House of Commons - Police Finances - Home Affairs Committee

Police Finances - Home Affairs Committee Contents

Key facts

In the police service in England and Wales, as of 30 September 2010, there were 142,363 police officers, 16,376 police community support officers, and 78,120 police staff.[1]
The headcount of the police workforce fell between September 2009 and September 2010: there were 1.7% fewer police officers, 2.6% fewer police community support officers, and 2.7% fewer police staff.[2]
71% of police budgets is spent on salaries and 16% on pensions, meaning that in total almost 88% is spent on the workforce.[3]
The largest savings are being required of police forces in 2012-13, year two of the four-year settlement period.[4]
The percentage of individual forces' gross revenue expenditure financed through central Government provision varies from 83% in the West Midlands Police to 51% in Surrey Police.[5]

Background

1. On 13 December 2010, the Minister for Policing and Criminal Justice, Rt Hon Nick Herbert MP, set out the Government's proposals for the aggregate amount of grant to Police Authorities in England and Wales for 2011-12, and indicated how the Government intended to allocate funding for the years 2012-13 to 2014-15. The proposals are summarised in the following table, which is also displayed in chart form below. The figures are in cash terms and have not been adjusted for inflation.

Figure 1: Police revenue funding, proposed figures for 2011-12 and indicative figures for 2012-13 to 2014-15

2011/12 2012/13 2013/14 2014/15

Total formula funding: £ million £ million £ million £ million

Comprising....

Home Office Police Main Grant 4,579 4,251 4,515 4,429

National, International and Capital City Grant (Metropolitan Police Service only) 200 189 185 183

Dept Communities and Local Govt general grant 3,345 3,138 3,093⁽¹⁾ 3,051⁽¹⁾

Welsh Assembly Government general grant 161 151 149 147

Total specific grants:

Comprising...

Welsh Top-up 13 13 20 20

Neighbourhood Policing Fund 340 338

Counter-terrorism Specific Grant 567 564 563 562

Council Tax (11/12) Freeze Grant 75 75 75 75

Police and Crime Commissioner election funding 50

PFI grants 54 54 60 79

Total Government Funding 9,341⁽²⁾ 8,830⁽²⁾ 8,660 8,546

% cash change in total Govt Funding -4% -5% -2% -1%

(1)How this funding is paid to the police may change as a result of potential changes to the retention of business rates. (2)This includes a small amount of funding that will form part of a contingency fund, which is not shown in the table above.

Source: HC Deb, 13 December 2010, col 74WS

Figure 2: Sources of police revenue funding, proposed figures for 2011-12 and indicative figures for 2012-13 to 2014-15

Figure 3: Police settlement allocations, 2011/12, £m

Note: Income from redirected business rates and the revenue support grant is combined for Welsh forces.

Source: Headline Allocations, 2011/12, CLG; Police Settlement Letter to Clerks and Treasurers 2011-12 (Final), WAG; 2008-based local authority population projections for Wales, StatsWales

2. Following the announcement, we decided to hear oral evidence on the proposed settlement and its impact. A list of witnesses is included at the back of the report. We are grateful to those who took part. This report summarises some of the points arising out of their evidence. The reductions in funding will have a significant impact on the police. It is still too early to predict easily what this impact will be. Therefore, the evidence sessions will be followed later by a full inquiry into the new landscape of policing.

Impact on the police workforce

REDUCTIONS IN HEADCOUNT

3. By far the largest proportion of police budgets is spent on the workforce. A report published in 2010 by the previous Home Affairs Committee, Police Service Strength, cited data provided by the Association of Police Authorities showing that 71% of police budgets is spent on salaries and 16% on pensions, meaning that in total almost 88% is spent on the workforce.[6] Chief Constable Peter Fahy of Greater Manchester Police told us that his force spent about 82% to 84% on the workforce.[7] It will not be possible for police forces to achieve the level of savings that are being required of them over the next four years without reducing the size of their workforce. The workforce consists principally of police officers, police community support officers, and police staff (civilians employed by the police).

