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Mr. McNulty: To be absolutely fair, and at the risk of sounding pedantic, I should tell the hon. Gentleman that my predecessor probably did not say what I said, because he was in his post for 10 days. His predecessor almost certainly did say it, and I suspect that it was said by predecessors going way back into the mists of time. However, the point remains germane. It is right and proper for the distribution of resources to local government to be aligned with the distribution of resources to the police for historic reasons, but it should not be beyond the wit of the House to come up with alternatives on a cross-party basis. Michael Lyons examined the whole issue of council tax for some time and tippy-toed in the direction of the police tax base, but did no more than that. It was not really part of his brief. None the less, I think that, even a year on, this is a debate that we should have.
Mr. Crispin Blunt (Reigate) (Con): The Minister used Surrey as an extreme example of local funding replacing national funding. I will attempt to make that point in more detail later if I am lucky enough to catch your eye, Mr. Deputy Speaker, but will the Minister acknowledge that there is a very special problem in Surrey because of the peculiarities of the funding formula?
Mr. McNulty: The hon. Gentleman may be putting words into my mouth. I did not say that local funding was replacing central funding. What I said was that Surrey benefited from the highest local contribution. The central contribution has not diminished at Surrey’s expense; it is just that, during the past 10 years, the local contribution has climbed higher than the central contribution.
Mr. Blunt: I am sure that the Minister would not wish inadvertently to mislead the public or anyone else. The fact is that the real total Home Office grant in Surrey fell in 2005-06. It is now narrowly above the 1997-98 level in cash terms, but there has been a real-terms cut of approximately 25 per cent.
Mr. McNulty: I am not being pedantic when I say that that is simply not the case. The increase in total Government grants of some £39.5 million—50 per cent., or 14 per cent. in real terms—between 1997-98 and 2008-09 is a fact.
Mr. Blunt: On a point of order, Mr. Deputy Speaker. The Minister is in danger of misleading the House. I have the facts, in the form of a parliamentary answer given by the Home Secretary on 1 December 2005.
Mr. Deputy Speaker (Sir Michael Lord): That is not a point of order for the Chair. Statistics can vary in all sorts of ways. It is a matter for the debate in which we are engaged.
Robert Key (Salisbury) (Con) rose—
Mr. McNulty:
May I finish what I was saying before the point of order? The increase of £23.6 million— 25 per cent., or 0.4 per cent. in real terms—between 2001 and 2008-09 shows clearly that Surrey has benefited collectively during the past 10 years. I accept that the process may have slowed down, but it does not
constitute a significant cut in real terms. However, that takes us away from the point, which I agree with, that the contribution from the local base is significantly higher than for any other force in the country. The proportion in the last round, that for 2007-08, was 46.1 per cent. compared with the Northumbria contribution of 11 per cent.—rather than 18 per cent. which I think I said earlier, in which case I did inadvertently mislead the House in that regard. Notwithstanding what the points of the hon. Member for Reigate (Mr. Blunt) might be—I have not heard them yet, but I suspect that they will be perfectly valid—I was simply trying to get across my point about there being such disparities in terms of what should be, at core, a universal service. There should be some local variation—some scope for local flexibility—but a range of between 11 and 46 per cent. cannot in any logical sense be right.
Such disparities are rooted in a host of reasons such as history, the options various forces made when there was no capping regime, and what the original base budgets were. It will take time to get to a stage where that can be resolved, because it will invariably require either giving more money to one force and taking it off another or allowing some to go in one direction locally and others not. However, I repeat that the time for debate is upon us—if not a year late.
Robert Key: May I draw the Minister’s attention to a particular problem that has arisen in Wiltshire? When I saw the proposed settlement I knew it was going to be tough, but on 26 January an MOD Minister wrote to tell me that the MOD police complement on Salisbury plain would be cut by four fifths and that the slack would be taken up by the Wiltshire constabulary. Yet no additional resources have been provided for that very substantial cut in MOD police cover. Will the Minister take a look at that and see if he can make an adjustment?
