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Mr. David Heath (Somerton and Frome) (LD): It is a pleasure to follow the hon. Member for Manchester, Central (Tony Lloyd), who has just made one of the most rational speeches I have ever heard in one of these grants debates. I am grateful to him for that. I hope that we shall soon not need to have debates on council tax, because I hope that that unloved, unfair relic of a
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previous Administration will eventually be consigned to the dustbin of history. The way in which it works at the moment certainly does no favours either to us or to our constituents. Following revaluation next year, there will be a massive increase in council tax for practically every household in towns in the south, and particularly in the south-west, where house prices have increased by well over 200 per cent. That will be entirely unacceptable. It would be far better to find a more realistic option now than to wait for the time bomb that was set ticking by the previous Conservative Administration, and allowed to tick on by the present Government, to explode, which will cause a great deal of difficulty for an awful lot of people.

Mr. Llwyd: In supporting the hon. Gentleman's argument, may I tell him that the rebanding exercise is continuing apace in Wales? Even modest properties there are now jumping up two or three bands. That is causing extreme hardship, and I hope that lessons will be learned from the Welsh experience.

Mr. Heath: The hon. Gentleman is absolutely right. Some areas of Wales are similar to areas in the west country, where house prices are often inflated—not by local interest but by outside interest—out of all proportion to the average earning power of the residents. We had a clear message from the Minister for Local and Regional Government when he said that only when the change in a property's value is significantly above or below the average is it likely to change bands. Well, the average is 160 per cent., so we will be well over that threshold in the south-east, the south-west and parts of Wales, which will result in massive increases. That is perhaps a matter for a later debate, however.

We have seen a significant increase in police funding and police council tax in recent years. To be fair, we have also seen a significant increase in police numbers. My huge criticism of the Government, as the Minister for Crime Reduction, Policing and Community Safety knows, is that when they came to power in 1997, they stuck to the meagre budgeting proposals of the outgoing Conservative Government for two years and refused to recruit the extra police officers who should have been recruited at that stage. There was therefore a delay in improving the situation. The fact is, however, that those police officers are now being seen on our streets and in our villages, and that is something that we should welcome.

I have to say, however, that that increase was not the doing of central Government. It is being paid for by the council tax increases that our residents have had to pay. The increase in police numbers is being paid for almost entirely from local taxation. That worries me, because it will be a fragile increase if it is sustainable only by massive increases in council tax, which most of our constituents would find unacceptable.

When asked, people are normally prepared to pay a little more if they think that they will get better policing. The difficulty that we have experienced until now, however, is that people have been paying a lot more without seeing the extra police on their streets. That is particularly true in police authorities such as Avon and Somerset, which covers a large conurbation as well as a large rural area. Inevitably, the big city acts as a magnet for resources, because that is where the crime levels are
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highest and where the chief constable applies the resources, for obvious reasons. People in rural Somerset are paying an awful lot more without seeing any extra police to represent that extra investment.

Mr. John Horam (Orpington) (Con): That is also true of London, where the inner city attracts all the extra support while the outer suburbs and rural fringes get very little of the extra resources coming from Mayor Livingstone.

Mr. Heath: The hon. Gentleman is right. That problem bedevils the metropolis as well as the shire forces. There is an answer, however, and it is one that I have strongly promoted. It is simply to relate the policing of an area directly to the amount that people pay to support that policing. It would involve a minimum policing guarantee that would derive from debates held in the local area involving the borough council in the hon. Gentleman's case, and the district councils or county council in my own, as well as the police authority. There would be a guarantee that if people paid extra, they would get the policing that they had paid for. That would be a much more satisfactory way of organising police funding.

Mr. Kevan Jones: I am fascinated by the hon. Gentleman's suggestion. If a community such as mine were to adopt the Liberal Democrats' local income tax proposals, the amount of money contributed by some of the outlying villages in which unemployment is high and where many old people live would be quite small. Is the hon. Gentleman suggesting that those villages should get a poorer service than the wealthier parts of my constituency that could pay more?

Mr. Heath: Transparently not. The hon. Gentleman would not wish me to spend the next 20 minutes explaining in detail the mechanisms of equalisation, or the contribution made by central Government. I want to reduce neither the flexibility of chief constables to deal with crime effectively nor the contribution of central Government. I am simply saying that—

Mr. Jones rose—

Mr. Heath: I want to answer the point that the hon. Gentleman has made.

