With this it will be convenient to discuss the following:
Amendment 498, in schedule 5, page 112, line 27, leave out paragraph 2.
Amendment 499, in schedule 5, page 112, line 31, leave out paragraph 3.
Amendment 500, in schedule 5, page 112, line 37, leave out paragraph 4.
Amendment 40, in schedule 5, page 113, line 8, leave out ‘three-quarters’ and insert ‘two-thirds’.
Amendment 501, in schedule 5, page 113, line 11, leave out paragraph 5.
Amendment 502, in schedule 5, page 113, line 27, leave out paragraph 6.
I wanted to wake everyone up before we reached to the debate on the schedule which is brought into effect by clause 26.
Amendment 497 goes to the heart of some of the debate. The Minister will continue to chide me for suggesting different models and different ways of doing things. Earlier, we suggested that, if we were to have direct elections in the whole country, making the directly elected person the chair of the police and crime panel would be one way of resolving some of the tensions. Another way, of course, would be to increase the power of the police and crime panel vis-à-vis the directly elected individual.
The amendment to schedule 5 suggests another way in which the police and crime panel, made up of all those representatives from local authorities, can have more say over the precepts—or have the say. That is important, because the panel can then have a say over budget requirements. We can therefore ensure that the directly elected police and crime commissioner and the panel work more closely and effectively together. That would be an important step forward.
We tabled our own amendment about the veto power available to the panel on the issuing of the precept. Our amendment 495 changed the majority from three quarters to two thirds, but it was not selected, because the hon. Members for Cambridge and for Edinburgh West had tabled amendments to do the same thing. Essentially, we have a recurring theme—not just from me, but from our Liberal Democrat colleagues—throughout the Bill. The hon. Member for Edinburgh West, with the support of his colleague from Cambridge, has tabled amendments addressing the lack of power or involvement of the police and crime panel. The panel can veto a precept, but it must do so with a three-quarters majority—before the Minister points out the drafting error in our amendment, I shall point it out to him.
The point is that the three quarters is almost saying to the police and crime panel, “We’ll give you a veto, but we really hope you don’t use it.” Two thirds is used elsewhere as a legitimate estimate of the feeling among the members. On the Greater London authority and other bodies, the two-thirds majority is generally used as a barometer of the opinion of a panel or authority.
The Minister might want to answer my next question in the stand part debate, in which I want to make another couple of points. Does he envisage a quorum for police and crime panels? Does the three-quarters majority mean three quarters of the total membership of the police and crime panel, or three quarters of the people who come to the meeting?
If the panel is to mean anything, if it is to be anything other than a talking shop, if it is to scrutinise properly and hold the commissioner to account, it must have power. It has only two major powers: one is vetoing the appointment of the chief constable; the other is vetoing the precept. If we establish a barrier that is so high that under any normal circumstances the panel will find extremely difficult to get over it, we have to question whether the Government are serious about providing it with such powers.
The hon. Gentleman makes a powerful case. I want him to think about the numbers, because the panels will generally be made up of 12 members. To have a bare majority would effectively require six with a casting vote, and seven in a simple situation. Two thirds would require only one extra person to vote that way, which would be eight out of 12, and three quarters would take the threshold to nine. With 66 and 75, the difference is large, but a difference of one member is not quite as significant. We should be careful, because we do not want to have a situation of absolute deadlock, in which someone with an elected mandate cannot do anything because a relatively small number of people can block him.
The hon. Gentleman makes a reasonable point. The judgment about what is fair and reasonable in the operation of the proposed model is made when the legislation is introduced. I think that three quarters is too high a threshold, and that one or two is significant. Obviously, if the number were one, the committee would be small, so that would be a significant proportion of that committee. I hope that the Minister will tell us whether the measure relates to a quorum or whether to an ordinary meeting of the panel and whoever turns up, in which case two thirds could be two out of three.
The amendment is supported by the Local Government Association. I am not sure of the Minister’s views on the LGA; I know his views on police authorities. The LGA has said clearly that it would support the amendment. I want to return to that issue and deal with it at greater length when I respond to the debate.
