§ 1 pm
§ Mr. Jamie Cann (Ipswich)
Disquiet was expressed by several hon. Members in a debate in this place yesterday about the impact of police grants on the police services in various counties. My next door neighbour, the hon. Member for Suffolk, Central (Mr. Lord), intervened in that debate. It is therefore useful today to examine a fairly representative shire county to consider the difficulties which have arisen as a result of the settlement that has been achieved.
Before I go any further, I must state that the debate is not about the Police and Magistrates' Courts Act 1994. I shall not go on about independent people being members of the police authorities. The issue is not about the principle of cash limits or the desirability, or otherwise, of using the formula. It is not about whether it is appropriate to devolve such matters to the chief constable.
The debate is not about politics in a party political sense. I represent the view of many Suffolk people of all political persuasions. The police authority in Suffolk is unanimous in its view, and that involves the magistrates, Conservatives, Liberals, Labour members and independents appointed by the Hone Secretary. They believe that there is a case to be answered.
In the Home Office press release 241/94, the Home Secretary stated:Provision for the police service in England and Wales will increase by approximately 3 per cent. over 1994–95. This is fully sufficient to enable the present number of police officers to be maintained across the country, if chief officers, in consultation with police authorities, choose to do so.I contend that that statement is incorrect when the figures are worked out.
Much of the problem relates to the formula. Everyone recognises that no formula could conceivably treat everyone fairly across the nation, because of the immense differences that exist. What is more, the formula is new and new formulae are even worse than older ones in that they have not been tried and there are bound to be teething problems.
Concern was expressed when the formula was first introduced. The Association of Chief Police Officers had 15 meetings about the formula. ACPO states:the outcome of the current formula cannot be construed, in any terms, as a sound basis for the equitable distribution of resources to police forces in the future. The anomalies are clearly apparent even to the lay observer".The representatives of police officers had no faith in the formula even when it was first introduced.
Suffolk has suffered particularly badly as a result of the formula. Suffolk is the second lowest spender per head of population on its police services in the whole of Britain. Some 23p per head per day is all that is spent on the police services in Suffolk. However, Suffolk finds itself with a cash increase of only £2,086,000, when it has extra costs which have been calculated as follows: between £2 million and £2.5 million extra is required for lump sum pensions; in respect of pay, from September 1994 full year consequences require an extra £0.4 million; in September 1995, the probable half-yearly pay increase will be between £300,000 and £500,000.
In addition, Suffolk has had to establish a contingency fund because it has been separated from the county council on which it used to rely. That will cost between 1039 £500,000 and £700,000. If we include other factors, such as price increases, pay increases for civilian employees and the capital programme, it is estimated that Suffolk has a £3 million shortfall.
It is probably appropriate at this stage to quote the chief constable of Suffolk. He stated:The major difficulty for the Constabulary arises from the considerable increase in funding requirements to deal with police pensions, particularly the payment of lump sums to which all ranks are entitled following their completion of appropriate pensionable service. The increase in Suffolk to make adequate provision for 1995–96 is in the region of £3 million and this is not atypical of other constabularies.When this increase is matched to the requirement to absorb the impact of a pay award of 3 per cent. and the requirement to maintain adequate reserves following the creation of autonomous police authorities …the position is further aggravated. If this is then placed alongside a formula which has redistributed resources such that a small number are showing considerable gains while others are facing heavy losses, one can readily see the extent of our difficulties. Recent research has indicated that when comparing the costs of policing per person of population only one other force, West Mercia, shows a lower figure than that for Suffolk, with some forces (particularly the Metropolitan forces) spending over twice as much per person.That is the problem that the police authority and the chief constable face in Suffolk because of the settlement announced yesterday.
How is the police authority going to cope? The chairman is not a politician but a magistrate. He was elected by the independent members of the authority who were appointed by the Home Secretary. I think that the Minister should listen carefully to what the police authority chairman has to say. He said:The existing authority has made substantial savings during 1994–95—about £1 million. These have been achieved through a range of efficiency and value for money measures. But they have also meant holding vacant 43 police officer posts out of an establishment of 1,234.Last week, the new authority reached the conclusion that another £3 million of savings would be needed if the maximum budget requirement for 1995–96 permitted under the capping regime is around £58 million.About £1 million of these savings will come from the leaner structure being introduced by the Chief Constable and front some savings on overtime.A further £1 million will come from reducing expenditure on a wide range of operational and administrative items. These include reducing overtime for police officers and civilians, reducing police officer training, reducing building maintenance"—to emergency repairs only—reducing transport costs and increasing charges.These reductions will of course have an effect on the policing of Suffolk.The third £1 million can only come from reducing the number of police officers (by a further 60) and civilian employees (by 20), by closing two police stations and deferring construction of a new station. The total number of police officer vacancies would rise to just over 100.HM Inspector of Constabulary has regularly commended the efficiency and effectiveness of Suffolk Constabulary. Both would be severely affected by the scale of reductions in police officers now facing the Authority and which are totally at odds with the Home Secretary's statement.It is projected that, in 1996–97, a further 40 jobs will be lost in the police force. That would make a total of 143 job losses in three years out of an establishment, agreed only two years ago with the Home Office, of 1,234. It does not take an Einstein to calculate that that is an 11 per cent. reduction in the operational police force.
