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13 Jan 2009 : Column 57WH—continued

Mr. Harper: The hon. Gentleman is quite right. I would not suggest that every part of the country should get exactly the same amount of money; my contention
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is that the disparity between areas is simply too large, particularly when the Government place central burdens on all police authorities. Incidentally, Her Majesty’s inspectorate of constabulary and the Home Office judge police forces on the burdens that they place on them; they do not take into account the relative amount of funding that they provide to them. Given that, police authorities should not get exactly the same, because we have to take into account need, but the funding formula does not accurately reflect the needs of different areas, and it is one of the questions that I should like the Minister to address.

On collaborations and mergers, the current state of finances for the constabulary means that it will look to find savings. It is also working with other forces, where that makes sense: for example, it runs the regional intelligence unit based at Clevedon, although a number of forces pay for it. The constabulary works very well, such as in procurement, and on uniform purchasing it is best in class, with low-cost and high-quality uniforms. The best example of collaboration is with other emergency services. There is a tri-service control centre, with control rooms for the police, fire and ambulance services, and it worked incredibly well during the flooding crisis in 2007. It represents a great opportunity for services to work together, but inexplicably, the Government insist on breaking it up by taking away the fire control element as part of an over-budget, behind-timetable and ill-conceived regional project. But enough of that; fortunately for the Minister, it is not his responsibility.

There is some concern that the financial squeeze on constabularies is part of an attempt to force through the back door those police mergers that failed to get through the front door. I challenged the Home Secretary on that issue, and she told me in the House that it was not the Government’s intention to force through mergers, so I should like the Minister today explicitly to rule out any police mergers—either by the front door or the back door—that are forced by a financial squeeze.

In conclusion, this year will be very tough for local policing in Gloucestershire. The Government grant is inadequate when compared with centrally imposed costs, and council tax payers are already stretched and cannot afford to have a large increase in the council tax precept. Gloucestershire county council has delivered a record low council tax rise, and I hope that the police authority will keep its increase low as well; but it would be very welcome if the Minister addressed my questions, so that the people of Gloucestershire might understand why their constabulary is poorly funded and whether the Government intend to do anything to put it right.

1.16 pm

The Parliamentary Under-Secretary of State for the Home Department (Mr. Alan Campbell): I congratulate the hon. Member for Forest of Dean (Mr. Harper) on securing the debate, and I am grateful for his best wishes to my hon. Friend the Minister for Security, Counter-Terrorism, Crime and Policing, who had originally intended to respond to him. If my remarks do not address all the hon. Gentleman’s points, my hon. Friend has agreed to meet him at a future date. That is on the record.

This is a timely opportunity to discuss funding, both nationally and for Gloucestershire, shortly before we finalise the funding settlement for 2009-10. I hope that
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the hon. Gentleman and others will join me in paying tribute to the police authority, to the chief constable of Gloucestershire, Dr. Tim Brain, and to his force for all their efforts and the very real improvements that they have made to the safety of the people of Gloucestershire. I am sure the hon. Gentleman knows that there was a 19 per cent. fall in recorded crime between 2002-03 and 2007-08 in the Forest of Dean, with a 6 per cent. fall between 2006-07 and 2007-08.

I shall say something about the funding picture generally, before turning to the specifics of Gloucestershire. My hon. Friend the Minister for Security, Counter-Terrorism, Crime and Policing made a written ministerial statement on 26 November 2008, confirming that we intend to implement the funding settlement for 2009-10 broadly unchanged from that which was announced in December 2007. We announced provisional funding totals for three years, incorporating the period from 2008-09 to 2010-11, and police forces and police authorities very much welcome the extra certainty that three-year settlements bring, not least because they will help to improve their medium-term financial planning.

In response to some of the hon. Gentleman’s points, police forces and police authorities in general have welcomed the reduction in the number of targets from central Government and, indeed, the reduction in the ring-fencing of resources. We very much want decisions and resources to be determined locally by police forces and police authorities. Next year’s funding settlement is built on a significant increase in resources for the police since 1997-98, and on a like-for-like basis, Government grant for the police will have increased by 60 per cent., or by more than £3.7 billion, during the period since then.

