Financial sustainability of police forces in England and Wales Contents

2Matching demand with funding

Understanding the demand for police services

17.Between the years ending March 2011 and March 2018 recorded crime, as reported in the Crime Survey for England and Wales, decreased by 36% (excluding fraud and computer misuse). The crime survey results showed that crime in the year to March 2018 was at a similar level to that reported in 2016, following a long-term fall in crime since the 1990s. Some types of crime, such as child sexual abuse, are increasing, and these are often complex, placing substantial demands on police resources. The Department states that most of the growth in these offences stems from improved reporting and recording.22 The Department said there had been a rise in recent years in reports of lower volume but high-harm crimes, including child sexual abuse and other sexual offences, and also a rise in the number of homicides and crimes involving serious violence—crimes which are lower in volume but costly to investigate.23 There have also been increases since 2016 in offences involving knives or other sharp instruments and in firearms offences.24

18.However, the police do not deal solely with crime-related incidents. PCC Devon and Cornwall said that about 80% of police work was about safeguarding and non-crime related activities. She told us there had been a clear shift over time towards a prevention and safeguarding role rather than crime-fighting.25 PCC Merseyside told us that Merseyside police received 23,480 calls a month, 5,500 more per month than two or three years ago. Only 20% of those calls were crime-related, and while some were triaged out for others to respond to, primarily the police were the first responders.26 The Chief Constable for Durham said that his force was responding to 1,400 mental health incidents a month, compared to an average of 856 a month in 2016. He added that even recorded crime statistics did not reveal the full picture of crime, with statistics for his force doubling once cyber-crime had also been included. However, he also commented that while 20% of calls received by the Durham force were for crime incidents, over 50% of the force’s time was spent on dealing with crime incidents because they were more complex.27

19.The PSA Vice President told us that the College of Policing had identified that, out of about 12 million incidents a year, an estimated four million were linked to mental health. He also commented that austerity in other public services had impacted on the police, with an exponential rise in everything else (i.e. non-crime) that the police dealt with because of the gaps appearing in other public services.28 This Committee drew attention in its 2015 report to the impact of cost reductions made by other government departments on the police’s workload (cost shunting) and urged the Department to do more, alongside other departments, to understand and address the issue.29 The Department acknowledged a “strong perception in policing—and, I think, evidence to support it—that effectively costs are being shunted … out of the health system and into policing because it is so often the first line of response.”30 It told us that it can and does raise the issue at the national level with police, and with the Department of Health and Social Care. One of the key things it discussed with them was how they could provide the best service to people in acute mental health difficulties.31 But it said that “Clearly, in the Home Office we cannot influence the overall health budget and the way that is spent in health trusts. That is a question for the Department of Health and Social Care. We can work with forces to support them collaborating locally.” It told us that the measurement of such demand on police’s time was picked up by HMICFRS’s force management statements.32

20.HMICFRS data on forces’ responses to emergency and priority incidents show that 24% of the incidents that forces responded to in 2016–17 were crime-related. Around 12% of the incidents were because of anti-social behaviour, and the remaining 64% were non-crime related, such as dealing with missing persons or responding to car accidents.33

21.In its 2015 report this Committee highlighted the lack of sufficient information on the current and future demands on police forces, and highlighted the need for a common standard for measuring demand that could be used to provide comparable and accessible data on all forces.34 The Department told us that it had carried out ‘a comprehensive piece of work’ in autumn 2017 to look at demand in police forces, which also looked at financial pressures on forces and at performance measures. The Department said that work that had been used to support the police’s funding settlement for 2018–19 would be maintained and widened into a bigger piece of work, and used to support the funding settlement for 2019–20 as well as in the run-up to the next spending review.35

22.The Department told us that it had looked at ‘weighted’ demand in relation to crime, for example taking account of serious sexual offences taking more time and resource to investigate and thus showing a much higher weighted cost. It had also looked at factors such as crimes per 100,000 population, per officer, and numbers of 999 calls. It said it had also looked at non-crime measures, including for example missing persons and road traffic collisions. The Department said that although 80% of incidents responded to are non-crime, around 80% of costs related to crime.36 The Department acknowledged that there had been a real impact on policing associated with extra demand, particularly with the investigation of complex offences, and that this pattern was ‘pretty widespread’ across the country.37 However, while there is standard information available for some demands for police services, there is still much less information available on more complex crimes and non-crime incidents. There are no common standards for measuring all demands for police services and their costs, and therefore no national picture of what forces need.38

