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Dates: Topic: Finance - Police Grant

Issued: 21/3/05

Implementation: Immediate

Impact: This Circular Supersedes Police Circular No: 7/2004

Contact(s) for more information: Ann Tocher (0131 244 2148)

Dear Colleague

Purpose of the circular: To inform Chief Constables of the commencement of The Police Grant (Scotland) Order 2005 on 1 April 2005.

Summary of contents: A copy of the Police Grant (Scotland) Order 2005 and accompanying Report is attached. This Order determines the amount of police grant payable in 2005-06.

Yours sincerely

Ann Tocher

The Police Grant (Scotland) Order 2005

1. This Order sets the amount of police grant payable to each authority or board for 2005-06. These amounts are related to budgets together with 100% grants for officers based in forces engaged in dedicated drugs duties, and also a share of the costs of forces seconding officers to the SDEA. These payments will be net of an adjustment for the recovery of expenditure for common police services in 2005-06 as set out in the Determination attached to Police Circular No./2005.

2. The Department will make payments of police grant in 12 instalments amounting to 97.5% of the estimate of police grant based on the budget set by each authority or joint board. The 2.5% retention for 2004-05 will be paid on receipt from Audit Scotland of the audited grant claim (Form PG1).

3. Amounts of grant for 2005-06 can be varied if outturn expenditure is different from forecast, but grant will not be paid above the cash limit.

4. The accompanying Report states the considerations Scottish Ministers took into account in determining the amounts of police grant set out in the Order.

5. The Report sets out the cash limit for each authority, the calculation of amounts of grant in the Order and the distribution of Grant Aided Expenditure among authorities.

6. The attached Appendix sets out for convenience the circulars already issued in 2005.

Police Division 1

March 2005

Scottish Executive

Police Grant (Scotland)

THE POLICE GRANT (SCOTLAND) ORDER 2005

Report by the Scottish Ministers under section 32(6) of the Police (Scotland) Act 1967

Laid before the Scottish Parliament by the Scottish Ministers March 2005

THE POLICE GRANT (SCOTLAND) ORDER 2005

1. Introduction

1.1 In accordance with section 32 of the Police (Scotland) Act ('the 1967 Act') as substituted by section 45(1) of the Crime and Punishment (Scotland) Act 1997 ('the 1997 Act'), the Scottish Ministers have made the Police Grant (Scotland) Order 2005

('the 2005 Order'). This Order determines the aggregate amount of police grant to be made to police authorities (not being constituent authorities) and joint police boards ('authorities') for the financial year 2005-2006 and the amount of such grant payable to each such authority.

1.2 The 2005 Order is laid before the Scottish Parliament in accordance with section 32(8) of the 1967 Act (as read with section 118 of the Scotland Act 1998 ('the 1998 Act')), which provides that the Order is subject to negative resolution procedure.

1.3 This Report is prepared under section 32(6) of the 1967 Act. It states the considerations, which Scottish Ministers took into account in making the determinations, which are contained in the 2005 Order. This Report is laid before the Scottish Parliament in accordance with section 32(9) of the 1967 Act (as read with section 121(2) of the 1998 Act) at the same time as the 2005 Order is laid.

2. Police Grant Aided Expenditure (GAE) and process of calculating grant at 51%

2.1 Police Grant Aided Expenditure (GAE) is an estimate of the expenditure required by police forces to provide the required levels of service. Police authorities set the budgets for their respective forces and those budgets may be set at, above or below GAE.

2.2 Subject to the matters mentioned in paragraphs 4 and 5, Scottish Ministers pay police grant of 51% of the net eligible expenditure incurred by forces up to the GAE total. The constituent local authorities provide the balance. If net expenditure exceeds GAE the constituent local authorities meet in full the costs incurred over and above GAE. If net expenditure is less than GAE the unspent portion of police grant remains unclaimed.

