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Medium Term Financial Strategy (MTFS) 2012 to 2016 Executive Summary

Operational Context

South Wales Police provides a policing service to 1.3 million people covering 42% of the total Welsh population with around 47% of the total crime in Wales. The Force area includes 63 of the 100 most deprived communities in Wales (and indeed Europe).The recent British Crime Survey estimates around a million people had used a Class A drug across England and Wales and the Welsh Government has reported an estimated 168,000 controlled drug users in Wales and we are working collaboratively to tackle serious and organised crime.

The service area includes two of the largest cities in Wales, Cardiff and Swansea. The Capital City of Wales presents some additional policing challenges which receive no special recognition within the funding formula. The scale and complexity of incidents routinely dealt with by South Wales Police make it unique within Wales. The demand for policing services remains high and in 2010/11 there were 451,000 recorded incidents and we successfully policed 105 major events. The Force is being recognised nationally for best practice in a number of operational areas.

In this context of local and regional policing requirements, improving performance is highly challenging in the face of the largest reduction in resources in a generation. However it is important to note that it is still being delivered and overall crime has been reduced by over 50,000 over the past decade and Victim satisfaction levels have increased dramatically raising the Force from 43rd to 10th in England and Wales

The emerging picture on resources is an extension of the austerity measures into the following CSR as a result of the worsening economic circumstance.

The Authority will therefore need to maintain the current balanced strategy of Value for Money, Precept, Reform and Collaboration to sustain effective policing over the medium Term in line with the Mission of KEEPING SOUTH WALES SAFE.

Economic Context

The Comprehensive Spending Review 2010 (CSR10) is the governments four year plan to address the national Structural Budget Deficit and aims to reduce public expenditure by £81B. The impact of this on South Wales Police is a reduction in resources of 20% in real terms with 85% of the reductions falling within the first two years of the CSR. The overall Budget deficit to 2016 is forecasted to be £55M when inflationary factors are taken into consideration.

Given that over 80% of the police budget is on pay then reductions in staffing levels both police officers and staff are unavoidable. The MTFS is therefore based on reduction of 688 staff being 256 police officers and 432 police staff over the CSR10 period. For 2011/12 the forecasted reductions are 121 and 252 officers and staff respectively. The financial year 2012-13 represents the second year of the CSR10 and grant reductions of £12M for the year have been confirmed.

The funding for a Police Authority is a combination of central grants and local police precept however the proportion of funding from precept varies across England and Wales from less than 20% to over 50% of the total police budget. South Wales police



has the lowest police precept in Wales and is the 20th lowest amongst the 43 Police Authorities.

South Wales Police does not get the level of funding that it should if the funding formula was allowed to be applied as intended. South Wales Police contributes around £8M (equivalent to 155 Police Officer posts) to the other Welsh forces as part of the Home Secretary’s determination that all Police Authorities should receive the same 6.7% reduction in central grants irrespective of their formula assessed need or other sources of income.

Risk Management and Infrastructure

The Authority has a strategic risk and evidenced based approach to investments and service delivery. The new public service centre and the rationalisation of custody provision are excellent examples of invest to save initiatives that will improve service outcomes and reduce costs, albeit there will be a consequence of further reductions in staff numbers. The force has established a critical mass in respect of police officer numbers of 3,000 to ensure resilience and efforts should continue to return to this level of establishment as soon as practically possible.

Project Reform has and will continue to ensure that the public remain at the centre of our service delivery model and deliver the vision of “being the best at understanding and responding to our communities needs”. The Authority has ensured effective governance over this transformation programme and the changes are making a lasting difference to the South Wales Policing model.

Value For Money and Financial Management

The Authority is independently assessed on the delivery of Value for Money by both Her Majesty’s Inspectorate of Constabulary and the Wales Audit Office. Both bodies have provided positive assurances on Financial Management and Value for Money including the operational delivery. The Authority will have delivered over £100M of efficiency improvements by the end of CSR10.

Statutory Requirements

The Local Government Finance Act 1988 and the Police Act 1996 requires the Police Authority to set a balanced budget for the forthcoming year and to advise the billing authorities on the amount of precept to be collected by the 1st of March at the latest. The provisions of the Local Government Act 2003 require the Authority to give adequate consideration to the following:

1. Government policy on police spending, as applied to the Police Authority

2. The medium term implications of the Budget and Capital Programme

3. The CIPFA Prudential Code

4. The size and adequacy of general and specific earmarked balances, against the backdrop of inadequate levels the Authority has had to manage in recent years

5. Whether the proposals represent a balanced budget for the year



6. The impact on the Council Tax

7. The threat or risk of capping

8. The prevailing pressure for service development and associated risk to performance.

The Medium Term Financial Strategy provides the necessary level of supporting information to facilitate the discharge of this responsibility.

Precept Considerations

Given the economic and operational context and the risks facing the Authority careful consideration needs to be given to the level of police precept to support effective policing over the medium term. The Authority has minimal influence on the level of central grants but the decision on the level of police precept is determined by the Authority and then subject to subsequent judgment on capping if deemed by the Welsh Government to be excessive. Local authorities and precepting authorities in Wales have not benefitted from council tax freeze grants and it is clear that there are no further resources available to make good any funding gaps resulting from low precept levels.

The MTFS considers three options for an increase in the police precept from 6% to 4%. Each option is evaluated and whilst a 6% increase would be the preferred option and would enable the recruitment of 60 Police Officers (if sustained) to the front line, it does carry the risk of capping by Welsh Government. The 4% option is opposite of the 6% option and would result in a cut in officer numbers of 60 on the same basis. This would reduce officer numbers below 2,700 and would clearly question the sustainability of the policing model that is predicated upon the delivery of the reductions contained with the approved VFM strategy.

The planning assumptions include in the MTFS and the Reform Programme are based on the availability of precept levels no lower than 5% and it is vital that this base level of funding is sustained in order to put the Force in the best possible position to meet further anticipated funding cuts in the next comprehensive spending review.

Therefore the recommended option is to maintain the medium term precept strategy for an increase of 5% which will not breach the current Welsh Government guidance on Police Precept increases. A 5% increase would add £8.07 to the annual Band D precept which equates to an increase of 2p per day.

This is entirely in accordance with the MTFS approved last year which has received independent positive assurance and delivered a balanced budget.



SOUTH WALES POLICE AUTHORITY AUTHORITY MEETING 13 FEBRUARY 2012

SUBJECT MEDIUM TERM FINANCIAL STRATEGY 2011 to 2015

REPORT BY CFO AND CHIEF CONSTABLE

CONTACT OFFICER UMAR HUSSAIN , CHIEF FINANCIAL OFFICER TELEPHONE: (01656 869204)

GWYN WILLIAMS ASSISTANT DIRECTOR OF FINANCE TELEPHONE: (01656 869204)

SUMMARY AND PURPOSE OF REPORT To inform the Authority on the medium term financial resource implications for both the Revenue and Capital Accounts for financial years 2012-2016.

To consider and approve the Budget Requirement and Police Precept on Council Tax for 2012/13.

RECOMMENDATIONS That the Authority:

9. Determines a Revenue Budget Requirement for 2012/13 of ___________ resulting in an annual precept on a Band D property of _______ being an increase of __________ giving a total precept requirement of _____________ and that this sum be precepted on the relevant billing Authority in accordance with Appendix __.

10. Approves the Capital Programme and Strategy 2012-13 which will continue to be reviewed annually in line with the Revenue Budget proposals.

11. Approves the Value for Money Plan for 2012-13 which is a live document subject to continuous improvements.



A. SUPPORTING INFORMATION

This report sets out the key issues to be considered in determining an appropriate level of budget and resulting precept necessary to provide an efficient and effective police service to all the citizens across South Wales.

The South Wales Police Authority is duty bound to secure Value For Money and this is independently examined by the Wales Audit Office (WAO) and by Her Majesty’s Inspectorate of Constabulary (HMIC).

The current period of Comprehensive Spending Review 2010 (CSR 2010) sets out the proposed police funding levels from 2011 to 2015 and has already been acknowledged as the most financially challenging in a generation (Source HMIC).

Over the period 2011 to 2015 police funding will be reduced by 20% in real terms with 85% of the reductions in central grants falling within the first two years. HMIC have stated the police service could manage a target of 12% cash releasing efficiencies over the four years without affecting the frontline services. A 20% target is therefore understandably highly challenging if frontline services are to be maintained.

The financial year 2012/13 is the second year of a sustained period of grant reductions and the £12.2M reduction for the year is the single largest cut in funding in the history of the South Wales Police Authority.

The Medium Term Financial Strategy established last year to address the cuts in police funding over the CSR 2010 period has been shown to be successful with the funding gap for the year being met and performance being improved in the face of considerable change.

The HMIC and the WAO undertook two challenge reviews of the Authority to test its preparations for the impeding cuts in central funding and the robustness of the Financial and Operational Strategies. The current strategy has been proven to be effective.

The Financial Strategy now extends the planning horizon to 2016 and updates some of the assumptions on inflation, Winsor pay reform as well as the Force’s Project Reform to ensure we remain on course to deliver the force vision of being

“the best at understanding and responding to our communities needs”.

On the 22nd of November 2012 a new model of police governance will come into being with the introduction of directly elected Police and Crime Commissioners and consequently 2012/13 represents the final budget of the present South Wales Police Authority.



1.0 STRATEGIC CONTEXT

1.1 South Wales Police provides a policing service to 1.3 million people covering 42% of the total Welsh population with around 47% of the total crime in Wales. The service area includes two of the largest cities in Wales, Cardiff and Swansea. The Capital City of Wales presents some additional policing challenges which receive no special funding status and this is highlighted later in the report.

1.2 The scale and complexity of incidents routinely dealt with by South Wales Police make it unique within Wales. The demand for policing services remains high and in 2010/11 was recorded as 451,000, in addition last year we successfully policed 105 major events.

1.3 The South Wales Police area is also of major strategic importance to southern Wales. The good road network (particularly the M4 corridor and A465 Heads of the Valley road) and rail links together with the sizeable market, present the Force with an ever present risk that organised crime gangs from England and Europe will infiltrate the region.

1.4 The Force area includes 63 of the 100 most deprived communities in Wales (and indeed Europe), many young people living in these areas have become drug abusers and victims of the associated criminality linked to drug addiction. The level of drug activity is being translated into enforcement action through the courts but the root causes remain the demand for drugs, the lack of treatment and organised criminal activity that is ever willing to prey on the vulnerable in our society. Drugs’ testing on arrest consistently shows that southern Wales, including the South Wales Police area have amongst the highest levels of heroin misuse in the UK.

1.5 The recent British Crime Survey estimates around a million people had used a Class A drug across England and Wales and the Welsh Government has reported an estimated 168,000 controlled drug users in Wales. Recent successes in tackling organized crime in the current financial year have seen prison sentences totaling 123 years with over 10kg of class-A drugs seizures as well as cash seizures being proceeds of crime. The map below shows the prevalence of drug abuse across Wales and the hot spots in the South Wales Police area of Cardiff and Swansea being high population areas as well.



1.6 The Chief Constables across Wales continue to provide substantial commitment to combating criminality operating at regional and national level which not only benefits the communities of the South Wales Police force area but also those in our neighbouring forces. Tarian is our joint operations unit for serious and organised crime and the continued support of the Welsh Government in recognising this threat to the communities in Wales is essential. Further collaboration opportunities underway are in the areas of Forensic Services, Specialist Crime and Firearms, which will further bolster the operational capabilities and effectiveness of regional resources.

1.7 The relative proximity to Bristol, and other cities such as London, Manchester, Liverpool and Birmingham, which have levels of gun crime and drug related violence not seen in the cities of South Wales is an ever present reminder of the seriousness of the threat from organised crime.

1.8 The Force has a good track record of managing operational risks and driving up performance which has led to significant reduction in crime and consequently fewer victims of crime i.e. the projected position for 2011/12 is estimated to be a further 4% reduction in crime on the previous year. The following chart highlights that overall crime has reduced by more than 38% (50,000) since 2002/03 following the commencement of the National Crime Recording Standards (NCRS).

