Wednesday 28 January 2009
[Mr. Peter Atkinson in the Chair]
Thames Valley Police
Motion made, and Question proposed, That the sitting be now adjourned.—(Mr. Blizzard.)
I am conscious of several things, including the fact that a good number of Members from all three counties that make up the Thames valley—Berkshire, Buckinghamshire and Oxfordshire—are in the Chamber, so I will keep my comments as brief as possible to enable every colleague who wishes to speak to make a full contribution to the debate.
I thank the Minister for being here, as well as for having spent half a day late last year in Bicester, in my constituency, looking at the excellent work being done on neighbourhood policing by Thames Valley police in north Oxfordshire. His visit was genuinely welcome.
This debate is co-ordinated. I would not want it to go unsung in dispatches that my hon. Friend the Member for Wantage (Mr. Vaizey) co-ordinated our general submission of a request for a debate on the subject, nor would I want him to think that I was seeking to claim all the glory for an initiative that he helped to co-ordinate. This debate is the result, as I am sure the Minister will appreciate as it goes on, of a general frustration felt by Members from all political parties from all parts of the Thames valley about what is happening in policing there.
Last year, the Select Committee on Home Affairs undertook an inquiry on policing in the 21st century. The Chair of the Committee, the right hon. Member for Leicester, East (Keith Vaz), said that the focus of that inquiry was on “recruitment and retention”—issues of concern to all of us who represent constituencies in the Thames valley area. Thames Valley police is the largest non-metropolitan police force in England, but it has one of the lowest ratios of police officers to population, which is a matter that relates to our grant. I have a strong suspicion that my hon. Friend the Member for Henley (John Howell) will say something about that, Mr. Atkinson, if he is fortunate enough to catch your eye.
The crux of the debate and of my concerns is the fact that the Thames Valley police force is experiencing significant loss of police officers through transfers to the Metropolitan Police Service. In the past five years, the Thames Valley police force has lost 360 officers to the Met police. Of those, 52 were specialist officers such as firearms officers, detectives and road policing officers, who are more expensive to train and replace. Indeed, Thames Valley police lost 12 detectives to the Met in one year.
We are not the only area concerned by loss of police officers to the Met. The same concern is shared by police forces in Hertfordshire, Surrey, Kent, Essex, Northamptonshire and Bedfordshire. However, a substantial proportion of those transferring to the Met come from the Thames Valley police area. Sara Thornton, chief constable of Thames Valley police, was clear in her evidence to the Select Committee about the reasons why:
“We believe that the different levels of pay in the Metropolitan Police Service contribute to that significantly and the free travel, from areas such as Thames Valley, up to 70 miles away from the centre of London also contributes to that.”
A Thames Valley police officer who transfers to the Met is instantly £5,000 better off, as well as receiving free travel, which probably equates to about £8,000 a year in all. Housing is still expensive in the Thames valley, notwithstanding recent economic difficulties, and is a particular challenge for younger police officers. One can jump on a fast train pretty well anywhere in the Thames valley area—whether in Banbury or Bicester in my patch or in Reading, Slough, High Wycombe, Milton Keynes or indeed any of the constituencies represented by hon. Members who are present—and be in London within an hour. The temptation is strong for officers to transfer to the Met for higher pay and better benefits.
The loss of so many police officers has disproportionate impact on the make-up of Thames Valley police. The force has the highest percentage of officers with fewer than five years’ service of all the police forces in England and Wales. I have been fortunate in the past year to take part in the police parliamentary scheme, which has involved spending several days on shift at Cowley police station, in the constituency of the right hon. Member for Oxford, East (Mr. Smith). I was struck not just by the professionalism of the police officers, but by the fact that most of the officers going out into Oxford on shifts during the day, early in the day or late at night were largely recent recruits with little experience and service. That is not their fault; it is the reality of the turnover of officers in Thames Valley police.
Terri Teasdale, head of personnel at Thames Valley police, told the Select Committee:
“In relation to the transfers out, it is not the number; it is when you add them onto other people leaving—the normal turnover, if you like—and add capacity within the organisation to deal with the number of recruits that have to come in to replace them and the loss of experience. That is our concern to do with retention.”
I may not be able to stay until the end of the debate, so I am grateful to my hon. Friend for permitting me to intervene. Does he agree that that also has a by-product? In Chesham and Amersham, when officers leave from other parts of the police authority, police officers with a great deal of experience of a particular area often have to move away from that area, where their experience could help with crime reduction and creating a strong policing presence. There is an internal churn within Thames Valley police, which is often damaging to policing in our constituencies.
My hon. Friend makes a good point. I suspect that both her constituency and mine are, in the totality of life, quiet compared with places such as Reading, Oxford or Slough. What tends to happen, therefore, is that if Thames Valley police are under pressure, officers are moved from constituencies such as hers and mine to areas where there are greater challenges, such as Oxford, Aylesbury or Slough. That is greatly unfair on her constituents and mine.
On internal churn, although all areas within Thames Valley police are suffering from the problem that my hon. Friend is so clearly explaining, it is especially bad in the north, including in Milton Keynes. Thames Valley police has in the past been forced to put an internal ban on officer movement from north to south to compensate for the outflow into the Met police. That means that the situation is even worse in the north in places such as Milton Keynes.
It is also particularly bad in the north for other reasons that I shall explain later. Thames Valley police has sought to address the movement of police officers to the Met by slightly increasing pay—from its own resources—to officers in the south. However, officers in the north of the area, such as in Milton Keynes or in north Oxfordshire in my constituency, feel that that is somewhat unfair. It reflects the general pressure that so many officers transfer out.
As the interventions from my hon. Friends show, lower police numbers becomes a self-reinforcing problem. Having proportionately fewer police officers can make officers feel rather alone when on patrol, which can increase the attraction of the Met area, where there are a lot more officers to give support. Moreover, as Maurice Collins, chair of the Thames Valley Police Federation, noted:
“The other reality which concerns me is that the core shifts, which are the bread and butter of policing, used to be driven by officers with four to seven years’ service. That is not the case any more. Those core shift officers have now, typically, two-and-a-half to three years’ service, and some of them are in probation. Often their sergeant in Thames Valley has only three to four years’ service in total. That is not good for Thames Valley; it is not good for our community. We need to do something about it.”
He went on to observe:
“There simply are not enough police officers to go around.”
That is a fundamental concern for all of us who represent constituencies in the Thames valley. It is not our judgment; it is the judgment of the Police Federation, which represents police officers out there on the beat.
For all of us living in the Thames valley, and for those of us who represent Thames valley constituencies, this is a serious issue. Moreover, if there are not enough police officers to go round, those we have tend to be allocated to larger towns such as Oxford, Reading and Slough, and constituencies such as mine, and those of my hon. Friends who are present, sometimes feel very stretched for police resources.
The loss of officers is further exacerbated by what is known as the Edmund-Davies bubble. In the Thames valley, we have a significant number of officers who will retire in the next few years—139 in 2009-10, and 172 in 2010-11. That means that the Thames Valley police force is getting close to capacity in terms of taking in recruits. The problem is not capacity at the training school, but coping with the large number of newly recruited officers on patrol, having sufficient tutor constables and needing to take people away from front-line policing to support probationers.
The Thames valley has become a training ground for the Metropolitan police. This year, the Met plans to recruit 550 transfers; it actually has a plan to do that. That means that its budget—I hope that the new commissioner will think seriously about the morality of this—works on the basis that it will be able to recruit more than 500 trained police officers from other forces. The Met is therefore relying on other police forces to train and provide it with 550 officers this year alone, many of whom are specialist officers. That is unfair and unsustainable, and it is likely to get worse as we approach the 2012 Olympics and the expansion of Heathrow. We are talking about a police force that is not as experienced as it could be if it had not lost experienced officers.
Not only are we losing experience, but the Thames Valley force is incurring training costs, which will be reflected in the grant funding formula. The force has calculated that the cost of training is £55,000 for a normal constable, rising to £77,000 for a firearms officer. Therefore, if only 20 officers transfer, even at a cost of £55,000 each to train, that is £1 million. Our concern is that local people in the areas around London—our council tax payers—are paying to train their local police while the benefit is being felt in London.
A south-east allowance was introduced a few years ago, but it has remained frozen, whereas the Metropolitan police’s London weighting allowance has continued to rise, so the pay gap has become wider. The Thames Valley police force has done what it can within its resources. It is now using 3 per cent. of its pay budget, which is a considerable amount of money for the force, to try to give officers in the south of its area, who are more likely to find it easier to work in London, a bit more money, but that is a stretch on its budget. As my hon. Friend the Member for North-East Milton Keynes (Mr. Lancaster) has shown, it also creates tension within Thames Valley police. The force has helped more than 700 of its officers on to housing schemes, so 15 per cent. of its officers are being helped in that way.
The force is doing what it can, within its resources, to assist retention, but that still leaves the main issue: the difference between pay and conditions in Thames Valley police and in the Metropolitan police, and the free travel afforded to officers in the Met. As the local Police Federation representation has made clear:
“For that reason, for the health and wealth of the Thames Valley and its community, the Thames Valley Federation think it is the right thing to do to support the Chief Constable, to break away from the national agreement”.
The Home Affairs Committee, of which the hon. Member for Reading, West (Martin Salter) is a member, reached a unanimous conclusion in last year’s report on 21st-century policing. It made two relevant recommendations: differential pay between the Metropolitan police and surrounding forces should be reduced, and the Metropolitan Police Service should negotiate a protocol with surrounding forces on the recruitment of staff. I note that although the Met has made noises about such a protocol, nothing has really happened.
My submission to the Minister is that the south-east allowance should be increased substantially to recognise the cost of living in areas such as Oxfordshire, Berkshire and Buckinghamshire, including in towns such as Banbury and Bicester in my constituency, because the current situation is simply unfair. He will doubtless jump up and ask how that should be funded, but the question that he should address is how to tell a police officer in Slough that they are worth £6,000 a year less than a police officer 2 or 3 miles down the road in Uxbridge. That is unsustainable.
The Home Secretary has yet to respond to the Select Committee’s unanimous report, but the Committee has made two very straightforward recommendations and we hope that that response will be positive.
Before calling Mr. Salter, may I have an indication as to how many Members wish to speak? The winding-up speeches will have to start at about 10.30 am. If my maths is right, that gives hon. Members about six minutes each. If they stick to that, they can all get in.
I shall do my best to stick to six minutes, Mr. Atkinson. I congratulate the hon. Member for Banbury (Tony Baldry) on securing the debate. He has set out arguments on which we all agree. I have been ploughing this furrow, which is not such a lonely furrow any more—I welcome the number of Members who are throwing their weight behind the campaign—since 2002, when my hon. Friend the Member for Slough (Fiona Mactaggart) and I launched the initial campaign for a south-east allowance. The hon. Member for Banbury joined me and the hon. Member for Buckingham (John Bercow) in meeting the Minister’s predecessor, my right hon. Friend the Member for Harrow, East (Mr. McNulty)—now the Minister for Employment and Welfare Reform—to put forward the case for substantial increases in the south-east allowance. We also floated the interesting notion of transfer fees. How is it that the Met police can use not only the Thames Valley force but the five other forces surrounding London as a recruitment pool and training ground, while the council tax payers in our constituencies are in effect subsidising the training of Met police? That has to be wrong.
We are not talking about raw numbers; there have been 417 more police officers since 1996—the Thames Valley force has never had so many officers. The issue for all of us, in all our constituencies, is not the number of officers, but the number of experienced and fully trained officers. Let us be clear: experienced coppers catch more crooks.
In Reading, in 2003, we held a conference on regional pay. The then chief constable of the Thames Valley police, Peter Neyroud, provided us with some pretty shocking figures. If we had carried on losing experienced officers to the Metropolitan police and elsewhere at the rates that we were losing them in 2001, 2002 and 2003—about 90 officers a year—there was a realistic prospect that within four or five years the streets of my constituency, and of the Thames valley as a whole, would have had only a minority of experienced officers. By that, I mean that there would have been a minority of non-probationer officers patrolling our streets, which would have been simply unacceptable.
Ironically, what was said at the regional pay conference—at which the guest speaker was the then Chief Secretary to the Treasury, my right hon. Friend the Member for Oxford, East (Mr. Smith)—prefigured what appeared in the Home Affairs Committee report, which I was proud to help produce. The report’s recommendations could not have been starker, and we need to press the Minister for an early response from the Home Secretary on the issue. The south-east allowance should be increased substantially, and the Metropolitan police should be forced to adopt a protocol and a neighbourly way of working.
It cannot be right for the Metropolitan police to offer bounties to attract a member of Thames Valley police or one of the surrounding London forces to apply for a job in the Metropolitan police. I understand that the bounty is reported to be between £250 and £400. We have heard stories of the Metropolitan police putting on coaches for recruitment fairs in our constituencies. That cannot be right. It is particularly galling for my hon. Friend the Member for Slough to hear stories from police officers in her community who walk past bus shelters advertising to attract police officers away from her streets and communities. That is an aggressive and entirely deliberate recruitment strategy—it is not an accident of history or geography—and it has to stop.
In February 2008, I put together a cross-party delegation of Members of Parliament to see the Home Secretary. She is fully aware of the issue and has tried to raise it with the byzantine machinery of the Police Negotiating Board. The issue stalled because of the problems with police pay. Those have now been resolved and I understand that the machinery is once again grinding, but exceedingly slowly. It is time that we, as politicians, gave that machinery a kick and made the wheels move a little faster.
Because this is a general debate on Thames Valley police, as well as touching on the recruitment issue, I pay tribute to three exceptional police officers with whom I have had the privilege of working during my 25 years in public life, particularly during the 11 years I have spent in Parliament. The first person is Dave Murray, who is the finest area commander I have ever worked with. He was a Reading area commander for many years—a copper’s copper—and did a huge amount to re-establish the reputation of police in my community. He is still sorely missed both by officers and the community.
I have worked with two exceptional chief constables. Our current one—Sara Thornton—is quite exceptional and inspirational. As an aside, I congratulate her on overturning one of the more stupid decisions of her underlings, which was to try to refuse to police the Reading versus Celtic testimonial match scheduled for May this year. Apparently, we were going to be engulfed in a tidal wave of sectarian violence for some reason—perhaps we should have a debate on the role of special branch and the quality of the intelligence it puts forward; but seriously, Sara Thornton has been a magnificent and inspirational leader of Thames Valley police.
Lastly, I pay tribute to Peter Neyroud, who heads up the National Police Improvement Agency. He was an inspirational leader and recognised the need to concentrate resources—although my colleagues from more rural constituencies might take issue with that—on where the crime was rather than just where the people live. It is a simple fact that although one can make a case for spreading police officers around the Thames valley like jam, if young people from Newbury or Wantage are spending a Friday or Saturday night out in Reading or Oxford, police officers need to go where the crimes and problems might arise.
I hope that the Minister will respond positively to what I think will be a common rallying call in this debate. I do not want to organise any more delegations to see Ministers about the issue. I do not want to sign any more early-day motions. I do not want to organise any more conferences; in fact, I do not want to make any more speeches on the issue, which is why I shall now sit down, but nor do I want a nasty glimpse of the future that shows my community and the communities of my colleagues in the Chamber policed by raw recruits. That is not policing for the 21st century.
I am grateful for the opportunity to speak under your chairmanship, Mr. Atkinson. I congratulate my hon. Friend the Member for Banbury (Tony Baldry) on securing the debate and on his kind words.
To follow what the hon. Member for Reading, West (Martin Salter) said, and in case any hon. Members think that all the young people in my constituency travel to Oxford to kick off on a Saturday night, I assure him that the young people of Wantage, Didcot, Wallingford and Farringdon are extremely well behaved. In fact, I was going to begin by saying that I am lucky enough to represent one of the safest areas in the country. Indeed, some police officers have described it to me as a boring area to police—long may it remain so. However, like any Member of Parliament, I occasionally criticise Thames Valley police. There are one or two issues, and there has been the occasional wrongful arrest. There is the legendary case of an 85-year-old pensioner who was arrested for chopping down a tree in his garden, which is now known as the willow tree case and has a 2 ft thick file. I am also trying to deal with a small amount of antisocial behaviour at Smith’s Wharf, Wantage.
I think that all hon. Members and most policemen would agree that there is a growing management culture in the police. In fact, at the Home Affairs Committee hearing, to which my hon. Friend the Member for Banbury referred, that was mentioned by the chairman of the Police Federation. He said:
“Years ago, when I was making arrests, it was an instant decision, but these days it is a long process to get there.”
That is a general issue that affects police forces across the country.
The telephone service should be more local—all my constituents hate the 0845 number—and we should have more special constables. I join the hon. Member for Reading, West in paying tribute to our chief constable, Sara Thornton, and to our new local area commander in the Vale of White Horse, Andy Boyd. On first meeting, he certainly comes across as being a copper’s copper. Both of them have put more police on patrol at the right time on Friday and Saturday nights and they are going around visiting victims of crime.
Most of what I would describe in the vernacular as the slam-dunk arguments in favour of Thames Valley police’s case have been made by the two hon. Members who spoke before me. However, some other points may add weight to the case. First, all hon. Members in the Chamber represent areas that will experience huge housing growth once the credit crunch is over. Hundreds of thousands of houses are planned for our area and that will lead to a need for more police officers for Thames Valley. If all the housing that is planned goes ahead, Thames Valley police estimates that it will need at least 1,200 more officers and staff. That is something that must be included in the mix.
The arguments about the different wages for Metropolitan police officers and Thames Valley officers have been made clearly. One could travel a few hundred yards and earn £4,500 more for doing the same job. The Select Committee made a clear recommendation to increase the south-east allowance from £2,000 to £3,000, and noted that the allowance has not increased since its introduction—even with the rate of inflation. That is why there is such a disparity. At present, Thames Valley police would need another 436 police officers, 349 special constables, and 22 police community support officers to reach the shire average, not just the national average. If it were to reach the shire average in terms of its budget, it would need to receive additional revenue of almost £4.5 million. Those are significant sums.
The core point that was so ably made by my hon. Friend the Member for Banbury is that the Thames valley is becoming a training area for the Metropolitan Police Service. We are very low down the list in terms of the number of experienced officers patrolling our streets, whether in Reading, Milton Keynes or Wantage. That is not an aspersion; it is simply an objective statement of fact, which means, for example, that there will tend to be officers with only two to three years’ experience on the core and most important shifts of the police week in Thames valley when, ideally, a police force wants at least one officer of four to seven years’ experience patrolling the streets. A clear protocol is needed between the Metropolitan Police Service and the neighbouring constabularies.
I understand that Her Majesty’s inspectorate of constabulary got involved earlier this year or at the end of last year and reduced the demand of the Metropolitan Police Service, which has had an overt demand for something like 500 to 600 experienced trained police officers whom it wants to recruit from other police forces. I understand that the total has been reduced to 400.
There are two clear solutions, to which I hope the Minister will respond. One is to increase the south-east allowance to reduce the differentials between the Metropolitan Police Service and neighbouring constabularies. The second solution is to bring the MPS to the table and force it to sign up to a meaningful protocol that will ensure that Thames Valley police and other constabularies can keep experienced officers and maintain an important balanced ecology in their force.
I, too, congratulate the hon. Member for Banbury (Tony Baldry) on securing the debate, and I welcome his having been out on the streets in Cowley. Whether that was responsible for the fall in crime locally, I do not know, but he is very welcome, and I know that he learned many useful lessons from the experience.
The debate is a welcome opportunity, on a cross-party basis, as we have seen, to raise the important issues of retention and the need for a fair deal for police in the Thames valley, especially in relation to the Metropolitan police. It is, as others have noted, a good opportunity to place on record our appreciation, and that of our constituents, of the job that the police are doing in our area. I go out on the doorstep a lot in my constituency, calling round with local councillors, and we pick up a fair few issues that need taking up with the police. I also regularly survey constituents on whether they feel that community policing is making their neighbourhood safer, and satisfaction with policing and police responsiveness when cases are raised have been going up for a while—they were doing so even before the hon. Gentleman went out with our officers. I think that is because there are more police officers and the police are more visible—with neighbourhood policing and community support officers.
At the end of the day, policing, like justice, has to be not only done but seen to be done, and progress is being made. That is not to say that crime is not still too high, because of course it is—even one crime is one too many—but people can see the progress that is being made. I certainly get fewer complaints about lack of police response than I did a few years ago. One conclusion I draw is that community policing, including the valuable contribution of community support officers, is a success. It is valued by the public and puts the police more closely in touch with them at a time when the nature of specialist operations and the fight against highly organised crime and terrorism inevitably distances some police functions from the citizens they serve.