4. In the police service in England and Wales, as of 30 September 2010, there were 142,363 police officers, 16,376 police community support officers, and 78,120 police staff.[8] It is not possible for us to be specific about reductions in headcount as decisions on workforce numbers will be made by individual forces. However, some witnesses speculated as to what these reductions in headcount would be. Mr Paul McKeever, the Chairman of the Police Federation, stated that he expected there to be a loss of "at least 20,000 officers over the next three to four years". He commented that the estimate was based on reports from the Federation's 43 branch boards and said that it was "pretty sound".[9] Councillor Mark Burns-Williamson, Deputy Chair of the Association of Police Authorities, and Mr Bill Wilkinson, Treasurer of South Yorkshire Police Authority, estimated that 11,000 police officer posts and 14,000 police staff posts would be lost over the four-year period: figures which Mr Wilkinson stated were based on returns to the Association of Chief Police Officers from around half of forces.[10] This estimate is considerably lower than the Police Federation's, demonstrating that there is still uncertainty about the extent of the impact on workforces.

5. The then Shadow Home Secretary, Rt Hon Ed Balls MP, stated that 16 forces had made public statements about workforce reductions and that between them those forces estimated they would lose 14,482 posts, 6,257 of which would be police officer posts.[11] Extrapolating from this figure to estimate job losses across all 43 forces would give a total loss of 38,920 posts, 16,815 of which would be police officer posts. This is a loose estimate given that reductions will not take place in a consistent manner across all forces. The Minister said that he did not have any specific figures in relation to likely reductions in headcount. He pointed out that the Government does not directly control police numbers and stated that neither this Government nor the previous Government had ever given a guarantee on police numbers.[12]

6. Looking at individual forces, Chief Constable Chris Sims commented that West Midlands Police expected to lose 2,200 posts: 1,000 police officers and 1,200 police staff.[13] The most recent Home Office statistics show that West Midlands Police employs 8,485 police officers and 3,544 police staff, meaning that police officer numbers would reduce by 11.7% and police staff numbers by 33.8%.[14] Chief Constable Fahy stated that Greater Manchester Police expected to lose 2,800 posts, split approximately 50:50 between police officers and police staff "with police staff taking the brunt in the early years".[15] Greater Manchester Police employs 7,976 police officers and 3,822 police staff, meaning that police officer numbers would reduce by 17.5% and police staff numbers by 36.6%.[16]

REGULATION A19

7. As these estimated figures indicate, the proportion of police staff lost is likely to be greater than the proportion of police officers. With the exception of cases of misconduct or unsatisfactory performance, police officers cannot generally be made redundant, as they are not considered to be employees subject to normal employment law. If they have at least 30 years' service, regulation A19 of the Police Pensions Regulations 1987 may be used to require their retirement if retaining them in the force is deemed by the Police Authority not to be in the interests of efficiency. Mr McKeever, the Chairman of the Police Federation, told us that the general trend seemed to be that "forces are looking to lose as many officers as they can through natural wastage and where they can't the first port of call they're going to is regulation A19".[17] When questioned about the situation with regard to redundancy, he cautioned against changing the status of police officers and emphasised the importance of "the independent office of constable where we can't be influenced or pressurised to act in a way that we shouldn't be acting".[18] However, he also expressed concern about the use of regulation A19, explaining that those who could be subject to this regulation "tend to be the officers who have the experience that you rely on when you're going through difficult times".[19] Chief Constable Fahy expressed frustration about the consequent need to use regulation A19, but still said he did not want to see a change to the current situation with regard to the restrictions on making police officers redundant. He stated: "you've ... got to look at the good will, which we rely on, and the professionalism of our officers and the restrictions you put on their private lives, and the fact that they don't have the right to strike and all those issues."[20]

