Labour’s Zero-Based Review

Interim Report Number 1: Policing Labour’s Zero-Based Review: Interim Report No.1

Policing Part One – Exploring efficiencies; prioritising the frontline

FOREWORD

David Cameron and are set to break their promise to balance the books by next year and so it will fall to the next Labour Government to finish the job where the Conservatives have failed. In tough times Labour knows we will have to make tough decisions. We have pledged, and will legislate for, tough fiscal rules to deliver a surplus on the current budget and get the national debt falling as soon as possible in the next Parliament.

Our Zero-Based Review project is delving deep into every pound the Government spends in order to throw light on the current Government’s waste and false economies. But the Zero- Based Review will also help the next Labour Government to ruthlessly prioritise public spending and deliver service reform and improvements, rather than just salami-slicing budgets and watching services deteriorate, as has been the practise under the Conservatives and Liberal Democrats.

This series of publications will set out some of the ways in which a tighter approach to financial management under Labour could free up resources, whilst also maximising the value for money of our public services.

In the first of our interim reports from Labour’s Zero-Based Review, we highlight the first phase in Labour’s policing work, and set out how we will make nearly £250 million of savings in the Home Office budget in order to better protect frontline policing. We outline examples of nearly a quarter of a billion pounds where Ministers could make savings immediately or implement efficiencies to hold off their planned future cuts to the frontline, if they chose to do so.

Specifically, we detail recommendations on how Home Office and policing structures should be less wasteful, how savings could be made through smarter purchasing and management of the procurement chain, and where the costs of regulation should be recovered in a way which does not disadvantage the taxpayer.

Police forces are planning cuts for the next financial year 2015/16 of over 1,000 officers – because Government plans are not helping police forces protect the frontline.

Our first priority has been to look at changes and reforms to meet the budget already set for 2015/16, finding savings to protect the frontline, while longer-term work is underway to

1 find future savings. Labour’s Zero-Based Review has identified initial cuts, savings and revenue-raising measures to protect the frontline and help meet the financial constraints on policing budgets.

Police forces are attempting to save money through selling estate, and a degree of collaboration, in 2015/16, with little or no support from the Government. However, forces have told us they are also having to cut a further 1,100 frontline police officers in 2015/16 to meet the savings required.

Sir Hugh Orde has warned that future cuts could mean “a greater number of officer posts would be involved, and this could potentially have serious implications for statutory responsibilities and the safeguarding of the most vulnerable”.

Through scrapping the Police and Crime Commissioner elections, saving £50 million, implementing full-cost recovery for gun licensing to raise £17.2 million and levying increased fees for police DORs (Driver Offender Retraining), raising £9 million – Labour will stop the cut of 1,100 officers we know are already planned under the Theresa May for 2015/16, having found the savings required through making different decisions with different priorities.

Furthermore, Labour will support the police in finding additional savings to meet the pressures on police force budgets into the future, to better protect officers on the frontline – including through mandatory national procurement, enhanced collaboration and bearing down on overtime in forces performing below the level of the majority.

This document is intended to present an indication of our direction of travel – and only the first party of Labour’s work to reform policing. It is illustrative of the next Labour Government’s plans to bring the deficit down in a fairer way, whilst protecting public services, and delivering big reform, without big spending.

Chris Leslie MP, Shadow Chief Secretary to the Treasury

Yvette Cooper MP, Shadow Home Secretary

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LABOUR’S ZERO-BASED REVIEW

The Zero-Based Review is a root and branch review of every pound the Government spends and will help the next Labour Government to ruthlessly prioritise public spending and deliver service reform and improvements, rather than just salami-slicing budgets and watching services deteriorate, as has been the practise under the Conservatives and Liberal Democrats.

This process is intended not only to reveal the current Government’s costly errors and skewed priorities but will require the Labour Party to grasp opportunities to deliver reformed public services which are valued and justifiable; which provide value for money and quality services that meet the needs and demands of the public who use them; and which can both make savings, and secure economic growth.

Fundamentally reviewing current Government spending is a necessary step in preparing for office. Last year MP, the Shadow Chancellor, announced that Labour would conduct a detailed review of every pound the Government spends, in order to help prepare ourselves for the challenges the next administration will face. We set out the principles of our Zero-Based Review in a Phase 1 discussion document in December.