2.3 Distribution of GAE among authorities is shown in column A of Appendix B. The cash limit of police grant payable to each authority for 2005-06 is shown in column H of Appendix B and is calculated as follows:

2.3.1 97.5% of GAE for payments on account in respect of 2005-06 is calculated (shown in column B); (a 2.5% retention amount is held back each year)

2.3.2 51% of that figure is then calculated (shown in column C);

2.3.3 the 2.5% retention amount deducted from the prior year calculation (shown in column D) is added; and this total is known as net grant;

2.3.4 an estimate of the funding in respect of the Scottish Drug Enforcement Agency - Operational and Intelligence Group (SDEA - OIG) (shown in column F) is added to the Net Grant and;

2.3.5 each authority's share of estimated costs of common police services recovered under section 36(3) of the 1967 Act (shown in column G), is deducted.

2.4 The resulting cash limit figures for police grant are shown in column H of Appendix B. Grant payable on loan charges is excluded.

2.5 In distributing GAE for 2005-2006 Scottish Ministers took account of forces' best estimates of the costs that they will incur in the forthcoming year in respect of pensions; Airwave; levels of core GAE for each authority in 2004-05; and final recommendations from the Police GAE Working Group for additional increases to some forces. See paragraph 9 below.

3. Determination of Aggregate Amount of Police Grant

3.1 The aggregate amount of police grant, which Scottish Ministers have determined to be made for the financial year 2005-2006, is £518,930,000 (see Appendix A ), as set out in article 2 of the 2005 Order.

3.2 In determining the aggregate amount of the police grant, Scottish Ministers aggregated the amounts determined to be made to each authority in the Order.

4. Determination of Police Grant to Each Authority

4.1 The amount of police grant, which is determined to be made for the financial year 2005-2006 to each authority, is set out in Article 3 of the 2005 Order.

4.2 The amount of police grant determined for each authority for the financial year 2005-06 was determined as being in accordance with the table at Appendix A. The amount of grant comprises 51% GAE grant calculated as described below; and additional grants in respect of the SDEA - OIG, the calculation of which is described at paragraph 5 below.

4.3 The amount of expenditure forecast for each police force, other than expenditure on loan charges (which is excluded by virtue of section 32(4) of the 1967 Act), is shown at column A. Column B shows the amount of forecast expenditure after deduction of a 2.5% retention. Column C shows 51% of the figure shown in column B. Column D shows the retention from the previous financial year, based on forecast expenditure for that year. Net Grant for financial year 2005-06 is calculated by adding the figure in column C to the figure in column D. Net Grant is shown in column E.

4.4 An estimate of the SDEA - OIG funding (shown in column F) for each authority is added to these figures. The resulting totals, shown in column G, represent the Total Police Grant determined to be made to each authority.

4.5 The figures in column G of Appendix A are higher than the cash limit figures shown in the table at paragraph 8 below because they include a sum in respect of the share of common police service expenditure. See paragraph 6 for explanation.

4.4 Audited accounts for the financial year 2004-05 will be received during 2005-06. Upon receipt of those audited accounts, the figures shown in columns D and F will be substituted with figures representing actual expenditure and SDEA funding for financial year 2004-05. Net Grant and Total Police Grant payable for 2005-06 will be recalculated using those audited figures. Scottish Ministers will then make an Order to vary the amount of Police Grant payable in respect of financial year 2005-06 and payments to police forces will be adjusted accordingly.

5. Officers Working with or on Secondment to the SDEA-OIG

5.1 In addition to Net Grant, £2 million will be paid towards the cost of 100 officers who are based in forces and engaged in dedicated drugs duties. This payment is made on a 100% grant basis, and no part of it is recoverable. An estimate of the amount due to each authority in 2005-06 is set out in the table below.