CRIME LEVELS AND THE SERVICE PROVIDED BY THE POLICE

8. The headcount of the police workforce fell between September 2009 and September 2010: there were 1.7% fewer police officers, 2.6% fewer police community support officers, and 2.7% fewer police staff.[21] With reductions in the headcount of the police workforce likely to accelerate over the next four years, the obvious question is what impact this will have on crime. Mr McKeever, the Chairman of the Police Federation, stated: "You can't say definitively that crime will rise." However, he also commented: "It is not an exact correlation, but there is a clear trend in the relationship between police officer numbers and crime."[22] When we asked Councillor Burns-Williamson, Deputy Chair of the Association of Police Authorities, whether he anticipated crime would rise in his area as a result of the required savings, he replied: "I know from all the research and evidence into this that there is not a clear-cut definitive answer. My guess is that, given the cuts over the four-year period, performance and probably crime levels will start to rise." Mr Wilkinson, the Treasurer of South Yorkshire Police Authority, agreed.[23]

9. The Minister commented that "there is no simple link between the numbers of officers and levels of crime", although when pressed, he agreed that this did not mean that there was no link. He stated that "the real question is how resources are deployed; what use is made of officers".[24] A similar point was made by Mr Bill Bratton, former Chief of the Los Angeles Police Department and former Commissioner of the New York City Police:

I would always like to have more police, but the reality is it is not just numbers but, more importantly, what you do with them. More is fine, but if they're just standing around or if they're not focused on issues of concern to the public, then those numbers are not ultimately going to achieve what you would hope to achieve, which is improve public safety and reduce crime.[25]

10. The Minister commented that decisions on deployment were for Chief Constables to take. However, he stated:

we want to assist forces in driving savings in what you might call the back and middle offices, to ensure that resources can be prioritised for what we might broadly call the front line; in particular, what I think is the people's priority, which is visible and available policing ...[26]

A discussion of what constitutes the front line is beyond the scope of this report, although we shall return to it in our subsequent inquiry. While acknowledging that the public prioritise police on the streets, it is important to remember that a police force operates as a whole: the front line is not disconnected from the back and middle offices. There are aspects of policing that are not visible to the public most of the time—for example, the investigation of child abuse, support for victims of domestic violence, analysing terrorist threats, assessing intelligence about football-related violence, and the major growth area of internet-related crime—which are crucial to the police's basic mission of preventing crime and disorder.

11. In a written parliamentary question, the Home Secretary was asked what definition her Department uses for back office, middle office and front line police roles. The Minister for Policing and Criminal Justice replied:

There is no formally agreed definition of frontline, middle office and back office services, although these are terms in relatively common use across the police service. Consideration is being given, with the police service, to the establishment of a common definition. Although no fixed definition exists, frontline officers and staff are generally those directly involved in the public crime fighting face of the force. This includes neighbourhood policing, response policing and criminal investigation. Middle office services include a variety of functions which provide direct support to the frontline, such as police training and criminal justice administration. Back office services are those which keep police forces running smoothly such as finance and HR.[27]

The current confusion about what constitutes the front line in the police service is unhelpful, especially given the frequency with which this term is used by those involved in the debate about the service's future. Police forces are being asked to prioritise the front line; it is only reasonable that the Home Office specifies what it means by this term. We urge the Home Office to work with the police service to produce an agreed definition of front line, middle office and back office police roles as soon as possible.

12. There may be some scope for reducing headcount in the police. When asked whether there was an argument for saying that the police had been overfunded over the past 13 years, Chief Constable Fahy commented:

We were funded in different ways. There was a big emphasis on things like devolving more activities to the local level, structures like basic command units. There was a lot of partnership funding coming around and ... I think there was already a recognition, certainly in Greater Manchester Police, that some of our headquarters operations had got too big.[28]

However, he added: "But things will be—although we'll do our best to try and preserve the service to the public—very, very difficult."[29] Chief Constable Sims commented that West Midlands Police expected to lose 1,000 posts before 31 March next year and stated: "If you want to make the point that service will change as a result of those 1,000 posts going, of course it will."[30] As an example Chief Constable Fahy said that he thought that there would be "less discretionary activity by patrol officers" as "more of their effort is going to be directed against particular problems".[31] He also claimed that some police stations would close, although he added: "but at the moment we've got police stations open where we know there are going to literally be one or two callers right the way through the night."[32]

