A paper giving details of the outcome of the two-year review of the Financial Services and Markets Act 2000, which the former Financial Secretary to the Treasury announced on 4 November 2003, Official Report, column 28WS, is available in the Vote Office and the Library of the House, and is accessible on: www.hm-treasury.gov.uk.

I have completed the annual review under section 141 of the Social Security Administration Act 1992. I propose the following changes to take effect from 6 April 2005. These rates and limits will also apply to national insurance contributions in Northern Ireland.

Employers and Employees

In line with the Social Security Contributions and Benefits Act 1992, the lower earnings limit for primary Class 1 contributions is to be raised to £82 a week. It is set at the level of the basic state pension for a single person from April 2005 and rounded down to the nearest pound.

The primary and secondary thresholds for Class 1 contributions will continue to be aligned with the weekly amount of the income tax personal allowance, which will be increased to £4,895 from April 2005. The primary and secondary thresholds will therefore be increased to £94 a week. This means that no tax or Class 1 contributions will actually be paid on earnings below this level.

The upper earnings limit for primary Class 1 contributions will be raised to £630.

The self-employed

The rate of Class 2 contributions will be raised to £2.10 a week. Self-employed people with earnings below the annual small earnings exception can apply to be exempted from paying Class 2 contributions. This limit will be raised by £130 to £4,345 in line with inflation.

The annual lower profits limit for liability to Class 4 contributions will increase to £4,895 a year (in line with the income tax personal allowance). The upper profits limit will increase by £1,040 to £32,760, to maintain the link with employees' earnings liable to Class 1 contributions.

Class 3

The rate of Class 3 voluntary contributions will be increased by 20 pence to £7.35 a week.

Share fishermen

The special rate of Class 2 contributions for share fishermen, which allows them to build entitlement to contributory Jobseeker's Allowance in addition to the other contributory benefits available to the self-employed, will be increased to £2.75 a week.

Volunteer Development Workers

The special rate of Class 2 contributions for volunteer development workers, which entitles them to the full range of contributory benefits, will be increased by 15 pence to £4.10 in line with the statutory formula of 5 per cent of the primary Class 1 lower earnings limit.

Treasury Grant

I need to ensure that the Fund can maintain a prudent working balance throughout the coming year and, in accordance with section 2 (2) of the Social Security Act 1993, I propose to do so by prescribing that the maximum Treasury Grant which may be made available to the Fund in 2005–06 shall not exceed 2 per cent of the estimated benefit expenditure for that year. Similar provision will be made in respect of the Northern Ireland National Insurance Fund.

I shall be laying a draft re-rating order before Parliament in due course. This will accompany a report by the Government Actuary to myself and my Right Honourable Friend the Secretary of State for Work and Pensions which we shall jointly present to Parliament.

The following table sets out the rates, earnings limits and thresholds for National Insurance Contributions proposed for 2005–06.

Enclosed below are the latest figures reported by Departments on their Private Finance Initiative (PFI) activities. The submission of this information is in accordance with Departments' obligation to disclose PFI information to Parliament on a biannual basis.

Table 1 shows the estimated private sector investment in public services resulting from signed PFI contracts over the period 2004–05 to 2006–07.

Table 2 shows the estimated total capital value of PFI contracts that are currently at the Preferred Bidder stage of procurement. Tables 1 and 2 are both presented on a departmental basis.

Table 3 shows a forecast of the estimated payments for services flowing from signed PFI projects. It should be noted that procuring authorities only pay when they receive the high quality services specified in PFI contracts. If such services are not received then deductions can be made from anticipated payments. This table is presented in aggregate form and covers the period 2004–05 to 2029–30.

Table 1: Departmental Estimate of Capital Spending by the Private Sector (signed deals)^{(1), (2)}

(001) Investment in assets scored on the public sector balance sheet also scores as public sector net investment. Figures are for investment under PFI-type contracts only.

(002) PFI activity in local authority projects is included under the sponsoring central government department.

(003) Excludes private finance activity in educational institutions classified to the private sector.

(004) Figures reported for non-IT projects relate to the amount of PFI credits awarded.

(005) Includes estimates of the capital expenditure for the London Underground Limited (LUL) Public Private Partnership PFI Contracts in the years that investments are expected to take place.

(006) Excludes estimates of capital expenditure on the Channel Tunnel Rail Link (CTRL).

Table 2: Estimated Aggregated Capital Value of Projects at Preferred Bidder Stage

(7) Figures reported relate to the amount of PFI credits awarded.

Table 3: Estimated Payments under PFI Contracts—December 2004 (signed deals)⁽⁸⁾

(8) The figures between 2004–05 and 2017–18 include estimated payments for the LUL PPP contracts. These contracts contain periodic reviews every 7.5 years and therefore the service payments are not fixed after 2009–10.

This Government are determined to ensure that all employers and employees pay the proper amount of tax and NICs on the rewards of employment, however those rewards are delivered. Despite the efforts of successive Governments of all persuasions over several years, we continue to be presented with ever more complex and contrived attempts to avoid paying tax and NICs on rewards from employment, particularly in relation to bonuses in the City.

In the most recent year for which we have figures, well-rewarded individuals receiving bonuses of at least £1.5 billion in total sought to avoid paying their fair share of tax and NICs.

The disclosure rules in Finance Act 2004 have revealed that this kind of avoidance is still rife. Without prompt and decisive action we think there could be up to £2 billion paid this year in bonuses on which the amount of tax and NICs properly due is at risk, as a result of increasing ingenuity and inventiveness of the tax avoidance industry.

We cannot allow avoidance on this scale to continue. It is only right that everyone who should pay tax and NICs, does pay and that they pay their fair share when it is due. The overwhelming majority of employers and employees do pay their fair share. But for too long some employers and employees with the benefit of sophisticated tax advice have sought to avoid their responsibilities and to pass more of a burden onto the rest of us.

Early attempts at avoidance in this area took the form of paying bonuses and salaries in gold bullion, diamonds and fine wines. When these routes were closed, employers started to pay bonuses through shares and share options to reduce the amount of NICs they had to pay, avoid their obligation to operate PAYE, and reduce employees' tax bills. When, in 1998, assets readily convertible into cash were brought within PAYE, and NICs, avoidance schemes moved on to more complex arrangements.

Despite extensive reforms to the tax legislation in 2003, employers and their advisers are continuing to devise and operate ever more contrived avoidance schemes. One such example of which Inland Revenue has learnt involves payment of a bonus to an employee in the form of dividends on shares in a specially constructed company. This avoids tax at 40 per cent. and employer and employee NICs.

