04/06/2015 00:01 BST | Updated 03/06/2016 06:12 BST

Warning Over Police Funding Cuts

The Home Office does not have enough information to determine how much further it can cut police funding without "degrading" services, the public spending watchdog has warned.

A report by the National Audit Office (NAO) also concluded that forces in England and Wales do not have a clear understanding of the demands placed on them or the factors that affect their costs.

Central government funding for forces has been slashed by £2.3billion, or 25%, between 2010-11 and 2015-16, the assessment of forces' financial sustainability found.

Overall the amount handed to police and crime commissioners (PCCs), who set budgets in most of the 43 forces, fell by 18% in real-terms over the period when local council tax receipts received by forces were included. The total available to individual forces fell by between 12% and 23%.

Separate figures show the number of officers fell by 16,659 between 2010 and 2014.

Policing minister Mike Penning insisted police still have the resources "to do their important work".

The NAO's findings come weeks after Home Secretary Theresa May accused the Police Federation of "crying wolf" about the impact of austerity as she warned rank-and-file officers to brace themselves for fresh cuts.

The report said: "The Department has insufficient information to determine how much further it can reduce funding without degrading services, or when it may need to support individual forces."

Police watchdog HM Inspectorate of Constabulary (HMIC) provides regular information on policing, checking and verifying data provided by forces through inspections.

The report added: "However, in our view there is currently insufficient information to identify signs of the sector being unable to deliver services, unclear links between financial reductions and service pressures, and limited data on police productivity."

The Home Office should build on an ongoing review of funding formulas for police and adopt an approach "that takes account of forces' local circumstances more fairly", the report recommended.

Although statistics show crime falling since 2010, police forces were said to have an "insufficient understanding of the demand for services" and "will need to transform the service they deliver if they are to meet the financial challenge and address the changing nature of crime".

Forces have successfully reduced costs but most "do not have a thorough evidence-based understanding of demand, or what affects their costs", the report said.

"It is therefore difficult for them to transform services intelligently, show how much resource they need, and demonstrate that they are delivering value for money," it added.

Financial reserves across all forces with comparable data have increased by 35% in real terms between 2010-11 and 2013-14, the report said, but stressed that "this is not necessarily a sign of financial health".

Amyas Morse, head of the NAO, said: "Although police forces have successfully reduced costs, without a thorough understanding of demand or the factors that bear on their costs it is difficult for them to transform services intelligently.

"The Home Office also needs to be better informed to discharge its responsibilities. 

"It needs to work with HMIC, the College of Policing and forces to gain a clearer understanding of the health of the service, particularly around demand and on when forces may be at risk of failing to meet the needs of local communities."

Mr Penning insisted police reform is working and said figures show crime is down by more than a quarter since 2010.

"There is no question that the police still have the resources to do their important work," he added.

"Her Majesty's Inspectorate of Constabulary has made clear that the police are successfully meeting the challenge of balancing their books while protecting the frontline and delivering reductions in crime.

"The Government has committed to a fundamental review of the police funding formula to ensure that allocations to local forces are fair and appropriate. We will consult police forces fully in due course."

Steve White, chairman of the Police Federation of England and Wales, said: "What this report shows is that the Home Office does not have the evidence to claim that policing is coping adequately with the cuts of the last five years.

"Ministers point to falling crime rates as evidence the service is coping, however they are basing this argument on a false premise.

"Crime stats neither take account of all crime – some of which is on the rise - but nor do they take account of all the other vital work that officers do which doesn't fall into bald crime statistics. This includes counter-terrorism, monitoring sex offenders, child protection, policing football matches - the list goes on."

Alex Marshall, chief executive of the College of Policing, said: "Earlier this year the College published the first national picture of demand and we welcome the NAO focus on this work. Our analysis showed that, while the number of crimes may have fallen, the level of demand has not reduced in the same way.

"Investigating and preventing crime has become more complex, particularly in areas such as child abuse and domestic abuse, and the costs of crime have not fallen as much as overall numbers of crime.

"We are already seeing forces adopt our methodology to develop their own analysis of demand at a local level, and we will continue to build on this early evidence base, to help equip those in policing with the knowledge and skills they need to protect the public, cut crime and catch criminals."

National Police Chiefs' Council vice chairman Assistant Commissioner Martin Hewitt said forces "have risen to the challenge" of austerity.

"It's unrealistic to think that further cuts can be absorbed with no significant impact on the service," he added.

Her Majesty's Chief Inspector of Constabulary Sir Thomas Winsor said: "HMIC uses some data provided by the police – which in many respects is inadequate – but its primary instrument is independent, expert and objective inspection involving on-the-ground work, interviews, verification and corroboration.

"HMIC is designing a new form of reporting – based on regulatory practice in utilities – to be provided annually by chief constables and containing detailed information about demand, resources and police assets, and forces' plans to improve their efficiency and effectiveness.

"These will revolutionise information about the police, and thereby improve accountability considerably."