All police authorities and forces will receive a minimum 2.5 per cent. increase in general formula grant, which makes up the great bulk of central Government support to the police. Those with greater relative need will receive a little more, and if we add specific grants, the overall increase in Government revenue support for policing in 2009-10 will be 2.8 per cent. That is a fair and affordable settlement for all police authorities, backed up by a programme of reform and modernisation and a continuing drive to cut bureaucracy. Chief constables and police authorities have maximum flexibility to make the best possible use of resources.

The hon. Gentleman referred to concern about rising costs over the coming year. In the current economic climate, pressure will intensify on businesses to keep price increases to a minimum. Combined with expected reductions in oil and commodity prices, inflationary pressures are not the main issue facing the UK economy or police authorities.

We have just completed the usual period of consultation on our funding proposals for next year. Consultation closed on 7 January. Gloucestershire police and police authority have chosen not to make representations about the funding settlement. We are currently considering the representations we have received before taking final decisions on the grant settlement for 2009-10. Hon. Members will have the usual opportunity to debate the final police grant settlement in the House in early February.

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Gloucestershire, like every other police force, has benefited from the solid funding settlements of the past few years. Assuming that, following the consultation process, the House approves the provisional allocations previously announced, next year Gloucestershire will receive £59.3 million in general grants—an increase of 2.5 per cent. or £1.5 million—and an estimated £9.7 million in specific grants.

As the hon. Gentleman knows, we have said that it is our intention to move to full implementation of the funding formula at the fastest pace that is compatible with ensuring the stability of police forces. Many forces that contribute to the funding floor are now pushing for greater or full implementation of the needs-based funding formula. Not unnaturally, police authorities such as Gloucestershire and my own in Northumbria that are supported by the funding floor want the protection to remain in place. We recognise that the funding floor is important. Gloucestershire has benefited for many years from a funding floor. This year, it receives £2.5 million more than its strict formula share and next year it will receive £2.4 million more.

The damping mechanism operates to ensure that no police authority suffers a substantial change in funding from one year to the next. It is in no one’s interest that one part of the country should suffer a sudden decrease in funding. That would be a recipe for instability. A fine line must be steered to ensure that we have both a stable finance system and that resources are targeted where there is greater relative need. For next year, the 2.5 per cent. grant floor will provide for stability and a degree of scaling above the floor, thus enabling us to target resources on areas with greater relative needs and implement the formula more fully. The hon. Gentleman is correct in saying that we intend to move towards an improved funding mechanism, but let me try to reassure him not only that we are aware of the concerns that he and his chief constable have raised, but that, in moving forward, we want to address those concerns wherever we can.

Mr. Harper: The Minister is quite right. His own police authority would be one of the biggest losers from a removal of the floor, so from his point of view it is to be hoped that the Government will not be doing that very quickly. He has just acknowledged that the current formula is not perfect. He said that the Home Office wants to move to a new formula and that it does not accept that the current formula accurately meets relative needs. Does it therefore make any sense to push to remove the floors and ceilings, as that would inevitably have a detrimental impact on a large number of police forces? Would not it be more sensible to keep that system, get the new formula in place, which people could accept genuinely reflected relative need, and then move to the new formula?

Mr. Campbell: The hon. Gentleman will know that, once a formula is put in place, over time, as circumstances change, the appropriateness of that formula will also change. From time to time, therefore, in this and other areas, it is the Government’s responsibility to look at the funding formula. By announcing a three-year settlement, which will run until 2010-11, and by consulting on the new funding formula—two meetings have already taken place—we are trying to ensure that the new formula is in place by the time that the next round of finances is
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announced in 2011. If the hon. Gentleman is asking whether there would be sufficient change with the application of that formula to warrant a mechanism for guaranteeing the fairness that we have tried to ensure in the current funding formula, I am sure that that will form part of the discussion. In moving from one funding formula to the next, we anticipate not only that the formula will be improved, but that it will have built into it a mechanism to ensure fairness.