23.This Committee heard in 2015 about HMIC (as it was then) introducing ‘force management statements’. These statements require each force to publish data annually on a range of management and performance information, including on demand for police services. HMICFRS planned for force management statements to come into effect in 2016. By June 2018, all forces had produced force management statements.39 HMICFRS told us that the statements require each force to measure all demand—crime, non-crime, latent, patent and hidden—and consider how it is going to change over the next four years. HMICFRS gave forces a fair degree of flexibility in how they completed their statements in the first year. It told us that it now had 44 statements that it was in the process of analysing and 44 different ways that forces measured demand. It said that in year two, the current year, it would give forces a greater degree of prescription to measure demand and productivity in a particular way. When force management statements are fully up and running, in the year after next, it would have 44 statements which could be aggregated. It said that it would then know what the total demand—as far as it could ever be known—is for police in England and Wales, as well as the state of the assets, productivity and efficiency, and how much money forces have coming in to meet demand.40 HMICFRS told us that force management statements would flush out just how much of the demand that the police are meeting, or being asked to meet, is truly something that the police should not be expected to do, and that forces would be asked to value those activities.41

Monitoring of financial sustainability

24.As with local government, legal requirements prevent commissioners and forces from running deficits. Any problems for police forces caused by funding reductions are likely to manifest themselves in a force being unable to provide an adequate policing service.42 The Department told us that its work in autumn 2017 had looked at financial pressures, as well as demand and performance measures.43 However, that work was an assessment of financial resilience to inform decisions about 2018–19 funding, and not designed to monitor forces’ financial sustainability or the risk of financial or service failure. The work served its purpose of providing a snapshot of pressures faced in policing and it was used to inform decisions made for the 2018–19 funding settlement. The Department told us in written evidence that the work had led it to increasing investment through the 2018–19 settlement, including enabling commissioners to increase force funding by £280 million through precept flexibility. However, the work did not provide the Department with a tool to monitor financial sustainability on an ongoing basis. Without systematic monitoring, there is a risk that any deterioration in forces’ financial resilience might not be spotted soon enough.44 The Department recognised in written evidence that work should be done to make its approach more systematic and stated that, as a first step, work should be done on the robustness of its analysis. It stated that it was working with police finance specialists towards a joint approach to assessing financial resilience.

25.The Department concluded in November 2017 that while financial pressure was currently at a manageable level, there were a number of forces that were high-risk in terms of future resilience. The Department said that in the area of financial resilience it relies on the work of HMICFRS, who specifically look at the effectiveness, efficiency and legitimacy of forces through the PEEL programme.45 HMICFRS told us that it continuously monitors forces’ efficiency and effectiveness. It highlighted the importance of it having introduced force managements statements, which covered demand as described above, but also required forces to assess how much money they had coming in, their assets, and what outcomes were achieved. Assets would cover physical assets, but predominantly cover people, and cover condition, capability, serviceability, productivity, efficiency and security of supply. Given the work done by HMICFRS we asked if the Department felt HMICFRS should be mandated to identify risks to forces’ financial sustainability. The Department was not sure, stating it would like to think about that, was unsure whether it could mandate HMICFRS to do so, and that it was a good question.46

26.The Department’s capital funding for forces has reduced since 2010–11 and forces have become increasingly dependent on capital receipts from the sale of land and assets to fund new capital expenditure. Capital receipts from the sale of land and assets have increased from £81 million in 2010–11 to £264 million in 2016–17, while the Department’s capital funding for forces has reduced from £215 million to £82 million over the same period.47 We asked about the Department’s interest in the risk exposure arising from forces selling of assets. The Department stressed the responsibility of forces themselves for such decisions rather than the Department overseeing local decisions. However, the Department also acknowledged the importance of balance sheet strength to financial resilience, said that it had a deep interest in the financial resilience and robustness of forces, and accepted that it should “keep an eye on” forces’ balance sheets.48 Similarly on reserves, the Department stressed that it was not its job to specify what the level of forces’ reserves should be, that was for each force itself to judge in order to maintain financial resilience. However, the Department also said that it closely monitored the level of reserves that forces have, would want to understand why a force’s reserves were particularly low, and said it had a responsibility to be satisfied that forces are financially resilient.49 Forces as a whole reduced the amount of reserves set aside for specific costs or events by 20% between March 2015 and March 2017 after growing their reserves in previous years.50

