Jargon Buster

There is a considerable amount of jargon used in police and local government finance particularly in relation to the formula funding distribution mechanism.

The Jargon Buster provides a plain English explanation or definition for the most commonly used terms in police finance.

Please click on a box to see a list of terms beginning with your chosen letter.


  Activity Based Costing (ABC)

A budgeting technique used to allocate costs to services. ABC is used in the top-up elements of the police funding formula to weight different types of activities undertaken by the police. More funding is allocated to those activities which take up a lot of police time, according to data that the police provide on how they spend their time.

  Association of Chief Police Officers (ACPO)

A private limited company which provides a forum for the chief police officers in England, Wales and Northern Ireland. It works with the Home Office to influence the direction and development of the police service and coordinates a number of national bodies which provide strategic support to policing.

  Area Cost Adjustment (ACA)

The element of the funding formula which takes account of the varying costs of service delivery in different areas. The ACA has two components: the labour cost adjustment, which takes account of differences in pay across the country, and the rates cost adjustment, which reflects the differences in the cost of business rates on premises.

  Amending Report

Amending reports can be issued after the final local government settlement is approved. They are generally published in order to address major systematic or data errors which have resulted in an incorrect settlement being distributed. Only one Amending Report can be issued each year and any losses are adjusted for in the baseline to ensure that an authority still receives damping protection even after repaying the effect of the Amending Report.

  Annual Settlement

The Local Government Finance Settlement sets out in the Local Government Finance Report the amount of formula funding to be distributed to local authorities and the way in which the funding will be distributed in the forthcoming year. It is subjected to an affirmative resolution of the House of Commons before being determined as final.

  Association of Police and Crime Commissioners (APCCS)

The Association of Police and Crime Commissioners (APCCS) is a national body which represents all Police and Crime Commissioners and the other policing governance bodies. The APCC will represent PCC’s views to the Home Office between November 2012 and March 2013; in January 2012 PCCs will decide on the future structure of the body from April 2013.

  Autumn Statement

The Autumn Statement provides an update on the Government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility. The Autumn Statement usually takes place in November or December each year.


An Act of Parliament is a Bill which has received Royal Assent and is therefore law. When both the House of Commons and the House of Lords have agreed on the content of a Bill it is presented to the monarch for approval, known as Royal Assent.


  Basic Amount

The PAF includes a basic amount per resident and a basic amount for special events. In the formula the basic amount per resident is multiplied by the projected population and the special events basic amount is multiplied by the projected daytime population.


A Bill is a proposal for a new law, or a proposal to change an existing law that is presented for debate before Parliament. Bills can be introduced in the House of Commons or the House of Lords for examination, discussion and amendment.However, because local government's responsibilities change from year to year these two amounts cannot simply be compared to each other. The 2005/06 (or relevant year's) allocation must be "adjusted" so as to make the two years more comparable. This adjustment is either a plus or a minus for various new or removed responsibilities. For example, the 2006/07 settlement was the first year after the introduction of DSG. To be able to compare the 2006/07 and 2005/06 grant settlements, the 2005/06 grant would need to be adjusted for this transfer. This new "adjusted" figure is called the Baseline, as it is the base on which the damping is to be applied.

  Budget Statement

The Budget Responsibility and National Audit Act 2011 requires the Chancellor of the Exchequer to make a Budget Report covering each financial year. The Charter for Budget Responsibility sets out what the Budget Report must include. The Budget is the most important economic and financial statement made by the Chancellor each year and usually takes place in spring.

  Budget Requirement

An authority’s estimated net revenue expenditure allowing for movement in reserves. It comprises the amount to be met from formula funding and council tax income.

  Barnett Formula

The Barnett Formula is used in the calculation of budgets for the devolved Scottish Parliament and Welsh National Assembly and to adjust spending plans for Northern Ireland. It ensures that changes to public spending in one geographical area leads to changes in others proportional to population. It was devised in 1978 by the then Chief Secretary to the Treasury Lord Joel Barnett, and has been used ever since.  The formula is based on the relative populations in 1978 and does not take into account actual public spending need; as the population proportions have changed since 1978 there have been calls to reform the formula to avoid disproportionate per capita allocations between geographical areas of the UK.