38% Reduction in Crimes

60,00070,00080,00090,000

100,000110,000120,000130,000140,000150,000

2002

/3

2003

/4

2004

/5

2005

/6

2006

/7

2007

/8

2008

/9

2009

/10

2010

/11

2011

/12 (p

rojec

ted)

1.9 This continued and sustained reduction in overall crime has continued against the backdrop of funding reductions and it is recognised that improving performance will continue to be highly challenging during a period of the largest reduction in resources in a generation. However, performance improvements are still being delivered and it is very pleasing to report that Victim satisfaction levels have increased dramatically raising the Force from 43rd to 10th in England and Wales.



2.0 ACCOUNTABILITY ARRANGEMENTS

2.1 A key statutory duty of the Police Authority is to ensure an efficient and effective police service for the public in the South Wales Police area and this includes a consideration of the adequacy of resources to deliver the policing plan. The joint mission of the Police Authority and the Police Force is “Keeping South Wales Safe.”

2.2 The Annual Policing Plan reflects the Strategic Aims of delivering a high quality service that is the best at understanding and responding to the needs of our communities. This plan contains short and medium term performance targets that will ensure continuous improvement in service delivery. The draft plan is attached at Appendix 1.

2.3 The Police Authority and the Force have a robust and embedded Governance Framework to secure the delivery of its aims and objectives; the external auditor function has determined that the governance arrangements provide a high level of assurance both in design and application.

2.4 However with the introduction of the new Police and Crime Commissioners from November 2012, it is important that The Authority plans effectively for this transition and the Interim Chief Executive sets out proposals for members consideration under a separate cover. The Police Authority’s current governance chart is attached at Appendix 2.

2.5 In addition the Wales Audit Office (WAO) provides statutory review of the Authority’s governance and the key messages within the Authority’s 2011 Annual Audit Letter were:

The Authority has a good track record of operating within its revenue budget and this continued in 2010-11. Against a revenue budget requirement for the year of £257.3 million, the Authority recorded an underspend of £1.7 million (representing a budget accuracy of 99.4%) after accounting adjustments, representing slippage on planned spend. This amount was transferred to reserves to fund the planned spend in the following year. There was a net increase of £0.6 million to the General Reserve, which totalled £5.7 million at 31 March 2011.

The Authority continues to receive regular reports from the Chief Finance Officer/Director of Finance on expenditure and position against budget through the Performance Monitoring Group. The reported position at 31 May 2011 showed that £10.8 million of savings had already been achieved against a year-end target of £14.8 million for 2011/12. A further £5.1 million of savings were currently on target to be delivered by the year end. This helps strengthen the position of the Authority to meet financial and future operational and non-operational challenges arising from the comprehensive spending review in October 2010.

The Accountable Officer was responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in the Authority’s use of resources. For the purposes of my work, I have evaluated the Authority’s systems against a number of questions. For each question, I consider whether there are gaps in the arrangements expected to be in place, and the significance of those gaps. There were no matters arising from my work in this area for 2010-11 that I wish to draw to your attention.



3.0 EXTERNAL FUNDING THE NATIONAL POSITION

3.1 The 2010 Comprehensive Spending Review (CSR10) announcement covered the central government funding allocations for the four years 2011/12 to 2014/15. On the 20th of October 2010, the Chancellor of the Exchequer Mr. George Osborne MP set out the Government’s spending plans for this period heralding a prolonged period of financial contraction in public service finances.

3.2 The Chancellor announced that departmental spending would fall by 19% over the next four years, in order to save £81B. This is in keeping with the Government’s policy to remove the ‘structural’ deficit by 2014/15 primarily by cutting spending, rather than increasing taxes.

3.3 As a consequence the central government police funding would reduce by 20% in real terms by 2014/15. However, the Chancellor did announce that if police precepts were increased at the level forecast by the Office of Budget Responsibility, then the overall reductions could be mitigated down to an average of 14% in real terms over the CSR10 period.

3.4 The Home Office’s (HO) departmental budget would reduce by 33% in real terms over the same period. The HO has stated that it will manage these reductions by focusing spending where it matters most – protecting the public, and ensuring the security of our borders. The counter-terrorism specific policing will be protected with a smaller percentage cut (10%) compared to the general police funding allocations.

3.5 The Home Office Police Settlement for the CSR period to 2014/15 is shown below and reflects the cash allocations for each year:

2010/11 (base)

2011/12 2012/13 2013/14 2014/15 Total

£M £M £M £M £M £M

Cash Allocation 9,709 9,341 8,830 8,660 8,546

Grant Reductions (368) (512) (169) (114) (1,163)Percentage Reduction 3.8% 5.0% 1.9% 1.3% 12.0%

3.6 There were also assurances that the appropriate level of funding will be in place to deliver a safe and secure Olympic Games in 2012. However it became subsequently clear that forces hosting events outside London will in the main have to absorb security costs locally, the unfunded estimate for South Wales Police is £1M.

3.7 During 2012/13 the public will elect their first Police and Crime Commissioners in England and Wales, who will have the same statutory duty as the present Police Authority to deliver an efficient and effective police force, but also deliver policing and community safety services in the local and national interest of the communities within their force area. The Commissioners will have new powers and access to funding to facilitate this new responsibility.



3.8 The Police Funding Announcement (8th December 2011) confirmed that the total revenue provision for policing across England and Wales to be supported by grant in 2012/13 will be £8,830M. This is in accordance with the CSR10 and represents a further decrease, in cash terms, of 5% and covers both grant allocated through the funding formula and centrally funded policing measures.

A summary of the Police revenue funding announcement for 2012/13 is as follows:

2012/13£M

Total Formula Funding: Comprising… Home Office Police Main Grant 4,251 National, International and Capital City Grant 189 (MPA/MoPC only) DCLG General Grant 3,213 Of which council tax (11/12) freeze grant - England 75WG General Grant 151

Total Home Office Specific Grants: Comprising…Welsh Top-up 13Neighbourhood Policing Fund (NPF) 338 Counter Terrorism Specific Grant 564 PCC Elections – any additional funding will be met from outside the police settlement

50

PFI Grant 54

Total Government Funding 8,830* * - includes a small contingency

3.9 In keeping with the CSR10 announcement the damping level applied to the Home Office Police Core Settlement (Police Main Grant and the National, International and Capital City Grant) and Revenue Support Grant and National Non-Domestic Rates from the Department of Communities and Local Government (DCLG) and the Welsh Government, has been set at the level of the average cash reduction for 2012/13 (6.7%). This means that every force will receive the same percentage reduction in their cash funding from these sources compared to 2011/12.

3.10 To effect this in Wales, the Home Office provides an additional cash sum of £13M to North Wales, Dyfed and Gwent Police forces and also applies a Rule 1 Grant reduction of £8M to the South Wales Police formula allocation.

3.10 It is important to note that since the initial CSR10 announcements the latest economic position is considerably worse than projected with lower levels of growth, higher levels of unemployment and consequently higher levels of government borrowing. National Debt has now exceeded the £1Trillion mark. Setting aside the causes of this circumstance it is now apparent that the structural budget deficit will not now be met at the end of the CSR10 and a further period of austerity is expected to continue into the next CSR14. This has significant implications for public funded bodies and consequently the Medium Term Financial Strategy (MTFS) reflects a further difficult grant settlement for 2015/16.



4.0 EXTERNAL FUNDING - SOUTH WALES POLICE GRANT POSITION

4.1 The CSR10 funding allocations for South Wales Police Authority have been confirmed for 2012/13. It should be noted that allocations for 2013/14, 2014/15 and 2015/16 remain provisional. It is assumed at this stage that there will be a further reduction in grant funding of 1% for both 2013/14 and 2014/5. The resulting analysis over this period is set out in the following table.

2011/12 2012/13 2013/14 2014/15 2015/16Source of Funding £M £M £M £MPolice Grant (includes NPF Grant from 2013/14) 100.647 92.690 97.285 97.180 97.180

Revenue Support Grant 48.911 39.342 38.807 38.053 38.053

Non-Domestic Rates 32.947 38.241 37.720 36.989 36.989

Total Formula Based Grant 182.505 170.273 173.812 172.222 172.222

Specific Grants - NPF (6.730) (6.730) (6.730)

Comparable Funding 182.505 170.273 167.082 165.492 165.492

Percentage Reduction 5.1% 6.7% 1.9% 1.0% 0.0%

Rule 1 Floor Funding Adjustment (7.793) (7.985) (7.985) (7.985) (7.985)

Indicative

4.2 In relation to specific grants, the ring fenced funding in respect of the Neighbourhood Policing Fund (NPF) is to be removed and will be allocated in line with the police funding formula from 2013/14. Whilst this is to be welcomed the full benefits of such removal will not be felt by SWP (South Wales Police) without the removal of floor funding guarantees. Also it is unknown yet as to whether there will be conditions applied particularly in respect of the NPF in relation to PCSO numbers.

4.3 Although the quantum of the net Police Grant figure for SWP is the same as that reported in the CSR10 announcement the ‘Rule 1’ floor funding adjustment has in fact increased from of £7.793M to £7.985M.

4.4 The formula allocation (based on need) gives a reduction in grant funding for SWP of only 2.3%, however, as a consequence of the Home Secretary’s decision that no police force should receive a grant reduction of more than 6.7% (and the resulting equalisation process) £7.985M is removed from SWP for redistribution to the other three Welsh Forces, which is similar to the adjustments in England. There is no evidence of a plan to remove this floor damping mechanism over the foreseeable future and therefore over the next four years this results in a further loss in funding of £32M.

4.5 It is also important to recognise that in a climate of funding cuts, inflation pressures add to the financial gap created by grant reductions. The base central grant funding before the CSR10 announcements was £192.3M, the level of funding anticipated by the end of 2016 is £165.5M a reduction therefore of £26.8M which when taking into account inflation pressures over the period results in a overall resource gap in excess of £51M.

4.6 Given that over 80% of the total budget relates to employee costs, reductions in staffing become unavoidable. Current estimates are for a reduction of around 36,000 full time staff over the CSR10 period across the police service in England and Wales being in proportions of 40% in police officers and 60% police staff.



5.0 FUNDING INEQUITIES AFFECTING SOUTH WALES POLICE

5.1 Funding Mechanism

The 43 police forces across England and Wales are funded through a combination of Central Government Grants and Police Precept (which is decided locally). The Government determines a total sum of money for Central Grants and this is then distributed through the application of a needs based formula

The formula used for distributing the Home Office Police Main Grant is the same as the Police Relative Needs Formula used by the Department for Communities and Local Government (CLG) in England and the Welsh Government (WG) in Wales. The formula divides funds between the different activities that the police undertake. These activities, or workloads, can be broken down into five key areas:

Crime (of which there are seven sub-categories) Incidents (e.g. public disorder) Traffic (e.g. assistance at road traffic accidents) Fear of Crime (e.g. public reassurance) Special Events (e.g. football matches).

A portion of total funding is also distributed according to population sparsity, to address the specific needs of rural forces. South Wales Police Authority is detrimentally affected by some specific issues within the current funding mechanism in the following areas:

Area Cost Adjustment Formula Allocation - Floor Funding Mechanism and Precept Yield. Capital Expenditure Funding Lack of recognition of Cardiff as the Capital City of Wales for funding purposes.

5.2 Area Cost Adjustment

The area cost adjustment (ACA) was introduced to recognise the costs of public services in different geographical parts of the country. The application of which raises concerns on a number of grounds for the police service, namely:

1. The police officer pay is nationally determined and except for specific issues around London this is consistent across the country.

2. Similarly the police staff pay increases are determined nationally and are broadly similar except in cases of market forces and this could be argued more for London.

3. The remainder of non-pay expenditure (20%) is subject to a variety of procurement routes including national frameworks.

4. Therefore only a limited argument could be made for local variation. Yet the ACA is applied to the whole of the Formula Allocation as the final reallocation adjustment.