The Inland Revenue will be challenging such arrangements in the courts where it is appropriate to do so. We cannot however await the outcome in the courts before taking action. We intend that from today both tax and NICs legislation should achieve our objective of subjecting the rewards of employment to the proper amount of tax and NICs, however the rewards are delivered. Taxpayers who contribute their fair share have a right to expect that others will also do so.We also want to make it plain that to the extent that legislation may still not achieve our objective in the face of continuing avoidance, we will ensure it does.

To that end we will be including legislation in FB 05, effective from today, to close down the avoidance schemes we know about. A technical note explaining what we intend to do in FB 05 will be published today. We will also ensure that NICs is charged on these schemes with effect from today.

However, experience has taught us that we are not always able to anticipate the ingenuity and inventiveness of the avoidance industry. Nor should we have to. Our objective is clear and the time has come to close this activity down permanently.

I am therefore giving notice of our intention to deal with any arrangements that emerge in future designed to frustrate our intention that employers and employees should pay the proper amount of tax and NICs on the rewards of employment. Where we become aware of arrangements which attempt to frustrate this intention we will introduce legislation to close them down, where necessary from today.

This action will not affect employers and employees who organise their affairs in a straightforward and ordinary way—the vast majority. In particular, genuine employee share schemes and share option plans will not be affected. We continue to believe these make an important contribution to the Government's productivity agenda.

I have today presented the provisional local government finance settlement for 2005–06. Included in the announcement was the distributable amount of national non-domestic rates in England for 2005–06 to be redistributed to local authorities, which will be £18.000 billion.

Calculation of Distributable Amount for 2005–06 (£ million)

Notes to the table:

The above calculation involves estimating several figures that are inherently difficult to forecast accurately, such as the gross rate yield and the prior year adjustments. The resulting figure of £18.100 billion has therefore been rounded to £18.000 billion exactly to avoid spurious accuracy.

For 2001–02, 2002–03 and 2003–04, the amounts shown are generally those reported on the outturn (NNDR3) returns, with those for 2003–04 being regarded as provisional in advance of the receipt of audited returns. For 2004–05, the amounts shown are the provisional outturn for the year based upon authorities' provisional contributions to the non-domestic rating pool, as reported on NNDR1 returns. For 2005–06 figures, the estimates are based on:

1. Item 1: The gross rate yield represents the estimated effective total rateable value of non-domestic hereditaments on local rating lists multiplied by the small business non-domestic rating multiplier of 41.5p. The supplement of 0.7p that is also applied to businesses paying for the new small business rate relief is not included, and neither is the small business rate relief included within the reliefs at item l(i). This reflects the fact that the income from the supplement is intended to equal the cost of the relief nationally, resulting in a zero net effect upon the Distributable Amount.

2. Item 1(i)(a): The cost of the transitional reliefs in 2004–05 is estimated to be zero, to reflect the fact the scheme is designed to be self-financing, through phasing in reductions to rate bills.

3. Item 1(i)(b): The empty property relief adjustments include voids and partially occupied hereditaments. The 2005–06 figure includes an allowance to reflect the increase in the gross rate yield.

4. Item 1(i)(c): Charitable rate relief. The 2005–06 figure includes an allowance to reflect the increase in the gross rate yield.

5. Item 1(i)(d): Rural Shops and Post Office relief. Figures include mandatory relief for general stores and post offices under the Local Government and Rating Act 1997. The 2005–06 figure includes an allowance to reflect the increase in the gross rate yield.

6. Item 1(i)(e): Community Amateur Sports Clubs (CASCs). This is mandatory rate relief for sports clubs registered with the Inland Revenue as Community Amateur Sports Clubs under Section 64 of the Local Government Act 2003, which came into effect on 1 April 2004. The 2005–06 figure includes an allowance to reflect the increase in the gross rate yield.

7. Item 1(i)(f): Discretionary relief granted to charities, non-profit making organisations and for other reasons including discretionary relief for village shops and post offices under the Local Government and Rating Act 1997. The 2005–06 figure includes an allowance to reflect the increase in the gross rate yield.

8. Item 1(ii)(a) and (b): The allowances for the costs and losses incurred by authorities in collecting non-domestic rates from ratepayers.

9. Item 1(ii)(c): City Offset—the amount which the City of London is not required to pay into the non-domestic rating pool. It has been set to zero for 2004–05 onwards.

10. Item 1(iii): Net adjustment in respect of appeals and other amendments to the rating list affecting liability for previous years rates settled in that year: comprising repayments and associated interest payments.

11. Item 2: the rateable value of non-domestic hereditaments on the central rating list multiplied by the multiplier, less the net effect of transitional arrangements, and adjusted for appeals and other changes in respect of previous years.

12. Item 3: Almost all properties previously included in the Crown List are included in the local list figures at item 1.

13. Item 4: the contribution from central government to offset the amount of the Secretary of State's estimate of income foregone as a result of transitional arrangements is assumed to be zero for 2005–06, given the self-financing nature of the transitional relief scheme.

The Government are today announcing the allocation to administering authorities of £1.715 billion for the Supporting People programme in 2005–06. These grants are awarded to authorities to enable them to provide housing related services to over 1.2 million vulnerable people in our society.

The Supporting People programme was successfully launched in April 2003. Since then authorities have made good progress in managing the programme but there is work still to do. Findings from an independent review, inspections by the Audit Commission, and other research work have shown that there are considerable opportunities for authorities to make efficiency savings in their programme and that some services are not delivering the quality of support that clients deserve.

We are addressing these concerns by requiring authorities to complete reviews of individual services by April 2006 and ensure that these are value for money, good quality and strategically relevant. In partnership with local stakeholders, authorities are developing five-year strategies for their programmes and these will examine critically the services delivered and focus them on local need and strategic priorities.

Additionally, we are providing help and advice through capacity building programmes, and monitoring and support to authorities and providers. This includes projects to develop and disseminate best practice, a benchmarking programme, web-based support through hub services, and support to authorities struggling with their administration of the programme. We will also continue to work with authorities and providers to ensure that administration of the programme is effective and does not create unnecessary burdens.

As a preventive programme, Supporting People contributes to a range of key Government targets and objectives. The Office of the Deputy Prime Minister will be working closely with colleagues across Government to ensure that the Supporting People programme is better integrated with other support packages.

Throughout 2005–06, we will be developing the monitoring arrangements for the programme including measuring performance against three key Supporting People performance indicators. We will use this data to establish baseline performance and will then look to authorities to deliver continued improvement in outcomes over time.