On the question of retention and recruitment by the Met, I wholly agree with the points made by the hon. Members for Banbury and for Wantage (Mr. Vaizey) and my hon. Friend the Member for Reading, West (Martin Salter). As my hon. Friend said, several of us put those points to the Home Secretary last year in a meeting that he organised with her. I note from the police briefing for this debate that following those meetings and our representations, and the intervention of Her Majesty’s inspectorate of constabulary, to which the hon. Member for Wantage referred, the Met has been forced to reduce its target for recruiting experienced officers from other forces from between 500 and 600 to 400. One must ask what the justification is for drawing as many as 400 experienced officers from neighbouring forces. What evidence does my hon. Friend the Minister have as to whether the commitment is being kept? Does he have statistics on what is happening month by month or quarter by quarter? Incidentally, I was very grateful to my hon. Friend for coming to my constituency to see the local neighbourhood policing strategy for himself. He went on to visit Banbury on that occasion too, so it is good to know that he is out and about, keeping in touch with what is happening on the ground.
We are all familiar with the factors that cause officers from the Thames Valley force, and others within striking distance of London, to go to the Met: the aggressive recruitment policy, the pay differential of £4,500 and free travel within a range of 70 miles. I am sure that we want to send a united message to the Minister and, through him, to the Home Secretary that the unfairness in the differential must be tackled without further delay.
I single out in particular the nonsense whereby the London allowance increases with inflation while the south-east allowance does not, meaning that the gap gets wider all the time. The Select Committee on Home Affairs recommended a substantial increase in the south-east allowance and a protocol with the Met to limit transfers, so it would be very helpful if the Minister could tell us when the Home Secretary will respond to that report, and even better if he could at least hint that the response will be positive. The police do a very good job of serving our area, and they must be helped to keep to a minimum the wasteful and wholly avoidable drift of officers to the Met, and to tackle the problem sooner rather than later.
I thank my hon. Friends the Members for Banbury (Tony Baldry) and for Wantage (Mr. Vaizey) for their respective roles in this debate. My hon. Friend the Member for Banbury comprehensively set out the background to the issue, so I shall spend a few moments on two problems: first, rural policing; and secondly, the impact of the funding formula grant.
The Thames valley policing area is varied, but we should not forget that large parts of it include rural constituencies, such as mine. From the point of view of officers, rural policing is not the sexiest part of the job. The fleshpots of Newbury, Wantage, Oxford and Reading are more attractive in terms of the variety of crime that the police handle, but rural policing is a vital and visible part of policing the whole area. It has often been seen, from a force perspective, as the poor relation of other policing—certainly when compared with policing in the Met. However, that, too, must be addressed, because one characteristic of rural policing is the need for a police officer’s local knowledge, owing to the distances involved and the isolation of villages and individual houses, and the need, therefore, to build strong working relationships with local individuals, many of whom have had to establish their own intelligence networks—to report crimes and potential crimes to each other—that go far beyond the neighbourhood watch scheme.
Thames Valley police has made progress on targeting rural crime, and I pay tribute to its work. It would be a great shame, however, if that were to be undermined as a result of the retention problem. Let me hint at the scale of rural crime. There are major issues with theft, often of highly valuable machinery, but there is also a problem with the theft of animals, particularly of working dogs, for which there is quite a black market. Perhaps the most disturbing aspect of all, however, is the increase in mindless destruction by people who are often armed. They drive into fields in vans or cars with bull bumpers, run down deer or sheep and, without any consideration whatever, leave them maimed, to die in agony. The activity is not restricted to, or at the heart of, my constituency, but the intelligence network on such activities is based there. It requires co-ordination throughout the Thames valley, however, because the gangs that carry out those activities come from many parts of the area.
The point has already been made that Thames Valley police has the highest percentage of new officers, and the implication for rural policing is that the knowledge base, and the relationships to which I referred, are weakest there. Thames Valley police has the eighth lowest proportion of police officers per 100,000 of the population, and that, coupled with the long distances in, and rural nature of, the area leads to isolation and a loss of teamwork there. That also has an influence on retention.
I join my hon. Friends in calling for a review of the south-east allowance and the London allowance, because there can be no justification for such a disparity, particularly given the additional costs that Thames Valley police has to put up with. That is only part of the solution, however, because pressures also come from the funding formula, which does not pick up on location or other costs. My hon. Friend mentioned the costs of training, and Thames Valley police authority is not a floor authority, so, despite the additional costs, its subsidy of floor authorities is predicted to be £3.8 million in 2010-11. It may escalate, but it has been in the range of £3 million to £4 million. I understand the nature of floor regimes, which try to provide some stability across the piece, but in reviewing the funding formula, which I believe the Minister is committed to, we need to consider whether removing £3.8 million annually from a police force such as Thames Valley police is sustainable. We must also consider whether it is wise for the floor authorities to be increasingly dependent on that redistributed formula grant, in terms of targeting the formula at where the problem is.
In reviewing the formula, I should like to put down a marker and say that there are three points that we would like to keep a close eye on. I will put it no stronger than that in case it is taken as a spending commitment. We would have serious considerations about three things: first, the idea, which has been advanced frequently, of rolling the rural policing grant into the general grant and allocating that according to the formula; secondly, rolling the London and south-east allowances into the general grant; and thirdly, the abolition of the area cost adjustment. If those three things are on the Minister’s agenda, he can expect particular scrutiny from the Opposition.
I concur with the remarks made by hon. Members from all parties. This is a major policing area and it is under a lot of stress, but it has a huge variety of situations to offer policemen and policewomen coming into the service in terms of the balance between rural, urban and suburban. This debate has highlighted the major problems that it faces.
I, too, welcome the chance to debate this matter and I congratulate my hon. Friend the Member for Banbury (Tony Baldry) on securing it. I also thank my hon. Friend the Member for Wantage (Mr. Vaizey) for his contribution.
I should like to comment on a point made by the hon. Member for Reading, West (Martin Salter) and develop a theme that has been mentioned. Many of his constituents come to Newbury to drink in the evening because it is safer. This creates a policing issue, because in a relatively low crime area, suddenly there can be a requirement for more police officers. We should try to have an even mix.
I was concerned when the basic command unit area went from being just my local authority area to include Reading and Wokingham, because I naturally thought that there would be a migration of police officers from my area to a higher crime area, such as Reading. I keep a close tab on that. However, at times I detect that there is, as my hon. Friend the Member for Henley (John Howell) says, great difficulty maintaining the police numbers required for when crimes do happen in rural areas with a low crime rate.
We should all congratulate the new Metropolitan Police Commissioner on two things: first, on being successful in getting appointed to the important job of running the Metropolitan Police Service and, secondly, on achieving a degree of unanimity of view between the Home Secretary and the Mayor of London, which is an achievement in itself. I hope that we, as Thames Valley Members of Parliament, will take this opportunity to write to him, congratulating him on his appointment. However, my hon. Friend the Member for Banbury talked about the morality of the issue—we can use words like morality or responsibility—and the Metropolitan police must be responsible in its approach to recruitment. The hon. Gentleman mentioned posters in Slough station, for example. That is not a responsible act and it should not be continued.
I hope that the Minister will encourage a revisit of the meeting that took place last June with Martin Tiplady, the director of resources for the Metropolitan Police Service, which achieved something—although it seems more like warm words than actual achievement. The Met agreed that it would monitor transfers and run recruitment campaigns in conjunction with south-east forces and would seek to stage transfers where the negative impact of transferees is proving critical to service delivery. That all sounds nice, but the Metropolitan Police Service still intends to recruit some 400—possibly more—experienced police officers whose training will have been paid for by the council tax payers of areas such as the Thames valley.
We should not run away from the fact that it is not just the Met that is sucking police officers away and that it is a situation that we cannot entirely control. I went on patrol in Newbury some years ago with a young police officer whose girlfriend was a police officer in Reading. They lived in a two-bedroomed flat in Reading. He was moving to Lancashire with her and they were going to sell their two-bedroomed flat in Reading and buy a four-bedroomed detached house in Lancashire. Their quality of life was going to be massively improved. The Thames Valley council tax payers had paid for his and her training, but the people of Lancashire were going to have the benefit of it.
It is undoubtedly true that the weighting and the travel allowance covering places 70 miles from the centre of London are causing the problem. Many hon. Members have Metropolitan police officers in their constituency. I seem to meet them every time I go canvassing, although I do not know whether that is just luck or whether an enormous number of them live in west Berkshire. The truth is that the Thames Valley police force has been nicknamed the Met’s training force for too long.
In conclusion, I hope that the Minister will accept the two key recommendations in the Home Affairs Committee report. First, the differential in pay should be reduced. That could be achieved in many ways without it sounding like a spending commitment. Secondly, there should be a clear protocol agreed between the two authorities that will ensure that this problem will cease to exist in years to come.
I congratulate my hon. Friend the Member for Banbury (Tony Baldry) on securing this important debate. I am conscious that, coming last in the pecking order of speaking, I may repeat things that other colleagues have already said. But this is such an important debate that a little repetition will not hurt on this occasion.
I am keenly interested in the work of Thames Valley police and I support the great and good work that it does across my constituency. Since becoming an MP, like other hon. Members, I have spent several nights with my local force patrolling my constituency. I have patrolled around east Reading on my mountain bike and in a van around Reading town centre, which attracts a large number of people, particularly at weekends. I have seen first hand the problems that the police experience. Recently, in December, I was out with a vehicle safety check unit, pulling over and stopping cars that are unfit to be on the roads. So I have seen at first hand the important work that police officers do and I have been amazed by the professionalism that they show and by their dedication to their work.
We have a good team of police officers in Reading. I should like to single out one in particular, Steve Kirk, who has been doing an excellent job for my constituents across Reading, East. I also join hon. Members in paying tribute to Dave Murray, who retired last year from the Thames Valley force. He was an excellent, dedicated police officer and he did an enormous amount for Reading.
I should like briefly to cover three issues to do with Thames Valley police: detection, officer retention and red tape and bureaucracy. On detection rates, during the Safer Reading campaign last year the chief inspector announced that offences in Reading had been rising since the previous March and that his force needed to improve. The detection rate of only 10 per cent. of crimes, such as burglary, robbery and theft from vehicles, is disappointing to say the least. These are the crimes that our communities come into contact with the most—almost daily—so it seems that people have cause for concern. Being concerned, I asked several questions about the force’s detection rates and I am interested in the responses that I have received.
According to a parliamentary written answer from the Home Office, in 2007-08 the Thames Valley detection rate for theft was 16 per cent. and just 9 per cent. for burglary. Even with the much discussed changes in measurement made by the Home Office over recent years, a detection rate of below 10 per cent. is surely a cause for great concern. Similarly, the results to a question asked by my hon. Friend the Member for Wellingborough (Mr. Bone) have exposed the below-par performance by Thames Valley when comparing its detection rates against other forces. Out of 43 forces in England and Wales, Thames Valley is ranked 36—only three forces have a worse detection rate. That is cause for concern and a very disappointing result for our local police force. It is clear that the force needs to take steps to improve its detection rates if it is to reassure people that it is improving its service to the community.
That leads me to my next point. Officer retention, as hon. Members have said, continues to be a problem in the Thames Valley area, despite the authority investing considerable resources in housing and related schemes. One can sympathise about the low detection rates when one realises how many excellent experienced officers the force is losing to the Met because of its wages and free travel.
Giving evidence to the Home Affairs Committee last year, Sara Thornton, the chief constable of Thames Valley police, admitted that it is a very young force. That has been commented on today. According to the chairman of a local branch of the Police Federation, the average length of service in Thames Valley police is just two and a half years. Considering the resources involved and the fact that it costs nearly £50,000 to train just one police constable, Thames Valley police are continuing to invest valuable money in training officers in the knowledge that that will be wasted because they will go to the Met. Clearly, losing officers at that rate will not benefit local communities in the Thames valley and it is a financial drain on resources. With just three years until the Olympic games, the demand for specialist officers will undoubtedly increase, exacerbating the problem.
I understand that Thames Valley police are continuing their dialogue with the Met, but there has yet to be a satisfactory conclusion to those discussions. One major concern is that, as many hon. Members have said, the Met is able to pay much more to equivalent ranks as a result of the London allowance and the free travel zone around the capital. One way to alleviate the problem—a way that is advocated by Thames Valley police and the Select Committee—would be to increase the south-east allowance to make it feasible for officers to live in the south-east, in places such as Reading. However, I do not know whether that solution is practical or even possible in the current economic climate. I doubt that the issue is worth pursuing in the short term.
Following the evidence session in Reading, in my constituency, the Home Affairs Committee recommended that the Met should agree with surrounding forces to limit transfers, and I believe that that is the right course of action. I understand that the need for specialist officers is somewhat greater in London, but it does not follow that that should be to the detriment of surrounding forces, such as our own. We are all vulnerable to the forces of extremist behaviour and terrorism, and Thames Valley police should be able to build and maintain a mature force that is fit to cope with the challenges that it faces. I believe that, by pursuing that course, Thames Valley MPs could make a real difference and persuade the Home Office to do what has been recommended.
There has been an increase in the number of police officers since 1997, but the impact of that increase has been curtailed by the Government’s self-imposed bureaucracy, meaning that those officers spend a mere 14 per cent. of their time on patrol. That negates the increase in numbers. Along with my constituents, I believe that police officers should spend more time on the beat, conducting high-visibility patrolling and providing reassurance. Police forces should be free to operate without the high levels of top-down interference to which they are subject from the Home Office.
I welcome the willingness of the Thames Valley force to embrace community policing by publishing local crime statistics and making crime maps available online. I am also pleased by the improvements that neighbourhood policing has brought about in my constituency of Reading, East, although there is still much work to be done. That was proved by the recent review of policing conducted by Her Majesty’s inspectorate of constabulary, in which only 51 per cent. of respondents thought that the police were dealing with locally important issues. There is clearly a need to improve the public’s sense of connection with and confidence in the police. A great deal remains to be done in that respect. Community policing should be local; it should be what it says on the tin. Forces should be able to operate without Government restriction and they should be fully accountable to the communities in which they operate.
I congratulate the hon. Member for Banbury (Tony Baldry) on introducing the debate and on his commendable honesty. He confessed that he could not claim the credit for securing the debate, as there was a co-ordinated attempt to secure it. He is obviously not the sort of man who would say that he had saved the world unless he had.
I can confirm what other hon. Members have said, although I start by congratulating their local chief constable, Sara Thornton, on the work that she has done. It is clear that the results from Thames Valley’s area are good in terms of crime in the region falling, fewer victims of crime, response rates to emergency and non-emergency calls, and the number of offenders being brought to justice. I understand that the target in that respect was exceeded by 1,000, although with that particular target one has to add a word of caution about targets perhaps distorting priorities in terms of quick wins. However, the picture is very positive on fighting crime.
It is clear from the debate that officer retention is an issue. All hon. Members have spoken about that and I commend them for highlighting the concerns about the lack of experienced officers, or at least a smaller percentage of experienced officers relative to other forces. It is not as though there are not crime issues in the Thames valley. All hon. Members will have received the briefing pack on the issue and seen the article that refers to a problem in Milton Keynes. The reporter was taken around by officers and shown a bundle of guns that had been confiscated from a member of the public in Milton Keynes just a couple of days earlier, including five handguns and three rifles, so clearly there are significant policing issues in the region that require officers with significant experience to tackle them effectively.
I do not know whether the hon. Gentleman saw the excellent documentary that was on last night, but it featured a Thames Valley police detective who co-ordinated the work of four constabularies to put the notorious Johnson gang in prison after they had smashed and grabbed numerous cash machines as well as raided many country houses. That is an example of the fine and experienced policing that we want to hold on to in the Thames valley.
I agree entirely with the point made by the hon. Gentleman. Experienced officers are needed to crack organised crime in the way that he describes. Many hon. Members referred to what can be characterised as a brain drain of experienced officers from Thames Valley and other forces surrounding the Met area. In the Thames valley, the exodus in the last year has been the largest for six years, with a significant number of specialist officers leaving the force as well.
Many hon. Members referred to the pay differential of £5,000 and to the free travel on offer with the Met. I do not want to quibble too much about the free travel. Clearly, there will be officers who have to travel a short distance to their place of work. The argument about people having free travel when they were perhaps paying much less for travel previously is perhaps not so strong in cases such as that, but I do not quibble with the basic principle, which is that if officers work in the Metropolitan police, they are substantially better paid, and for some there will be the attraction of free travel to their place of work.
Hon. Members referred to the forces around London being a recruitment pool for the Metropolitan police with regard to the expansion of Heathrow due to the new terminal and the London Olympics. The Oxfordshire branch of the Police Federation has expressed concern that officers will be poached over the next four years. I have some specific questions for the Minister. Does he believe that that is a realistic concern in the short term? When the Olympics take place, there will clearly be strong demand for additional officers to supplement the police presence, probably from all over the country. What will be the police profile? How many additional officers will be required to police the Olympics from now on? There will be a slow build up to the Olympics and a need for specialist officers. At what point will that growth in numbers occur?
A number of Members referred to training costs, which are significant. Indeed, additional training costs for the Thames Valley force since 2002-03 are £10 million, partly because specialist officers are being poached or are moving to work for the Met. Additional training costs will clearly be incurred to train officers in the use of the Taser. I seek clarification. I believe that the Government will pay for the Tasers, but that forces will be required to pay to train officers in their use. I have another specific question for the Minister: what does he expect the average cost of training an officer to be? That cost will clearly have an impact not only for the Thames Valley force, but for many others.
I hope that the Minister can answer some specific questions on what has happened since the meeting between the south-east police forces and the Home Secretary in January 2008. Other Members have already referred to what was promised.
The Metropolitan Police Service was to monitor transfers in from other forces and provide advanced warning to them every month. Will the Minister confirm that that has happened each month since that meeting? The Metropolitan Police Service was to run recruitment campaigns in conjunction with south-east forces. Will he confirm how many such joint recruitment campaigns have taken place? Finally, the Metropolitan Police Service was to work with forces by staging transfers when, for instance, the negative impact in relation to transferees was proving critical to service delivery. Will he confirm how many cases there have been in which a transfer has been delayed due to critical risk to service delivery?
I am sure that the House will want to know that that meeting resulted in some concrete outcomes. If the Minister cannot answer my questions today, I hope that he will write to Members to specify exactly what has happened.
An idea that has not been put forward in relation to training is one that other industries have sought to implement. That was certainly the case when I was working in the IT industry 20 or more years ago. The big firms were keen to set up an agreement so that if one firm had a consistent record of poaching staff from other firms it would be fined an amount equivalent to the cost of training the employee. As a result, there was no incentive for firms not to train and poach staff from others.
Have the Government put that idea to the Metropolitan Police Service or discussed it with police forces? It might be a way forward. The fact that the Met does not have to pay the training costs is clearly one reason why it can offer more money to its officers—it is saving the training costs. If some sort of fine system was in place, there would be no such incentive. As a result, one might be able to reduce the brain drain, if not completely cut it.
We have a healthy cross-party consensus today. As a member of the Select Committee on Home Affairs, the hon. Gentleman will be aware that his local Lib Dems trashed the Select Committee’s proposals—the entire notion of the south-east allowance and possibly of some recompense. Will he put on record Liberal Democrat Front-Bench support for taking that approach, rather than for the political pygmies who inhabit life in Reading?
The hon. Gentleman is much more familiar with political pygmies in Reading than I am. Indeed, I am sure he has some in his party.
I am happy to put forward the idea of reducing the brain drain by putting financial incentives in place for forces not to poach officers from other forces. As for the south-east allowance, I would be happy to take the subject up with my party’s shadow Chancellor, my hon. Friend the Member for Twickenham (Dr. Cable), and seek his authority to push the idea forward.
I am sorry to say that all hon. Members who have spoken so far have entered a caveat for everything they have said, saying, “It is not a spending commitment.” In practice, however, unless they can identify the funding, there may still be a need for a spending commitment.
It is always tough for someone who does not represent the area under discussion to be across all the issues, but the fact remains that Thames Valley policy authority has provision in its budget to pay for the south-east allowance uplift that we are all calling for. That is why the hon. Gentleman is fundamentally wrong, as is the hon. Member for Reading, East (Mr. Wilson), to say that that is not an option worth pursuing at this time. The money is already in the budget. Is the hon. Member for Carshalton and Wallington (Tom Brake) aware of that?