Since the start of 2014 Chris Leslie MP, Shadow Chief Secretary to the Treasury, has completed the first round of the Zero-Based Review, analysing every departmental budget and exploring public service reform and redesign in detail with each Shadow team. This process has been guided by the following five principles:

• We will use public money more efficiently – and seek efficiencies in every area of government spending • We will use all departmental budgets to strengthen the economy – supporting growth, job creation, innovation and exports • We will ensure greater fairness in the impact of spending – and will prioritise spending that prevents future problems • At the same time as increasing efficiency, the quality and experience of public service must improve – offering the speech, simplicity and responsiveness that people now expect • We will strengthen accountability and transparency across government – with clear efficiency incentives for all departments

No department has been exempt from this process, including any areas that we may choose to protect or ring-fence, because efficiency will be necessary across all areas of spending. Our work for Phase 1 of our Zero-Based Review has been informed by the wide range of work and reports which have contributed to the Labour Party’s Policy Review: the Armitt

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Review of long-term infrastructure planning; the Local Government Innovation Taskforce; the Stevens Review of policing and crime; and the Adonis Growth Review, to mention just a few.

Labour’s Treasury team will continue to collaborate with Shadow Ministers to expose waste, mismanagement and poor decision making by David Cameron’s Government, as well as increase the scrutiny of each departmental balance sheet over the months to come. We will complete our Zero-Based Review with our first Spending Review in Government, but this early work is crucial to inform the policy choices we will make. As and Ed Balls have outline the next Labour government will be about big reforms and not big spending.

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FAILURES OF THE TORY-LED APPROACH TO POLICING

The current Government will fail to eradicate the deficit as they promised, leaving behind a £75 billion shortfall which will place an incredible burden on public services for the years ahead. But as the next Labour Government, we are determined that savings can be found in a fairer way, viewed through the values that we hold and our determination to protect the frontline.

The Tory-led approach has been wasteful and inefficient, indecisive and characterised by too many costly u-turns, and has undermined economic growth.

• Cutting the frontline rather than eliminating waste: Theresa May frontloaded cuts to the frontline in the first two years of the Parliament, making no effort to improve collaboration and regional delivery of specialist functions. Instead forces rushed to cut frontline numbers rather than reforming the services they provide. • Fragmentation of services: The arrival of Police and Crime Commissioners has added to the fragmented approach to police reform – with some forces becoming less collaborative, and PCCs pulling out of arrangements with other forces that could save millions of pounds. In the criminal justice system, and across our public services Ministers are driving fragmentation, reorganisation and competition just at a time when local services need to collaborate more to deliver better services and save money too. • The wrong priorities: The Tories chose to spend £75 million on elections for Police and Crime Commissioners, in November, resulting in record-low turnouts. According to the Home Affairs Select Committee PCCs have also cost more than their predecessors, with expensive deputies appointed in some areas. Meanwhile 16,000 police officers have been cut, with neighbourhood policing all but disappearing in some areas. There have been increases in violent crime, but fewer criminals have been brought to justice. Meanwhile standards in policing have caused understandable public concern, but the Independent Police Complaints Commission remains unreformed and inadequate. • Short-termism: Theresa May’s short-termist approach to bringing down the Home Office’s police and crime budget is putting at risk the Government’s duty to ensure our police service is fit for the 21st Century. Neighbourhood policing faces an existential crisis if Ministers continue with their current approach. Domestic and sexual violence will continue to be a neglected crime, especially as the incidence of violence in teenage relationships increases. An increase in reported online fraud and the all too present reminder of online child abuse raise questions about the preparedness of modern policing for the scale of the cyber challenge. Tackling these challenges with a long-term perspective was the aim of the Independent Commission on the Future of Policing, from which Labour will draw inspiration for a programme of positive reform.

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PART ONE OF LABOUR’S ZERO-BASED REVIEW OF THE POLICING BUDGET

In this document, Shadow Home Secretary sets out progress made so far in our work to meet the fiscal challenges a Labour Government would inherit from the Tories’ failed economic policies. Further work in finding savings within policing is ongoing.

Over the last year the Shadow Home Secretary has consulted experts in the field to maximise savings and eliminate waste in the most substantial segment of the Home Office budget – police spending. Longer-term work is looking at savings from enhanced collaboration and sharing of services that can be delivered across larger areas – there remains significant scope for real savings in this area, as Her Majesty’s Inspectorate of Constabulary have noted.

This analysis is contributing to Labour’s Zero-Based Review.

