---

Lord Bassam of Brighton: My Lords, I suppose I should have a good deal of sympathy for this amendment because I can remember 10 years ago trotting off to the Home Office as a humble official to sit behind my politicians at the time, pumping the information to them to argue the case. It was not a case which was wildly dissimilar to that advanced by the noble Lord, Lord Bradshaw, today.

There is no doubt that the scheme is in need of modernisation. That is not in dispute. The current scheme does not best meet the needs of the service. Under the existing scheme officers can retire with an immediate maximum pension and lump sum after 30 years' service. As a result the police service loses a number of very experienced police officers in their late 40s or early 50s who would still have much to contribute.

We need to modernise police pensions to make them more flexible and more affordable for new entrants. The current scheme is based on a system of fast accrual after 20 years' service. That does not reflect modern working patterns where more people are taking career breaks, working part-time and moving into and out of jobs.

We aim to complete our work on examining the options for a new scheme as quickly as possible. Amendment No. 276 offers one approach, as I said in Committee. But it would come with a massive price tag. It would cost approximately £35 billion to set up

16 Apr 2002 : Column 927

a funded scheme. Consider the impact of that on the police budget. Consider what we could do in terms of pumping more money into front-line services—I am not arguing one against the other; that is not our case today. But it is a huge amount of money to divert from more immediate needs.

In our previous debate the noble Lord, Lord Bradshaw, did not advocate an immediate wholesale change to a funded scheme because of the cost. Instead he favoured a gradual change which would involve a new funded scheme that would supersede the current arrangements as members of the current scheme progressed through their retirement. We have given that option careful consideration. Though no final decisions have been made, I have to say that that too would have a hefty price tag, albeit spread over time rather than at a cost of £35 billion in one fell swoop.

Setting up a funded scheme just for new entrants would place an extra and increasing pension burden on police authorities' finances for many years to come. There would be immediate and growing contributions into the new fund but no benefits in return until the fund began to finance most pension payments. That point would not be reached for well over 30 years. The immediate effect of setting up a new fund would be increased pressure on police authorities' budgets, for two reasons. First, employee contributions from new entrants could not, as now, be used to offset the cost of existing pensions but would be diverted into the new fund. Secondly, authorities would also have to pay into the fund employer contributions for the new entrants.

A funded scheme is not a panacea and would not necessarily make the scheme affordable. As I pointed out in Committee, although a funded scheme is necessary for a private sector occupational pension scheme, a public sector scheme such as the police pension scheme can have its benefits guaranteed by statute.

Although we are still considering the detailed options, we believe a better way forward would be a twin-track approach. First, introduce a better and fairer system of financing police pensions. Secondly, introduce a more affordable and flexible scheme for future entrants. We aim to fulfil the requirements of police authorities and chief officers for a system that has more certainty for pensions obligations on police forces. We hope to announce our conclusions on that issue in the near future. Note the change of wording—not "shortly" but "the near future".

As to Amendment No. 282, under present arrangements police grant is indivisible. It is calculated from a variety of elements—the majority of which are related to policing activity, with only a comparatively small part for pensions. The total grant for each police authority is unhypothecated. We do not attempt to ensure that authorities break even on each component but, generally speaking, the overall result is fair.

Provision is made in the police funding settlement for the overall cost of pensions but the allocation between police authorities does not always match the costs that they incur from year to year. For many

16 Apr 2002 : Column 928

forces, that is not a problem. For some, it is. We review pensions projections periodically—we are about to do so this year—to ensure that police grant calculations for each authority are reasonably up to date. Even so, there will always be years when costs are not fully supported by grant, which is why authorities may put money aside in good years for reserve, to cover exceptional costs in years when pressures are greater.

It is suggested that pensions funding should be separated from operational policing in the interests of transparency. I do not dismiss that valid argument but it can have disadvantages. If we were to split off a piece of grant for pensions, it would be logical to break the whole provision into its several components. That would not be beneficial to anyone and would limit the scope for police authorities and chief officers to be flexible in moving around their resources, according to different pressures on police budgets.

As I emphasised in regard to the pensions amendment and our debates in Committee, we intend to bring forward proposals as soon as possible. This is a serious, complex and long-term issue. There are no easy solutions. Actuaries have been trying to work something out for at least as long as I have been in public service and involved in policing matters. We have to take time to ensure a scheme that is workable and provides stability. We have developed the argument since Committee stage and hope to bring something forward in the near future, rather than shortly.