Mr. McNulty: I have already looked at that and I am assured by both MODP and some of the local forces involved—although not Wiltshire in this instance—that policing remains covered sufficiently by the civilian force, but I am more than happy to look into that again. The last time I did so in any detail, that was on behalf of the less than churlish hon. Member for Colchester (Bob Russell), who has experienced not dissimilar circumstances in that MODP numbers had fallen a bit in the garrison town he represents, and he wanted to know about the impact on the Essex police force. I do not encourage the hon. Member for Salisbury (Robert Key) to do this, but he might like to speak to the hon. Member for Colchester and also get a few other Members who represent garrison towns together, and if they then wanted to explore such matters further with me, I should be more than happy to consider doing so.
I think— [Interruption.] Even more clarity on Surrey’s funding has floated up to me from below. Apparently, the figures on its funding are distorted by what happened in 2001-02, when Surrey’s general grant fell by 4.1 per cent. because of changes between the Metropolitan police service and Surrey boundaries. I do not, however, think that that goes to the broad point of the hon. Member for Reigate that things have slowed for Surrey in comparison with others over the
latter end of that 10-year period—which I agree with, and I am sure he will elaborate on those points when he makes his contribution.
Some of the main points made by Members go to the heart of one of the original questions, which was about the formula. I am happy that we have been able to move, even in this year’s tight circumstances, at least a little way towards the formula, but that implies winners and losers, and that is our difficulty.
Kerry McCarthy (Bristol, East) (Lab): Considerable concern has been expressed in the local media about Avon and Somerset losing out because the formula has not been applied for the last few years. Will the Minister confirm that, as a result of moving towards the formula, Avon and Somerset will get an above-average increase in the coming financial year?
Mr. McNulty: Absolutely, and I am very happy to do so. We spoke earlier about Avon and Somerset, and with 3.5 per cent. it is doing considerably better than the floor of 2.5 per cent. or the average of 2.7 per cent. Notwithstanding that, I take on board the point of my hon. Friend and other Members—not least those who represent constituencies in the Bristol area—that still more might be done to move towards that formula more readily than we have done thus far. That would help me, not least in the sense of notional gainers and losers. We must consider what would have happened if we had not moved towards the formula, where in reality forces are not gainers or losers per se, unless they are judged against the absolute instant implementation of the formula. Given the way these things work, that was never going to happen all at once.
I am mindful that having taken a range of interventions, my speech has taken a good deal of time. I know that this debate is very important for hon. Members, who want to get their local points across, so I shall bring my remarks to a conclusion when I find an appropriate place in this telephone book of a speech to do so. However, may I just make two points in conclusion?
Given that we have sought deliberately again to maximise the increase in general grant next year and we have ensured that all police authorities have received a guaranteed minimum increase in grant of 2.5 per cent, and given the delivery of efficiency gains, prudent budgeting and our making full use of available funding flexibilities—I was going to tell the House about those, but they will have to wait for another time—we believe there is no reason for excessive increases in the police precept on council tax. As I have suggested, much good work is being done across the police service. In pursuing the new efficiency and productivity strategies, we must foster that good practice, disseminate it across the whole service and drive forward dynamically. I am always impressed by the drive for improvement and progress in all 43 authorities and forces, and I know that they operate in a dynamic environment that simply does not stand still and allow them to catch up or draw breath.
As I have also said, we have had extensive deliberations with a range of key authorities and police. In fact, anyone who has wanted to come to see
me has done so or is planning to do so over the coming weeks. We have listened carefully to stakeholders in determining the detail of this funding settlement, and I think we have got the balance right in distributing the available resources. The settlement will support the police service in meeting the challenges that lie ahead, it will help the police to deliver effectively for the public and it will protect our communities, so I commend the police grant report to the House.
4.52 pm
Mr. David Ruffley (Bury St. Edmunds) (Con): In opening for the Conservatives, may I congratulate the Minister on taking quite a lot of interventions on the settlements for specific police areas for the second year running? I should also flag up his comment at the end of his speech that he would be happy to receive representations from individual Members who have issues about how the formula might be working.
This debate is vital to the public. All of us would accept that the fear of crime in this country is too high; the Home Secretary bravely acknowledged that when she questioned how safe it was to walk alone at night. Violent crime has doubled in the past 10 years: gun crime has increased—last year, a gun crime was committed every hour in England and Wales; gun-related violence has increased fourfold in the past 10 years; and knife crime has doubled in the past two years. That is not to say that crime has increased in every category over the past decade, but violent crime and the other crimes that I have listed have, and that causes the public concern. They want to know what police funding is in place to meet that challenge.
