Grant settlement 2011/12

Report: 7
Date: 31 March 2011
By: Treasurer

Summary

This report sets out the detail of the Government’s announced grant settlement for 2011/12 and indicative allocations for 2012/13 to 2014/15 and the implications for the funding of the Authority.

A. Recommendations

That Members note the details of the Government’s grant settlement announcement for 2011/12 and the detail of the settlement for the MPA.

B. Supporting information

1. On 13 December 2010 the Policing Minister, Nick Herbert, announced the provisional 2011/12 police funding settlement at the same time as the provisional local government finance settlement was announced. The Home Office also published indicative allocations for 2012/13, 2013/14 and 2014/15. The final 2011/12 grant settlement figures were approved by Parliament on the 9th February.

2. Changes in Formula Grant to police authorities in 2011/12 ranged from an increase of 6.4% to a decrease of 26.5%. However all authorities were damped at the average level of reduction of 5.1%. In England 18 police authorities received an increase in funding as a result of damping, 21 police authorities therefore lost money as result of damping. The average reduction in 2011/12 is 6.7%.

3. The Government will pay a grant, equivalent to a 2.5% increase in local council tax, to those authorities that agree to freeze their council tax in 2011/12. This grant will be paid for three years, in ten monthly instalments in each year, from April 2011.

4. The Government has made it clear that it believes forces will find these reductions challenging, but it does feel that forces can meet the challenge whilst still protecting the frontline and prioritising the visibility and availability of policing

Specific Grants

5. Rule 2 Grant, Basic Command Unit (BCU) and Crime Fighting Fund (CFF) specific grants have been consolidated into Police Grant. Both the Neighbourhood Policing Fund and Counter Terrorism Grant will remain as ringfenced specific grants in 2011/12. The new Council Tax Freeze Grant will be paid to eligible authorities as a separate unringfenced grant. With regard the MPA the decision re precept lies with the Mayor, and therefore the grant will be paid to the GLA.

6. The MPA has been granted a specific exemption to treat the Neighbourhood Policing Fund as unringfenced for 2011/12 and 2012/13 i.e. it can be used for any policing purpose. From 2013/14 onwards it will, in line with all other police authorities, become part of the police main grant.

7. Rule 2, BCU and CFF grants are now allocated via the Police Allocation Formula and therefore according to the distribution of Police Grant. Those authorities which, particularly benefited from specific grant allocations, are likely to lose out as a result of this change. Since Police Grant is subject to damping those authorities which lose funding through damping are more adversely affected by this change.

Metropolitan Police Authority Allocations

8. Members will be aware that grant and precept income for the MPA are received by the Mayor of London, who then reflects the settlement allocation within the overall consolidated budget and proposes a draft budget and precept level as a consolidated budget and as individual budget proposals for each of the functional bodies including the MPA.

9. The Mayor’s budget proposals for 2011/12 were approved by the Assembly on 23 February 2011.

10. The overall impact of this announcement on Government funding available for the MPA, compared to that received in the current financial year, is shown in Table 1 below. The table also includes details of the counter terrorism and dedicated security posts grant which have now been announced.

11. The MPA gains £35m of grant in 2011/12 as a result of damping.

Table 1: Government Funding Changes

Capital Grant

12. The provisional Police general capital allocation for 2011/12 was also announced along with indicative amounts for 2012/13 – 2014/15, details of which are provided in table 2 below.

Conclusions

13. The Government’s funding settlement presents a significant challenge to the service nationally and in London.

14. The front loading of the cuts in the early years is particularly challenging. From a separate paper on the agenda, members will note that the MPA now has a balanced budget for 2011/12, but there remain significant budget gaps in subsequent years, which are currently being worked on.

C. Other organisational and community implications

1. Equality and Diversity Impact

1.1 There are no direct implications arising from this report, which impact upon equality or diversity.

2. Consideration of MET Forward

2.1 The MPA budget supports the MPS / MPA in taking forward all strands of MET Forward.

3. Financial Implications

3.1 The financial implications are encompassed within this report.

4. Legal Implications

4.1 The Mayor’s budget including the component budget for the MPA was approved by the London Assembly on 23rd February 2011.

5. Environmental Implications

5.1 There are no environmental implications arising directly from this report:

6. Risk Implications

6.1 There is no risk impact directly from the funding announcement and the risk impact of implementing the cuts within the MPA budget is considered as part of the process of developing the budget and medium term financial forecast.

D. Background papers

None

E. Contact details

Report authors: Bob Atkins, Treasurer, MPA

For more information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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