RT HON JACQUI SMITH MP AND MR DAVID FORD

11 DECEMBER 2007

  Q1 Chairman: Home Secretary, may I first of all apologise for keeping you waiting. As happens at the end of a session, we were trying to approve a number of reports which we hope to publish by the start of the recess. Can I also ask everyone to be aware of the Committee's declarations in the Register of Members' Interests and ask everyone to switch off their mobile phones. Home Secretary, thank you very much for coming to see us about the Government's counter-terrorism proposals. I think I speak for the whole Committee in saying that the response of the Government to requests from this Committee for information and time has been extremely generous. We asked you last Thursday when we were considering our report following the publication of your proposals to come in and you agreed readily to come here today at very short notice and we are extremely grateful. I would like to start, if I may, with a question of which I have given you notice which concerns the issue of police pay. We are not going to spend a huge amount of time on this because we have decided to ask the Police Federation to come in next week and have a one-off session on police pay. Could you begin by telling us why the Government has failed to honour the agreement made by the arbitrators in respect of this pay award?

  Jacqui Smith: Firstly, Chairman, could I be clear with respect to your description of that as being "failing to honour". It is the legal responsibility of the Home Secretary to respond either to a recommendation of the Police Negotiating Board or a recommendation of the Police Arbitration Tribunal. That is the legal position and that is of course what I have done. Can I also say however that one of the things that I have recognised in this job, and I hope recognised before, is the vital and hard work which police officers carry out every day, and therefore I take seriously my responsibility to ensure that we put in place pay arrangements that are fair, that recognise that contribution and reward police officers fairly, but also that are affordable both for the Police Service and for the taxpayer, and that fulfil our overall approach as a Government to public sector pay, with of course the important knock-on impacts that has for the economy.

  Q2 Chairman: But is this the first time that a Home Secretary has not accepted an award?

  Jacqui Smith: Over the last four years the average pay award has been 3% and that has not been staged. This year, as far as I am aware, is the first year that we will have staged the pay award to bring it in at an overall cost below 2% which of course is directly in line—or above in fact—the majority of other public sector pay awards.

  Q3  Chairman: So this is a departure from precedent in staging the award rather than accepting the award in full as decided by the arbitrator?

  Jacqui Smith: It is a bringing into line of what we have done on police pay with what has happened across other public sector pay awards.

  Q4  Chairman: But it has never happened to the police before?

  Jacqui Smith: As far as I am aware it has not happened to the police before.

  Q5  Chairman: Were you aware of the strength of feeling, because we have a possibility now of members of the Police Federation and others balloting for strike action? Is this the right message for the Government to send at this very moment in time?

  Jacqui Smith: I did understand that the Police Federation felt that they should be receiving a considerably higher pay award. They went into the negotiations of course with a request for 3.94% and the official side put to the Police Negotiating Board a recommendation of 2.325%. If I could just say though, Chairman, I was outlining the way in which I think the decision that has been made is both fair for police officers and also in line both with our responsibilities across government and also with relation to our responsibilities to ensuring recruitment and retention in the police force. It is absolutely right that the police reward package is fair and highly competitive. I think it is important that we consolidate the considerable progress that police officers have made in terms of their overall levels of pay, particularly over the last ten years, when actually we have seen a 39% increase in police officers' pay, 9% above inflation over that time period, and above the average increases for both private and public sector average settlements, and, as I say, over the last four years 3% in each of those years.

  Q6  Chairman: Yes, but you have seen the comments of Jan Berry: "I think we are definitely going to have to ballot people. There is so much anger and frustration out there at the moment. People who once would have sat back are now saying `enough is enough'." Indeed, Ken Jones, who will be giving evidence later today to this Committee, has issued a press release on behalf of ACPO basically saying that the Government has got it wrong. Are you prepared to reconsider this in the light of the representations you have had, not just from the police but can I say in the last 24 hours to me from members of the Government because ministers in the Government have said to me that they think this award should be paid.

