§ (Control of disposals of land) and (Control of contracts)
§ Lords amendment: No. 12, after clause 8, and after the clause last inserted, insert the following new clause—
|5||". —(1) If, on the application of a constituent council or a local government elector for the area of a constituent council, it appears to the High Court that the Greater London Council or a metropolitan county council has made a disposal in contravention of section (Control of disposals of land) above or entered into a contract in contravention of section (Control of contracts) above, the court may order any person responsible for authorising the disposal or contract who is, or was at the time of the conduct in question, a member of the council to be disqualified for being a member of that council and to be disqualified for a specified period for being a member of any other local authority.|
|(2) In sections 80(1)(e), S6(b) and 87(1)(d) of the principal Act references to Part III of the Local Government Finance Act 1982 shall include references to this section."—[Mr. Patrick Jenkin.]|
§ Read a Second time.
§ Mr. Alex Carlile
I beg to move amendment (b) to the proposed Lords amendment, in line 2, leave out 'a constituent council or'.
§ Amendment (a) in line 11, leave out from 'council' to end of line 12 and insert 'provided that—
- (a) no such order shall be made unless the Court is satisfied that the person acted unreasonably or in the knowledge that the disposal or contract was being authorised in contravention of Section 8 or Section 9 as the case may be; and
- (b) no period of disqualification shall extend beyond 31st March, 1986. '.
§ Amendment (e) in line 11, leave out from 'council' to end of line 12.
Amendment (f) in line 12, after 'period', insert
'no longer than one year'.
§ Mr. Carlile
The purpose of amendment (b) is to put an end to political ping-pong from the public purse—to stop constituent councils from taking proceedings according to the provisions in the new clause, and thus making applications to the High Court for the disqualification of councillors for contravention of provisions considered earlier.
The provision is bound to be misused, if unaltered, as a political vehicle for Conservative-controlled councils to take proceedings in the High Court against the GLC; and it would also be used against metropolitan county councils.
Such proceedings should not be at the public expense. The power available to any local government elector to make an application to the High Court is sufficient. I would go further in criticising the provision. The new clause proposes draconian penalties against councillors when controls over the disposal of land or contracts have been breached. It places in serious jeopardy not only councillors who voted for the breach in question, but possibly those who voted against the breach and expenditure, or were absent.
On the application of a constituent council or local government elector, the new clause states thatany person responsible for authorising the disposal or contractmay be disqualified. The concept of that provision is offensive, for here we face the prospect of councillors 182 being disqualified not only from the council on which they are serving but from other councils which they might wish to join in future. They face being disqualified for aching in accordance with the democratic rights which they possess; in accordance with the manifesto on which they were elected; in accordance with the views of the majority of democratically elected councillors on that council; and even when they may be acting in the interests of the community at large.
The difference between the punitive provisions in Lords amendment No. 12 and other local government disqualification provisions is that no test is allowed for in this new clause which would enable the courts to look at the merits of the action which the councillors had taken.
Pursuant to Lords amendments Nos. 10 and 11, the Secretary of State has absolute discretion to rule whether such expenditure as is dealt with in those amendments should be permitted. Whereas in relation to other sanctions against councillors the court must apply a test in considering whether councillors had acted reasonably and in the interests of their constituents, here the only test which the court can apply is whether councillors had acted in breach of the discretionary ruling made by the Secretary of State pursuant to his powers under new clauses 10 and 11.
That brings us back to section 137 of the 1972 Act. Whereas it is open to an elector under that section to challenge the way in which the council has acted on the basis that it has not acted in the interests of the persons whose interests are provided for in section 137—and the court can, therefore, make a judgment on the merits—by comparison, under amendment No. 12 the court will have no power to look at the interests of the electors or the merits of the case. It can only decide whether the Secretary of State's diktat has been broken.
What is meant by "any person responsible?" Is it the chairman of the relevant committee, or the chairman of the council? Does it include absentee members of the council who may not have been at a meeting but who were members of the committee which reached the decision in question? Does it involve any member of the council or only those council members with knowledge of the decision? Or does it, as would appear to be the case, involve any person who may, by membership of any of the 183 seven councils, be responsible even in an indirect way for authorising the disposal or the contract? Here is yet another example of local accountability being removed.
It is clear from the speeches of Ministers that the Government no longer care about local accountability in relation to these seven councils. At least the Government should modify the proposals in this draconian new clause to enable the court hearing an application to consider whether the contract was good or bad, in the interests of the community, or otherwise. I urge the Government to consider the exclusion from the new clause of the words "any constituent authority" and to agree that it would be inappropriate for this political ping-pong from the public purse to continue.
