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Police Grant Report

I thank the Minister for his comprehensive speech. I want to begin my remarks on behalf of Her Majesty's Opposition by expressing the sentiment that the police in this country do a very difficult and often very dangerous job on our behalf, and I pay tribute to their service. The police need resources from the Government, and indeed the taxpayer, to discharge their duties in upholding law and order. That is why this debate is so important to us all. Last year's crime figures showed that violent crime has risen by almost 80 per cent. in the past decade. Crime has not increased in every category in that period, but violent crime certainly has and that causes great concern to the public. In addition, the economic downturn has placed even greater strain on already tight police budgets. Sadly, the analysis from the Home Office that predicted a rise in crime as the economy worsened has been borne out by the latest quarterly crime figures. In the last year, burglaries have risen by 4 per cent., while fraud and forgery are up by about 16 per cent. and the number of street robberies committed at knife point have increased by 18 per cent. This year's settlement is the second part of the three-year 2007 comprehensive spending review. Excluding additional grants for counter-terrorism and other specific grants, the police settlement increase will be 2.7 per cent. this year, as the Minister said. A total of 20 police authorities will receive the lowest increase, of 2.5 per cent., and the Minister mentioned that there was a bigger-than-average increase for the West Midlands authority. There is no doubt that the police grant settlement is extremely tight, as the Minister would be the first to accept. Last year, the Association of Police Authorities said that the three-year settlement was one of the ““tightest for many years””. In its submission to the 2007 CSR, the joint APA and ACPO expenditure forecasting group said that there would be a funding gap, even with an annual grant increase of 2.7 per cent. The group's most optimistic assumptions suggested a funding gap by 2010-11 that would be in the region of £660 million. Using less optimistic assumptions, the group calculated that the gap could be as high as £996 million. The economic downturn has had an adverse impact on the financial position of police authorities. The collapse of Icelandic banks has wiped out about £95 million of police authority reserves, according to information that I have received from the APA. Lower interest rates of course mean that there is less investment income for police authorities, and proceeds from asset sales are lower in a depressed market. The Gloucestershire police authority, for example, estimated in January that the current grant settlement and economic conditions mean that it could lose up to around 60 police officers and 28 PCSOs, as well as 50 police staff posts. The estimates used by the expenditure forecasting group assume that the police precept on council tax would increase up to that maximum of 5 per cent., but the Minister for Local Government announced in a statement on 28 November that seven police authorities, including Cheshire, Leicestershire and Warwickshire, would face precept increase caps of 3 per cent. in 2009-10. In his reply, I hope that the Minister will confirm that those authorities will receive less than the 5 per cent. precept cap. Of course, Her Majesty's Opposition oppose excessive increases in council tax, especially in these dire economic times. The Minister will be very well aware that some police forces with historically low police precepts believe that they have no alternative but to seek more revenue from local council tax payers. Does the Minister think that in some police force areas there is a public demand—not a councillor demand—for an increase in locally funded police spending above the cap limit? Has he received any representations from members of the public along those lines? In last year's debate, the Minister's predecessor said that he expected the 2.7 per cent. growth in the police force grant to apply to this year as well, and the Minister has confirmed that today. However, I should like to hear his views on the pre-Budget report statement of 24 November, when the Chancellor announced"““that the Government will now find an additional £5 billion of efficiencies in 2010-11””—[Official Report, 24 November 2008; Vol. 483, c. 489.]" On a point of clarification, will the Chancellor's demand for extra efficiency affect the 2.7 per cent. increase? I have seen minutes from Lincolnshire police authority and the Met that express the concern that they might be expected to find extra efficiency savings at short notice. Will the Minister clarify the position in relation to that efficiency target? The 2007 CSR set a target for police authorities to make 9.3 per cent. efficiency savings over three years, so will the Minister say whether police authorities are still expected to meet that target? Alternatively, is there a new target—explicit or otherwise—that he wants them to work to, as a result of the catastrophic downturn in the economy and in the fortunes of the Government finances since the CSR statement for the three-year period that we are currently in was made? I should also like to hear the Minister's views on some other statements by the Chancellor, who recently announced plans to bring forward £3 billion of capital spending to assist the economic recovery. How much of that accelerated capital expenditure has been channelled into the policing sector, in its widest definition? Many people in the police authorities believe that accelerated local investment could assist improvement in the police estate and also support the local construction industry. I turn now to some of the minutiae of how the police grant is distributed. The calculation is notoriously complex, and is based on five separate components. The first, the needs-based formula, is easily the most important and is otherwise known in the trade as the principal formula. Its main determinant is the projected resident population, which is then adjusted to take into account several ““police crime top-ups”” that adjust the main principal formula to take into account socioeconomic and demographic factors that may impact on crime levels. Those factors include how many licensed bars, people in long-term unemployment, daytime residents or residents in terraced accommodation there are in an area, as well as its population