Debate on the Final Police Settlement 2017-18

10 February 2017

Article by Sarah Hatherley and Owen Holzinger, National Assembly for Wales Research Service

Darllenwch yr erthygl yma yn Gymraeg | View this post in Welsh

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Image from Flikr by Jon Candy Licensed under the Creative Commons

Policing policy is not devolved to Wales; however, the Welsh Government delivers an element of the annual funding as part of a three-way system that also involves the Home Office and council tax. Police forces also have access to special and specific grants and other income sources.

Under the Police Reform and Social Responsibility Act 2011 Police and Crime Commissioners (PCCs) replaced police authorities in each police force area (outside of London), with the first elections held in November 2012. More recently, PCC elections were held alongside the Assembly Elections in May 2016. PCCs appoint the chief constable, set local policing priorities and set the budget and council tax precept.

The Police settlement is derived in a two-stage process with a provisional settlement released in line with the Welsh Government’s draft budget and a final settlement in line with the final budget. The four Welsh police forces are consulted on the provisional police settlement, before agreeing the final settlement. The National Assembly for Wales must then approve this funding. As part of this process, the settlement will be debated in plenary on Tuesday 14 February 2017.

Final Police Settlement 2017-18

For 2017-18, the overall funding allocated to PCCs in Wales has been set at £349.9 million. This represents a 1.4% reduction from the 2016-17 settlement and is a 1.4% reduction for each of the four PCCs. The overall funding is outlined in table 1 below:

Table 1: Police Revenue Funding – Total Central Support

2014-15 2015-16 2016-17 2017-18
Dyfed-Powys 53.0 50.3 50.0 49.3
Gwent 76.8 72.9 72.5 71.5
North Wales 77.1 73.2 72.7 71.7
South Wales 169.2 160.6 159.6 157.4
Total   376.2   356.9   354.9   349.9

Within the £349.9 million allocation, the Welsh Government’s element is £138.7 million. This can be broken down further and comprises funding from the Revenue Support Grant (£85.8 million) and Non-domestic rates (£53 million). The remaining £211.2 million funding is provided through the Home Office. The sources of Police funding are outlined below:

Home Office Police Grant

In England and Wales, the main source of income for police forces is the central UK government grant made available through the annual Home Office Police Grant Report. The Home Office Police Grant is general revenue funding and is not ring-fenced. It is paid directly to PCCs. The Police Allocation Formula determines the allocation of central government funds between the 43 police force areas of England and Wales. This is based on the estimated workload of each police force area, including crime related activity, policing special events, policing sparsely-populated areas and population and socio-economic factors. The Home Office has recently reviewed its funding formula for police forces, which will continue to be a needs-based formula. As has been the case in recent years, the Home Office has again decided to overlay its needs-based formula with a floor mechanism. This ensures all police forces in England and Wales can expect to receive the same percentage reduction, this year this is 1.4%.

Funding from the main grant is subject to “damping”, which in 2017-18 will redistribute £12.2 million from South Wales and £417k from Gwent to Dyfed Powys (an additional £5.1 million) and North Wales (an additional £7.4 million). The PCCs for Dyfed-Powys (£3.6 million) and North Wales (£2.4 million) also receive top-up grant.

Welsh Government formula grant/ Police Revenue Settlement

In Wales, the equivalent funding previously provided by the UK’s Department for Communities and Local Government in England is devolved to the Welsh Government. The Welsh Government funding to PCCs still forms part of the local government finance settlement and is paid under provisions of the Local Government Finance Act 1988 and must be approved by the National Assembly for Wales.

Council tax precept

Each police force can also raise additional revenue funding through council tax precepts. The elected PCC in each police force area determines the annual level of the police precept, which is added to residential council tax bills. A greater proportion of police funding comes from council tax in Wales than in England; 37% compared with an average of 24% in England in 2015-16. There is also much less variation between the Welsh police forces than in England. PCCs are known as major precepting authorities. Whilst they set the precept, the funds are collected on their behalf by local authorities. In 2016-17 the Police element of council tax amounted to approximately 16% of the total, average, council tax bill in Wales.