5. The expansion of ACA across the country is now significantly distorting the formula grant allocation and has expanded over a wider area over the last decade as shown overleaf:



NO T P R OT EC TIV EL Y M A R K ED

NO T P R OT EC TIV EL Y M A R K ED

F u n di n g D is a d va n t ag e A re a C o s t A d ju s tm e n t 1 .0 %

1 .0 – 1 .5 %1 .5 – 2 .0 %2 .0 – 2 .5 %2 .5 – 3 .0 %3 .0 – 3 .5 %3 .5 – 4 .0 %4 .0 – 5 .0 %5 .0 – 1 0 .0%1 0 .0 – 1 5.0 %1 5 .0 – 2 0.0 %

2 0.0 %

jA v o n & S o m e r s e tB e d fo r d s h i r eC a m b r i d g e s h i reC h e s ir eC i ty o f L o n d o nC u m b r iaD o r s e tE s s e xG lo u c e s te rL o n d o n M e tG r e a t e r M a n c h e s t e rH a m p s h i r eH e r t fo r d s h i r eK e n tM e rs e y s id eN o r th a m p t o n s h i r eN o t t i n g h a m s h i reS u r r e yS u s s e xT h a m e s V a lle yW a r w i c k s h i r eW e s t M i d la n d sW e s t Y o r k s h i r eW i l ts h ir e

Whilst it is understandable to apply the ACA to a restricted area in the South East region this should be constrained to those elements of policing costs that are directly affected by geographic price variations. It is clear from the above that the ACA goes much wider than the South East of England.

In addition, the area cost adjustment ignores Wales as a country and yet the areas of South and North Wales are not dissimilar in economic terms to some of the areas where the ACA currently applies.

5.3 Formula Allocation, Floor Funding Mechanism and Precept Yield

In addition to the disparities caused by the Area Cost Adjustment we are concerned that there is no progress on an alternative mechanism to address the floor funding deductions. South Wales Police is currently contributing £8M per annum towards the Floor Funding mechanism.

West Mids A&S

HampshireCity London

NottinghamshireWest Yorkshire

South WalesThames Valley

EssexDevon &corn

CambsLeicestershire

HumbersideNorthampton

NorfolkHertfordshire

DorsetDerbyshire

BedsStaffordshireWarwickshire

GloucesterLincolnshire

Suffolk GMPGwentCleavelandSyorkshireSussex

Wiltshire Surrey

LancashireDurhamMerseyside

KentNYP

Dyfed PowysChesireNorth Wales

West Mercia Cumbria

NorthumbriaGLA

-40 -30 -20 -10 0 10 20 30 40

FloorFundingBeneficiaries

FloorFundingContributors



Our analysis shows that the floor funding mechanism takes no account of the totality of funding available to an Authority including precept or the precept yield per head of population, there are clear disparities where a potential reallocation of grant funding from deprived areas to less deprived areas is taking place as a result of floor funding.

The allocations would be different if a more sophisticated approach was taken. However, it would be far more preferable that additional funding is found to protect those forces below the floor until such time as the funding formula is properly reviewed.

5.4 Capital Funding

The continued contraction in capital funding reduces the capacity of the Authority to address legacy issues on an obsolete estate and increases the risks on sensitive areas around custody. An alternative mechanism to address capital estate funding is long overdue particularly as PFI funding is no longer accessible to the Police Service in Wales.

5.5 Capital City

The South Wales Police area contains around 42% of the Welsh population. It includes the Capital City of Cardiff (12th largest city in the UK based upon population), Swansea and the South Wales Valleys. The policing challenges include significant number of major events, serious organised crime activity as well as the policing of National and Sporting Events with around 11 Million visitors to the area per annum.

The presence of the National Assembly for Wales has required a dedicated policing unit responsible for its security. As a consequence of having this seat of devolved government is the requirement to investigate fraud allegations in the public sector arena. These result in complex and technical investigations, with implications for public confidence in both policing and wider government.

We have long argued that there are unique costs associated with a Capital City and this is acknowledged by the Scottish Parliament which contributes around a £1M per annum to policing Edinburgh and by the Home Secretary in respect of London. There is no comparable contribution for policing the capital city of Wales and indeed independent analysis work on the police funding formula has shown that there is no specific recognition within the formula for such responsibilities. In essence the formula allocates the same sum per head of population for major events as that given to a rural force area.

We have undertaken a detailed analysis of the resources needed to meet the additional demands of a capital city around number of incidents, visitor numbers, retail crime, night-time economy, major sporting events, student population and associated crime, serious and organised crime threat of terrorism and this is equivalent to £2.6 Million per annum in addition to the expected core policing costs of an average large non-capital city.

A number of representations have been made to MPs in Westminster, with the Welsh Government and the Secretary State for Wales as well as Policing Ministers and we will continue to press for a redress on what is clearly an inequitable funding situation.



6.0 REVENUE BUDGET 2012/13 AND REVENUE FORECAST TO 2015/16

6.1 At the Police Authority Finance Seminar in December 2011, Members were presented with the estimated expenditure requirements for the medium term based on the continuance of the CSR 2010 funding reductions adjusted for the latest announcements for pay awards and estimated changes to grant funding.

6.2 The total cumulative resource gap including the additional financial year of 2015/16 rises to £55M. The current financial strategy to bridge this gap is a combination of cash releasing efficiency savings and increases in police precept broadly similar to the assumptions of the independent Office of Budget Responsibility. This requires the force to deliver cash releasing efficiency savings to 2015/16 of £33M with balance being met through police precept and this is illustrated below:

3-15- 24

-

26

-

29

-

33

-

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

£46M

£39M

£32M

£19M

£55M

Planned Efficiency Savings

Planned Precept Contribution

3-15- 24

-

26

-

29

-

33

-

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

£46M

£39M

£32M

£19M

£55M

Planned Efficiency Savings

Planned Precept Contribution

6.3 The detailed medium term financial projections 2012 to 2016 are shown at Appendix 3 and are summarised below in broad income and expenditure classifications:

2011/12 2012/13 2013/14 2014/15 2015/16£M £M £M £M £M

Employees 248.0 233.1 236.0 239.6 248.0Indirect Staff 1.0 1.0 1.1 1.1 1.1Premises 8.2 8.2 8.4 8.6 8.8Transport 9.7 8.2 8.4 8.7 8.9Supplies and Services 18.7 16.9 17.3 17.7 18.2Agency Services 9.4 10.6 10.9 11.1 11.4Capital Financing Costs 4.9 5.0 5.1 5.1 4.9Gross Expenditure 299.9 283.1 287.2 291.9 301.3Less income & specific grants (27.7) (28.5) (21.8) (21.8) (21.8)Net Expenditure 272.2 254.6 265.4 270.1 279.5External grants (182.5) (170.3) (174.6) (172.2) (172.2)Precept based on 5% (74.9) (79.1) (83.4) (88.0) (92.9)Total Resources (257.4) (249.3) (258.1) (260.3) (265.1)Cumulative Unfunded Expenditure-2012/13 onwards 14.8 5.2 7.3 9.8 14.4

Value For Money Plan Achieved (19.0)Overall Unfunded Expenditure CSR10and 2015/16 (4.2) 24.2 26.3 28.8 33.4

SUMMARY REVENUE ACCOUNTCSR10



6.4 A comprehensive reconciliation of the requirements between the two financial years 2011/12 and 2012/13 is detailed at Appendix 4 with further analysis of the revenue budget changes in Appendix 5 which shows a shortfall in funding on a standstill basis of £13.2M which is then partly mitigated by the accelerated efficiency savings rolling forward to 2011/12 to give a net shortfall for the year of £9M (before the application of further Value for Money Plan savings and precept increase) and reflects the following assumptions.

a) Pay Awards and Inflation

The pay freeze is set to continue for 2012/13 and the Chancellors autumn statement in November 2011 set out that public sector pay awards would average at 1% for the last two years of the spending review i.e. 2013/14 and 2014/15. However as pay awards are implemented in September there is a consequential impact in the following financial year. In addition the Government have announced that there will be pay uplifts of £250 for police staff earning £21K or less. The following table provides a broad basis of the forecasts for the medium term:

2012/13 2013/14 estimate

2014/15estimate

2015/16estimate

% % % % Police Officers 0 1.0 1.0 2.5 Police Staff 0 1.0 1.0 2.5

The budget requirement for 2012/13 recognises the specific inflationary requirements especially in relation to utility costs that have seen price increases of up to 32% over the last twelve months. In addition suitable contractual uplifts have been recognised along with a general inflationary uplift of 2.5%.

b) Pensions & National Insurance

The employers’ contribution rate for police officer pensions remains at 24.2% over the planning period.

The last Local Government Pension Scheme (LGPS) triennial actuarial review was undertaken in 2010 which revised the basis for the calculation of employer contribution rate. The review outlined that there would be an annual increase required to the lump sum payment equivalent to 5% which revises the composite rate to over 15% from 14.7%.

In terms of National Insurance the employers contracted out rebate will be reduced from 3.7% to 3.4% with effect from the 6th April 2012. This has required a further budget provision of approximately £250K.

c) Establishment Police Officers and Staff

The proposed budgets for 2012/13 reflect a zero-base budget for all staff drawing a salary. The zero-base ensures appropriate budget provision for each individual based on their specific entitlements including increments and cost savings from individuals who leave the organisation.



Using the revised base budgets, all calculations on potential savings resulting from a reduction in staffing levels are undertaken on real costs to ensure budget accuracy.

d) Winsor Phase 1

The Home Secretary has now agreed to accept in full the recommendations of the Police Arbitration Tribunal to apply the negotiated Winsor review of police pay and conditions. The MTFS reflects the implications of these recommendations and the overall impact is in increase in the pay bill over the longer term. There are however some non-recurrent savings arising from the freeze in awards and incremental pay. This however will reverse towards the end of the planning horizon. A summary of the agreed Winsor Recommendations and proposed actions are attached at Appendix 6.

e) Police Authority

Under the present governance arrangements the vast majority of the Authority’s budget is delegated to the Chief Constable to facilitate effective delivery of the policing plan objectives as set by the Police Authority in consultation with the public.

The Police Authority retains a smaller separate budget allocation to facilitate governance arrangements. The proposed budget for the Police Authority for 2012/13 is £0.845M, which is a reduction of £76K compared to the base budget for 2011/12 and reflects the disestablishment of the post of Deputy Chief Executive as part of the Value For Money Programme. The detailed budget for the Police Authority is attached at Appendix 7.

Whilst it is recognised that the introduction of the Police and Crime Commissioner (PCC) in November 2012 may require a fundamental revision of this budget it is currently assumed in line with the government announcement that the cost of the new governance arrangements is not expected to exceed current budgetary provision.

The precept that the Police Authorities will set for 2012/13, will not be affected by the election of Police and Crime Commissioners in November 2012. Once elected Police and Crime Commissioners will begin to prepare their police and crime plan and budget for 2013/14.



7.0 BUSINESS RISK

7.1 Over the last few years, the Authority has developed a robust risk management framework and business process which drives resource decisions to mitigate the identified risk. This process has been independently examined and deemed to be fit for purpose. The diagram below illustrates the current spread of risk by policing plan area and the frequency of the risks of a particular category across the organisation. The diagram shows that the greatest number of risks lie in the Value for Money portfolio which is linked to the present financial circumstance and is well documented within this report.

Making Every Contact Count

Equality Diversity and Human Rights

Quality of Service

Leadership

Value For Money

2520161512109

2

4

1

3

1

2

1

1

1

1

4

2

1

1

3

2

Risk Score

7.2 Members will be aware that a risk score of 25 reflects the highest probability and impact from an event occurrence. The detailed risk registers have already been considered by the Audit and Scrutiny Group as well as the various planning seminars. This medium term financial strategy has recognised some of the resources required to mitigate the risks as follows:

The requirement to address custody provision (Bridewells) and operational hubs The requirement to address Fleet Maintenance provision and realise collaborative

opportunity The requirement to address poor Business support systems and establish a Fully

Integrated Resource Management system (FIRM) Increase the encryption level security of the PSBA infrastructure Ensure adequacy of core information and technology systems.

7.3 However the overall condition of the police estate requires a significant investment that is no longer funded from either direct capital grant allocation or supported PFI funding. The current investment requirement is around £30M and this remains an outstanding risk. These issues continued to be risk managed going forward.

7.4 In addition, the reductions in staffing locally and nationally bring a risk of resilience at the various levels. The critical mass for police officer numbers in South Wales Police is estimated at 3000 Full Time Equivalent Officers, however, as a consequence of the cuts in funding, the police officer establishment will become some 235 officers short of this critical mass. Whilst a number of key strategies are in place to help mitigate this risk it remains the case that the Force should aim to re-establish the critical figure of 3000 FTE officers at the earliest opportunity.