I thank the hon. Gentleman for highlighting that fact. It sounds familiar, given the arguments that have taken place over police pay. Nevertheless, I am happy to investigate and if necessary talk to the outstanding and fine Liberal Democrat activists in his area to see what approach they have adopted.
I mention one name that we have not yet heard in the debate—that of Boris Johnson. It cannot have escaped the attention of those Conservative Members who have spoken that the Mayor has a significant role in relation to the Metropolitan Police Service. I wonder whether a co-ordinated effort should be made to talk to the Mayor about his influence over how the Met operates. They may want to consider that. On that topic, I have a specific question for the Minister. Will he outline precisely where the Mayor’s responsibilities lie in relation to the Met and who could best address the issues that have been identified?
I do not want to take up too much time, but I wish to question the use of 0845 non-emergency numbers. They are used by Thames Valley police. I hope that the House will agree that if people want to contact the police or other organisations, they should not have to pay a premium, but that clearly happens if they have to call an 0845 number from a non-BT phone.
It might help all hon. Members to know that the estimated cost of the south-east allowance is £20 million. On that basis, the estimated cost of the proposal by the Association of Chief Police Officers to give forces the flexibility to increase the allowance by up to an additional £1,000 per officer could be some £6 million a year, spread across the eight forces. As my hon. Friends have said, ACPO is clear that no additional central funding will be required to implement that change. I hope that that factual statement is helpful to the House.
I thank the Minister for putting that on the record. It is indeed a useful clarification.
I hope that the House will agree that people should not have to pay a premium when using an 0845 number to contact the police for information. I have taken up the matter with the Home Office, but it has no plans to limit the use of those numbers. Perhaps the Minister will accept responsibility for pursuing the matter, as it has a significant cost impact on those seeking to report problems to the police, as well as to other organisations such as the NHS.
Clearly, hon. Members have made a strong case for tackling the problem of retention through both addressing how the Met handles this matter and the south-east allowance. I hope that the Minister will answer my questions and provide some clarification to Members.
I congratulate my hon. Friend the Member for Banbury (Tony Baldry) on securing this debate, which has largely been conducted on a cross-party basis; Her Majesty’s Opposition are particularly well represented today. I wish to make two points by way of introduction. First, I hope that the Minister will resist the temptation to talk about national spending cuts and allegations about what the Opposition might be doing on police spending. In reality, as this debate has shown, he needs to conduct a review and consider some sensible rebalancing, so that Thames Valley police authority’s problems can be addressed. Secondly—I am sure that we can all agree on this—this is not exclusively a matter of money. If we want more police officers on the streets, we must look again and ruthlessly at one question: why is it that only one hour in five of patrol officers’ time is spent on patrol? Many interventions can be made to reduce bureaucracy and process to get more police officers on the beat and to improve visibility. This is not exclusively a numbers game, although numbers are terribly important.
This debate is important in the Thames valley and elsewhere. My hon. Friend the Member for Reading, East (Mr. Wilson) pointed out that detection rates are not as good as they should be. That comes against a backdrop, in the past year, of a 4 per cent. national increase in burglary, 16 per cent. in fraud and forgery and nearly 20 per cent. in street robberies committed at knife point. As a Cabinet Office study last August made clear, with the recession biting, we would expect acquisitive crime to rise. That would certainly be true in the Thames valley. We need more police to deal with that.
Early in the debate, we heard from my hon. Friends the Members for North-East Milton Keynes (Mr. Lancaster) and for Banbury about the ban on movements within Thames Valley police authority. We also heard about the clear incentive for some officers to transfer to the Metropolitan Police Authority—because of the pensionable London weighting allowance, the London housing allowance, free travel passes and so on. In evidence to the Home Affairs Committee, Chief Constable Sara Thornton pointed out that more than 240 officers had transferred to the Met in the past five years. I wish to raise an important technical point with the Minister that I hope that he will bear in mind when he considers this matter again: that conflicts with numbers that I have received from the Met’s personnel department, which puts the figure at more than 330 transfers.
We need some clarity. In April of last year, I asked the Minister’s predecessor, the right hon. Member for Harrow, East (Mr. McNulty), about those numbers. He replied:
“The numbers of officers who transfer between specific police forces cannot be derived from the centrally collected data.”—[Official Report, Westminster Hall, 25 April 2008; Vol. 474, c. 2341WH.]
We need a better understanding of the scale of the problem. Obviously, we do not know the quantum, but Thames Valley has a huge problem.
My hon. Friend the Member for Wantage (Mr. Vaizey), in a typically insightful point, drew our attention to the work force mix, and the levels of experience in certain ranks being depleted as a result of these transfers. Figures published by the Home Office in July 2008 break down, by rank, the number of officers entering and leaving the Thames Valley police authority. They show that in the last year for which figures are available, among the leavers were four chief superintendents, six superintendents, four chief inspectors and 11 inspectors. None of the new joiners to the force were above the rank of sergeant. In 2007, in Thames Valley police authority, 41 per cent. of officers had less than five years’ experience—the highest percentage in the country.
Thames Valley and their leadership are not just holding out a begging bowl. I know that—I have been briefed by Sara Thornton, who is an excellent chief constable—some housing schemes have been set up to assist more than 500 officers in Thames Valley on to the housing ladder. Also, in the south of Thames Valley, special priority payments are in operation. However, that is not enough. The self-help that Thames Valley’s leadership is practising, and the other innovative ideas that we have heard about, in retaining officers, are not sufficient.
As the right hon. Member for Oxford, East (Mr. Smith) said—I was going to make this point anyway—the problem is getting worse. There has been a freeze in the allowance over the past five years, whereas the Met gets inflation. The inequality is not static, but will grow over time. Like other hon. Members, I urge the Minister to respond clearly to the recommendation, in the Home Affairs Committee report on policing in the 21st century, that the
“South-East Allowance be substantially increased to make it more feasible for officers living in the South-East to work outside London.”
When will he publish a response to that recommendation? Will he undertake a review? I am not saying that he should make a spending commitment; I just want to hear his answer to the Committee’s recommendation.
My next question touches on a point raised by my hon. Friend the Member for Newbury (Mr. Benyon). The Met has agreed—we have heard some warm words—to recruit in different ways. For example, it has placed advertisements in Scotland and Northern Ireland to reduce the need to poach from forces in the south of England. As my hon. Friend pointed out, however, advertisements are still up in Newbury station. Such activity is clearly undesirable from Thames Valley’s point of view.
We need an answer to the suggestion in that excellent report by the Home Affairs Committee that the Metropolitan police agree to a protocol with surrounding areas to seek to limit transfers. Will the Minister tell us what representations he has made to the Metropolitan police to make that protocol a reality? Many Opposition Members have raised that point during this excellent debate.
My final question touches on an excellent point made by my hon. Friend the Member for Henley (John Howell) about the wider police grant settlement and how it will affect Thames Valley police. We do not have the time to go into the arcane and interesting details of ceilings and floors, but it would be extremely useful if the Minister—he is a helpful Minister—could give us some indication of the general police grant settlement. I know that it will be announced quite soon, but could he give us an early indication of how his latest thinking on the operation of ceilings and floors will help Thames Valley—that point is separate from the south-east allowance. On that note of honest inquiry, I hope that he will avoid party politics and give us some interesting answers to our interesting questions.
It is a pleasure to serve under your chairmanship, Mr. Atkinson. On behalf of all of us, I congratulate Sir Paul Stephenson on his appointment as Metropolitan Police Commissioner. I am sure that all of us wish him well in his new role, and I am sure that he will do an excellent job. I wish him well, personally and professionally.
I congratulate the hon. Members for Banbury (Tony Baldry) and for Wantage (Mr. Vaizey) on securing this excellent and interesting debate. I might not have time to make my remarks in full, but I shall attempt to address some of the comments and questions raised by hon. Members. First, however, it would be remiss of me not to mention that the hon. Member for Chesham and Amersham (Mrs. Gillan) apologised to me for having to leave the debate before the end, but said that she would read our remarks afterward. It is worth putting that on the record as well.
I say to the hon. Member for Banbury and other hon. Members that I know that this is a very real issue. I know that the matter has been discussed for a considerable period of time, and that there have been a large number of meetings about it. Although such discussions and negotiations are ongoing on the Police Negotiating Board, I recognise the concerns of the Thames Valley force and other south-east forces about the loss of officers to the Metropolitan Police Service. I understand that this is about not just the number of officers—I will try to refer to that issue later if I have time—but the type and experience of officers and the work force mix. I know that my hon. Friend the Member for Reading, West (Martin Salter) is particularly concerned about probationers. Others have raised concerns about firearms officers and so on. Therefore, the issue is real. All I can say to reassure hon. Members is that I intend to do all that I can to ensure that we get an early resolution of the matter.
Hon. Members have been kind enough to say that I try to be helpful. There does not seem to be much point in having a debate such as this unless one tries to be helpful. As the hon. Member for Bury St. Edmunds (Mr. Ruffley) said, there is a time for party politics and a time for making things happen. I will try to push this matter forward. My hon. Friend made a very pertinent point when he said that we can have Adjournment debates and meetings and we can send letters, but sometimes we have to find a way to resolve the problem. That is not easy because we need to negotiate different positions. Different people take a different point of view. We must find a way to move forward.
I say to the hon. Member for Banbury and other hon. Members that I will use my office—I am not being pompous here—to bring about a resolution to this particular issue.
In an earlier intervention, the Minister seemed to suggest that the money is already in Thames Valley’s budget to uplift the south-east allowance. That is news both to me and to some of my colleagues, and it has not been in any of our briefings from the chief constable. Will the Minister explain how Thames Valley police is spending that money, which is apparently already in its budget?
I was responding to what the hon. Member for Carshalton and Wallington (Tom Brake) was saying to his hon. Friends. I said that this was a spending commitment. The Association of Chief Police Officers advised me that there could be an uplift to the south-east allowances without any additional central funding, and that the overall figure for the eight forces amounts to some £6 million.
That is subject to the PNB coming to an agreement on how such allowances should be paid. That is the point that I am making. Such matters are negotiated conditions between the PNB’s various bodies. The board generally works like an established piece of machinery, but it comprises different points of view. The key point is that it is a negotiating board. Between us all, we need to ensure that we negotiate a settlement that is fair to the Metropolitan Police Service and to the south-east forces. I have tried to put some facts on the table that will help to inform the debate about how we can take the matter forward.
I thank the hon. Member for Bury St. Edmunds for his remarks about how we conduct debates such as this. I know that the Home Secretary will be meeting the new commissioner very soon to discuss the protocol between the Metropolitan Police Service and the south-east forces. Hon. Members have raised a number of issues—I do not have time to go through all of them—which are a matter for the commissioner and the south-east forces.
The hon. Gentleman and the hon. Member for Newbury (Mr. Benyon) referred to the police funding formula. Obviously, such an issue is subject to review. Let me say that there are winners and losers with respect to the way in which the police grant is allocated, and we will discuss the matter next week. Although a number of forces will benefit if we take away the floor—including my own force in Nottinghamshire—a reasonable number will lose significant sums of money. If we are to change the formula, we must find a way of ensuring that we keep stability within the police forces, and that we do not undermine that stability. Fairness with stability has to be a key principle. It may mean that we have to bring about change, but we must consider what we are doing. The matter is subject to review and to large numbers of people making all sorts of points, and we will consider all of them.
I have mentioned the protocol. My right hon. Friend the Member for Oxford, East (Mr. Smith) and my hon. Friend the Member for Reading, West have talked about the importance of neighbourhood policing. May I say to the hon. Member for Henley (John Howell) that all crime is important? He raised the point about rural crime. It would be easy to make sarcastic remarks about some of his points about animal theft and so on, but such matters are very serious in rural area. He was right to say that there is not a distinction between rural and urban crime. Crime is the enemy for all of us, and we need to address that. He also raised the issue of the funding formula, and he has now heard my remarks.
The hon. Member for Newbury said that we needed not just warm words but real action. As I have said, I will try to ensure that that happens. The hon. Member for Reading, East (Mr. Wilson) strayed from the debate slightly, and I will resist the temptation to return to the political banter that we had at the start. We are trying to reduce bureaucracy, and the hon. Gentleman will know that we have taken away all of the individual targets and replaced them with the single force-wide confidence target.
May I say to the hon. Member for Carshalton and Wallington that a plan is being put together for the Olympics? Additional money will be made available. There have been discussions between the Home Office and Thames Valley police. Earlier this week, the Home Office’s director of Olympic safety and security visited the Eton Dorney site to talk to the police about some of the issues.
As for the Mayor, he has no role in relation to the PNB, but the Metropolitan Police Authority is part of the Association of Police Authorities’ representation on the PNB.
With regard to Taser training, the roll out of Tasers has been widely welcomed as a good thing. The training costs will be a matter for individual forces. Clearly, the number of Tasers that a force has is not dictated centrally. It is a matter for individual chief constables, with their authorities, to determine what they should have.
In conclusion, this is a very important issue and the debate will help me in trying to take forward all of the matters. I am grateful to Opposition Members, my hon. Friend the Member for Reading, West and my right hon. Friend the Member for Oxford, East for contributing to the debate. As we have all said, Thames Valley police has been given an additional 417 police officers and increased money. It has seen crime falling and has an excellent chief constable. Although there is the issue of retention, I am sure that we should all want to finish by saying that Thames Valley is an excellent police force, doing an excellent job, and we commend it for the work that it is doing.
Marston Vale Eco-town
I am delighted to have secured this debate and to be under your chairmanship, Mr. Atkinson.
The debate concerns the eco-town proposed for my constituency and I am sure that the Minister will concede that we have discussed it on a number of occasions. He may want to comment on yesterday’s High Court ruling in his reply. I would be interested in his opinion about how that ruling will affect the proposed development in Marston Vale.
Because we have only 30 minutes for this debate, I will ask the Minister a number of direct questions so that he can spend most of the time giving us information. My constituents know my opinion, and he will be aware of all the well-rehearsed arguments against the eco-town, but I would like to raise some direct points with him.
As I am sure the Minister is aware, there are infrastructure plans to have trains running between Bedford and London every three minutes by 2015 or 2020. Is that part of a national Government strategy to develop infrastructure so that Mid-Bedfordshire can be developed accordingly? If there is such a strategy, he will know that there are now plans to extend the eco-town even further. The East of England Development Agency has produced a proposal for 120,000 homes that will encompass Ampthill, Flitwick and Westoning and extend to Harlington, to the border of the M1. Will the eco-town be a key piece in that jigsaw? Did the Government propose it in the location that they did so that expansion can take place and urban sprawl can develop from Milton Keynes down to the borders of the M1?
If that is the intention, surely it would be preferable to bring on board the opinions of local people. The Minister might say that there has been a consultation process. He knows—as I know, because I was present at the consultation process—that outside the caravans, the consultation produced an overwhelming no from the people of Mid-Bedfordshire. I was present at a protest outside the consultation caravan. I was at a torchlit procession outside one of the consultations. The people of Mid-Bedfordshire said a resounding no to the eco-town. Does the Minister see the eco-town as a key piece in the developmental jigsaw puzzle of Mid-Bedfordshire? After that is in place, will the sprawl continue from Milton Keynes down to the M1?
How eco will the eco-town be? Again, the argument is well rehearsed. The Minister knows that by 2016, all new homes will have to exceed the code 6 criteria, yet the proposed eco-town must meet only codes 3 to 4. By the time the eco-town is built, it will already have been exceeded in eco criteria and credibility by new homes. How does he feel that sits with local people, who know that future homes will not even carry the eco banner but will have greater environmental credibility?
The case for the eco-town is that it will meet housing needs in Bedford and the surrounding urban areas. If that is the case, there are brownfield sites in Bedford that are screaming out for redevelopment. No employers are moving in, building on those brownfields and bringing employment into the area, although in fact we have little unemployment. Bedford desperately needs inward investment from developers and section 106 agreements.
The people of Bedford need additional housing, but they want it to be near hospitals, doctors, schools and what employment there is. They do not want to live in Marston Vale. I know that the Minister is not from Bedfordshire, but I assure him that Bedford has a unique cultural identity. People from Bedford belong in Bedford, and they do not see the vale that is being developed as the answer to their housing needs. It is not what they want: they want homes to be built in Bedford.
I agree that there is some development in Bedford, but it is all too easy for developers to take over thousands of acres of what green fields there are, and to ignore urban areas such as Bedford and Luton that desperately need inward investment. The Campaign to Protect Rural England estimates that 1 million homes could be built on brownfield sites across the UK. Why do the Government not look at the housing needs of people in Luton and Bedford, and do something about investing in those towns so that they can be developed to meet the needs of local people more accurately? The solution of building an eco-town and building houses across the countryside in Bedfordshire, from Milton Keynes, is not the answer that anyone in Bedfordshire wants.
I have spoken to the Minister about Aspley Guise, a chocolate-box village in my constituency that will be swamped. The way of life and the environment of almost 2,000 people will be decimated by the eco-town. Most people in Bedfordshire have moved there from other areas. I am from Liverpool, and I meet people in Bedfordshire every day from Liverpool, Manchester, Newcastle and London—many people have moved there from urban areas.
Bedfordshire has been a growing county for some considerable time. People move there for a reason: they have chosen not to live the urban life, but to take their families to a more sustainable and environmentally friendly location. They want a different way of life for their families, and they have moved from areas such as Milton Keynes, and from towns and cities. They have used their life savings, moved their families and bought their homes; they have changed their entire lifestyle to move to Bedfordshire. People who have made that choice see it being taken away from them, and destroyed by the huge amount of development coming into Bedfordshire.
The proposal is for 120,000 homes across Bedfordshire, with 15,000 in the core eco-town development, and there are now proposals to extend the eco-town. That is a massive increase by anyone’s analysis. My entire constituency contains 77,000 constituents, so it will be a massive increase, but where are those people going to work? Are they to work in London? Are there 200,000 jobs in London screaming out for people to do them? Many people say that we are not in a recession at the moment, but are re-evaluating how the country operates economically, how we live our lives, and the viability of our nation’s economy. Given that it probably is a re-evaluation, I should like to know where those jobs will be. We are making people redundant on a daily basis, with 3 million people forecast to be unemployed by the end of next year.
If 120,000 homes are built in the middle of my constituency, where are those people going to work, because there is no employment? Once Center Parcs is built in Mid-Bedfordshire, we will have no unemployment there. We have minimal unemployment at the moment, at 1.1 per cent., the majority of which is in Flitwick, and that will be mopped up and taken care of by the development of Center Parcs. I have backed, approved of and fought for that development all the way, against a number of people in my constituency. It was not a vote winner for me, but I knew it was right, and I backed it for several reasons that I shall not go into now, one of which was that by supporting Center Parcs, we would be doing our bit to reach our economic growth target and to mop up what unemployment we had in the constituency.
I should like the Minister to respond to the issue of housing needs in Bedford. Why can they not be taken care of in Bedford, as people want, and in Luton? Why do they have to be accommodated in the middle of Mid-Bedfordshire?
I have already outlined the fact that the development will destroy the way of life for 2,000 people, but I must point out that the eco-town development alone will be bigger than my constituency’s two main towns, Ampthill and Flitwick. It will be larger than both the main conurbations in my constituency. I am not sure whether the Minister can appreciate the eco-town’s impact on local people, or how angry they are. They feel very angry indeed that the equivalent of almost a new town will land on them—out of the sky—from Westminster. The Minister may reply, “Well, it’ll have to go through the normal planning process.” He nods; I anticipated that would be his comment. However, it is difficult for the local planning process to deny an application for an eco-town if it meets the planning guidance and criteria set down by the Government. If the town were being granted on the basis of whether it was wanted by local people, it would not happen.
The Minister is aware that many other factors will come into play. He is excellent in his role. I constantly praise him and he knows that I think that he is an excellent Minister, so perhaps he could give my constituents some advice: how can they use the planning process to guarantee that the development will not happen? Perhaps he can give us some tips and advice; we would take them most gratefully.
There is another issue that I should like the Minister to address, because I have a particular interest in food security. We are entering difficult times—we have been for some time, as the Minister will also be aware—and the security and independence of energy and food are important issues that we, as a nation, should address. Some 90 per cent. of the land on which the eco-town will be built currently produces food. Bedfordshire has a history of being England’s market garden. At 4 am and 5 am in my constituency, lorries and vans trundle on to the M1, taking their wares to various markets in London. We are good agricultural producers, too: in my constituency, there are busy farmers who work very hard. By taking away all that acreage, which currently produces food, we will reduce our capability to be independent—as producers of our own food. Once that agricultural land is wiped out, we will not get it back, and if we enter stormy waters in the future and need our land to produce food, it will be too late, because it will be full of empty houses that people do not want to live in.
