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The hon. Gentleman spoke about some of the developments in Tunis and of the notion that money may have been spent in the easiest areas. Money is spent according to performance-based allocation mechanisms, which are set out at the beginning of each financial year. It is not actually spent in the easiest way.

The hon. Gentleman asked about the unit of account. I share his perception that it can cause confusion—it certainly does to non-bankers like us. However, the unit of account is based on a basket of the currencies of all member countries of the ADB. All multinational development banks use that mechanism so that financial issues in one country—for example, depreciation of the US dollar—do not affect the financial balance sheet of the bank, as might be the case if it was based on one currency.

I turn to some of the comparative advantages of the ADB. The bank is concentrating its efforts on assisting countries and supporting regional growth. Infrastructure is the key; indeed, the hon. Gentleman focused on it. The UN Economic Commission for Africa estimated that Africa needs to spend an additional $20 million a year on infrastructure between now and 2015. Given the scale of the challenge, it is essential that the bank works with other development partners to help African countries and regions to prioritise infrastructure projects that will unlock and sustain growth.

Africa’s future economic growth will depend on linking its internal markets to create more sustainable regional markets, as well as connecting to the global economy. Regional integration is the only way forward for Africa’s domestic markets, limited as most are by small populations and low incomes. Regional integration provides economies of scale, stronger competition and more domestic and foreign investment. I believe that the ADB is well placed to help connect and increase Africa’s markets.

I was pleased that it was agreed that regional integration should be a key factor over the next three years, with extra resources being allocated. About a quarter of the resources for the next three years will be used in that way. More generally, the ADF 11 negotiations that were concluded in December were positive for the bank. Donors agreed to provide a record level of support. Over the next three years, the total resources available to the bank will reach $8.9 billion, an increase of more than 50 per cent. over the previous period.

The new resources will help to fund important innovations, most significantly a new fragile states facility. Of total resources, 7.5 per cent.—$665 million—will be provided to post-conflict countries, including for assistance in arrears clearance. We all know of the special challenges of fragile states—weak institutions, dysfunctional governance structures, poor policies and the inability to provide basic services. They undermine economic growth, deepen poverty and make countries vulnerable to natural
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disasters. The allocation of 75 per cent. of resources—about $6.7 billion—will be based on the performance of African countries, to ensure that the resources are used effectively and to encourage good performance and accountability in each country. The replenishment also agreed that the bank would place more emphasis on critical cross-cutting objectives, including the promotion of gender equity, environmental sustainability, climate change adaptation and private sector development.

James Duddridge: Having worked opposite the African Development Bank for a year, I am less convinced of its efficiencies. The outputs—the millennium development goals—are rightly the concern of the Minister’s Department. How, roughly, would he attribute the input from the bank to the outputs? Is the bank’s input 10 per cent., or is it nearer 50 per cent.? How important is what he has called a premier institution in that mix, when delivering the millennium development goals?

Mr. Malik: We want the bank to become a premier institution. I shall speak about the millennium development goals a little later; the bank has a crucial role in helping to achieve them.

As we heard, in February 2003 the bank was temporarily relocated to Tunis, following the war in Côte d’Ivoire. Discussions are under way for the bank to return to Abidjan, but that will not happen without substantial improvements in security and the physical conditions required for a functioning bank. At the bank’s annual meeting in May, a review will take place of how far forward the situation has moved in Abidjan, with a view to considering relocation.

I turn to the board of directors. In the past, the board—it is a resident board—has not worked as effectively as it might. Several shareholders have considered the option of moving to a non-resident board. That is certainly something to consider in the longer term. A non-resident board would reduce the problems of micro-management and the costs of running the board. In the immediate short term, we need to ensure that the board continues to add value and not to micro-manage. The recent performance of the new board, mostly appointed in 2007, has been encouraging.

There are two other critical areas—climate change and the capital situation of the bank. Although Africa bears little blame for climate change, it will be the first to suffer its effects. The bank’s board is considering the problem, with our encouragement. On capital, we have been in discussions with the bank about how it can make better use of its resources for development purposes. At the 2007 annual meetings in Shanghai the president committed the bank to reviewing its capital position in time to put recommendations to governors at the 2008 annual meetings.

11.30 am

Sitting suspended until half-past Two o’clock.

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Police Pay

2.30 pm

John McDonnell (Hayes and Harlington) (Lab): As hon. Members will see from the monitor, the House is debating the Criminal Justice and Immigration Bill and the withdrawal of trade union rights from the Prison Officers Association, and the debate in this Chamber is about police pay, so it is clearly a day for dealing with contentious political matters. I understand that there will be a Division in 15 minutes, before which I shall make a brief introduction.