8.0 FINANCIAL STANDING 2012 - 2016

8.1 There is an obligation on the Authority to have proper regard to the totality of the settlement when considering its approach to the budget for 2012/13 and subsequent years, including an assessment of the contingency reserve.

8.2 The Authority needs to maintain a prudent level of balances in line with the sound financial management principles and guidelines. The Authority needs to have a risk assessed process for determining the level of reserves and maintaining their purchasing power which requires annual revision particularly to reflect inflation and increased risk.

8.3 It is even more important in times of austerity (when budget flexibility is severely constrained) that an adequate level of contingency reserves is maintained to avoid adverse impact on policing plans in the event of a critical incident.

8.4 Sound financial principles would therefore advocate a provision of at least 1% for major incidents, 1% for day to day operating cashflow risk and 1% for other unknown events. This would suggest that the Authority should maintain a General Reserve of at least 3% of its gross operating expenditure. This would result in maintaining a General Reserve of £8.5M.

8.5 The table below provides a forecast estimate of the reserves and provisions at the end of the 2011/12 financial year against the target level and shows a shortfall in contingency reserves of £32M.

Reserves and Provisions Balances Forecast Target Shortfall

01/04/2011 2011/12 2011/12 2011/12

£M £M £M £M

Unallocated Reserves

General Reserves 5.7 7.3 8.5 1.2

Reform Reserve 6.5 6.5 10.0 3.5

Capital Reserve 3.5 3.5 30.0 26.5

15.7 17.3 48.5 31.2

Earmarked Reserves

Icelandic Banks Impairment 5.0 3.4 3.4 -

Specific Events 7.0 5.1 5.6 0.5

POCA 0.7 0.7 1.2 0.5

Capital 8.1 6.3 6.3 -

20.8 15.5 16.5 1.0

Provisions

Insurance liabilities 1.8 4.0 4.0 -

Other Provisions 0.4 0.4 0.4 -

2.2 2.2 4.4 -

8.6 It is pleasing to note however, that the level of general reserves has increased towards the target resulting from the ongoing repayments from Icelandic bank investments. It is expected to reach the required target by the end of 2013/14. This represents a considerable achievement given that the level of reserves has been historically low and the unprecedented levels of funding cuts. The specific provisions above are necessary to address known liabilities and the current forecasted level of provisions will need to be reassessed at the year end.

8.7 The material causes for concern continues to be the capital reserve shortfall, although the adoption of the revised Estate Strategy could address some of the condition survey issues especially in relation to the rationalisation programme.



9.0 CAPITAL PROGRAMME

CAPITAL STRATEGY

9.1 Given the prudential regime, it is important for the Authority to prepare and approve a statement of its capital strategy. The statement is intended to describe how the Authority and Force collectively determines the programme of capital investments including how it identifies the key priorities. The Capital Strategy is important because:-

a) It promotes the most effective use of the Authority’s capital resources by ensuring that the capital investment programme is closely aligned to its key priorities;

b) Its assessment by HMIC and External Audit contributes to both the financial and operational management of the police service.

9.2 The Capital Strategy is based on the Authority’s policing priorities and is within the context of the Authority’s agreed financial framework of sustainable policing through effective infrastructure management.

9.3 The detailed requirements will be informed by:

An Asset Management Plan

Capital Programme Monitoring Board

The Police Authority Planning Seminars

The Performance Management regime

And the Authority’s and Force’s Risk Management Strategies.

10.0 APPROVED INVESTMENTS 2012 TO 2016

10.1 The medium term Capital Programme has been developed in accordance with approved strategies for Estates, ICT and Fleet. A fully costed programme in line with these strategies is included in summary form at Appendix 8 and summarised below:

2011/12 2012/13 2013/14 2014/15 Total£M £M £M £M £M

Estate 21.717 8.109 3.999 12.857 46.682ICT/Communications 4.371 3.221 4.533 4.379 16.504Vehicles 1.894 1.725 1.908 2.075 7.602TOTAL 27.982 13.055 10.440 19.311 70.788

10.2 The above Capital Programme is currently not fully funded and existing sources including capital grants, revenue contributions, capital reserves, capital receipts, and prudential borrowing contribute £43.1M of the requirement with a further potential for additional prudential borrowing for custody proposals of £15M, This would leave an overall shortfall of £12.7M and reflects significant requirements of the Property Condition Surveys.



10.3 Available funding for 2012 to 2016 comprises the following:

The Welsh Government has confirmed general capital funding in 2012/13 of £2.7M – this has been reduced by £140K in relation to the National Police Air Support (NPAS) top slice. Future grant capital grant allocations of £2.4M per annum will also be reduced by £190K and £120K in 2013/14 and 2014/15 respectively, in relation to the NPAS funding.

The estimated annual revenue contribution will be approximately £1.9M per annum.

Prudential recurrent borrowing of £1.7M per year.

Capital reserves/ receipts of £9M.

The balance of funding for the Capital Programme is met from earmarked capital reserves which roll forward from previous years.



11.0 TREASURY MANAGEMENT POLICY AND PRUDENTIAL BORROWING

11.1 The Authority’s borrowing requirements are determined by the application of the Prudential Code which is designed to ensure that any borrowing is affordable and sustainable.

11.2 The prudential indicators are summarised below and the detail is contained within the Treasury Management Policy which will be considered under a separate paper on the agenda.

PRUDENTIALINDICATORS

2011/12 2012/13 2013/14 2014/15 2015/16

Estimated Estimated Estimated Estimated Estimated£M £M £M £M £M

Estimates of Capital Expenditure

12.2 28.0 13.1 10.4 19.3

Capital Financing Requirement (CFR) (as at 31 March)

22.2 27.3 39.7 41.7 43.7

External Borrowing 21.8 25.4 31.9 20.5 20.1

11.3 The Capital Financing Requirement measures the Authority’s underlying need to borrow for capital purposes and is linked to asset values and proposed capital expenditure. In accordance with best practice there is no association between individual loans and particular types of expenditure. External borrowing arises as a result of both capital and indirectly revenue expenditure and funding. Therefore, the Capital Financing Requirement and actual external borrowing can be very different.

11.4 As part of the previous capital strategy, prudential borrowing of up to £1.4m in 2010/11 and 2011/12 was approved to part finance the previous capital programme. New unsupported borrowing of £15.0M is required for the suggested future programme. The revenue budget requirement proposed for 2012/13 and 2013/14, includes appropriate provision to meet additional repayments with regard to all estimated borrowings.



12.0 VALUE FOR MONEY

12.1 The confirmation of the second year settlement of CSR10 continues to highlight the on-going importance of efficiencies in meeting resource pressures for Police Authorities.

12.2 The requirement to develop annual efficiency plans in the police service was introduced in 1999/2000, with an annual efficiency target of 2%, being 1% cash releasing efficiency savings and 1% non-cash releasing (productivity improvements). The target was increased in 2005/06 to 3% annual efficiency savings with half of these being cash releasing. However, due to the historic under funding, the Force has had to exceed the national targets to achieve a balanced budget, which in latter years have been achieved through budget cuts

12.3 In 2007/08, Police Authorities were expected to deliver a further efficiency target of 9.3% (£27M) productivity/efficiency gains based on gross revenue expenditure (£300M) for the period 2008/09 to 2010/11. During 2009/10 this efficiency target was increased yet again with a requirement to deliver a further 1% of efficiency and productivity gains of increasing the overall target to 10.3% by 2011.

12.4 The graph below outlines both the achieved cashable efficiencies and those required to address the CSR10 funding reductions extended to 2015/16. In context it is worth noting that during the period 2001 to 2011 the Force achieved over £30M of cashable efficiencies and delivered £19M of efficiencies in 2011/12 being the highest sum in any single year since the inception of the Police Authority.

12.5 The cumulative cash releasing savings of £68M over the period coupled with productivity gains to date result in a total efficiency improvement of well in excess of £100M or 33% of gross expenditure. This is a considerable achievement when considered in conjunction with substantial operational improvements through reductions in crime and victims of crime.

Cashable Efficiencies

0

10

20

30

40

50

60

70

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06

2006

/07

2007

/08

2008

/09

2009

/10

2010

/11

2011

/12

2012

/13

2013

/14

2014

/15

2015

/16

£MAchieved CSR 2010



114 167

121 252

176 292

206 352

256 432

0 100 200 300 400 500 600 700

2011-12

2011-12 Forecast tobe achieved

2012-13

2013-14

2014-15

officers staff

12.10 The reductions in staffing carry the greatest risk for the organisation, there is presently an upper limit on the number of officers that can be reduced within the CSR10 period that is linked to the pensionable years of service of officers and the requirements of Police Regulations.

12.11 Similarly there is an affordability limit on the number of police staff that be can exited within the CSR2010 period as statutory redundancy entitlements also require additional unbudgeted resources as well as a risk to effective organisational support to the frontline. Police staff roles in the areas of forensics, criminal justice, contact centres etc.. are equally vital to an emergency service which is more than a just a 999 response.

12.12 There is therefore a considerable operational risks if the financial strategy is not implemented fully (i.e. combination of efficiency and modest precept increases). Each 1% increase in police precept has a £3M funding stream consequence over the CSR10 period, which equates to 60 police officers or 120 police staff. These further reductions would compound the force resilience issues and the policing capability and capacity. The critical mass for officer numbers is 3,000 and as identified in the Risk Assessment section earlier the preferred objective would be to restore police officer establishments to this level as soon as practically possible.

12.13 The cost reductions required above already represent a huge sustained challenge for the organisation over the medium term. The precept requirement is an essential component of delivering a balanced budget over the period. Members will therefore have to consider carefully the implications of police precept on the totality of resources over the CSR10 period and beyond to 2016 given the bleak economic announcements and a potential extended period of austerity.



13.0 POLICE PRECEPT AND BUDGET REQUIREMENT FOR 2012/13

13.1 Set out below is the history and context of police precept levels (based on a Band D property) since the Authority was created in 1995 across police forces in Wales.

13.2 The chart shows that South Wales Police Authority has the lowest level of police precept in Wales and has been able to maintain relatively low precept increases in over the last decade.

13.3 It has been acknowledged by ministers that Police Authorities with lower levels of police precept as a proportion of their total budgets will face a greater financial challenge as the cuts are in central grant funding only. It is clear that South Wales Police has the lowest proportion of its funding from police precept in Wales and is 20th lowest in England and Wales.

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

180.00

200.00

220.00

1995

/96

1996

/97

1997

/98

1998

/99

1999

/00

2000

/01

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06

2006

/07

2007

/08

2008

/09

2009

/10

2010

/11

2011

/12

North Wales Gwent Dyfed-Powys South Wales

£132M

13.4 The current average level of Police Precepts in Wales including that of South Wales Police is £187.66. South Wales Police precept is currently £161.35 or £26.31 below the average which is equivalent to annual additional investment of £16M (£132M over the decade) or 320 police officers.

13.5 It is important to note that the £16M differential in local funding coupled with £8M of formula allocation that is redistributed away from South Wales Police as part of the floor funding guarantee amounts to a loss in funding of £24M, which in police officer number terms equates to 480 constables. It is also important to note that the floor funding guarantee takes no account of local police precept levels and the clear differentials shown above.

£16M



13.6 The level of precept in 2011/12 for each constituent Welsh force is:

Police Authority 2011/12£

Potential Impact of a 5% increase

North Wales 209.34 £10.47Dyfed Powys 189.09 £9.45Gwent 188.09 £9.40South Wales 161.35 £8.07

13.7 In essence the higher the current precept base the greater the amount of local income that can be generated for the same percentage increase. For example, a 5% increase for North Wales Police (£10.47) would require a 6.5% increase in South Wales Police to achieve the same cash increase and this is equivalent to an additional £1.12M per annum

13.8 The Police Authority has considered the medium term financial position in a series of presentations and seminars during the current 2012/13 planning process, as such, members will be conversant with issues concerning the poor financial position facing the Authority and the potential for major shortfalls in funding over the medium term.

13.9 Whilst recognising the pressures to comply with government guidance on council tax increases there are a limited number of alternative options to bridge the budget gap:

a) Generating additional cash releasing efficiencies

b) Phasing development requirements in line with delivery of efficiencies

c) Increasing borrowing for long life assets

d) Minimising developmental expenditure

e) Making service cuts

f) Raising additional income through police precept/grants.