  Billing Authority

A local authority which has the power to set and collect council taxes, and manage the Collection Fund, for itself and on behalf of precepting authorities in its area.

  Business Rates

A tax on non-domestic property based on the notional annual rent of a property know as the Rateable Value, calculated by the Valuation Office Agency and collected by the billing authority. Also known as National Non-Domestic Rates.



Central government previously had powers to impose a limit on a local authority’s budget requirement and hence its council tax. These powers were generally exercised when the Government believed an authority had set an excessive council tax increase and have been replaced in England by a system of council tax referendums.


A national survey of households which provides information and statistics used to develop government policy and provide data for funding formula. It takes place every ten years in the UK, with the most recent census in 2011.

  Community Safety Fund

A unringfenced fund paid by the Home Office to PCCs and the City of London from 2013/14 to fund community safety priorities.

  Comprehensive Spending Review (CSR)

Spending Reviews are a process led by HM Treasury to allocate financial resources across all government departments, according to the Government's priorities. Spending Reviews set firm and fixed spending budgets (Departmental Expenditure Limits) for several years for each department; within these limits departments are given some discretion to decide how best to distribute this spending within their areas of responsibility. The most recent Spending Review in 2010 set budgets for the period 2011/12 to 2014/15.

  Chartered Institute of Public Finance and Accountancy (Cipfa)

Cipfa, the Chartered Institute of Public Finance and Accountancy, is the professional accountancy body for public finance. It represents public sector accounting and the accountancy profession to Government and interprets and provides guidance on accounting standards and other matters.


The Government publishes consultations to which it invites responses as part of its policy development process. Consultations can take place at different points in the policy cycle, sometimes before legislation is drafted or once legislation has been laid before Parliament. Department usually publish responses to consultations, summarising the responses received from interested parties and outlining next steps.

  Council Tax

A tax on domestic properties based on the value of the property and the number of residents. It is set by a billing authority in order to collect sufficient revenue to meet their demand on the collection fund and the precepts issued by the precepting authorities. The Valuation Office Agency assesses the properties in each district area and assigns each property to one of eight valuation bands; A to H, based on 1991 property prices. The tax is set on the basis of the number of Band D equivalent properties and tax levels for dwellings in other bands are set relative to the Band D baseline.

  Council Tax Benefit

An income-related social security benefit to provide support to those eligible on low incomes to pay council tax. Council Tax Benefit will be abolished in March 2013 and replaced by local council tax support schemes, developed by each billing authority in England and according to a national framework in Wales.

  Council Tax Freeze Grant

The Coalition Government introduced a grant for 2011/12 to compensate all local authorities which set their 2011/12 Band D council tax level at the same amount as 2010/11. This grant was equivalent to the increase in income authorities would have received were they to have increased the Band D amount by 2.5% in 2011/12. The grant is payable each year between 2011/12 and 2014/15. Similar Council Tax Freeze Grant offers were made by Government in 2012/13 and 2013/14, however not all authorities took up the offer.

  Council Tax Referendum

The Localism Act 2011 requires authorities which set an excessive council tax increase to hold a referendum of local electors to ratify the increase, which exceeds the principles set out by the Secretary.


  Department for Communities and Local Government (DCLG)

The Government department with primary responsibility for local government. It provides funding allocations to councils and policing bodies through the Formula Grant system, for which it has responsibility for designing and updating.


Damping smoothes the effects of annual changes in funding caused by data and formula changes by restricting the change in an authority's formula funding. It is self-funding, therefore, those authorities above the damping threshold will have their allocations scaled back in order to fund the cost of bringing those authorities below up to the threshold.


  Formula Review

The process examines existing formulae for Formula Grant and considers proposals for updates based on changes in the services covered by Formula Grant, local authority boundary changes, data availability and the Government's policy intentions. It focuses on the distribution of the grant and does not consider the quantum i.e. the total amount of Formula Grant to be distributed.

