Guidance

# Guide to the police allocation formula

A guide to the calculations used to work out how much money is allocated to police forces.

## Overview

The police allocation formula (PAF) is essentially a calculation that uses various data sources (such as population density) to share money between police authorities in England and Wales. It is not a calculation of absolute needs, that is, it does not estimate how much each force needs independently of other forces. Instead it shares out the amount of money designated for police funding between forces based on their relative needs compared to each other.

The PAF is used to divide the majority of the money available for total police funding between forces. The results of the PAF have a significant impact on how much money a force will receive in order to police its local area. The PAF allocates funding to forces based on their relative need.

## Funding distributed from central government to the police

There are 4 main sources of funding from central government to the police. Two are from the Home Office and 2 are from the Department for Communities and Local Government (DCLG) in England, and the Welsh Assembly government (WAG) in Wales:

1. the Police Grant (from the Home Office)
2. Revenue Support Grant (from DCLG and WAG)
3. redistributed business rates (from DCLG and WAG)
4. specific grants (from the Home Office)

For the first 3 of these the Home Office, DCLG and WAG distribute around £8.5 billion using the PAF. For the distribution of the Revenue Support Grant and redistributed business rates, DCLG and WAG take into account the relative resources as well as the relative needs expressed through the PAF. To do this, WAG and DCLG include the council tax base in their calculations so that the total payment (including that from the Home Office) takes this into account. This is because some areas will have a higher tax base (ie more band-D equivalent properties) to levy council tax from. Taking this into account goes some way to levelling the playing field in terms of access to local tax funding.

The fourth source of police funding is a set of grants for specific purposes (totalling around £2.5 billion) which are distributed on a different basis to the PAF, with the exception of the capital grant which does use the PAF.

Note that the Crime Fighting Fund also partially uses the PAF to distribute funding.

## Why the PAF is used

Designing a system to fund the 43 police forces of England and Wales is complex. 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.

The limitations of available data mean that the PAF cannot capture every factor that will affect relative need for policing in an area. But the model is designed to be able to provide a good statistical prediction of relative police workload across the country. We are constantly trying to improve it, and this is currently being done by the Police Allocation Formula Working Group (PAFWG) which is an official-level working group made up of officials from Home Office, DCLG and WAG and representatives from police authorities, the Association of Police Authorities (APA) and the Association of Chief Police Officers (ACPO). After the PAFWG has made its recommendations, ministers will decide on which they wish to include in a public consultation where anyone from police authorities, and other authorities with an interest in policing, together with the general public, can make representations to the Home Office and DCLG/WAG. This process ensures that the formula is scrutinised and can be discussed by a wide range of stakeholders.

## How the PAF distributes funding

The first step of the PAF is to divide everything the police service has to do to police the country - the total police workload - into 11 categories. Seven of these relate to reducing/investigating different types of crime.

The 7 crime types are:

• more serious violence/sexual offences
• less serious violence
• robbery
• vehicle crime
• domestic burglary
• other crime (high cost)
• other crime (low cost)

The other 4 are as follows:

• providing reassurance to the public
• providing assistance at or reducing road traffic accidents
• providing assistance with non-crime incidents
• policing special events such as protest marches or football matches

Using data that the police provide on how they spend their time, we know that some of these activities take up more police time than others. As a result more funding is allocated by reference to activities which take up a lot of police time, like investigating violent crime, and less by reference to activities which take up less time, like policing special events. For example we allocate 60% of funding on the basis of reducing/investigating crime nationally. It is important to note that although this is how the PAF allocates funding, police authorities and forces do not have to spend their budget according to this allocation. They get a lump sum and are free to spend it according to their assessment of local priorities.

## Taking into account the different policing needs of different areas

So far we have divided funding by reference to duties that all police forces need to perform. But we know from crime statistics that different forces will have different amounts of work in each of these categories, and this obviously affects the workload of the police in different areas. For example, urban forces will tend to have more violent crime than rural forces, but rural forces tend to have more road traffic accidents than urban ones. To deal with this, the PAF allocates a bigger share of the funding for a particular category (eg vehicle crime, reducing road traffic accidents etc) to forces which have greater needs in that area. For example, a bigger proportion of the funding allocated for burglary will go to forces in areas where burglary is more likely to happen and a lower proportion to forces in areas where burglary is less likely. Again, it is important to note that although funding is based on police activity, like how much burglary there is in an area, police authorities and forces do not have to spend their funding in-line with the way the total amount of money received has been calculated.

