Select committee inquiry
Reform of the Police Funding Formula inquiry
Closed
What the inquiry looked at
“Report Report: Reform of the Police Funding Formula Report: Reform of the Police Funding Formula (PDF 604 KB) In a report published on Friday 11 December 2015, the Commons Home Affairs Committee says during the pause in the Home Office's review of the police funding formula, an independent panel of accounting firms, financial experts and the College of Policing should be appointed to assist the Home Office in formulating revised proposals. The review process was paused after Home Office officials made serious errors in calculating the funding allocations for police force areas. These errors resulted in forces who had been advised they would be "winners" under the new funding allocation finding they are in fact facing cuts, and vice versa. Government Response Reform of the Police Funding Formula: Government Response to the Committee's Fourth Report of Session 2015–16 Reform of the Police Funding Formula: Government Response to the Committee's Fourth Report of Session 2015–16 (PDF 150 KB) The Home Affairs Committee is holding an inquiry into the police funding formula, following the Government announcement that it is considering a new model of allocating funding to the 43 police forces in England and Wales.”
The committee's words, from the inquiry page on parliament.uk ↗.
What the government said
The government responded on 16 March 2017.
Summary written by Accountability Index from the government's response.
The government remains committed to reforming the police funding formula and has launched a new Review, whose recommendations Ministers will "consider carefully before reaching decisions on next steps".
- It accepts that the error in information shared with PCCs and forces was "a serious and regrettable matter", and says changes have been made to how the department handles and quality assures data.
- It states that it "does not intend to compensate PCCs for the costs of accessing any dataset", but will "seek where possible to utilise publicly available data in any future formula".
- On the Committee's call for a panel, it says the Review's Senior Sector Group and Technical Reference Group include organisations such as CIPFA, the Institute for Fiscal Studies and the College of Policing, "in line with the Committee's recommendation".
- On counter-terrorism, it says it "would be complicated" to include this in core grant, as it is funded through a separate ring-fenced grant, but will consider whether relevant statistical indicators could be incorporated into a future formula.
Read the government's response ↗ Read the report ↗ Report an error
How the inquiry ran
Each dot is a dated item listed on this page, from the inquiry's opening on 16 September 2015 to 11 April 2017.
- Oral evidence 2 sessions
- Report 11 Dec 2015
- Government response 16 Mar 2017
- Correspondence 11 Apr 2017
What it recommended 6 recommendations · 17 conclusions
1Successive governments have failed to tackle the underlying problems of the current police funding arrangements.
Concluded (the committee's words)
Successive governments have failed to tackle the underlying problems of the current police funding arrangements. This has resulted in the current funding formula becoming out-of-date and subject to ‘damping’ to such an extent that it is widely recognised as being ‘not fit for purpose’. The Minister for Policing’s decision to take on the challenge of reforming the police funding formula was urgently needed and is welcome.
2This important review has been rushed.
Concluded (the committee's words)
This important review has been rushed. The police funding formula is clearly a complex matter, with wide-reaching consequences, so an appropriate amount of time should have been allocated to the review process, to allow detailed responses to be prepared and properly considered. Not to have done so is disrespectful to those who seek to engage with the Home Office. We appreciate that the Home Office was motivated by a legitimate desire to have the new funding formula in place for the start of the 2016/17 financial year. However, to allow only eight weeks for the consultation, over a period which spanned the summer holiday, underestimated the complexities involved and disregarded Cabinet Office guidance. It is regrettable that the Minister proceeded on this timescale, and it is unfortunate that he accepted that advice from officials. It is not surprising that, as a result, the process ended in chaos, with an Urgent Question in Parliament and the decision to suspend the whole review.
3From the beginning of this consultation, the Home Office has set an implementation date which...
Concluded (the committee's words)
From the beginning of this consultation, the Home Office has set an implementation date which coincided with the start of the next Spending Review period. The Permanent Secretary has acknowledged that this would have been extremely challenging to have met. The prospect of a “double whammy” to funding, from the Spending Review and the formula review, created panic among PCCs and police forces and a genuine fear about whether they would be able to bridge the financial gap. This scenario could have been avoided, and it points to the disjointed way in which the review has progressed. In response to this Report, the Home Office should explain why it did not set out the transitional arrangements it envisaged putting in place, even by the late stage of the second round of consultation.
