Guide to the police allocation formula

Overview

Overall funding for the policing system is determined through the government’s periodic spending review process. The police allocation formula (PAF) is a calculation tool used to divide the available grant funding between the 43 territorial police forces in England and Wales based on an assessment of their relative needs.

Since 2013/14 funding shares have remained unchanged in favour of each force receiving the same percentage annual increase or decrease in core grant funding. This has supported budget certainty. Decisions on funding distribution are made annually at the police funding settlement.

A detailed technical breakdown of the PAF distribution methodology and force level allocations are included in the annual Police Grant Report published by the Home Office.

The Home Office has committed to review the PAF as part of the Police Reform White Paper: From local to national: a new model for policing - GOV.UK.

Why the PAF is used

Designing a system to fund the 43 police forces of England and Wales is complex, as there are many diverse drivers of demand on police force time and resources. The PAF is a way to measure the need for policing in areas relative to each other, by using a range of indicators of demand that are available on a consistent basis for all police forces. Indicators are used rather than actual recorded crimes to best account for underlying demand in an area.

The limitations of available data means that the PAF cannot capture every factor that will affect relative need for policing in an area. However, it captures as much as possible based on the data available at the time it was developed, and it is designed to be able to provide a good statistical prediction of relative police workload across the country.

It is important to note that although funding allocations are based on predicted relative demand for different types of police activity, Police and Crime Commissioner (PCCs), mayors with PCC responsibilities, and chief constables do not have to spend their funding in-line with the way the total amount of money received has been calculated. PCCs and mayors with PCC responsibilities have operational independence over local resource allocation, as they are best placed to make resourcing decisions within their communities based on their local knowledge and experience.

The PAF is not used to distribute all grant funding to policing in England and Wales. Police forces can also raise other sources of funding, such as through council tax (known as the police precept), which is at the discretion of locally elected PCCs and mayors with PCC functions.

How the PAF distributes funding

The PAF divides police demand into 11 broad categories. This includes crime demands, such as robbery or vehicle crimes, as well as non-crime workload such as road traffic accidents or policing special events.

Using data that the police provided on how they spend their time, we know that some of these categories take up more police time than others. As a result, more weight is put on activities which take up a lot of police time, like investigating violent crime, and less by reference to activities which take up less time, like policing special events.

The PAF then estimates the predicted level of demand within each category, for each police force area. This is done based on various socio-economic and demographic indicators that have been shown to be strong predictors of those demand types.

For instance, the data showed that rural forces tended to have more road traffic accidents than urban ones. That is, the more sparse an area’s population, the more likely there is to be road traffic accidents. This means that a police force area that has a high population sparsity will be allocated more of the funding that is available for the traffic accidents category than an area with low sparsity. This relationship is given in Appendix A of the Police Grant Report. Again, these allocations do not dictate how police forces must spend their funding, only how much total funding they receive.

Different socio-economic and demographic indicators are used for each demand category based on the established statistical relationships. Examples of indicators used include the daytime population inflow (visitors to an area), number of bars per hectare, and overcrowded households, all of which have been shown to have a statistical relationship to different types of police demand.

It is important to note that the inclusion of an indicator does not necessarily imply a causal relationship with the demand type. It only means that the indicator has a statistical relationship with the demand. For example, the PAF is not suggesting that population sparsity particularly causes road traffic accidents, only that it can be used as a statistical predictor of demand. The equations for all the police demand indicators can be found in the Police Grant Report.

How PAF deals with regional costs in different parts of England and Wales

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

The ACA factor for each police force can be viewed in the Police Grant Report.