The hon. Gentleman raised a number of specific points about royal protection and about funding for police community support officers. Let me encourage him by saying that discussions are already under way on what would be the best funding formula for 2011-12 onwards, and I encourage him to take part. The chief constable is already involved, and I urge Gloucestershire police authority and people from other force areas to take part in those discussions. It is in all our interests that we get the very best formula, not just for Gloucestershire, but for the rest of the country, too.

The other important element of police funding, as the hon. Gentleman said, is the contribution made directly by local council tax payers through the police precept. The Government expect the average increase in council tax in England to be substantially below 5 per cent. in 2009-10. We have made it clear for a long time that we will not tolerate excessive increases in council tax. In this difficult economic climate, we will not hesitate to take strong action if necessary to protect council tax payers from excessive increases, including requiring authorities to re-bill if necessary.

Final capping principles will be set out after authorities have set their final budgets, but my right hon. Friend the Minister for Local Government wrote to all local authority leaders on 9 December to say that the Government are prepared to announce the principles in advance if the circumstances suggest that capping may be necessary.

Returning to the position in Gloucestershire, it is only right that local decisions are made locally by the chief constable, who is best placed to decide how to deploy resources. Gloucestershire is a relatively well resourced force, with 1,338 police officers in March 2008—205 more than in March 1997. That is an increase of 15 per cent., which exceeds the overall 11 per cent.
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increase for England and Wales. The police are also supported by 162 police community support officers and 684 police staff.

Mr. Harper: The Minister is quite right that Gloucestershire has more police officers, but as I made clear in my remarks, that increase has largely been funded from council tax. Before I was elected to the House, there was a 51 per cent. increase in the police precept in a single year. That was a significant contribution to funding the increase in police officers. If it was up to the national grant alone, there would be fewer police officers in Gloucestershire now than there were 11 years ago.

Mr. Campbell: If it was only up to the national grant and we did not have the systems in place through the damping mechanism that the hon. Gentleman talked about, there might be fewer officers, but I would hate anyone to go away with the impression that the resourcing of Gloucestershire police and police numbers are entirely the responsibility of locally raised funding. The Government continue to put a considerable amount of money into policing, which accounts for the record number of police officers that we have had in the past few years.

The hon. Member for Cotswold (Mr. Clifton-Brown) referred to a police station, and I remind him that the staffing and closure of police stations are operational matters for the chief constable.

We should not focus on officer numbers alone, but on making the best use of officer time. Gloucestershire is doing that. The 57 per cent. increase in police staff since 1997 has allowed the chief constable to improve service quality and to free police officers for front-line duties.

In conclusion, I reiterate the commitment made by my hon. Friend the Minister for Security, Counter-Terrorism, Crime and Policing to meet the hon. Member for Forest of Dean should issues remain for discussion, but I thank him for securing this debate and allowing me to set out the national position and that affecting Gloucestershire. There will be tough decisions ahead, but with the substantial support that the Government have made available, authorities such as Gloucestershire have laid firm foundations and given the police the platform from which to continue the improvements in the service that they provide to our constituents, and I am confident that they will continue do so.

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Home Repossessions

1.30 pm

Dr. Vincent Cable (Twickenham) (LD): I am delighted to have this opportunity to introduce a debate on a big and important subject. I have two reasons for doing so. The first is local: like many other MPs, I am hearing from a growing number of constituents who are running into mortgage distress or who have faced or are facing repossession, and I wish to speak up for them. But I believe that every MP could say that; there are no special circumstances in my constituency.

The main reason for this debate is to try to pursue a series of questions about the Government’s recent initiatives on repossessions, which I welcomed. Obviously, we will debate these matters on the Floor of the House amid the normal party political banter, but on this occasion I want to take advantage of the short Adjournment debate format to pursue what are, in essence, factual questions about where we are and where Government policy stands.