Further work is being undertaken in policing and other areas of the Home Office budget following a series of Tory failures – including expensive PCC elections and by-elections, the £224 million wasted following the contractual dispute with Raytheon, the plummet in fines for hiring illegal migrants, taking resources away from enforcement, the failure of the Police ICT company despite taking millions away from police forces, and no credible plan on how to achieve further police savings.

EARLY CONCLUSIONS AND ACTION REQUIRED

In this interim report we highlight four new areas where further savings should be achieved from the Home Office departmental budget:

1. Stronger action is achievable to reduce procurement costs through closer police force collaboration. Home Office agencies could link up more effectively with other branches of Government and public services to create stronger synergies – and cost efficiencies. 2. Revenues could be secured and protected more effectively, including a more active approach to the collection of the proceeds of crime. 3. The costs of regulation and protecting the public could be properly recovered from activities which require supervision. 4. Criminal justice structures could be de-cluttered and more cost-effective.

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1. NATIONAL PROCUREMENT – REFORMS BETWEEN POLICE FORCES AND WITH OTHER PUBLIC SERVICES

The Tory-led Government has done little to encourage more collaborative procurement, as the National Audit Office laid bare. Large differences in the prices paid for different items – from cars to handcuffs – have not been addressed from compelling forces to collaborate. The next Labour Government will ensure shared procurement of goods and services required by public service providers to pool purchasing more actively and share data across departments on inventory that could be better shared to avoid waste. This will help to protect the frontline.

None of this has been addressed by the current Government – despite procurement accounting for £2.2 billion (including ICT) each year in police spending.

The procurement situation remains piecemeal, with little joint purchasing and a failure to pursue reforms seen in other services, such as the Prison Service. And the Police ICT company has badly failed – not even getting off the ground, but taking some money away from forces.

Analysis from Labour’s review work highlights the huge differences forces are spending on basic items:

Source: National Audit Office; Police Procurement: http://www.nao.org.uk/report/police- procurement-2/

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Utilising figures from the National Audit Office evidences the room for substantial savings:

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Reforming procurement policy

As the independent Stevens Commission on the Future of Policing concluded, "the continued failure to manage procurement is not only costly in economic terms and wasteful of human effort but it potentially compromises the efficiency and effectiveness of investigation and other policing tasks".

Labour's answer, following the recommendations of the Stevens Commission, is to implement a national procurement strategy which secures integration of procurement, common standards and value for money for these services.

Police forces will not be allowed to procure outside of the common standards and value for money framework.

Summary of analysis and case studies:

Based on the detailed analysis of the NAO data, examples from across the public sector, and a private sector comparison, experts conservatively estimate that savings of 20% across the Parliament are possible (through analysing spends on car fleet, clothing, legal services, consultancy) – with an initial savings of £172million in the first year to help meet the budget already set for 15/16. Procuring in this way will help protect the frontline from the planned Tory cuts to police numbers, instead meeting the budget through working differently.

These savings will increase in future years as further procurement arrangements are managed jointly. Provisional estimates suggest our procurement plan would see savings increase to £301 million and £430 million by 2017.

Joint Procurement Savings from Labour’s policy (2015/16): £172 million

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2. REVENUE RAISING AND PROTECTION

It is clear from the work so far across departments that more can and should be being done to protect Government revenues, and also boost the income generating potential of policing activity. Analysis of Home Office accounts has revealed instances of failure to recover costs, error, and negligence which are occurring Government-wide and which are contributing to costly waste. It is vital that public services are not undercut because of poor management of revenues. Last year the Government was owed an estimate £22 billion, a sum equivalent to a fifth of the total funding which goes into healthcare in the UK and sufficient to construct 1,500 new schools.

The Zero-Based Review is exploring options for how Government can do more to ensure that ‘non-tax receivables’ and debts owed are pursued in a more effective and concerted manner. For example, the level of unpaid court fines which is unacceptably high and the proceeds of crime are collected in too un-rigorous a way by the criminal justice system.

A few specific examples of where this work has already identified the potential for savings include;

(a) Increase in Police DOR (Driver Offender Retraining) fee

The police charge for speed awareness courses, often provided through third parties. The South Yorkshire force is choosing to raise £400,000 a year through a £5 increase in one of the courses. Following an FOI into the policies of each force, Labour will instigate a national increase estimated to bring a further £9 million into policing.