4We accept the Minister’s motivation that he did not want the consultation to descend into...
Concluded (the committee's words)
We accept the Minister’s motivation that he did not want the consultation to descend into an argument between winners and losers. However, we believe that this was a misguided approach and that it was insulting to suggest that the default position of police forces would be to bicker on the basis of their own vested interests. The lack of transparency in the information provided for the consultation also meant that confidence in the review was lost. Furthermore, the process did not allow interested parties to contribute in the level of detail they would have wished. This goes against the Home Office’s statement that “we will only be successful in achieving our aim of building a fit-for-purpose and sustainable model with considerable input from policing partners”. It is also regrettable that the department decided not to ‘show its 34 Reform of the Police Funding Formula workings’. The Home Office stated on multiple occasions throughout this process that it wished to engage with police forces but then created a process which made it impossible for them to do so.
5We commend the work of Andrew White, Chief Executive of the Office of the Police...
Concluded (the committee's words)
We commend the work of Andrew White, Chief Executive of the Office of the Police and Crime Commissioner for Devon and Cornwall, in bringing to light the calculation error that the Home Office failed to identify. It would be amusing if it were not so serious that Mr White was able to unravel the entire funding model in a way that made the Home Office look foolish. It is reprehensible that the response of the Director General of the Crime and Policing Group at the Home Office, Mary Calam, to Mr White did not include any apology for the mistakes made by the Home Office, nor does it appear to address the implications of the error. Although Mary Calam did write later to apologise to police forces for the error, this seems to us to represent too little action, too late. The Home Office should also consider compensating PCCs for the costs they incurred to gain access to the “Urban Adversity” data which the Home Office used in its calculations but which were only available to PCCs through commercial subscription.
6It is deplorable that Home Office officials made errors in calculating the funding allocations for...
Concluded (the committee's words)
It is deplorable that Home Office officials made errors in calculating the funding allocations for police force areas. The Minister was right to apologise to the House for the mistake. However, the Home Office was wrong not to have made a Statement to Parliament and wrong to have suggested that it was not an Urgent matter to be dealt with on the same day in the House. The Permanent Secretary was unable to explain to us on what basis this advice was given to the Speaker when the application for an Urgent Question was made in the usual way.
7As a result of the Home Office’s error, confidence in the process has been lost;...
Concluded (the committee's words)
As a result of the Home Office’s error, confidence in the process has been lost; time, effort, resources and energy have been wasted; and the reputation of the Home Office has been damaged with its principal stakeholders. We welcome the Permanent Secretary’s commitment to keep us informed about the outcome of the review he has set up to establish what went wrong and his statement that disciplinary action should be taken where serious errors are found to have been made. He must report back to us before Christmas 2015. We will be undertaking further work on police funding and the formula review once decisions have been taken by the Home Office on what action to take. As part of this, we will keep the action points resulting from the review under ongoing scrutiny.
8The lead Home Office official in respect of these matters, Mary Calam, replied to the...
Concluded (the committee's words)
The lead Home Office official in respect of these matters, Mary Calam, replied to the 2 November letter from the Office of the Devon and Cornwall PCC on 5 November. She accepted the error in the Home Office’s calculations but she clearly did not understand its seriousness as she did not refer the matter to Ministers until the day after her reply to Devon and Cornwall PCC had been sent. In fact, the error meant that, at a single stroke, police forces which believed that they would be winners became losers and vice versa. Improvements in the Home Office’s internal communications are clearly needed.
9The Home Office’s objective of a transparent system is welcome.
Concluded (the committee's words)
The Home Office’s objective of a transparent system is welcome. To facilitate this, certain pre-conditions for calculations in any future review of the funding formula should be established. Any data used must be made available to PCCs, Members of Parliament and other stakeholders well in advance. The Home Office should also make efforts to show how they arrived at figures in a clear and precise fashion. Had the Home Office provided more detail around their calculations and methodologies, forces might not have felt the need to hire consultants to assess the implications of the funding formula or, in the case of Devon and Cornwall, to pay for the use of an external database.
