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Funding fix: milking an old formula

More than £1bn in extra cash is coming but the Fed, PCCs and even the government admit it’s not being allocated fairly. So how’s it being fixed? Slowly…

When details of the 2022/23 police funding settlement dropped last week, it should have been cause for celebration.

The statement details exactly how much forces will get, including cash from all contributing Whitehall departments such as local government.

The Home Office grant will provide up to £16.9bn of funding for forces, an increase of up to £1.1 billion on the 2021/22 settlement, the policing minister confirmed.

Kit Malthouse revealed the cash sums which are including funding from local council tax (precept), and funding for national priorities. Funding available to PCCs will increase by up to £796 million.

But the champagne is on ice. Every senior figure in policing said they wanted a total overhaul: not only a move to multi-year settlements but a new way of calculating how the cash gets allocated through the hated funding formula.

And patience is running out after years of ministers kicking the issue into the long grass.

West Midlands Federation leader Rich Cooke says: ”It stinks that at present the safety of our citizens remains so low down the list of priorities for government spending.

“We badly need to invest in our people and our infrastructure, and we need to do this fast. The danger is the increased costs that forces will incur in real terms may see much of this £1.1bn swallowed up by higher energy and fuel bills and not allow the level of investment that’s so imperative.”

Another group frustrated by the inaction is the Police and Crime Commissioners Treasurers Society (PACCTS) which represents the Treasurer of each of the 41 Police and Crime Commissioners in England and Wales.

They – along with PCCs want the current funding formula binned. Why? Because it doesn’t reflect the true demand in each area, particularly forces with large rural areas.

Even Whitehall officials admit the process is flawed. Home Office guidance dryly reveals: “The UK Statistics Authority has previously noted that arrangements for police funding are complicated.”

How complicated? It involves multiple departments, governments and statistics.

The Home Office adds: “During the calculation of the police funding settlement, data is input from a number of different sources, including from internal Home Office budgets, HM Treasury, MHCLG and Welsh Government.

“In addition to government funding, Police and Crime Commissioners (PCCs) set a local police precept which is part of Council Tax.

“Police precept accounts for around 34 percent of the funding PCCs receive and is paid directly to collecting authorities by local taxpayers. The level of the police precept for the following year is set by each PCC by 1 March.”

The core problem is that the Police Allocation Formula (PAF) is based on a set of demands like population density and its impact on workload.

So, for example for a given force: Traffic accident workload = 1.1555 x population sparsity.

Whitehall and forces have been complaining about it since 2013. Not least because people move around more, there’s more national demand from issues like County Lines and there’s also online offending.

Suffolk’s Police and Crime Commissioner, Tim Passmore, is among the sternest critics.

He tells Police Oracle: “I have made no secret of the fact that I find the current system extremely unfair and have pledged to fight for fairer funding. Suffolk Constabulary polices the ninth largest county area in England, and while the population is small compared to some policing areas, the rurality of the area and sparsity of the population present challenges for policing visibility and emergency response.”

But there may be light at the end of the tunnel.

Mr Malthouse tells PACCTS in his letter to them: “The Police Funding Formula Review is currently in progress, and this Government has confirmed its intention to complete this work before the next General Election.”

CIPFA, the body which represents them, welcomes the update but there’s concerns the delay in implementation will further exacerbate issues that are evident in the current funding arrangements.

Alan Bermingham, CIPFA Technical Manager, says change is long overdue: “Police funding arrangements have failed to be addressed by successive governments and have been widely recognised as based on data that is out of date or no longer collected, leading to the funding basis becoming opaque and no longer fit for purpose.”

Central government’s attempt to rebalance the allocations (damping) aren’t helping either, he says.

“The continuing damping arrangements in place to apply level percentage increase in the totality for funding further adds to the disparity between funding provided and actual need in individual forces and localities.”

It's the numbers for calculations that are the main problem: austerity cuts have impacted on Whitehall data teams and systems. They are struggling with a hopelessly out-of-date system.

The Home Office guidance reveals how antiquated it is: “The data underpinning the settlement is held and managed by the Police Funding Policy team within Home Office.

“This information is considered admin data, i.e. data that are collected for administrative or operational purposes, with statistical use being a secondary purpose. 

Here's the worrying bit: “Calculations are carried out in a comprehensive Excel spreadsheet, from which the tables in these statistical publications are partially derived.”

It’s not just the Home Office numbers.

Local government minister Kemi Badenoch told councils last month: “One challenge is that the data used to make this assessment has not been updated in several years – a lot of it is coming from 2013/14, nearly 10 years ago, and some even as far back as the turn of the millennium. I don’t want to say ‘pre-historic’ but it’s difficult to properly forecast using data that came before Windows XP.”

Bear in mind that, as the Police Federation pointed out at its annual conference, the UK’s total population has grown by the same amount as Wales.

So the new approach will contain some huge shifts – and that will have to be handled sensitively, CIPFA says.

Alan Bermingham says: “CIPFA recognises that any funding formula changes will have winners and losers. A key principle that we would urge the government to follow is that of clear transparency in the way resources are allocated and agreed going forward.

“The future funding formula should be driven by available and reliable data, be transparent and fair and should be reviewed regularly to ensure it is future proofed.”

Suffolk’s Police and Crime Commissioner, Tim Passmore, says: “The funding settlement should properly consider equity between forces and reflect the pressures on forces which police more sparse communities across large, mainly rural, areas and I will be ready to make our case for Suffolk.”

And there’s a final, bigger problem.

The government might be changing the way it divides the cash, but there’s one ominous factor that isn’t mentioned. The pot isn’t getting bigger.

The Home Office has at least pledged to collaborate even if there is no sign of when the problems will be resolved.

Mr Malthouse tells PACCTS: “The current formula remains the most reliable method of distributing resource. This year we have taken steps to simplify the presentation of reallocations and will continue to work as transparently with the sector as possible.”

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