13. Although data collection from all 43 police forces in England and Wales is not yet complete and there is still uncertainty about the precise figures involved, it is expected that there will be significantly fewer police officers, police community support officers and police staff as a result of the savings being required of police forces over the next four years. We accept that there is no simple relationship between numbers of police officers and levels of crime. The reduction in the police workforce need not inevitably lead to a rise in crime. However, the loss of posts will have an impact on the range of services that the police provide and the way in which they are provided. The primary mission of the police is to prevent crime and disorder. In order to fulfil this mission in the immediate future, police forces will have to cut back on some of the activities that they currently undertake. In the context of reducing police numbers, it will clearly be crucial that police forces manage the time of police officers and police staff in the most efficient and effective way possible. In particular, we would like to see an end to unnecessary bureaucracy and encourage the Government to continue taking urgent steps to achieve this.

Other sources of savings

14. When the Minister announced the proposals for the allocation of grants to police authorities, he commented that the Government would continue to work with Police Authorities and forces on value for money, including:

more effective procurement at national level, greater collaboration between forces and other partners, and better use of comparative information; through the removal of unnecessary bureaucracy which adds costs and impedes a sharp focus on front-line policing; through its policy for public sector pay; and through careful consideration in due course of the recommendations from Tom Winsor's current independent review of police remuneration and conditions.[33]

Our evidence sessions touched on the role that reduced bureaucracy and more effective procurement could play in contributing to the savings police forces will be required to make. Both are subjects to which we plan to return shortly.

BUREAUCRACY

15. Making the best use of the workforce entails ensuring that time is used as efficiently as possible. This means eliminating unnecessary paperwork. Mr McKeever, the Chairman of the Police Federation, said that one of the things to consider was "changing the culture that we [the police] don't say no to other organisations—partnership organisations—who impose bureaucracy on us: 'Here's a four page report we want you to fill in before somebody is transferred as a prisoner'." However, we note that, while welcoming the Government's moves to eliminate unnecessary bureaucracy, Mr McKeever stated that "we have to have some sort of bureaucracy, because we are accountable".[34] The keeping of records is a necessary element in ensuring public trust in policing. Identifying what information needs to be recorded and what record-keeping can be safely dispensed with, and the Government's role in encouraging reduced bureaucracy, are subjects to which we shall return.

PROCUREMENT

16. The Minister told us:

Procurement is one of the areas where we can expect significant savings to be made. We know that police authorities are spending some £2.8 billion a year on equipment, goods and services, which is a very substantial sum of money. We have identified that something like £200 million worth of savings could be made annually by better procurement.[35]

Mr McKeever, the Chairman of the Police Federation, responded to the suggestion that procurement for the main goods and services used by the police could be centralised, by agreeing that there were savings to be made. He stated that procurement "could be done better". However, he commented that there were problems with centralised procurement in the Ministry of Defence, and said: "it's not an exact model we would want to follow".[36] Chief Constable Sims characterised procurement as "a huge red herring" in the debate. He stated that "if we were to do everything we could on procurement, if we were to believe all the optimists out there, there is a potential [saving of] 1% to be made."[37] He said that 1% of his annual budget amounted to £4 million or £5 million, when he needs to find savings of £125 million over four years. Given that the vast majority of the police budget is spent on the workforce, the proportion of savings that can be made through better procurement will necessarily be relatively modest. However, even a modest contribution is better than none and we remain interested in the idea that more co-ordinated procurement offers scope for forces to save money. We are disappointed that the National Policing Improvement Agency, which has as one of its statutory objectives the provision of support to forces on procurement, has not already got to grips with the issue of procurement, although we accept that in some important areas, such as the procurement of IT systems, it is as important to achieve integration of systems and consistency of approach as it is to cut the direct costs of equipment. We will return to this in detail when we look at the new landscape of policing. As the National Policing Improvement Agency is due to be phased out by spring 2012, we urge the Home Office to clarify as soon as possible who will be responsible for driving better procurement in its absence.

