REGISTER OF FINANCIAL INTERESTS

HC Deb 18 June 1973 vol 858 cc119-46

On election to an authority each member shall sign a register disclosing the full extent of all financial interests and the name and address of any company or organisation from which he receives remuneration of any kind, and any such register shall be open for inspection by any person, and where a member of an authority is an agent, representative, executive, director or shareholder in any commercial or industrial firm, that firm may not enter into any contractual arrangement with that authority.—[Mr. Buchan.]

Brought up, and read the First time.

Mr. Buchan

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker

With this we are to take Government Amendments Nos. 66 and 81 and Amendment No. 67, in page 21, line 26, leave out local authority' and insert 'public'.

Mr. Buchan

I approve of the three amendments that are being attached to the new clause. They are minor, indeed minimal, but they help the situation and raise one of the points on which I wish to comment. This refers to the declaration of interest which has been discussed on a number of occasions on the Floor of the House, in local authorities and within the various political parties. I make no apology for raising it again. Every hon. Member, being aware of the prevailing mood and climate in the country, will understand this. My first point concerns the wording of the clause itself.

I accept that this provision goes much further than most legislation so far on this subject, whether relating to members of local authorities or to Members of Parliament. A number of clauses in the Bill try to set down a modus operandi for dealing with this question in regard to voting. But the time has come properly to express what many people rightly feel about the responsibilities and duties of public representatives, so I make no apology for the toughness of the clause. At the same time, I recognise that there are some difficulties.

Those difficulties can be overcome if the Government are willing to accept the spirit and intention of the clause both in the first half, about a register of financial interests, and in the second half, which lays down what will happen when a particular kind of interest exists—that is to say, that a person must choose whether to represent an outside body or to speak for the public authority. If, in the process of choosing, he has to give up one or the other, this is the price that must be paid to ensure the health of the community.

The people of this country have the right to know. I guess that it is partial acceptance of this principle that has motivated the two minimal amendments put down by the Government and the amendment by my right hon. Friend the Member for Kilmarnock (Mr. Ross)—that is, that the community has the right to know, when a public representative speaks or votes, what his other interests are.

I do not accept that there is an area of privacy here which is sacrosanct. The moment that a man puts himself forward for election to a public body, the boundary between his private interests and his public interests is in quite a different situation from those of other members of the community. So the community as a whole has a right to know the full interests of a member of a local authority or of Parliament.

I had to give up teaching when I became a Member of Parliament. A person who sees his primary interest as looking after his shareholders or being a director of a company should also make up his mind which he will represent. In other words, particularly for members of regional authorities, this should be a full-time job.

I cannot envisage a region of the size of Strathclyde being run by part-time regional councillors. I hope that we can return to this in the House of Lords. I regret bitterly the failure of the House to pass the clause which would have allowed the payment of regional councillors, in particular, on a full-time basis. Strathclyde is a region the size of Israel, with a population the size of Israel. It is a "State".

Without my proposal, one of two things will apply. The first is that the nature of the representatives will be very narrow. No one with an ordinary job could become a regional councillor; the work will be left to housewives, retired union officials and businessmen. This would be much more narrow than the obligation under my new clause to choose whether one wants to represent a business or a local authority. That would cut out far fewer people than an attempt to run a region like Strathclyde with part-time councillors.

The other possibility is that, if this work cannot be done by full-time, committed people, the councils will be run by officials. The purpose of our discussion on this and the previous new clause has been the extension of democracy. That is why I believe that the clause is right to give full expression to that democracy.

7.45 p.m.

The clause is being introduced against a particular background. I do not want to go into details of some of the material that has been filling the public columns in the Press month after month on the Poulson case. I know nothing of the case and nothing of the legalities or illegalities of anything that may have taken place. What concerns me is that this whole apparatus of part-time employment going to people because they are members of local authorities is evil and should be stopped. I rise the word "evil" rather than "illegal" because I think that it is worse than being illegal. If something is illegal, we, not always too frequently, have to take legal measures to make it also illegal. That should be done in this case.

There are certain consequences of the prevailing climate in the country. One is seen in the kind of political malaise which may be expressed in the form of low voting figures or of condemnation or of a belief that "they are all the same". I do not believe that all public representatives are the same. I do not associate myself or anyone here or in most local authorities with some of the behaviour that has been outlined in recent months, but unless we ensure that that is made clear the mood that "they are all the same" will continue.