Will the Minister explain one further point? What happened to the proposal to hold a referendum on the precept? I am pleased that it has disappeared, but there was a suggestion in the early stages that there would be a referendum, although it was not clear whether it would be proposed by the PCC or by the police and crime panel. People have asked me, “What happened to the referendum?” I have had to answer, “I don’t know, but I will ask the Minister to enlighten us.”
I want to ask the hon. Gentleman about amendment 497. As I read it, in a committee with a membership of 12, three or four members, depending on how many were present, could block the issuing of a precept proposal. Is that what the hon. Gentleman intends? In general, we have said that a 75% majority would be needed for the panel to block something, but in the amendment, 75% would be needed to issue a precept, which strikes me as creating potential for deadlock every year.
The amendment does not try to create deadlock; it tries to say that either the PCP has a realistic power that it can use, or the legislation constrains that power to such an extent that it does not have it, because in practice it would not work out. The veto on the precept is one of only two real powers held by the police and crime panel. It can consult, review, publish its thoughts, tell everyone what it thinks and let everyone know if it does not agree with the police and crime commissioner, but that is all rhetorical rubbish. At the end of the day, if the panel is to mean anything, it has to have some power to hold the commissioner to account. That will be the thrust of the whole debate when we come to clause 28, which is about police and crime panels and their role vis-à-vis the commissioner.
The matter now is about the issuing of a precept. What power do we want the police and crime panels to have? Panels should, under amendment 497, be the bodies that issue the precepts. If that is not acceptable, and the Minister says that the commissioner should still issue the precept, the requisite formula for making the veto available to the panel should be two thirds, not three quarters. I very much agree with the hon. Member for Edinburgh West, and I hope that he will press his amendment to a vote. If he does so, he will have the support generally across a large number of parties. I think most people would think that three quarters is unacceptable. I am interested in the Minister’s comments on that matter, but we will also be interested in what he has to say about the quorum.
I am afraid that I am going to disappoint the hon. Gentleman immediately by saying that my amendment is a probing amendment, aiming to gain further information from the Minister about the factors that were taken into account when choosing the three-quarters hurdle for allowing the police and crime panel to veto the commissioner’s proposed precept.
I spent some time, but not a great deal, looking for other examples where a 75% majority is required. I did not find any, but I found an example of a similar sort of power in the case of the London assembly, which can veto the Mayor of London’s budget with a two-thirds majority. I am happy to be corrected if I have missed something, but I am not aware that the London assembly has, at any time, chosen to pick a fight with the Mayor because of the lower threshold.
We will return the composition of the PCPs in later amendments, but at present, as my hon. Friend the Member for Amber Valley has said, we have 12 members. My amendment would move us from a position of needing nine members to vote to veto a precept to one in which we would need eight. I do not think that that is necessarily a huge change, but it would slightly alter the balance of power between the panel and the commissioner, and would bring the powers more into line with what is used successfully in London. It would allow panels to scrutinise the work of the commissioners more robustly. As I said, I seek clarification from the Minister about the factors that led to the decision to choose a three-quarters majority for the veto rather than any other figure.
There are two sets of amendments to schedule 5, but they all seek to amend the provision that a police and crime panel may, with a three-quarters majority, veto the police and crime commissioner’s proposed precept. I shall deal first with the amendment tabled by my hon. Friend the Member for Edinburgh West. It seeks to alter the necessary majority for a vote—something which the hon. Member for Gedling also addressed. We all agree that there should be checks and balances on the level of precept. It is desirable that it should not be set too low, thereby risking public safety, nor should it be unnecessarily high and needlessly take money from the public. The primary check is the fact that the police and crime commissioner will be directly elected. He or she will be directly accountable to the public for ensuring that an adequate policing service is provided, with the best possible value for money.