I am aware that a number of Members on both sides of the House put their names forward for this debate—I was fortunate enough to have my name pulled out of the hat to start the debate—and that demonstrates the seriousness of the concerns over police pay on both sides of the House. I have taken an interest in police matters for a number of years, largely because my brother was a police officer for 30 years—from police cadet to chief superintendent. He retired a number of years ago. I therefore have an understanding of the job. However, I am also the secretary of the Justice trade unionist group, which brings together all unions whose members work in the justice system. Although the Police Federation is not a trade union and therefore not a formal member of the group, it regularly sends us observers to keep us informed on policing issues and, more recently, on the development of negotiations on the latest pay settlement.

The Justice trade unionist group has supported individual police officers and the Police Federation in expressing its deep concern over the unilateral imposition of the latest pay settlement by the Government. It also supported the federation’s concern over the deferment of the pay award from the regular date of 1 September to 1 December. This debate therefore takes place in a climate of considerable concern in the House and anger among serving police officers and their families about the Government’s intervention in this year’s pay settlement. That anger has been expressed in correspondence that has filled Members’ mail bags in recent weeks from long-serving police officers, their families, retired officers and trade union officials.

David Taylor (North-West Leicestershire) (Lab/Co-op): My hon. Friend referred to the scale of concern. I am sure that my e-mail inbox is similar to others. Concerns over police pay have been the fifth most frequently expressed to me over the past 10 years—debt and climate change were among the top-four issues. The key point that comes out of the many dozens of e-mails that I have received is that this is about trust, although there is also talk about recruitment, retention and morale. What is the meaning, if there is still one, of binding arbitration if neither side is bound by it? Surely, we must tackle that before anything else. In a typically robust performance in Question Time, the Prime Minister rightly pointed out our strong record on inflation and how it is under control. If that is so, why are we picking a fight over £30 million?

John McDonnell: It is a matter of trust, which has been reflected in statements by the chair of the Police Federation, Jan Berry, to the Home Affairs Committee—I am grateful to the Chair of that Committee, my right
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hon. Friend the Member for Leicester, East (Keith Vaz), for being present for this debate—and she referred to the

In another statement on this issue of trust, she said that

That is how strongly the representatives of serving police officers feel. However, it is not only police officers who are concerned, but chief police officers. Ken Jones, who is president of the Association of Chief Police Officers, stated:

his word, not mine—

And not just serving police or chief police officers are concerned; employers are also concerned. I am interested in some of the statements made by the employers’ side of the joint negotiating body and representatives.

Daniel Kawczynski (Shrewsbury and Atcham) (Con): I concur totally with what the hon. Gentleman has been saying about the volume of e-mails that we have all received on this issue. From my perspective, it was the No. 1 issue on which I received e-mails and letters last year. However, not only police officers are concerned; many of my constituents, who have nothing to do with the police, are equally outraged about what they feel is a betrayal over police pay.

John McDonnell: The anger and concerns are widespread. However, it is rare, in a breakdown in industrial relations, that the employers’ side also makes representations on behalf of the principle of adherence to a deal. The chair of the Metropolitan Police Authority, Len Duvall, wrote to the Home Secretary in a letter that was unanimously agreed by the MPA—again, cross-party. The letter stated that

the point that my hon. Friend made. It continued:

The employers’ side—let alone the employees’ side—feels that it is undermining relationships within the service. In my view, that is impacting upon morale. Our concern must be over the delivery of service.

The Home Affairs Committee unanimously—again, cross-party—agreed to write to the Home Secretary. That letter, written by my right hon. Friend, the Chair of the Committee, stated:

this refers back to the point made by my hon. Friend the Member for North-West Leicestershire (David Taylor)—

It is extraordinary to have that broad range of virtually unanimous opinion in condemnation of a Government’s actions and a call for the Government and, in particular, the Home Secretary to act.

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Bob Spink (Castle Point) (Con): Before the hon. Gentleman moves on from the issue of morale, does he accept that policing in this country is conducted with, and through, public consent? The police do not walk around with guns and batons flying. That requires a tremendous amount of good will from the police, which in turn requires a high level of police morale. The Government are putting that and the whole basis of policing in this country at risk for a measly £30 million. Can that be right?

John McDonnell: All of us who have been involved in policing affairs over the past 30 years, particularly in the 1970s and ’80s, have accepted how remarkably policing in this country has been transformed as a result of that consent—whether it involved communities seeking reforms in the police, their attitudes and delivery of their service or the creative response from the police themselves. On that basis, we thought that we were moving forward—indeed, I believe that we have moved forward considerably—but this breakdown in trust threatens those gains. That is a running theme in all of the comments and representations received on this matter.