The Minister is aware that many housing associations currently inherit homes from developers who cannot sell them. They are taking over—granted, by purchasing them—homes that developers have built for the market but cannot sell, so where is the sense in the eco-town proposal? I hope that the Minister will extend the boundaries of his reply beyond the eco-town to take in the bigger picture of its expansion—the bigger picture from Milton Keynes down to the M1 and those 120,000 homes, because they will not arrive without the eco-town development. It is the key piece of the jigsaw puzzle, and I believe that is why the Government have proposed it.
The Minister must take on board the fact that the Government have not been completely transparent and open about the issue. He is aware that when his predecessor arrived in my constituency, my office was telephoned at 4.55 pm on a Friday evening to be told that she would arrive on the Monday morning to take a meeting. Fortunately, I work my staff hard, they were still in the office and they took the telephone call, unlike most staff, as the Minister knows, who are gone by then on a Friday afternoon. We therefore knew that the then Minister would be arriving, and we were able to ensure that when she did, she had a welcoming committee, so that she knew local people’s feelings. That took some doing over a weekend.
That is not consultation; that is not transparency; that is not being open and engaging with people, or even engaging with Parliament, about what the Minister does. Let us have a little bit more openness. Will the Minister please provide us with some advice and tips on what my residents can do to make sure that the eco-town does not go through the planning process, and will he please answer the question about Bedford and Luton’s housing needs and the impact of the infrastructure proposal for trains between Bedford and London every three minutes? I will sit down now because I would like the Minister to answer all my questions comprehensively.
It is a genuine pleasure to serve under your chairmanship, Mr. Atkinson. I am sure you will keep me in order during the debate and I congratulate the hon. Member for Mid-Bedfordshire (Mrs. Dorries) on securing it.
The hon. Lady mentioned in her excellent contribution the fact that it is only a matter of weeks since we were discussing Aspley Guise and, following her strong promotion of the area, I have since had a look at the village’s website. I have to agree that it seems an extraordinarily beautiful village. However, it is slightly longer since I have had the opportunity to speak on the matter of eco-towns, so I am grateful to her for securing such a timely and relevant debate.
There has been a great deal of activity in relation to the Government’s programme for eco-towns, not least in the past 24 hours. In responding to the hon. Lady, I would like to do two things: first, provide some context to the programme and, secondly, focus on her specific concerns about the proposed eco-town development at Marston Vale, as well as the wider concept of housing in her area and Bedfordshire as a whole.
The hon. Lady will be aware that, as in the immediate post-war era, housing needs are increasing. That has made it necessary to explore options such as new communities and new ways of living in relation to a green and low-carbon economy. Eco-towns give us an interesting, even unique, opportunity to tackle two of the greatest challenges that this country faces: the pressing need to provide housing—particularly affordable housing—and the need to try to tackle and mitigate the effects of climate change.
In the current economic climate, that is, of course, more challenging, but I am sure that the hon. Lady agrees that everybody deserves a decent home at an affordable price. That is our aim.
Throughout consideration of the eco-towns proposal, I have been blunt and said that it is not a magic wand or the sole answer to our questions about housing delivery. However, again, I am sure that the hon. Lady will agree that eco-towns could be exemplars of new ways of living, working and playing in a low-carbon economy and society. They can make an important contribution to the development of new technologies and practices, and we want to encourage that as much as possible.
The nature of the programme means that it is a long-term policy, with a phased approach. The aim is for the first phase of a number of exemplar projects to start in the next couple of years, building on the successes that have occurred in relation to it as a means of moving forward to achieve the 2016 zero-carbon homes target that the hon. Lady mentioned.
The hon. Lady mentioned the judicial review. Before I move on to her specific concerns, I am sure that the House would like an update on that, particularly in relation to the judge’s summary judgment. I am pleased to report that the judge recognised that the Government have acted properly throughout and has dismissed the review on all grounds. That supports the ongoing nature of our consultation. I shall quote from yesterday’s summing up by the judge. In paragraph 13, he states that Better Accessible Responsible Development, the group opposed to the Middle Quinton eco-town proposal,
“submitted that in truth the Eco-towns process was an attempt to outflank the planning system. In my view what is envisaged is a proposed Eco-towns Planning Policy Statement (‘the EPPS’), which will include a list of locations that the Government considers meets its criteria. This seeks to deploy planning law so as to require decision-makers to have regard to the EPPS.”
He goes on to state the following key point:
“In so doing the government is using, rather than outflanking, the planning system. This process would not necessarily compel the grant of planning permission for a location on the list.”
The hon. Lady will want to reflect on that final sentence, which will naturally be of interest to her.
The underlying theme of the hon. Lady’s contribution, having spoken to her about this matter before, seems to be a supposed lack of consultation. Her concern is that the public have not been consulted. I disagree fundamentally with that assessment of the process. She will be aware that, on 4 November, my right hon. Friend the Minister for Housing announced in the House a second round of consultation on eco-towns based on the draft planning policy statement on eco-towns. That was accompanied by a sustainability appraisal being carried out on both the policy and the 12 shortlisted eco-town locations, including Marston Vale. If I have time, I shall quote from the appraisal for Marston Vale, because it is very important to put a balanced view.
As part of the second-stage consultation, we have been running a number of activities to encourage the giving of the public’s views. The hon. Lady will be aware of the road shows and stakeholder events in venues close to the sites of potential eco-towns, including Marston Vale, as well as online questionnaires and feedback forums. The road shows were designed to help to provide information to people locally and went beyond required consultation practices. They enabled us to hear from hundreds of local people, both for and against eco-towns. They were never intended to be about the detail of individual schemes for proposed locations, but directed people to information and encouraged them to have their say.
I shall move on to the proposals for Marston Vale and the hon. Lady’s concerns. As she is aware, Marston Vale is identified as a priority area for regeneration in the sub-regional strategy, and work on the longer-term growth points towards Marston Vale as the preferred direction for long-term growth. That is acknowledged by local authorities. The proposal for an eco-town at Marston Vale plans to provide about 15,000 homes, with jobs, community infrastructure and open space, which will offer the opportunity for the regeneration being sought. That could have many benefits beyond the building of more homes.
An eco-town proposal for Marston Vale would draw on existing delivery expertise and make good use of former industrial sites. As well as adding to existing settlements and enhancing their eco-credentials, it would help people to live more sustainably by providing access to a variety of infrastructure. The green infrastructure proposed for this eco-town will build on the excellent work by the Marston Vale Trust in this area. There is also potential to deliver sections of the Bedford and Milton Keynes waterway park, which is identified in the east of England plan as a strategically significant green infrastructure project.
There are also proposals for green rapid public transport routes through Marston Vale helping to connect local communities with Bedford and Milton Keynes. Marston Vale, and all the shortlisted locations, has the potential to deliver vital affordable housing for tens of thousands of young people and families. The hon. Lady will agree that their needs cannot be ignored. Those proposals will also help us to respond to the challenges of climate change.
I have mentioned the sustainability appraisal for Marston Vale. Like the majority of the other locations, it has been classed in group B—locations that might be suitable subject to meeting specific planning and design objectives. We are at one of the earliest stages in the process and issues remain to be worked through, at Marston Vale and elsewhere, and the sustainability appraisal identifies those. I shall be blunt with the hon. Lady: the appraisal identifies a number of weaknesses that we would want to see addressed before moving to the next stages.
According to the appraisal, the weaknesses of the Marston Vale location are that
“the proportion of previously developed land is not known as some of the land may have been restored and is not therefore strictly previously developed land”,
“there are features of historic interest within the site that potentially require investment and conservation”.
The third point, about which the hon. Lady spoke strongly, concerns food security. Another key weakness of the location is that
“there may be a loss of productive arable land”.
The appraisal discusses other weaknesses of the proposal, including the presence of priority habitats and species, and water supply status.
Ninety per cent. of the proposed land is arable. The Minister said that the development would make use of previous industrial sites. There are industrial sites there, and that land needs to be taken care of, but 90 per cent. of the proposal deals with greenfield or arable land.
I understand that a sizeable proportion of the proposal is about regenerating former brick pits, but I agree with the hon. Lady’s analysis that food security and the provision of good arable land are important. The sustainability appraisal says strongly that that is a key weakness of the proposal. I am not saying that it is not an issue that needs consideration—of course it is—but I am trying to be as balanced and forthright as possible.
To be balanced, the proposal has a number of strengths, including the potential to generate ecological gain, proximity to Marston Vale community forest for leisure and recreational pursuits, and proximity to railway stations, as the hon. Lady mentioned, for important transport infrastructure.
To work through the proposals, a more detailed assessment is under way covering the scheme’s financial viability, the transport infrastructure requirements and its deliverability. Alongside the sustainability appraisal and feedback from the road shows, the work will help us to make decisions on the final list of locations with the potential to become eco-towns.
I cannot stress enough that we are still at a relatively early stage in the process. A lot of work is being done and a lot of strengths and weaknesses are being identified in Marston Vale and other proposed eco-towns. Further work to ensure that all the proposed locations meet the criteria must be undertaken. The final version of the planning policy statement will be delivered later this year. We have also been working with local authorities and promoters to develop and understand the proposals further, including the proposal for Marston Vale. I hope that that will continue as the eco-towns programme goes forward.
The hon. Lady described the eco-towns vividly as having landed out of the sky from Westminster. I fundamentally disagree. There are concerns in her local community, and others, that the Government have somehow imposed the eco-towns on communities, that there has been some sort of done deal in a smoke-filled room and that eco-towns will go ahead regardless of local people’s feeling. That is categorically not the case. After the announcement of the list of potential locations for eco-towns, individual schemes will need to submit planning applications. They will be for local authorities to determine through the local planning process, which will provide a vital opportunity for further consultation.
The PPS reinforces the Government’s commitment to the plan-led system, as was mentioned by the judge in his summary judgment yesterday. We have undertaken what we believe to be a full and comprehensive consultation at this relatively early stage on the potential eco-towns and the standards that they must meet, which involve very high criteria for environmental sustainability. We also acknowledge that we need to undertake further work.
There is still time for people to feed in their views. That is my tip to the hon. Lady, who asked for advice. Our second consultation on the shortlist of locations and the proposed standards remains open, and I urge people in her constituency and others to contribute. After we have identified a final shortlist of potential locations, developers will need to go through the local planning process. As I have said, that will give people a third opportunity to have their say, but whatever the outcome with Marston Vale, I think she will agree that we cannot lose sight of the bigger picture that she mentioned.
Eco-towns provide an opportunity for hard-working families to have much-needed affordable housing—great, innovative, sustainable places to live—in her area and in others.
Retrospective Business Rates
I am grateful for this opportunity to debate a monstrous injustice that is being perpetrated on businesses in ports: the levying of a retrospective rate demand that goes back to 2005. The rating assessments were made and the bills charged in 2008, yet businesses are being asked for retrospective payments going back all that way.
I am concerned primarily with the ports of Humberside, but the issue affects 678 businesses in ports nationally. It will lead to bankruptcies, labour lay-offs and a failure of investment in our ports at a time when they are already going through difficulties because of the state of the general economy. It will be a particular blow to the ports of Humberside, which are my preoccupation and that of the hon. Friends by whose beauty and intelligence I am surrounded. It is not just a mess; it is a disaster.
Adding to the other side of the equation, will my hon. Friend press the Minister on cancelling the retrospective taxes? When we debated them on the Floor of the House of Commons, the Minister said that primary legislation would be necessary and went on to tell us that primary legislation would be used to phase in the retrospective taxation. If there is time for that bit of primary legislation, there is surely time for primary legislation to eliminate this injustice.
My right hon. Friend, who fights the valiant fight for Liverpool, makes an excellent point, and I shall raise it later. That is the way we must go.
Until April 2005, the rateable values of hereditaments in the docks and harbours were prescribed by the Secretary of State, who in fact still has that power. Businesses on the docks paid rates via the port owners: the rental that they paid to the port owners went in part to pay the rates on the dock businesses. That system, the cumulo system, still prevails and rates are still paid to port owners in that way, through the rental. However, it was under threat. The Government proposed to end the prescription rating and charge individual rates on port businesses in all 55 statutory ports.
In 2000, my right hon. Friend the Member for Stretford and Urmston (Beverley Hughes), who was then Under-Secretary of State at the former Department of the Environment, Transport and the Regions, postponed the change to the new system, saying that good progress was being made with new valuations, but that they could not come into effect until 2005. She therefore issued an order prolonging the prescription system until 2005.
At that stage, the Valuation Office Agency was required to do new valuations for the individual ratings of port businesses that were to apply from 2005, but it did not. That was the first of a number of failures by the valuation agency, which have got us into this mess. In fact, it did the opposite. In 2002, when Grimsby Fish Dock Enterprises was set up to provide a landing company for fish coming into Grimsby, the valuation agency first asked it for rates, then accepted on the basis of barristers’ advice that it should pay the rates indirectly through the cumulo system to Associated British Ports, as was happening with all the other businesses.
The valuation agency has a statutory duty to compile and maintain accurate rating lists and to have accurate rating lists to come into force on 1 April 2005, so it was obliged to carry out a revaluation of the ports by 1 April 2005. It did not do so, and the owners of the port businesses were not notified of any change in the system, increase in rates or new rating arrangements from 2005.
The valuation agency woke up to the need to do so only in 2006, when it began to do new assessments. I do not know about Liverpool, but in Humberside those new assessments started in 2007, two years after they should have come into force, and they are still not complete. Four ports have still to be assessed by the valuation agency. That does not bespeak great efficiency or concern on its part.
As a result, at this late stage—since the end of 2008—port businesses in Liverpool, Humberside and other areas have been notified not only of increased rate bills, but of even bigger bills for retrospective rates going back to 2005. For instance, rates for Freshney Cargo Services, which has been persistent in putting its case, increased from £48,000, the normal business rate, to £800,000. Its backdated bill is £2,900,000. In a business that must struggle to increase fees and where importers haggle over every penny increase per tonne, it will have to impose massive increases on business coming through the ports.
The ferry trade is competitive, with very tight margins. P&O in Liverpool and Humberside faces a backdated bill of £6 million. The backdated bill for Rowlinson Timber is £1 million. DFDS Seaways, a Danish shipping organisation, faces a bill of £9.9 million. DFDS says that if it must pay that bill, there will not be any more investment in this country or in the ports of Humberside where it maintains its activities. Grimsby Fish Dock Enterprises now has a rateable assessment of £120,000 and a total back payment of £560,000.
I congratulate the hon. Gentleman on securing this important debate. He is making an articulate and powerful case. Is he aware that the retrospective rates increases will affect not just the larger ports that he mentioned, but smaller ports such as Boston in my constituency? The port occupiers’ rates bill will roughly double and, as he said, be backdated three and a half years, which will have a detrimental impact on the economic sustainability not only of the port operating businesses, but of all the tangential businesses that rely on ports, such as haulage.
That is absolutely correct. I shall deal primarily with the Humberside ports, which are of vital interest to me, but the case extends far wider. The effects are similar in smaller ports; actually, they are likely to be more devastating. The problem is what to do about it. As I understand it—perhaps the Minister will correct me—if the port businesses cannot pay their rate bills and go bust as a consequence of the retrospective rate demands, the business premises will pass to ABP, which will pay lower rates on them than those assessed for the current operators. ABP will be in a powerful competitive situation if it carries on itself the business that used to be carried on in those premises by others.
What do we do about it? I want to make it clear that businesses are not saying that they do not want to pay rates. Ministers accuse them of that from time to time, but they are not saying it. They accept that they will be individually rated and that there will be some increase in rates as a result. They accept their liability to pay rates even though they already pay rates through the cumulo system via ABP. The grievously unfair thing is to be asked to pay retrospectively back to 2005. That is an impossible burden. It is unjust, unfair and unreasonable. I cannot see why the Government insist on it.
These rates are not like domestic rates, where a property can be rated and back rates have to be paid. Property does not move; it cannot get up and move on. Businesses cannot charge extra for services that they have delivered in the past, or increase their charges retrospectively, so they cannot pay retrospective rates that they were not billed for at the time.
The Government clearly feel guilty about this—I can see smiling admissions of guilt written on Ministers’ faces when they speak in debates. If they did not feel guilty, why would they be offering to allow the rates to be paid over eight years without interest? That is an admission of guilt. They will probably go further and will eventually allow businesses to pay in Zimbabwean dollars. They are clearly able to make amends.
My hon. Friend might know that the port of Holyhead, in my constituency, and other Welsh ports have had subsequent increases of some 220 per cent. in the rateable value that they will be paying. There is to be no transitional relief for them, so they will be expected to pay immediately. Does he agree that that will cause anxiety and make them less competitive compared with their European competitors? Moreover, at a time when energy prices have also gone up by 200 per cent., this adds to the burden on Welsh ports and British ports.
My hon. Friend is absolutely right, and I should have made that point myself about the effects that the measure will have.
The concession of paying over eight years is of little relevance if the debt has to be reported in the annual accounts, because if those accounts show that a company’s liabilities are greater than its resources, it will technically be insolvent and will not be able to carry on trading. The eight-year concession is therefore a bit of a failure.
Ministers have told us that the Government cannot scrap the measure, even now, but the Treasury Committee is recommending that they should scrap it. After looking into the matter, the Committee has recommended:
“Consideration should be given to the proposal to maintain the rateable values of premises in statutory docks and harbours at the levels published in the April 2005 rating lists until the new ratings list is published”.
Ministers say that they cannot do that, but why not? They say that writing off the retrospective debt would be unfair state aid, but that is one of the feeblest excuses that I have heard. To remedy an injustice is an unfair state aid—that is what they are telling us—but if that is the case, what is the writing off of the retrospective payment between 2000 and 2005? Is that another form of state aid? That is the kind of chop logic being used to justify the measure.
Ministers also say that writing off that debt would be unfair to other ratepayers, but to whom? Who is competing with these dock businesses and is it fair to ask dock businesses to pay rates twice? They are already paying, through the cumulo system, and now they will have to pay retrospectively. Is that fair? Ministers’ arguments are so much gobbledygook. We are at the crunch point, because letters have gone out to all the Humberside ports, I think—certainly to those in north-east Lincolnshire—giving 2 February as the date by which the first instalment of these bills must be paid. If it is not paid by then, the whole sum is due, so the situation is now all or nothing.
That shows that in my hon. Friend’s constituency, as in mine and the constituencies of my hon. Friends, we are at crisis point. A decision has to be made, and that decision must be to write off the retrospective payments, which cannot be paid—I cannot emphasise that point enough. We cannot get blood from a stone. If we are to insist on these retrospective payments, we are going to bankrupt businesses on a large scale.
I pay tribute to my right hon. Friend the Minister, who is the nicest Minister I know. This is the unctuous bit before we come to the counter-punching. He has done an assiduous job in replying to the arguments and been meticulous in hearing constituents, listening to what the problem is and discussing it. I congratulate him on that, but the problem is that he is defending the indefensible. He is defending it very well, but this system is simply indefensible.
I accept that a decision to call the whole thing off is a political decision to take—perhaps one that is above the Minister’s pay grade—but that decision has to be taken, because this system is not going to work. I do not expect him to break down and confess at the end of the debate, however long my speech is, Mr. Atkinson, as that is not the nature of these Adjournment debates. However, I hope that he will go back to the Secretary of State and to the Treasury to say, “We cannot win this, and we are not going to. We cannot do this to these businesses. We cannot get blood from a stone.” It is not a matter of businesses saying that they will not pay; the point is that they cannot pay. This is about our businesses.
Is it not the case that before those businesses go bust, the first casualties will be workers at the ports? In my port of Dover, one company is laying off 60 workers, one shipping company has gone bust and even the Dover harbour board is making people redundant. At a time when the whole industry is going through the squeeze of the credit crunch, here are our own Government, piling on the agony. Is not that wrong?
Absolutely. One hundred precautionary notices have been given by Cobelfret in Immingham, and I understand that three firms in Tilbury have already gone under—have become insolvent—because of this retrospective payment. That is the kind of damage, on an accelerating scale, that we are going to be causing.
The whole argument centres not on the rating assessment, whatever it is—I accept that it is going to be difficult to pay, but that is their due—but on the retrospective payments and the demand for payment of that increased non-domestic rate bill, back to 2005. That is the essence of the problem. I hope that the Minister will recognise that and report back that we are not going to be able to levy that retrospective payment.
