House of Commons - Police Service Strength

Police Service Strength - Home Affairs Committee Contents

3 Managing with less

25. In this chapter we briefly explore some of the methods by which forces are seeking to maximise their resources, namely efficiency savings, collaboration and voluntary mergers and private sector partnerships; and the financial barriers faced by some forces in the form of application of the police funding formula and council tax capping.

Efficiency savings

26. Efficiency savings targets for the police were introduced in the 1999/2000 financial year. Forces have used a number of methods to meet these targets, particularly in the areas of workforce modernisation, structural reorganisation and inter-force collaboration. In the Policing White Paper published in December 2009 the Government set out its intention for the service to save at least a further £70m per annum by 2013/14 through more effective deployment and more robust internal management of police overtime; and at least £75m per annum by 2013/14 by rationalising back-office support.[40]

27. The police service argued that there is a limit to the extent to which forces, which have been focusing on efficiency for a decade, will be able to continue to make further savings. According to ACPO:

The majority of forces who have driven out efficiencies through workforce modernisation have reinvested the savings to the frontline. Self evidently this is a 'one-off' saving and consequently the search for further opportunities has been reduced.

The organisation further argues that there is a "myth" that back-office functions can simply be "deleted" to free up resources to the front line.[41] Chief Constable Parker agreed it would be difficult:

In the last five years we have made £7 million worth of efficiency savings, approximately 75% of which have come out from the back-office functions. Whilst there is always room for improvement and further efficiencies, we have taken a substantial chunk out of ours.[42]

28. This is particularly the case because of the high proportion of police resources spent on the workforce. The Association of Police Authorities provided a breakdown of police service costs which shows that around 71% of the police budget is spent on police salaries and 16% on pensions, meaning that in total almost 88% is spent on the workforce:

Table: Breakdown of police service costs, 2007/08[43]

Net costs after income/grants
£m

%

Uniformed police officers 5441 46.7

PCSO/traffic wardens 395 3.4

Other staff 2485 21.3

Police pensions 1889 16.2

Other running costs 1311 11.2

Capital financing charges 138 1.2

11659 100.0

Therefore limiting efficiency savings to non-workforce budgets can only have a limited impact on overall spending.

29. The Association of Police Authorities argues that calls to maintain "frontline" policing, require forces to "skew" budgets to accommodate a "simple, narrow conception of policing activity—visible, reactive patrolling".[44] When asked how he would define frontline policing, the Minister of State responsible for crime and policing said:

I think first and foremost it is … neighbourhood policing, and the local beat officers and the local beat managers who work in those communities. Equally, for me, it is also those officers who do some hidden work, but which are affecting frontline crime issues … people who are involved in supporting domestic violence reduction, people who are involved in tracking down drug and serious organised crime issues, people who are involved in preventing terrorist offences.[45]

The public value a visible police presence and this is a key factor in public confidence in the police. However, the service is keen to investigate if, and how, performance in this and other frontline areas could be achieved with fewer officers. According to ACPO:

Police officer numbers is still only part of the overall picture, as innovations with technology, processes, collaboration, partnership, outsourcing are constantly driving up productivity and performance allowing the same level of service (or even better levels of service) to be delivered with less police officers.[46]

30. We are pleased that the police service has made a commitment to protect frontline policing, which incorporates not only the kind of visible policing activity so valued by members of the public but also a number of important business areas that are less immediately perceptible to them. However, there is a limit to the efficiency savings the police service can generate from rationalising back-office support or making cuts to other parts of their budgets. Given that almost 88% of police budgets are spent on the workforce, we agree with the Association of Chief Police Officers that the service should pursue innovative means of service delivery that can allow it to operate with a reduced workforce, if necessary, as a means of managing spending cuts.

Collaboration and mergers

31. A number of police forces and authorities made reference to inter-force collaboration in explaining their approach to maximising resources, the East Midlands Special Operations Unit being one example.[47] Sharing back-office functions in particular can save substantial amounts of money. In our inquiry into Policing in the 21^st Century, we noted some good examples of collaboration between forces but concluded that overall there had been a "lack of progress" in this area and that "the Home Secretary should now use her powers to mandate forces to share services".[48] A review by Her Majesty's Inspectorate of Constabulary earlier in 2009 found at least 720 joint ventures between police forces and authorities (an increase from previous years); a positive link between collaboration and performance; but that forces and police authorities supported the idea of collaboration in principle but often struggled in practice. The recent Policing White Paper states that "where it makes sense to do so, in the interest of efficiency and effectiveness, the Government will mandate collaborative action by police forces and police authorities",[49] in line with our recommendation.

