Finance and Audit

The Police Authority has set a Net Budget Requirement for 2011/12 of £332.645m. The precept, which provides the balance of funding not covered by Government Grant, is set at £61.504m. In council tax terms this is equivalent to £97.49 per property at Band A and £146.23 at Band D, a nil increase on the current year's level.

This position has been achieved through the approval of £20.097m of budget reductions, along with the receipt of a Council Tax Freeze grant, which provides the equivalent of a 2.5% increase in the precept.

During the formulation of the 2010/11 budget, the Authority set a budget of consolidation given the uncertainties of the next Comprehensive Spending Review (CSR) announcement. This has at least allowed the Authority to face 2011/12 and beyond in a financially resilient position, that at any other time, would have provided a sound foundation for future investment in priority services.

In the Local Government Finance Settlement, which covers the next 4 years, (i.e. the CSR period), the Authority has been awarded a net reduction in general grants of 5.141%, i.e. £14.701m, for 2011/12. The level of the settlement awarded to this Authority equates to the same percentage reduction for all Police Authorities in England and Wales. The Government has also provided details of the police grant for 2012/13 and this will see the Authority's grant reduce by a further 6.703%, i.e. £18.182m. Unfortunately, the third and fourth years of the settlement will only be confirmed following the Local Government Resource Review currently being undertaken by the Government. Therefore, a number of assumptions have been made regarding the likely grant funding in these years.

Consequently, the above settlement has presented the Authority with two very significant financial challenges, i.e. the enormity of the required savings over 4 years (£61.4m) and the "front loading" of the savings requiring £38.5m to be saved over the initial 2 year period.

The 2011/12 budget sets out a strategy for implementing the quickest and deepest cuts in living memory, whilst, by "back loading" the impact on frontline services seeks to migrate, as much as possible the timing of the impact on operational policing. Undoubtedly, this challenge will become greater as cuts run deeper. However, it is inevitable that this impact will grow over the 4 year period.

Paul Johnson BA (HONS) CPFA

Treasurer

Merseyside Police Authority