Early next year we will consult on the revised needs based distribution formula which will provide the basis for allocating Supporting People grant in the future. In the long run this could give rise to significant changes in current pattern of allocations between authorities and I recognise this cannot be achieved quickly. We have previously announced that under the Spending Review 2004 settlement the funding for Supporting People in 2006–07 and 2007–08 will be around £1.7 billion. To provide some further assurance to authorities about the pace of change I have decided that no authority should face a reduction of funding of more than 5 per cent. or an increase of more than 10 per cent. in either of these years.

This Government's on-going commitment to the Supporting People programme and our continued support to authorities and other stakeholders in the delivery of the programme will ensure the continued improvement in value for money and better use of resources in 2005–06 and beyond.

The Office of the Deputy Prime Minister is also beginning today a consultation on the grant conditions for Supporting People in 2005–06, which we are proposing to keep broadly the same as 2004–05. The consultation ends on 11 February 2005. We are writing to local authorities to inform them of their allocations.

My right hon. Friend the Deputy Prime Minister has today announced the following three-year settlement for the general GLA grant, which is provided by the Government to support the activities of the Mayor of London and Greater London Authority. This settlement reflects the overall 2004 spending review settlement for local government and in particular the requirement to generate efficiency savings of 2.5 per cent. per annum across the public sector. The actual grant will continue to be determined by the Secretary of State annually, in accordance with section 100 of the GLA Act 1999.

The Independent Advisory Group on Teenage Pregnancy has published its third annual report today, 2 December 2004.

This is a very thorough and considered report which continues to build on the group's previous two annual reports. We commend the Independent Advisory Group for the notable contribution it has made since it was formed. We welcome the advisory group's acknowledgement of the significant progress made to date nationally, regionally and locally on implementing our teenage pregnancy strategy. We recognise that we are at a critical point of this 10-year strategy, the goals of which can only be achieved by sustaining the drive and energy we have demonstrated so far. Our continued commitment to addressing this key inequality and public health issue is signalled by our PSA jointly held with the Department of Health. Reducing teenage pregnancies and supporting young parents is central to our change for children programme with its aim of improving the life chances for all young people. The report contains eight recommendations on potential areas for further action. Each recommendation will receive our full and careful consideration and a detailed Government response will be published by March 2005.

A copy of the Independent Advisory Group's third annual report has been placed in the Library.

): The joint Defra—HM Treasury consultation "Developing Measures to Promote Catchment-Sensitive Farming" sought views on the broad possible approaches and measures (including regulatory, voluntary and economic measures) to reduce diffuse water pollution from agriculture. The consultation, which closed on 9 September 2004, stressed the need for action to further improve water quality and to help meet the requirements of domestic and international targets including the water framework directive. It also suggested that a package of different measures likely to be needed.

Respondents to the consultation expressed a variety of views across the range of possible measures. A detailed analysis of responses is available on the Defra website www.defra.gov.uk/. In brief: there was broad support for the concept of a package of measures; many respondents suggested a potential role for regulation as a means for targeting catchments that are particularly environmentally sensitive or where there is a particular problem from diffuse water pollution from agriculture; views were divided on the use of economic instruments; and voluntary and awareness-raising measures were generally strongly supported. The Government are today publishing a summary of responses to the consultation.

The Government, having carefully considered all consultation responses, have decided to continue to work with stakeholders to promote voluntary action on the ground, to increase awareness and to evaluate the effectiveness of this approach, whilst continuing to refine the evidence base, for example to take into account the potential impacts of CAP reform. The Government will also continue to actively work with stakeholders in 2005 to develop an effective package of measures for tackling diffuse water pollution and will consult further on this in due course.

In developing policy options, we will be mindful of cumulative economic and administrative impacts on farmers and growers. Our aim is to keep any measures as light touch and as closely targeted as possible.

A parallel announcement has been made today by the Chancellor in the Pre-Budget Report.

The Department for Environment, Food and Rural Affairs' 2004 Autumn Performance Report (Cm 6396), which highlights progress towards achieving the Department's outstanding Public Service Agreement targets since the publication of the Departmental Report in April, has been published today. Copies have been placed in both Libraries of the House.

The next meeting of the Employment, Social Policy, Health and Consumer Affairs Council will be on 6 and 7 December. Items on the agenda relating to health will be covered on 6 December.

Items for discussion are: a co-ordinated approach to combat HIV/AIDS in the European Union and its neighbourhood; European Commission proposals for a regulation of the European Parliament and of the Council on medicinal products for paediatric use; and the proposal for a regulation of the European Parliament and of the Council on nutrition and health claims made on foods.

I will attend for the United Kingdom.

Health Ministers will have a public debate on HIV/AIDS, where they will be asked to focus on next steps for both European Community and national level action.

This will be followed by a first council discussion of the European Commission proposal on paediatric medicines, which aims to encourage the development of medicines for children. There will be a presentation by the European Commission, followed by interventions from some member states.

There will be an exchange of views on the proposal to regulate health and nutritional claims on food labelling. Discussion will be structured around the Dutch presidency questions on the key issue of nutrient profiling, the proposed method to identify foods or categories of foods which will be permitted to make claims.

Ministers will be asked to adopt the draft council conclusions on a European response to emerging zoonotic diseases. The UK can agree to adopt these conclusions as currently drafted.

Under any other business, the Dutch presidency will report on progress made to establish the council's public health working party meeting on a high official level, which had its first meeting on 23 November 2004.

The European Commission will also present the interim report of the high level group on health care and medical services.

At lunch on 6 December, Health Ministers will also discuss pandemic preparedness planning.

My right hon. Friend the Home Secretary has today placed in the Library of each House his response to the second annual report produced under section 19E of the Race Relations Act 1976 by Mary Coussey, the Independent Race Monitor, which was placed in the Library of both Houses in July. The Race Monitor has a statutory duty to report to Parliament via the Home Secretary on ministerial authorisations made under section 19D of the Race Relations Act enabling immigration staff to discriminate on the basis of nationality or ethnic or national origin in the exercise of their functions.

The Home Office autumn performance report 2004 has been published today by command of Her Majesty. Copies of the report are available in the Vote Office and in the Library. The report is also available on the Home Office website.

The report sets out the progress we have made towards achieving our public service agreement targets.

The report shows we have made significant progress. Crime has fallen dramatically and people's fear is following suit. Police performance is improving and the justice gap is continuing to narrow. Our correctional services are operating effectively, we have expanded drug treatment and asylum is increasingly under control. Our work to increase race equality and community engagement is beginning to show real results: there are now 1.6 million more volunteers than in 2001, and more black and minority ethnic police officers than ever before.

I have today placed in the Library a copy of the Home Secretary's proposals for allocation of police grant for England and Wales in 2005–06. The Home Secretary and I intend to implement the proposals subject to consideration of any representations and to the approval of the House.