There should be a level of policing for each area consistent with that area's needs. We should not have to see, as we do at the moment, a reduced level of policing, or abstractions to deal with every incident in the big cities, which denude rural areas of the police that they need—[Interruption.] It is interesting that Labour Members should jeer at this idea. If they ask people in their constituencies whether they want to see the police that they have paid for on their streets or in a city 40 miles up the road, they will say that they want them on their streets. The Labour party had better get its head round that pretty quickly.

The settlement is better than we had feared it would be, and I am extremely pleased to be able to say that. The Minister knows that we had debates on this matter prior to the announcements, at which time we heard the advice of the Association of Chief Police Officers and the Association of Police Authorities. They were extremely
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concerned not by a figure that they had plucked out of the air, but by the Home Office's own figure, as we were anticipating a 3 per cent. increase this year. They knew perfectly well that they needed a 5.7 per cent. increase to stand still. That huge gap between the two would have resulted in very difficult decisions for many chief constables and many police authorities.

Instead, we have a settlement that, as the Minister has said, gives us a 4.8 per cent. increase—but may I make an obvious and necessary point? That is an average, so some authorities—West Midlands is a case in point, as is Greater Manchester, which has done better than average—have done well out of this. I cannot grumble about that average figure in terms of my authority, Avon and Somerset. We have less than the 5.7 per cent. that we would have liked, but it is better than the average.

That, however, hides the fact that many authorities will do an awful lot worse. The figure for London is over 6 per cent, while the average for the metropolitan authorities is a little over 5 per cent. and for the shires a little over 4 per cent., but 15 authorities are on the floor—the 3.75 per cent. increase. That will pose huge problems for them. It is better than their worst fears, but very far short of what they would have hoped for or what they think they need to maintain their services.

In some cases, there has been an adjustment because of the errors in the census figures. Although I strongly support the Home Office in applying a floor system that means that authorities have not gone below that floor as a result of those adjustments, this is nevertheless not a satisfactory way of doing business with local government.

The key now is how the capping criteria will be imposed. We have had a clear message from the Office of the Deputy Prime Minister that capping will be applied to police authorities. Last year, it was applied—I think absurdly—to West Mercia police and others. If the cap is set too low so that police authorities do not have the flexibility to maintain their services, we will still have, as Chris Fox, president of the Association of Chief Police Officers, said,

I want the Minister to be absolutely clear about what the capping criteria are. She said that she would have close discussions with the Minister for Local and Regional Government; I hope she does. I think that she wants to achieve the same objective as me in these matters, which is not excessive council tax increases, but ensuring that the effectiveness of the police service is maintained. That will be much better organised if we know what the criteria are and what is expected of the police authorities.

I am pleased that the rural fund is being maintained, as it is a key part of the equation for many rural forces because of the extra costs of policing rural areas— although I wish that it were not decided year by year. If we achieve a three-year rolling funding programme—I know that that has been promoted by local authority associations for at least 20 years, because I have promoted it in local authority associations for at least 20 years, as have members of other parties—that will be extremely good news.
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I very much welcome the fact that the Government are finally doing something about pensions, although I worry that they have not met the needs in the first year. As the Minister for Crime Reduction, Policing and Community Safety knows, the Association of Police Authorities estimates the gap to be about £35 million this year, simply because of the 1970s recruiting bulge, which she mentioned, and the fact that those people are now retiring. So, there may be a short-term problem, but at least there is some mechanism for the longer term, which is to be commended.

We asked in vain for that for very many years under the previous Government. Indeed, I have to say to the hon. Member for Sutton Coldfield (Mr. Mitchell), who talked about micro-management, that I remember the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), as Home Secretary, personally deciding how many police officers we could recruit in the police authorities. He told us whether we were allowed to have one extra police officer for the police authority area. The answer he always gave Avon and Somerset—I know this, because I was the person doing the banging on the desk—was that we were to have no extra police officers. That is why so many of us are extremely dubious indeed about the offers of tens of thousands of police officers that are pouring from the Conservatives.

We know that when the Conservatives were in office the reality was that the shires did not get extra police officers. [Interruption.] There were a few extra in the Metropolitan police area, but not in the shire authorities, where they were desperately needed.

I asked the Minister about capital. I do not know whether she yet has an answer and wants to intervene.

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