 March 2011]) and Labour Party, Police cuts (http://www.campaignengineroom.org.uk/police-­‐ map [accessed 11 April 2011]) 2

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28

Home Office, ‘The deal: one year on’ (http://www.homeoffice.gov.uk/media-­‐centre/speeches/one-­‐year-­‐on [accessed 19 May 2011]) 29 T Winsor, Independent Review of Police Officers’ and Staff Remuneration and Conditions, part 1 (http://review.police.uk/documents/police-­‐remun-­‐and-­‐conditions/first-­‐report [accessed 21 April 2011]), 208 30 HMIC, Demanding Times: the frontline and police visibility, HMIC, 2011 (http//:www.hmic.gov.uk, 4, 8, 9 and 18 31 HMIC, Valuing the Police: Policing in an Age of Austerity, HMIC, 2010 (http//:www.hmic.gov.uk/.../VTP_NFS_20100720.pdf [accessed 21 April 2011]), 11 32 ibid 33 BBC News, ‘Budget cuts threaten “60,000 police jobs”’ (http://www.bbc.co.uk/news/uk-­‐10639938 [accessed 20 May 2011]); O Bowcott, ‘Up to 40,000 police jobs face axe, federation warns’ (http://www.guardian.co.uk/uk/2010/sep/10/hampshire-­‐police-­‐cut-­‐1400-­‐jobs [accessed 20 May 2011]); S O’Neill, ‘Thousands of police to lose jobs as forces feel the pinch’ (http://www.timesonline.co.uk/tol/news/uk/crime/article5793087.ece [accessed 20 May 2011]); P McKeever, ‘Speech to conference – 18 May 2011’ [sic] (http://www.polfed.org/annualconference/ac2011.asp [accessed 20 May 2011]); and, 34 Home Secretary, ‘Police federation speech’, 17 May 2011 (http://www.homeoffice.gov.uk/media-­‐ centre/speeches/police-­‐fed-­‐speech [accessed 20 May 2011]) 35 House of Commons, 23 May 2011, column 709 (http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm110523/debtext/110523-­‐0003.htm [accessed 25 May 2011]

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ABOUT UPSI UPSI provides an integrated model that develops and uses research to directly inform the education of police officers at all levels and to shape the direction of policy and practice. Of particular importance in enabling our work to achieve ‘real world’ impact is the highly collaborative approach to research and training that we have developed.

At the University of Glamorgan police probationer training is undertaken by a team of academic staff working directly alongside experienced police trainers. In conducting research, the team at Cardiff are frequently engaged in direct collaborations with police officers.

This helps to ensure that our findings and recommendations fully reflect the complexities of the realities of modern police work, whilst also being rigorously informed by robust methodological frameworks.

This does not mean that our relationship with our police partners is always necessarily comfortable and easy. Indeed, part of UPSI’s role in working with the police is to challenge and critique accepted ways of doing things, in order to encourage reform and improvement where it is needed.

Another important facet of the UPSI approach is that it is genuinely inter-disciplinary in its orientations. The team at Cardiff University includes experienced field researchers with backgrounds in: Criminology; Experimental Psychology; Geography; Research Methods; Educational Research; History; and Sociology.

It is this combination of ingredients that has led us to be recognised internationally as a leading centre for innovative thinking about the future of policing.

Cardiff University School of Social Sciences, Glamorgan Building King Edward VII Avenue Cathays Park Cardiff CF10 3WT T: +44 (0) 2920 875440 E: upsi@cardiff.ac.uk