It will be for the commissioner to set out his views on the precept when standing for election—that was certainly the case in the London mayoral election in relation to policing—and to answer to the public should a different decision be made. We must not forget the significance of that direct mandate. The public will be able to hold their police and crime commissioner to account at the ballot box not only when he stands for re-election but also, if the precept is excessive, through a referendum. I am happy to confirm to the hon. Member for Gedling that police and crime commissioners are included in the referendum framework set out in schedule 5 to the Localism Bill, which is currently under consideration in the House. I do not intend to go into detail about that provision, as it is for the Committee considering that Bill to consider the matter, but it is an additional democratic check on the level of precept.
Will the Minister clarify what he has said? I do not properly understand it—it is not his fault, but mine. If the police and crime commissioner sets a rate and the police and crime panel turns it down, in what circumstances would a referendum be held? Why would the commissioner hold a referendum if it was his own precept? Would he go for a referendum in order to say to the electorate, “I wish to increase the precept by 25% more than the Government say I should, and if you say I can, that’s fine”? Is that what the Minister is saying?
Schedule 5 to the Localism Bill enables the public, through a referendum, to veto an excessive precept rise. That will apply to all precepting authorities, including police and crime commissioners once they are in place. “Excessive” will be defined by the Secretary of State, subject to the approval of the House of Commons.
The Localism Bill will require the Secretary of State for Communities and Local Government, whether or not he chooses to determine excessive rises for a given year, to lay a report before Parliament on or before the date on which the local government finance report for the year is approved by resolution of the House. Typically, that happens early in February. Under the Localism Bill, it is envisaged that if an authority set its council tax at an excessive level, it must make substitute calculations to derive a budget that would require an increase in council tax that was not excessive. That provision would take effect if the excessive increase in council tax were rejected by voters in a referendum.
The process for police and crime commissioners must be consistent with that broad framework once the precept is set. However, schedule 5 to our Bill sets out how the precept is to be set in the first place. It enables the Secretary of State to set out by regulation what is to happen should a panel veto the commissioner’s proposed precept. I can set out that procedure at a later stage should the Committee wish. We have two checks. One is provided by the police and crime panel, which can veto a precept. The other is provided through a referendum, should the rise be excessive according to the requirements set by the Secretary of State.
I understand what the Minister is saying. Perhaps he will tell us who pays for the referendum, and how it is triggered. Notwithstanding the minimum budget requirement, if I lived in Nottinghamshire and wanted to pay more in my rates for policing so that we could have more police on the street, could I trigger a referendum on that on the basis of localism?
The referendum provision, as the hon. Gentleman knows, replaces the principle of capping, which was applied by the previous Government in relation to precept rises judged by central Government to be excessive, for the protection of local taxpayers. The principle, which stands in the Localism Bill, is that we substitute the current centralist and bureaucratic lock with a democratic one. Although the Secretary of State has to say what constitutes an excessive rise, the decision to accept it rests with local people, whereas capping is instituted wholly by the centre and local people have no say.
In north Wales, the chief constable of the police authority ran a campaign to increase part of the council tax, looking at what every penny equates to—[ Interruption. ] 10p bobbies, as one of my hon. Friends says. Would that sort of campaign be possible, or even allowed?
It would be allowable if that is what local people decided in a referendum. If the rise exceeded the level set by the Secretary of State, the referendum would be triggered and the decision would then rest with local people. That is the fundamental difference between the new position and the current one, in which local people are shut out of the decision and the Secretary of State unilaterally decides whether a rise is excessive. Under the provisions, the decision would be with the people. By giving the decision over to a referendum, local people would have a say, which would make it clear whether they supported the increase in the precept, and whether they wished to pay for it.
I am not sure what the hon. Gentleman means. With a referendum, someone would have to make the case for why they thought it was a good thing. In this case, that might be the directly elected police and crime commissioner, who wished to set that higher level of precept on the basis of a consultation that they had conducted with local people, and who would argue that they should vote for the rise. In spite of the commissioner’s mandate, they will not be able simply to set an excessive precept without some kind of check, and two checks are provided, one by the police and crime panel, which can veto a rise, and the other by the democratic lock of the referendum. We can discuss the detail of the matter, but it is important to understand that there are significant checks on directly elected commissioners in respect of potentially excessive precept rises.