sparsity. Secondly, in coming to a grant settlement, the Home Office will also apply additional rule 1. I will not detain the House on the minute working of that rule, important though it is. It affects the grant provision for South Wales police and redistributes it to other police authorities in Wales. Thirdly, the Home Secretary will apply additional rule 2. In the past, the Home Secretary distributed specific grants such as the rural policing grant, the forensic grant and the initial police learning and development programme grant. Ministers decided to amalgamate those grants, so that police authorities would have more control over how a number of those funds were used; that was sensible. The distribution of those amalgamated moneys under the additional rule is determined by the principal formula. Fourthly, the Home Office will distribute specific grants. I will not repeat what the Minister said, but there is, of course, a separate pot for counter-terrorism. He also referred to the crime fighting fund and the ring-fencing of funds for neighbourhood policing, all of which we support. Finally, the police grant floors are applied. The introduction of the principal formula in 1995 was designed to reflect the resource needs of police forces. However, to ensure that the introduction of the formula did not leave forces facing widespread financial instability, floors have been introduced. They guarantee that each police force receives a minimum percentage increase in the police budget, and we heard something about that from the Minister. Notwithstanding his statement, there remains serious concern among police authorities and police forces, in all parts of the country, about how the police grant formula is calculated; the Minister understands that concern because he is a well-informed and listening Minister. The floors mean that forces cannot receive an increase below 2.5 per cent., even if the principal formula has determined that they do not require such a level of funding. Equally, a police force that should, according to the formula, receive a higher amount will have its grant scaled downwards. As the Flanagan report illustrated, using 2007-08 figures, that meant, at the extreme ends, that the West Midlands force had its grant scaled down by 11 per cent., or £48 million in nominal terms. Bedfordshire received 6 per cent., and Thames Valley police 4 per cent.—less than they would have done if the formula was applied in its raw form. The funds that are taken away from one force are given to another, and that has meant that some forces, such as Northumbria, have received over 12 per cent. more. Her Majesty's Opposition welcome the removal of the ceiling, which the Minister's predecessor, the right hon. Member for Harrow, East (Mr. McNulty), announced last year when he was Minister for Security, Counter-Terrorism, Crime and Policing. However, I think that all of us—this might even extend to the Minister, judging from his comments—remain less than clear about the future for grant floors. It is worth reminding ourselves of what Sir Ronnie Flanagan's report on the future of policing said of grant floors:"““If we are to get the best performance return for our investment over the lean times ahead””—" how prescient Sir Ronnie was; he said that in February 2008, before the credit crunch—"““we must start to deal with these anomalies.””" He was referring to the floors. He went on to propose the following:"““I think it prudent that, from that point on, there should be a staged relaxation of the 'floors and ceilings' factors which dampen changes in allocations, possibly combined with special consideration for those few Forces which would face the most significant reductions in funding””" as a result of that relaxation. The Home Affairs Committee supported Sir Ronnie's proposal. It produced an excellent report, ““Policing in the 21st Century””, and I see that the Chairman of the Committee, the right hon. Member for Leicester, East (Keith Vaz), is present. The report was thoughtful, and it avoided party politicking and cheap points. Neither he nor I indulge in that kind of business when we are talking about the serious matter of policing the United Kingdom. The report said:"““We support Sir Ronnie Flanagan's recommendation for full application of the police funding formula at the next Spending Review.””" Can the Minister confirm that the Home Office will implement that proposal, and will he give us his detailed thoughts on it? The Select Committee and Sir Ronnie—an independent adviser to the Home Secretary—think that it is a good idea. Where are we on that? In November, in a written ministerial statement relating to the settlement that we are considering, the Home Office said:"““Our promised review of the funding formula before the next CSR is already under way with active collaboration from the police community.””—[Official Report, House of Lords, 26 November 2008; Vol. 705, c. 163WS.]" That is reassuring, but the House would be grateful for a bit more specificity on how far that review has gone. Will the Minister show a bit of ankle, to use a colloquialism, and share a bit more detail on how far he has got with that review? Will he say when we might expect an interim announcement on where the Government have got to? Again, this is not a matter of party politics; all of us with a concern about policing need to hear the Minister say more about the future for the formula on the record. With your permission, Mr. Speaker, I would like to say something about population figures, because I think that that is an area of technical inadequacy with which all Members on both sides of the House have problems. On 27 November 2007, the then Minister for Borders and Immigration, the right hon. Member for Birmingham, Hodge Hill (Mr. Byrne), told the Home Affairs Committee that the funding formula used to allocate money to the police for 2008 to 2010 would draw on 2004 national population projections"““simply because that is the best available data.””" Population projection figures form an integral part of the policing formula, as we all know, so is it really acceptable that the budget that we are debating is distributed according to a formula that is fed with data from 2004? I know that the Minister cannot wave a magic wand and get a sub-national version of a census for certain areas, or even a national census before the due date, but he might want to share some of the thinking about the inadequacy of the data, to which his former Home Office colleague, by implication, 'fessed up and drew our attention.