  Final Settlement

The Final Settlement or the Final Police and Local Government Finance Settlement is the funding settlement agreed by an affirmative resolution in the House of Commons.

  Formula Grant

The element of funding provided to councils and policing bodies as calculated by the four-block model system. The system uses Relative Needs Formulae to calculate an amount of money to be allocated to each authority for each of the four blocks. This allocation is subject to damping before the final allocation for each authority is determined.

  Four-Block Model (4BM)

The model used to allocate Formula Grant funding. It includes four blocks each representing an amount of money: Relative Needs Amount, Relative Resource Amount, Central Allocation and Floor Damping. The model is extremely complex and uses factors to represent funding rather than a cash amount.


  Green Paper

A Government publication which sets out tentative policy proposals for discussion and comment by interested parties. Generally, the publication of a Green Paper is followed by the production of a White Paper, with firmer proposals.


  Home Office

The Government department with primary responsibility for the police service. The Home Office is also responsible for immigration, passports, counter-terrorism, and drugs and crime policy.


Ringfenced - see 'Ringfencing'

  Her Majesty's Inspectorate of Constabulary (HMIC)

A body, separate from central government and the police, which independently assesses police forces and reports to Parliament on their efficiency and effectiveness. HM Inspectors have powers to seek information from police forces and to access their premises.

  HM Treasury

The Government department with primary responsibility for public finances and the economy. The Treasury's overall aim is 'to raise the rate of sustainable growth, and achieve rising prosperity, through creating economic and employment opportunities for all'.


  Mid Year Estimate (MYE)

Annual estimates of population published by the Office for National Statistics. The estimates are published in the year following that which they refer to and are compiled using data from GP registrations, emigration and immigration statistics and birth and death registers.

  Multi-Year Settlements

A funding settlement for police and local government which set out allocations for several years. These replaced annual settlements and are intended to give local authorities greater stability to allow them to plan better for the medium-term.


  Police Allocation Formula (PAF)

The formula used by the Home Office to share funding between police areas in England and Wales. It consists of two basic amounts for general policing and special events and eleven top-up formula to determine relative funding for the main tasks that police undertake.

  Police Allocation Formula Working Group (PAFWG)

A consultative group that meets to consider the design of the police funding formula. It is chaired by the Home Office and includes representatives from different interest groups across the policing sector.

  Police Grant

The element of formula funding for police which comes from the Home Office Departmental Expenditure Limit and is distributed via the Police Allocation Formula.

  Police Grant Report

The annual report published by the Home Office setting out formula funding allocations for police areas in England and Wales. A provisional report is published in November/December for the forthcoming financial year and then confirmed following consultation and resolution in Parliament in February.

  Police Negotiating Board (PNB)

The body which negotiates hours, leave, pay and allowances, pensions and the use of police clothing and personal equipment. The PNB has an Employers' Side and Staff Side and makes recommendations to the Home Secretary. If the recommendations are accepted, they are placed within a statutory instrument on Police Regulations, which are legally binding once approved by Parliament.


The amount of council tax that a local or major precepting authority has instructed the billing authority to collect and pay over to it in order to finance its net expenditure.

  Precepting Authority

A precepting authority sets a precept which is collected by the relevant billing authorities in their area through the Council Tax bill. Major precepting authorities include county councils, Police and Crime Commissioners, the Greater London Authority and single-purpose fire and rescue authorities. Parish and town councils are known as  local precepting authorities.

  Provisional Police and Local Government Finance Settlement

The funding settlement generally published in November/December each year for the forthcoming financial year for consultation and approval in the House of Commons.

  Public Works Loans Board (PWLB)

The PWLB is part of HM Treasury's Debt Management Office. It makes loans to those local authorities requiring loans for capital purposes; its interest rates are determined by the Treasury.


The period of time from when a local or national election is announced until after the election, also known as the pre-election period. Guidance is generally issued before each election outlining the restrictions on policy announcements, official support and the use of public resources.