10We recommend that, during the pause in the review process, an independent panel be appointed...
Recommended (the committee's words)
We recommend that, during the pause in the review process, an independent panel be appointed to assist the Home Office in formulating revised proposals. We recommend that a member of the following organisations be appointed to that panel: • The Chartered Institute of Public Finance and Accountancy (CIPFA—which has a police panel that advises forces and PCCs) • The College of Policing • The Institute for Fiscal Studies • Grant Thornton and PriceWaterhouseCoopers (which provide external audit to a number of forces and PCCs and therefore have an understanding of financial risk within policing) • The Royal Statistical Society. We hope that with this expert input the shambles we have seen so far can be remedied.
11We have received a large amount of evidence which has questioned whether the proposed funding...
Concluded (the committee's words)
We have received a large amount of evidence which has questioned whether the proposed funding formula will achieve the Home Office’s aims, and whether it is consistent with the guiding principles. The Home Office must work with its policing partners during the pause in the review to co-design an effective and fair funding formula.
12Any future funding formula must ensure that those ‘low-cost’ per capita forces which anticipated potential...
Concluded (the committee's words)
Any future funding formula must ensure that those ‘low-cost’ per capita forces which anticipated potential reductions to their budgets and made the necessary efficiencies before others, are not unfairly penalised in future reductions. It must not be indiscriminate, in the way that the blanket percentage reductions of previous years has been; it should do more to reward or compensate those who have historically been more efficient, to incentivise innovation and smart decision- making.
13The funding formula model must also re-examine the provisions for raising funding through the local...
Concluded (the committee's words)
The funding formula model must also re-examine the provisions for raising funding through the local taxing precept. The proposed model did not fully take into account that current precept levels vary considerably and any annual increases 36 Reform of the Police Funding Formula above 2% have to be agreed through a referendum. In his Spending Review, the Chancellor pledged “greater flexibility” for PCCs to raise precepts where they had been “historically low”, and this is welcome news. However, more detail will be required. Further, it is seemingly unfair that some taxpayers pay more at a local level for the same standard of policing as others. Any new formula should try to reset precepts at a common level, or to propose some means of mitigating the difference by, for example, reducing grants given to forces with lower precept levels while strengthening their powers to raise income from council tax. This would give forces the power to decide whether to maintain the status quo by charging more from the public, or by making further efficiencies. This would be a fairer system, and one which would create closer links between the allocation of resources in a given area and the success of its overall policing strategy.
14We recommend that, in response to this Report, the Home Office explains how new and...
Recommended (the committee's words)
We recommend that, in response to this Report, the Home Office explains how new and emerging crime types, such as cyber-crime, child sexual exploitation, and radicalisation, are accounted for in the funding formula. These types of crime are very different to more traditional volume crimes, such as burglary and robbery. We consider it unlikely that the six key drivers of crime that the Home Office consultation identified (alcohol; drugs; character; opportunity; the effectiveness of the criminal justice system; and profit) would also apply to these new crimes.
15Chief Constables and Police and Crime Commissioners, including those from Leicestershire, Hampshire, South Wales and...
Concluded (the committee's words)
Chief Constables and Police and Crime Commissioners, including those from Leicestershire, Hampshire, South Wales and West Yorkshire, and the National Police Chiefs’ Council, have argued that there is a growing level of non-crime demand on the police service. This is arising in part from the police being expected to assist with services for which they are not directly responsible, such as helping people with mental health and welfare issues, because the police are available outside office hours when the responsible agencies are not. Given the need to develop an effective funding formula, the Home Office must demonstrate that it understands these wider demands on the police, and that they are not only ‘crime fighters’. This would contribute to the efficacy of a new funding formula and also improve the Home Office’s ability to influence other Government Departments who should be responsible for helping to reduce these other demands on the police.
16Given the amount of time and resources the police expend on non-crime demand, it seems...
