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Baroness Scotland of Asthal: My right honourable friend the Minister for Policing, Security and Community Safety (Hazel Blears) has made the following Written Ministerial Statement.
After considering the responses to the consultation document published earlier this year I am pleased to announce the introduction of a reformed system of financing police pensions with effect from 1 April 2006.
The new arrangements will cover both the existing Police Pension Scheme and the new scheme to be introduced next April, but will not affect officers as members of those schemes. The new system of financing pensions will benefit police authorities by keeping the pension payments they make to retired officers separate from their operating costs. The new
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system will facilitate operational budgeting and planning based on the real cost of serving officers, including the cost of their accruing future pensions. The new arrangements will also prevent any future rises in the cost of pensions in payment, as more officers retire, from impacting directly on police operating costs thus helping to keep council tax precepts to a minimum over the coming years.
Currently the Police Pension Scheme, which is administered locally by the police authority for the force concerned, is financed on a "pay as you go" basis. Police authorities do not hold specific pension accounts and officers' contributions are therefore paid into their operating accounts, from which the pensions of retired officers are paid. This means that police authorities have to meet the cost of the pensions of retired officers from the same source that funds operational policing. Although authorities currently receive an element in their police grant to support these pension payments there can be volatility from year to year in pensions expenditure, depending on the number of officers who retire, which can have an impact on operational expenditure.
In 2001 a working party from the Treasury, Home Office and the Department of Transport, Local Government and the Regions completed a joint review of arrangements for the financing of police and fire pensions. Following the recommendations of the joint review, a Home Office-led working group of officials drew up the consultation document Report of the Working Group on Police Pensions Finance Reform which we published on 24 March. We have now considered the responses to the consultation document and the outcome is that all respondents wish the new system to be introduced next year essentially as proposed. Support for the proposals was subject to specific comments and I am placing in the Library a copy of a summary of the results of the consultation exercise and of the Home Office response.
The new arrangements for financing police pensions will be based on officers' contributions and a new employer contribution that will be paid by the police authority into a separate pensions account. Any shortfall would be made up by a central government grant and any surplus in the account recovered by central government. To facilitate a smooth transition, adjustments will be made in the level of government funding through the police grant to ensure that there is no disadvantage to either the local or national taxpayer as a result of the change in the financing system.
The new arrangements are similar to those currently being used by other unfunded public service pension schemes; for example, those for teachers, civil servants and NHS staff. The changes are also very similar to the changes being made to the financial arrangements for firefighters' pensions, also announced today.
We are in close touch with the Association of Police Authorities and the Association of Chief Police Officers about the changes and we will shortly issue police authorities with detailed guidance on the new arrangements.
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Baroness Andrews: My honourable friend the Minister for Housing and Planning has made the following Written Ministerial Statement.
My right honourable friend the Deputy Prime Minister will publish for public consultation on 29 November, a paper discussing security of tenure for residential boats.
During the passage of the Bill which became the Housing Act 2004 the Government received representations that the Bill should be amended to provide similar protection for those living on boats as the Bill provided (and the Act now provides) for owners of park homes.
The Government agreed to explore possible options with stakeholders and publish a consultation paper in 2005.
In the consultation paper we have examined how residential moorings are managed particularly with regard to security of tenure; highlighted some problems that exist with these arrangements; and outlined possible solutions.
Copies of the paper are being sent to a wide range of interested parties including local authorities, trade and resident associations, and others with an interest in this issue. The closing date for responses is 21 February 2006.
Copies of the paper will also be placed in the Libraries of the House, and will be available on the Office of the Deputy Prime Minister's website at www.odpm.gov.uk.
A summary of the responses to the consultation will be published on the ODPM website and copies of the responses will be made available for inspection through the ODPM library.
Lord Davies of Oldham: My honourable friend the Parliamentary Under-Secretary of State for Transport (Derek Twigg) has made the following Ministerial Statement.
In July 2004, I took the decision to withdraw funding for the South Hampshire Rapid Transit (SHRT) scheme because of excessive cost increases. Since then, the scheme's promoters, Portsmouth City Council and Hampshire County Council, have put revised proposals to the department.
I have considered very carefully all the new information provided by the promoters. The promoters have succeeded in reducing the cost of the tram schemes below last summer's level. However, costs remain significantly higher than those the department approved.
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The latest tram proposals are still very expensivecosts are nearly 50 per cent higher than originally planned. This is for a reduced scheme which places more of the risks with the public sector. I therefore cannot support requests to re-instate the SHRT proposal.
The scheme was given full approval in 2001 with a cap on the public sector funding of £170 million, present value terms at 2003 prices. Following receipt of bids that greatly exceeded the approved public sector cost, the promoters put forward an alternative proposal in late 2003 removing the proposed cycle shuttle and introducing revenue risk sharing. But the public sector funding remained £100 million more than we had approved.
The promoters' latest proposal requires public sector funding of £214 million in 2003 present value terms. Cost savings were achieved by removing the short loop proposed for Fareham and changing the proposed procurement, with less risk transfer to the private sector. This is a 26 per cent increase above
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the previously approved amount. However, this simple comparison does not give a full picture because:
These figures are the total value in 2003 of the required public funding, at 2003 prices. In 2005, at current prices, the value would be £253 millionnearly 50 per cent above the approved cap. And this is still a present value figure, so it understates the cost increase in cash terms over the life of the scheme.
But it is the cash costs that count. The current proposal would require £93 million of capital grant and a total of £581 million in annual payments, associated with the PFI credits, up to 2036. The original proposal required grant of £75 million, and £244 million in annual payments to 2033. The cost to government has therefore more than doubled, from £319 million to £674 million, over 36 years.
I appreciate that the promoters have made every effort to reduce the costs of the scheme. However, it is clear that costs remain significantly higher than those that I previously approved. In the light of all the information, I cannot support requests to re-instate the SHRT proposal.
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