The PSNI will become unrecognisable from the force envisaged in the Patten Report without sustainable funding, MPs have been told.
Pamela McCreedy, the PSNI chief operating officer, also said the force is set to shrink below 6,000 officers for the first time by March 2025.
In remarks to the Northern Ireland Affairs Committee, Ms McCreedy said the funding crisis facing policing in Northern Ireland is a marked contrast to the "uplift programme" for police forces in England and Wales.
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In the absence of a devolved Executive at Stormont, Northern Ireland Secretary Chris Heaton-Harris set a budget for the region earlier this year.
The DUP is blocking the devolved institutions in Belfast in a protest against post-Brexit trading arrangements and senior civil servants are currently running public services in the region.
They have estimated that Stormont departments need hundreds of millions of pounds in extra funding to maintain public services at their current level this year.
Ms McCreedy told MPs the PSNI has now received its budget allocation from the Department of Justice.
She said the budget for 2023/24 saw the PSNI facing a reduction of 1.7%, which amounts to £12 million.
She added: "Combined with rising costs and pay inflation, we are now facing a substantial funding gap of around £107 million."
Ms McCreedy said that even with a range of cost-saving measures, the PSNI is still facing an unaddressed funding gap of £38 million in the financial year.
She said: "I am concerned that as things stand, even with our savings plan, it is difficult to see how further savings can actually be delivered in 2023/24.
"We have already slowed and paused recruitment, tightened control of future internal promotions and selections, and as a result the police service will shrink over the next number of years.
"Last year we reduced officer headcount by 300 to 6,700, again this year a further reduction will take us to 6,300, and if this trajectory is maintained we will see the police service go to under 6,000 officers by March 2025.
"That is significantly less than Government committed to in New Decade, New Approach of growing officer numbers to 7,500.
"It is a marked contrast with the uplift programme for police in England and Wales.
"These cuts are happening at a time of increasing demand.
"The Northern Ireland population is growing and investigations are becoming more complex.
"Serious crime and road deaths are increasing and the terrorist threat has recently been raised to severe, and police officers remain the primary target of that threat."
Ms McCreedy said the police service would be "smaller, less visible, less accessible and less responsive".
She added: "Attendance times will deteriorate, non-emergency calls will take longer and investigations will slow down and intelligence gathering reduce.
"We will do what we can to protect our neighbourhood policing function. It is the foundation to the community confidence, but this too will shrink.
"We are now at a crossroads, without intervention some very difficult and unpalatable decisions are going to be needed.
"Some of those decisions will take years to reverse.
"Without sustainable funding very soon, the police service is going to be unrecognisable from the service envisaged in Patten and indeed New Decade, New Approach.
"It will be unrecognisable from what people in NI have grown to expect and deserve."
The PSNI was created following the Patten Report in 2001 which said the force should have 7,500 officers for peacetime policing.
The New Decade, New Approach agreement which restored Stormont in 2020 reaffirmed that commitment to 7,500 officers.
Also giving evidence to the committee was Geraldine Hanna, the Victims of Crime Commissioner-designate.
She said: "I have worked in the victims sector for over 22 years and believe we are at a tipping point due to the continued under-investment and lack of meaningful reform in this area."
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