The Police Funding Formula is used to make an assessment of the relative demands placed on each police authority in England and Wales. The population of each authority is a key driver within this formula With the introduction of multi-year settlements in 2006-07, projections of population are used to ensure that the formula is forward looking. The population projections are constructed using information supplied by the National Assembly for Wales and the Registrar General.
Grant allocations made to police authorities also take into account each authority's ability to generate resources through the policing precept. To ensure stability, final general grant allocations in 2006-07 were adjusted to ensure that each authority received a minimum increase of 3.1 per cent.