13.10 In preparing the detailed budget, all the above factors have had to be considered and addressed. Cash releasing efficiencies of £25M over two years are unprecedented in the history of South Wales Police and will prove to be highly challenging to deliver. Previous plans have already delivered some unpalatable reductions through police officer number and rank reductions, BCU mergers, overtime reductions and changes in traffic management and Project Reform phase 1. The Value For Money Plan section above has documented the Value For Money compliance by the Authority and independent scrutiny has provided further assurance on the successful delivery of Value For Money.

13.11 The determination on the level of police precept is a combination of operational need, Police Authority judgments on affordability and Welsh Government powers to limit increases if deemed by ministers to be excessive. Whilst there is no expectation that the historic differential in police precepts can be abridged over the medium term or indeed longer term, the strategy of modest increases in precept alongside efficiency cuts is sound.



13.12 The Budget Requirement for 2012/13 assuming a 5% police precept increase still leaves a shortfall of £5.23M and plans to address this are detailed at Appendix 10 of which the main components are a further reduction in staff establishment of 147 being 62 police officer posts and 87 police staff posts. The resultant precept levy and tax implications would be:

Option 1 2011/12 2012/13 2013/14 2014/15 2015/16Band D Precept £161.35 £169.42 £177.89 £186.78 £196.12

Annual Increase in Precept £7.68 £8.07 £8.47 £8.89 £9.34

Weekly Increase in Precept £0.15 £0.15 £0.16 £0.17 £0.18

Percentage increase 5.00% 5.00% 5.00% 5.00% 5.00%

13.13 Given the difficult nature of the cuts facing the Authority, Members may wish to consider a precept option that would help offset some of the required reductions under option 1. Option 2 (below) is for a 6% increase in police precept which would provide additional funding of £0.75M (equivalent to £3M over the period 2012 – 2016). This would result in a council tax precept increase of £9.68 per annum. The additional cost over and above the 5% precept option would be £1.61 per annum on a Band D property and is equivalent to an increase of 4p per week. However, this could put 14 police officers back on the frontline immediately, increasing to 60 officers by the end of CSR10 if this strategy is maintained.

Option 2 2011/12 2012/13 2013/14 2014/15 2015/16

Band D Precept £161.35 £171.03 £179.58 £188.56 £197.99




13.14 Members could consider a departure from the current successful Medium Term Strategy and consider setting a precept increase below the recommended 5% level. For example a precept increase of 4% would reduce the overall yield by £0.7M resulting in a further cash saving requirement of £2.8M over the four year period. This would reduce the police precept by 3p a week or £1.62 over the year on a Band D when property compared to Option 1.

Option 3 2011/12 2012/13 2013/14 2014/15 2015/16Band D Precept £161.35 £167.80 £176.19 £185.00 £194.25






13.15 Having considered each of these options, an increase of 5% would increase revenue income by £3.765M and is deemed the minimum essential level to achieve a balanced budget in the most effective manner. This clearly does not mitigate all risks but is considered to be the only viable option given the need to avoid the prospect of capping on council tax and the current national economic circumstance.

13.16 It is important to recognise that the Financial Strategy matches every £1 increase in police precept with £2 of cash releasing efficiency savings thus clearly demonstrating the balanced approach taken to provide an effective service within the given circumstance and recognise the implications of the wider economic downturn.

14.0 CAPPING CONSIDERATION

14.1 Informal consultations with the Welsh Government (WG) indicate that setting a police precept increase significantly in excess of 5% brings with it the threat of capping. Ministers have made it clear in the past that they will not hesitate to cap Authorities if necessary, where increases are deemed to be excessive.

14.2 There are two forms of capping designation and nomination. The WG may designate or nominate an Authority for capping its precept if in their opinion its budget requirement is excessive.

14.3 Designation requires the Authority to reduce its budget requirement and re bill the Council Tax payers (through the Unitary Authorities). Nomination effectively puts the Authority on notice that the WG will stipulate a budget limit for the following year.

14.4 The WG is responsible for determining the criteria (the principles) for capping for all Local and Police Authorities in Wales. The principles must include a comparison of the amount calculated by the Authority as its budget requirement with that calculated for a previous financial year. Ministers are free to include in the principles any other matters they consider relevant. Officers of the Authority and Force have maintained effective communications between WG and the Authority and Ministers are not unaware of the unprecedented cuts being faced by the police service which are considerably greater than the cuts being faced by many other public bodies in Wales. We remain confident that 5% precept rise is highly unlikely to trigger any capping implications.

14.5 The South Wales Police share of the overall Council Tax Bill in a Local Authority area is around 10%, therefore, if all other factors remain equal then the impact of the police precept on the total council tax bill would be 0.5%.

15.0 COUNCIL TAX BASE

15.1 The Council Tax to be paid has to be allocated to the billing councils on the basis of the relevant tax bases notified by them. The tax base is calculated from the number of properties in each area allocated to each property band and discounted for single occupancy, non payers, etc. The tax base is expressed as a “Band D” equivalent as follows:



Band D Equivalent Properties

Change

Councils 2011/12 2012/13Cardiff County Council 136,311.00 137,951.00 1640.00City & County of Swansea 87,363.00 87,806.00 443.00Bridgend County Borough 49,444.62 49,691.74 247.12Merthyr Tydfil County Borough 17,320.48 17,484.37 163.89Neath Port Talbot County Borough 45,838.27 45,766.95 (71.32)Rhondda Cynon Taff County Borough 72,472.87 72,780.37 307.50The Vale of Glamorgan Council 55,100.00 55,190.00 90.00

Total Properties 463,850.24 466,670.43 2,820.19

15.2 Using the above tax base the impact of the police precept on property bandings for each local authority area is detailed at Appendix 11. Additional details are provided at Appendices 12 and 13 in relation to the options outlined in Section 14.

15.3 The Authority’s precept will be added to the figures for the Unitary Authorities and will form part of the overall Council Tax demand bills. Under the regulations, the billing authority must determine a schedule of instalments for payments to precepting authorities. The agreement is that the Unitary Authorities will pay the Police Authority in 12 instalments on or before the last working day of each month.



16.0 CHIEF FINANCIAL OFFICERS (CFO) COMMENTS

16.1 The Local Government Act 2003, Part 2 Section 25, requires additional statements by the CFO to be included in the budget report. The CFO is required to report to the Authority on the robustness of the estimates, which underpin the budget requirement, and the adequacy of the proposed financial reserves. The Authority is required to have regard to this report when making decisions on the budget.

16.2 The proposed budget presented in this report is based upon robust figures, prepared by the Assistant Director of Finance and his team and being the second year of CSR2010 come as no surprise to members. The confirmation of the very bleak public finances is a testament of the forward planning undertaken within Force and has been properly highlighted in previous planning seminars and financial reports. Members will also be aware of the tough actions taken to achieve a balanced budget in 2011/12 to deliver £19M of efficiencies the largest in year reduction in expenditure since the inception of the Police Authority in 1995/96. This is more impressive in the context of year on year efficiency improvements delivered in previous years. The Authority can evidence cumulative efficiency savings in excess of £100M for the period to 2016.

16.3 The detailed estimates have been prepared on a realistic basis. A wide range of Senior Officers have been involved in the budget process. Proper provision has been made for pay and price increases, achievable levels and deliverable efficiency savings.

16.4 There is a detailed monthly budget monitoring system in place involving all budget holders and reports are provided to the Performance Management Group. The WAO have commented favourably on the Financial Arrangements within South Wales Police in the Annual Audit Management Letter. The most recent report reflects positively on the approach taken by the Force and Authority on tackling the funding cuts and the effectiveness of the measures in place to achieve a balanced budget. Members will also be aware that from an independent examination by the HMIC (Appendix 14) that SWP has adopted a successful a financial strategy which puts it in a more favourable position than a number of other forces.

16.5 As predicted the economic circumstance continues to worsen and we are still faced with tough choices of balancing our duty to deliver an efficient and effective police service against a climate where individuals across the police force area are facing cost of living pressures.

16.6 The strategy on addressing the adequacy of General Reserve has proven to be successful and the Authority is finally on course to deliver its General Reserve Target within the MTFS cycle.

16.7 The force has made good progress in reducing the budgetary pressures resulting from the CSR10 and has an excellent track record of managing the finances to plan.

16.8 Similarly the robust approach on risk management has enabled critical infrastructure developments and ensure a sustainable police service, however the Estate condition continues to be a cause for concern.

16.9 The establishment of Project Reform to identify and deliver efficiency savings whilst improving operational performance has proven to be effective. The depth and breadth of reviews being undertaken are unprecedented and the Authority’s role in this process is well judged and appropriate given the potential for radical change. The project will need to retain its high priority status throughout the CSR10 period if the ambition of



transformational change is to be realised. The pace of change being evidenced by the force already is to be commended particularly when this is not matched by many other forces.

16.10 The comprehensive Value for Money plan is the sensible and measured way to reduce expenditure in a controlled and structured manner. It is recognised however, that the Value for Money Plan carries a higher risk than the budget in terms of attainment. The force will need to continue to develop contingency schemes to supplement any cash releasing efficiency measures that are subsequently not attainable. The sensitivity analysis work on the plan has been conducted and it remains attainable at this stage.

16.11 Informal discussions with WG indicate an acceptance and acknowledgement on the necessity of a 5% increase in police precept, which whilst clearly insufficient to address fully the medium term budget requirement, remains the only viable option for the Authority and is consistent with the approved strategy to meet the CSR10 cuts and is therefore recommended.

17.0 LOCAL GOVERNMENT ACT 2003 “SECTION 25” STATEMENT

17.1 When setting the Budget and Capital Programme for the forthcoming year both the Police Authority must be satisfied that adequate consideration has been given to the following,

a) Government policy on police spending, as applied to the Police Authority

b) The medium term implications of the Budget and Capital Programme

c) The CIPFA Prudential Code

d) The size and adequacy of general and specific earmarked balances

e) Whether the proposals represent a balanced budget for the year

f) The impact on the Council Tax

g) The threat or risk of capping

h) The prevailing pressure for service development and associated risk to

performance.

This Financial Strategy has fully considered and documented the requirements above.

18.0 CONCLUSION

18.1 Whilst the current national economic climate has a significant bearing on the acceptability in level of police precept to be levied on local taxpayers it is also recognised that in times of economic decline the requirements for an efficient and effective police service rise considerably.

18.2 This medium term financial strategy has attempted to balance the difficult equation of risk, demand, affordability and the threat of capping. The need to make £5M of further cuts on top of the £19M delivered in 2011/12 is unprecedented.

18.3 The foresight of Project Reform should be acknowledged and provides a positive assurance that such a measured approach affords the best opportunity for controlled reductions in spending, but it still remains highly challenging. Consequently a precept increase of 5% in line with financial strategy remains the minimum necessary to achieve a balanced budget for 2012/13.



19.0 RECOMMENDATIONS

19.1 It is recommended that the Authority:

Determines a Revenue Budget Requirement for 2012/13 of £_________ resulting in an annual precept on a Band D property of £______ being an increase of __% giving a total precept requirement of £________ and that this sum be precepted on the relevant billing Authority in accordance with Appendix __.

Approves the Capital Programme 2012 to 2016 which will continue to be reviewed annually in line with the Revenue Budget Requirement.

Approves the Value for Money Plan for 2012 to 2016 which is a live document subject to continuous improvements.

B. LEGAL AND HUMAN RIGHTS CONSIDERATIONS

The Authority is required to set a balanced budget, determine the rate of Council Tax and issue a precept in accordance with the Local Government Finance Act 1988 and the Police Act 1996.

Under section 19 of the Police Act 1996, the Authority may only issue a precept if:1. At least ten of the members of the total membership of the Authority approve. 2. At least six must be Councillor representatives.

C. PERSONNEL, EQUAL OPPORTUNITIES AND DIVERSITY ISSUES

The reductions in staffing levels are fully supported by an effective governance process and structured business process reviews including Equality Impact assessments. A further reduction of 147 posts will be managed to minimise compulsory redundancy where ever possible.