32. We also concluded that while we endorsed the Government's decision to drop plans for enforced mergers between forces, because of local opposition to the specific proposals, "we are not opposed to voluntary mergers".[50] The Association of Chief Police Officers supports voluntary mergers. Chief Constable Parker explained her personal view that it is the "right thing to do" because of the economies of scale, resilience and value for money that can be realised. However, "the tricky bit … is which forces you put together and how you do it".[51]

33. Bedfordshire Police Authority is considering a voluntary merger with Hertfordshire, but would proceed with this only if supported by the Chief Constables and following consultation with the communities and workforces affected.[52] Chief Constable Parker explained that the forces are a good match because:

We are geographically close; there are some civic ties; some military ties; there is a road network; there is crossover of intelligence and operational needs; and most important of all, there is a willingness to make it happen.

Thus far, collaboration—joint units of more than 500 police officers and staff—has resulted in combined annual savings for Bedfordshire and Hertfordshire of £2.2m. The merger would cost £20 million to effect, but within three years the forces would be saving £14.6 million per annum. The chief officers and managers concerned consider that it would be impossible to close the estimated combined budget gap of £23m by 2013-14 without a measure of this significance.[53]

34. The Minister of State responsible for crime and policing was "keen to support voluntary mergers".[54] The Government's position is to allow mergers provided they are voluntary on the part of all forces and authorities involved; self-funded; they increase the likelihood of achieving the minimum standards on protective services; and they have the support of the public. The Home Office recently has announced it will make available a voluntary merger exploration fund of £500,000 to which forces and Police Authorities may apply before April 2010. It is also considering mechanisms to help police authorities to manage the upfront costs of reorganisation and to equalise police precepts in areas that wish to merge.[55]

35. A recent review by Her Majesty's Inspectorate of Constabulary drew a positive link between inter-force collaboration and performance but highlighted the fact that some forces struggle to implement collaborative schemes in practice. We are pleased the Government has accepted our recommendation to mandate collaborative action where appropriate, in the interest of efficiency and effectiveness.

36. It has become clear to us that voluntary mergers, in the right circumstances, can enable forces to make substantial savings. We are pleased that the Home Office is supporting voluntary mergers by announcing a new voluntary merger exploration fund of £500,000. This is a good first step, but is a drop in the ocean given the costs involved in setting up a merger—the potential merger between Bedfordshire and Hertfordshire would be likely to cost £20m, for example. We urge the Government to consider how forces and authorities can be assisted with managing the up-front costs of reorganisation. The long-term financial benefits should make this area of investment a priority.

Working with the private sector

37. Some forces have begun to work with private sector partners as a means of generating efficiencies, particularly outsourcing delivery of some back-office functions. Cleveland Police, for example, has outsourced its Custody and Medical Services, allowing the force to release 36 police officers back to frontline duty in 2007/08.[56]

38. We took evidence about the joint venture company between Avon and Somerset Police, Avon and Somerset Police Authority, Somerset County Council, Taunton Deane Borough Council and IBM, called SouthWest One, set up to deliver key corporate support functions for a ten-year period. SouthWest One currently delivers Human Resources, Finance, Payroll, Procurement, Estates, IT, Police Station Enquiry Offices, Administration, Facilities Management and Revenues and Benefits. It is the first instance of any police force in the UK forming a partnership with the private sector in a joint venture. It differs from an outsourcing arrangement in allowing the public sector partners to have control over the direction of the business.[57]

39. The Chair of the Police Authority, Dr Moira Hamlin, explained that the two drivers behind SouthWest One were "funding" and "a desire to transform and modernise the services." Avon and Somerset is the second worst affected force in the country in terms of the impact of the application of the funding formula, meaning that in 2009/10 the force potentially has to address a £5m funding gap: SouthWest One is intended to enable savings in the region of £35m over the next ten years, including £15 million in procurement savings and £18m from the unitary charge.[58]

40. Mr Simon Humberstone, of IBM and the Director of SouthWest One Board, explained the benefits that private sector partners can offer to the police service, namely:

Expertise in delivering back-office services;
An experience in managing risk; and
Available funds for investment which might not otherwise be available to the public sector, in particular being able to provide significant investment up-front.[59]

