How our local police forces are funded

Funding for police services in England and Wales (policing is a devolved matter) is set for five years at periodic spending reviews and adjusted annually. It has long been recognised that the process by which funding is allocated to police forces requires reform. Funding to forces, through their Police and Crime Commissioners (PCCs), has not kept track with overall spending on police services.

Over the last spending review period (2015/16 to 2019/20), overall funding for police services increased by 18%, but the amount of funding that goes to police forces increased by only 10%. Previous governments have tried to make changes to the allocation process but reform has stalled since 2017.

The 40 elected Police and Crime Commissioners (PCCs) in England and Wales have responsibility for the governance and budgets of their police forces. For London, the role of the PCC is performed by the Mayor’s Office for Policing and Crime. The Mayor of Greater Manchester has responsibility for Greater Manchester Police.

Where does police funding come from?

The main income source for the 43 geographic police forces in England and Wales is a central government grant made available through the annual Home Office Police Grant Report. A provisional Police Grant Report, setting out the central government funding allocation for each force for the next financial year, is usually published in December of the previous year. Following a public consultation, the final Report is presented to Parliament in January for approval.

PCCs can raise additional revenue locally through the council tax (police) precept. PCCs can increase the precept, but the increase cannot be at a rate that is ‘excessive’ unless authorised by a ‘yes’ vote in a local referendum. The level for triggering a referendum is determined by central Government, and for 2019/20 it was set at £24 for an equivalent Band D property. In Wales, PCCs are not subject to the same referendum rules, as council tax is a devolved matter.

How much funding do local police forces receive?

The 2015 Spending Review set out funding for police services between 2015/16 and 2019/20. In the Review, the Coalition Government pledged that: “overall police spending [will be] protected in real terms over the Spending Review period”. Latest figures from the Home Office (see Chart 1) show that overall police funding increased over this period by just over £2.1 billion (18%) in cash terms, and by just over £1.1 billion (9%) in real terms (taking inflation into account), meeting this pledge.

Funding to PCCs (excluding the pensions grant) also increased over the period by 10% in cash terms and 1.5% in real terms. This increase has been funded by the local council tax precept. While central government funding to PCCs has remained relatively constant (0.3% increase), the council tax precept element of PCCs’ funding has increased by just over £1 billion (34%). The proportion of total funding to PCCs provided through the precept has increased from 28% to 35%.

Funding for police services in 2020/21 has yet to be announced. Due to the December election, the final Police Grant Report 2020/21 may not be presented to Parliament before February 2020. Some extra funding for 2020/21 was announced through the Spending Round 2019, including £750 million “for policing to begin delivery of the government’s commitment to recruit 20,000 additional officers by 2023.”

The Labour 2019 manifesto pledged to recruit 22,000 additional officers. It is not yet known if the increased funding required to recruit these officers will be met by central Government or through increases in local police precepts.

Police Allocation Formula (PAF)

The Home Office’s guide to the police allocation formula states that: “The PAF is a way to measure the need for policing in areas relative to each other. It uses a range of indicators that are available on a consistent basis for all police authorities.” This is then used to determine the annual allocation of the available funding for each police force.

In July 2015, the Government issued a consultation on reforming how police forces in England and Wales are funded by central Government. This followed a year-long Home Office review of the current system, involving consultation with police forces.

The reform was put on pause by the Home Office later in 2015 after errors were found in the information shared with PCCs and police forces concerning the indicative impact of the Government’s proposed funding model. The Home Affairs Committee’s 2015 Report, “Reform of the Police Funding Formula”, criticised the original process and made recommendations on future reform.

In September 2016, the Minister of State for Policing and the Fire Service wrote to all PCCs setting out the Government’s plans to continue the process of reform by launching the Review of the Police Core Grant Distribution Formula. However, it was suggested in the media in mid-2017 that the reforms would not go ahead.

In a Written Statement in January 2018 announcing the publication of the provisional settlement for 2018/19, the Minister stated “It is intended that the funding formula will be revisited at the next Spending Review.” This was due to take place in 2019 but has now been scheduled for 2020, and it is not yet clear whether the review will include reform of the Police Allocation Formula.

Further reading

• Police Funding, House of Commons Library