D. REVIEW ARRANGEMENTS

There will be regular monitoring of the 2012/13 Revenue Budget, Capital Programme and Value for Money by the Performance Monitoring Group.

E. RISKS 1. The risk of capping has been mitigated through discussions with WG and a 5%

precept is not expected to initiate capping action.

2. The main uncontrolled risk relates to the long term estate issues and these are reviewed regularly to ensure legislative compliance is not compromised.

3. The General Reserve Position whilst currently remain below recommended levels will be mitigated through return of Icelandic investments.

4. The VFM plan is by its nature a more fluid process and will need careful monitoring to achieve the targeted level of savings.

F. LIST OF BACKGROUND PAPERS Local Government Finance Report 2011 to 2013 (National Assembly for Wales) Police Grant Report England and Wales 2011 to 2015 (Draft)



South Wales Police Authority 2012/13 – 2015/16 Budgets

Schedule of Appendices

Appendix 1 Draft Annual Plan 2012/13

Appendix 2 Police Authority Governance Arrangements

Appendix 3 South Wales Police Budget Summary 2011/12 to 2015/16

Appendix 4 Reconciliation of Changes on Revenue Budget 2011/12 to 2012/13

Appendix 5 Detailed Analysis of Revenue Budget Changes 2011/12 to 2012/13

Appendix 6 Winsor Recommendation Summary

Appendix 7 Police Authority Revenue Budget 2012/13

Appendix 8 Summary Capital Programme and Financing Arrangements 2011/12 to 2015/16

Appendix 9 Reconciliation of Establishment Changes

Appendix 10 Value for Money Plan 2012/13 to 2015/16

Appendix 11 Police Precept on Council Tax – 5%



SOU

TH W

ALE

S PO

LIC

E A

UTH

OR

ITY

APP

END

IX 2

G

OVE

RN

AN

CE

STR

UC

TUR

E

Aud

it &

Sc

rutin

y G

roup

Equa

litie

s &

H

RG

roup

Perf

orm

ance

Mon

itorin

g G

roup

Prot

ectiv

eSe

rvic

esG

roup

Com

mun

ity

Enga

gem

ent

Gro

up

Qua

lity

of

Serv

ice

Gro

up

Stan

dard

sC

omm

ittee

App

oint

men

ts &

R

emun

erat

ions

Pane

l

App

eals

Pane

l

Polic

e A

utho

rity

Cha

irs A

dvis

ory

B

oard

Plan

ning

& R

efor

m

Prog

ram

me

Sem

inar

s


SOUTH WALES POLICE

DRAFT REVENUE BUDGET @ 5% PRECEPT APPENDIX 3

2011/12 - 2015/16

BudgetProposed

BudgetForecast

BudgetForecast

BudgetForecast

Budget

2011/12 2012/13 2013/14 2014/15 2015/16

£ 000 £ 000 £ 000 £ 000 £ 000

Employees

Police Officers 136,253 135,585 136,941 139,060 143,966

Police Staff 67,812 66,750 67,918 69,097 71,324

Police Pensions (net) 30,981 30,789 31,097 31,408 32,693

Total Employee Costs 235,046 233,124 235,955 239,565 247,983

Running Exps

Non Pay 49,145

Indirect Staff 1,018 1,032 1,058 1,084 1,111

Premises Costs 8,102 8,210 8,415 8,626 8,841

Transport Costs 8,131 8,240 8,446 8,657 8,874

Supplies and Services 16,646 16,869 17,291 17,723 18,166

Agency and Contracted Services 10,458 10,597 10,862 11,133 11,412

Total Running Expenses 44,355 44,948 46,072 47,223 48,404

Capital Financing Costs 4,867 5,036 5,136 5,075 4,938Total Expenditure 284,268 283,108 287,163 291,863 301,325

Income

Specific Grants (18,322) (21,219) (14,489) (14,489) (14,489)

Other Income (8,599) (7,315) (7,315) (7,315) (7,315) Total Income (26,921) (28,534) (21,804) (21,804) (21,804)

257,347 254,574 265,359 270,059 279,521

Grants and Precepts - Based on

Police Grant (108,440) (100,675) (106,101) (105,165) (105,165)

Rule 1 7,793 7,985 7,985 7,985 7,985

NNDR/RSG (81,858) (77,583) (76,527) (75,042) (75,042)

Total External Support (182,505) (170,273) (174,643) (172,222) (172,222)

(74,842) (79,062) (83,430) (88,040) (92,904) TOTAL RESOURCES (257,347) (249,335) (258,073) (260,262) (265,126)

Cumulative Unfunded Expenditure 5,239 7,286 9,798 14,395

Balance of VFM Plan (5,239) (8,614) (13,114) (13,114)

Shortfall/ (Surplus) (0) (1,328) (3,316) 1,281

TAXBASE (INCLUDING 0.5% GROWTH) 463,850 466,670.43 469,004 471,349 473,706BAND D PRECEPT AT 5% INCREASE £161.3498 £169.4173 £177.8882 £186.7826 £196.12

Nominal Split

TOTAL NET REVENUE EXPENDITURE

Precepts on Billing Authorities


NO

T PR

OTE

CTIV

ELY

MA

RKED

APP

END

IX4

REV

ENU

E B

UD

GET

201

2/13

REC

ON

CIL

IATI

ON

OF

CH

AN

GES

1 20

11/1

2 to

201

2/13

Incr

ease

s in

Bud

get a

bove

201

1/12

Exp

endi

ture

Ban

d D

Equ

ival

ent T

ax

Una

void

able

Cos

tsN

et o

f Ext

erna

l Fun

ding

as

per s

ettle

men

t£0

00%

£%

Pay

Infla

tion

and

Incr

emen

tal D

rift (

inc

Win

sor)

2,27

30.

88%

4.87

3.0%

161.

3498

Val

ue F

or M

oney

Pla

n A

ccel

erat

ed S

avin

gs(4

,247

)(1

.65)

%(9

.10)

(5.6

)%

Oth

er In

flatio

n1,

336

0.52

%2.

861.

8%

Bas

e B

udge

t Adj

ustm

ents

and

Re-

allo

catio

ns76

2

0.30

%1.

631.

0%

Spe

cific

Gra

nt A

lloca

tions

and

Rec

lass

ifica

tions

(2,8

97)

(1.1

3)%

(6.2

1)(3

.8)%

Cut

s in

Pol

ice

Gra

nt/R

SG

/NN

DR

- C

SR

201

012

,232

4.75

%26

.21

16.2

%

Tax

Bas

e In

crea

se(4

55)

(0.1

8)%

(0.9

7)(0

.6)%

Stan

dstil

l Bud

get R

equi

rem

ent

9,00

4

3.

5%19

.29

12.0

%

Bud

get B

alan

ce A

ctio

ns

Add

ition

al V

alue

For

Mon

ey P

lan

Sav

ings

(5,2

39)

(2.0

)%(1

1.23

)(7

.0)%

Bal

ance

of F

undi

ng fr

om P

olic

e P

rece

pt In

crea

se(3

,765

)(1

.5)%

(8.0

7)(5

.0)%

Res

idua

l Bal

ance

-

2573

4646

6670

.43

161.

3498

NO

T PR

OTE

CTIV

ELY

MA

RKED


SOUTH WALES POLICE APPENDIX 5ANALYSIS OF REVENUE BUDGET CHANGES2011/12 to 2012/13

AcceleratedPay & Pensions Inflation and Incremental Drift Change VFM TOTAL

£'000 £'000 £'000Police Officers

National Insurance 186 186Increments 865 865Winsor removal of Increments (774) (774) VFM Plan Acceleration (1,445) (1,445) Changes in Externally Funded Posts (118) (118)

Overheads & AllowancesOvertime 66 66Winsor removal SPP (2,346) (2,346) Winsor 10% New Shift Premium 2,587 2,587Injury Awards 119 119

(860)Police Staff

National Insurance 42Incremental Drift 121VFM Plan Acceleration (2,751)Employers Pension Contribution Revaluation 110Deputy Chief Executive Post (78) Changes in Externally Funded Posts (incl WG funded PCSOs) 1,474Overtime 19

(1,063)Sub - Total Pay & Pensions Inflation and Incremental Drift 2,273 (4,196) (1,923)

Other InflationInflation, Contracts & Utilities 1,370 1,370Inflationary Increases on Income (34) (34)

Sub - Total Other Inflation 1,336 1,336

Base Budget Adjustments and Re-allocationsNet Base Budget Adjustments (132)VFM Plan Acceleration (51)NNDR Sucessful Rating Appeals (30)Collaboration reduction (Est) (150)Agency Staff Budget reduction (123)Capital Financing 167Firearms Income reduction 77Changes in External Funding (incls £880k reclassification to Grant) 953

Sub - Total Base Budget Adjustments and Re-allocations 762 (51) 711

Specific & General GrantChanges in Specific External Funding (2,897) (2,897) Reductions Police Grant/RSG/NNDR - CSR 2010 12,232 12,232

Tax Base Increase (0.6%) (455) (455)

Total Standstill Budget Requirement 13,251 (4,247) 9,004

5% Precept Increase (3,765)

Total Unfunded Expenditure 5,239


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umpt

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part

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spec

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ct o

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shi

ft pa

ttern

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hich

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trodu

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and?

Wha

t is

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Will

requ

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is d

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now

nee

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incl

ude

this

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cess

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es to

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side

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tern

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self

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ficat

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S

houl

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rrear

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ths

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pay

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Sep

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and

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Cor

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Fina

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ld ta

ke p

lace

ove

r a p

erio

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at l

east

30

days

. Bef

ore

mak

ing

his

deci

sion

, the

chi

ef o

ffice

r sh

ould

be

requ

ired

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onsu

lt th

e af

fect

ed o

ffice

rs a

nd ta

ke fu

ll ac

coun

t of t

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indi

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al c

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ces,

incl

udin

g th

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ely

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cts

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w a

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hift

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ents

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uld

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ough

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to e

ffect

ear

lier t

han

30 d

ays

afte

r the

com

mun

icat

ion

of th

e de

cisi

on o

f the

chi

ef o

ffice

r. A

CC

EPTE

D

No

Act

ion

at p

rese

nt

Rec

omm

enda

tion

6 –

Det

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inat

ion

Ann

ex G

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Reg

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ion

25 o

f the

Pol

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Reg

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ions

200

3, s

houl

d be

am

ende

d to

repl

ace

time

and

a th

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rem

ium

pay

for c

asua

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ertim

e w

ith p

lain

tim

e. T

he m

inim

um h

ours

for b

eing

reca

lled

betw

een

duty

sho

uld

be a

bolis

hed

and

inst

ead

paid

at p

lain

tim

e fo

r the

hou

rs w

orke

d, w

ith tr

avel

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MO

DIF

IED

:Th

e pr

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m ra

te o

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e an

d on

e th

ird to

be

reta

ined

for c

asua

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ertim

e, w

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ent o

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ng ti

me

for r

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tour

s of

dut

y. T

he m

inim

um h

ours

pay

men

t for

bei

ng re

calle

d to

be

abol

ishe

d as

pro

pose

d.

Ove

rtim

e po

licy

to b

e am

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d co

mm

unic

ated

to fo

rce.

C

orpo

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Fin

ance

Rec

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7 –

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ion

Ann

ex H

, mad

e un

der

Reg

ulat

ion

26 o

f the

Pol

ice

Reg

ulat

ions

200

3, s

houl

d be

am

ende

d to

rem

ove

doub

le ti

me

prem

ium

pay

and

the

notic

e pe

riod

of fi

ve d

ays

for w

orki

ng o

n a

rost

ered

rest

day

. Tim

e an

d a

half

prem

ium

pay

sho

uld

be p

ayab

le fo

r wor

king

on

a ro

ster

ed

rest

day

with

few

er th

an 1

5 da

ys’ n

otic

e.