The average cost to a police authority of a referendum would be £750,000. Imagine that all 43 police authorities chose a referendum. Would that be a wise use of scarce resources and funding?
I doubt that we would be in a situation where all 43 authorities were holding referendums, but that goes to the wider question of whether we think it is right to give the people a say. I think that we all agree that if we give the people a say in a new form of election, there will be a cost in holding that election; we know that the Opposition’s proposal for directly elected police chairs involves an election cost. That alternative solution was advanced sincerely by the Opposition Front Benchers, and we cannot escape the fact that it would involve a new cost.
I do not remember, but that is a really good point; I should have listened the first time. I am sure that the more industrious of my hon. Friends will tot up the number of referendums that were promised by the Labour party in its general election manifestos. I think it is about five, but I am ready to stand corrected if somebody can arrive at the right number.
The Labour party did not say how those referendums would be funded. It is a bad argument to suggest that we should not give people a say because of the cost. It is not an argument that we can safely make when we are advancing a democratic reform, which the hon. Member for Birmingham, Selly Oak did with such conviction last week.
The Minister is far too kind. Is there not a distinction between referendums on major constitutional issues of the kind that his hon. Friend the Member for Cannock Chase might be thinking about and a referendum in which, according to the evidence that Hampshire provided, there is a 1% predicted rise in precept that would bring in £1 million, but may cost £750,000? To encourage that type of referendum up and down the country would surely be tantamount to wasting public money.
The knowledge that a referendum would have to be held is something that a police and crime commissioner would have to take carefully into account before setting a precept that he was aware was likely to be judged excessive by the Government. But we should not forget that if it went to a referendum, the police and crime commissioner would already have the challenge from a police and crime panel; that is what the panel is there to do. We should reflect on the fact that capping is very unpopular with police authorities.
I receive many representations about capping. It is worth repeating that the problem with the current arrangements is that people claim to have the support of the public in setting a high precept rise. At the moment, the police authority is not directly elected and has no mandate. There is no way of ensuring that the local public support any kind of rise, and some of the rises in precept over the years have been considerable.
We stand by the position that the democratic lock is the right one, but it is in addition to the panel’s ability to veto precepts, which we are discussing now. A key question raised by the amendment is whether the threshold for the veto should be three quarters of the members of the panel or two thirds. My hon. Friend the Member for Amber Valley has already effectively dealt with the fact that we expect a police and crime panel to have about 12 members. A few will have more.
The difference in percentage may sound significant, but it is not so significant when it comes to the numbers of votes. There is a rationale for setting a higher threshold of three quarters for police and crime panels compared with the GLA, for instance, which has a threshold of two thirds. The rationale is that the GLA is a directly elected body and therefore its ability to veto, which, as my hon. Friend the Member for Edinburgh West pointed out, has not been exercised, is drawn on a democratic mandate. There is therefore legitimacy in its challenging the precept decision of the Mayor.
On the police and crime panel, its members are nominated from local authorities. They may be elected councillors but they are nominees to that panel. They do not have a direct mandate themselves. That is not the function of the panel. We have to take care about not handing the members of the panel a significant power to cut across the local mandate of the police and crime commissioner, who would have a clear mandate in respect of what he or she intended to do about the precept, and to strike that mandate down when they have no mandate themselves. The ability to levy what is effectively a local tax to pay for policing is, of course, a significant one.
I thank the Minister for giving way once again. If the police commissioner was elected during a “high” for a political party—let us say it was the Conservatives just after the last election—and he had a good mandate, and the police and crime panel was elected at a later date when the national Government were unpopular and that panel was of a different political persuasion, would that not be a recipe for petty political infighting, which would not serve the people in a police authority area?
I want to correct the hon. Gentleman in one respect. The police and crime panel is not elected. There are nominees who will be drawn from local authorities, which will have their elections at different times. I take the hon. Gentleman’s point, however. One of the things that I think there is a collective desire to ensure is that party politics does not feature in a police and crime panel, in the same way that it is largely excluded from police authorities. It is right to give local authorities a stake in the governance and scrutiny of police and crime commissioners. We cannot legislate for that, but that should be our ambition.
