Police Employer Pension Contributions

Debate between Pat McFadden and Rachael Maskell

Wednesday 14th November 2018 Commons Chamber

[Mr McFadden]

The price is being paid on the streets of the west midlands, the streets of Greater Manchester, the streets of Durham, the streets of Cardiff and the streets represented by everyone who has made interventions.

[Rachael Maskell (York Central) (Lab/Co-op)]

Does my right hon. Friend recognise that, where the fire and rescue authority has amalgamated with the police, such as in North Yorkshire, the risk has been spread even further, to our fire service?

--- Later in debate ---

[Mr McFadden]

My hon. Friend has graphically set out the potential impact on a smaller police force such as Gwent. For my force in the west midlands, the commissioner and chief constable estimate that the extra costs from these pension changes could be around £22 million over the next two years. If these costs came from their budgets alone, the impact would be around 450 officers lost. That would be on top of the 2,000 that we have already lost. As I said to the Minister at the beginning of the debate, expecting the public to accept reductions of this magnitude in force levels after the cuts that have taken place over the past eight years would be intolerable.

[Rachael Maskell]

Julia Mulligan, the Conservative police and crime commissioner in North Yorkshire, wrote to me yesterday to highlight how for her police force, the £1.6 million to be cut in 2019-20 and the £4 million in 2020-21, on top of the £10 million savings that also have to be made, will mean that 30 officers will be lost immediately and then another 80 the following year. How can that be sustainable?

[Mr McFadden]

It is not sustainable, which is why leading chief constables have said that forces are already stretched beyond sustainability.

I turn now to how the changes might be paid for. The Budget allocated no extra money for local policing, but it did allocate extra funds for national counter-terrorism work, which I welcome. Of course, it is an essential part of protecting the public—we are all aware of the grave terrorist threat facing the country, so we all support extra funds for this essential counter-terrorism work—but it is not a substitute for the local neighbourhood policing that all our communities need on an all-year-round basis.

In evidence to the Treasury Select Committee on Monday 5 November, shortly after the Budget, the Chancellor implied that the Treasury would meet the extra costs of the pension changes.  He said:

“In 2018 the Government decided that it was necessary to reduce the scope discount rate still further but on that decision we decided that the Treasury would absorb the additional cost. We have added a sum to the reserve and Departments will be reimbursed for the additional costs of the 2018 scope change.”

When asked if that would be for every year ongoing, the Treasury official accompanying the Chancellor at that evidence session said:

“It is actually for every year”.

On the face of it, that sounds as though the Government are ready to compensate Departments for the extra costs incurred. I hope the Minister will address this when he sums up, because if that is the case, it will be warmly welcomed by chief constables, the public and Members on both sides of the House.

The picture is not really that clear though, because in response to an urgent question on Tuesday 6 November, the Minister for Policing did not say that the money would come from the reserve and go through Departments. In response to a question from me, he said that

“it is my intention to work through the issue and come to the House in early December with a funding settlement that works.”—[Official Report, 6 November 2018; Vol. 648, c. 1387.]

He also said that the outcome of the question of where these extra costs would fall would be decided in the comprehensive spending review. These two statements appear to be in contradiction: either the Treasury will fund it, or the issue is not settled and will be settled, or not, in the CSR.

To add to the confusion, a written answer from the Chief Secretary to the Treasury on 9 November read:

“Budget 2018 confirmed additional funding for expected costs in excess of the level envisaged at Budget 2016. Government will review police spending power and further options for reform at the provisional police funding settlement in December.”

I hope the Minister can clear this up. Has the Budget set aside further funds for the police to cover these costs, so that the fears of chief constables about their impact need not come to pass, or as he has implied, is the matter undecided and to be settled in the CSR? It cannot be both: either it has been settled, or it has not. What is the correct understanding that the House should have of the financial position?

I want to deal with one more issue that often comes up in these debates: the issue of reserves. During last week’s urgent question, there were several references to these reserves, the implication being that there was a large unused pot of cash sitting there, ready-made to deal with such situations. My own force in the west midlands has publicly set out the position on reserves. It does have reserves, but they are there to deal with issues such as capital costs, the self-insurance of vehicles, protective equipment, major incidents and so on, and the West Midlands force is already committed to running down these reserves at around £20 million per year. The capital and budget reserves will be gone completely by the end of the next financial year, and on current plans, 70% of the total current reserves will be gone by 2020, so this money is already committed and not available to meet the pension costs. In a couple of years, all that will remain will be reserves for essentials such as civil unrest, terrorist attacks and the self-insurance of vehicles.