I watched my right hon. Friend, who is a very capable Minister, on “Look North” on Monday, when I had the rare privilege of being in Grimsby. He said very eloquently that there was not much that the Government could do about redundancies, and that they were not the Government’s fault, but the redundancies that we are talking about will be caused by the Government. They are not like the redundancies at Corus; they will be caused directly by the Government if they go ahead with retrospective payments.
The consequences of going ahead will be disastrous for the ports, which are already in difficulties because of the recession and are already disadvantaged. I draw hon. Members’ attention to the Centre for Cities report, which tells us that the ports that are most threatened by the coming recession are Liverpool and Hull.
I am grateful to my hon. Friend for giving way, because in a moment I must leave for a meeting. Will he stress to the Government the fact that, appalling as it is to think about the number of people who will be made redundant, the ports are the arteries for our trade, which means that not only our port workers will be made redundant? Others will also be laid off because there will be no raw materials and no exports.
That is exactly right. We need to encourage exports at this time, with the pound at this low, competitive level, but we are destroying the structures in the ports. My port and the ports in the Humberside constituencies of my hon. Friends the Members for Brigg and Goole (Mr. Cawsey) and for Cleethorpes (Shona McIsaac) are the gateway to Europe and to the economic expansion and improvement of the area. They are going to be hit hard and directly by the measure, and they are already in difficulties. We are a disadvantaged area and, as the Centre for Cities report says, we are going to face real problems.
It is time for the Minister to go back to the Secretary of State and to the Treasury to say that there is another way. The Secretary of State has powers to prescribe ratings for the ports, which she retains, as they have never been repealed. She should therefore prescribe the assessment for 2005 as it was at that time—upgraded, of course, for inflation. There would be no loss of revenue to the Government because they are being paid through cumulo via ABP. They should forget the retrospective payments, which cannot be collected without ruinous damage being done to the ports and the companies concerned.
Why not then bring in the new assessments in 2010? That is an eminently sensible option that is open to the Minister. Put the blame where it belongs—on the valuation agency—and bring in the new assessments in 2010. My right hon. Friend said in an Adjournment debate last week that legislation would be needed to do that. Well, he needs legislation to do anything—levying the charges or wiping them.
I must point it out to my right hon. Friend that we are not exactly over-pressured by the legislative programme. We have the shortest Queen’s Speech I have ever known in my long career since Mr. Gladstone wrote the Queen’s Speech in 1893, when I first came into politics. There is not much business to get through; we are ticking over in this place. It is dead easy to pass legislation and we could do so to remove this damaging claim for retrospective payments that will be ruinous for our ports and the businesses in them.
Before I call Mr. Stephen Crabb, may I have an indication of how many hon. Members want to speak? The winding-up speeches must start at about half-past 3, so it would be helpful if hon. Members bore in mind the fact that they should therefore speak for about five or six minutes.
I congratulate the hon. Member for Great Grimsby (Mr. Mitchell) on securing this important debate, which follows on from the 19 January debate on the Floor of the House. He started by talking about a monstrous injustice, and that is exactly what this is. That kind of language is certainly being used in relation to how some of the businesses I have recently been talking to in Milford Haven will be affected by the business rates revaluation.
I will not speak for long, but I would like to make a couple of points about the port of Milford Haven in my constituency. I reiterate the point made by my hon. Friend the Member for Boston and Skegness (Mark Simmonds) about the way in which this is impacting on small and large ports and on large firms and small businesses that are tenants of ports. In response to the hon. Member for Liverpool, Riverside (Mrs. Ellman) last week, the Minister said:
“The impact of the review… has not… caused universal problems”.—[Official Report, 19 January 2009; Vol. 486, c. 598.]
His response smacks of huge complacency. When we consider the range of ports and different parts of the country represented by Members here, I hope that the Minister will recognise the problems facing businesses that are tenants of ports.
I am aware of the number of ports and I have read the background material on this. I would have hoped that the Minister recognised that ports up and down the country and businesses small and large are affected. The impact on the viability of these firms and the jobs that these firms create and sustain is significant.
I should point out to hon. Members that I am a tenant of Milford Haven port authority because my constituency office is based on land owned by the port authority. I pay business rates directly, so the issue has not affected me directly—although a few weeks ago, I was interested to receive a form from the Valuation Office Agency asking me to fill out details of the activity that takes place at my premises. That smacks of the inefficiency of this whole process. Milford Haven is one of the last ports to receive the results of the revaluation, and a complaint that has come across loud and clear is the length of time it has taken.
I am a member of the Treasury Committee and we looked at this issue as part of our review of the work of the VOA. It will not surprise hon. Members to know that there were very strong feelings about this issue among members of the Committee. Those feelings were reflected in the recommendation that the Government should certainly consider maintaining the port ratings at the levels published in 2005 lists.
The size of the businesses in Milford Haven port means that some of the figures are not of the order of some of the sums mentioned by other hon. Members who have large firms that are tenants of their local ports. Nevertheless, the impact is real and significant. At Milford Haven docks, there are a range of micro and small businesses, some of which are very small—one or two person operations. In recent years, the port authorities have made huge efforts to diversify the kind of economic activity happening in and around the port. Alongside the traditional businesses associated with engineering and the remnants of the fishing industry, there are new media companies, bars, cafés, and an art gallery, which has just received a backdated bill for a liability of £19,000.
Is the hon. Gentleman aware that Stena Line operates from Fishguard, and, as a port operator, it is passing this cost on to small businesses? In the port of Holyhead, some businesses that have been identified include engineers who do essential maintenance and leave their equipment in the dock in a small locker. They are being rated for the same time. Also, car hire firms are being charged rent for having a phone for emergency calls. Those are the types of small businesses caught up in this reassessment.
The hon. Gentleman is exactly right. The impact is being felt far and wide among businesses that are close to ports.
As a commercial entity in its own right, Milford docks faces a 30 per cent. increase in business rates. That increase is coming from a separate assessment of four of its tenants who were not charged rates previously. The port authority paid the rates for the whole of the docks and the rental agreements with those four firms took account of that. The rent levels were therefore set accordingly. The new bill that the port authority has received is the same as it was previously, but it will not receive any rebate to offset the extra costs being levied by the new system. In addition, it is not in a position to reduce the rents to those tenants to help them meet the extra costs that they are facing. The burden of this problem affects both the port authority itself and its tenants.
The issue concerns many hon. Members up and down the country. It was not clear from the Minister’s response to the hon. Member for Liverpool, Riverside last week why he cannot take the action that many Members from all parties are calling for to bring a solution to this. At a time when one of his departments—Her Majesty’s Revenue and Customs—is writing off tax liabilities for profligate football clubs, why can he not focus on the action that is being called for and bring an urgent solution to the matter?
I congratulate my neighbour and hon. Friend the Member for Great Grimsby (Mr. Mitchell) on securing the debate. I do not think that any of us here today can underestimate the devastating effect that this issue will have on the businesses operating out of our ports. We have had several meetings with Ministers about the matter—indeed, we have had a meeting with the Prime Minister too—and credit where credit is due, I appreciate the fact that changes have been made. The bills were not imposed immediately and, as has been said, firms will be given eight years in which to pay the backdated rates.
However, I am sorry to say that such changes have not gone far enough to stop the redundancies and prevent firms from closing down. In my part of the country, on the south bank of the Humber, we have seen some dreadful job losses in recent weeks. One of the most recent—at DFDS Tor Line—is directly because of port business rates. DFDS Tor Line is making about 10 per cent. of its work force redundant. It is one of the biggest employers in the port of Immingham in my constituency and employs about 700 workers.
I have received a letter from Jens Skibsted Nielsen, the managing director of DFDS Tor Line. I shall read out some of the things that he has said in that letter because it demonstrates excellently the real problem that companies are facing. He states in the letter that the company faces a £3 million business rate demand for 2009. Associated British Ports, the port owner, with which DFDS Tor Line has a commercial agreement, and through which it believed it had paid its contribution towards the business rate, refuses to discuss matters with DFDS. Indeed, it has in fact received a £5 million rebate from Hull city council—the port owner, that is, not the people who have had the rates imposed upon them. My hon. Friend the Member for Kingston upon Hull, North (Ms Johnson) is in the Chamber, but her position as Whip does not allow her to speak in the debate. However, she has attended all the meetings with Ministers, as have the other Hull MPs.
The letter from DFDS Tor Line goes on to state:
“The lack of consultation with port businesses added to the fact that no notice was given about the effects of the re-valuation post 2005 has left DFDS facing a backdated rates demand of £9.9m. Clearly we are not able to recover this cost from our customers so it becomes a liability going forward to a business that is already loss making.”
Recently, DFDS Tor Line received a letter from one of its customers, BMW, which stated:
“BMW are extremely concerned about the prospect of increased costs as a result of the change in the way business rates are to be assessed at statutory ports in England and Wales. In the event this should happen, BMW would be forced to re-examine its decision to handle their UK distribution from the ports of Immingham and Southampton and instead move the operations back to the port of exit on the Continent, as a number of our competitors already do. This would be regrettable but necessary as BMW cannot afford to lose competitiveness in what is a very challenging market.”
Other DFDS Tor Line customers, such as Corus, Arcelor Mittal, Stora Enso, Volvo, General Motors and Honda, have raised similar concerns, and DFDS simply cannot meet an almost £10 million demand for backdated rates, which it believed it had already paid, because it had a commercial agreement with ABP, the port owner. I want the Minister to understand that those people had commercial agreements; they felt that they had paid when they paid their rent and rates to ABP.
Does my hon. Friend agree that if we had followed the example of Scotland and gone through a proper consultation period prior to these radical changes, they would not have taken place? If any consultation had listened to the evidence that my hon. Friend and others have given in the debate, there is no way that the changes would have gone ahead. The situation rings out as being unjust and unfair.
I thank my hon. Friend for that intervention, and he is quite right. I have not come across one firm in my constituency operating out of the ports that knew that the measure was going to be introduced. I am sure that other Members would say the same. It was like a bombshell: at the end of 2008, someone said, “Hey! You’re going to have pay this, going back to 2005.” The Valuation Office Agency has tried to backdate the demands, but the firms cannot backdate what they have charged their customers in the past.
Liverpool chamber of commerce and industry, and Hull and Humber chamber of commerce, industry and shipping, have come up with three ideas as a solution to the problem, and others will probably articulate the same points. They say that the Government should
“withdraw the requirement for backdated rates from 1st April 2005 prepayment element of the rates bills; allow operators across the region and country to work with the VOA to assess businesses fairly and transparently, and implement the review on 1st April 2010—the next rating review date; and provide transitional support to affected businesses.”
If we needed any more evidence of the unjustness and unfairness of what is happening, we have the Treasury Committee report, which came out last week. It says what we have been saying all along. For example, it states:
“We note that Port Occupiers are facing bills for backdated business rates which do not take account of payments they have already made to Port Operators towards rates. We recommend that the Government take steps to ensure that the financial liabilities faced by Port Occupiers take such payments into account.”
On backdating, it recommends that we start again in 2010.
This is an unholy mess. I am sorry that people are losing their jobs. Whether they worked in a steelworks or in a shop, all such losses are a tragedy for the families, but when there is a solution, it hurts even more. We could have done something about the 70 job losses that DFDS Tor Line has announced by saying, “We aren’t going to impose these changes until 2010.” I am sorry that we missed the opportunity to save those jobs at the port of Immingham.
What a pleasure it is to serve under your chairmanship, Mr. Atkinson—I think, for the first time. I join others in congratulating the redoubtable hon. Member for Great Grimsby (Mr. Mitchell) both on the campaign that he has led and on securing today’s debate. It is a pleasure, too, to speak after the hon. Member for Cleethorpes (Shona McIsaac) and, indeed, after my hon. Friend the Member for Preseli Pembrokeshire (Mr. Crabb), who added so much to the strong and overwhelming case that had already been made.
“Chaotic” is the word that springs to mind when we consider the issue in general and in detail. If it was not for the fact that people’s jobs and working lives were on the line, it would be almost a comedy of errors. If a programme of “Yes Minister” had been prepared on this theme, people would have said that it was pretty unlikely. Government agencies are operating unchecked, a Minister has admitted that she knew nothing of what the VOA was doing about the matter while it was going on, and current Ministers are unable to agree on the facts.
In the 19 January Adjournment debate, which has been referred to several times, the Minister who is with us today said that
“the rateable value of some port operators has been reduced significantly, particularly in some places. In Liverpool, the rateable value for the port operator has been reduced to less than half of the previous rateable value; in Grimsby it has been reduced to almost a third, in Hull to around a third, and in Goole to less than a quarter of the previous rateable value. Across England and Wales, the port operators’ rateable value has been reduced by a total of £44 million.”
He argued that any financial liability for sorting out the problem must lie with port owners rather than with the Government, saying that
“in my view, port companies that legitimately believe that they have contributed towards rates by means of payments made through the cumulo or through fees to the port operator should take the matter up with the operator… I have not seen any hard evidence that the arrangement is that rates are part of the fees.”
He went on to say that
“it is a private contractual matter that the port businesses must take up with operators.”—[Official Report, 19 January 2009; Vol. 486, c. 600-601.]
That assumption rests on the notion that both parties had advance warning of the changes via the VOA and should have made appropriate arrangements. Yesterday, during Transport questions, however, the Under-Secretary of State for Transport, the hon. Member for Poplar and Canning Town (Jim Fitzpatrick), who has responsibility for shipping, said:
“I am advised that UK Major Ports and the British Ports Association refute the suggestion that money has gone to them and that they are in some way obliged to pay the money back to businesses in ports. They say categorically that that is not the case, and they have demonstrated that in discussions I have had with them.”
We thus have a direct contradiction between the Minister before us, who tells us that most of the money that was stripped arbitrarily from the tenants—about four fifths, if I remember the figures rightly—is going back to port operators, and his hon. Friend in the Department for Transport, who not only denies it and says that the operators deny it, but says that they have demonstrated it to him in meetings.
Will the hon. Gentleman not accept that the extract that he has read from a speech made by my hon. Friend the Under-Secretary in the main Chamber yesterday clearly underlines the fact that my hon. Friend was setting out the position put to him by the British Ports Association? He was setting out the BPA’s position, not the Government’s assessment of it. I can tell the hon. Gentleman that the rateable value of port operators across the country as a result of the ports review has been reduced by £44 million.
There are two points to be made about that intervention. First, I shall correct the mistake that the Minister has just made when he told us—the record will confirm it—that the Under-Secretary was setting out the view of the British Ports Association, not the Government’s. Let us be clear about what he said, because I shall read the text from Hansard again:
“UK Major Ports and the British Ports Association refute the suggestion that the money has gone to them and that they are in some way obliged to pay the money back to businesses in ports. They say categorically that that is not the case, and they have demonstrated that in discussions I have had with them.” —[Official Report, 27 January 2009; Vol. 487, c. 150.]
The Under-Secretary was making it clear that he shares their view.
The second and more important point is that both Ministers cannot be right. I am not in a position to judge which of them is right, but it is extraordinary that two Ministers are still unable to agree on the matter after the many months that the crisis has been running. However, irrespective of who is right, the key question is, were the various port tenants all warned when this exercise began in 2004, when the first wheels started to turn? In fact, the exercise started late, as the Minister explained—it did not actually start until 2006. Whatever arguments one might have about the current arrangements, if the tenants were not warned, there can be no moral case whatever for collecting back-tax from them, as all three Members who have spoken made clear. If the Government cannot show evidence that the Valuation Office Agency approached the businesses and told them that the exercise was going on, the Government must understand that those businesses were paying rent on the basis that they believed that their landlords were responsible for rates.
The Minister must know that when a business decides whether to take on premises, one of the factors in the rent negotiations is who is paying the rates—it has to be. Unless the Minister can show the House evidence that the Valuation Office Agency explained the exercise to the businesses—he was unable to do so last week—he has no moral case whatever.
I conclude by making a few general points, because I am conscious that a lot more hon. Members want to speak. Regardless of what the real facts are—I am not sure, for the reasons that I have mentioned, that Ministers fully understand them—the situation is dire. We have had a string of examples already, so I will not repeat them.
Ports businesses suggest that some 700 businesses are affected and the Minister himself admitted that an extra 564 properties in England are affected. The worst affected areas appear to be Mersey and Humber, although other examples have been raised today. I am interested to see the hon. Member for Dover (Gwyn Prosser) in the Chamber. So far I have had no complaints from Whitstable in my constituency, but I am waiting for the letter.
I remind hon. and right hon. Members that freight rates—the rates enjoyed by the customers of ports—are at their lowest in real terms in living memory. I am told that the situation is so bad that ships travelling at the moment are simply being reimbursed for fuel so that companies can keep their vessels on the move. In some areas the freight rates have dropped by more than 95 per cent.
Against the background of the Government’s seeming to be happy to shell out vast sums to the banks, despite the fact that they are not lending, and to shovel out vast sums to the automotive industry, how can they possibly justify such a grossly unfair impost on businesses that are not asking for subsidies, although they are in a desperate trading position? All these businesses are asking for is fair treatment.
I thank my hon. Friend the Member for Great Grimsby (Mr. Mitchell) and hon. Members from all parties. We are representing our communities and our constituents who are faced with serious problems.
The port of Sheerness is probably the fourth—sometimes the fifth—largest in Britain. It is the main importer of cars and is the biggest importer of Cape fruits from South Africa. When running businesses, as some Members have done, people look forward and break the year up into four quarters and try to reach the figures that they have ascertained. In the next year, 2009-10, it will be hard for anybody to guess whether they will reach their figures, but they will try, because that is what being in business means.
The one thing that people do not do is look back to quarters one, two, three and four of 2008, 2007, 2006 or 2005. Why? Because the accounts for those years have been audited and tax paid on them to Customs so, as far as the business is concerned, they are done, sealed and finished—that is it. The Government should not then undo the law of the land and say, “I am awfully sorry, but although those accounts have been professionally audited and taxed officially and the tax has been paid, we have made a bit of a mistake. P.S. You owe us hundreds of thousands of pounds.” That should not be done.
I understand that the Minister is in a difficult spot. He is a reasonable man, whom I have met on many occasions in his different portfolios, and he is well respected in the House. This is not his issue, but he has to carry the can today. How can anyone possibly say that the system is fair, decent, practical and honest? If it is for UK plc, what on earth is the sense of it? The system is an appalling mistake and we have to ask the Minister to redress it.
What sort of Government have made such a decision? In due course, I shall press the Minister with the Freedom of Information Act 2000, but he could save me the trouble by putting into the public domain the correspondence, e-mails and telephone calls between his Department and the Treasury, the Secretary of State for Transport and the Secretary of State for Business, Enterprise and Regulatory Reform. I cannot believe that either of those Secretaries of State could possibly have agreed and signed off such a system. I hope that in his summation the Minister will not tell me that they have. That would make the situation even scarier, because the Government do not understand what they have done.
Will the Minister tell me what I should tell some of the people from Sheerness dock, whom I saw last Friday? For instance, listen to Mr. Sampson’s case. He imports vehicles and is very good at it. In 1998 and 1999, we said we wanted added value. Mr. Sampson adds value to the cars he imports, putting in different stereos, satnavs and different colours of leather, and so on. He is exactly where we want people to be. His rates are £4,438, but now he has to pay £57,715.97. Please tell me what I should say. If the Minister does not change the situation, those people will be in the receiver’s yard within three months.
Kleerfreight is a small family business employing five people. Things are tight and it is hard running a small business, so what has Kleerfreight just been asked for? The sum of £11,270, which it cannot afford. The owner tells me, rather nicely:
“Someone somewhere is accountable for such gross negligence”.
Please tell me that there is a principle and value behind the system. We do not understand it.
Mark Holmwood, the managing director of Seatrade, says that his business is now faced with a rates assessment of nearly £20,000. The business will not be able to pay that sum—there is no question about it.
Worse still is the case of the big companies. Peugeot Citroen and Volkswagen in my constituency will now have to pay back £3 million and £2.8 million each if the measure goes through. As a consequence, that will threaten the future of the dock, because as they say,
“in our case…our UK and Paris offices started to make significant changes on our receipt of this demand in our UK supply chain”.
They have reduced
“storage capacity and staff in Sheerness, this continues and we have conversely increased storage and facilities in Europe”
that cost less, and
“50 jobs have gone so far more are anticipated, revenue to the port and investment by us will be down by a number of millions this year and active consideration is being given to whether we remain in Sheerness.”
