The Scottish Police Federation has had Professor Arthur Midwinter (Budget Adviser to the Finance Committee of the Scottish Parliament from 2002-07) update the work on police financing he did in 2007.  Clearly since then there have been some significant changes in the way the police and other services are financed but what the Professor has found is that while Scottish Government funding has increased by above average levels, local authority spending on the police has decreased in real terms. See report below:

REPORT FOR THE SPF ON:

“Police Funding in Scotland Since 2007

By Professor Arthur Midwinter

INTRODUCTION

1.         This report provides an update to my previous research for the Federation into police funding in Scotland.  That report showed that police funding levels per capita in Scotland were the lowest in the UK; that central police funding grew consistently in the post-devolution period, but at a lower rate of growth than the Scottish Budget as a whole; and that police funding by police authorities grew broadly in line with other local services.

2.         This report is focussed on spending in Scotland, and is in two sections – the Scottish Budget and Police Authority Expenditure.  A further note on UK comparisons will follow.

POLICE FUNDING IN THE SCOTTISH BUDGET

3.         Comparative analysis of funding trends since 2007 is hampered by accounting changes in the presentation of the Scottish Budget.  The three changes of most relevance to the police are:

(a)        the transfer of responsibility for pension payments to the Scottish Government;

(b)       the transfer of police capital grant funding on ring-fenced to the local government budget line; and

             (c)        the removal of GAE service totals in the budget information.

4.         The Scottish Departmental Expenditure Limit (DEL) was increased by £3.7 billions over the three-year Spending Review cycle from 2007, or 1.5% in real terms (i.e. around £500 million new monies each year).  This is the lowest level of increase since devolution.

5,         The SNP Administration had a manifesto commitment to recruit an additional 500 officers, costed at £22.5 million from 2010-11.  During the 2008-9 budget process, this number was increased to 1,000 officers during parliamentary scrutiny.  Whereas there is disagreement over other spending commitments in the new Concordat between central and local government, the increase in police capacity was clear-cut.  The Concordat states:

            “ making an additional 1,000 police officers available in communities.  This will be achieved through an investment of £54 million to support additional recruitment of new officers and building capacity at a national level as well as providing support for key retention and redeployment initiatives.  This additional funding will be transferred from the local government settlement to the Justice portfolio shortly”. (Concordat, p4)

6.         The sum of £54 million appears to be a cumulative figure.  Funding would be increased by £13.5 million per annum in 2008-9; and a further £4.5 million in both 2009-10 and 2010-11, making the annual cost £22.5 million.  This has since been increased to £32.4 million in 2010-11 (SPB 11/09 Paper 5).

7.         Central support for policing is now provided as police specific grant to police authorities, whilst the former police capital grant is now provided as part of the general capital grant paid to local authorities.  The Concordat arrangements now mean that payment of police-specific grant is no longer tied to the amount of funding determined by police authorities.  Funding for police loan charges is now ring-fenced within the local government block.

8.         These changes have made it difficult to provide consistent time series data for central government funding of police since 2007.  In 2007-8, £107.4 million was allocated to the Police Central Government (PCC) line; £31.4 million in the Police Capital Grant line; £541.4 million in Police Current Grant; and £14.7 million for Police Loan Charges.  This totalled to £694.6 million of support, or 2.59% of the Scottish DEL.

9.         In my previous report, I had included GAE provision within these totals, as it was tied to police grant levels.  Using this measure, central police funding fell from 4.61% of the DEL in 2002-3 to 4.11% in 2007-8.  The abolition of GAE figures by the new Administration means that £538.5million has been removed from centrally driven expenditure, and becomes part of local funding.

10.       The lack of consistent data means that I can only examine budget changes on an annual basis.  As previously, I will measure police funding as a percentage of the DEL, and as a percentage increase over the previous year.  Police capital grant is also excluded as it is now part of a block allocation to councils.

11.       In 2008-9, central resource support rose from £648.8 million to £714 million, an increase of 10%.  This compares with an increase of 4.8% for the Scottish Budget as a whole.  Police funding’s share of the DEL rose from 2.42% of the DEL to 2.55%.  Around £10 million of the increase was from transfers.