Lord Bradshaw: My Lords, I thank the Minister for his remarks. We shall return to the subject from time to time. Amendment No. 282 was meant to separate pensions from the policing function and it is a pity that it has not proceeded. Then at least the public would know what they are paying for and how much goes into pensions—even if the part they are paying for is split into separate headings. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

9.30 p.m.

Lord Bradshaw moved Amendment No. 277:

After Clause 87, insert the following new clause—

"REPEAL OF RIOT (DAMAGES) ACT 1886
The Riot (Damages) Act 1886 (c. 38) shall be repealed."

The noble Lord said: My Lords, with this amendment we seek the repeal of the Riot (Damages Act) 1886. We withdrew a similar amendment in Committee, following assurances that there would be an urgent review of the matter. To recap, the Act provides that where a police authority declares under the terms of the Public Order Act 1986 that a riot has taken place, police authorities become liable to pay for any damages to buildings and their contents arising through riots.

As everyone knows, a few weeks ago the Act came into the public eye when a claim was made against the Bedfordshire police—we were involved in the action, not necessarily the claim—for £100 million arising

16 Apr 2002 : Column 929

from disturbances at Yarl's Wood. The provisions of the Act apply even when there has been no negligence on the part of the police.

I mentioned in Committee that last November Dr Ruth Henig, the chairman of the APA, wrote to John Denham calling for an urgent review of the Act and its repeal in the Bill. The noble Lord, Lord Rooker, acknowledged that the Government should have had the courtesy to respond to that letter. I am surprised that to date no reply has been received. That does not give me any confidence that the Government are taking the issue seriously.

The Minister announced that an urgent review of the Act was being carried out. However, I know that so far the APA has not been consulted in the review. That is a little surprising considering the impact of the Act on police authority budgets.

I am sure that when the review is completed we shall discover that there is no justification for the Riot Damages Act or that police authorities should meet payments for damages. At the end of the day, the impact is on operational policing, with funds being diverted away from frontline policing towards meeting costs which in other circumstances would be met by insurance companies. The Minister made some fairly unparliamentary comments about some of those people. I hope that the House will agree that we should grasp this opportunity for reform and repeal this outdated piece of legislation. I beg to move.

Lord Rooker: My Lords, with regard to the letter from Ruth Henig mentioned by the noble Lord, I have seen the reply that John Denham wrote yesterday. Whether it was sent yesterday or today, I freely admit that it does not actually say anything. One of the reasons for the delay in the substantive response to her letter is that we considered it better to wait until after the review which, I regret to say, is not yet complete. We will of course consult both the APA and the ACPO when we have some formal proposals to put to them. It was not intended as a discourtesy to the chairman of the Association of Police Authorities.

I have nothing further to add to what I said in Committee. I do not think that there is much purpose in repeating that. Indeed, given the more acrimonious comments that have made even more recently, it is even more important that I probably say nothing about the Yarl's Wood situation, other than what the Home Secretary and I have already said, either in the parliamentary answers or through the media. It would be dangerous to start extrapolating on that now.

I make absolutely clear that we are aware that the police service is unhappy with the current arrangements. We accept that there are two outstanding claims at the moment; one relating to the disturbances last year and of course Yarl's Wood.

There is an urgent review going on regarding the Riot (Damages) Act 1886. Straightforward repeal is fraught with difficulty. It is not simply a matter of coming to this House and saying that we wish to repeal an Act and that is the end of the matter. Of course, no

16 Apr 2002 : Column 930

one who calls on us to get rid of the Act actually comes up with a solution. I accept that it is the job of government to come up with a solution. However, we recognise that there is normally no case for public compensation for criminal damage. Riots are, however, a special case. Compensation provides a safety net for businesses and households in the inner city areas most prone to riot. As I said earlier on, I had experience in 1985 in my own constituency of damage to both domestic and commercial property at the Handsworth riots in the Lozells area of my constituency and that of Small Heath.

As I say, removing the protective net provided by the Riot (Damages) Act, without any alternative means of assisting people, could prove counter-productive in that it could discourage responsible businesses and householders from staying in areas where they are needed. That said, we are actively pursuing the matter. It is my view, and that of other Ministers in the Home Office, that we want to get this settled as quickly as possible. Clearly, we do not want to do anything that interrupts outstanding negotiations and claims, because they are being conducted under the status quo, but as soon as we have more proposals we will hot-tail it down to Parliament, the Association of Police Authorities and ACPO for consultation on the matter.

---