There is an unintentional consequence of the system, which is that we are now giving other ports in Europe a quick opportunity to take the market away from us in the worst trading conditions since 1929. I cannot believe that the Government really want to do that. It is simply beyond the wit of man to understand how that could have been the intention. I also received a letter from John Dowding, of Overland Freight Forwarders, saying exactly the same as the others I have mentioned.
The Minister understands our anger, but we do not make business; we do not get up in the morning and serve our communities in that way. However, the people who do have tried to make their businesses work. The measure is not just an own goal; it is 10 own goals. I urge the Minister to consider the total impact of the system on UK plc.
I, too, congratulate my hon. Friend the Member for Great Grimsby (Mr. Mitchell) on securing the debate, although I will not thank him for his timing, because today is the 21st birthday of my eldest daughter, Hannah. I managed to get up to north Lincolnshire for the birthday and get back just in time to attend the debate, thanks to National Express, I think.
This is a timely debate, however. Many people outside the House may be surprised to learn that a lot of companies at ports around the country were not paying business rates, but the situation is much more complicated than that. Anyway, as has been said, the businesses are complaining not about that decision, but about the implementation and the retrospection. That has been caused by a long period of procrastination by the Valuation Office Agency; it has taken so long to get figures to the companies. I do not think that anybody in the Chamber expects those figures to be right when there has been a revaluation, but in the meantime those bills are held against those companies—hon. Members have described the implications of that.
The Government have acknowledged that there is a problem. That is why they have already offered a potential solution. The solution of extending the time to pay, fast-track revaluation and an opportunity to open a dialogue with port owners such as Associated British Ports, which covers Goole in my constituency, is all right as far as it goes, but it could work only if the moneys that were collected previously by ABP through the cumulo and then handed over to the Government in business rates were likely to flow back to the companies. We now know that that will not happen.
I know that this is not true for every other port, but certainly in Goole it is true to say that ABP has had a lot of money back. However, that money will not be passed on to the companies that operate off the port of Goole. I have met representatives of ABP and they are quite up front about that. First, they do not have to pass the money on and, secondly, to be fair to them, they make the point that their own liability over all their operations across the country has gone up as well. They may have gained in Goole, but they have lost in other places and they will not pass the money on.
The basis of the original offer from the Government is being undermined by the fact that the companies that operate in Goole and at other ports across the Humber region and in other parts of the country will not get any money back. I cannot add to what my hon. Friend the Member for Sittingbourne and Sheppey (Derek Wyatt) said about retrospection and how businesses operate, except to say that I agree with every word he said.
I come now to the issue of valuation. I genuinely think that the offer from the Government of a fast-track revaluation was to be welcomed. Whatever happens about retrospection, we have to get the valuation right for the future. The companies have to know what their future liabilities will be, but the offer of a fast-track process, which the Minister made to us previously, has fallen into disrepute already. This all goes back to the cumulo. Until perhaps three or four months ago, when Peter Aarosin of Danbrit Shipping in Goole mentioned it to me, few of us even knew what a cumulo was—I thought it was a new wave band from the 1980s, but there we are. It is a strange system. Nevertheless, that is what it is, the companies have been paying through it and it covers everything.
I received an e-mail from David Johnson, who runs a company called RMS in my constituency. He points out that the cumulo includes stevedoring licensing fees, tolls to use the River Ouse, electricity, security, cranage, berthing and mooring of vessels, third-party cargoes, water, maintenance of quays, ships dues and wharfage, and maritime security through TRANSEC—the transport security and contingencies directorate. However, nobody knows how much is allocated to any one element of the list—through it, there are business rates and rent, but the company just pays a fee.
RMS and many other companies have now taken up the offer of a fast-track appeal and their appeals have been thrown out, dismissed by the VOA. When I took the issue up on behalf of companies in Goole, I received a letter from the VOA:
“The appeals have been deemed invalid by the VOA as the forms submitted… contain no information on the amount paid by the company under its occupancy agreement… without this information, the VOA cannot make a proper assessment of the circumstances of the case and legally the appeal must be declared invalid. If the ratepayer disagrees with this decision, recourse is available to an independent Valuation Tribunal who can decide on the validity of their proposal.”
The valuation tribunal was always open to them, so where is the fast track, the help, the assistance?
I am extremely grateful to the hon. Gentleman for giving way and I am sorry that I was not here from the beginning of the debate. On the point about the fast-track process, I have had a letter from Tim Rix, managing director of JR Rix & Sons Ltd, who has a subsidiary company called Rix Shipping Co. Ltd, which carries on the business of terminal and ship operators at the port of Hull. He hoped that the fast track would offer real hope, but says that if it does not deal with the backdating of the tax and the huge imposition on his business, which threatens its very existence, it would be
“merely ineffective window dressing used by the government and the Valuation Office Agency to appear to be doing something substantive to resolve the problems… when, in fact, they are doing nothing to assist.”
We can all say amen to that. What we have heard shows that the VOA has no idea at all of how the cumulo and the ports system have worked. The idea that people can now unpick the rent from their cumulo, but that if they cannot do so they cannot have a fast-track appeal, is a bit like handing back an omelette to the chef and saying, “Give me the yolk.” They cannot do it because there is just an overall figure. At no point have they been told what their rent is, because it is part of an overall figure, and without the rent they cannot have a fast-track appeal, so even the little bit of help that the Government said they would give is now floundering in the water and it needs ministerial involvement to put it right.
We are hitting ports at a difficult time, as hon. Members have already said. Many of those who operate in Goole and at other ports are based not just in the UK; they are international. They do not have to be here, however. They are looking at future investment and the costs here compared to those in other ports around Europe. They are being hit at a very difficult time through the actions of the Government.
What is being done is contrary to everything else that the Government are trying to do. Everywhere I turn, I see the Government trying to give help to people who may be in danger of losing their jobs and to companies that are in difficulty, yet because of the actions of the VOA and the Government, companies are being affected in the way that hon. Members have described.
I like my right hon. Friend the Minister enormously. I have known him for more years than either of us would care to remember and I accept that he has in effect been dropped in it by the actions of his own agency, but that is how it falls—I think another hon. Member said, “That is why you get a car.” Whether it requires conversation with the Treasury, my right hon. Friend the Prime Minister or whoever, it is time to make things happen. We need to put right an injustice, helping our ports as a result.
I add my congratulations to those offered to the hon. Member for Great Grimsby (Mr. Mitchell), who made a passionate and detailed case. The story that we have heard is almost unbelievable to the uninitiated. There are no ports in Solihull—one could not get farther from the sea in England if one tried. Notwithstanding that, I can completely understand the problems and challenges so clearly outlined by hon. Members.
As I said, this is an almost unbelievable story of backdated demands almost as large as £10 million and of debt having to be reported in annual accounts, which will push a number of companies into insolvency. Whether or not there are eight years of interest-free payments, the repercussions of the backdated amount being suddenly foisted on those companies will be much greater than the Valuation Office Agency could ever have thought possible.
If a number of companies are pushed into liquidation, the upshot will be the Government not receiving the money anyway. The hon. Member for Sittingbourne and Sheppey (Derek Wyatt) told us that many accounts will already be closed off, and that seemingly incompetent organisation seems to be flying in the face of every accounting procedure. I wonder what gives it the right to ride roughshod over such commercial practices.
We heard about the strategic importance of the ports; the hon. Member for Great Grimsby said that they are the gateway to Europe. Our ports are the gateway to the world and vital to our economic prosperity, for exports as well as imports. It seems that the Government are deliberately creating an unfair playing field for United Kingdom ports, particularly when competing with other European ports.
The charges being levied on some firms are higher than last year’s turnover. There have been increases of as much as 1,700 per cent. at a time when the Government say that they are trying to protect jobs. The charges will destroy jobs. DFDS Seaways, based at Immingham, has already announced that 71 jobs will be lost, with half those losses being directly attributable to the rates problem. It is facing a demand for almost £10 million. It has been estimated that as many as 150,000 jobs are threatened.
Several hon. Members spoke of the lack of consultation when the charges were introduced, but it is worse than that as no impact assessment has been made. How can one suddenly levy such charges on organisations without working out what their impact will be?
During a previous debate, the hon. Member for Liverpool, Riverside (Mrs. Ellman) talked about the terrible shock to many companies of seeing bills that were retrospective for the previous three and a half years, especially as they thought that they had already paid. It is a treble whammy. Where is the money that has been paid? The port operator’s fees have been reduced by £44 million, so where has the money gone? I hope that the Minister will produce a definitive answer, at some stage if not today.
We are asking for the new assessments to be brought in during 2010, but we have been told that that would require primary legislation. We have also been told that we have plenty of time, so there is no impediment to the Government enacting those provisions. That would not be a huge burden on the public purse. In fact, it may save money, as otherwise revenue would be lost from companies, and it may save costs, as benefits would need to be paid so that the families of redundant workers could keep going—and that before we start counting the human cost.
The traditional pattern of Westminster Hall debates is that an injustice is raised and the Minister replies but does not commit himself to making changes. Indeed, we heard this afternoon that it might be above the Minister’s pay grade to make such a decision. Sometimes—surely not today—we do not do even get a straight answer. If the Minister cannot commit himself to changing this injustice today, will he commit himself to taking the matter to whichever Minister is at the appropriate pay grade for further reflection?
The Government have the opportunity to show reasonableness and humanity. Yesterday, it was announced that £2.3 billion will be given to automotive manufacturing industry. Let today be the day when the Government exercise the same but much less costly compassion to help to keep our port companies afloat.
I, too, congratulate the hon. Member for Great Grimsby (Mr. Mitchell) on raising this important subject. I also congratulate hon. Members in all parts of the Chamber who have spoken in the debate. I have not been a Member that long, but I cannot think of a Westminster Hall debate in which stronger feelings were more articulately expressed. Frankly, neither can I think of a more damning and comprehensive indictment of the Government’s position.
In some respects, I feel for the Minister; he is a decent man, and I respect him as an opponent. When I was a barrister, I defended some pretty hopeless cases. I am sorry to say that, forensically, defending the Minister is rather like defending someone whose fingerprints have been found at the scene of the crime, where a DNA sample has been recovered and there is a signed confession—and with the Archbishop of Canterbury as an eye-witness. [Laughter.] The case is overwhelming; there is no other word for it. The only advice that I could give clients under such circumstances was, “Own up, and throw yourself on the mercy of the court.” I hope that the Minister finds a means of doing that.
The Minister is being asked to defend the indefensible. What has been set out in today’s debate—it was well referenced with correspondence by all hon. Members and through the Treasury Committee report—is a lamentable litany of failure by the Valuation Office Agency. It has been politely described by some hon. Members. I note that the Treasury Committee report quotes the director of the VOA as saying:
“Perhaps with hindsight we should have done more investigative work”.
In the league of mealy-mouthed statements, that makes Pontius Pilate’s hand-washing an act of generosity and decency.
Far worse, the VOA’s attitude is negligent in the extreme. Why is that? There was no consultation and no advance warning. Furthermore, as the hon. Member for Solihull (Lorely Burt) said, there was no impact assessment on the immediate effect nor on the wider impact on associated businesses and the supply chain, as hon. Members have indicated. Therefore, no assessment was made of the likely revenue that would be raised—another important point.
Because there was no assessment of revenue, the Government’s normal guidelines on dealing with retrospective taxation—namely, that it should be introduced only in limited circumstances and to protect revenue—could not be met in this case. That breached every rule. Subsequently, the VOA has compounded that error. First, as was pointed out, it offered a fast-track solution, which is effectively useless. Secondly, and regrettably, but no doubt with good intentions, the Minister offered a payment period that is useless in practice, for the reasons set out by the hon. Member for Great Grimsby—the liabilities have to be brought into this year’s accounts.
I do not wish to sound sarcastic, but an O-level accountancy student would understand that concept. I despair of the fact that no one at the Department for Communities and Local Government seems able to get that simple message. Because the liabilities would be brought into the current year’s accounts, the firms would be trading insolvent. They cannot legally afford to do that.
Mr. Andrew Finfer, a partner in the solicitors advising the firms, makes the point well:
“It is clearly irrational for the government to make businesses insolvent by demanding huge backdated business rates without warning and as a result of the failures of the Valuation Office Agency. Making a company unable to pay tax in the process of trying to collect tax is not the most sensible method of revenue collection.”
That is a pretty fair way to put it. The Government have got themselves into a perverse situation. As other hon. Members have said, it is the most bizarre contrast with what we are told the Government seek to do to assist business during a recession.
I shall add one more example in this nonsensical situation: a firm called Freshney Cargo used to make an annual payment of just over £48,000 per annum, but is now facing a backdated charge of £2.4 million. Like other hon. Members, I have spoken to other businesses about this matter and it is clear that the backdated demand often exceeds annual turnover, not to mention the profit margin. That is putting people under, and for no good reason, which cannot have been the intention.
Nobody would blame the Minister if he said, even at this late stage, “Well, that wasn’t our intention. There’s been a mess up. Let’s try and put it right.” Ultimately, that is what people look to Parliament and Ministers to do—put right injustices. That is what they are there for.
Ways have been postulated to the Government for setting things right. It has been suggested that we use prescription, which is still provided for on the statute book, as the hon. Member for Great Grimsby pointed out. Is it necessary, therefore, to use primary legislation? If so, the official Opposition will do everything they can to facilitate the passage of any legislation that the Minister introduces in this House or elsewhere. I mean that genuinely. We will do everything we can to help to set this right, and I am sure that that goes for other Opposition parties, too.
I am grateful to the hon. Lady for making that point. This is a genuine offer to the Minister and the Government. In such times, we will do all we can to assist the Government in getting us out of the hole that they have dug.
We cannot underestimate the point about the damage to the competitiveness of port business. I was at a meeting where the UK director of DFDS Tor Line made the point that the hon. Member for Cleethorpes (Shona McIsaac) raised. I do not think that some people in the Department for Communities and Local Government appreciate how likely it is that shipping operations will be transferred to the continent and that goods will then be brought in either by air or by road. That would be economically, environmentally and socially undesirable, but that is the position into which the industry could be forced.
The revenue raised from this measure will be but a drop in the ocean. It is worth reminding ourselves, too, that the Government did not budget for it originally. In a sense, therefore, it is a windfall, precisely because there was no impact assessment or, as Ministers have confirmed in written answers, assessment of the revenue likely to be raised. Nothing was ever budgeted up; it is pure windfall. Forgoing it is not likely to cause any difficulties.
More to the point, however, if a firm goes bust, the money will not be collected anyway. It would be far better to keep firms in business and paying rates. Every business to which I have spoken in this sad affair has said, “Of course, we know that we have to pay rates. We are willing to do that. And we know that they are likely to increase, because there was a review.” They accept all that. However, they are entitled to object to the lack of warning and the backdated, retrospective nature of the measure, which will cripple many of them.
I beseech the Minister to think again. This was not his responsibility to start with, but there comes a stage when the inaction of Ministers makes them as culpable as those who began the mess. I really hope that he will not get himself into that situation and will take the lifeline being offered to him from both sides of the Chamber.
Like everyone else who has spoken, I congratulate my hon. Friend the Member for Great Grimsby (Mr. Mitchell)—he is genuinely a friend, despite our differences—on securing this debate. We have more time for discussion than we did last week at the end of business in the Commons. Wide concerns have been forcibly expressed this afternoon in this very good debate about the serious situation being faced by many businesses. Despite some of the light touch and humour that has been expressed, it is important that we look as closely as we can at the concerns that have been raised.
I am grateful to my hon. Friend for some of his kind comments. I shall try to answer his points as meticulously as I can and not to cover ground covered before. Before that, however, I wish Hannah Cawsey a happy birthday; I hope that my hon. Friend the Member for Brigg and Goole (Mr. Cawsey) gets back in time for the birthday party, otherwise I shall obviously be blamed for something else.
What has been made clear by hon. Members was already clear to me and other Ministers: the outcome of the ports review undertaken by the Valuation Office Agency could create serious financial cash-flow pressures on companies newly listed on the valuation list, particularly at this time of general economic pressure. We will take all possible steps to prevent such businesses from being driven over the edge by the tax that they are now legally liable to pay. We are genuinely concerned about their situation, not least because we are trying, in many other ways, to support businesses and people in work during this difficult period, as has been acknowledged on both sides of the Chamber.
That concern was behind the announcement made by my right hon. Friend the Chancellor, in the pre-Budget report, to put in place arrangements allowing companies to pay their backdated, full-year liabilities over eight months.
I have only just started. I ask my hon. Friend to bear with me and not to dismiss my comments in the way that his murmuring suggests.
The time for payment is unprecedented for rates liabilities and business taxes. If a viable business has difficulty paying a bill for other business taxes, Her Majesty’s Revenue and Customs can spread payments over a number of months, but we have now offered eight years to businesses facing this business rates problem. That is far from normal in the business tax system, let alone the business rates system.
Does the Minister understand that if the money must be paid back over eight years, many businesses will give up on the ports and move, sometimes offshore? I accept that is an unintended consequence. They will not pay the rates, because it will be cheaper to rent outside the area.
Each company will make a different decision in light of the situation. Some might take the step mentioned by my hon. Friend.
I reject completely some of the comments made by the hon. Member for Preseli Pembrokeshire (Mr. Crabb). I accept that serious concerns have been expressed, and that some companies have been clear and vociferous in raising them, but the response to the Chancellor’s announcement has not been uniform. I recognise that the impact on some companies will be severe, but equally some companies are already paying in full their business rates bills and backdated liabilities.
Let me finish my point first. After my hon. Friend’s intervention, I must press on, however. If hon. Members wish to raise further points, I shall be happy to hear from them in another debate or in writing.
First, some businesses are already paying the bills. Secondly, some are talking to their local authority—their billing authority—about setting up a schedule of payments and, thirdly, some are taking advantage of the fast-track system that we have established to deal with any challenges or questions about the system the VOA has put in place. So far, some 70 companies are pursuing that route.
The Minister says that the reaction has not been universal around the country. That is because in some ports the companies are not renting from Associated British Ports and thus have been paying the cumulo over the years. If he and his officials examine the variety of ports around the country, he will find that is why there are such differences.
Let me be clear. I was not talking about different ports, but the businesses within ports—across the country in some places—all of which have been listed separately as liable for paying business rates with a big backdated liability, and some of them are settling them.
Many hon. Members and some commentators have criticised the VOA for backdating the effect of the ports review to the beginning of the list on 1 April 2005, but that is not its decision. The date of the change is governed by legislation. If the property existed before April 2005, by law, the rates must be backdated to the beginning of that list period. In that way, the system tries to ensure that all rateable property pays its fair amount of rates from the point when the property should be rated, and with all businesses being treated equally.
May I say to my hon. Friend the Member for Great Grimsby that although we have discussed port occupiers in this debate, they are not alone in having backdated liabilities as a result of the VOA keeping the ratings list accurate? Some 777 new assessments conducted in a similar way to the ports review were added to the list during the past year, creating liabilities at this point of at least 33 months. In the current financial year, up to the end of October, more than 1,600 new assessments, including most of the port occupiers, were added to the list in the same way. Backdating in such a way is a feature not just of the 2005 ratings list period, but of the 2000 ratings list period. In the last year of that period, more than 3,000 new assessments—new companies—were listed for the first time with backdated liabilities. In other words, it is an established feature of the ratings system and the ratings list period, for this period, the last period and the one before. It is also a situation faced by companies other than the ones we have discussed this afternoon—other than those in ports affected by the ports review. When the Chancellor announced the provision in the pre-Budget report, it was not just for the ports companies, but for all the companies facing pressures from the current economic climate.
If my hon. Friend will let me, I will reach that point. In fact, let me deal with it now. I am anxious to deal with the various arguments about the use of prescription and formula, and waiving the tax liability.
I have confirmed that the rateable value for some port operators has reduced by a total of £44 million as a result of the ports review. That comes at the same time as 577 businesses in ports in England and 80 in Wales are listed as liable for the first time. Many port occupiers say that their contractual arrangements with the port operator contain a fee, either explicit or implicit, to cover the business rates. My hon. Friend the Member for Cleethorpes described that as a commercial agreement in which they pay their business rates through the port operator. If that is the case, clearly they need to take it up as a contractual matter with the port operators.
I have not seen clear evidence of how the contracts work. If hon. Members feel that it would be helpful, the Under-Secretary of State for Transport, my hon. Friend the Member for Poplar and Canning Town (Jim Fitzpatrick), and I will sit down and discuss the matter with the port operators—particularly those who have seen a significant drop in their rateable value as a result of the ports review. It is clearly in the interests of commercial port operators to ensure that their facilities in the port are used. They must have some interest in the health of the businesses that operate within their ports. If they fold, the port operator will be left with empty premises, no fee income and, as owners, a liability to empty property rates.