So this register is designed not merely to deal with the corrupt. It is even more important to protect the innocent and the good in local authorities, who are the vast bulk of local authority membership, so that this malaise has no longer any foundation in fact; society will have shown that it is prepared to deal with it.

The basic principle here is a generalised one. It should also be applied to Members of Parliament. What we have in mind here is in line with much of the current thinking, particularly in my party. I welcome the decision by the Conference of the Scottish Labour Party that such a register should be established of all Labour councillors and Members of Parliament, in which they would enter fully all their financial interests. I will fill mine in the moment that it arrives, and I hope that all my colleagues will do the same.

The principle that we are seeking to apply is that what is good enough for us to accept voluntarily should be good enough for all parties—in local authorities or in Parliament.

Mr. David Steel

The hon. Member knows that my party has taken some steps in this direction. Why does not his clause, which we certainly support, make any reference to officials in local government? Is it not important to extend the principle to them?

Mr. Buchan

Each man to his own amendment. I am concerned at this stage with the nature of democracy rather than with the task of dealing with corruption. That is what is implied in any question of the officials. I am not rejecting the hon. Member's point, but I see a difference here. I am talking of the duties of publicly-elected representatives. I had the word "officials" question-marked in my notes. I would have raised it and dealt with it in the way as I have done.

If we are left in the situation that because of a failure to accept the obvious point of full-time pay for regional councillors and a failure to take steps to ensure that Members of Parliament and councillors can afford to be full-time members, there will be certain consequences. On the whole, the proposal in the clause will improve the quality of local government and the purity—and old-fashioned term—of local government and of the House of Commons.

I am rather disturbed at the ease with which at present certain councillors envisage themselves entering into the new structure. I am not so sure that all local councillors at present realise the size and scope of the new authorities and the demands and tasks that will be laid upon them by becoming regional councillors. These should be spelt out. I cannot see this as anything but a full-time job. If that is so, they have to find some other means of existence. I was rather shaken by hearing, in the latter part of a Committee conversation, what the amount might be for paying councillors on a full-time basis as opposed to a generous allowance scheme. The generous allowance scheme is a ridculous way of doing it. It would lead to all sorts of abuses. I have heard it said that people would get more from that. That indicates the whole principle.

This proposal is necessary for the health of local authorities, and, more important, for the health of democracy in this country. It will help to deal with the malaise. We could have a revolution in this Chamber which would not touch the perimeter of the Palace of Westminster. Along with that malaise has come a feeling of the irrelevance of ourselves. We have to watch this mood. It is the background of some of the success and of the failure of the community politics of the Liberal Party which I have seen taking a dishonest form, somehow to detach the individual from general politics. There is a danger in this.

In putting forward this proposal I want to make it clear that we are not all the same. Most councillors and most Members of Parliament are honest, straightforward and incorruptible. This is one means of dealing with those who are not. More important, is the majority with which I am concerned.

Mr. Dempsey

My hon. Friend is hell bent on having this register of interests. How does he propose that the clause will be enforced if it becomes law?

Mr. Buchan

The most important enforcement section is in the second half. The first part deals with the right to know, which would be on the register. Other clauses deal with that information in relation to voting aspects, laid down in Clause 89 onwards, and limitations in terms of voting in the form of penalties when such interests are not disclosed. On the overall question, there is the massive penalty that an agent, director or shareholder denies for the firm by which he is employed the entry into a contract with the local authority of which he is a member. That is a massive penalty. That is why he has to choose.

We are not all the same. Here I speak to my own party. While outside influence as part of the system is almost an article of faith of Conservative hon. Members, because they believe in capitalism and want to encourage and develop it and can see no reason why they should give much of their time to other business, that is not true of members of the Labour movement. We want to alter or to destroy particular aspects of the unacceptable face of capitalism. I regret that some of my colleagues have become part of that structure. We have an extra obligation to avoid that.

We have to choose. Jennie Buchan, my wife, writing in Tribune a year ago, quoted the Bible when saying that one cannot serve two masters. That is true. We have to create a situation in which the councillor serves only one master—the people who put him into his position of responsibility

Mr. MacArthur

The hon. Member for Renfrew, West (Mr. Buchan) seemed to think it disreputable that we on the Government side of the House should wish to encourage capitalism. Disreputable or not, that is certainly something that I want to do, because it is in the interests of the progress of this country that capitalism should be encouraged.

It is because of that belief that I view with great dismay the moonshine proposals put forward by the Labour Party for the nationalisation of the major companies in this country. The hon. Member for Renfrew, West may well believe that the right hon. Member for Bristol, South-East (Mr. Benn) could run Marks and Spencer, which is on the list, better than the directors of Marks and Spencer. My belief is that the public at large is much better served by the present system.

