“In cash terms, once precept forecasts are taken into account, we are talking about a 6 per cent reduction in total over four years.”
Theresa May, 16 August 2011
Police cuts remain the hot political potato of the day as the recriminations over last week’s riots continue.
Despite pressure from Labour and critics within the police, Theresa May is sticking to her guns on ruling out a U-turn on Government plans to reduce the money forces get from Whitehall by 20 per cent over the next four years.
Speaking to an audience of senior officers on Tuesday, the Home Secretary sought to play down that headline figure of a one-fifth reduction by 2015 by introducing a new, much smaller figure.
The true scale of the shortfall in police spending is in the order of just 6 per cent, Mrs May said. That’s a figure that David Cameron and Nick Clegg have made passing reference to in recent interviews too.
Mrs May said: “People often say there will be 20 per cent cuts. That’s true if you are talking about central Government police funding in real terms, but police forces get their money from local precept too and when you take into account the Office for Budget Responsibility’s precept forecasts, the real terms reduction is 14 per cent.
“But even this doesn’t quite give the full picture, because 80 per cent of police spending is on pay, and as we are likely to freeze police pay for two years the cash terms figures are actually closer to the reality than the real terms figures.
“And in cash terms, once precept forecasts are taken into account, we are talking about a 6 per cent reduction in total over four years.”
Unpacking the Home Secretary’s logic on this issue is no mean feat. Luckily, an acknowledged expert, Dr Tim Brain of the Universities Police Science Institute has just published an authoritative report on police funding which tackles Mrs May’s numbers head-on.
As she begins by saying, there’s no dispute about the scale of the cuts central Government is making to the police: 20 per cent by 2015. And the cuts are frontloaded, with three quarters of the savings to be made this year and next year.
And it’s perfectly true to say that not all the police’s money comes from Whitehall.
When other funding from police precepts – the slice of your council tax that goes to the boys in blue – is taken into account, overall budgets do indeed drop by a national average of 14 per cent by 2015.
That’s in “real terms” – taking the changing value of money into account by using projected figures for inflation over the next four years. In “cash terms”, forgetting about inflation, the cut looks a lot smaller: 6.2 per cent or £0.8bn.
Not surprisingly, the Home Secretary prefers the much smaller number. What’s wrong with that?
The first problem is that there’s a reason why they call it “real terms”. Factoring in inflation and growth is the only meaningful way of talking about the actual purchasing power of money.
But Mrs May suggests that a 14 per cent real terms figure may be artificially high because police forces spend most of their money on wages and there will be zero pay inflation for two years.
Attempting to get around the well-established definition of real terms in this way is a highly theoretical tactic that provoked raised eyebrows from Channel 4 News’s economics experts, although it’s not an outright lie.
More importantly, there’s a practical problem. The two-year freeze on police pay increments, as recommended by the Winsor review into police pay and conditions is still under negotiations and changes are unlikely to kick in until the year 2012/13, when a third of the cuts will already have been implemented.
According to Dr Brain, the former Chief Constable of Gloucestershire Police, there are more pressing problems with the numbers.
He points out the weaknesses of assuming that money from council tax will make up a shortfall of funding from central Government.
Firstly, the Government is relying on forecasts from the Office for Budget Responsibility that the money which police authorities levy from the local population through their council tax precepts will rise over the next four years.
The expected increase of £0.4bn partly offsets the cut from Whitehall, reducing the overall real terms cut from 20 per cent to 14 per cent on average.
But it’s not up to the Home Secretary or the Chancellor to set council tax precepts, and there’s no guarantee about what the future level of police income from that source will be.
The Government has in fact been able to exercise a degree of control over police authorities so far, persuading most of them to keep council tax precepts at last year’s level by offering them a grant to make up the shortfall.
But Dr Brain thinks that factoring in this council tax freeze grant to future assumptions about council tax revenue is highly problematic.
The grant will be fixed at £75m for the next four years. It will not rise with inflation so its value will fall in real terms, Dr Brain said.
He also sees evidence of “double counting”, in that the £75m grant seems to appear on the books twice, as one of a number of central Government grants to police, and a separate item listed under police authority budgets – something that could artificially inflate the total amount of police funds.
Dr Brain said he wasn’t able to put a precise figure on how much this double counting undermines the Government’s final figure of a 14 per cent real terms cut.
But his research does demonstrate how the headline numbers – whether you prefer 20, 14, or 6 per cent – fail to show how the effect of the cuts will differ dramatically around the country.
Because some forces take a far higher percentage of their funding from central Government – just 55 per cent in Surrey and as much as 88 per cent in Northumbria, for example – the flat cut in Whitehall funding across the board will hit some constabularies far higher than others.
Lastly, and most importantly, Dr Brain makes the simple point that, regardless of how Theresa May wants to interpret the figures, the cuts are real and they will lead to fewer police personnel.
He comes up with a projection that the equivalent of 29,700 police officers and civilian staff will have to go by 2015, a similar number to other forecasts.
The Association of Chief Police Officers predicts 28,000 job losses, a Labour Party survey of forces put the number at 30,000, and Her Majesty’s Inspector of Constabulary came up with a worst-case scenario of 34,100, after suggesting that more than 11,000 posts had already been lost.
We’re going to spare Mrs May the Fiction rating because she’s avoided telling an outright lie. But it ought to be clear that her preferred figure of 6 per cent cuts carries very little meaning.
There are so many “ifs” in the Home Secretary’s calculations – the future rate of inflation, what happens to council tax, the fate of police pay negotiations – that it’s difficult to see how she can offer any firm assurances that the police cuts saga won’t end in tears.
FactCheck pointed out last week when we looked at the Government’s promises about the effects on visible policing, there appears to be very little concrete planning involved.
As Dr Brain concludes in his report, “the truth is that the Government has no firm plan or expectation of where the losses will fall.”
By Patrick Worrall