Financial efficiency savings
and operational efficiencies
60. The Home Office defines the two different types
of efficiency saving as follows:
A cashable gain is where resources, equivalent
in magnitude to the level of the improvement, could be extracted
and redeployed elsewhere. Non-cashable improvements are those
where it would be more difficult to extract resources but where
improved efficiency and effectiveness can be measured in terms
of their cash equivalent cost.[80]
Police forces and authorities are required to identify
efficiency gains in advance in their Annual Efficiency Plan. The
National Audit Office states that "non cashable gains do
not … affect the budgets" but that cashable gains are
"removed directly from their [the forces'] base budget at
the beginning of the year".[81]
61. In 1999 the Home Office introduced an efficiency
saving target for all police authorities set at 2% of Net Revenue
Expenditure (NRE). This target was subsequently increased and
is now set at 3% per year until 2007-08, of which at least 1.5%
must be cashable. The police service has a good record in making
efficiency savings. The ACPO/APA submission Sustainable Policing
stated that "from 1999-00 to 2004-05 all police forces
had an efficiency gain target of 2% of net expenditure. The average
gain was 2.7%, of which 1.1% was cashable".[82]
62. The Government maintains that any shortfall in
the CSR funding settlement "will have to be bridged by efficiencies
that release cash or increase capacity from which additional demand
can be met".[83]
The Minister acknowledged that "the Police Service has done
a huge job in terms of gaining some efficiencies over the last
eight to ten years",[84]
and that "success begets success and people very, very quickly
pocket that success and demand to move on".[85]
However he added that "I do not accept the assumptions they
make about that process slowing down and I think there are still
efficiencies and productivities that can be made".[86]
63. Police representatives, however, argued against
ever greater efficiency targets, warning that the police have
already exceeded Home Office efficiency targets, and that further
efficiencies are unrealistic and will impact on services:
There is a danger that efficiency savings will
be double counted, being seen as the answer to both the continuity
budget funding gap and the means of financing development …
If this is done it will lead to cuts rather than efficiencies
and will undermine all the positive work achieved in recent years,
put at risk neighbourhood policing, and run the risk of de-civilianisation.[87]
64. Some of our witnesses argued that, in the long
term, significant savings can be made through shared services
programmes—that is, forces pooling back-office functions,
such as payroll and pensions. Savings can also be made by rationalising
police equipment—for example, a number of police forces
currently share police helicopters in order to maximise the cost
efficiency of running an air support unit. The APA told us that
"collaborative ventures are being developed in several areas
of the country (examples include 14 forces collaborating on forensic
analysis; level 2 collaboration in East Midlands and Yorkshire;
joint provision of internal audit/legal services)".[88]
Mr Bill Wilkinson, Treasurer of the APA, agreed that, in principle
at least, shared services can engender significant efficiencies:
"the shared services project is quite well advanced and I
think substantial savings are projected … It is in the tens
of millions".[89]
65. Police representatives were cautious about whether
savings from shared services could be released in the short term.
Mr Wilkinson of APA told us that "the problem with it is
that it will need some fairly substantial investment to get it
going in systems and starting costs".[90]
Dr Brain of ACPO agreed: "caution needs to be exercised around
expectations that Workforce Modernisation, Shared Services and
Collaboration can deliver significant cash efficiencies. They
will require significant investment and time to release benefits
and relying on them to fund programmes and budgets for CSR07 is
unrealistic".[91]
66. These comments from police witnesses indicate
a certain reluctance to commit to greater use of shared services,
despite recognition of the very substantial savings which they
can generate. Shared services programmes in other areas of the
public sector have the potential to be very effective in reducing
running costs. For example, the NHS shared business services programme
undertakes to reduce the baseline costs of participating NHS business
areas by 20%.[92] It
is certainly true that, as police witnesses argued, there can
be a timelag before shared services programmes begin to release
benefits. However, the example of the 'Phoenix Programme' in the
prison service shows that such programmes can be launched within
a realistic timescale: in that case the total planned time from
the pilot (October 2006) to full roll-out (March 2008) is only
17 months. A similar timetable for the police service would generate
results well within the timescale of the CSR period.
67. Shared services were identified as a priority
for the police service in 2004. The National Policing Plan 2004-09,
drawn up in that year, states that key elements of the efficiency
agenda include "increasing collaboration, or sharing, to
deliver such corporate services as financial and human resource
management".[93]
Some police forces are making more progress than others. A number
have signed up to a pilot shared services project. Although the
Home Office has the power to mandate forces to introduce shared
services, for reasons of maintaining a positive working relationship
with forces, it does not consider it desirable to exercise this
power. This places the onus on police forces themselves to make
greater progress in introducing shared services.
68. The Police Superintendents' Association (PSA)
stated that "full delegation to Basic Command Units (BCUs)
and Departmental Heads will bring about more effective delivery
of local policing and prove to be extremely cost effective".[94]
We asked the PSA for examples of how local accountability can
drive efficiency. Their President, Chief Superintendent Ian Johnston,
told us that:
where we have delegation working in certain parts
of the country, it means that our members can actually decide
the workforce mix they want … they are empowered to commit
funds to crime and disorder partnerships which means that they
can address matters that are brought to them by the local community
and not imposed on them.[95]
69. In 2006 the Home Office produced a guide to better
delegation, which gave detailed guidance to police forces to encourage
effective delegation to both BCUs and departments. The guidance
identified a range of operational gains which can flow from delegation,
including more effective partnership working, less force bureaucracy,
greater scrutiny of expenditure, and a greater impact at BCU level.
It also stated that the effect of non-delegation can be that "budgets
and resources are divorced from the reality of policing on the
ground".[96]
70. The Minister agreed that greater devolution of
resources to BCU level would engender more effective policing
and use of resources. He said that many BCUs in London already
had:
a significant degree of devolution of resources
and responsibilities, and I think that model is replicated up
and down the country, but not yet in all forces. What I would
resist is legislation that tells Chief Constables to do that because
I do not think that would be appropriate.[97]
The Minister's comments require to be qualified by
noting that a London BCU is bigger than many non-metropolitan
forces and consequently that the model in London cannot necessarily
be easily transferred. Nonetheless, police representatives argued
that there continues to be, countrywide, too little delegation
to BCU level. Mr Johnston of the PSA expressed regret that the
Home Office guidance "had not been acted upon in large areas
of the Police Service and in fact our members, BCU commanders
in particular, have seen less devolved budgets and not more".[98]
Thus the picture painted by the Minister, of better delegation
"up and down the country", does not seem to be reflected
in the experience of the police.
Funding flexibility