I turn to the question of waiving the liability. We are urged to set aside the liability to tax. None the less, the companies have now been assessed as liable for business rates, including for the period of back payments. We cannot now act as if we do not have the full facts or as if they do not have a liability that is now clearly established in law. Therefore, it is not straightforward or possible simply to undo what has been done, or to hold off until 2010 when the next ratings list comes into effect.
I am trying to avoid groundhog day, but let me return to prescription. Its only effect would be to alter the rating period for the port operator. Prescription and use of the formula allows that to be done. It is true that the Secretary of State still has the power to prescribe rules for establishing rateable values. In theory, she could use such powers to do so for individual businesses at ports, but it would not help them that much for three reasons: they would still be rated separately from the port—as they should be—and, in some instances, were before 1 April; the power is not retrospective; and, finally, they would still be faced with three years backdated liability immediately on top of the liability for this year.
On the question of backdated liabilities, the approach to business rates is no different from other business taxes. Ministers simply do not have the discretion or the power to waive or set aside tax liabilities when they have been legally established. Therefore, when a company is assessed as liable for corporation tax or national insurance payroll taxes, it is legally liable to pay by the set statutory date. That date can be nine months after the company’s end-of-accounting year. When there is difficulty, HMRC has the scope to negotiate a payment schedule, but it is a matter of months, and not years as we propose for the port companies payments scheme.
I will be quite blunt. In effect, my hon. Friend the Member for Great Grimsby is asking me to turn a blind eye to tax that port companies are legally liable to pay. Companies in other sectors are in a similar position—brought on to the rating list separately some time after the start. Although they may have to compete head to head with businesses based inside and outside ports, they have been paying business rates and carrying overheads over the period—in some cases, before. We do not do that with other taxes when companies are liable to pay them.
We do not have the power to waive tax liabilities, so these companies are asking us to change primary legislation to do so. In effect, they are asking Parliament to turn a blind eye to the tax that the companies are legally liable to pay. Even if the Government accepted that such a case should be put to Parliament, persuading Parliament to give such powers to Ministers sets a serious tax precedent. I say to the hon. Members for Bromley and Chislehurst (Robert Neill) and for Solihull (Lorely Burt) that I hope they have cleared their lines on the scheme because we do not do it for other business taxes. I regret to have to say to my hon. Friend the Member for Great Grimsby that it is therefore not something that we can do with business rates. None the less, we will do what we can to help both with the schedule of payments and the fast-track system that the VOA has put in place.
If there are other steps that hon. Members think we can take, particularly in relation to the port companies and the port operators, my hon. Friend the Under-Secretary of State for Transport and I are prepared to consider them, but the problem is not faced uniquely by the port operators even though the ports review has created that serious problem.
Much has been written and spoken about the UK economy in the past nine months or so. With every word uttered or written, we are told about the darkening depths to which our economy is plummeting. In my contribution, I will consider the economy as a whole and mention some examples of sectors that I feel represent my argument best. At this point, I should highlight my external activities as recorded in the Register of Members’ Interests.
The financial sector has been a great wealth provider for the UK over many years, and that wealth has trickled down to many parts of the economy, including the high street, but we now see the banking sector as the villain, not the hero. For many years, when businesses asked banks for finance, they were expected to meet the banks’ demands in order to secure capital investment. It is now clear that the rules that the banking industry expected UK businesses to follow were not rules to which the banks themselves were playing.
Now, because of financial mismanagement of astronomical proportions, it is not only the banking industry that is in crisis but every sector, potentially, of the UK economy. Millions of people throughout the UK were employed in the private housing sector and its supply sectors, building homes for a market that struggled to meet demands. House building companies were busy, suppliers were busy and the manufacturing industry was busy. Although I appreciate that house prices in some areas showed unsustainable growth, it was a strong market with strong skills and high employment levels. Now it is decimated and haemorrhaging jobs and money as though there were no tomorrow.
Barratt Homes is a company close to my heart, as I was once a chief buyer in Scotland. It has fallen from being a FTSE 100-listed company with a share price of about £11 to having a share price of about 70p, after dallying with values as low as 34p. Barratt and its competitors have virtually stopped production. It is important to understand that the industry has always built speculatively, not to order. Only by speculation can businesses provide continuous employment—it is little different from the car market, where mass production is not to order—but that speculation has stopped. The sector has lost jobs at an alarming rate, affecting the supply side, design and manufacture and road haulage, to name just a few industries.
How do we stimulate a sector such as house building? In the words of Mike Farley, chief executive of Persimmon Homes, it is all about mortgages. I would like to discuss two aspects of mortgages. The first is deposits, or, in sector-speak, loan to value. Not so long ago, the financial sector was offering mortgages of 100, 110 and 120 per cent. of the value of properties. Plainly, that was madness. Lest anyone think that I am absolving individuals from responsibility, I am not. Individuals who use such vehicles have a responsibility, but so does the financial sector. We did not ask the financial sector to create those products. It created them and offered them to individuals on the clear understanding that lenders were content that individuals could afford them. Today, that madness has gone full circle. Most products now demand a high deposit of 20, 25 or 30 per cent. Why?
Last week, in my constituency, I convened a meeting with construction industry representatives, representatives of all the major banks and representatives of the economic development department in the local council. Unfortunately, at that time, the bank representatives were not in a position to clarify the criteria by which new loans and guarantees through Government financial injection could be accessed.
Does my hon. Friend agree that at a time when Government are acting speedily to get the economy moving, the banks have been unduly slow to clarify their position? Does he also agree that the banks have gone from one extreme to another on mortgages, and that the restrictions are equally irresponsible at a time when we need movement in the housing market? In addition, does he agree that unnecessarily bureaucratic planning systems in some local authorities have acted as a further brake on development? These unprecedented economic times demand unprecedented changes. Speeding up the planning process would be a necessary catalyst for change.
I agree with everything that my hon. Friend said, not only on the mortgage industry, which we are discussing, but on planning issues, too, which are important to the sector.
Why has there been the change to such high demands on mortgage deposits? Could it be that the lenders really have the individuals’ best interests at heart and want to ensure that they can cope with repayments? I do not think so, because if those were the banks’ true concerns, they would help by passing on the full falls in interest rates which have been generated recently. I believe that they are protecting their own backs against projected falls in house values. However, the solution is simple: we must return to widely available 90 per cent. mortgages if we are to have any hope of saving the industry.
The Treasury’s recent support for lending will not deliver if it fails to move lenders towards that goal. The Royal Institution of Chartered Surveyors shows that new homebuyer inquiries are at their highest level since October 2006, yet mortgage approvals, despite a rise in December, are less than 50 per cent. of the figure for approvals in December 2007.
Shared equity schemes are valuable and have a role to play, but they depend on how the lender views the share. If a 20 per cent. state-funded or industry-funded shared equity scheme is available, it is no good the lender demanding a 25 per cent. deposit on the remaining 80 per cent.; it defeats the purpose. The industry itself has many shared equity schemes, and I am advised of one developer whose company held £1 million of shared equity. Obviously, there was a need to turn it into capital, but when the markets were approached, the best offer that he got was £400,000. Why? Because the markets said that it would be worth £1 million in 10 years’ time, but not today. The really sad thing is that he was thinking about taking it.
Moving to 90 per cent. mortgages will help the housing sector, but it cannot stop there. If someone buys a new car, what do they do? Nothing, other than put fuel in it and drive it; but they did that with their old car. If they buy a new house, they spend additional money. Ask any high street retailer and they will tell you that a buoyant housing market—new and second-hand—fuels spending on the high street. New homeowners buy carpets, fixtures and fittings, curtains, white goods, furniture and so on. It is the one industry—of which I am aware—that directly feeds spending in other sectors.
Let me provide an interesting figure. In 2007, there were 357,800 first-time buyers, and Halifax has produced data suggesting that the cost of furnishing and equipping a new property is about £6,000, which equates to about £2.14 billion of high-street spend by first-time buyers alone. That, in my mind, is quite a fiscal stimulus, but I am not convinced that the Government have yet grasped it.
It is also relevant to discuss interest rates, because they affect mortgages and businesses. It is unacceptable that rate cuts have not been passed on; it is plainly and simply wrong. However, it is not holding back the markets as much as the issue of deposits.
What is the future for the wider economy? If the house building sector and its supply side cannot be returned to stable growth, I fear that we can kiss goodbye to zero-carbon homes in 2016. If that happens, we will be letting down our environmental ambitions and missing the opportunity to expand the sector into a greener future. The technology required to deliver the objective could be used worldwide, and we really could become market leaders, but not with lending as it is now.
More generally in the economy, businesses are being put under unacceptable pressure by the financial sector. In my constituency, businesses that have an overdraft facility at base rate plus 2 per cent. or plus 2.5 per cent. find that what is on offer for renewal is base rate plus 7.5 per cent., and that is when interest rates have plummeted. The Forum of Private Business has stated that 47 per cent. of its members who applied for funding in the last quarter of 2008 were either rejected outright or partially, and the Federation of Small Businesses, of which I am a member, says that about one third of its members are struggling to get affordable credit. That is all due to new criteria being introduced by the banks, many of which are in business today only because of taxpayers’ money. Such new criteria result in businesses being unable to afford the higher rates and going out of business, costing people jobs, the state money and—wait for it—the banks money, too.
I thank my hon. Friend for giving way, and I congratulate him on securing this important debate. He has touched on jobs; does he agree that there are serious implications not only for tradesmen and women who are currently employed in the construction industry, but for the future of apprenticeships? If the Government aspire to increase the number of apprenticeships, we will have to address those issues.
I agree wholeheartedly. Many people have learned their trade in the construction industry, and it is a sign of the times that the issue that is high on the agenda today is not that, but survival.
I applaud the Government for what they have done. Intervention was and is the only sensible option in an economic downturn or recession. In some ways, however, I want them to do more, because they are the only ones who can do anything positive. The Opposition in Westminster and the Scottish Executive in Holyrood seem intent on doing nothing. In fact, many from the Tory party are talking Britain down and taking rewards from the banking sector at the same time. The UK economy needs the effect of Government announcements to kick in quickly, and I urge the Minister to ensure that the support that the economy and UK businesses need is delivered now. The effects of any support will be diminished by delays of weeks or months while the detail of packages is thrashed out. Business can and does react quickly, as it must to remain competitive, and we need the Government to force the banks to react quickly so that business can survive.
In the weeks after the banks were provided with the £37 billion recapitalisation package, with a design to raise mortgage availability back to 2007 levels, lenders dramatically reduced their lending, which has plummeted ever since. I hope that the Minister is aware of the anger that much of the public feel about our investment in the financial sector. Many people recognise the absolute need for it, but that does not stop the feeling of anger about banks being bailed out with taxpayers’ money while other areas are losing jobs as a result of the actions of the banking institutions that we are saving.
Lord Myners recently said that there has been mismanagement in our banks, but businesses in my constituency were saying that months ago. The RBS losses—£28 billion this year—are the biggest in UK history. That is virtually the whole of the Scottish Executive’s budget. Under its previous management, RBS has been an embarrassment. It searched for growth in order to hide its defects. If Scotland had been independent during this period, RBS would be bust and the Bank of Scotland would be bust. Given that oil—that one cornerstone of the Scottish economy—has tumbled in value, I shudder to think what would have happened to an independent Scotland.
While I am talking about Scotland, let me highlight the failure of the Scottish Futures Trust, which has failed to have any impact on the Scottish economy. I urge my hon. Friend the Minister to engage with Scottish Executive Ministers so that the Scottish economy can play its full part in the UK economy without unnecessary, idealistic barriers.
We are subject to a daily barrage of media comment, and comments in the media—there is a difference—on the recession. Recent positive comments by Ministers who see green shoots and light at the end of the tunnel are at one end of the scale, and hedge fund managers who tell us that Britain is bust are at the other end. I read an interesting article last week in that well-known bastion of socialism, the Evening Standard—perhaps it will be now that the Russians own it—by Anthony Hilton, who said that the people who deliver doom-and-gloom messages have, to put it bluntly, an agenda. I could not agree more. They have an agenda that delivers them financial gain from the further weakening of our economy. Hon. Members will know a saying that I have heard many times: “Someone will be making a lot of money out of this.” It was refreshing to see a commentator argue that there was no fundamental reason for the recent falls in sterling and stocks—just panic, fanned by those who can benefit from its effects.
What does the future have in store for the UK economy? Short-term predictions are gloomy, but there is only one action that can face up to the challenge: a return to lending. That would rekindle the confidence that is so lacking in our economic thoughts today. What is confidence? I do not have time to expand on what I think it is, but perhaps the Minister will in her response. The Government have a massive role to play in delivering that confidence. We need them to move the banks to provide funding streams that deliver confidence to businesses so that they will invest and employ more people. I worry seriously that things take too long to filter through. The Government at all levels need to streamline their process so that they can respond in difficult circumstances with the swiftness that business expects, needs and deserves.
Getting public money to support business investment projects is a tortuous process. We cannot use it as an acceptable yardstick for delivering new economic packages into the marketplace. It must be done swiftly. I also believe that in such situations, Governments cannot stop a recession or downturn but can lessen the impact and quicken the return to growth. I support the Government’s plans to get the unemployed back into work with golden hellos, but I would welcome an even greater direct intervention to prevent job losses in the first place.
Overall, we must take a long, hard look at the structure of the UK economy. We have been shown how dangerous over-reliance on one sector, in this case the financial sector, can be to the economy as a whole. We need a structured approach to spread our interests and risks, as business does every day. I urge the Minister to ensure that the announced financial support reaches its targets quickly. Failure to do so will cost a lot more economically and socially, and that is a price that I do not want the country to pay.
I congratulate my hon. Friend the Member for Ochil and South Perthshire (Gordon Banks) on securing this debate and on the points that he made. He is right to observe that we are facing some of the harshest economic conditions for decades. As I would expect of an assiduous constituency Member, he spoke about what he sees happening in his constituency.
In the late 1980s, inflation rose into double digits and interest rates rose in an effort to control it. As a result of domestic policy mistakes, the economy entered recession in 1990 and unemployment rose above 3 million for the second time in 10 years. We must recognise that the nature of the downturn that we face at the moment is fundamentally different from those that we have suffered in past decades. It is not a domestic problem; it is a global one. Due to increasingly integrated global financial markets, ever higher amounts of capital flowed across borders every day. Low inflation and low interest rates across the developed world meant that returns on conventional investments were low and borrowing was cheap.
In their search for higher yields, the financial institutions discussed by my hon. Friend borrowed heavily and devised new products that packaged securities into investment opportunities. Advances in information technology parallel to those developments allowed those new products to be repackaged, as it turned out, again and again and sold around the world in ever more complex forms. That meant that banks, credit rating agencies and national regulators struggled to understand where the risks lay. The scene was set for the irresponsible lending that we saw in the American mortgage markets, which subsequently infected institutions around the world. Bad decisions at the heart of the financial system have led banks to lose confidence in each other and global credit markets to freeze up.
The effects of the credit crunch are being felt everywhere, and increasingly in the real economy. In the past few months, trade and manufacturing have contracted sharply in America, Europe and Asia as companies have been unable to access the credit that they need. Economic forecasts for growth in 2009 have been revised down sharply, with gross domestic product expected to fall significantly in the US, Germany, Japan, Italy and here in the UK. In the US, 2 million jobs have been lost in the past two months. Many forecasters now expect the world economy as a whole to contract for the first time since the second world war.
The problems are global, and they require global solutions. Working with our international partners, the Government are taking a role in agreeing and delivering those solutions. That is why my right hon. Friends the Prime Minister and the Chancellor took a leading role in the G7 autumn discussions in Washington. The five-point action plan that was produced as a result of that meeting was largely based on the UK’s own recently implemented financial stability measures.
Both my right hon. Friends attended the Washington summit in mid-November, and the next meeting of leaders will be in London in April. The UK holds the presidency of the G20 Finance Ministers and central bank governors forum in 2009, through which we will drive an ambitious work plan to help tackle the problems that my hon. Friend has brought before us today.
My hon. Friend mentioned the package of financial stability measures. It was my understanding that the recapitalisation of the banks was, at least in part, to help banks continue lending, particularly to small businesses. Will the Minister tell us what the Government are doing to monitor just how much the banks are continuing to lend, and to whom, if anyone, they are giving the money?
Certainly. We have set up the lending panel, which meets regularly. As part of the latest measures announced by my right hon. Friend the Chancellor on 19 January, we will also be coming to legally binding agreements with the banks that we are supporting. In fact, there has been an increase in lending to our economy from the banks that have been recapitalised. The problem for my hon. Friend’s constituents and those of my hon. Friend the Member for Ochil and South Perthshire is that the globalised banks and non-bank institutions that are not based here that used to lend into the economy have now retrenched and taken away their lending, which has led to an overall decline in the availability of lending in the economy. Although our banks that were recapitalised have increased their lending, the overall effect is still a decrease because of the retrenchment of other non-bank institutions and foreign banks. Clearly, some banks, such as the Icelandic banks, have disappeared completely.
I fully understand and agree with what the Minister has said about the hole that has been left by the international banking sector pulling back. However, it is an untenable situation for basically state-funded banks to move their overdraft rates from 2.5 to 7.5 per cent.; it is untenable for the businesses concerned and it should be untenable for us as a Government because it is taxpayers’ money. When interest rates have fallen to the level that they have, there is no explanation that I can swallow for why the interest rate being offered to business will grow by 5 per cent. It is shameful.
I do not disagree with my hon. Friend’s sentiments, but I want to emphasise that we have taken steps to support the banking system not because we support bankers, but because we wish to guarantee the savings of the many millions of people who have their money in retail banking. It is important to remember that retail depositors have not lost a penny, because of Government action. We also want to make certain that companies can access credit. That is vital to the functioning of our economy, if we are not only going to recover from the current circumstances, but aspire to have a resumption of growth and prosperity in the future. That is what we have been doing.
Over time, my hon. Friend will have seen announcements not only about the recapitalisation of banks, which happened last October, but about the small business package, which was recently announced by my noble Friend the Secretary of State for Business, Enterprise and Regulatory Reform. That will make hugely increased amounts of money available to small and medium-sized enterprises. There have been further announcements on supporting and insuring banks against their losses. Those measures will enable banks to do the job that they should have been doing and that they were created for: lending to the real economy.
To partially answer my hon. Friend’s question, there has been a contraction in lending not only because we have lost some of the major players that were lending into the UK economy, but because of the huge amounts of uncertainty being caused, following the collapse of Lehman Brothers, about the bank balances and assets of various of the large players. They have been unable to price their losses and, therefore, they have hoarded cash.
Unfreezing that cash and making lending available to the real economy is the key to dealing with the challenges that face us now. That is why earlier this month my right hon. Friend the Chancellor announced a package of measures to support the banking system and safeguard the millions of jobs that would be put at risk if the banking system continues to have difficulties lending. These measures are aimed at beginning to replace the lending capacity lost by the withdrawal of foreign banks and other non-bank institutions from this market and addressing the barriers that are preventing UK banks from expanding their own lending, supporting stability and restoring certainty to the banking sector.
Again, I fully support what the Government have done, but the crux of the matter is the swiftness with which that filters through to the end user. The announcement is one thing, but if we spend weeks and months thrashing out how this is going to get through to business or the person looking for a mortgage, its impact will be diminished. We need swiftness. We need the lending on the high street now.
I can assure my hon. Friend that we in the Treasury are well appraised of the need to achieve that degree of swiftness and that result. That is why the Government are acting to deliver real help now, partially by introducing £3 billion of capital projects on housing repairs, insulation, school extensions, health centre refurbishment and transport improvements. To ease the cash flows of business, we have set up a scheme to allow businesses to spread their tax payments over a timetable that they can manage and some 25,000 businesses have spread tax payments worth £430 million already under that scheme. I would say that that is quite rapid and immediate help.
We have committed an extra £1.3 billion to boost the capacity of Jobcentre Plus to get people back into work and we have expanded our schemes to help those who lose their jobs stay in their homes, with support for their mortgage repayments to avoid repossessions in all possible ways. We are increasing household income next year by putting an extra £145 in the pocket of every basic rate taxpayer. We have given all pensioners a bonus of £60 on top of their annual £10 Christmas bonus and the basic state pension for a single person will be increased from April. We are supporting families by permanently increasing child benefit to £20 per week in January instead of April.