As specific examples of these benefits, Dr Hamlin cited the purchase of the SAP enterprise resource planning system which has released the equivalent of 24 police officers per year and saves every staff member 15 minutes each week:

That system is used by large companies across the world that we could not afford. It is only by joining up with our other partners, the local authority partners and IBM's expertise to help us implement it, that we were able to do that.[60]

Chief Constable Port added that SouthWest One has allowed him to reallocate policing resources to long-term crime reduction initiatives.[61]

41. Chief Constable Port was unequivocal in his support for other police forces to investigate adopting a similar model to SouthWest One.[62] Mr Humberstone advised that there had been a lot of interest from other forces although IBM have not yet entered into a contract with any of them.[63] Other witnesses were more cautious about such initiatives, but considered there could be a role for the private sector in supporting police activity, in the right circumstances. Chief Constable Parker said:

Sometimes, in some areas, using private industry is the right way forward. Whether it is the right thing overall for the police service and for the public is another matter altogether.[64]

Deputy Commissioner Godwin noted some of the problems involved with previous approaches to contracting with the private sector:

I think one of the mistakes in previous times in terms of outsourcing was if you outsourced something where you had not driven those costs you are effectively offering money over to the private sector. The key for us as a police service is to drive out those costs first and then see what the private sector can do to actually drive those costs down still further.[65]

The Chief Executive of the National Policing Improvement Agency, Chief Constable Peter Neyroud, added that other mistakes in the past included the use of very short-term contracts and not initiating proper partnerships.[66]

42. Avon and Somerset emphasised the difficulties they had experienced in setting up the joint venture company, described by Chief Constable Port as "an enormously complicated, long process", taking three years.[67] When asked if they had received support from the Home Office, Dr Hamlin replied:

I think the Home Office initially was sceptical … about what we were trying to do until they really understood what it was that we were trying to bring about, and since then they have been very supportive … We did not get any money, we had to fund that out of our own money. One of the things that we tried to get help for was the project costs … £3 million over two years … It would have really helped us to have been able to capitalise those project costs. We asked the Home Office for help and direct to CLG, who make that decision, and they would not allow us to capitalise the costs. That is a barrier that if removed could help other people in the future.[68]

43. There have been media reports that the SouthWest One venture made significant losses in the last financial year,[69] so it is as yet impossible to judge the success of this experiment. However, there are many less ambitious forms of outsourcing and partnership. In terms of the Government's current approach, Chief Constable Neyroud said that the focus was looking at how to achieve economies of scale by joining up different outsourcing initiatives:

There are significant benefits from having that particular, very defined service run by a company like Reliance or G4S. There would be greater benefits if we were able to do that more consistently nationally. It is currently the case that there are 11 forces who have got a private contractor delivering their custody. It is one of things we are proposing to examine, whether we could get better value for the public by doing that on a bigger scale.[70]

44. In the right circumstances, the private sector can provide the police with expertise they may lack, value for money in service delivery and a source of up-front investment. In the past, private sector involvement in policing has tended to develop in a piecemeal fashion across the service This has not only made the contractual process difficult for individual forces, it has meant that the service has lost opportunities to achieve economies of scale. The Home Office and the National Policing Improvement Agency should take a pro-active lead in determining appropriate forms of private sector involvement in police support services, and support a consistent approach to their application where this is deemed beneficial to individual police forces and the communities they serve.

Administration of police funding

45. The greater part of the amount of central grant paid to each police authority is calculated in accordance with the principal needs-based formula. The main determinant in the formula is the projected resident population but cost adjustments are built in for the socio-economic and other characteristics of police authority areas and for differences in the costs of provision between areas. However, the formula has never been fully applied. Application of the formula has been subjected to a damping mechanism to promote stability and planning by ensuring that each police authority receives a minimum percentage increase over the previous year. At the extreme ends, this meant that the West Midlands force received nearly 11%, or £48 million, less than the funding formula would have allocated in 2007/08 if applied correctly, whereas Northumbria Police received over 12%, or £29m, more.

46. In our Report on Policing in the 21^st Century, based on the evidence we received we concluded that "we support Sir Ronnie Flanagan's recommendation for full application of the police funding formula at the next Spending Review. The Home Office must work closely with forces that currently benefit from the damping arrangements to help them manage the transition".[71] However the evidence submitted to our current inquiry was more ambiguous.