The reason why the three-quarters threshold has been chosen is that, in my view, there should be a higher threshold given that the police and crime panel is only nominated and given that its members are exercising a very significant power. That power is to reject the local tax—the precept—that the police and crime commissioner has established in relation to policing. That explains the difference in the threshold and that is why I think that it is right to have a higher threshold.
I thank the Minister for giving way yet again. He says that police authorities, in the main, do not operate on party political grounds and that is entirely correct. However, if we are going to a new system under which the commissioner will be elected on a party political ticket with a party political mandate, he will go to that policing panel on a daily basis, saying, “This is the way we’re going to do it”. That is a recipe for the party politicisation of policing. It is a recipe for disaster.
I do not agree that the proposals in the Bill are a recipe for disaster. However, the hon. Gentleman might be helping me make my point. [ Laughter. ]
I say that because the hon. Gentleman’s argument might very well be a reason why a higher threshold is necessary, so as to prevent a group of people from behaving in the way that he has described—playing party politics by seeking to reject a precept increase that was established by an elected police and crime commissioner.
There would be a problem—would there not?—if the members of a police and crime panel, who had not been directly elected themselves, decided for party political reasons to strike down a precept that was established by somebody who had a mandate. Again, that is a reason why the bar should be set at a very high level. It seems to me that the position in London is rather different, because of course the Mayor of London and the GLA are elected at the same time and, as I have pointed out, the members of the GLA are directly elected.
So I appreciate the spirit in which these amendments have been tabled by hon. Members and the rationale for their asking whether there should not be a two-thirds threshold. The hon. Member for Vale of Clwyd made the same points. I hope that they will all have had an insight into the Government’s thinking in establishing the threshold at three quarters and that they will also reflect on the point made by my hon. Friend the Member for Amber Valley, who questioned how much difference having a higher threshold would actually make.
Yes, I apologise to the hon. Gentleman for not clarifying that before. It is three quarters of the membership of the panel, although it is open to the panel to set rules on the quorum if it wishes to do so. That is my understanding of the position.
I will give the hon. Gentleman some clarification. The panel can set rules on having a quorum for other matters, but on this issue—the power of veto on the precept, which is so fundamental—it is three quarters of all the members, irrespective of arrangements that it may make for a quorum on other decisions. I hope that that answers the hon. Gentleman’s point.
I am sorry to be pedantic, but irrespective of how many people turn up, if a panel has 12 members, nine have to attend and vote for the precept to be vetoed, because nine is three quarters of 12.
We got there. I hope that that addresses amendment 40 and I hope that Opposition Members will reflect on my point, as I will certainly reflect on theirs. There is a distinction between what the PCPs are doing. It is worth noting that this power of veto being given to the PCP was not in the original proposals. We added it on the basis of the consultation exercise that we conducted and the views that were expressed about wanting to augment the powers of PCPs.
The Government have already moved in that respect. That is a fundamental difference between what we propose in this Bill and what was originally proposed. We must, however, be careful before moving further, because of the issue about the mandate of the PCC. I hope that the Opposition will withdraw the amendment and think about their position. I will, of course, reflect on their comments, too.
I think that amendments 497 to 502 were linked to the larger group of amendments, which we have already discussed and which attempted to pave the way for maintaining a police authority within each force area and establishing a directly elected chair for each office of PCC. It is a pleasure to hear the proposal of the hon. Member for Gedling for directly elected chairs of police authorities, but I have already set out why that is a seriously bad idea.
It will not be the last time we hear it. It does not embarrass me and I do not feel upset or at all sad about it. I cannot remember the procedure, but I want to make sure that we can vote on amendment 40 if the hon. Member for Edinburgh West withdraws it. What the Minister has said about this amendment is really disappointing and I do not think that the hon. Member for Edinburgh West is convinced by what the Minister has said. A recurring theme all the way through the Liberal Democrat amendments has been that the PCPs do not have sufficient power. Amendment after amendment, including amendment 40, is about trying to increase and strengthen the role of the PCP. What it means, to be frank, is that the PCP will be a toothless watchdog, because it will not have any power over the PCC. That will be a shame.