The Welsh Government has the power to cap excessive council tax rises (generally considered to be anything over 5%).

Specific and special grants

There are also a smaller number of special and specific grants that are ring-fenced for national policing priorities. The Home Office provides a series of specific and special grants in addition to the Police Main Grant. This funding comes from the Home Office resource departmental expenditure limit crime and policing group. Some of the grants are funded by top-slicing the Police Main Grant, that is reducing the funding available for general revenue funding through the Police Main Grant to pay for some specific grants. The largest element of this is the Counter Terrorism Police Grant; other grants include the Police Special Grant and the Police Innovation Fund.

Other income

Police forces can also charge for some of their services. The main source of income from fees and charges is through charging for special police services. These are police services provided over and above core policing at the request of a person or organisations, such as football matches and music concerts. The basic powers to charge for services are set out in the Police Act 1996. Police forces are prevented from making a profit on special police services and for some types of event are prevented from recouping 100% of costs.

More information regarding how each element of police funding is calculated can be found in the Local Government Finance Report (No. 2) 2017-18 (Final Settlement – Police and Crime Commissioners). Welsh Government has published the financial tables and other information regarding the police settlement on their website.

Welsh Government Second Supplementary Budget 2016-17

09 February 2017

Article by Gareth Thomas and David Millett, National Assembly for Wales Research Service

Darllenwch yr erthygl yma yn Gymraeg | View this post in Welsh

The Cabinet Secretary for Finance and Local Government (Mark Drakeford AM) laid the Second Supplementary Budget 2016-17 on 7 February 2017.  This was accompanied by an explanatory note and tables showing departmental allocations.  This supplementary budget amends the First Supplementary Budget 2016-17 approved by the National Assembly in July 2016.

Over two thirds of the revenue allocations in this budget are additional funding to the NHS, including £75.9 million to address forecast overspends by Local Health Boards (£7.5 million of which is in addition to the £68.4 million announced in November 2016), £50 million to mitigate winter pressures, £27 million to fund a shortfall in income from the Pharmaceutical Price Regulation Scheme and £16 million to support the launch of the New Treatment Fund

Also, £20 million has been allocated to the Higher Education Funding Council for Wales to address financial demands from the recommendations of the Diamond Review, £8.5 million to establish Transport Wales to design and let the rail and South Wales Metro franchises, and £4 million to Tata Steel for skills support.

The main capital allocations are £47 million to support trunk road projects (including £22 million for M4 Route Development), £33.4 million capital grants and loans to deliver economic development priorities and £30 million to support the Programme for Government commitment to build an additional 20,000 affordable homes.

These investments are funded by a mixture of allocations from reserves and funds carried over from the previous financial year, and also takes account of changes in funding from the UK Government.

Changes in overall budget allocations, and in allocation of fiscal revenue and capital expenditure between different Welsh Government departments between the previous Supplementary Budget and this one, are summarised in the accompanying chart.

Infographic showing key allocations in the Welsh Government Second Supplementary Budget 2016-17

Fiscal Framework

16 January 2017

Article by Martin Jennings, National Assembly for Wales Research Service

View this post in Welsh | Darllenwch yr erthygl yma yn Gymraeg

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Mark Drakeford, the Cabinet Secretary for Finance and Local Government, will make a statement in plenary regarding the Fiscal Framework on 17 January.

This fiscal framework was jointly announced by the UK and Welsh Governments on 19 December following months of negotiations.

The framework is of vital importance to Wales as it will determine both how the block grant is adjusted following the devolution of taxes in 2018 and how these adjustments are made in future years.

The Welsh Government had previously stated that the Assembly should not consent to the Wales Bill before such an agreement on long-term funding and that this agreement must incorporate an allowance for relative needs in Wales.