This Government are continuing to deliver on law and order. Our programme of reform and improvement for the police service in England and Wales over the past four years has been matched by a significant increase in resources for policing. On a like for like basis, expenditure on policing supported by Government grant or spent centrally on services for the police has increased by 39 per cent. or over £3.0 billion between 2000–01 and 2005–06. This substantial increase has helped to both support the reform agenda and deliver the things that we all want to see. Crime is down and there are record numbers of police officers, police staff and community support officers.

We have recently set out our programme for further change. On 9 November we published "Building Communities, Beating Crime: A Better Police Service for the 21st Century". This is an ambitious agenda for sustainable improvement in policing. We are aiming for the spread of neighbourhood policing, with improved responsiveness and customer service; further modernisation of the police workforce to ensure that the service is fully equipped and able to deliver these changes; and greater involvement of communities and citizens in determining how their communities are policed. We are committed to working with the service, police authorities and their partner agencies in delivering safer communities across our country.

The national policing plan for 2005–08 was published on 24 November. This too puts the law abiding citizen at the heart of policing, with the police working in partnership to create and maintain secure and confident communities. Our key priorities are to reduce overall crime; provide a citizen-focused police service; take action with partners to increase sanction detection rates; reduce people's concerns about crime and anti-social behaviour; combat serious and organised crime and counter the increased risk from terrorism.

The police funding settlement will support the priorities outlined in the Plan. The police will receive sufficient resources to enable them to provide an efficient and effective service to the public. We have listened very carefully to the concerns raised by the policing community. The Association of Police Authorities and the Association of Chief Police Officers made available their own surveys of projected cost increases for 2005–06. These have been taken into account in determining Government increases in grant.

Total provision for policing to be supported by grant in 2005–06 will be £11,833 million. Central Government revenue grant funding direct to police forces will increase by 5.1 per cent. This includes an increase of 4.8 per cent. in total formula grant and more than £760 million in specific grants. Taken together with the increase in central funding for police communications, IT and support services, this provides an increase in supported spending of 6.7 per cent. overall.

The overall 6.7 per cent. increase or £746 million includes police formula grants, specific grants, capital related grants, direct Home Office spending and the formula spending on which revenue support grant is based. It also includes counter-terrorism and security, and international and organised crime funding.

For formula grant, the Home Secretary and I have added £194 million in Home Office Police Grant to last year's general police grant provision. There has also been an increase of £156 million in Revenue Support Grant and National Non Domestic Rates from ODPM and the Welsh Assembly. This will give police authorities maximum scope to determine their own spending and help authorities manage down financial pressures next year. This extra money has enabled us to increase police formula grant by 4.8 per cent. in 2005–06.

Last year we took the exceptional decision to provide a broadly standard rate increase in general grants in recognition of the financial pressures on all authorities. This year we will again provide a minimum increase for all police authorities but we have been able to return to a better reflection of the funding formula. The settlement provides a funding floor of 3.75 per cent. This will benefit 26 police authorities who under application of the formula without damping would have received £103.6 million less. Increases for other authorities, above the funding floor, range up to nearly 6.9 per cent. This approach balances financial protection for all police authorities with distribution of additional resources to areas where need is greater. Above-floor increases will help authorities facing rapid population growth and those that have faced ceiling restrictions in the past.

The minimum increase of 3.75 per cent. in general grants is substantially above police pay increases and inflation. Police Authorities, the Association of Chief Police Officers and the Association of Police Authorities have impressed upon me the particular pressures they face in the coming year. I am responding to their concerns with what is one of the highest police settlements in recent years. To help meet those pressures, particularly on police pensions, police grant overall and the floor level include a special 0.25 per cent uplift, around £20m that would not otherwise have been provided. I do not intend to claw back the £20m in future years, but equally we will not take it into account when calculating grant increases in 2006–2007. The effect will be that grant increases in 2006–2007 will be calculated as increases on a baseline from which the 0.25 per cent. uplift has been removed.

Pressures on policing change over time and the way in which we assess police authorities' relative need for grant support has to develop. As the National Policing Plan 2005–08 explains, we are reviewing the formula that underpins police grant, in association with the service. We are examining the factors that drive demands on the police and will take account of those factors at local level which are known to affect levels of criminality. We will be updating the formula in the light of new data, and we are exploring the possibility of linking performance expectations and resource allocation and the extent to which specific grants can be incorporated in general grant. We are also supporting wider Government consultation on three-year rather than annual grant settlements and collaborating with the Lyons Review of Local Government funding.

The settlement continues to take account of our commitment to improve efficiency and effectiveness in the police service. We expect, for the three years from 2005–06 to 2007–08, the Police Service to deliver efficiency gains of 3 per cent. per annum, half of which are to be cashable gains. Guidance on efficiency plans for 2005–06 has been issued this week.

The Home Office, the Association of Chief Police Officers and the Association of Police Authorities are committed to working in partnership to deliver cumulative year on year improvements in the value for money to deliver the efficiency targets. Future police grant allocations will be considered in the light of police authorities meeting the target for efficiency improvements.

This is an excellent settlement. If police authorities deliver efficiency gains, and exercise judicious financial planning, there is no reason for police authorities to set excessive increases in police precepts on council tax next year. The Government's policy in relation to council tax increases of less than 5 per cent. has been clearly set out by my right hon Friend the Deputy Prime Minister and my hon. Friend the Minister for Local and Regional Government.

In this statement, I want to outline provision for support for the police service in England and Wales.

The police grant settlement

We propose to distribute the settlement as set out below. The table includes funding for both local and central spending.

Table 1: Police funding settlement for 2005–06 compared to 2004–05

(1) Figures rounded to £ million.

(2) Product of policing share of assumed national council tax.

(3) The £162 millon increase represents mainly £65 million for the Bichard agenda; an extra £47 million for Airwave core charges; £23.5 million for Criminal Justice Systems (IT); £15 million for ANPR and £10 million for NAFIS.

(4) Includes provision for NCS/NCIS (£257 million), Serious and Organised Crime Agency (£24 million) and counter terrorism.

Police funding proposals within the Local Government finance system are being announced by the Minister for Local and Regional Government today, and by the Welsh Assembly Government.

Provisional general policing grants (i.e. Home Office Police Grant, Revenue Support Grant and National Non Domestic Rates) for English & Welsh police authorities in 2005–06 compared with 2004–05 are given in Table 2.