§ Mr. Straw
About two years ago the hon. Member for Edinburgh, Central (Mr. Fletcher), the Parliamentary Under-Secretary of State for Trade and Industry, was one of the Under-Secretaries of State for Scotland. In that capacity he made a series of decisions on the sale of Hamilton college of education which resulted in a loss to the taxpayer of £5 million. The Public Accounts Committee, in a unanimous report, censured the Scottish Education Department for its conduct. The words used by the PAC were damning by the standard of the language usually used by it. It said that the SED had adopted a more casual approach to the sale than the recommendations of the Halliday report demanded. It added:SED failed to ensure that everything possible was doneto ensure that the property was sold at an adequate price. Had that Minister been a Labour councillor, he would have been subject to proceedings for surcharge or disqualifica-tion and, depending on the size of the surcharge, for bankruptcy and loss of office. As the hon. Gentleman was a Minister, he suffered no penalty.
§ Mr. Straw
As my hon. Friend says, the hon. Gentleman was promoted. I read in the Sunday newspapers, however, that it is now predicted that his elevation will not last for much longer. The fact that the £5 million was lost is incontrovertible, and I am not surprised that some Conservative Members have suggested, from a sedentary position, that I should refer to something else. It is a matter of deep discomfiture to Conservative Members to know that a Minister should have lost the taxpayer £5 million. Far from having to resign his office, he has been promoted. I ask my right hon. and hon. Friends to bear that in mind when they come to judge the amendments before the House.
The surcharge provisions for local government have always been overdraconian and inappropriate. They were introduced in the previous century when financial procedures for local authorities were elementary, to say the least. They were designed to ensure that there was no fraud or embezzlement by local councillors or the local officials of the councils.
§ Mr. Barry Henderson (Fife, North-East)
Surely the hon. Gentleman will agree that the PAC's report stated that there had been no better offer made and that there had been no suggestion that other than the market value had been achieved in that instance.
§ Mr. Straw
I am glad to note that the hon. Gentleman has a copy of the report on his person. That shows good 184 briefing and is a sign of how sensitive Conservatives are to the charge that they have a Minister in their ranks who lost £5 million and was promoted for his pains. The SEDfailed to ensure that everything possible was doneto ensure that there were adequate uses or development to market the property adequately. There may have been only one offer, but an offer at that level should have been refused. That is the way in which the loss arose. As I said, had that Minister been a Labour councillor of the GLC, he would never have heard the last of the loss and he would have rendered himself liable to surcharge, disqualification and bankruptcy.
The present rules for surcharge were introduced in the last century to provide measures against embezzlement and fraud. They have come to be used wholely inappropriately to control, in a belt and braces way, policy decisions of local authorities. These surcharge provisions have no parallel with the Government and other public industries. Certainly, they have no parallel with private companies, including public limited companies, and they have few parallels with other Western countries.
At least in the law as it has stood, one essential element has had to be removed before the disqualification provisions could apply—wilful misconduct in the way in which councillors acted. Lords amendment No. 12 will introduce an entirely new crime, involving no wilfulness, recklessness or negligence by members of an authority —the crime of strict liability. By virtue of their failure — and nothing else — to obtain the consent of the Secretary of State for the disposal of land or for any contract over £100,000, the members of an authority render themselves liable to proceedings for disqualifica-tion for any period from that council or any other authority.
Do Conservative Members, given that they have closed their ears to the damage that has been done during the passage of the Bill to our constitution and to people's liberties, find that acceptable? What would have been their reaction had a Labour Government proposed to take such draconian powers to shackle councillors who were simply following the mandates of their own authorities and seeking to ensure that local democracy operated properly?
There is no justification for these provisions. The existing disqualification surcharge provisions, the criminal law and the provision by which an elector can seek judicial review by the courts of the actions of a local authority or its councillors are sufficiently adequate to deal with any potential failure. To render councillors liable to disqualification for no greater crime than the fact that they have simply failed to obtain the consent of the Secretary of State is an outrage and should be resisted by the House.
§ Sir George Young
I beg to move, That this House doth agree with the Lords in the said amendment.
I hope that I can persuade the House to reject the sub-amendments. Amendment (b), which was moved by the hon. and learned Member for Montgomery (Mr. Carlile), would remove an important part of the control system which is necessary to prevent irresponsible action by the outgoing authorities. The amendment would deny the constituent councils, boroughs and districts the right to apply to the High Court where they believe that the controls over land disposals and certain contracts may have been contravened. It is important that the constituent councils, in addition to local government electors, should have that right because they are the authorities that may 185 have to carry the consequences of the disposals and the contractual commitments which the control provisions are designed to cover. They are the authorities that will be well placed to learn of potential contraventions. It would be unfair and inefficient to rely solely on individual electors to spot those cases.