Having said that, I agree entirely with the hon. Member that where an interest lies it shoud be declared so that Parliament or a local council will know whether one of its members has a financial interest in the matter under consideration. But I suggest that the new clause goes much too far. It includes extraordinary words which are in line with the crazy thinking which is sometimes illustrated by the hon. Member. It states: where a member of an authority is an agent, representative, executive, director or shareholder in any commercial or industrial firm, that firm may not enter into any contractual arrangement with that authority. I accept completely that if a member of the local authority is an agent, representative, executive or director of a company, he should make that known so that any decision reached by the local authority can be reached in the knowledge that that member of the authority has a direct interest in the company under consideration. I suggest, however, that it is crazy to extend this to the proposal that if he is a shareholder in any commercial or industrial firm which might do business with the local authority, that firm should be denied the possibility of doing such business simply because one of the councillors happens to be a shareholder.

How is one to decide what a shareholding amounts to? For all I know, the hon. Member may have had close associations with a union in the past. He may have had some interest in indirect investment through union funds and his union—I suspect that the hon. Member belongs to a union—may well have invested substantial funds in a whole range of industry in Britain. Therefore, if not a direct shareholder, he is an indirect shareholder in many public companies.

Does it follow that a local authority, if the hon. Member were to be a member of it, would not be able to conduct business with one of the companies or parent companies in which he indirectly held an interest? The hon. Member may well, for all I know, have an interest in a contributory pension fund, managed by one of the great insurance companies which are contributing so enormously to our balance of payments position and which the Labour Party seeks to nationalise. Among these is the General Accident Insurance Co. in Perth. I hope that Sir Henry Hardman will take note of this. The General Accident Insurance Co. is one of the largest insurance companies in the world, and it runs most efficiently and profitably from Perth, in the centre of Scotland.

Mr. Buchan

Before boasting about General Accident being a Scottish firm the hon. Gentleman should remember that it was the company that did not pay out after the 22 deaths in the James Watt Street fire.

8.0 p.m.

Mr. MacArthur

The hon. Gentleman may make that remark if he likes. However, he will agree with me that General Accident is one of the world's greatest insurance companies, that it is centred on Perth, and that it operates efficiently from there—a point which I call to the attention of Sir Henry Hardman.

A local councillor could well hold shares in a company such as Thomas Tilling, which is a large holding company. I am sure that every shareholder in Thomas Tilling will read the company's report and have a good knowledge of the major subsidiary holdings held by Thomas Tilling, but an individual shareholder may not have precise knowledge of some of the company's lesser holdings. A local councillor could well find himself under some legal penalty because of the provisions of the clause.

A local councillor might in all innocence hold shares in Thomas Tilling which held shares in a subsidiary which held shares in an associate company which proposed to tender for a contract with a local authority. Yet the clause would make it impossible for the local authority to do business with that firm even if the member of the local authority had no knowledge of his connection with it.

The hon. Gentleman, who believes in direct labour, might well propose that a district council should order overalls for some members of its direct labour force. One of the council members might well have shares in Courtaulds which might, directly or indirectly, have complete ownership of, or at least a stake in, a company making a fabric for the overalls which the local authority was to buy. According to the clause, the council would be debarred from doing business with that company, or, if it did, the councillor who innocently had shares in Courtaulds would be acting contrary to the law.

I could extend this. I could take the case of Imperial Chemical Industries, Distillers or any of the great companies which contribute so much to the country's growth and to the people's prosperity. Any one of these companies has a mass of diverse interests, and a small shareholder might not have a precise knowledge of the extent of the diverse interests. Yet, by virtue of the new clause, councils would be debarred from doing business with any subsidiaries of such companies if any local authority members held shares in the major companies.

The clause as it stands is absurd and reflects the absurd thinking of the Labour Party exemplified by the narrow doctrinaire approach of the hon. Member for Renfrew, West.

Mr. Maclennan

The hon. Member for Perth and East Perthshire (Mr. MacArthur), in so characterising the clause, does less than justice to the intention expressed by my hon. Friend the Member for Renfrew, West (Mr. Buchan).

It is surely desirable in the interests of democracy that transactions in which local authority representatives are involved should be known to all. The first half of the clause, in seeking to set up a register disclosing the full extent of the financial interests of representatives on the council, simply gives some body to that general desire.