Amending Reports

The Amending Report for 2003–04, to take account of changes to ONS population data, was set out in my written statement of 18 November. Amending the settlement requires 10 police authorities to pay back formula grant. We have therefore adjusted 2005–06 grants to ensure that any authority owing money under the Amending Report will be able to pay it back and still be left with at least the floor grant increase over 2004–05. The consultation period on the Amending Report 2003–04 will end on the same date as the consultation on the funding settlement proposals 2005–06 on 11 January 2005.

Welsh police authorities

The Home Secretary has for several years provided additional funding to ensure Welsh police authorities receive at least a minimum increase in grant in line with English authorities. This additional support (£14m) will continue in 2005–2006 and is included in Table 2.

There are to be minor boundary changes affecting South Wales and Dyfed Powys, taking effect from 1 April 2005. These changes are not yet reflected in the figures in Table 2 but will be incorporated into the final Police Grant Report put to the House.

Metropolitan Police funding

Grant for the Metropolitan Police Authority will increase from £1,822 million to £1.928 billion, a cash increase of £106 million or 5.8 per cent. Including an extra £4.2 million from the Amending Report for 2003–04, the cash increase is £110.2 million. As part of general grant, I have increased the formula provision for the Metropolitan Police national and capital city functions by £10 million to £217 million. The Metropolitan Police will receive separately provision for counter-terrorism. The Metropolitan Police will also receive a range of specific grants including London Allowance payments (£34 million) and free officer travel (£3.0 million).

Specific grants for police authorities

In addition to increased general grants, police authorities will continue to receive extra funding through a range of specific grants for particular schemes. Targeted grants were introduced as a direct response to what the police service and the public told us they wanted. Specific grants enable us to target funds to the areas where they are particularly needed. We have again tried to minimise provision for specific grants next year to maximise general grants which may be spent at the discretion of police authorities. Total provision for specific grants in 2005–06 is £766 million.

Specific grants for 2005–06 compared with 2004–05 are set out at Table 3.

The main specific grants are:

Crime Fighting Fund: £277 million will be made available to forces in 2005–06 to continue to support the costs of officers recruited through the Crime Fighting Fund. A further £8 million to cover pay inflation has been included within the general grant uplift. This Fund has been remarkably successful in helping the police service boost its strength which reached a record level of 139,728 in August 2004. Subject to forces maintaining their strength, we will continue to pay for the 9,650 police officers recruited through the scheme by a combination of specific and general grant.

Counter Terrorism: As last year, we will continue to provide additional funding to the Police Service to enable it to respond to the increased threat from international terrorism. We will be providing the Metropolitan Police with some £61 million in 2005–06 for ring-fenced counter terrorism funding. Provincial forces in England and Wales will receive £35 million of revenue and £8 million of capital in 2005–06 for dedicated counter terrorism work. This will be allocated following full consultation with the Association of Chief Police Officers and individual forces. In total the Police Service of England and Wales (including the Metropolitan Police) will receive £96 million of revenue and £8 million of capital to enable it to counter the increased risk from international terrorism.

Basic Command Unit (BCU) funds: £50 million will again be provided for BCUs. These are at the forefront of local policing. The grant is targeted towards forces with BCUs in high crime areas to help reduce crime in partnership with Crime and Disorder Reduction Partnerships. All forces in England and Wales receive a share of the grant. Next year will be the third year of the Fund. BCU Commanders will have discretion locally to pool their BCU allocations with the new Safer and Stronger Communities Fund if they wish.

Special Priority Payments: The pay and conditions package agreed by the Police Negotiating Board in May 2002 introduced new elements into police pay such as payments for the most experienced officers who can demonstrate a high level of professional competence and extra rewards for officers in the most difficult and demanding posts. For 2005–06 I have again split the allocation. A further £9 million (making £18 million) has been included in general grant. £69 million will be available as a specific grant, an increase of £9 million over the provision for 2004–05.

Community Support Officers (CSOs): CSOs free up police officer time, provide reassurance and have powers to deal with aspects of anti-social behaviour and low level crime. For 2005–06, we have allocated £49.5 million for continuing support of CSOs recruited in the first three rounds from 2002 onwards. In addition to this, I announced on 24 November the introduction of a Neighbourhood Policing Fund which would provide initially £50 million to be spent on additional CSOs to bring us up to our target of 5,500 by 31 March 2005. We have allocated £13 million for the last quarter of this financial year and £37 million for continuation funding in 2005–06.

Rural Policing Fund: £30 million is again provided for the particular needs of the 31 forces with the most widespread populations. There is no change to the formulae underpinning the fund.

Airwave: Specific revenue grant for Airwave locally determined or 'menu' services will be made available to ensure that all forces will have received the sums originally promised when Airwave was first introduced. Payments have been made as Airwave became 'Ready for Service' in each force. Delays in rollout in some areas have meant that some forces have not yet obtained the full amount of originally promised funding. A final £17.3 million will be paid to 26 forces. Forces were notified of their allocations on 20 October.

Street Crime Initiative: This was launched by the Prime Minister in April 2002 and the initiative successfully brought down levels of robbery by 24 per cent. in its first two years. There has been a further 15 per cent. reduction across England and Wales in the first quarter of 2004–05. The aim of the initiative was to bring down levels of robbery which had climbed steeply. We have achieved this aim. Funding was due to cease at the end of 2004–05, however we have retained a residual specific grant in 2005–06 of £6.5 million to ensure that the benefits of the initiative are not lost and that we retain our capability to tackle mobile phone theft and other robbery. This will be allocated to forces with the biggest challenges.

Other specific grants

We will make available funding for the following: 75 per cent. of the cost of the London and South East Allowances (£55 million).

Funding support for the cost of free travel for Metropolitan and City of London officers (£3.2 million).

DNA Expansion Programme. Approximately £46 million grants will be available to continue support for this and the successor Programme, the Forensic Integration Strategy (FIS). The DNA Expansion Programme has helped to demonstrate the value of the effective use of forensics and FIS will help to build on this.

Police authority capital

The Home Secretary and I intend to allocate provision of capital grant for 2005–06 later this month.

Central spending on policing

Central spending on policing will total £653 million. This includes funding for Airwave core charges, DNA, funding to develop the Bichard agenda, National Strategy for Police Information Systems, Criminal Justice System (IT), Police Information Technology Organisation, Centrex, the Independent Police Complaints Commission, Automatic Number Plate Recognition (ANPR) and National Automated Fingerprint Identification Service (NAFIS).