My starting point is that the Council of Mortgage Lenders has estimated that there will probably be some 75,000 repossessions in 2009, which is roughly the same figure as occurred at the peak of the last recession in 1991. Of course, they are the tip of the iceberg. In the last recession, there were estimated to be some 350,000 cases of arrears of varying degrees of severity, and the current projections are that half a million mortgages may be in arrears of some kind at the end of this year. Could the Minister begin by saying whether he regards the CML’s assumptions as sensible and realistic? Are they the assumptions that the Government themselves use?

I ask that question with a particular point in mind. Three months ago, the CML was using the same figure—75,000. It is still using it despite the introduction of what seemed to be quite promising Government initiatives. Does that mean that the CML’s assumptions are not up to date, or does it mean that the situation is deteriorating? It would be helpful from the outset to get a sense from the Minister of the Government’s working assumptions about the scale of the problem and how it will evolve during the coming year. As to why that is a problem, I hardly need to state the obvious. Repossession is a tragedy for families because it usually involves not just the loss of a job but the loss of a home at the same time. It is a double tragedy.

However, there are some less obvious reasons why repossession is a problem. It is a problem for society, particularly for local government, because of the pressure that it brings to bear on social housing. Over the past few weeks, there has been an upward revision in the number of people on waiting lists from 1.7 million to 2 million, so the pressure is clearly there.

In addition, repossession frequently results in distress selling, thereby driving down the price of housing at a particularly sensitive time and creating additional negative equity problems. Clearly, it is desirable from a wider market standpoint to avert it.

Of course, there are many hidden costs. For example, before this debate I was sent a report on the incidence of mental health problems among people facing repossession.
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There is a great deal of general anxiety. A YouGov survey suggests that 44 per cent. of all mortgage borrowers are currently anxious.

I would like to proceed by asking the Minister about each of the four components of the Government’s response. There has been a flurry of positive initiatives: the pre-action protocol; the reforms to income support for mortgage interest—ISMI—which involves interest payments under the social security system; the mortgage support scheme in collaboration with the banks; and the mortgage rescue scheme. I shall deal with each of them briefly.

The pre-action protocol, which my colleagues and I had been calling for for some time, was particularly important. It was an intervention in court rules by the Ministry of Justice to try to ensure that repossession is always treated as a last resort, that all other options are explored, and that financial advice is available. As I understand it, the Government’s guidance to the courts should have that effect.

A case that I recently encountered is the kind of case that the protocol should reduce or eliminate. The home of one of my constituents has just been repossessed by a company called Capstone Securities, a subsidiary of Lehman Brothers. My constituent had tried very hard to save his home. He had put an offer to the bank that he would repay 80 per cent. of his arrears on the spot and clear the remainder within two months, but the bank rejected it. It wanted to repossess, end of story, no negotiation. Many people have found themselves dealing with uncompromising, unreasonable creditors who operate in that spirit. My constituent has now lost his home, and because of the delay in selling, has seen all his equity disappear. There are thousands of stories of that kind.

The questions that are now being asked about the Government’s initiative, welcome as it was, are about its limitations, both legal and practical. Can the Minister tell us what kind of assessment the Government are making of how the new system of rules is working? One point that is made is that because the rules are guidance and not binding on judges, the judges quite understandably apply legal principles. They view a mortgage as a contract and therefore do not treat mortgage arrears as they would treat arrears on a tenancy. There is not a test of reasonable behaviour, and therefore mortgage lenders are able to repossess much more easily than a landlord is able to obtain repossession from a tenant.

Another point is that mortgage lenders, particularly those outside the mainstream banking system, are often highly unreasonable. There are cases of legal costs being added to the bill without the need for any reference to the court, and of companies not being obliged to return to the original owner any equity in the property. There is a general unreasonableness in the way that court settlements emerge, and the guidance that the Government have established does not appear to deal with the problem.

An additional difficulty has now surfaced: a legal precedent was set with GMAC just before the Christmas period in which the mortgage lender established that it could repossess without even going to court. Can the Minister give the Government’s assessment as to whether that case is a serious problem or merely an anomaly?

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