So how does the formula know which areas have a greater need for funding for certain categories (such as robbery or providing public reassurance) and which have less? The PAF does this by predicting the relative workload (or need) for each category of police activity for each force based on socio-economic and demographic factors (eg the amount of bars per hectare in an area).

If we take providing assistance at and reducing road traffic accidents as an example, population sparsity is the predictor we use because across England and Wales this tends to be higher in areas where there are more road traffic accidents. This means that a police force area that has a very low population density (ie high population sparsity) will be allocated more of the funding that is available for the traffic accidents category than an area with high population density. This relationship is given at the bottom of page 6 of the Police Grant Report.

So, for a given force:

Traffic accident workload = 1.1555 x population sparsity

The number we multiply population sparsity by, 1.1555, is generated by a statistical technique  and represents the relationship between population sparsity and traffic accident workload on average in England and Wales. It is important to note that although population sparsity is used in this case, this does not mean that population sparsity particularly causes road traffic accidents. It only means that population sparsity has a statistical relationship with road traffic accidents. The equations for the other police workloads can be found in the Police Grant Report and can be understood in exactly the same way as the above example .

## How PAF deals with the different costs of wages in different parts of England and Wales

We know that there are regional differences in costs across England and Wales and the PAF incorporates these by adjusting funding by a factor called the Area Cost Adjustment (ACA). This factor compares wages, and rental rates for business premises, across England and Wales and ensures that the differences for equivalent services are taken into account. For example, a cleaner in a police station in Northumbria earns less than a cleaner in a City of London police station. Thus the City of London gets a higher ACA factor than Northumbria.

## How the PAF fits in with the minimum increase in annual funding guaranteed to all police authorities

In this Spending Review period, each police authority is assured a minimum percentage increase of 2.5% (‘the floor’) in grant year-on-year. Those police authorities that get less than this based purely on the formula are topped up so that their grant increase equals 2.5%. In order to pay for this any force receiving an increase based purely on the formula that is greater than 2.5% has their grant increase above 2.5% scaled back by a standard proportion. For example, if Force A has only received an increase of 2.4%, in order to meet its floor increase it needs another 0.1%. Now, if Force B received a 2.7% increase on last year, part of the 0.2% increase above the 2.5% floor would be used to finance the cost of providing the floor for Force A. This process is commonly referred to as floor damping. Note that this does not mean that all the forces end up receiving a 2.5% increase because those that receive an increase above 2.5% only have part of their funding scaled back so that they are still above the 2.5% floor.

Comprehensive Spending Reviews (CSRs) are carried out by HM Treasury, usually every 3 years, to set the spending limits for government departments and public services.

## Rule 1 grants

These are similar to the floor damping mechanism mentioned above. The reason this is done separately from floor damping is that floor damping is done by DCLG for English authorities. Rule 1 is the equivalent for Wales with south Wales being scaled back because it is above the floor and this money then being redistributed to the other Welsh forces. However, this redistribution is not sufficient to bring the other Welsh forces up to the 2.5% floor increase. During this Spending Review period the Home Office pays a further grant called The Welsh Top-Up Grant so that they attain the floor increase.

## Rule 2 grants

This is an amalgamation of 5 specific grants that are not distributed on the basis of the PAF. They are as follows:

• the Rural Policing Fund
• the Forensic DNA Grant
• the Integrated Police Learning and Development Programme
• the London and south-east allowances,
• special priority payments

They were combined into 1 non-ring fenced grant to give police authorities more control over how they are used.

## Metropolitan Police Service special payment

The Metropolitan Police Service has duties related to its national and international capital city functions which other forces don’t have. These factors are difficult to include in the PAF and so this grant is given instead.

## How top-ups correspond to the 11 categories of police workload

Crime top-up in Police Grant Report Police workload category
Special events basic amount Policing special events
Police crime top-up 1 Violence against the person (more serious) and sexual offences
Police crime top-up 2 Robbery
Police crime top-up 3 Violence against the person (less serious)
Police crime top-up 4 Vehicle crime
Police crime top-up 5 Burglary
Police crime top-up 6 Other crime (high cost)
Police crime top-up 7 Other crime (low cost)
Police incidents top-up Providing assistance with non-crime incidents
Police fear of crime top-up Providing reassurance to the public
Police traffic top-up Providing assistance at or reducing road traffic accidents
Police sparsity top-up A top-up that addresses the specific needs of forces in rural areas
Published 26 March 2013