Let us talk about why that breakdown has occurred. Let us be specific: it is a breakdown in trust in the Government and in the Home Secretary in particular. There are straightforward answers. As my hon. Friend said, the Government have reneged on a system of settling police pay awards that has existed and worked effectively for almost 30 years. It came as a shock that this of all Governments have intervened to undermine the system, which has worked so effectively. On that basis, serving police officers, their representatives, and others now, have interpreted the Government’s move as an act of bad faith.

I was a member of the Greater London council in the early 1980s, but I remember how, in the late 1970s, when I was a trade union official, the system came about because of concerns that police pay had fallen behind the general development of pay in this country. Some Members will recall the recruitment and retention problems in particular forces and across the board. As a result, the Edmund-Davies inquiry was established under a Labour Government—the Callaghan Administration—to resolve the problem of police pay once and for all, taking the negotiation of police pay out of a process of disharmony to try to establish an objective system that would enable us to increase morale and improve recruitment and retention overall.

At that time, there was a recognition—cross-party recognition, I think—that an objective system was needed to set police pay. We developed an index; we derived an indexation process; 1 September became an annual settlement date; and each year we went through—yes—negotiations, but negotiations based upon the parameters of the index, and, even after arbitration, the assurance that the agreement would be honoured. It provided fair settlements and a generally accepted fair system.

David T.C. Davies (Monmouth) (Con): I very much agree with the hon. Gentleman. Does he agree that, as a result of the issue, we could face the same recruitment and retention problem once more? Is he aware, as I am, being a serving part-time special constable, that large numbers of experienced and trained officers are
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seeking employment in Canada, Australia and other Commonwealth states, where they feel that they will be much better treated?

John McDonnell: I shall address that matter later, but there is an air of complacency that, just because there are a large number of applicants for individual vacancies currently, the situation will go on for ever. There is also complacency about the quality of recruitment being maintained for ever.

For me, and generally for the people involved in the police in this country, the Edmund-Davies process was acceptable, because it recognised that the police were unlike other workers: they did not have the right to strike, and therefore they did not have the same negotiating powers as others. The process was transparent, and it had an element of independence due to arbitration. On that basis, generally, it was—yes, I use the word again—trusted. We know what has happened this year. The process started as usual, and the Police Federation was considering an initial claim of 3.94 per cent.

2.43 pm

Sitting suspended for a Division in the House.

2.58 pm

On resuming—

John McDonnell: I was describing what has happened in this year’s negotiations. As I said, the process operated as usual. The federation and the staff side were looking for a settlement of 3.94 per cent., which was slightly inflated to take into account changes in the index. The employers’ side wanted a settlement of 2.325 per cent., so the matter was referred to conciliation, as is often the case. There was a failure to reach agreement, so the negotiations went to arbitration.

Arbitration recommended 2.5 per cent., payable from 1 September in the normal manner. Arbitration is not binding on the Home Secretary, but in the history of the process, since its foundation 30 years ago, no Home Secretary has refused to honour a recommended award. There lies the problem. The cause of anger is the Home Secretary’s unilateral intervention, refusing to pay the full award on 1 September and deferring the matter until 1 December. Many found that extraordinary and incomprehensible, and certainly many found it reprehensible.

Why did the Home Secretary make that intervention? It was not about saving money. We are assured that police authorities have already budgeted for the award, and we know from statements made by the employers’ side that that is exactly the case. On 18 December, the Home Affairs Committee took evidence on police pay from Mr. Steve Green, the chief constable of the Nottinghamshire police. He advised the Committee that he could have paid the full award without budgetary difficulty and that the money for it was contained in his budget. We have heard the same from the Metropolitan Police Authority and other police authorities around the country.

Mr. David Drew (Stroud) (Lab/Co-op): I congratulate my hon. Friend on securing this important debate. What he has just said was exactly the case in respect of the Gloucestershire police authority. It had allowed for
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2.9 per cent., so 2.5 per cent. was a quite acceptable and—dare I say?—conservative judgment in its implications. I do not understand the notion, in much of the correspondence that has come to MPs, about how important the £40 million saved will be to police authorities.

John McDonnell: It is interesting that the Association of Chief Police Officers said in its statement that it found the award fair, affordable and budgeted for. Therefore, this is not about saving money. Is it about diverting resources away from other areas? No, the award does not come at the cost of existing plans to recruit more officers, as some Ministers and others have alleged. Chief constables have denied that the resources saved will be used on further recruitment. It is not part of any manpower planning process and is not likely to be. Therefore, what is the main reason? The Prime Minister explained it to the Liaison Committee before Christmas:

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