Timetable for the savings

17. The largest savings are required of police forces in year two—2012-13—of the four-year period. The Association of Police Authorities wrote to the Minister to propose "reversing the current arrangements for phasing police funding cuts, shifting the weight of the required savings to years three and four, with reduced cuts in years one and two".[38] The Minister described the reductions in years one and two as "challenging" but "deliverable".[39] Chief Constable Fahy said that the year 2012-13 "looks particularly difficult", although he said too that years three and four would involve "very significant cuts".[40] Chief Constable Sims said "our most difficult year is 2012-13".[41]

18. Not only are the savings required in year two the largest, year two is when the transition from Police Authorities to directly elected Police and Crime Commissioners is scheduled to take place. The first elections for Police and Crime Commissioners are due in May 2012. Chief Constable Sims commented:

The timing is, I think, unfortunate because the budget will clearly need to be set before April, so the budget will be set by an outgoing police authority who will then not be part of the arrangement for managing that budget, and the commissioner will arrive in May and pick up 11 months of a budget that's been set by someone else.[42]

When we raised this point with Councillor Burns-Williamson, Deputy Chair of the Association of Police Authorities, he said that the Association of Police Authorities was "in dialogue with the Home Office regarding ... which staff need to be retained and managed in key positions, particularly chief executives, treasurers, and key policy advisers." He stated that Her Majesty's Inspectorate of Constabulary was currently meeting Police Authorities and Chief Constables to plan transition arrangements.[43]

19. During our inquiry, it became clear that some steps had already been taken by Police Authorities and police forces independently of the Government's requirements on efficiency savings. Councillor Burns-Williamson told us that £100 million of savings had already been identified.[44] Chief Constable Fahy also told us that before the election Greater Manchester Police felt that their headquarters operation was too big.[45]

20. We asked the Minister what he thought were the risks of requiring forces to make savings at the same time as the Government was looking to introduce new governance arrangements. He replied:

I don't think that there are risks in that. The savings that we're requiring are from police forces. It is important that police authorities, for the remainder of their life, are assisting the drive to make those savings, and that job will then be taken by police and crime commissioners.[46]

However, although the savings will have to be made by police forces, Police and Crime Commissioners will make important decisions about budgets. For example, in his written statement, the Minister commented that the specific Neighbourhood Policing Fund will continue for the first two years of the settlement period. He stated: "From 2013/14, the new directly elected Police and Crime Commissioners will have full discretion over this funding, recognising their accountability to the communities they serve."[47] However, Police and Crime Commissioners are likely to have been in place for nearly a year by the time the 2013-14 financial year begins.

21. It is clear that some witnesses were concerned that reductions in the police budget are being front-loaded in the first two years. The greatest savings are being required when the transition from Police Authorities to Police and Crime Commissioners is scheduled to take place and when police forces nationwide will be under the additional pressure of policing the Olympics. We urge the Home Office to acknowledge that there are risks involved in this transition. Police and Crime Commissioners will have to deal with budgetary decisions that they have inherited rather than made. The Home Office should, as soon as possible, set out how the transition should be managed.

How different forces will be affected

22. The proposed settlement announced on 13 December 2010 reduces central Government grant to all Police Authorities in England and Wales by the same flat percentage rate. However, police forces will be affected differently because the proportion of their total funding that they receive from central Government varies. Forces that receive comparatively high proportions of their funding from central Government—such as the West Midlands, which receives 86% of its budget requirement in this way—will be required to make greater savings overall than forces that receive a smaller percentage of their funding in this way and the bulk of the rest of their funding from council tax. Chief Constable Sims commented: "What you are seeing is not an even set of cuts operating across the police service, but a very different set of impacts across different forces."[48]