The provisions of Lords amendment No. 12 are modelled on the audit provisions of the Local Government Finance Act 1982. These provisions go further, and give the constituent councils the right to challenge. As I have explained, that is not only necessary but consistent with the approach adopted in other parts of the Bill. It is consistent especially with the provisions of clause 9(1), and rightly so, because the constituent councils are bound to have a close and legitimate interest in the affairs of the GLC and the MCCs in the run-up to abolition.
The hon. Gentleman asked which councillors might be responsible in the event of any breach of the legislation. The councillors responsible for a disposal or a contract are, as a question of fact, all those who voted for a proposal and all those who could have voted against it but who either abstained or failed to attend for no good reason. In any event, it will be for the elector or the constituent council bringing the action under the new clause to identify those who were prima facie responsible. The court has a discretion about whether to disqualify any member, and in coming to a decision it will of course have regard to all the circumstances of each case.
In dealing with the other amendments, moved by the hon. Member for Blackburn (Mr. Straw), perhaps I might put Lords amendment No. 12 in context. It is an integral part of the series of measures which we have introduced in order to prevent irresponsible action by the outgoing authorities. The Lords amendment provides for the penalties which may be applied if the consent procedures are not complied with. It allows, but does not require, the High Court to order the disqualification of the person or persons responsible for contravening the consent requirements. The procedure is for a constituent council, or any local government elector for the area of a constituent council, to apply to the High Court. If it appears to the court that an abolition authority has made a disposal, or entered into a contract, in contravention of the new clauses, the councillors responsible may be disqualified if they were members of the authority at the time of the conduct in question.
The new clause proposed by the Lords amendment is modelled upon the audit provisions of the Local Government Finance Act 1982. But there are two significant differences. First, as we have just discussed, the court can act on an application from a constituent council as well as a local government elector. Secondly, there is no monetary penalty or surcharge. The only sanction is the possible disqualification of the member or members concerned.
The amendments seek to limit the High Court's discretion to make an order of disqualification if the new clauses are contravened and to limit the penalties if such an order is made.
The question whether a responsible person has acted unreasonably or in deliberate contravention of the provisions of the new clause, or whether he has acted in all good faith, is already one for the High Court to weigh. There is no express defence of "good faith" built into the 186 Lords amendment because it is not necessary. The High Court will have complete discretion whether to impose any sanction, and "good faith" would undoubtedly be a powerful plea in mitigation. So where a disposal had been made or a contract let in the honest but mistaken belief that no consent was required, or that it had already been obtained, I am sure that this would weigh very heavily with the court, which would judge each case on its merits. So from that point of view, amendment (a) is unnecessary.
All three amendments limit the penalties, and they are not acceptable. As amended by the other place, the Bill allows the court to disqualify the person responsible for being a member of the GLC or relevant MCC and for being for a specified time a member of any other local authority. That is a perfectly sensible maximum penalty for someone in a position of power and responsibility who has wilfully ignored or flouted an Act of Parliament. Indeed, some may argue that it is rather lenient But these amendments at most would limit the penalty co disqualification for up to one year from any other authority, in addition to that of which the individual is a member. That is the effect of amendment (f) to Lords amendment No. 12.
§ Mr. Straw
The hon. Gentleman referred to the power lying in the High Court where there had been wilful misconduct relating to the failure to obtain consent by a member of a council. But where in Lords amendment No. 12 is there any reference to wilful misconduct? It is an offence of strict liability.
§ Sir George Young
As I said, in listening to the case the court would take into account the circumstances surrounding each individual offence. It would take into account whether there was wilful misconduct or whether there was a genuine error. Obviously it would reach a conclusion about what was the appropriate penalty.
Amendments (a) and (e) to Lords amendment No. 12 are even more restrictive. The effect of those is to limit disqualification only to the GLC or the relevant MCC and then only until the day it is abolished. The GLC or MCC councillors can even then remain, or become, members of any other local authority. That does not constitute a credible deterrent to those who are determined to obstruct and impede the policies of Parliament, and who in some cases have threatened to resign from their councils, no doubt after they have done the maximum amount of damage.
If the provisions of the control clauses are to be effective, we simply must have penalties which will at least make those who are responsible think twice before they engage in obstructive activity.
§ Sir George Young
No, it would not —[Interruption.] I notice that this may cause some dismay among my hon. Friends. The disqualification is from a 187 local authority, not from this House. If the hon. Gentleman can sleep peacefully at night in the light of that assurance, we will at least have made some progress.
For the reasons that I have outlined, I invite the House to reject the amendments.
§ Amendment (b) to Lords amendment No. 12 negatived.
§ Question put, That this House doth agree with the Lords in the said amendment:—
§ The House divided: Ayes 247, Noes 117.189
§ Question accordingly agreed to.