Scottish police facing £190m deficit after years of 'unacceptable' financial incompetence

To highlight the scale of the “finance challenge” facing the SPA and Police Scotland, she issued a revised projection of the potential deficit facing the force by 2020-21.

Taking into account last week’s Budget for 2017-18, and assuming a continued minimum of 17,234 officers, she said the SPA could have a “cumulative deficit of almost £0.2billion (£188.2m) in real terms by the end of the current parliamentary session.”

When the SNP created the single force in 2013 it was supposed to save money.

Ms Gardiner also accused the SPA of deliberately concealing how Police Scotland’s £1.1billion was being spent, saying the “very limited” information it released “impedes effective scrutiny and transparency to the public”.

She revealed the SPA had been forced to write down the value of a botched IT system known as i6 from £19.3m to just £200,000 after it was finally abandoned in July.

The SPA is now recovering the loss from the firm behind the scheme, Accenture.

Ms Gardiner’s comments were contained in an audit report on last year’s SPA accounts.

She placed a health warning to the 2015-16 figures as the SPA’s records on property and equipment were “of poor quality” and contained “numerous errors” relating to asset values.

Mr Gardner complained she had been forced to express a “modified opinion” on the SPA accounts in all three years since it and Police Scotland came into being.

She said: “The Scottish Police Authority and Police Scotland are among the largest and most important public bodies in the country.

“It's therefore unacceptable that I've had to report to the Parliament on weak financial leadership and management in all three years of their existence.

“Substantial improvement is required now to deliver the strong financial leadership, long-term planning and robust scrutiny that will be needed if policing in Scotland is to withstand the major challenges ahead.”

In her report, Ms Gardiner said there “continued to be weak financial leadership in both the SPA and Police Scotland” in 2015-16, leading to an “unusually challenging audit that required significant additional work from the Audit Scotland team”.

Last year saw significant turnover in senior personnel in both organisations, with the SPA appointing a new chair in August 2015 and an interim chief financial officer in February 2016, and Police Scotland getting a new chief constable in January 2016.

Police Scotland’s finance director also left just after the financial year ended, in June 2016.

The SPA’s total budget was £1,089m, of which £1,051m was revenue and £38m capital.

At the end of 2015-16, revenue was £20.5m overspent and capital £19.4m underspent.

To fix the problem, and despite revenue and capital budgets usually being kept separate, the Scottish Government last month “exceptionally” allowed the capital underspend to be offset against the revenue underspend to reduce the overspend to £1.2m, Ms Gardiner reported.

Last year the Scottish Government also gave the force £50m for one-off reforms.

Ms Gardiner said a significant part of this had absorbed into day-to-day spending instead.

Green MSP John Finnie said: “It's deeply concerning that this is the third consecutive year that the Auditor General has highlighted serious issues relating to the finances of the Scottish Police Authority and Police Scotland. It's clear that there is a lack of effective financial leadership in these organisations, and this can only add to a loss of public confidence.

“It's essential that the SPA get a grip. As a member of Holyrood's Justice Committee I will continue to scrutinise this important issue."

SPA chief executive John Foley, who has a £150,000 pay and pensions package, said: “There are issues raised by Audit Scotland regarding capabilities and accounting for fixed assets during the year which I am personally working with Police Scotland’s Executive to ensure are urgently addressed.

“In addition to the financial management changes already underway, we will invest in ensuring the finance function has the appropriate capabilities required.”

SPA chair Andrew Flanagan said the accounts demonstrated “continued progress in the reform of policing and the delivery of further significant financial savings and efficiencies”.

However he added: “There is undoubtedly still more work that needs to be done by the financial management function to address concerns raised again by Audit Scotland in relation to the accounting of key financial information.

“I share Audit Scotland’s concerns that progress in this area has been slow.

“Over the last 9-months a number of significant improvements have been announced and implemented to strengthen financial management of policing. I am confident that the new arrangements translate to a step-change.”

Police Scotland’s Deputy Chief Officer David Page said: “We will continue to work with the Authority to ensure the appropriate resources are in place to improve capacity and capability to address the issues raised by Audit Scotland in their report.”

In a separate report, HM Inspectorate of Constabulary said overall performance by the SPA and Police Scotland “remains strong” but “major financial challenges persist”.

HM Chief Inspector of Constabulary Derek Penman said: “Although there have been changes in the strategic financial leadership of both Police Scotland and the SPA, urgent work is still needed to strengthen their finance function and improve their scrutiny governance.”

However he added: “The single service is better placed than the legacy forces it replaced to respond to the challenges from changing demand and increased vulnerability. The unique opportunities of the single service to be connected locally, nationally and even internationally will facilitate major change, whilst still providing sufficient resilience to maintain operational effectiveness and deal with both major events and major crime.”