47. Several police authorities again emphasised the extent to which they are disadvantaged by the current distribution. Bedfordshire Police Authority wrote that:

Bedfordshire is one of those Authorities that has been badly affected … Since 2006/2007 Bedfordshire have had their grant, calculated through the funding formula, reduced by approximately £3.9m per annum.[72]

Derbyshire currently lose out on funding of around £5m per annum, or 160 police officers.[73]

48. However, ACPO argue that fuller application of the funding formula may not be an appropriate solution as the formula itself is not fully fit for purposes nor is it technically a measure of policing need:

Since its inception, this grant has never been distributed without a dampening mechanism, as to do so would cause significant funding issues for around a third of forces nationally … It is clear that a dampening mechanism, while frustrating for some forces, is useful in ensuring the stability of police numbers across the whole of the country.[74]

It is worth mentioning that over half of the forces which have made overall cuts to officer numbers over the past five years are actually those which benefit from the dampening mechanism. The Minister of State responsible for crime and policing advised that the Government had committed to looking at the funding formula before 2011.[75]

49. One of the major barriers some forces face in maximising their resources is the current distribution of the police national grant, which means that just under half of them receive less than they are allocated under the funding formula. There is disagreement across the police service about Sir Ronnie Flanagan's recommendation that it should move to a fuller application of the formula. Understandably, those areas that are disadvantaged by the damping mechanism feel unfairly treated; and those who receive more money because of it fear the consequences of its removal. The Government is committed to reviewing this issue by 2011. It may be the case that, rather than tweaking its application, the entire means by which money is allocated to forces should be reviewed. If more forces move towards voluntary mergers, as we hope they will do, the Government will need to address the implications for both national and local funding streams.

Council tax capping

50. Forces who are financially disadvantaged because of the way in which the funding formula is currently distributed, or for historical reasons, argue that they are forced to make up the deficit through higher council tax revenues. ACPO wrote that:

Council tax is now responsible for providing over 25% of all funding available to the 43 forces (with the proportion varying per force);
Above inflationary increases in the council tax has played "a significant part" in recent service improvements: "the only funding available to improve service delivery and meet national and locally identified development has come from efficiencies and the council tax".[76]

51. Since the mid-1980s police authorities have been forced to limit the amount they raise through the council tax precept according to a cap stipulated by central government, administered in various forms. This is unpopular with the police service, partly because it limits the amount they can raise—for example public surveys show that Northamptonshire residents are prepared to pay 10%-30% more in council tax to fund more police officers, but the capping regime makes it impossible for the Police Authority to respond to this demand[77]—and partly because of apparent inconsistencies in the Government's capping policy:

We know there is a capping policy but each year we try to guess where the line is going to be drawn … what appear to be some odd anomalies come out of it. For example, I understand that Greater Manchester Police have a higher council tax increase than Surrey and Derbyshire, but the GMP were not capped.[78]

52. ACPO argued that if the Government sets future caps at or below rises of 3%, this would "severely affect" force funding and subsequently impact on service delivery.[79] In response, the Minister of State assured us that the Government currently has no current plans to do this :

At the moment we have got two criteria for council tax capping issues. One is a 4% rise in budgets this year and the second is a limit of 5% on council tax rises this year. the moment we have only had five authorities out of 43 who have been anywhere near being capped or potentially being warned about capping for the future. The vast majority of authorities do work within that framework, and I think that is reasonable.[80]

53. We recognise the importance of the council tax precept in allowing forces to raise funds for service delivery improvements, and its particular value to those forces who are disadvantaged by the current application of the funding formula. The Association of Chief Police Officers warned of a significant impact on service delivery should council tax rises be capped at below 3%. We are therefore pleased that the Government is setting the cap for this year at 5%. However, in our view, local police authorities should have the discretion to raise funds according to their needs, provided this is done in consultation with stakeholders including local residents and local authorities.

40 Home Office, Protecting the Public: Supporting the Police to Succeed, December 2009, p 10 Back

41 Ev 58-9 Back

42 Q 9 Back

43 Ev 82 Back

44 Ev 74 Back

45 Q 80 Back

46 Ev 58 Back

47 Ev 34 [East Midlands Police Authorities] Back

48 Home Affairs Committee, Seventh Report of Session 2007-08, Policing in the 21^st Century, HC 364, para 215 Back

49 Home Office, Protecting the Public: Supporting the Police to Succeed, December 2009, para 4.48 Back

50 Home Affairs Committee, Seventh Report of Session 2007-08, Policing in the 21^st Century, HC 364, para 278 Back

51 Qq 10, 28 Back