Financial sustainability of police forces in England and Wales Contents

Conclusions and recommendations

1.The Department’s hands-off approach to police forces limits its ability to ensure value for money. While the Department has overall responsibility for policing, it is Commissioners, in conjunction with their Chief Constable, who decide how police forces are organised, including things such as outsourcing functions, how funds are spent and what levels of financial reserves are required. The Department told us that it would only intervene locally in such matters “in extremis”, relying instead on informal conversations. HM Inspectorate of Constabulary (HMIC) estimated that police forces had been required to make savings of £2.5 billion between 2011-12 and 2014-15. The Department told us that it had been possible to achieve the required savings in the 2010-15 Parliament largely through squeezing money out of the existing system. But finding further significant savings as a result of the next Spending Review would require looking thoroughly at structural reforms including the integration of specialist capabilities and more partnership working. However, it is not clear how this would be achieved under the current devolved delivery model.

Recommendation: The Department should set out how it proposes police forces make further significant savings via structural reforms, and assess the legal implications of changes and possible mergers, while having regard to local accountability.

2.The process by which the Department allocates funding to Commissioners by a formula is ineffective and the results have been subverted by the decision to apply an equal percentage funding reduction to all Commissioners regardless of local conditions. The Department uses a formula to determine how much funding individual Commissioners require, which takes into account local conditions and likely policing needs by using data on crime, fear of crime, population and the policing of special events. While the formula takes account of the council tax base in each police force area, it does not take account of all demands on police time, relative efficiency of police forces, levels of financial reserves or the proportion of central government to police precept funding. Since 2010 actual funding for Commissioners has been subject to a process known as “damping”, whereby an equal percentage funding reduction has been applied to all Commissioners, regardless of the outcome of the formula. The Department accepts that the funding formula and the way it has been applied is ineffective and is seeking to address these issues by introducing a new formula which it hopes to apply for the 2016-17 funding process.

Recommendation: The Department should ensure the new funding formula takes proper account of the demand for police services, the scope for savings, local circumstances including precepts, and the levels of reserves. It should introduce the new formula for 2016-17 after consulting with the sector. It must announce any changes to the formula as soon as possible, to allow forces to plan.

3.The impact of cost reductions made by other government departments on the police’s workload (cost shunting) is not known. The police’s main duties are to protect the public and prevent crime. But police officers respond to a wide range of incidents. In 2013-14 just 22% of the 7.3 million emergency and priority incidents that police responded to were crime-related. The Department told us it was concerned that policing does not become the “social service of first resort” outside office hours in areas such as mental health because other services were not available. It recognised that this is an issue that has to be tackled cross-government. However, no data currently exists which show the extent to which police forces are filling gaps in services that should be provided by others. HMIC has not systematically included police forces’ responses to mental health issues in its inspections as yet.

Recommendation: The Department must ensure police forces collect data that allows it to identify the impact on forces of funding reductions elsewhere in government, and work closely with other departments to ensure that the impact of their spending decisions are not borne by the police service. HMIC should identify the scope for joint inspections of services in those areas where cuts may impact on the police.

4.It is not clear who is responsible for ensuring that there are adequate business skills to manage police forces effectively and for spreading best practice in this area. Senior police officers are responsible for managing complex safety-critical multi-million pound organisations, but the degree of sophisticated commercial and contract management skills amongst police officers is limited. The College of Policing (the ‘College’), the professional body for policing, has provided 6.5 days of “management skills” training, covering finance, commercial and human resource skills, to 100 senior police officer candidates. The College considers that its £67 million budget is insufficient to allow it to take on a broader role spreading best practice or raising wider business skills throughout police forces in addition to the work to support front line policing it is already doing. We do not consider the College’s view of its role to be a rounded description of what it is to be a professional body. We welcome the undertaking we received from the Department and the College to discuss the College’s role and remit, and how best to support skills in police forces.

Recommendation: The Department and College need to ensure police officers have the requisite business skills to manage police forces effectively and form a joint view on the role and remit of the College in these areas as a matter of urgency.

5.Most police forces lack sufficient information on the current and future demands they face, which is essential for the Department and the police to ensure forces have the right skills and resources to meet that demand. HM Chief Inspector of Constabulary told us that “it is sometimes quite startling how little police forces truly understand the nature and volume of the demand that they face…”. Three quarters of police forces do not have a sophisticated understanding of demand. Without this it is not clear how forces will transform their organisations, or how the Department will make informed funding decisions. Police forces and Commissioners publish different information on demand and performance making comparisons between forces difficult. We welcome the Department’s acceptance that it needs more information on demand, financial sustainability and performance. We also welcome HMIC’s new police efficiency, effectiveness and legitimacy (PEEL) assessments and force management statements which are designed to help fill some of the gaps in information available to the Department and the public. We note the College’s commitment to produce a template for police forces to use to assess demand, although currently this stops short of being a common standard on measuring demand.

Recommendation: The Department, working closely with the College of Policing, should ensure that there is a common standard for measuring demand and that this is used to provide comparable, accessible data on all forces. This needs to be addressed as a matter of urgency.

6.The need to make further savings may encourage forces to make greater use of outsourcing, but even given the devolved accountability system for policing, current oversight for these types of arrangements is inadequate. Some police forces have already outsourced specific functions, for example Lincolnshire Police have an arrangement with G4S to provide various back office functions. It is likely more forces will make use of outsourcing arrangements in order to meet future savings requirements, but the Department only has limited oversight within the accountability system of such arrangements. We are very concerned that we and government should be able to properly hold private companies to account for their performance, and we welcome the Department’s assurance that oversight arrangements will be examined in the new policing Bill due this year.

Recommendation: The Department should ensure any outsourcing arrangements undertaken by Commissioners or forces are subject to effective scrutiny. It should also develop a clearer mechanism for assessing the long-term value for money of outsourcing; and encourage arrangements that allow forces to retain the ability to respond to evolving needs.