The Finance Committee held a scrutiny session with Mark Drakeford on this Framework on 11 January 2017. The Cabinet Secretary stated that the fiscal framework is “no longer an impediment” to Members voting for the Wales Bill.

The Cabinet Secretary also quoted two sets of modelling assumptions they had undertaken that suggested Wales could be £500 million or £1 billion cumulatively better off as a result of the Fiscal Framework agreement over the next 10 years.

Some key points in relation to the Framework are:

  • Inclusion of a new needs-based factor set at 115% for adjustments to the Welsh block grant, through the Barnett formula.
  • Assembly able to set Welsh rates of income tax from April 2019 (subject to passage of Wales Bill and Welsh Government policy).
  • A block grant adjustment reflecting the different income tax base in Wales.
  • Increased capital borrowing powers from £500 million to £1bn.
  • Creation of a new Welsh cash reserve with more flexibility than the current Budget Exchange System.

New Publication: Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Bill – Bill Summary

10 January 2017

Article by Christian Tipples, National Assembly for Wales Research Service

Darllenwch yr erthygl yma yn Gymraeg | View this post in Welsh

Introduction

Date of introduction: 12 September 2016

Member in charge: Mark Drakeford AM, Cabinet Secretary for Finance and Local Government

Assembly Committee responsible for Stage 1 scrutiny: Finance Committee

Stage 1 reporting deadline: 22 December 2016

The Land Transaction and Anti-avoidance of Devolved Taxes (Wales) Bill (‘the Bill’) was laid before the Assembly on 12 September 2016. The Bill was introduced in plenary by Mark Drakeford, the Cabinet Secretary for Finance and Local Government, on 13 September 2016.

The Bill is the first tax specific legislation to be introduced in the Assembly. It establishes provisions for Land Transaction Tax (LTT) in Wales, which will replace UK Stamp Duty Land Tax (SDLT) in April 2018. The Bill is the second in the series of three bills relating to the devolution of tax powers to Wales as stated in the Wales Act 2014.

The Bill follows the Tax Collection and Management Act (Wales) 2016, which received Royal Assent on 25 April 2016. The Act provided the legal framework for the future collection and management of devolved taxes in Wales and established the Welsh Revenue Authority (WRA), the body responsible for collecting and managing devolved taxes.

Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Bill – Bill Summary (PDF, 355KB)

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Final local government settlement 2017-18 published

21 December 2016

Article by Martin Jennings and David Millett, National Assembly for Wales Research Service

Darllenwch yr erthygl yma yn Gymraeg | View this post in Welsh

Following the Welsh Government Final Budget for 2017-18 (released on Tuesday 20 December 2016) the Cabinet Secretary for Finance and Local Government has today published the Final Local Government Settlement 2017-18, this outlines funding for each of Wales’ twenty-two local authorities.

The total settlement is £4.113 billion, which is an increase of £10 million (0.2%) when compared to the Final Settlement in 2016-17. This is the first increase in the local government settlement since 2013-14.

The provisional settlement includes increases and decreases in funding for different local authorities. The largest increase is 1.1% in Gwynedd and the largest decrease is -0.5% for three local authorities (Wrexham, Powys and Merthyr Tydfil).

The full breakdown of percentage change in funding by local authority is outlined in the below infographic.

draft-budget-2017-18-local-government-settlement-01

This year no authority will experience a decrease more than -0.5%. Of the three authorities where the funding change equates to -0.5%, two have received top-up funding totalling £1.6 million to ensure they do not experience a reduction beyond -0.5%, allocated as below:

  • Powys – £1,237,000
  • Merthyr Tydfil – £391,000

General Capital Funding for local authorities in 2017-18 is £143 million.

The Cabinet Secretary’s letter to local authorities, the Local Government Finance Report 2017-18 and the Local Government Revenue and Capital Settlement 2017-18: All Wales – Tables, can be found on the Welsh Government website.