The overall level of funding available.

  Queen's Speech

At the opening of each session of Parliament the Queen's Speech outlines the legislation the Government intends to bring forward in the forthcoming session. It generally takes place on an annual basis.



A statistical technique used in the creation of funding formulae. Various independent measures are selected as possible indicators of "need". Regressions are undertaken, resulting in a  list of the independent measures that best indicate the "need". Each measure is then assigned a weighting, with high weightings given to those measures with the highest influence over "need" and lower weightings to those that indicate "need" the least.

  Rule 1

A grant paid to policing bodies in Wales to achieve damping. South Wales' allocation is scaled back with the funding redistributed to the other Welsh forces. If this scaling back does not bring these areas up to the threshold the Home Office pays a further grant, the Welsh Top-Up Grant.

  Rule 2

An amalgamation of five specific grants which were not distributed on the basis of the PAF. It comprised the Rural Policing Fund, the Forensic DNA grant, the Integrated Police Learning and Development Programme, the London and South East Allowances, and Special Priority Payments, combined into one non-ring fenced grant to give police authorities more control over how they are use. These grants have now been consolidated into the main Police Grant.

  Revenue Support Grant (RSG)

Revenue Support Grant is the element of Formula Grant funded by central government from general taxation, rather than national non-domestic rates.


A restriction on the way in which a grant can be spent, imposed by the Governmnet department paying the grant. They are often distributed to fund particular services or initiatives that are considered to be a national priority.


  Settlement Working Group

A group chaired by DCLG to consider and discuss potential changes to the methodology for distributing Formula Grant. Like the PAFWG it includes representatives from across local government interest groups.


The process of increasing or decreasing an authority's allocation in order to apply damping.

  Specific Grant

Grants paid by various government departments outside the main formula funding; they can be ringfenced or unringfenced.

  Spending Power

A definition introduced by Government following the 2010 Spending Review to determine year-on-year changes to authority's ability to spend, based on external funding sources. It includes council tax, formula grant and other specific grants.

  Spending Review

See 'Comprehensive Spending Review'.

  Statement of Accounts (SoA)

Local authorities are required to prepare an annual statement of accounts according to the CIPFA Code of Practice. These are published for inspection by the general public and for audit by external auditors, appointed by the Audit Commission.

  Spending Profile

The overall spending levels and changes for each Government department set out at the Spending Review.

  Sub-National Population Projections (SNPP)

Population projections published every two years by the Office for National Statistics based on the most recently available Mid Year Estimates. They provide an estimate of the future size and age structure of the population of local authorities for the next ten years. These figures are incorporated in funding formulae.



The number of Band D equivalent properties in an authority's area. Authorities are required to calculate several different taxbases which are used in the setting of council tax and by central government to calculate formula funding allocations.


The PAF divides the police's workload into eleven categories; for each of these categories there is a separate formula which corresponds to a 'top-up' in the PAF. Seven of these relate to reducing and investigating different types of crime to which 60% of funding is directed. There are four others top-ups: providing reassurance to the public, providing assistance at or reducing road traffic accidents, providing assistance with non-crime incidents and policing special events such as protest marches or football matches.


  Welsh Government

The devolved administration for Wales. It has responsibility for an element of police funding, which in England is the responsibility of DCLG. However, the Home Office retains responsibility for policing policy in Wales.

  White Paper

A Government publication which sets out proposed policy in a particular area. They are often used as the basis for a Bill to be put before Parliament. A White Paper allows the Government an opportunity to gather feedback before it formally presents the policies as a Bill and are generally less open-ended than a Green Paper.

  Welsh Top-Up

A grant paid to Welsh policing bodies, excluding South Wales, in order for them to be able to attain the floor increase.


  Zero Based Budgeting (ZBB)

A budgeting technique whereby all expenditure must be justified in each new period. No assumptions are made about pre-existing commitments, ZBB effectively treats all claims on financial resources as if they were entirely new claims for entirely new projects, thus encouraging the preparation of budgeted costs at the lowest possible level.