12        In Draft Budget 2009-10, the Police Central Government line is increased by £27.1 million.  This includes funding agreed by Parliament for additional police officers of £13 million.  Overall, police resource funding rose from £724 million to £786.3 million, an increase of 8.6% compared with a 4.6% for the Scottish DEL.  The budget share rose from 2.58% to 2.68%.

13.       In the current Draft Budget for 2010-11, trend comparisons are again problematic because of transfers between budgets.  These include £22.6 million from local government for ICT, now the responsibility of the Scottish Police Services Authority (SPSA); and a transfer of £15.5 million from Police Specific Grant to SPSA, which is financed through the Police Central Government budget line.  Additional funding of £22.5 million is provided for extra police officers, and £27.2 million for pension payments, also in the PCG programme.  Overall, despite these significant transfers, central police funding overall rises from £829.6 million to £853.5 million, because of an unexplained fall of £20.3 million in the PCG programme.  The percentage increase is 2.8%, compared with 0.6% for the DEL as a whole (although this low figure reflects significant re-profiling of other capital programmes), with the budget share increasing from 2.80% to 2.87%.

14.       Overall, the analysis shows police funding receiving a growing share of the Scottish DEL, with above average increases over the three-year cycle.  This is the direct consequence of Parliament’s decision to increase provision for additional officers to 1,000 compared with the original plan for 500.

LOCAL GOVERNMENT FUNDING

15.       In my previous report, the low priority given to police funding in the Scottish Budget was partly counterbalanced by the decisions of local police authorities which increased funding broadly in line with other local services.  During this period, the growth in local government spending as a whole has been below the Scottish average.

16.       The Concordat has resulted in a modest increase in local government’s share of the Scottish Budget, largely because of the £210 million provided to fund a council tax freeze.

17.       Most of this analysis is based on data from authorities published in CIPFA’s Rating Review.  The figures are recorded below

18.       The data for local government as a whole, however, is significantly influenced by the incorporation of former specific grants into the block grants.  The police increases under the Concordat regime have both been below inflation, which reflects the funding gap in the Concordat resulting in an across-the-board squeeze.

19.       The extra funding for 1,000 additional officers was ring-fenced at the centre.  This suggests that around a 1% reduction in police resource funding was made at a local level, around £11 million over two years.  However, given the need to exempt police staffing costs from efficiency savings and the requirement for a further 2% efficiency savings, the pressure on support service costs would be significant.

20.       This is revealed in the Scottish Government’s staffing statistics.  Since March 2007, the number of officers employed has increased by 1,044 from 16,234 to 17,278.  Over the same period, the numbers of support staff fell by 514, from 7,366 to 6,852 (new figures due in two weeks!)

21.       The fall in police spending share of local government spending reflects the impact of accounting changes under the Concordat.  A normal pattern should resume once the funding for the additional 1,000 officers is transferred to the Police Specific Grant.

22.       The position regarding Police Capital Grant is unclear. In the 2007-8 Budget,  the provision was for £31.4 million.  This has not been identified in the Scottish Budget since then.  The capital spending figures published in Rating Review do not square with this, recording £3.5 million in 2006-7; £3 million in 2007-8; £24.8 million in 2008-9; and only £8.5 million for 2009-10.  (I am pursuing this problem with SPICE.)  Falls in capital spend on this scale could adversely affect policing capacity

23.       In summary, in terms of police resource funding, police authorities are no longer providing above inflation increases to forces, whilst the picture with capital funding is unclear.

CONCLUSIONS

24.       The 2010-11 Budget is close to approval.  There are a few issues of concern, although the extra officers funding, loan charges and police pension are now ring-fenced.

25.       For next year then, the key concerns are the local budget decisions by authorities.  In his evidence to the Justice Committee, the Chief Constable of Strathclyde projected a £16-18 million deficit next year, mainly because funding was not sufficient to cover current pay agreements.

26.       Although the Police Specific Grant will increase by 3%, the local government settlement remains tight – a broad standstill in real terms – so the police budgets may again face a funding squeeze because of the local government settlement.

27.       So whilst the funding for new officers is safely ring-fenced for that purpose, the main baseline budgets, resource and capital, look likely to be under pressure once again in 2010-11.

SOURCES

1.         The Draft Scottish Budget, 2007-8; 2008-9; 2009-10 and 2010-11.

2.         CIPFA Rating Reviews 2007-8; 2008-9 and 2009-10.

3.         COSLA Spending Review Briefing Note, 2007