I wish I could go the whole way with my hon. Friend with regard to the second half of the clause. However, it is not so easy to do so, because in practice certain difficulties arise to which my hon. Friend did not devote full attention. First, my hon. Friend spoke, in justification for the proposal that firms should not enter into contractual arrangements if shareholders in that firm were members of the local authority, in the context of members of the local authority being full-time employed by the local authority.

Although I entirely go along with my hon. Friend's view that it is extremely probable that certainly at the regional level and in the West Central Scotland region most of the members of the authority will in practice be virtually full time, I do not think that the same considerations apply to the district authority. Indeed, even the busiest district authority representatives are hardly likely to find it possible to make a living out of their work on the district authority, even taking the most generous arrangement which the Government may make.

However, it must be realised that it is at the district level that many of the decisions will be taken in which this apparent conflict of interests will lie, particularly with regard to the housing function.

There is another general principle which the House should bear in mind in considering conditions of membership or the criteria which should apply to those who wish to go forward for local government service. It is desirable to widen rather than restrict the categories of persons who participate in local government. Any measures which would operate in a restrictive capacity to exclude people from service on local authorities would be unfortunate. The clause would necessarily exclude from service any local authority work very large numbers of people who I believe would be able to give great service.

I do not think that it follows—here do not go all the way with my hon. Friend—that a shareholding in a company is necessarily incompatible with membership of a local authority. Someone standing for election to a local authority would be bound to think twice if he thought that his shareholding in a company would in some way restrict the freedom of the local authority to enter into contractual arrangements with companies which he might be, even in a most marginal way, associated.

Campaigns might be mounted against individuals on the grounds that a possible conflict of interest would lie when in fact there was little evidence of it.

My hon. Friend's intention is wholly admirable, but I am not entirely convinced that the clause, particularly in the second half of it, deals in a wholly satisfactory way with the problem we face. I might be prepared to go considerably further than my hon. Friend with regard to the disclosure requirements in the first part of the clause. Indeed, it might be reasonable to consider whether a penalty should be attached for non-disclosure of an interest. However, it is rather hard to go all the way with the restriction at the end of the clause.

Mr. J. Bruce-Gardyne (South Angus)

We are frequently told that we should not take a sledgehammer to crack a nut. Therefore, I shall make my remarks reasonably brief on the clause because it is a fairly nutty one.

As my hon. Friend the Member for Perth and East Perthshire (Mr. MacArthur) pointed out, an argument which was somewhat reinforced, in a rather more gentle and discreet manner, by the hon. Member for Caithness and Sutherland (Mr. Maclennan), the ultimate nonsense is the inclusion of the word "shareholder". I realise that the hon. Member for Renfrew, West (Mr. Buchan) has little respect for the breed of shareholder. I sometimes wonder whether he really knows what a shareholder is.

The purpose of the clause, if carried into effect as it stands, would be to make it impossible for anybody who held shares in any company to stand for a local authority for fear that that company would be debarred from tendering for a contract with the local authority of which he was a member.

That is a preposterous situation. The hon. Member also failed to grasp the point of the intervention by the hon. Member for Coatbridge and Airdrie (Mr. Dempsey) about enforcement, and that related particularly to the first part of the clause. One of the hazards about any proposal for a register of interests is that the interests which are likely to be most controversial or most undesirable are those which are least likely to appear on the register. Enforcement is a matter of considerably greater difficulty than the hon. Member for Renfrew, West seemed to realise.

Apart from all these points, the hon. Member's motivation in moving the clause is one that I find totally unacceptable because he math it clear that it was his ambition and intention, if the clause were accepted, that membership of the new local authorities would be a full-time occupation. I have always believed that the creation of a House of Commons consisting exclusively of full-time Members—a proposal which the hon. Member favours—would not enhance the respect in which this House is held by the general public—a respect which at its present level is causing the hon. Member concern which in many ways I share.

Our behaviour and our clear lack of contact with the world outside would inevitably intend to diminish the respect in which we are held, and the same applies, and for the same reasons, to the members of the new local authorities. Therefore, on the grounds of the motivation behind the clause I should not be prepared to give it any support.

However, there is a serious consideration which we have to bear in mind and which I hope my hon. Friend the Under-Secretary will feel able to touch upon when replying to the debate. I suppose it could be said that corruption is the tribute that people pay for power. In the days when this place was highly corrupt Members of Parliament had a great deal of power. It would be no exaggeration to say that there is a certain amount of corruption in American politics at congressional and senatorial levels. Members of Congress and the Senate have considerable power—much more than hon. Members of this House have enjoyed for a long time. In some respects, however, we have to recognise that members of local authorities, whether the local authorities which are now disappearing or the ones which we shall create in future, have considerable power in certain specific areas. Clearly we should be deluding ourselves if we did not imagine that there was a certain amount of public unease about the circumstances in which these powers are sometimes exercised.