This year’s settlement is part of a three-year spending settlement, coinciding with the comprehensive spending review 2007, which extends the spending horizon until 2011. Apart from additional funding specifically for counter-terrorism, the police settlement reflects the overall spending provision for the Home Office. On that basis, we face no increase in real terms. The 2.7 per cent. grant increase for 2008-09 is to be read with similar increases for the following two years.
It would be futile to deny that the Minister and I would agree on the importance of efficiency and productivity improvements in the police service. Compared with 2007-08, police authorities will be expected to deliver 9.3 per cent. cashable increases in efficiency and productivity by the end of 2010-11. That needs to be flagged up when considering the headline nominal figures for cash increases that are before us today.
The settlement for the Home Office is very tight, and the Government have been forced to be so strict mainly because of a macro-economic problem—the borrowing problem—that the country faces. In March 2006, the Treasury said that it would need to borrow some £30 billion in 2007-08. In March 2007, that estimate was inflated to £35 billion, and last October it increased again to £38 billion. The Institute for Fiscal Studies tells us that the Government will borrow £42 billion this year.
The Government have run out of money. They have spent too much in the good years and were not prudent. The police authorities are now feeling the
pinch as a result. The average increase of 2.7 per cent., in the words of the Association of Police Authorities, represents the “tightest police settlement” for many years. To give an example from the north-west, the chairman of the Lancashire police authority, Malcolm Doherty, has said:
“The demands on policing are increasing, and even with efficiency savings and other grants, we are still left with a challenging financial position.”
For other parts of the country, “challenging” is not the word. In December, Surrey police force took the decision to drop one of its divisions, going down from four to three, because of its budget shortfall and budget constraints. Chief Constable Bob Quick, with whom I have had the pleasure of speaking at length, wrote in the Police Review:
“We are being forced into making these difficult decisions because of our crippling funding situation, which has steadily weakened over the last six years in spite of saving £49 million over the past nine years through efficiency measures.”
“This is unlikely to be the only tough decision we will have to make—we are exploring other measures in order to continue to make budget savings in both the short and long-term.”
That is an example of a successful police force, according to the performance and assessment framework measures. It came top of the league table last autumn. In addition, it has an excellent record of delivering great efficiency savings, which will have delighted the Minister of State. It is a forward-thinking police force, but even the chief constable who has done all the work in delivering high standards and reducing costs says that he is down to the bone. That poses some questions as to how the national formula is operating in the real world.
Mr. Blunt: My hon. Friend has properly given the example of Surrey. Is he aware that the chief constable has written to the Minister? His letter begins:
“I am writing in unprecedented terms to express my professional concerns about the risks to public safety of people in Surrey over the next three to five years, if our funding position is not resolved urgently.”
Mr. Ruffley: I am delighted that the chief constable is writing to the Minister and I think that I know enough about the Minister to know that he will listen and take representations seriously. I urge him to focus on the Surrey example because there are other police forces—I shall not name them—which may not deliver as well as they could. If the criticism that there was not enough money were coming from them, one might be somewhat sceptical of their requests for more money, but I cite Surrey because it has done so well with efficiency savings and performance. I shall not labour that point any further, as my hon. Friend and I have both flagged up the Surrey example.
We accept that the distribution of the grant and the implementation of the funding formula are, as the Minister rightly observed, work in progress. The way that settlements will operate this year, with the floor and ceilings, means that 18 forces will receive the minimum increase of 2.5 per cent.—average 2.7 per cent.—but only one will receive the maximum of 4 per cent. That is only one of the 43 forces.
The joint Association of Police Authorities and Association of Chief Police Officers expenditure forecasting group, in a submission to the 2007 CSR, said that there would be a substantial funding gap at that level of grant increase—this year’s amount—and for the two subsequent years. On the group’s most optimistic assumptions, the funding gap by the end of the CSR period—2010-11—would be in the region of £660 million. Using slightly less optimistic assumptions, the group calculates that the gap would be £996 million—just shy of £1 billion. It is worth noting that both sets of calculations by that authoritative group assume that police authorities will increase the police precept on council tax up to the maximum of 5 per cent. a year, although of course some of them might not want to go that far.