1040 The word "decimate" is about 2,500 years old. Nowadays, it is misused. People think that it means to destroy something. Originally, when a Roman legion did not perform correctly in battle, one man out of every 10 was chosen by lot to be executed. They were decimated. The Home Secretary would not wish to go down in history as the man who decimated the Suffolk police force, but he is in danger of so doing.
§ 1.9 pm
§ The Minister of State, Home Office (Mr. David Maclean)
Judging by the way in which the hon. Member for Ipswich (Mr. Cann) presented his case, the House could be forgiven for thinking that the police have had a poor deal in this year's settlement, but this year's settlement is very fair and very generous. It represents an increase on last year's settlement for the police throughout the whole of England and Wales of an average of more than 3 per cent., or nearly £200 million. It is a clear demonstration of the Government's continuing commitment to the police service in England and Wales. That is the national average across the country—a settlement of more than 3 per cent., when inflation is about 2.5 per cent., and police pay is increased by about 2.5 per cent.
Suffolk, however, has not had an increase of 3 per cent. Suffolk has had its fair share of resources, and the result is that the Suffolk police force will have available to it 4.7 per cent. more than last year. By any standards, can anyone seriously suggest that that is a cut in funding?
I agree with the hon. Gentleman on one point: the word "decimate" is wildly overused. When Suffolk can spend 4.7 per cent. more on its police this year than it did last year, and bearing in mind the two crucial points that the general rate of inflation is 2.5 per cent. and that the bulk of police expenditure, which is on pay and salaries, is increasing by 2.5 per cent., there is no way in which that could be called a cut in funding or a decimation of the force.
§ Mr. Maclean
If the hon. Gentleman has not used the word "cut", of course I accept that, but he floated the word "decimate". Let us not argue about which word sounds worse. It will scare the people of Suffolk more to hear that a Suffolk Member of Parliament has talked about the possibility of the force being decimated when it has had a 4.7 per cent. increase in funding. I accept that the hon. Gentleman said that he might not have used the word "cut". There were certainly some colleagues last night who, when looking at the increase that their force had and comparing it with the increase that they would have liked it to have if money were no object, called the difference a cut.
§ Mr. Michael Lord (Suffolk, Central)
Obviously, as my hon. Friend knows, I represent Suffolk, and I share the concern of my hon. Friend the Member for Ipswich (Mr. Cann) that Suffolk should be properly policed. I have been struggling with the conundrum of how a 4.7 per cent. increase can be described as a cut. Although the hon. 1041 Gentleman has not described it as such, newspapers in Suffolk have carried banner headlines stating that there will be severe cuts. Our chief constable and the committee are talking about removing the police launch and closing police stations. The general public are extremely worried about the situation, including the hon. Gentleman's points about fewer police on the beat.
I do not know whether I am posing an impossible question in the time available, but, as a Back-Bench Member with a Suffolk constituency, I should like my hon. Friend the Minister to explain how the problem has arisen. Is it pensions? Is it the sparsity part of the formula? Why is the chief constable saying that things are so drastic, when the county has received a 4.7 per cent. increase?
§ Mr. Maclean
I cannot answer my hon. Friend's valid point, because that would require my going into the detailed budgeting of his police force and the calculations that his excellent chief constable has made. I do not have those figures, and it would not be appropriate for me to seek to challenge them even if I had them. All I can say is that my hon. Friend and our colleagues from Suffolk must put those same points to their own police authority. They should ask, "At a time of inflation of 2.5 per cent. and when the biggest item of police expenditure, police pay, is going up by 2.5 per cent., what is the difficulty of a force living within an increase of 4.7 per cent?"
I accept that, throughout the country, the police pensions element is a big contributor, but I do not think that it is any worse in Suffolk than in other areas. Difficulties are caused by the huge amount of money that must go on police pensions. In some forces which have had increases of 2 per cent. to 5 per cent. and which are not quite as generously funded as Suffolk, chief constables are juggling priorities and coming up with an à la carte menu of things that they might do to live within their increase. That is why newspapers can print banner headlines saying that 20 rural police stations may close or that 50 bobbies may be lost, as chief constables understandably and rightly float their ideas on how to keep their expenditure within that increase. I am sorry that I cannot be absolutely specific with my hon. Friend or with the hon. Member for Ipswich, but it would be wrong to go into the detail of the local police authority's budget and say, "Aha, that's what is wrong; that's what you must change." I cannot and would not do that.
