The Home Office has had to rescue a police force from going bankrupt for the first time over a £65million black hole in finances.
South Yorkshire Police has become the first force in the UK to issue a ‘114 notice’ asking the Government to step in to help.
It blamed a major ‘accounting error’ which went unnoticed for five years, plunging the force £65million in the red and teetering on the brink of bankruptcy.
The development comes weeks after police chiefs warned that Labour’s soft justice reforms will unleash a crimewave which may push some forces to bankruptcy.
Forces are preparing for a surge in all crime types across the country costing police £800million later this year when the Government goes ahead with plans to jail fewer offenders by ditching short sentences.
In recent years, several councils unable to balance their books have issued section 114 notices, effectively declaring the organisation bankrupt, but no police force has ever done so.
An inquiry has now begun into the activities of the office of the former South Yorkshire Police and Crime Commissioner (PCC) Dr Alan Billings after a £65million loan was taken out in 2019 to pay for equipment including investment into police kits, vehicles and IT services, which went unpaid.
Over the next five years, £16million worth of repayments were ‘missed’ and future payments of £49million had not been included in spending plans, meaning money had been wrongfully allocated to other services.
South Yorkshire Police blamed a major ‘accounting error’ which went unnoticed for five years, plunging the force £65million in the red and teetering on the brink of bankruptcy (file photo)
The blunder was not picked up until Dr Billings left office when the PCC’s powers were taken over by the South Yorkshire Mayoral Combined Authority (SYMCA) in May 2024.
This week, Policing Minister Sarah Jones wrote to the authority to confirm that the Home Office had provided £17million in exceptional financial support, which means that the force can resolve the debt.
Ms Jones said ‘a series of historic accounting errors’ had ‘resulted in South Yorkshire becoming the first police force in England and Wales to issue a S114 notice’.
She said: ‘South Yorkshire Police have been issued with a capitalisation direction to support them in correcting a historic and unforeseen financial error which, if left unaddressed, would have prevented them from setting a balanced budget and maintaining efficient and effective policing in future years.’
A spokesman for the mayoral authority said the force had issued a notice relating to an ‘accountancy error’, but it had not had to declare bankruptcy as the Home Office had been ‘supportive through the provision of funding, technical interventions, and the award of a capitalisation direction’ which means ‘available resources are adequate to meet proposed expenditure for the financial year.’
The ‘capitalisation direction’ allows for one-off exceptional costs to be spread over an extended period of time.
She said: ‘Since that (114 notice) report, SYMCA and South Yorkshire Police set a balanced budget for financial year 2025/26 and are in a position to set a balanced budget for financial year 2026/27.
‘The identification of the accounting and budgetary omissions does, however, place material strain on the financial health of the South Yorkshire Police Fund, exacerbating financial challenges felt by Police Forces across the country.
‘The Mayor of South Yorkshire commissioned an independent review by the Chartered Institute of Public Finance and Accountancy into the circumstances of the omissions, and in parallel, significant progress has been made to address the financial challenges. The review is in its final stages and will be published in due course.’