I agree with the hon. Member for Renfrew, West that obviously the vast majority of members of existing local authorities are not corrupt. Equally I do not think that we can delude ourselves that there is no public concern in some areas and about some authorities. This has existed for many years. Equally we should be deluding ourselves to imagine that that sort of concern was necessarily disappearing with the change in the system of local government because we are establishing new local authorities which will have very real powers in planning and development and which it would be in the interests of some people to seek to corrupt if they had the opportunity to do so.

8.15 p.m.

Therefore I hope that in replying to the debate my hon. Friends, while not hesitating to reject the clause, will nevertheless be able to say something about the Government's thinking on ways in which we can effectively endeavour to safeguard the new local authorities against the risks and temptations which the powers with which they are endowed in the Bill are liable to subject their members. If my hon. Friend can say something on the matter perhaps the new clause has provided a context for it, though heaven forbid we should take it as our lesson for today.

Mr. Russell Johnston (Inverness)

I do not intend to say much about the clause but there are a few points I should like to make. I understand that the hon. Member for Renfrew, West (Mr. Buchan) in moving the clause is seeking to do what he considers to be the best. However, we are all of us in a contradictory situation. A great many of us feel that privacy of the individual is increasingly being invaded and many of us are worried about the ways in which this is done. I do not know what other hon. Members think, but my constituents come to me and ask why they should divulge certain information, why people should want to know their income and what business is it of people to want to know this or that about a private individual.

This is a matter of concern for people, and yet while the Liberal Members in the House have already established a register of interests for themselves, nevertheless it is regrettable that we should be forced into the position of doing these things. It would be equally regrettable if the same situation were to be forced upon the local authorities. Many people have good reasons for not wanting to tell the whole world where they get their money. Their reasons may be worthwhile. I am in the happy virginal position that I have no income from any other source to declare or to be found out, but it is important with the new authorities that people should not be discouraged from putting up for election.

I do not disagree with the hon. Member for Renfrew, West. We are beginning more and more to put ourselves in fish bowls, however, and fewer and fewer people are willing to stand in fish bowls and be looked at. I accept the first part of the clause but not the second. I do not believe that the first part is practical for a variety of the reasons which have been expressed. It would need to be set out in most watertight terms to be practical. I am not a great business expert but I understand that wives are frequently used to disclaim any personal responsibility or interest when that interest exists.

Mr. Robert Hughes

In the Bill the interests of the spouse, if known, are grounds for disqualification.

Mr. Johnston

I understand the hon. Member's point about voting on a contract, but here we are talking about whether a firm should be open to enter into any contractual arrangement with the authority.

On the third point I agree with what has been said by the hon. Member for Caithness and Sutherland (Mr. Maclennan) that anything which limits people's democratic choice is a bad thing.

The hon. Member for Renfrew, West said that one cannot serve two masters. I am happy to allow the electors to make the choice, provided they know the kind of choice they have to make. If the member declares his interests and they are registered, it is reasonable and fair for the public to decide whether they want him.

Mr. Buchan

Does that mean that the hon. Gentleman accepts that every candidate should publish on the polling form or on his election address a list of his interests, saying that he represents financial institutions or whatever? If that is not done, no choice can be made by the elector.

Mr. Johnston

I have never thought of the matter in that way, but I should have no objection to that sort of thing. However, I am not sure how far it should be taken. Most candidates have a whole curriculum vitae at the back of their election addresses.

I do not think that the second part of the clause is practical or desirable. There is an adequate safeguard if the interests are known. We shall not succeed with this new scheme of local government unless we attract people of very high calibre, and if the clause excluded such people from giving service to local authorities it would have a very regrettable effect.

Mr. Peter Doig (Dundee, West)

I support the good intentions of my hon. Friend the Member for Renfrew, West (Mr. Buchan), but, unfortunately, the clause will not carry out those intentions. It is full of loopholes. For example, a member of a local authority is not allowed to take part in any business in which he has a direct financial interest of the kind listed. He must declare the interest, and not take part in the business.

Mr. Dempsey

And sign the book.

Mr. Doig

In some cases he might sign the book, but in my area one's word on the matter is taken.