AC

CEP

TED

As

abov

e C

orpo

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Fin

ance

Rec

omm

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8 –

Det

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Ann

ex H

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Reg

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26 o

f the

Pol

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Reg

ulat

ions

200

3, s

houl

d be

am

ende

d to

allo

w th

e pa

ymen

t of o

verti

me

at d

oubl

e tim

e fo

r 25

Dec

embe

r and

sev

en o

ther

day

s ch

osen

for t

he n

ext f

inan

cial

ye

ar b

y th

e of

ficer

bef

ore

31 J

anua

ry. C

ance

llatio

n w

ith fe

wer

th

an 1

5 da

ys’ n

otic

e sh

ould

requ

ire th

e au

thor

ity o

f an

Ass

ista

nt

Chi

ef C

onst

able

. A

CC

EPTE

D

Que

ries:

Doe

s it

appl

y to

201

2/13

or 2

013/

14 b

ecau

se if

20

12/1

3 of

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s ha

ve u

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.12

to id

entif

y 7

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cate

d da

ys.

C

an th

e fo

rce

refu

se to

acc

ept t

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ffice

rs a

lloca

ted

days

?

Can

offi

cers

allo

cate

all

7 on

con

secu

tive

days

?

If th

ey s

elec

t an

allo

cate

d da

y on

a w

eeke

nd –

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ave

a da

y in

lieu

whi

ch is

the

case

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if a

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Cor

pora

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Fina

nce/

HR

Rec

omm

enda

tion

11 –

Pol

ice

offic

ers

on m

utua

l aid

ser

vice

sh

ould

be

paid

for t

he h

ours

they

are

requ

ired

to w

ork

each

da

y, p

lus

trave

lling

time

to a

nd fr

om th

e pl

ace

of d

uty.

Whe

re

thos

e ho

urs

coin

cide

with

the

unso

cial

hou

rs p

erio

d, o

r the

dut

y ha

s be

en re

quire

d at

sho

rt no

tice

and

they

are

elig

ible

for t

he

new

ove

rtim

e ra

tes,

the

offic

er s

houl

d be

pai

d at

the

appl

icab

le

prem

ium

rate

s.

MO

DIF

IED

: B

oth

sent

ence

s of

Rec

omm

enda

tion

11 a

re a

ccep

ted

as w

orde

d. I

n ad

ditio

n, o

ffice

rs o

n m

utua

l aid

who

are

una

ble

to

retu

rn h

ome

are

to re

ceiv

e a

new

‘Aw

ay fr

om H

ome

Ove

rnig

ht

Allo

wan

ce’ o

f £50

per

nig

ht.

Rec

omm

enda

tion

11/1

2/13

are

all

linke

d an

d w

ill re

quire

a

Polic

y C

hang

e.

HR

/Kat

hryn

Cha

dd

Rec

omm

enda

tion

12 –

The

def

initi

on o

f ‘pr

oper

ac

com

mod

atio

n’ s

houl

d be

revi

sed

to d

escr

ibe

a si

ngle

oc

cupa

ncy

room

with

use

of e

n su

ite b

athr

oom

faci

litie

s. W

here

su

ch a

ccom

mod

atio

n is

not

pro

vide

d, th

e of

ficer

sho

uld

rece

ive

a pa

ymen

t of £

30 p

er n

ight

. The

cur

rent

def

initi

on o

f ‘hi

gher

st

anda

rd a

ccom

mod

atio

n’ s

houl

d be

rem

oved

and

not

repl

aced

. A

CC

EPTE

D

As

abov

e K

athr

yn

Cha

dd/C

orpo

rate

Fi

nanc

e (T

ax

impl

icat

ions

)

Rec

omm

enda

tion

13 –

Offi

cers

hel

d in

rese

rve

on a

day

and

w

ho h

ave

not b

een

paid

for a

ny m

utua

l aid

tour

of d

uty

that

day

, sh

ould

rece

ive

the

on-c

all a

llow

ance

of £

15 fo

r tha

t day

.

MO

DIF

IED

: O

ffice

s he

ld in

rese

rve

who

are

una

ble

to re

turn

ho

me

are

to re

ceiv

e th

e ne

w ‘A

way

from

Hom

e O

vern

ight

A

llow

ance

’ of £

50 p

er n

ight

.

As

abov

eK

athr

yn

Cha

dd/C

orpo

rate

Fi

nanc

e (T

ax

impl

icat

ions

Rec

omm

enda

tion

20 –

Pol

ice

offic

ers

and

all m

embe

rs o

f po

lice

staf

f bel

ow th

e to

p of

thei

r pay

sca

le s

houl

d be

su

spen

ded

at th

at in

crem

ent f

or a

two-

year

per

iod

com

men

cing

S

epte

mbe

r 201

1.

MO

DIF

IED

: Th

e fir

st 3

ste

ps o

n th

e co

nsta

bles

’ sca

le to

be

excl

uded

from

the

prop

osed

sus

pens

ion.

All

othe

r pro

gres

sion

on

W

hen

impl

emen

tatio

n da

te c

larif

ied

Cor

pora

te

Fina

nce

will

ceas

e in

crem

enta

l pro

gres

sion

.

Fede

ratio

n ne

eds

to c

omm

unic

ate

this

to th

eir

mem

bers

but

may

wis

h to

wai

t unt

il th

e P

AT

reco

mm

enda

tions

are

ratif

ied.

Will

Sup

erin

tend

ents

stil

l get

an

incr

emen

t if t

hey

are

entit

led

to o

ne b

efor

e th

e da

te o

f

Cor

pora

te F

inan

ce

PC D

anny

A’h

earn

D:\

Dat

a\sw

p536

92\O

utlo

ok C

ache

\App

6 W

INSO

R .d

oc

the

polic

e of

fices

pay

sca

les

to b

e su

spen

ded

as p

ropo

sed.

im

plem

enta

tion

in li

ne w

ith th

e cu

rrent

pro

cess

?.

This

nee

ds to

be

com

mun

icat

ed a

s ap

prop

riate

. K

athr

yn C

hadd

Rec

omm

enda

tion

25 –

The

chi

ef o

ffice

r bon

us s

chem

e sh

ould

be

sus

pend

ed fo

r a tw

o-ye

ar p

erio

d co

mm

enci

ng S

epte

mbe

r 20

11.

AC

CEP

TED

No

imm

edia

te a

ctio

n bu

t will

be im

plem

ente

d w

hen

reco

mm

enda

tion

ratif

ied.

‘Big

job’

allo

wan

ce is

not

affe

cted

. R

ecom

men

datio

n 27

– T

he b

onus

sch

eme

for s

uper

inte

nden

ts

and

chie

f sup

erin

tend

ents

sho

uld

be s

uspe

nded

for a

two-

year

pe

riod

com

men

cing

Sep

tem

ber 2

011.

AC

CEP

TED

As

in R

ecom

men

datio

n 25

.

Rec

omm

enda

tion

29 –

Com

pete

nce

Rel

ated

Thr

esho

ld

Pay

men

ts s

houl

d be

abo

lishe

d fro

m 3

1st A

ugus

t, 20

11 a

nd a

ll ou

tsta

ndin

g C

RTP

pay

men

ts u

p to

that

dat

e sh

ould

be

paid

on

a pr

o-ra

ted

basi

s.

MO

DIF

IED

: C

RTP

’s to

rem

ain

in p

lace

for t

hose

who

alre

ady

rece

ive

them

, but

ther

e sh

ould

be

a tw

o ye

ar fr

eeze

on

new

ap

plic

atio

ns.

Fr

om w

hen

does

the

2 ye

ar fr

eeze

app

ly?

W

hen

two

year

free

ze is

lifte

d of

ficer

s m

ay n

ot

qual

ify fo

r CR

TP a

s th

eir i

ncre

men

t wou

ld h

ave

been

froz

en a

t tha

t tim

e an

d th

ey w

ould

not

hav

e pr

ogre

ssed

up

the

pay

scal

es.

O

ffice

rs h

ave

prev

ious

ly d

elay

ed a

pply

ing

for

pers

onal

reas

ons.

Act

ion:

Whe

n da

te ra

tifie

d of

ficer

s af

fect

ed w

ill b

e id

entif

ied

and

actio

ned.

Offi

cers

are

to b

e re

min

ded

via

the

Fede

ratio

n to

pr

ogre

ss th

eir a

pplic

atio

ns in

acc

orda

nce

with

the

curr

ent p

roce

ss a

s so

on a

s po

ssib

le.

Cor

pora

te

Fina

nce/

HR

Po

lice

Fede

ratio

n.

Rec

omm

enda

tion

33 –

Spe

cial

Prio

rity

Pay

men

ts s

houl

d be

ab

olis

hed

from

31

Aug

ust 2

011

and

all o

utst

andi

ng S

PP

s up

to

that

dat

e sh

ould

be

paid

on

a pr

o-ra

ted

basi

s.

AC

CEP

TED

Th

is is

like

ly to

be

a gr

eate

r im

pact

on

thos

e w

ho

rece

ive

doub

le S

PP

e.g

. PS

U’s

who

per

form

this

ro

le o

n a

volu

ntar

y ba

sis

– is

ther

e an

y op

tion

to

cont

inue

to p

ay P

SU

and

sim

ilar g

roup

s un

der t

he

Bon

us P

aym

ent S

chem

e?

Act

ion:

Ext

raor

dina

ry m

eetin

g of

bon

us p

aym

ent p

anel

to

be

arra

nged

.

Act

ion:

Com

mun

icat

ion

that

cur

rent

sch

eme

will

appl

y up

to d

ate

of im

plem

enta

tion.

The

sam

e gr

oups

of

offic

ers

who

wer

e el

igib

le to

rece

ive

SP

P fo

r 201

1 w

ill co

ntin

ue to

rece

ive

it un

til S

PP

cea

ses.

HR

/Kat

hryn

Cha

dd

HR

/Kat

hryn

Cha

dd

D:\

Dat

a\sw

p536

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ok C

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INSO

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oc

Rec

omm

enda

tion

34 –

An

inte

rim E

xper

tise

and

Pro

fess

iona

l A

ccre

dita

tion

Allo

wan

ce o

f £1,

200

per a

nnum

sho

uld

be

intro

duce

d fro

m S

epte

mbe

r 201

1 fo

r offi

cers

mee

ting

the

skill

s or

leng

th o

f ser

vice

crit

eria

in th

e fo

ur s

tate

d pr

iorit

y fu

nctio

ns. I

t sh

ould

be

paid

mon

thly

and

pro

-rat

ed w

here

an

offic

er w

orks

pa

rt-tim

e. It

sho

uld

be re

mov

ed w

hen

an o

ffice

r lea

ves

the

qual

ifyin

g ro

le.

NO

AW

AR

D

No

actio

n re

quire

d as

this

will

be c

onsi

dere

d as

par

t of

Win

sor 2

.

Rec

omm

enda

tion

43 –

The

repl

acem

ent a

llow

ance

for

hous

ing

shou

ld re

mai

n. H

owev

er, t

he a

mou

nt a

n of

ficer

re

ceiv

es s

houl

d no

t inc

reas

e fro

m 3

1 A

ugus

t 201

1 w

ith

chan

ges

in p

erso

nal c

ircum

stan

ces,

suc

h as

pro

mot

ion.

The

ex

istin

g fra

mew

ork,

by

whi

ch th

e am

ount

an

offic

er re

ceiv

es

redu

ces

whe

n he

live

s w

ith a

noth

er o

ffice

r als

o re

ceiv

ing

the

allo

wan

ce, s

houl

d re

mai

n. A

CC

EPTE

D

No

Act

ion

requ

ired

and

Cor

pora

te F

inan

ce w

ill fo

llow

R

egul

atio

ns w

hen

they

are

pub

lishe

d

Rec

omm

enda

tion

44/4

5 –

A n

atio

nal o

n-ca

ll al

low

ance

for t

he

Fede

rate

d ra

nks

shou

ld b

e in

trodu

ced

from

Sep

tem

ber 2

011.

Th

e am

ount

of t

he a

llow

ance

sho

uld

be £

15 fo

r eac

h oc

casi

on

of o

n-ca

ll af

ter t

he o

ffice

r in

ques

tion

has

unde

rtake

n 12

on-

call

sess

ions

in th

e ye

ar b

egin

ning

on

1 S

epte

mbe

r. A

n on

-cal

l oc

casi

on s

houl

d be

def

ined

as

the

requ

irem

ent t

o be

on-

call

with

in a

ny 2

4-ho

ur p

erio

d re

late

d to

the

star

t-of-t

he-p

olic

e-da

y.