Can the hon. Gentleman really stand up the argument that having a threshold of three quarters, so that nine votes will be required to veto the precept, means that the PCP will be toothless—I completely reject that accusation—while eight votes would mean that it was not? Is that his serious contention?
Yes, it is, if the amendment is taken in conjunction with amendment 40, which is why I mentioned it. Other amendments to strengthen the powers of the police and crime panel have been tabled by the Minister’s hon. Friends the Members for Edinburgh West and for Cambridge. I have tabled amendments to strengthen the PCP vis-à-vis the police and crime commissioner, because the PCP has only two real powers—the powers of veto over the precept, and over appointments.
Although the Minister might say that there will only be one or two votes in it, the threshold that has been set will effectively mean that it will extremely difficult—given that the three-quarters rule applies to the total membership irrespective of how many members attend a meeting—for a PCP to veto the precept put forward by the PCC. I know that the Minister does not like this—it is a point of difference between us—but I say again that he wants PCCs to be omnipotent on the basis of their democratic mandate but, notwithstanding that argument, I think that PCPs should have effective powers to hold PCCs to account. The amendment would be one way of achieving that, but the Minister refuses to move. In my view, that will make the PCP a toothless watchdog, and I think his hon. Friends the Members for Edinburgh West and for Cambridge agree with me. I will withdraw the amendment, if by doing so I do not scupper amendment 40. Mr Chope, will you advise me on that matter?
I am grateful to the hon. Gentleman for asking for my advice, which is that if he withdraws amendment 497, it will be open, because we are also considering amendment 40, to the hon. Member for Edinburgh West or any other member of the Committee to move amendment 40 formally, and we can have a Division on it.
I think that the Minister has helped in that what he said in his explanation about referendums and in the debate on earlier amendments will answer the point that I am going to make. I would like, however, to have clarification and to make sure that I am right. I refer to schedule 5(6), “Next steps if veto”. Paragraph (2) says:
“The police and crime commissioner must not issue the proposed precept as the precept for the financial year” if there has been a veto. Paragraph (5) says:
“Sub-paragraph (2) is subject to regulations under paragraph 8”, which lists the regulations that the Secretary of State may make with respect to a precept that has been vetoed. Paragraph (7) says:
“That includes functions involving the exercise of a discretion.”
What does that mean for a precept that has been vetoed? Does that allow the Secretary of State, or whoever, to say that there should be a referendum?
I was also struck by what the Minister said: it is a serious point if the panel vetoes the precept set by a directly elected commissioner. Is it therefore also the case that under the discretion laid out in regulations, the Secretary of State, the Home Secretary or whoever can veto the decision of the police and crime panel? In other words, can the Home Secretary turn around and say, “The police and crime panel has vetoed the precept. It was completely wrong of it to do that, and I am going to exercise my discretion to say that the precept the police and crime commissioner proposed was perfectly fine, and you’ve got to accept it”?
The hon. Gentleman makes a fair point. I think that it will help the Committee if I set out how we envisage the power would be used.
The Secretary of State will be able to set out by regulation what will happen should a panel veto the police and crime commissioner’s proposed precept. The PCC will be required by regulation to propose a precept by 21 December in the year when that precept is raised. As required by the schedule, the PCC must make that proposal to the police and crime panel. The panel will be required by 15 January the following year to review the proposal and make recommendations, which may include vetoing the proposal. Should the panel decide not to veto the commissioner’s proposal, the commissioner may set either the proposed precept or an amended precept in line with any recommendations made by the panel. Should the panel veto the proposal, regulations will require the PCC to consider its recommendations by the end of January and make an amended proposal to the panel, which must take those recommendations into account.