§ Mr. Maclean
There is no peculiar reason why it is different this year. We have introduced a new formula to try to distribute all the extra money more fairly, and we have tried to base it on need. I should love our being able to justify a rural sparsity element—not that I am biased, of course, but colleagues have pressed me on that matter—but I should not do that out of political judgment. I must have proof that there is a statistically valid reason for a force receiving more money because its policing needs are greater because of its rural area. If that could be proved, I would happily do that. Nevertheless, the net result of the new formula is that Suffolk receives 4.7 per cent.
1042 Let us suppose that we do not have the new formula, that the Home Secretary has acquired the extra 3 per cent. this year, and that we decide to have a flat-rate increase—no fancy formulae for trying to distribute according to need. Suffolk would receive 3 per cent. this year—everywhere would receive 3 per cent. Although that might remove colleagues' arguments such as, "Why did your lot get more than my lot?", Suffolk would not be as well off as it is now.
Without criticising or questioning any of our excellent chief constables, if, over the past 12 months, considering the financial climate, the general level of inflation and the police pay settlement of 2.5 per cent., any police force expected that the Government were going to find 5, 6 or even 8 per cent. as a standstill budget, that would be cloud cuckoo land economics.
§ Mr. Cann
It might be my fault, but the Minister does not seem to understand what I said. It is not so much the formula that is the problem. The chief constable and the police authority have said that they could probably cope if the problem were just the formula. The essential problem, and the answer to the query of the hon. Member for Suffolk, Central (Mr. Lord), is that there are different things this year for Suffolk, just as there are throughout the land.
This is the first time that we have had an autonomous police authority. It does not have the contingency cover from the county council that it used to have. Therefore, it has to build its own general reserve for such purposes. It has problems with the payment of the lump sum element of pensions, which it did not have previously. That is the contention of the police authority, and that is why it is having to put up its estimate of expenditure to a figure way above what the Minister is talking about.
§ Mr. Maclean
Let us come straight to the point. First, let us deal with the question of reserves, which some people are misunderstanding. There is no statutory requirement on any authority to put money into reserves. I know that some people say that they have to take 2 per cent. to put into reserves, but there is no requirement to do so. It may be wise for an authority to do so if it can afford it—the Audit Commission recommends that that should take place—but if some forces are not capable of doing that, there is no compulsion on them.
Admittedly, every force and organisation would want reserves. My bank manager would like me to have some reserves, rather than an overdraft. All authorities want to have money in reserves in case they are faced with a police or education contingency. It is not right for an authority to say that a 4 or 5 per cent. increase is, in fact, a cut, because it has to put 2 per cent. in reserves.
§ Mr. Cann
Is the Minister really saying that he does not think that the Suffolk police authority needs to establish a reserve in case an event such as occurred at Brightlingsea happens in the area? Can I tell the authority that the Minister says not to worry, as the Government will bail it out at the end of year if it goes over budget because of unforeseen circumstances? I think not. Is it not the case that the Government have a contingency reserve of 4 per cent., or £7 billion out of £286 billion, in this financial year?
§ Mr. Maclean
I stand by what I said. It is sensible, prudent and desirable to set money into reserves, but if an authority has to decide between its priorities—some chiefs 1043 may be floating threats to close some rural police stations or to reduce the number of officers—it cannot say that the Government have told it to put money into reserves. That is not the case. It is up to the authority to decide what it wants to do in the circumstances.
We recognise the difficulty caused for police budgets by the large and rapid growth in the police pensions bill, which is increasing exponentially each year. That is not unique to Suffolk.
The way in which we have dealt with pensions in this year's formula is the way the police service wanted it done. Nine per cent. of funding is allocated in relation to pension payments. That figure comes from police budget statistics produced by the Chartered Institute of Public Finance and Accountancy. It is the proportion of national police funding which is spent on pensions. The decision to use this figure was taken following discussions with the Association of Chief Police Officers, and local authority representatives.
As the police themselves were keen to ensure, however, this funding is not hypothecated. Those forces which need to spend more than 9 per cent. of their funding on pensions can do so, while those forces in the fortunate position of having lower than average pension commitments can spend the remainder of their pensions allocation on other policing services.
Having decided that 9 per cent. of the global pot—all the available funding—should be allocated to cover, nominally, pensions expenditure, a model was developed for the projection of pensions expenditure in each force area so that the 9 per cent. of funding could be allocated according to the relative need in each area.