Recommended (the committee's words)
Given the amount of time and resources the police expend on non-crime demand, it seems obvious that an indicator for this should be included in the funding formula. The Home Office believes that the other indicators sufficiently account for non- crime demand. However, we disagree. This important element must be explicitly included in the next iteration of the funding formula. The Home Office should set out clearly and explicitly what it expects the police to do, and what the police are not expected, and not funded, to do. However, police forces also need to contribute to this process by assessing what their demand is, including non-crime demand.
17We consider it to be inexplicable that diversity is not one of the categories and...
Recommended (the committee's words)
We consider it to be inexplicable that diversity is not one of the categories and criteria within the funding formula. There seems to be no recognition that diverse Reform of the Police Funding Formula 37 communities mean that either police officers who speak other languages are needed, or that resources are allocated for translation services, nor of the additional challenges that new and emerging communities bring. We recommend that in the next iteration of the funding formula, there is an element that specifically accounts for diversity.
18The demands on the police are many and various, and differ in each force area.
Concluded (the committee's words)
The demands on the police are many and various, and differ in each force area. It is right that PCCs and Chief Constables should make their case for particular local demands to be included in the funding formula. The Home Office may then choose to disregard these arguments, but it needs to be open and transparent about the reason for those decisions. There also needs to be more recognition of the cross- boundary nature of crime. Any funding arrangement should reflect not simply the population within a police authority area, but the neighbouring areas as well. While the goal of simplifying the complicated funding system is a valid one, population distribution should not be examined in isolation.
19We recommend that the demands of counter-terrorism policing be included in the funding formula.
Recommended (the committee's words)
We recommend that the demands of counter-terrorism policing be included in the funding formula. It would be horrendous if terrorist actions, similar to those seen in Paris recently, were to occur in the UK. The police in our communities are the eyes and ears that can provide intelligence of possible terrorist activity. It would be a compounded tragedy if this intelligence was not discovered because funding had been prioritised on other matters.
20We welcome the work that has been started by the College of Policing and Her...
Recommended (the committee's words)
We welcome the work that has been started by the College of Policing and Her Majesty’s Inspectorate of Constabulary to develop a more sophisticated understanding of demand. In light of the pause in the reform of the funding formula, we recommend that the Home Office assess the work that has been done so far, and incorporate relevant findings into the next iteration of the model. This work will also be beneficial to individual police forces in determining how best to deploy their resources.
21The Bedfordshire PCC, Olly Martins, has made the case for more private sector involvement in...
Concluded (the committee's words)
The Bedfordshire PCC, Olly Martins, has made the case for more private sector involvement in police funding, including possible sponsorship of police cars and uniforms. We recognise that there may be appropriate collaboration with the private sector but we disagree with this particular example: police cars should not be sponsored in the same way as London taxis. We would also prefer that communities did not have to accept that they need to rely on privately-funded police or private security in order to feel safe and secure, particularly given the potentially negative effect on poorer communities which would be less able to find the necessary additional funding from their own resources.
22The outcome for police funding in the Spending Review came as a surprise to many...
Concluded (the committee's words)
The outcome for police funding in the Spending Review came as a surprise to many interested parties, including the policing community. We commend those who argued strongly for budgets to be preserved, including the Home Secretary for putting the case within Government, and the Chancellor for the decision he made. 38 Reform of the Police Funding Formula We particularly welcome the funding provided for counter-terrorism policing. In light of the attacks in Paris, it is essential that the police have the capability to prevent similar atrocities taking place in the UK. The settlement resulted in a standstill for police funding, but also encourages further efficiencies through collaboration, and provides flexibility through the changes to the police precept. Furthermore, there is extra funding provided for policing new and emerging types of crime such as cybercrime and child sexual exploitation. However, the full implications for police forces will not be clear until the provisional Police Grant allocations are announced in late December. We will continue to scrutinise the detail and implementation of the Spending Review announcement during the course of the Parliament.
23The Chancellor’s clear and clinical announcement to the House about future police funding is in...
Concluded (the committee's words)
The Chancellor’s clear and clinical announcement to the House about future police funding is in stark contrast to the way the Home Office has tried to reform the funding formula.
Evidence
Oral evidence sessions 2
- 10 Nov 2015No witnesses recordedparliament.uk ↗
- 3 Nov 2015No witnesses recordedparliament.uk ↗