Serious Organised Crime Agency

We are also establishing the Serious Organised Crime Agency (SOCA) under the Serious Organised Crime and Police Bill recently introduced into Parliament. This agency will mean a step change in how we fight and defeat organised crime and the harm that is caused by it. The harm is currently estimated to be at least £20 billion a year to the United Kingdom. It will be a new organisation with a new operation that will bring together the functions of NCS and NCIS, which will be abolished as a result, as well as the serious drug trafficking and organised immigration crime aspects of Customs and the Immigration, Service. The costs of these constituencies will transfer into SOCA once it is established in April 2006. The cost met by the Home Office in 2005–06 is estimated at £24 million.

Anti-Social Behaviour

The Home Office is investing £75 million over 3 years to 2005–06, including £25 million next year, to deliver many of the commitments in the 'Together tackling anti-social behaviour' action plan.

Safer and Stronger Communities Fund

The newly created Safer and Stronger Communities Fund will bring together existing Home Office and ODPM funding streams. This Fund will total a minimum of £210 million in 2005–06, the Home Office contributing a minimum of £70 million resource and £20 million capital. The police service, subject to the agreement of other local partners, will be able to draw upon these funds to support local crime reduction initiatives.

Asset Recovery Police Incentivisation scheme

This scheme boosts asset recovery by giving forces a direct stake in the proceeds they generate from the work. The police service will receive one third of the total assets recovered over and above £40 million in 2004–05. This will increase to one half in 2005–06 with the maximum benefit available to the police of £65 million.

Pensions

We are addressing the financial pressures of police pensions. Overall costs have grown steadily in recent years but are expected to increase more sharply in 2005–06 because of historic recruitment patterns. From 2006–07 new arrangements for funding pensions will protect forces from extraordinary fluctuations. For 2005–06 the Home Secretary and I are providing some general relief.

The Government Actuary's Department has used the most recent data from each force to calculate cost projections for 2005–06. These have been used to allocate pensions provision in the general grant formula. For the future, we are reviewing current arrangements to make pensions' costs more predictable and manageable. Police authorities would continue to meet police pensions, funded by employer and employee contributions and topped up by central Government if that were insufficient to meet the audited pensions bill.

Conclusion

We have listened carefully to all stakeholders in determining this settlement. We are continuing to provide the resources the police service need to work effectively and matching reform with investment. The proposals will ensure that all forces in England & Wales receive a fair share of resources. There is a guaranteed minimum increase in general grants for all police authorities but resources are also being targeted to where resources are needed most. The settlement will allow us to maintain record police officer numbers as well as expand the growing number of Community Support Officers, who are reassuring the public and helping to reduce crime and fear of crime.

Table 2: Police grant allocations by English end Welsh police authority

(01) Rounded to the nearest £100,000. Grant as calculated under the Local Government Finance Report (England) and Local Government Finance (Police) Report (Wales). This includes the Metropolitan Police special payment, and the effects of floors and ceilings.

(02) Figures for the City of London relate to Home Office Grant only as calculated in the Police Grant Report (England and Wales). Revenue Support Grant is allocated to the Common Council of the City of London as a whole in respect of all its functions. The City is grouped with education authorities for the purposes of floors and ceilings.

(03) Welsh base positions are adjusted to account for the transfer of PFI funding out of RSG.

Table 3: Specific grant allocations in 2005–06 compared with 2004–05

The Home Office has today published two online national statistics reports on reconviction rates, which are the basis for measuring progress against its 2002 public service agreement target, to reduce reoffending for young offenders and for adult offenders by 5 per cent. by 2005–06.

The results are:

for juveniles, a reduction in reconvictions of 4.5 per cent. for those dealt with in 2001 and 3.6 per cent. for 2002, both as compared to 2000;

for adults, a 1.8 per cent. reduction for those starting a community sentence or discharged fromcustody in 2001, compared to 2000.

Both of these are encouraging and demonstrate that we are on course to meet our PSA target.

The juvenile report includes a correction of figures published in 2003 in Home Office Online Report 18/03. That report indicated that 2001 figures showed a 22.5 per cent.reduction in reconvictions compared to 1997. As a result of an internal review of the methodology for calculating these figures, errors were identified and we commissioned an independent peer review, which confirmed the methodology used. The corrected figure for the fall in reconvictions between 1997 and 2001 is 7 per cent. Although lower than the previously published figure, this is nevertheless very significant progress.

A report on the review of the Agriculture and Environment Biotechnology Commission (AEBC) has been published today. The review has been conducted by an independent reviewer, Dr. Neil Williams, in line with the Cabinet Office guidance for reviewing non-departmental public bodies. Its main recommendation is that the AEBC should be wound up by the end of the current financial year.

I, and ministerial colleagues involved in the funding of the AEBC, are grateful for this report. We accept the advice of the review committee, that the report should be published as soon as possible and with minimal comment from Ministers. We would like to express our thanks and support for work that the AEBC has carried out since its creation four years ago. We acknowledge the dedication of its members. The contribution of its chairman, Professor Malcolm Grant, has been key to everything the commission has so far achieved.

We now intend to consider the recommendations of the independent review very carefully, and aim to reach a decision shortly. We will however ensure that we engage with stakeholders prior to making decisions on the future of the AEBC or a successor body.

I have written to the Chairman of the AEBC asking the commission to continue to carry out their current work programme, but to bear in mind the review's recommendations.

The Science and Technology Committee, the Environment, Food and Rural Affairs Committee and the Environmental Audit Committee have been sent copies of this report. It has also been sent to the Chair, Deputy Chair and Members of the AEBC, learned societies and other stakeholders and I have placed copies in the Libraries of both Houses. An electronic version of the report has been placed on the Office of Science and Technology website at: http://www.ost._gov.uk/policy/bodies/review.htm.

I have today published my Department's autumn performance report for 2004. Copies have been laid before Parliament and placed in the Libraries of both Houses.

The report sets out the Department's progress made on our seven public service agreement targets over the last six months since the publication of the annual report in May 2004.

Today I am announcing firm allocations for the 116 local highway authorities and six passenger transport authorities in England, outside London, for capital expenditure in 2005–06. This settlement amounts to a £1.62 billion package of funding for local transport. This brings the total investment in local transport projects in the last five years to over £8 billion, a 100 per cent. increase compared to the previous five years. Today's announcement clearly demonstrates the Government's continuing commitment to delivering better local transport.

This year's settlement delivers the final tranche of funding for local transport that the Government committed to in the five year indicative allocations, announced in 2000. As previously stated, Ministers have delivered sustained and predictable funding for each of the five years of the first LTP period (2001–06). This emphasises the Government's continuing commitment to the local transport system as a means of delivering sustained improvements to the transport infrastructure and, thus, to making real improvements to people's lives.