We will continue with our approach, enabling banks to stabilise their own balance sheets and lend into the real economy, using the insurance proposals that my right hon. Friend the Chancellor announced, to put a floor under banks’ losses and give them the confidence to lend again.
I urge any businesses that are experiencing difficulty accessing credit to look at Government websites and to go to the development agencies and Government agencies dealing with this issue to access help and assistance if they need investment to grow. There are also other parts of the structure that will allow them to get assistance. I expect that the proposals put in place by the Government will ease lending in the near future.
I am well aware of how difficult it is out there at the moment, as all hon. Members will be from seeing people visiting them in their constituency surgeries, be they businesses or households. We understand that real help, rather than a policy of doing nothing, is needed now. That is why the Government have acted, as only Governments can, to stabilise the banking system to give it certain guarantees, which the Institute for Fiscal Studies said in its green budget today may not only not cost taxpayers in the long term, but could even make a profit, although the figures at the moment look eye-watering.
We have to stabilise the banks as a necessary condition for economic recovery. We continue to work with our international counterparts to ensure that the fiscal stimulus that we have announced, and the global stabilisation of the banking system, is mirrored elsewhere, because the more effectively that is done, the sooner the global economy will cease to suffer from what the IMF has characterised as the greatest shock to mature financial markets since the first world war.
Police Funding Formula (Wales)
It is a pleasure to serve under your chairmanship, Mr. Atkinson, and to have secured this debate on an important subject for the people of Wales, and Dyfed-Powys in particular. I have been trying for this debate for some time, and I am pleased to have finally secured it. In November 2007, I led a debate in this Chamber on Dyfed-Powys police, in which I raised the force’s concern that changes to the police funding formula could leave it in a very difficult budgetary position. The Minister who responded to that debate acknowledged some of the challenges of rurality, and I hope that the Minister today will endorse those observations.
I want to talk about the effect of changes to the funding formula in Wales, which is an important issue affecting all Welsh forces. I shall address that later, but hope that hon. Members will understand if I focus the majority of my speech on Dyfed-Powys, which is my local police force and one that has much to lose from the changes. In many ways, not much has changed since the last debate. Dyfed-Powys still has an enviable record that compares well with any force in the UK. It has the highest detection rate of any force in England and Wales, the fifth highest confidence rate among the public of any force in England and Wales and the lowest level of fear among the public.
Like last year, however, the threat of a future funding gap looms large in the authority’s medium-term plans.
I congratulate the hon. Gentleman on securing this important debate. He is right that the performance of Dyfed-Powys police service is fantastic. It has had some great results. However, given the rurality of its area and the comparatively low level of funding per resident, does he recognise that the force faces real challenges in meeting some of the expectations in the policing pledges? The funding settlement being discussed today will make it even harder for it to achieve its policing pledges, especially on things such as police response times.
I shall come to those points later. The hon. Gentleman and I represent very scattered rural constituencies where police response times are a topical debate. The expectations in the policing pledge and the authority’s good intentions might breed a sense of belief. It does an amazing job, but the pledge is unrealistic, which again necessitates the increase in funding, to which I shall return later.
Proposals that when we last had this debate were at least tentative have been reaffirmed by the policing Green Paper. A point that has been made clear by Welsh forces, forces in England and the Welsh Local Government Association is that if the funding formula is to be applied in full, it must be reviewed. The Welsh Assembly Government, in their response to the Green Paper, said:
“Given these factors, the Assembly Government is concerned about how, for Welsh forces, a rapid move towards full implementation of the funding formula can be reconciled with maintaining the financial stability of the four forces.”
I agree wholeheartedly with that particular statement, and hope that, if the Minister will not today commit to retaining the current arrangements, he will at least commit to a fundamental review of the formula to take into account some of the considerations that might be lost by removing the floor that, in part, has safeguarded some of the concerns in the west of Wales.
If the funding formula is implemented in full, the police have estimated that the four Welsh forces would lose a total of £15 million from their current budgets, and that only south Wales would not lose out at all. Dyfed-Powys alone would lose £6 million per annum. Given that its budget for this year is £90 million, and for next year is expected to be just under £94 million, that is not an insignificant sum. It certainly is not a case of trimming a few extraneous projects to make up for the shortfall.
Dyfed-Powys has worked extremely hard to find efficiencies to enable it to focus what resources it has on fighting crime. The authority has identified a further £1.6 million of efficiencies in its budget for 2010-11, mainly through restructuring and work force change, and that is on top of the savings that it made in previous years, which the Minister acknowledged in the previous debate on this issue. Indeed, between 2005-06 and 2007-08, it achieved efficiencies of £9.8 million, well over its target of £7.3 million.
The Dyfed-Powys authority has been innovative in its exploitation of the opportunities for collaboration. Work between the four Welsh forces has provided cost savings and increased their ability to share information. The four forces have a formally constituted committee, the Police Authorities of Wales, which allows them to work together on certain issues. Dyfed-Powys is not an authority desperately trying to cling to its old ways and past certainties; it has done everything asked of it by the Home Office, and more. It has taken a lead on many issues that the Government have sought to instil in the police.
Is my hon. Friend aware that, in line with modernisation, Newtown police station has a new detention centre, which is really up to the minute and as good as anything in an urban environment? The difficulty is, however, that if the police do not have the funding, they will not have the human resources, so the investment in that high-quality facility will be compromised because they will not be able to use it to its full effect.
I certainly endorse what my hon. Friend said about the pressures on manpower. On one occasion, when I was out with the police in north Ceredigion, it was brought to my attention that from 1 am that morning, only one lead officer would be covering the whole of Powys and Ceredigion to deal with fatalities should they unfortunately arise in that whole, vast area of mid-Wales. My hon. Friend makes very strongly the point about staffing. We in Aberystwyth have benefited from a new police station in recent years, but this is not just about bricks and mortar; the public expect police officers on the ground.
What really lies behind the continual debate that we have to have is the complete inability of the Home Office in London to understand rurality. I wonder whether the experience in Scotland is similar, or different because there is a better understanding there. If we devolved police funding to Wales, we would be better able to reflect public service delivery in rural areas.
I thank the hon. Gentleman for that, and I have a great deal of sympathy with what he says, because the perception in Dyfed-Powys is that we are being penalised for our police authority’s great success. There is a lack of understanding of rurality and of the vast distances that challenge us.
When considered against forces in England, the four Welsh forces together cover a much more sparsely populated area. There are unique challenges to policing in rural areas, and, in fairness, the Government have in part recognised that. They introduced the rural policing fund, and, whenever I have raised the subject, Ministers have acknowledged that there are extra difficulties in policing scattered rural communities, and that we need to take rurality into account.
In the previous debate on this subject, I spoke of those particular concerns and of the potential threat to the rural policing fund. Dyfed-Powys receives £2.6 million per annum from the fund, but I understand that there is a proposal to roll all rule 2 grants into one grant that would be distributed to all the forces. For most rule 2 grants, which are paid in some degree to all forces, that is fair enough, and certainly Dyfed-Powys police authority has no great complaints with the idea in principle. The rural policing fund, however, is an entirely distinct fund that is available to considerably fewer forces, including Dyfed-Powys and North Wales, which shares some of our challenges. The fund should remain discrete from the plans to amalgamate rule 2 grants.
In specific terms, Dyfed-Powys believes that it would lose the equivalent of half the £2.6 million it receives, and the North Wales force would also lose a considerable amount, so I should be grateful to the Minister if he could clarify those figures and estimate the effect on the budgets of Dyfed-Powys and North Wales police forces of merging the rural grant with the other rule 2 grants.
On the point made by the hon. Member for Preseli Pembrokeshire (Mr. Crabb), Dyfed-Powys and other rural forces in England and Wales have expressed great concern about aspects of the policing pledge, particularly the target of a 20-minute response time in rural areas. Leaving aside the debate about how targets can distract the police from their core activities, those on the force have made it plain to me that it is impossible for them to achieve that target unless they can divert resources from other areas. I hope that the Minister will advise me how Dyfed-Powys can meet that pledge and, if it cannot, how he will ensure that it will not be disadvantaged as a consequence. I can certainly vouch for the fact that whoever drew up the pledge did not spend a particularly long time in Ceredigion, Powys or the old Dyfed area.
Although police reform is undoubtedly important and we should always continue to strive to improve practice and procedures, I hope that the Minister appreciates that there is a feeling among some forces that they are being required to do more than ever before and, in the case of Dyfed-Powys and many others, expecting to be given less money with which to do it. The Association of Chief Police Officers has identified 30 Government recommendations with uncosted financial implications. There are short-term budgetary pressures as well. Dyfed-Powys believes that a large proportion of this year’s increase will be swallowed up by the new pay award, and there are concerns about rising fuel prices and other inflationary costs that, although they might be easing now, put a dent in the force’s budget.
Many have also expressed particular concern about the arrangements for VAT on fuel. When VAT was cut as a consequence of actions taken in the pre-Budget report, fuel duty was increased to offset the lower VAT on fuel. For those who had been able to claim back VAT, such as police, that effectively meant an increase in fuel duty. I am not for one moment trying to open a debate on Government economic policy, but can the Minister suggest anything that can be done for those who have lost out or, at the very least, say whether the police will be considered when future funding is examined? The cost of fuel has had a massive impact on areas such as Dyfed-Powys, and there are inevitable concerns about short-term funding as well as the medium-term concerns that I identified.
The Minister will be aware that Dyfed-Powys police have been asked to carry out a risk assessment of the likely policing of the Milford Haven liquefied natural gas plant and have accordingly put forward a proposal. It is clearly a significant undertaking. At its peak, the pipeline is expected to carry 15 per cent. of the UK’s energy needs. Policing it will be a crucial and costly task. Although I do not expect the Minister to go into great detail about the bid, I hope that he will acknowledge the concern that if the proposal is not funded in full, it could add another burden to Dyfed-Powys’s budget. Surely, in the interests of national security, that cannot be ignored.
I am sure that the Minister will point to the increased number of officers in Dyfed-Powys police under this Government, which is obviously welcome. However, much of that money came from the crime fighting fund, which was available to all authorities, not uniquely to Dyfed-Powys. Dyfed-Powys made it clear that, with the prospect of losing £6 million from the funding formula, officer numbers might have to be cut. I do not seek to denigrate the overall increase in officer numbers to date, but it is reasonable to point out that if the changes to the formula are approved, much of the good work that is increasingly visible on some of our streets and in some of our villages may be undone.
In summation, like the last time that I expressed my concerns to the Minister, I make no special plea that Dyfed-Powys is more deserving of funds than any other authority; I only say that it is recognised that a successful police authority deserves its fair share and should not be penalised for its relative success. Its rural nature, its current responsibilities and, above all, its first-class record should be recognised fully in future funding settlements.
I congratulate the hon. Member for Ceredigion (Mark Williams) on securing the debate. I hope that he will forgive me for doing as he did and concentrating mostly on Dyfed-Powys.
The hon. Gentleman paid tribute to the police authority and to the work of the chief constable of Dyfed-Powys and his officers, as well as their efforts in reducing crime. I join him in that tribute. As he acknowledged, recorded crime fell by almost 15 per cent. between 2006-07 and 2007-08 in Dyfed-Powys. In Ceredigion’s crime and disorder reduction partnership area, crime fell by a similar amount over the same period. There were significant reductions in violence against the person, which was down by 16 per cent.; domestic burglary, which was down by 6 per cent.; and vehicle crime, which was down by almost a quarter.
The Minister for Security, Counter-Terrorism, Crime and Policing recently confirmed that we are implementing the funding settlement for 2009-10 broadly unchanged from what was previously announced. We originally announced provisional funding totals for three years—2008-09 to 2010-11—in December 2007. My hon. Friend confirmed the figures for 2009-10, with an indicative figure for 2010-11, on 26 November. Police forces and police authorities have welcomed the extra certainty brought by three-year settlements.
Next year’s funding settlement builds on a significant increase in resources for the police since 1997-98. Government grant for the police will have increased by more than 60 per cent., or more than £3.7 billion, during that period. All police authorities and forces will receive a minimum increase in general formula grant—the bulk of Government support to the police—of 2.5 per cent. Those with greater relative need will receive a little more. Including specific grants, the overall increase in Government revenue support for policing is 2.8 per cent. in 2009-10. In our view, that is a fair and affordable settlement for all police authorities. Furthermore, chief constables and police authorities have maximum flexibility to make the best possible use of resources.
We considered carefully all the written representations received in response to the provisional settlement announcement in November. Dyfed-Powys police authority chose not to make any representations.
I certainly have the figures for Dyfed-Powys, and I hope before the end of the debate to have the information that the hon. Gentleman requests. If I do not, I undertake to write to him as soon as possible.
Dyfed-Powys has benefited from the solid funding settlements of the last few years. Next year, it will receive £54.4 million in general grants—an increase of 2.5 per cent., or £1.3 million—and an estimated £9.2 million in other Government funding.
I turn to the specific point made by the hon. Member for Ceredigion on the rural policing fund. It includes £3.57 million in special formula grant—a consolidation of three former specific grants, including £2.6 million from the former rural policing fund, which the Dyfed-Powys force has discretion to use as it sees fit.
The hon. Gentleman raised concerns about the future of the special formula grant. Prior to the current comprehensive spending review, we consulted on whether to put that funding back into the formula funding pot, but doing so could have had a major impact on grant distribution. We decided, on balance, to maintain the status quo. The move was widely welcomed by police authorities, particularly by rural forces. In answer to a point that he made, I assure him that the position will be reviewed in full before any changes are made.
In the Green Paper, “From the neighbourhood to the national: policing our communities together”, we said that we intend to move to full implementation of the funding formula at the fastest pace compatible with ensuring the stability of police forces. Many forces that contribute to the funding floor are pushing for greater implementation of the needs-based formula. Police authorities such as Dyfed-Powys and my own police authority, Northumbria, which are supported by the funding floor, want the protection to remain in place. We recognise that the funding floor is important. Dyfed-Powys has benefited for many years from the scheme and next year will receive £6.3 million more than its strict formula share.
The damping mechanism operates to ensure that no police authority suffers a destabilising change in funding from one year to the next. It is in no one’s interest, in any part of England or Wales, for a police authority to suffer a sudden decrease in funding. As the hon. Gentleman knows, the mechanism benefits three Welsh police authorities: Dyfed-Powys, Gwent and North Wales.
For English police authorities, floor damping is made by reallocation of revenue support grant, held for English local authorities by the Department for Communities and Local Government. The Welsh Assembly Government are responsible for revenue support grant in Wales, but do not operate a damping mechanism. Without a grant floor, Dyfed-Powys would lose heavily. So, the Home Secretary provides Welsh police authorities with floor uplifts from Home Office resources on top of the general police grant settlement. The total cost, which the hon. Gentleman mentioned, is £15.5 million in 2009-10, of which Dyfed-Powys gets £5.7 million. That goes part of the way, but I understand that there is a much wider argument to be had on the points raised by the hon. Member for Carmarthen, East and Dinefwr (Adam Price).
Far from threatening Welsh police authorities with grant reductions, we have, with great care, supported police resources in Wales. We have delivered a stable financial system, but have equally targeted some extra resources where there is greater relative need. For next year, the 2.5 per cent. grant floor will provide stability and a degree of scaling above the floor, enabling us to target resources on areas with greater relative needs.
A further degree of formula implementation will not happen overnight. We have promised to review the funding formula for the next comprehensive spending review. I understand that the hon. Member for Ceredigion was looking for assurances in that regard on consultation and taking part in that process.
The police allocation formula working group includes representatives from the Association of Chief Police Officers, the Association of Police Authorities, the Welsh Assembly Government and the force finance director for Dyfed-Powys police, Mr. Andrew Bevan, and meets regularly throughout the year.
We are open for discussion on all areas of concern. I assure hon. Members that there will be a full consultation on proposals in advance of the next comprehensive spending review period.
The Government expect the average increase in council tax in England to be substantially below 5 per cent. in 2009-10. In this difficult economic climate, we will not hesitate to take strong action, if necessary, to protect council tax payers from excessive increases. Local government finance in Wales is, of course, a matter for the Welsh Assembly Government. Ministers from the Welsh Assembly Government have said publicly that they are confident that police authorities will act reasonably in setting their budgets. They are monitoring the position carefully and will take appropriate action to keep council tax increases to reasonable levels.
Dyfed-Powys is a well-resourced force. It had 1,181 police officers in March 2008—176 more than in March 1997—which is an increase of 17.5 per cent. between 1997 and 2008 and significantly more than the overall increase of 11.4 per cent. for England and Wales. The police are also supported by 73 police community support officers and 612 police staff.
We should not focus on officer numbers alone, but rather on making best use of officer time. Since 1997, there has been a 90 per cent. increase in the number of police staff employed by Dyfed-Powys police. That is substantial and a good indicator that the chief constable has used this extra resource to free police officers for front-lines duties.
We remain absolutely committed to neighbourhood policing. We said that we would maintain the ring fence on this funding for the remainder of the CSR period. That should help to ensure that neighbourhood policing is firmly embedded into core policing activity. During this financial year, we are providing £1.56 million to Dyfed-Powys as funding for neighbourhood policing and, especially, to help to pay the salaries of PCSOs. That sum includes an extra element that we have been able to provide to Dyfed-Powys, which means that the 2008-09 provision is 6 per cent. up on last year, while for nearly all other forces the uprating is 2.7 per cent.—the reason being that we exceptionally allocated 12 more PCSOs for Dyfed-Powys in 2007-08 to help to complete its roll-out of neighbourhood policing coverage. The effect of that decision has been to enhance its continuation funding for 2008-09, and it will be uprated for 2009-10, by 2.7 per cent., to £1.6 million.
The hon. Gentleman asked specifically about Dyfed-Powys in relation to national infrastructure and security. The Government keep security arrangements for the critical elements of our national infrastructure under constant review, and the chief constable of Dyfed-Powys police has suggested a number of potential protective security improvements relating to Milford Haven. I can assure the hon. Gentleman of two things: these matters are being considered and we have no intention of ignoring either the issues that he has rightly raised or their seriousness.
In conclusion, I repeat my thanks to the hon. Gentleman for initiating the debate.
I thank the Minister for the fullness of his response, but before he sits down will he address specifically the challenges of the policing pledge? He has talked about increased staff numbers, and I am loth to dispute those figures, but if one considers the workings of the pledge, including the 20-minute response time in rural areas and the requirement for 80 per cent. visibility, and if one compounds that picture with the rurality of Dyfed-Powys, our case for increased resources is vindicated.
I am heartened by the Minister’s comments on the role of Dyfed-Powys in the review group that is considering the future of rule 2 grants, but what about the practicalities of providing that visibility, having police officers on the ground and meeting 20-minute response times?
We have been in close discussion with chief constables and police authorities about implementing the policing pledge, and we are absolutely clear that the pledge is important. We must remember that it comes in two parts, one of which includes the commitments that the hon. Gentleman has mentioned, and that the second part is about engaging with local communities and ensuring that their priorities are reflected in the workings of the police service in their area. Having abandoned all top-down targets except one, on whether the public have confidence in the police in their area, we believe that is the right way forward.
I hope that the hon. Gentleman is not saying that, as an alternative, 80 per cent. of officers’ time in neighbourhood policing should not be spent on the patch, because that is not the message we are hearing from communities, which want more officer time. I hope he is not saying that we should stipulate what the public can expect from police officers, in terms of when they turn up. He might think that we have set very ambitious targets for Dyfed-Powys, but I assure him that we have set ambitious targets for every police force in every police area, because we want to respond, as far as we can, to what the public are telling us they want.
If the hon. Gentleman wants to know where the money is coming from, I should like to point out two things: substantial resources have been put into his area and resources will continue to go to such areas. He might say that there is a case for rural policing, but that is why we have the fund that he mentioned and why we intend to continue with it.
I am grateful for the Minister’s comments about the intention to continue with that rural policing dimension, because that is critical and what the debate is all about. That is the assurance that I had hoped to hear. I hope also that it will be pursued by the group considering rule 2 grants to address some concerns expressed by Dyfed-Powys in the medium term.
The Minister is right to talk about public engagement. This debate is all about meeting the expectations of the public in terms of visibility, response times and giving Dyfed-Powys the staffing and resources that it deserves.
I hope that the hon. Gentleman is reassured by my remarks. I assure him that where forces rely on the funding that he has mentioned, and on our floor mechanisms, we will not take any steps that put that funding in jeopardy. We want sustainable funding to continue the progress being made in his area and others.
Question put and agreed to.