  Jacqui Smith: I am seeing Jan Berry myself this afternoon. I cannot answer for those representations that you have had. I have certainly had a lot myself and the points I have made to them are, as I was saying, firstly, as I think your Committee recognised, we need to consolidate the considerable improvement in police pay that we have seen; we need to think very carefully about the recruitment and retention position with respect to police officers; and as you pointed out, that is quite a good position at the moment with our forces reporting six applications for jobs to join the police force, with a staff turnover of about 1.5%, when the average for the rest of the public sector is 7.8% and for the private sector is 11%. So, quite rightly, recruitment and retention remain good in the police force. As I also said, I have a responsibility as well in what will be a tight financial settlement over the next three years to weigh up the important emphasis that I have put on maintaining police numbers against the necessity and requirement to reward police officers fairly. I simply note, Chairman, that a decision not to stage as I have done to keep within an overall cost level of 2% this year would have been the equivalent of 800 police officers, and obviously the knock-on impact of higher rates of pay inevitably in a tight financial climate impacts on to numbers of police officers. I do not under-estimate police officers' concern about this pay award. Incidentally, I do not believe from my experience of police officers that they either want to take the right to strike or that that is the sort of motivation that brought them into the police force.

  Q7  Chairman: Finally from me, so it means that we are going to have 800 extra police officers now you have staged this award?

  Jacqui Smith: No, the point that I was making was that I have a responsibility to consider the impact of decisions that are made on pay for the other use of resources and I have made it a priority, not just this year but in terms of the way in which we have allocated money over the next three years, to maintain police officer numbers. It has also, incidentally, been a case that has been made to us by the Police Fed because obviously police officers are interested in their own pay and they are also interested, quite rightly, in how many colleagues they have alongside them in order to carry out the job.

  Q8  David Davies: The decision not to back-date that pay award to September will save the Home Office around £30 million. Is it not correct that the Home Office already had a surplus of £50 million?

  Jacqui Smith: It will not save the Home Office, this is funding of course that is already allocated to policing and I have to make a decision—

  Q9  David Davies: It will save £30 million, will it not?

  Jacqui Smith: It will not spend £30 million that would have been spent, just as it would not spend the equivalent cost of 2,670 officers—

  Q10  Chairman: And the Home Office has a surplus of £50 million?

  Jacqui Smith: I do not know whether or not that is the case at the moment.

  Q11  Chairman: You are the minister responsible.

  Jacqui Smith: I find it a rather strange argument that there is no opportunity cost to any bit of spending; there is.

  Q12  David Davies: You were not aware that the Home Office had a surplus of £50 million?

  Jacqui Smith: I am not willing today, without being clear about the figures, to put that figure on the record, no, and the argument I am making is that regardless of what surplus the Home Office did or did not have I still have a responsibility both of ensuring affordability of this pay settlement and future pay settlements. Incidentally, the fact that I have accepted the 2.5% pay increase, which of course will be in police officers' pay packets by the end of the year, over the original pay settlement that we put into the negotiating machinery will cost an additional £12 million, so we have been willing, if you like, to recognise the impact of £12 million extra in order to ensure that that 2.5% is consolidated into police officers' pay.

  Q13  David Davies: Just to enlighten the Home Secretary, there is a £50 million surplus which came about as a result of not having to house prisoners in cells. I would like to make you aware of that. The pay award being back-dated would have cost £30 million and you would have spent it this year only, and therefore I put it to you that it would be well worth doing that because of the anger it has caused and the fact that, unlike all the other members of the public sector to whom you have compared the police, they do not have the right to strike, and if they go to the European Court you will probably as a Government have to spend many millions of pounds defending the right not to let police officers strike, which you may well lose anyway and therefore you will have failed in your original intention of saving money.

  Jacqui Smith: I do not necessarily expect, Chairman, members of this Committee to have to share the responsibility that I share as a member of the Government to ensure the quite clear situation with respect to public sector pay that the Chancellor has laid down this year that pay settlements that are met for 2007-08 should remain within the Government's inflation target because of the impact that going beyond that will have on expectations, will have on inflation, will potentially have on interest payments and mortgages which all of those whom we represent and police officers themselves will have to pay, but that is part of a consideration that I took. I do just repeat, Chairman, that of those pay settlements awarded in 2007-08, only junior doctors and those in the Armed Forces have received a better pay deal, even with the staging that police officers have received this year.

  Chairman: We are going to have very quick questions from members of the Committee because we do have to question the Home Secretary on counter-terrorism. Mr Salter?