Authorities undertaking approved major schemes are also being given allocations to cover their spending on these schemes in 2005–06. I am approving eight new major local transport schemes:

Watford Interchange Scheme, a package of enhancements to Watford Junction rail station;

Derby Inner Ring Road Maintenance, crucial maintenance works in Derby;

West Midlands Red Routes, the first red routes scheme in the West Midlands conurbation;

Liverpool Edge Lane West, a scheme to improve the Eastern gateway to Liverpool, linked toCapital of Culture plans and a key regeneration area;

Castleford Integrated Transport Scheme; package of integrated transport improvements in akey regeneration area.

Bexhill to Hastings Link Road, a new link road which is a crucial component of theregeneration plan for Hastings.

Sittingbourne Northern Distributor Road, a new road to improve access to Sittingbourne. Itwill support the growth of housing and jobs in the Thames Gateway area;

Portsmouth Copnor Bridge, the urgent replacement of a bridge on a key access route forPortsmouth.

I have also given final funding approval to seven major schemes which have now successfully completed all of the necessary statutory procedures:

Barford Bypass in Warwickshire;

Wolverhampton Centre Access and Interchange;

North West Taunton Package;

A38 Northfield Regeneration Route in Birmingham;

A4146 Stoke Hammond and Linslade Bypass in Buckinghamshire;

Trimelines' Quality Bus Scheme in Coventry;

South Lowestoft Relief Road in Sufffolk.

Details of the 2005–06 allocations have been placed in the Libraries of the House. Right hon. and hon. Members representing English constituencies outside London will receive full details for the local transport plan area covering their constituencies, from their regional government office, by the start of next week.

Since the financial assistance scheme was announced in May we have made good progress in scoping what is an extremely complex problem, involving hundreds of pension schemes, with differing scheme rules and in different stages of winding up. Following an initial data-gathering exercise, we laid a report before the House in June, setting out an estimate of the numbers affected.

Ministers and officials have since consulted with scheme members, trade unions and industry experts to gather and analyse more data, and explore options for the best way to get assistance to those who need it most.

Obviously, the full extent of the problem can be known only once all potentially eligible schemes have been identified and information obtained on the individuals affected and the extent of their losses.

In September, we launched a second, more detailed data-gathering exercise to identify potentially eligible schemes. It is important that all scheme trustees and actuaries who think their schemes might be eligible respond by 10 December. Data-gathering on the position of individuals will follow.

While we continue to seek industry contributions to the financial assistance scheme, full participation in this exercise is an immediate opportunity for the pensions industry to provide valuable practical help and assistance in kind.

As we have previously said, the scheme will not give everyone all of what they want. Nor will the scheme provide the same assistance levels as the pension protection fund, which provides cover going forward, funded by a levy. The primary objective is to provide significant help to those who have lost the most.

The available funding is set. People who are younger have more time to work and save for a pension to replace one that has been wholly or partially lost. Therefore we are minded to gear assistance levels with reference to the number of years an individual is from their retirement. To further focus resources, we are considering making payments for all individuals at age 65.

The pension protection fund has a benefit cap for those below scheme pension age, and it makes sense that the FAS should also have one, which we intend to set at a lower level.

To minimise bureaucracy and to maximise payments to those facing the most serious losses, Ministers intend that, other assistance criteria aside, the FAS will include only those who will receive at least £10 a week, or equivalent, from the scheme.

Information already gathered makes clear that the vast majority of those that had started winding up with significant funding shortfalls did so after January 1997. We can therefore confirm that members of schemes that commenced winding up from 1 January 1997 will potentially be eligible, subject to the other FAS entry rules. Schemes starting to wind up right through to the introduction of the pension protection fund (6 April 2005) will also be potentially eligible.

Solvent employers have a duty to support their schemes and provide the benefits that members were expecting. So, it is right that the FAS focuses on insolvent employers. Nevertheless, issues concerning the definition of "employer solvency" remain under active consideration.

Those who have lost out due to their scheme winding up underfunded have already seen their expectations for retirement upset once. It is therefore important that the resources available for FAS are deployed in a way that ensures that any new promise made to those eligible will be delivered. This points to providing assistance by means of top-up to the occupational pension that individuals would otherwise receive. Trustees should therefore fulfill their duty to wind up schemes in an expeditious manner, including annuitisation where appropriate. We will consider further the precise means of delivery—options include a top-up pension, a cash lump sum, or purchase of an annuity at age 65.

Early next year we would hope to be in a position to announce what we propose by way of indicative assistance levels to those facing the most urgent difficulties, as well as an indicative list of schemes that are likely to be eligible for assistance if those schemes are subsequently shown to comply with the FAS rules.

The complexity of the issue, the amount of data that has had to be collected, and the level of consultation undertaken, means that the formal regulatory consultation will begin in the spring.

In April we will set up the body to administer the scheme and following the formal consultation we will lay regulations before Parliament, making payments as soon as practicable thereafter.

On behalf of my right hon. Friend the Secretary of State for Work and Pensions, the Benefit Fraud Inspectorate (BFI) inspection report on Merthyr Tydfil county borough council was published today and copies of the report have been placed in the Library.

Following the housing Green Paper "Quality and Choice: A Decent Home for All", published in April 2000, the Department for Work and Pensions developed a performance framework for housing benefits. The "Performance Standards for Housing Benefits" allow local authorities to make a comprehensive self-assessment of whether they deliver benefit effectively and securely. They are the standards that the Department for Work and Pensions expects local authorities to aspire to and achieve in time.

In 2002–03, Merthyr Tydfil county borough council administered some £11 million in housing benefits, about 10 per cent. of its gross revenue expenditure.

BFI found that Merthyr Tydfil county borough council was providing a poor benefits service and was not at standard in any of the seven functional areas of performance standards.

BFI reports that there have been some improvements in the benefits service following a critical Corporate Governance Inspection by the Audit Commission in Wales in January 2003. However, significant work remains to be done to deliver an effective and secure benefits service.

The report notes a lack of strategic and operational planning in the benefits service that left it without direction. Insufficient and inaccurate management information and limited reporting arrangements meant that senior management and elected members were unaware of the extent of the problems affecting the service.

BFI found levels of inaccuracy to be 90 per cent. for new claims processing and 75 per cent. for changes of circumstances. The council also had a poor record of recovering overpayments and the absence of management checks and controls meant that performance was not properly monitored.

The council had carried out a number of good quality fraud investigations but had not followed all through to a logical conclusion resulting in only 11 prosecutions between April 2001 and March 2004.

The council recognised the need to improve the service and has asked for help from the BFI's Performance Improvement Action Team.

The report makes recommendations to help the council address weaknesses and to further improve the administration of housing benefit and council tax benefit, as well as counter-fraud activities.

