The most radical reform ever

David Blunkett Home Secretary

The Home Office says it had reached agreement in principle with the Police Federation on a pay deal.

The agreement will see officers' basic wages rise in return for a 15% cut in overtime payments over the next three years.

The news will come as a boost to Tony Blair, who is under pressure to tackle soaring street crime rates.

'Radical'

The agreement also closes the loophole on sick pay which enables officers to claim half pay indefinitely during prolonged periods of sick leave.

It was hailed by Home Secretary David Blunkett as the "most radical reform ever" of police pay and conditions.

"We will now have a modernised pay structure and working conditions for the 21st century to go with the wider policing reforms we are introducing," he said.

Oliver Letwin fears policing could get worse

"We have delivered all of our aims set out last autumn and this settlement is a massive step forward in improving pay and conditions for the police."

He said that the Government was committed to providing "substantial new cash" to fund the changes.

The savings on overtime would be "ploughed back" into providing more frontline officers, he added.

The deal - worked out at conciliation talks at the Police Negotiating Board - now needs to be formally ratified by the federation following a short period of consultation with members, expected to last two weeks.

Terms of the deal

The deal applies across the UK - in England, Wales, Scotland and Northern Ireland.

The Home Office says it will cut 15% from the annual �300m overtime bill, saving about �45m over three years from April 2003.

Under the deal, officers will receive �400 from April next year on top of their basic salary.

And there will be additional "competency-related pay" of �1,002 for higher-paid officers and special payments for those in demanding roles.

There will also be one-off payments of up to �500 for work of "outstanding, demanding, unpleasant or important nature", such as hostage negotiations or fingerprinting badly decomposed bodies.

'Irresponsible'

Earlier, Tony Blair vowed not back down over police reform - despite a series of defeats in the House of Lords.

The prime minister said Liberal Democrat and Tory peers who voted against the government were being "totally irresponsible".

"It won't help the lives of people that we seek to represent," Mr Blair said after Labour suffered four defeats on important parts of the legislation.

The opposition peers object to plans to bring in private security guards to assist the police.

Fight

Ministers have vowed to reverse the defeats when the Police Reform Bill returns to the Commons.

But they may have a fight on their hands if they want it to become law in its current form.

The government will be unable to use the Parliament Act to force the changes through as the Bill originated in the Lords.

Earlier this week, Mr Blair sparked controversy by vowing to get street crime "under control" by September.

The pledge has been torn apart by opposition critics.

Crime hotspots

They claim Mr Blair was cynically exploiting plans by mobile phone companies to introduce new security measures later in the year, which would inevitably lead to a reduction in muggings.

Mr Blair said he was referring to 10 crime "hotspots" where special measures had been brought in to speed up justice.

"I believe that the trend that was rising, we need to see go into reverse.

"And we can only do that if we are prepared to take really tough measures at every level of the system," he added.

Lib Dem home affairs spokesman Lord Dholakia accused Labour of media posturing.

He said the party should "stop reacting to newspaper headlines and concentrate instead on enabling police officers to get on with protecting our communities".

Shadow home secretary Oliver Letwin said there was a risk that neighbourhood policing would be "diminished, not enhanced" by Labour's plans.