Mr. Douglas Hogg (Sleaford and North Hykeham) (Con): The phrase “funding gap” is wonderfully bland. Perhaps my hon. Friend would care to remind the House that police authorities are under a statutory duty to produce a balanced budget. They cannot operate on deficits; they must so adjust the provision of resources as to bring about a balanced budget.
Mr. Ruffley: As usual, my right hon. and learned Friend makes an elegant and trenchant point and I hope that the Minister will be able to answer the conundrum he poses—perhaps by straying into the area of how capping will operate. I know that one or two authorities want to bust the 5 per cent. limit. To meet my right hon. and learned Friend’s point, what will happen about the need to observe the statutory duty? I am sure that the Minister will want to answer that point.
As we all agree, greater efficiency is vital if better policing is to be delivered, but I want to explore the question of the doubling of the annual cashable efficiency savings from 1.5 per cent. to about 3 per cent. That is how we arrive at the figure of just over 9 per cent. cashable savings over the CSR period. Since the current efficiency targets were introduced in 1999 the police service has made a lot of progress in meeting them. It has taken up the challenge. Over the period 1999 to 2005, for instance, when the annual efficiency target was about 2 per cent., police authorities achieved average efficiency savings of about 2.7 per cent a year, but the point about jacking up the cashable savings to 9 per cent. over three years is that much of the easy, low-hanging fruit has already been plucked; the opportunities for cashing heroic efficiency savings of 3 per cent. or more each year diminish over time. It is also the case, as has been pointed out to me many times by people who come to see me, that the efficiency savings in earlier years were often re-allocated to improve front-line services, but that is likely to be less easy with future efficiency savings, which will have to fund the base, because policing demands are growing at a fair old rate. Everyone agrees that they are growing by more than 2.7 per cent. a year.
If those tight targets are to be met on the efficiency side, will the Minister share with us what he thinks some of the consequences may be? The first will be of immediate interest to every member of the public listening to the debate—I am sure they are watching in droves: does the Minister accept that there are likely to be fewer officers on our streets as a result of this year’s
settlement? The chairman of Cheshire police authority has warned that officers will be pulled off the streets to perform administrative duties unless more funding is found. He set out that case in December 2007, in Jane’s Police Review.
More recently—last week, in fact—the latest police strength figures came out from the Government, and they show a decline in the number of officers from 140,038 in September 2006 to 139,710 in September 2007. I ask the Minister a simple question: does he believe that that trend will continue, as a result of the settlement? The question relating to police on the streets is, to many people, a simplistic one, but it is the one that most of our constituents ask.
Last year and this year, the Minister acknowledged how the national formula was working in a slow and evolutionary way. However, last year more than this year, he acknowledged that its operation was palpably unfair to certain parts of the country. I should like to give an example relating to the east midlands police authorities—Nottinghamshire, Derbyshire, Leicestershire, Lincolnshire and Northamptonshire—whose representatives came to visit me to raise some of their specific concerns about what they consider to be a growing funding gap. Following the settlement, their funding gap amounts to about £47 million, and like the ACPO and APA estimates that I referred to earlier, they assume a precept increase of the full 5 per cent. If the precept were to increase by less than that—for example, by 4 per cent.—they calculate that that would increase the funding gap to more than £60 million, up from £47 million, over the CSR years.
It has been pointed out to me—I am sure that this argument could be adduced for other parts of the country—that the east midlands region is one of the two fastest growing regions nationally, with its population growing by 0.8 per cent. per annum and changing population demographics, including, but not limited to, the increase in migrant workers from EU states, which is greatly adding to the complexity of policing there.
In respect of my own neck of the woods in the eastern region, the chief constable of Cambridgeshire made some important points along those lines—as, indeed, has the chief constable of Kent, Mike Fuller. They have made representations about the grant allocation to the effect that perhaps not the most up-to-date population data are being used and that, as a result, they are not receiving the appropriate funding. It would take the Minister too long to deal with every police authority, but I wonder what his view is of the east midlands case.
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