The panel may then make recommendations within 14 days that can include rejecting the proposed precept. If it does not reject the precept, the regulations will allow the PCC to set either the proposed precept or an amended precept in line with the panel’s recommendation. Should the panel again reject the proposal, the PCC may still set the precept. However, in those circumstances, regulations will require the panel to propose an alternative precept, setting out its reasons.
Regulations will require that the precept, when set by the police and crime commissioner after this process, must take into account the views of the panel. If the commissioner does not set the precept proposed by the panel, he or she must publish the panel’s proposal and the reasons, and must set out in the same document why he or she did not implement the panel’s proposals.
No matter what happens, the police and crime commissioner must set a precept by 1 March. If that precept is excessive, the commissioner must calculate a substitute or default precept that is not excessive. Regulations will require that the PCC require that in consultation with the police and crime panel.
Where the precept is excessive, the local councils in that force area must arrange for a referendum to be held by 1 May that year, unless another date has been defined under the powers in the Localism Bill, which is also before the House. Should the referendum be successful, the precept set by the commissioner will be raised. If the referendum rejects the proposal¸ the substitute calculation will be raised instead.
The measures will fix the timings for setting a precept. An incoming police and crime commissioner elected in May will not be able to raise a new precept until the following April. That is right, as to send out a new bill mid-year would waste millions of pounds of taxpayers’ money.
The processes enable police and crime commissioners to make the key decision setting the precept on the basis of their public mandate. However, it sets out some clear and important checks and balances in the form of panels’ vetoes and also a public referendum. It is important that we set out the procedures that have to be followed when there is a fundamental disagreement between the panel and the police and crime commissioner. We cannot just provide for the permanent exercise of a veto because that would result in a position when a precept might not be set. We have to set out a procedure, and I believe that the procedure under which the police and crime commissioner has to have regard to what the panel is saying is the right one.
The hon. Gentleman will recall that I said that that is the level set by the Secretary of State in relation to rises for all precepting authorities. The Secretary of State will set the level that he regards to be excessive, in the way a capping level is set at the moment. It is not a subjective test. It is set precisely by the Secretary of State each year and he judges what an excessive rise that year would be. I hope that I have answered the hon. Gentleman.
It is worth repeating that the principle behind our approach is that the police and crime commissioner has a directly elected mandate from the people, and we must set out how to deal with a deadlock quickly and with the public interest at heart. We have to set out a procedure to deal with the situation in which the police and crime panel and the police and crime commissioner could otherwise not agree. That is a function of seeking to give force to the checks and balances and to ensure that the police and crime panel is not the toothless watchdog that the hon. Member for Gedling wrongly suggests it will be.
I am sure that the Minister is glad that he could read out that explanation. I understand the point that, in the end if there is a veto, we must have a mechanism by which we arrive at a position where a budget can be set. That is just good government. We would be ridiculous if we could not do that. The Minister can respond if he wants, but we just need to be clear.
The right hon. Gentleman does not like my description of the police and crime panels as a toothless watchdog, but will he ask his officials to reflect on the process that has been put in place to ensure that a budget can be set? It is a perfectly reasonable function. Of course, a budget has to be set. However, will the Minister check that the process does not ride roughshod over the PCP’s views? Will he try to ensure good governance? The police and crime panel may have a very real desire to stand up to the police and crime commissioner, notwithstanding the mandate. It may believe that he is wrong. Having heard what the Minister has just said, I am not sure that the process will ride roughshod over the PCP, but it is important that he checks matters to make sure that the clause does not have the consequence of delivering the police and crime commissioner the precept that he wanted, even though the police and crime panel vetoed it.
I understand exactly the point that the hon. Gentleman is making. This is the first opportunity that he has had to hear the procedure for deadlock. It is inevitably not straightforward to understand first time round, so we must set it out in some detail. It is important that if we arrive at a deadlock, we do not put in place something that could actually effectively wholly override the veto. I understand what he is saying. He has the opportunity to reflect on my explanation of the procedure, and to come back to it if he has further concerns, but I hope that he will agree that such an approach is sensible.