OXFORD East MP Andrew Smith has called for an independent panel to be set up after the Police Minister admitted errors in the Government’s controversial reform of the police funding formula.

Mr Smith said: “This has been fouled up very badly. It would have been damaging for Thames Valley police and the public needs the reassurance of the scrutiny an independent panel would give.

“Any settlement made must be fully transparent and fair.”

The Labour MP said Minister for Policing Mike Penning’s admission showed that Thames Valley Police and Crime Commissioner Anthony Stansfeld and six other PCCs had been “right to launch their challenge”.

Mr Penning said the Government regretted the statistical mistake and accepted the proposed changes were “never indicative” of police budgets under the formula.

He said the funding process for 2016/17 would be delayed while he consulted police and crime commissioners.

Last week Mr Stansfeld was one of seven PCCs from across the UK who threatened the Home Office with legal action over the reforms, which could lead to fewer officers on the streets.

Mr Stansfeld warned that, if the funding formula was unchanged, the police grant for Thames Valley Police would decrease by 2.6 per cent – or £5.6m – next year.

He was unavailable for comment after Mr Penning’s admission, but Mr Smith said an independent panel should review future funding.

He said: “If they had not threatened a judicial review this might not have come to light and been corrected.”

Mr Penning told MPs: “I am sad to say there was a statistical error made on the data that has been used.

“While this data does not change the principles that were consulted on, the allocation provided to the forces was never indicative.

“We recognise this has caused great concern to police forces. I and the Government regret this mistake and I apologise to the House.

“I also apologise to the 43 authorities that I wrote to during the extended consultation period as part of the funding formula review.”

Home Affairs Select Committee chair Keith Vaz called the situation a “shambles” and said the Home Office must establish an independent expert panel.

He said it was now unclear what funding forces would receive and he said 31 out of 43 English and Welsh forces could lose out.

The error was uncovered by Devon and Cornwall PCC Tony Hogg. The Home Office is said to have used two different sets of demographic data to arrive at the funding calculations.