My right hon. Friend the Secretary of State is now considering the report and will be asking the council for its proposals in response to the BFI's findings and recommendations.

On behalf of my right hon. Friend the Secretary of State for Work and Pensions, the Benefit Fraud Inspectorate (BFI) inspection report on Chester-le-Street district council was published today and copies of the report have been placed in the Library.

Following the housing Green Paper "Quality and Choice: A Decent Home for All", published in April 2000, the Department for Work and Pensions developed a performance framework for housing benefits. The performance standards for housing benefits' allow local authorities to make a comprehensive self-assessment of whether they deliver benefit effectively and securely. They are the standards that the Department for Work and Pensions expects local authorities to aspire to and achieve in time.

In 2003–04, Chester-le-Street district council administered some £11 million in housing benefits, about 34 per cent. of its gross revenue expenditure.

In June 2004, BFI carried out an inspection of Chester-le-Street district council and found that the council was not at standard in any of the seven functional areas of performance standards. Overall the council is providing a fair level of service.

The report notes that the council has made progress in addressing some of the weaknesses BFI highlighted in the comprehensive performance assessment that took place in October 2003 when BFI considered the benefits service to be providing a poor performance. It can now demonstrate how the service contributes to the council's corporate aims, it has cleared its claims backlog and is achieving upper quartile performance for claims processing.

However, there are still several issues that the council needs to address. There is no performance monitoring at a corporate level and the benefits service has not developed specific performance measures and targets to facilitate the monitoring of progress towards its objectives. The service's objectives are not prioritised and there is no link between these and individual job descriptions.

The council's high level commitment to provide an effective benefits service is not adequately reflected in its operational planning and staff development. Staff training needs have not been assessed and there is no training programme in place. Job descriptions fail to reflect current duties and consequently, lines of responsibility have become blurred.

The BFI reports that counter-fraud performance has suffered because attention has been focused on claims processing. This has resulted in insufficient resources and a lack of effective counter-fraud measures.

The council has developed a service improvement plan and there is now an effective electronic procedures manual to guide staff. Verification procedures are strictly followed and the council has introduced a claim form based upon the Department's claim form.

The report makes recommendations to help the council address weaknesses and to further improve the administration of housing benefit and council tax benefit, as well as counter-fraud activities.

My right hon. Friend the Secretary of State is now considering the report and will be asking the council for its proposals in response to the BFFs findings and recommendations.

On behalf of my right hon. Friend the Secretary of State for Work and Pensions, the Benefit Fraud Inspectorate (BFI) inspection report on the City of York council was published today and copies of the report have been placed in the Library.

Following the housing Green Paper "Quality and Choice: A Decent Home for All", published in April 2000, the Department for Work and Pensions developed a performance framework for housing benefits. The performance standards for housing benefits allow local authorities to make a comprehensive self-assessment of whether they deliver benefit effectively and securely. They are the standards that the Department for Work and Pensions expects local authorities to aspire to and achieve in time.

In 2003–04, the City of York council administered some £29 million in housing benefits, about 11 per cent. of its gross revenue expenditure.

BFI found that City of York council was providing poor benefits service and was not at standard in any of the seven functional areas of performance standards.

A best value review of its revenues and benefits services had resulted in a revised organisational structure and the implementation of a new benefits IT system in September 2003. City of York council said their difficulties with the implementation were the main cause of a backlog of work building up and this adversely affected its performance. In particular, its performance for processing new claims was very poor, taking an average of 81 days.

The report notes key management disciplines of planning, target setting, monitoring and control, checking and assurance testing were inadequate. Limited management information was obtained but only some was used effectively to manage performance.

BFI reports that the quality of verification of evidence to support claims was of a good standard. However, inadequate management checking meant there was insufficient assurance that the benefits system was secure or that benefit was being paid correctly. The report raises concerns about failures to comply with key legal requirements of housing benefit and council tax benefit legislation.

The council did not keep reliable records of customer complaints and many appeals remained outstanding for long periods.

The benefits service had failed to respond to internal audit recommendations and public accountability was being compromised by inadequate arrangements for reporting audit activity and performance to elected members.

The report notes serious failings in the recovery of overpayments. City of York council was recovering overpayments even though customers had not been advised of the overpayment decisions.

The council's efforts to counter fraud were more positive and it had achieved some impressive results as demonstrated by the full range of sanctions being applied and every case submitted for prosecution had been successful.

The report makes recommendations to help the council address weaknesses and to further improve the administration of housing benefit and council tax benefit, as well as counter-fraud activities.

My right hon. Friend the Secretary of State is now considering the report and will be asking the council for its proposals in response to the BFI's findings and recommendations.

On behalf of my right hon. Friend the Secretary of State for Work and Pensions, the Benefit Fraud Inspectorate (BFI) inspection report on Rutland county council was published today and copies of the report have been placed in the Library.

Following the housing Green Paper "Quality and Choice: A Decent Home for All", published in April 2000, the Department for Work and Pensions developed a performance framework for housing benefits. The "Performance Standards for Housing Benefits" allow local authorities to make a comprehensive self-assessment of whether they deliver benefit effectively and securely. They are the standards that the Department for Work and Pensions expects local authorities to aspire to and achieve in time.

In 2002–03, Rutland county council administered some £3.72 million in housing benefits, about 12 per cent. of its gross revenue expenditure.

In June 2004 BFI carried out an inspection of Rutland county council and, although it was performing well in a number of elements of performance standards, it was not at standard in any of the seven functional areas.

BFI found the council to be providing a fair service. There was a strong commitment at all levels within the council to provide an efficient benefits service and a high proportion of customers expressed satisfaction with the service provided.

The report notes that there were some strengths in the council's benefits service including clear and accessible claim forms, clear informative decision letters and effective internal security practices.

The average time taken to process new claims was 19 days against the standard of 36 days and 90 per cent. of new claims were processed within 14 days of receiving all information. Verification of evidence supporting benefit claims was good. However, at the time of BFI's inspection, there was no management checking.

The council identified and calculated benefit overpayments quickly but BFI considered that it needed to improve the accuracy of its management information and use all the recovery methods available to it.

The inspection was prompted by the council's failure to give any priority to countering benefit fraud. In June 2004, the council started to address its responsibilities to fight benefit fraud with the creation of a dedicated counter-fraud team.

BFI reports the council has been receptive to the findings in the report and implemented a number of changes immediately.

The report makes recommendations to help the council address weaknesses and to further improve the administration of housing benefit and council tax benefit, as well as counter-fraud activities.

My right hon. Friend the Secretary of State is now considering the report and will be asking the council for its proposals in response to the BFI's findings and recommendations.