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The Minister for Policing, Security and Community Safety (Hazel Blears): I am aware that a variety of estimates of the costs of change are being floated. I do not believe that all of those are well-founded. The independent Chartered Institute of Public Finance and Accountability will be working with forces and authorities over the next few weeks to establish the real costs of change and future benefits. We will then consider the position further.
Kelvin Hopkins: I thank my right hon. Friend, but she did not really answer my question, which was where the costs are going to be borne. There might be an argument about how big they are, but they should be borne by central Government, rather than local government. Will she give us assurances on that count?
Hazel Blears: I am sure that my hon. Friend accepts that before the Government make any commitments, it is absolutely imperative to have the full, accurate and rigorous financial examination that we will go through here. We have discussed with the Association of Police Authorities how we can fund the up-front coststhere will be some. We have decided to set aside £50 million of capital expenditure this year and £75 million next year so that we can bridge some of the costs that might well fall on us. There are other options, such as reprioritising already planned investment decisions for several forces. There might well be a question of some prudential borrowing. Among those three areas, I am sure that we can meet the costs and reap the advantages.
Mr. Douglas Hogg (Sleaford and North Hykeham) (Con): The Minister will know that the Lincolnshire police authority and the Lincolnshire constabulary believe that the one-off and recurring costs of amalgamation have been grossly underestimated by the Government. That being so, will she give an undertaking to the House that before amalgamation proceeds, we can have an independent audit of the likely costs, both recurring and one-off?
I am absolutely determined to get accurate and proper financial information. It is not in the interests of the Government, the country or the forces to make decisions without that firm evidence base. That is why we have taken the step of commissioning external assistance through CIPFAa well recognised, independent and authoritative organisationto work with the forces and authorities, to go through the books, to examine the businesses cases and to make sure that the decisions that we make are in the interests of long-term effective policing in this country and provide a firm foundation for the years to come.
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Chris McCafferty (Calder Valley) (Lab): Bearing in mind the fact that under the reorganisation plans the West Yorkshire police force meets all the criteria to remain a strategic authority, and the fact that the West Yorkshire police authority would take a huge burden upon itself if the proposed amalgamation took place, will my right hon. Friend give careful consideration to three financial measures that would aid the authority in the event of amalgamation? The first would be to fund a counter-terrorism unit. The second would be as a matter of urgency to repay to the West Yorkshire police force the outstanding claim in respect of the work that was done on the 7 July London bombings. The third and final
Hazel Blears: I pay tribute to my hon. Friend for making an extremely powerful bid on behalf of her local police force. Those issues are under consideration and I shall endeavour to expedite that consideration. I pay tribute to the West Yorkshire force and the police authority for their constructive approach to the proposals to bring forces together. There are serious issues to address and local communities have concerns, but her local authority has entered into the spirit of the negotiations in an extremely constructive way.
Mr. Iain Duncan Smith (Chingford and Woodford Green) (Con): The Minister tells us that she is making sense of what the costs will be, but we all know that in every Government change, reshuffle or reorganisation, regardless of who is in power, costs have always been underestimatedfor example, the costs of changing letterheads, signposts and badges and respraying cars. She knows very well that that will happen, so if she will not have an independent inquiry will she at least give an undertaking that the Home Office will cover all the non-operational coststhe costs of those extra changesthat will be incurred as a direct result of these ludicrous proposals?
Hazel Blears: What I can say to the right hon. Gentleman is that I am absolutely determined to ensure that we get value for money for the investment that we make as the process goes ahead. This morning, the Conservative leader said that
I reject that entirely. I think that the police have performed extremely well in recent years and we have seen massive reductions in crime. Bringing forces together into bigger, strategic forces to protect neighbourhood policing will be an extremely important next step in ensuring that we continue to get value for money from our investment.
David Taylor (North-West Leicestershire)
(Lab/Co-op): May I point out to the Minister that the name of the accountancy body in question is the Chartered Institute of Public Finance and Accountancy? I declare an interest as a member of it. Does she accept that, according to estimates made in the east midlands, the set-up cost, the cost of disruption and the associated costs of the proposals will swamp the tiny savings on which the Government hang their hat? Ministers have
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talked about having 43 IT systems, 43 human resources systems and so on, but the revenue savings associated with having a single system in each region will probably be in the order of 2 per cent. The increase in costs associated with the disruption of major regionalisation will not be met in the foreseeable future.
Hazel Blears: My hon. Friend may well be a member of CIPFA, and I am sure that he is extremely well qualified in these matters. However, I reject entirely the proposition that he puts forward that there will never be any savings as a result of bringing these forces together. Do we need 43 different human resources departments? Do we need 43 different press offices? Similarly, do we need 43 different payroll organisations? There are considerable economies of scale to be gained from bringing together back-office services, procurement, call centres and the organisation of our police forces. We will be rigorous in making that financial examination. I do not accept that there will not, in the long term, be economies of scale that we can then reinvest in ensuring that our protective services are more effectively provided and that we protect this country against serious and organised crime.
Nick Herbert (Arundel and South Downs) (Con): The Association of Police Authorities has estimated the costs of the amalgamations at between £500 million and £600 million. By contrast, the Minister has said that only £125 million will be available, belatedly, to meet those costs. Will the right hon. Lady tell us whether that is new money or whether it is coming from existing police capital budgets? Will she explain how the gap, to coin a phrase, will be closed? Is it not the case that inevitably the cost and the difference will be met by local tax payers?
Hazel Blears: I think that I have already made it clear to the hon. Gentleman that, with the assistance of CIPFA, we shall be carrying out a rigorous cost-benefit analysis. I do not necessarily accept some of the figures that have been put forward. I do not think that they are an accurate reflection of the costs that will be involved. It is extremely important that we have a rigorous analysis of what the true costs are. I ask the hon. Gentleman to think clearly. One of the costs of doing nothing and one of the costs of being so conservative is that we do not make the necessary changes that Denis O'Connor, Her Majesty's inspector, has recommended. If we do not take these steps, we leave the United Kingdom vulnerable to serious and organised crime and without the ability to deal with that or to provide counter-terrorism measures. I say to the hon. Gentleman that
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