5.2 Police authorities will be given an additional amount of grant amounting to the estimate of the costs of forces seconding officers to the SDEA - OIG. However, deducted from that are individual police authority's shares (50%) based on the Common Police Services (CPS) formula as shown in the table below. (Under the CPS formula, costs are apportioned to the individual police authorities and joint police boards in accordance with the annual number of recorded crimes and offences in each police authority area). The amounts due are based on estimates and redetermination of police grant will ensure forces are reimbursed in full for actual costs less their contributions. The amount applicable to each authority is set out in the table below.

5.3 The total amount due to each force is shown in Appendix A, column F. This has the effect of increasing the total grant payment due to each force shown in column G of Appendix A, and these figures appear in article 3 of the 2005 Order.

6. Common Police Services

6.1 Each authority's share of that part of Scottish Ministers' expenditure on common police services which they will recover under section 36(3) of the 1967 Act may be deducted from police grant payable to the authority under section 32 of the 1967 Act. The Scottish Ministers are empowered to do this by virtue of section 36(5) of the 1967 Act.

6.2 Scottish Ministers intend to determine, under section 36(3)(b) of the 1967 Act, the amounts payable by authorities in respect of their share of the expenditure on common police services, which in 2005-06 consists of non-staff costs and support staff costs of the SDEA - OIG. The amounts, which they intend to determine, are shown in Appendix C.

6.3 The amount of police grant payable under section 32 of the 1967 Act is, (for 2005-2006) inclusive of the gross amount which they intend to recover by virtue of section 36(5) in respect of expenditure on common police services.

6.4 The effect on authorities is just the same as if the amount of police grant payable under section 32 had not included any amount representing the share of expenditure on common police services and the power under section 36(5) had not been exercised.

7. Proposed Re-determination

7.1 Scottish Ministers propose that, when they receive the audited accounts of each authority's actual expenditure for police purposes for 2004-05, they will re-determine the aggregate amount of police grant to be made for financial year 2005-06.

7.2 It is proposed that the amount of police grant to be paid to each authority for the financial year 2005-2006 would not exceed the cash limit applicable to that authority, (as shown at 8) as a result of this re-determination.

8. GAE Cash Limits

8.1 The GAE cash limit applicable to each authority is set out in the following table: -

8.2 The cash limits have been determined by Scottish Ministers apportioning to each authority part of £1,003,554,000, which Scottish Ministers have estimated to be the aggregate amount of GAE for police purposes for the financial year 2005-2006.

8.3 The calculations of the figures in the above table are shown in Appendix B, which include a sum in respect of the share of common police service costs.

8.4 The figures shown in Appendix A, column A, are based on the budgets agreed by police authorities for 2005-06. The net grant figure in column E includes an estimated sum, determined by Scottish Ministers under section 36(3) of the 1967 Act, as recoverable for common police services. The figures shown in Appendix B, column A are the amounts determined by Scottish Ministers, as GAE. Police grant will be paid up to the amount determined and shown in column H in Appendix B. The net grant figures in Appendices A and B are identical as a result of the authorities setting their budgets at or above the GAE level available.

9. Distribution of Grant Aided Expenditure

9.1 For 2005-06, the apportionment between police authorities of the aggregate amount of GAE was calculated, by agreement with the Association of Chief Police Officers in Scotland (ACPOS) and the Convention of Scottish Local Authorities (COSLA), on the basis of final recommendations from the Police GAE Working Group. The apportionment was carried out as follows:

9.2 The component for pensions and commuted sums (£169,892,000) was apportioned to authorities on the basis of forces' estimates, approved by ACPOS, of their requirements in 2005-06.

9.3 A component for Airwave (£3,848,000) was apportioned to authorities by agreement with ACPOS.

9.4 The remainder was regarded as core GAE (£829,814,000. £1,000,000 of this total was allocated to those authorities which the Police GAE Working Group recommended should receive a higher share of police GAE. £300,000 was divided on advice from ACPOS in order to equalise the estimated benefits to forces from the contracting out of prisoner escorting. The remainder was allocated in proportion to the distribution of core GAE in 2004-05.

Scottish Executive Justice Department
Police Division 1
March 2005