The Government Actuary's department developed a pensions model which uses data on the age, gender, rank and length of service distribution of each force which were collected in August 1992 to make these forward projections of pensions expenditure. During the consultation period on the police funding settlement—we have similar consultation periods on local government finance—several points came to light in the pensions model which required revision.
The model had not fully taken into account the costs of pensions which were borne by a force other than the force actually making the payment. It had also inadvertently taken the higher costs of some London pensions into account twice. Suffolk benefited from the change we made there. These points were revised before the police grant report was laid before Parliament on 30 January. I am pleased to say that Suffolk gained a further £270,000 from the first change and another £240,000 from the second, making a total increase in the funding of more than £500,000.
We recognise the difficulty caused for police budgets by the large and rapid growth in the police pensions bill throughout the whole of England and Wales. The way in which we have dealt with it in this year's formula is the way the police service itself wanted it done. I have already promised that we will look very carefully at this for 1996–97 in conjunction with ACPO.
The hon. Member for Ipswich said that ACPO had 15 meetings before criticising the formula. It is interesting that, after 15 meetings, its ultimate conclusion was that it did not like the end product. That shows the difficulty of constructing a formula that pleases everyone. Nevertheless, the police service generally does not want 1044 the former allocated system, which I intended to describe last week as negotiation by megaphone. Those forces which shouted the loudest for bobbies got them, while those which did not shout—irrespective of need—did not. Derbyshire is a classic example. In the early 1980s, Derbyshire did not ask for bobbies. It did not get them and it is now suffering terrible consequences. That method could not continue.
The Government and the police service wanted a formula. The formula is not for my benefit of for the Government's benefit; it is for the benefit of the police service. This year, there is extra money for the police service above the level of inflation—Suffolk receives 4.7 per cent.—so the formula will not save the Treasury money. It is intended to try to allocate the extra resources fairly. I shall be delighted to take representations from all colleagues and from the police service on how to refine and improve the formula. It may be able to take into account factors which, some people allege, are not taken into account at present.
Rural sparsity is one of those factors. I recognise—coming, as I do, from Cumbria, a county that is even more rural than Suffolk—the particular difficulties faced by forces with sparse populations. We have to look again at whether the formula can more adequately reflect these difficulties. It is a matter not of independent or political will but of thorough work on the facts and figures to establish the true picture.
I know that the hon. Member for Ipswich did not raise this matter, and I did not have a chance to respond to it last night, but some Opposition Members have alleged that we made a £30 million error in the budget. That is absolute nonsense. The figure came in a report in The Guardian, and people who believe what they read in The Guardian should not be surprised if it gets things absolutely wrong. There is no truth in that at all. I hope that the hon. Gentleman will draw that fact to the attention of the shadow Home Secretary, as I did not manage to respond to that point last night.
I shall conclude by referring to the successes of Suffolk. While we are talking about police funding—I well understand that the force would like more money, although it has, in the circumstances, come out well in comparison with the rest of the country with 4.7 per cent.—we must not forget that Suffolk has been tremendously successful as far as the police are concerned. The police in Suffolk are doing a good job.
To set the funding in context, we must look at the successes of last year. Our statistics show that there was a 6 per cent. drop in recorded offences in Suffolk for the 12 months ending in June 1994. Within that figure, robbery offences dropped by 23 per cent., and there was a 15 per cent. drop in vehicle offences. Burglaries—which worry many of the constituents of the hon. Member for Ipswich and my hon. Friend the Member for Suffolk, Central (Mr. Lord)—dropped by 12 per cent.
The report by Her Majesty's inspector of constabulary on the Suffolk force for 1994 described it as maintaining one of the highest detection rates for recorded crime in the country. I believe that the settlement that Suffolk is getting under the formula will ensure that there will be no change in that tremendous success rate and that its efficiency will not be affected at all.
§ Mr. Cann
Is not the point that everybody concerned with that great success story is saying that the 1045 Government are putting that in jeopardy in the coming year because of the settlement? It is not a success story that the number of police officers on the beat in Suffolk was reduced by 43 last year.
§ Mr. Maclean
Since the Government came into office, Suffolk has had an extra 132 police officers approved in its establishment.
I shall not be responsible on 1 April for deciding the number of police officers that Suffolk can have or recruit. We shall no longer play a role in fixing the establishment. However, despite the excellent success of Suffolk—I understand that it is now structuring—it could do a little more to release more bobbies for the beat. It could continue the civilianisation programme because Her Majesty's inspectorate of constabulary reports that, at the end of 1993, some 50 police officers were doing jobs that could have been done by civilians.
Throughout England and Wales, we have seen the restructuring and thinning out of senior and middle management ranks. Hundreds of chief superintendents and inspectors have gone, and we have more constables instead. In the first 10 months of 1994, England and Wales had 600 more bobbies on the beat—