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Mr. Eric Forth (Bromley and Chislehurst): On a point of order, Mr. Deputy Speaker. Can you confirm whether you have had a request from the Prime Minister to explain to the House his role in hounding someone out of his job because of his political or religious beliefs?
Mr. Deputy Speaker: That is not a point of order for the Chair. No such request has been received and the Prime Minister is due to answer questions this afternoon, when there may be an opportunity for hon. Members to ask whatsoever they may choose.
London Fire Service
11 am
Dr. Vincent Cable (Twickenham): First, I must thank you for giving me the opportunity to introduce this Adjournment debate on the London fire service, Mr. Deputy Speaker. I introduced a similar debate a year ago and it is appropriate that the House should have an opportunity at least once a year to focus on the problems of that service. It is not a major public service in spending terms when compared with the national health service or education and it accounts for one third of 1 per cent. of all Government spending. However, it is a key service and one in which men and women risk their lives in our interests. Their concerns deserve proper attention.
I have not introduced the debate simply to create an annual ritual of reviewing the problems of the fire service in London; I have done so because the financial problems and cuts in the service with which we dealt last year have continued unabated. Last year, the debate took place in the context of the closure of two fire stations, Downham and Shooter's Hill, with the loss of 56 jobs. This year, the position is not entirely clear, but it seems likely--even if one is being fairly optimistic--that we will lose five fire engines and another 115 fire jobs as part of a process of cuts and economies in the fire service in London. That is the context and the motive for this debate.
The Under-Secretary of State for the Home Department, the hon. Member for Knowsley, North and Sefton, East (Mr. Howarth), responded to the debate a year ago and is to do so again today and I acknowledge that there are positive aspects. It is obvious that he has been defending his corner in his Ministry and inWhitehall debates about funding. The standard spending assessments for the past two years--1998-99 and1999-2000--of 4.7 and 3.9 per cent. respectively are above the rate of inflation, which is a positive outcome. It compares favourably with the previous four years, when the settlements were about half the rate of inflation.
That torrid period in the mid-1990s created many of the serious problems in the service. The annus horribilis of the London fire service was 1997, when 12 tenders were withdrawn and people like me, with no background in the service, were drawn into the campaign to save our local fire engines. The problems have continued and, although the Government deserve some credit for having granted relatively favourable settlements, the underlying structural problems, notably the overhang of pensions and flexibility in the service, have not been tackled. I have no doubt that they are in the pipeline. The fire service is in continuing difficulty in London because the problems have not been tackled. I hope that the Minister will point the way forward.
The immediate crisis has come about because the London fire service is totally constrained in several ways. It has limited freedom of manoeuvre and is a single-service operation. First, it is constrained on the pay front. Half its costs are salaries and, although the SSA settlement has been reasonably generous, next year's 3.7per cent. SSA does not begin to compare with the pay settlement, which is 5 to 6 per cent. I do not begrudge the firemen their pay increase--I am sure that they deserve it--but there is no obvious mechanism by which that pay award can be paid for. The assumption is that the money will come from efficiency savings, but in practice those
mean cuts in the fire service. After years of economies and cuts in overheads, that is primarily where such savings have to be made.
The second constraint is the pension problem, and I am sure other hon. Members will refer to it. The problem of unfunded pensions exists in several public services, but it is probably most acute in the fire service. Pension obligations are rising at twice the rate of inflation. About 20 per cent. of the fire budget goes in pension obligations and the percentage is rising every year because of the increasing number of fire service pensioners. Firemen are living longer, which is welcome, and the contribution rate is falling because fewer people are on the staff. It is a vicious circle whereby the more the service is cut, the fewer people are left to contribute. It is a downward spiral and it is creating an unsustainable financial position. I understand that the pension obligation will rise towards 30 per cent. of the budget in the next few years. That is a hopeless position and it is causing immediate pressure.
Reserves are a third constraint. In the past year or so, the fire service has been kept at a respectable level of service because it has been able to dip into its financial reserves. It drew £12 million last year and could probably draw some more this year. Out of the £7 million or so that is left, it could draw £2 million to £3 million more to remain roughly within sight of what the Government auditors consider financially prudent. Clearly, however, that cannot continue, unless the Government intend to hand the service to the London mayor with no reserves, which would be extremely dangerous. For example, an unforeseen increase in pension obligations would leave it illiquid and unable to meet its day-to-day obligations.
I do not fully understand the final constraint and I hope that the Minister will explain it. It is the way in which the new Government clawback arrangements for the so-called more sensitive form of capping that has been introduced will operate. I understand that the Government have said that they would tolerate a 4.5 per cent. increase in the precepting for local councils in London. I am not entirely clear what would happen if the fire service breached the ceiling. We are in new territory and I am not sure whether, when the Government introduced the new system, they had fully thought through what it might mean for precepting authorities, as opposed to normal, multipurpose councils. The new system has created significant uncertainty and difficulties for the service and I hope that that will be clarified during the debate.
Those severe constraints are hemming in the service. In the current and the coming financial years, even if the fire service draws down much of its reserves to a level that is verging on financial imprudence, uses the savings from last year--there were small savings because pension obligations were not quite as large as had been budgeted for--and breaches the Government's target for precepting up to perhaps a 7 per cent. increase, it will still have to close five fire tenders down. The situation could be worse. That is my analysis of the situation. What are the alternatives and what else could be done? Could the problems be avoided?
Mr. Geraint Davies (Croydon, Central):
One of those stations is in New Addington in Croydon. In recent times, we have lost a station in Sanderstead and engines in Warlingham, Beckenham and Woodside. As the hon. Gentleman said, the situation is not sustainable. It is gradually leading to the degradation of the service.
Dr. Cable:
The hon. Gentleman's suggestion is sensible and it is one of several that I intended to propose to the Minister. There are different ways of dealing with the pension problem and the hon. Gentleman correctly identified one. The local colour that he has added to the debate from Croydon is appropriate. I hope that other hon. Members will give from their areas examples showing how the position is causing alarm throughout the capital.
Before dealing with that point, however, I shall run through the options available to the fire authority to head off the cuts under the present financing arrangements. They are all extremely unpalatable. One option is to run the reserves down to zero and pass on a hot potato to the new London mayor. One can imagine the mayor's problems, faced with a bankrupt fire service and having to trade off its problems against those of the Metropolitan police. That is an unpalatable option, but it needs consideration.
A second option is to break the bank in terms of capping limits and go up to a 10 or 11 per cent. increase in precepting. That would not involve an enormous cash increase for local councils, but it would be extremely unpopular with them. It would also test to breaking point the Government's belief that a clawback system should be applied to authorities that breach limits, and I suspect that the Government would not be able to let that happen.
Mr. Simon Hughes (Southwark, North and Bermondsey):
The bill received by local council tax payers in London shows separately the precepted amounts for both the Metropolitan police and the London fire and civil defence authority. Because people value the fire service as they do the police service, the politics of raising money suggest that an increase in precept would be one method that would appeal to the Government, if they were willing to accept it, and be acceptable to the people and to local authorities. People want the fire service and would be willing to pay a relatively small additional sum on a relatively small part of the total council tax bill. It strikes me that that way forward in ensuring that the fire service receives the resources it needs would be the easiest to deliver.
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