Increase in Police DORs Savings from Labour’s policy (2015/16): £9 million

(b) The UK needs to improve its recovery of the proceeds of crime

The current Government are failing to make criminals pay, with the National Audit Office reporting that only 26p out of every £100 of criminal proceeds ever gets recovered. This means that over 99% of the proceeds of crime is kept by the perpetrator, a totally unacceptable situation.

The next Labour Government will give police and prosecutors the tools they need to freeze criminal assets at the earliest stage, to go after money hidden overseas, and to crack down on the bogus schemes that criminals are using to hide their assets with third parties.

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3. RECOVERY OF THE COSTS OF REGULATION – LICENSING OF ACTIVITIES REQUIRING SUPERVISION

The current Government has not given consistent thought to whether and how the costs of economic regulation should be borne more fairly by the sector requiring oversight or intervention. While some departments have designed regulation to be fully funded by industry, others have taken the view that taxpayer subsidy of regulatory costs is necessary.

Labour believes that the principle of full cost recovery needs to play a greater role. When there is less money around, it is right that the taxpayer is not left the bear an unfair share of the cost of regulating activities that do not have obvious public benefit. It is also important for revenues to be recovered where they are owed.

Firearms Regulation – full cost recovery of gun licences

At present a five-year shotgun or firearms license costs just £50 and a renewal only £40. A rod license for migratory fish, which does not require background checks, would cost £360 over the same period (£72pa).

ACPO estimate that each license applications costs nearly £200 to process and that the net cost to the police of operating a licensing regime is £17.2 million a year. The Treasury document ‘Managing Public Money’, which offers guidelines to Government Departments on how to spend money states (para 6.2) “Basic principle: The standard approach is to set charges to recover full costs […] This approach is simply intended to make sure that the government neither profits at the expense of consumers nor makes a loss for taxpayers to subsidise.”

The Prime Minister personally intervened to exempt firearms licenses from this principle. Labour would end the exemption for firearms licensing and implement full cost recovery; saving the Police £17.2 million a year.

Gun Licence Full-cost Recovery Savings from Labour’s policy (2015/16): £17.2 million

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4. DECLUTTERING AND STREAMLINING – FURTHER ACTION IN THE CRIMINAL JUSTICE SYSTEM

Administrative structures in the emergency services need to be reviewed. This Government has introduced controversial Police and Crime Commissioners, yet overseen the job losses of thousands of frontline police. Greater synergies and widespread de-cluttering of the machinery of government, particularly at local level, should be encouraged, as advocated by Chris Leslie in February 2014. The next Labour Government will learn the lessons from the Local Government Innovation Task Force and the Adonis Review and devolve to the frontline. But to make savings, and reform public services around the individual user, it must also de-clutter.

In policing, Lord Stevens’ Independent Commission on Policy commissioned by Shadow Home Secretary Yvette Cooper has set out a series of options for reform. The Tory-led Government’s fragmentary approach to budget cuts in public services needs to be countered, not least in policing and crime, where partnership and joint working is needed instead. This Government came to power promising that the frontline would not be hit, yet 8,500 frontline policing jobs have been lost. Neighbourhood policing is being eroded as the current Government has prioritised spending £100 million (including an additional £25 million from holding elections in November) on Police and Crime Commissioners which barely 15 per cent of the population voted for, while victims of crime are being unfairly let down. Fewer police on the beat, fewer traffic officers, and less justice. The next Labour Government will do things differently.

Scrapping Police and Crime Commissioners

Police and Crime Commissioners, and the expensive elections, will be scrapped by Labour. The current costs of PCCs (all figures House of Commons Library and Written Answers):

- The Conservatives want to spend £50m in 15/16 on the next PCC elections. - The annual costs of the officers of PCCs is £50 million, including £3.2 million in PCC salaries alone. - Police and Crime Panels – the ineffective watchdogs for PCCs – cost £2.1 million a year - In addition to the £50 million savings from scrapping the PCC elections, we expect further efficiency savings from the annual costs of PCCs, including through shared governance arrangements for forces already collaborating in a majority of functions, and in reduced office costs through axing expensive deputies. - The use of £42 million of the election savings will mean that Police under a Labour Government can be given the resources to ensure that the 1,100 officers lost in

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15/16 do not need to be lost whilst still delivering the necessary savings for that year.

Scrapping Police and Crime Commissioners Savings from Labour’s policy (2015/16): £50 million

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