NO

AW

AR

D

SW

P a

lread

y ha

s a

loca

l agr

eem

ent w

hich

we

will

mai

ntai

n un

til th

is is

con

side

red

in W

inso

r 2.

Rec

omm

enda

tion

45 –

The

nat

iona

l on-

call

allo

wan

ce s

houl

d be

revi

ewed

by

the

Pol

ice

Neg

otia

ting

Boa

rd th

ree

year

s af

ter

its in

trodu

ctio

n in

the

cont

ext o

f bet

ter m

anag

emen

t dat

a.N

O A

WA

RD

As

abov

e

Rec

omm

enda

tion

59 –

Reg

ulat

ion

5(4)

of t

he P

olic

e R

egul

atio

ns 2

003

shou

ld b

e am

ende

d so

that

an

offic

er g

ivin

g w

ritte

n no

tice

to re

turn

from

par

t-tim

e to

full-

time

wor

king

, mus

t be

app

oint

ed b

y th

e P

olic

e A

utho

rity

with

in tw

o m

onth

s if

the

forc

e ha

s a

suita

ble

vaca

ncy,

and

with

in fo

ur m

onth

s of

the

notic

e be

ing

rece

ived

.A

CC

EPTE

D

Flex

ible

wor

king

pol

icy

to b

e am

ende

d H

R/K

athr

yn C

hadd

Gen

eral

poi

nts:

H

ow a

nd w

hen

shou

ld th

ese

chan

ges

be

com

mun

icat

ed a

nd b

y w

hom

? C

orpo

rate

mes

sage

su

ppor

ted

by in

divi

dual

com

mun

icat

ion

rele

vant

to

reco

mm

enda

tion

e.g.

SPP

cea

sing

, etc

. FA

Q n

eed

to b

e de

velo

ped

for H

R H

elpd

esk

whe

n

D:\

Dat

a\sw

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utlo

ok C

ache

\App

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INSO

R .d

oc

WIN

SOR

PA

RT

1 –

Rec

omm

enda

tions

agr

eed

in p

rinci

ple

not r

efer

red

to th

e Po

lice

Arb

itrat

ion

Trib

unal

REC

OM

MEN

DA

TIO

N

AC

TIO

N

AC

TIO

N

ASS

IGN

ED T

O

Rec

omm

enda

tion

31 –

Chi

ef O

ffice

rs s

houl

d re

cogn

ise

who

le te

ams,

bot

h of

ficer

s an

d st

aff,

with

a te

am R

ecog

nitio

n aw

ard

paym

ent o

f £50

to £

100

each

fo

r out

stan

ding

ly d

eman

ding

, unp

leas

ant o

r im

porta

nt w

ork,

or o

utst

andi

ng

wor

k fo

r the

pub

lic.

P

oten

tial t

o lin

k th

is w

ith fo

rce

awar

ds

W

ordi

ng h

as n

ow c

hang

ed to

incl

ude

outs

tand

ing

wor

k fo

r the

pub

lic

M

ay a

lso

be a

n op

tion

for s

peci

alis

t tea

ms

who

ha

ve lo

st S

PP

?

To b

e ta

ken

forw

ard

to th

e E

xtra

ordi

nary

Mee

ting

HR

/Kat

hryn

C

hadd

Rec

omm

enda

tion

37 –

Pol

ice

Aut

horit

ies

shou

ld b

e re

quire

d to

pay

all

reas

onab

le c

osts

aris

ing

from

the

sale

and

pur

chas

e of

a c

hief

offi

cer’s

hou

se,

and

shou

ld p

ay a

ll ta

x lia

bilit

ies

aris

ing

from

any

relo

catio

n pa

ckag

es, s

o th

at,

for t

he c

hief

offi

cer c

once

rned

, the

re is

no

pers

onal

fina

ncia

l dis

adva

ntag

e

No

Act

ion

requ

ired

at th

is ti

me

but n

oted

for f

utur

e re

fere

nce.

Rec

omm

enda

tion

38 –

Pol

ice

Aut

horit

ies

shou

ld p

ublis

h de

tails

of a

ll be

nefit

s fo

r chi

ef o

ffice

rs a

nd th

eir v

alue

s in

thei

r ann

ual r

epor

ts, i

tem

ised

by

offic

er.

This

is c

urre

ntly

pub

lishe

d. N

FA re

quire

d

Rec

omm

enda

tion

39 –

Chi

ef o

ffice

rs s

houl

d pr

ovid

e re

ceip

ts fo

r all

expe

nses

, an

d in

form

atio

n as

to e

xpen

ses

abov

e £5

0 pa

id to

chi

ef o

ffice

rs s

houl

d be

pu

blis

hed

quar

terly

on

the

Pol

ice

Aut

horit

y’s

web

site

Cur

rrent

info

rmat

ion

to b

e up

date

d to

refle

ct

reco

mm

enda

tion

Cor

pora

te

Fina

nce

Rec

omm

enda

tion

46- T

he li

nk b

etw

een

Mot

or V

ehic

le A

llow

ance

for p

olic

e of

ficer

s an

d th

at fo

r loc

al a

utho

ritie

s sh

ould

be

re-e

stab

lishe

d fro

m S

epte

mbe

r 20

11.

A

s es

sent

ial u

sers

allo

wan

ce h

as n

ot b

een

abol

ishe

d th

e pr

evio

us re

port

by C

hief

Sup

t Lew

is

need

s to

be

reco

nsid

ered

.

Chi

ef S

upt L

ewis

Rec

omm

enda

tion

48 –

Offi

cers

’ mat

erni

ty e

ntitl

emen

t sho

uld

incr

ease

from

13

wee

ks a

t ful

l pay

to 1

8 w

eeks

at f

ull p

ay, w

ith o

ffice

rs h

avin

g th

e op

tion,

w

ith th

e ag

reem

ent o

f the

ir ch

ief o

ffice

r, to

spr

ead

the

final

five

wee

ks o

f m

ater

nity

pay

ove

r 10

wee

ks a

t red

uced

rate

.

Mat

erni

ty P

olic

y an

d pr

oces

s (te

mpl

ate

lette

rs) t

o be

am

ende

d w

hen

effe

ctiv

e da

te k

now

n.

HR

/Kat

hryn

C

hadd

Rec

omm

enda

tion

55- T

he P

olic

e P

ensi

on R

egul

atio

ns s

houl

d be

am

ende

d to

al

low

chi

ef o

ffice

rs to

mak

e a

choi

ce in

rela

tion

to th

e tim

e at

whi

ch th

eir

pens

ion

bene

fits

crys

tallis

e.

Aw

ait a

men

dmen

t to

regu

latio

ns a

nd im

plem

ent a

s ap

prop

riate

. N

FA.

Rec

omm

enda

tion

57 –

The

crit

eria

for t

he u

se o

f pow

ers

in R

egul

atio

n A

19

shou

ld b

e am

ende

d, w

ith s

ervi

ce-c

ritic

al s

kills

and

per

form

ance

bei

ng e

xplic

it co

nsid

erat

ions

.

Forc

e al

read

y ta

kes

thes

e cr

iteria

into

con

side

ratio

n. N

o fu

rther

act

ion

requ

ired.

Rec

omm

enda

tion

58 –

As

quic

kly

as p

ossi

ble,

pol

ice

forc

es s

houl

d be

pr

ovid

ed w

ith th

e ab

ility

to o

ffer v

olun

tary

exi

t ter

ms

to p

olic

e of

ficer

s,

subs

tant

ially

on

the

term

s co

ntai

ned

in th

e C

ivil

Ser

vice

Com

pens

atio

n S

chem

e 20

10.

Hom

e O

ffice

is w

orki

ng u

p w

hat t

his

will

look

like

. N

FA u

ntil

such

tim

e as

this

det

ail i

s kn

own.


SOUTH WALES POLICE AUTHORITY BUDGET APPENDIX 72012/13 BUDGET

2011/12 2012/13Budget Budget

£ £Secretariat Salary Related Costs 469,497 380,529 Members Allowances 244,355 252,460

Indirect Employee 6,375 6,534 Premises Costs 510 523 Transport Costs 21,930 22,478 Supplies & Services 176,920 181,343 Agency & Contracted Services 2,040 2,091

921,627 845,958

The reduction in Funding relates to the disestablishment of the Deputy Chief Executive and Administrative posts as part of the Authority's response to CSR10 funding cuts.


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NOT PROTECTIVELY MARKEDSOUTH WALES POLICE APPENDIX 92012/2013 BUDGETESTABLISHMENT MOVEMENTS FTE

Officers TargetTotal Funded Establishment

FTE FTE FTE2010/11 year end establishment 3,021

Value For Money Plan Reductions2011/12 114 2,9072012/13 62 2,8452013/14 30 2,8152014/15 50 2,765

256

Police Officer Establishment 2011/12

Police Officer Establishment 2011/12 3,032 Funding adjustments- Airport (23)Revised Establishment 3,009

movementsAll Wales Schools (1)Safety Camera Partnership (1)Seconded Officers 2Reductions 2011/12 (7)

3,002

Planned Efficiency ReductionsEfficiency Plan Reductions - A19/ Ill Health (55)Total Planned Police Officer Reductions (55)

Total Police Officers 2012/13 Funded Establishment in 2012/13 2,947

Of Which External Funded Officers are 102

SWP Funded Police Officer Establishment 2,8452,947

PCSO Establishment 2011/12 300Welsh Government Funded (206) Planned Intake 2012/13 only 154Total PCSO Establishment 2012/13 454 454

Total Uniformed Resources 2012/13 3,401

Staff Target2010/11 yr end SWP establishment 1,997

Value For Money Plan Reductions2011/12 167 1,8302012/13 125 1,7052013/14 60 1,6452014/15 80 1,565

432

Police Staff Establishment 2011/12 1,830

movementsAcelerated Post reduction (VFM Plan) - Vacancy Mgt (96)Additional anticipated reductions to end 11/12 (9)

New business case/reform posts 20

Planned Efficiency ReductionsEfficiency Plan Reductions - VFM Plan (40)

(125)Targeted Police Staff Establishment 1,705

Other ChangesNet Adj External/ FTC/ Temporary posts 3Post of Deputy Chief Executive (1)

Overall Police Staff funded Establishment 1,707

TOTAL FUNDED ESTABLISHMENT 2012/13 5,108


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SOUTH WALES POLICE APPENDIX 11REVENUE BUDGET 2012/13PRECEPT @ 5% INCREASE

A BUDGET AND COUNCIL TAX REQUIREMENT £

TOTAL BUDGET 270,554,718

LESS: Specific Grants 21,219,783

BUDGET REQUIREMENT 249,334,935

LESS: Revenue Support Grant 39,342,463 NNDR 38,240,410 Police Specific Grant 92,690,018

SOUTH WALES POLICE AUTHORITY PRECEPT 79,062,044

B SWPA ELEMENT OF COUNCIL TAX BY PROPERTY Proportion of Band D Council Tax £

Band A 6/9 112.94Band B 7/9 131.77Band C 8/9 150.59Band D 9/9 169.42Band E 11/9 207.07Band F 13/9 244.71Band G 15/9 282.36Band H 18/9 338.83Band I 21/9 395.31

C PRECEPTS ON UNITARY AUTHORITIES

No. of Band D EquivalentProperties

SWPAPrecept £

Cardiff County Council 137,951.00 23,371,286City & County of Swansea 87,806.00 14,875,855Bridgend County Borough 49,691.74 8,418,640Merthyr Tydfil County Borough 17,484.37 2,962,155Neath Port Talbot County Borough 45,766.95 7,753,713Rhondda Cynon Taff County Borough 72,780.37 12,330,254The Vale of Glamorgan Council 55,190.00 9,350,141

466,670.43 79,062,044










B SWPA ELEMENT OF COUNCIL TAX BY PROPERTY Proportion of Band D Council Tax £




SWPAPrecept £


466,670.43 78,309,072










B SWPA ELEMENT OF COUNCIL TAX BY PROPERTY Proportion of Band D

Council Tax£




SWPA Precept £


466,670.43 79,815,017


Documents

NOT PROTECTIVELY MARKED - Microsoftpcclive...NOT PROTECTIVELY MARKED NOT PROTECTIVELY MARKED Page 5 of 36 Police Authority 13 February 2012 6. The impact on the Council Tax 7. The