  Q14  Martin Salter: Home Secretary, I do not make a habit of agreeing with Mr Davies but I am afraid I do in these circumstances. Last week I met with the Chair of the Police Authority from Thames Valley and the Chief Constable and it was made blatantly and absolutely plain to me that the police authorities have already budgeted for this 2.5% and it is not issue in terms of police authority budgets. It is also plain to me that there is, in effect, a covenant between the Police Service and those who pay their wages; they do not have the right to strike. I think it is incumbent upon us to respect the deliberations and conclusions of the Tribunal and the Arbitration Board. You will also be aware of the massive recruitment problems in the South East where neighbouring forces are losing their police officers to the Met. The Metropolitan Police are earning between £4,000 and £6,000 a year more than police in Surrey, Essex, Thames Valley, Kent and Hertfordshire. The effect of this decision will be to trigger a recruitment and retention crisis particularly in the South East, as officers will move immediately into the Met where travel arrangements are on hand. Have you not taken these considerations into account and will you not tell the Treasury to back off in the interests of sensible policing for the country as a whole?

  Jacqui Smith: One of the things, Chairman, that I took into account was your own report into police funding published in July this year which itself recognised that there would be a tight financial climate for police pay over the next few years and also recognised, contrary to what Mr Salter has just said, that there were not at the moment recruitment and retention issues with respect to the police force. As I have identified, we do find ourselves at the moment in a situation where the turnover of those in the police force is significantly lower than in any other part of the public or private sector, where there are no reported recruitment problems. Now of course it is right that as we go forward I should bear in mind—and I can give an absolute commitment to do this—the impact on recruitment and retention. That is very important but having borne that in mind, I do not think it is a reasonable argument that that is an issue at the moment.

  Q15  Chairman: Home Secretary, I hope you are not suggesting that we in our last report suggested that you should not implement any arbitration award in full, because you keep referring to our previous reports as your inspiration. We never said that, did we?

  Jacqui Smith: You are not my sole inspiration although I do think about you quite a lot! I was simply pointing out that you said in your last report that there was no evidence of recruitment and retention problems in the police.

  Chairman: I was not here then; Mr Salter was.

  Q16  Martin Salter: Can I just say, Home Secretary, what you said is simply not the case. Back in the spring, a delegation of Thames Valley MPs went to meet your Policing Minister Mr McNulty, who acknowledged that there are serious problems with forces abutting or adjoining the Metropolitan police force area with the haemorrhaging of officers, particularly from places like Slough where literally going two or three miles down the road can see an increase in police pay of over £4,000. Can you not accept that if this exacerbates the situation you should put that fact in front of the Treasury, tell them to back off and take those important considerations into account, considerations considered important by your Police Minister?

  Jacqui Smith: Those issues are one of the reasons why as part of the police package there is already the possibility of regional payments for example.

  Martin Salter: This is on top of those.

  Q17  Chairman: Mr Salter, please let the Home Secretary answer.

  Jacqui Smith: The point I am making, Chairman, is there is already a range of payments including payments to address some of the differential issues with recruitment across the country that Mr Salter identified.

  Q18  Bob Russell: In fairness, you are going to have all-party criticism and I declare an interest that my daughter is married to a policeman. I would suggest that your misjudgment in the last few days has destroyed not only morale in the police force but also the good work of your predecessors over the last ten years. Has this decision been imposed upon you by the Treasury and has the Prime Minister given it his backing?

  Jacqui Smith: No, this decision has not been imposed on me. It is a decision that is made in the light, as I have said, of my responsibility to ensure affordability for the police force; to take into consideration issues around recruitment and retention; to bear in mind that in accepting the 2.5% pay increase we will actually consolidate into police officers' pay packets a higher amount than we went into the negotiation with in the first place, so it is a better overall pay increase by the end of the year than would have been the case on the index that we had actually proposed. It also bears in mind—and, frankly, as a Government Minister I do not necessarily make excuses for the fact—the impact which we as a Government have decided is important on the economy as a whole, the impact on inflation and interest rates, on a decision that has been taken and delivered across government for all other public sector workers that we need to do the 2007-08 public sector pay arrangements in a way that maintains them within the Government's inflation target, and the fact that we have done that will be important for ensuring, as I have suggested, not just some nebulous idea of economic stability but actually the impact on the buying power of our constituents' and police officers' pay packets and mortgages. I have to say that it is my responsibility to stand up for the police force and I have done that in terms of the arguments that I have had with the Treasury about funding for the Home Office overall. I have done that in the way in which I have allocated Home Office budgets to ensure that policing receives, frankly, a larger share of the increase that we are having into the Home Office than other areas of the work do.

  Q19  Bob Russell: So the Prime Minister supports it?

  Jacqui Smith: Yes, this is a Government position and the Prime Minister supports it.

  Chairman: I am going to have to cut these answers short because we do want to move on and I know you have other things to do today. You cannot stay with us all day unfortunately. Janet Dean has a very quick question and then we must move on.