23. Another source of perceived unfairness is the way in which the formula for distributing central Government grant is applied. The formula is intended to reflect the needs of individual forces, but the difficulty of doing so has long been acknowledged and there have been many adjustments, such as the rural policing premium, designed to deal with specific issues of equity in funding. The result is that the police funding formula is highly complex and liable to lead to unexpected "winners" and "losers" from year to year. In order to avoid excessive fluctuations, a system of floors and ceilings is used to "damp down", or mitigate, the formula's impact. Thus there are forces that are losers in the sense that they receive less money than they would if the formula were strictly applied and forces that are winners in the sense that they receive more money than if the formula were strictly applied. Our inquiry has not looked in detail at the police funding formula but it is clear that a simpler formula would be desirable and that police forces would be better able to plan ahead if the formula was less volatile and enabled the outcome to be more predictable for some years ahead. We shall return to this subject in a subsequent inquiry. The following table and charts provide further information about how individual forces are affected by the factors outlined above:

Figure 4: Financing police expenditure 2010-11, and effect of floor damping 2011-12 and 2012-13, England and Wales

Note: Floor damping is calculated differently in Wales from England. In Wales the level of floor damping is the 'Add Rule 1' allocation in the Police Grant Report and the 'WAG top-up' grant. Total damping levels in Wales for 2012/13 are not available as the Police Grant Report 2012/13 - which includes the 'Add Rule 1' adjustments - has yet to be published.

Sources: Police Statistics, Estimates 2010/11, CIPFA; Local Government Finance Settlement, CLG

Figure 5: Police expenditure 2010-11, percentage of forces' gross revenue expenditure financed through central Government provision

Figure 6: Police Authorities, winners and losers from 2011-12 floor damping. Difference between "full" grant (if the formula were strictly applied) and actual grant.

Notes: England: Formula grant made up of Home Office Core grant + CLG grant; Wales: Formula grant made up of Home Office Core grant (less Additional Rule 1) + WAG grant; Damping calculated as Additional Rule 1 + Welsh Top Up

24. Rather than applying a flat rate of savings to all forces, the Government could have varied the rate to take account of the proportion of a force's total budget obtained from central Government grant and the proportion obtained from council tax. The Minister commented there were two problems with this approach: firstly, "what we would effectively be doing is saying to people in areas who are already funding far more through their local council tax ... that they should be penalised for the fact that they have funded far more", and secondly, if the Government were to reduce the savings required of forces such as the West Midlands, it would have to increase the savings required of other forces.[49] On the issue of the application of the formula, he acknowledged that there was concern. However, he commented:

What we have said is that we will look again at this issue in two years' time, but it is much easier to ... do what I think everybody wants us to do, which is to move to a full formula and a fairer allocation, when the tide is rising, when grant is going up. It is highly problematic to do this when the tide is falling, which it will be over this immediate period. That is because you end up with some forces that would have to pay far more than the average cut in Government reduction, and that is why we don't think it's a sensible thing to do.[50]

25. The Minister said that, in his brief experience, "absolutely nobody is satisfied with the allocation of funding" and "every force believes that it has been treated unfairly". He commented that he listens to such arguments and tries to be as fair as he can, but giving more money to some forces means taking it away from others.[51] The complexity of the formula leads to fragility which in turn makes the outcome unpredictable. Ministers in successive Administrations have sought to improve the formula, but with limited success. Each year there are cries of pain from the losers while, unsurprisingly, little is heard from the winners. Police forces need a system that offers long-term predictability in order to be able to plan more effectively, especially at a time of reduced income.

1 Home Office, Police Service Strength England and Wales, 30 September 2010, 27 January 2011, p 2-5. Full-time equivalent rounded to the nearest whole number. Back

2 Home Office, Police Service Strength, p 2 Back

3 Home Affairs Committee, Fifth Report of Session 2009-10, Police Service Strength, HC 50, para 28 Back

4 See figure 1 of this report Back

5 See figure 4 of this report. City of London Police has been omitted because it is not directly comparable. Back

6 Home Affairs Committee, Fifth Report of Session 2009-10, Police Service Strength, HC 50, para 28 Back

7 Q 76 Back

8 Home Office, Police Service Strength England and Wales, 30 September 2010, 27 January 2011, pp 2-5. Full-time equivalent rounded to nearest whole number. Back

9 Q 3 Back

10 Qq 169-171 Back

11 Q 99 Back

12 Q 240 Back