The police funding formula

27.The Department uses the police funding formula to calculate how much money each force receives from central government funds. In 2015 we reported that the funding formula and the way it had been applied was ineffective, a point accepted at the time by the Department, whose then Accounting Officer said that the formula had “become more and more detached from the real demands on policing.” The Department then hoped to have a new formula in place for the 2016/17 funding settlement. The Department did start to review the approach to funding, but stopped that work in March 2017, and so the formula still does not consider the full range of demands on police time, the efficiency of forces, levels of financial reserves, or the proportion of funding that forces receive from central government relative to local funding.51

28.The Department told us that the work to review the formula had been stopped in the run up to the 2017 general election because Ministers had decided that the timescale for implementation of a new formula was too ambitious and, given the emerging pressures on policing, that there were two more important things for the Department to focus on: first, work on demand to support the case for the 2018/19 funding settlement; and second, giving police forces and commissioners clarity and certainty, to help them plan and have the best chance of responding to those pressures. The Department told us that it still accepted that the formula was out of date and needed to change, “but we do not think that now is the time to do that”.52 The Department said that the formula would be changed but it “is a very complex thing to do and it has to be planned properly rather than rushed”, noting particularly the complexities around local taxation versus central government funding and that it was seeking to understand as closely as possible the impact on local areas.53

29.Since 2010, central government funding has been reduced by an equal percentage for all forces, regardless of the outcome of the formula, a process known as ‘damping’. For forces with a lower proportion of their funding coming from council tax, this has meant a higher percentage cut in overall funding. For example, the Northumbria force has the lowest proportion of local funding, and so has faced the largest fall in overall funding since 2010–11—a 25% reduction compared to the national figure of 19% over that period.54 PCC Merseyside commented that police funding needed to take account of the complexities of demand, but instead forces had seen a crude method of across-the-board cuts which is not reflective at all of, for example, emerging crime types or the increase in other demands because of failures of mental health services.55

30.PCC Merseyside told us that there needed to be a much more nuanced approach to the way police are financed. While acknowledging different crime rates in different areas, albeit that the majority of policing was on non-crime related matters, PCC Devon and Cornwall drew attention to her area receiving 46p per person, compared to 51p in Durham and 64p in Merseyside.56 The Chief Constable for Durham commented that when there had last been an attempt to review the funding formula it had been overly simplistic; for example taking the density of pubs in an area as an indicator of alcohol related issues when, he told us, Durham had relatively few pubs and yet the worst health outcomes for alcohol in the entire country.57

22 Q 37; C&AG’s Report, paras 1.23, 1.25

23 Qq 110, 111

24 C&AG’s Report, paras 1.24

25 Qq 4, 12

26 Q 12

27 Qq 14. 40

28 Qq 10, 37

29 Committee of Public Accounts, Financial sustainability of police forces in England and Wales, Session 2015–16, HC 288, 18 September 2015, conclusion 3

30 Q 180

31 Qq 119, 181

32 Qq 118, 119

33 C&AG’s Report, para 1.26

34 Committee of Public Accounts, Financial sustainability of police forces in England and Wales, Session 2015–16, HC 288, 18 September 2015, conclusion 5

35 Qq 99–103

36 Qq 103, 104

37 Q 111

38 C&AG’s Report, paras 17, 2.14

39 Committee of Public Accounts, Financial sustainability of police forces in England and Wales, Session 2015–16, HC 288, 18 September 2015, conclusion 5; C&AG’s Report, para 2.15

40 Q 124

41 Q 177

42 C&AG’s Report, para 12

43 Q 103

44 C&AG’s Report, paras 2.11, 16

45 Qq 121, 122; C&AG’s Report, para 1.29

46 Qq 123, 124

47 C&AG’s Report, paras 1.18, 1.19

48 Qq 148–151

49 Qq 152–154

50 C&AG’s Report, para 13

51 Committee of Public Accounts, Financial sustainability of police forces in England and Wales, Session 2015–16, HC 288, 18 September 2015, conclusion 2, part 1, para 5; C&AG’s Report, paras 1.8, 11

52 Qq 98, 99

53 Qq 140–142

54 Q 143; C&AG’s Report, paras 1.8, 10, 11, figures 2 and 3

55 Q 45

56 Qq 3, 4

57 Q 14

Published: 7 November 2018