Apart from the interest of a member of a local authority, his wife can have an interest. My hon. Friend the Member for Aberdeen, North (Mr. Robert Hughes) said that that is covered; but there can also be an interest of his son, his daughter, his mother-in-law, or father-in-law, and all sorts of other people connected with him. How far do we extend the clause? The more I consider it, the more it seems impossible to cover that sort of thing.

My hon. Friend the Member for Renfrew, West referred to corruption that had been brought to light. The vast majority of such cases would not have been prevented if the clause had been in effect, because they concerned not shareholders, employees or agents but the people by whom councillors were bribed, the people for whom they obtained contracts. Therefore, the clause would not achieve my hon. Friend's purpose. But it would create a great deal of trouble and hardship, and, therefore, I cannot support it.

In many areas the local Co-op tenders for contract. In my area it was at one time the principal supplier of milk under contract. If we applied the clause strictly, the local Co-op would be debarred, because there are so many people with a few shares in it.

Before thinking of standing for the council, many people work for firms that may well tender for contract. I worked for 20 years in a firm before I stood for the council, and if the clause had been in operation it would no longer have been able to keep on tendering, or else I would have been out of a job. I would have got the sack straight away, because the firm would not have been able to afford to do without those contracts.

The more I study the clause, the more I come to the conclusion that it will achieve none of my hon. Friend's good intentions but will cause a tremendous amount of trouble and unfairness. I began by having sympathy for the first half and being against the second, but the more I listen to the debate and think of my own experiences the more certain I am that I can no longer even abstain. I must vote against the clause, because it will not solve the sort of problems that my hon. Friend thought it would solve. Instead, it will cause a great deal of trouble, which we must guard against.

The clause could well harm people who do not have interests. They could be like Lord Polwarth. Perhaps their wives, unknown to them, bought a few units in trusts investing in companies that obtain contracts from the corporation of which they are members. That could easily happen. There are all sorts of ways in which such complications could arise, possibly innocently, without the knowledge of those concerned.

It may be that the present law covers a person's wife but not his son. In many firms in my area the father is not strictly involved but has a roundabout interest in the business, not a financial interest, but just an interest in the well-being of his son. Other members of the family may be involved. Must the father leave the council for that reason?

I may be told that the provision does not cover that, but what will the public think when they discover that one council member whose wife owns a few shares, or is employed by a firm that obtains council contracts, must declare his interests and suffer all the consequences, while another does not have to do so because the person concerned is his son, daughter-in-law, nephew, some other relation, or just a personal friend? The public will think that the provisions should cover everybody.

Then we shall end up with nobody being eligible to stand for a council. We have already barred employees of councils. My party intends to nationalise other industries, and no doubt local authorities intend to start fresh departments. When I was on the council we took over a number of departments and created new ones. The increase in the number of council staff is bound to continue, and the number of people who will be debarred from standing for local councils will gradually snowball to the point where hardly anyone will be eligible.

Local authorities are responsible for vast sums of money. During the time that I was treasurer of Dundee I was spending more money than the largest business in the city. Are we to have a situation in which, because of the restrictive nature of the choice of members, colossal amounts of money will be controlled by people who are inferior in the sense that they have neither experience nor other qualifications?

The more I look at the new clause, the more I am convinced that not only must I not support my hon. Friend but that I must go against him.

8.30 p.m.

Mr. Ewing

As one of the signatories to the new clause I acknowledge the obvious, that there are defects and weaknesses in the clause. However, this debate has brought out the serious degree of concern which is felt by many people. That degree of concern is expressed in an editorial contained in today's edition of the Daily Record. Any hon. Members who choose to ignore that degree of concern or who display the same lack of knowledge of the outside world as the hon. Member for South Angus (Mr. Bruce-Gardyne) will do so at their peril.

For a brief moment I shall take up the frivolous and irrelevant intervention of the hon. Member for Perth and East Perthshire (Mr. MacArthur), who dealt with a serious subject in a jocular manner. I do not speak for insurance companies and it is my view that no insurance company would want to be blamed for the present balance of payments situation for which the Government is responsible. I see, Mr. Deputy Speaker, that you shake your head. Fortunately, you did not have the misfortune to have to listen—

Mr. Deputy Speaker

Order. I hope that the hon. Gentleman will confine his remarks to the new clause under discussion.

Mr. Ewing

Mr. Deputy Speaker, I was sympathising with or congratulating you on your good fortune. This is a new clause about which sensational statements could be made. However, I am not given to sensationalism. I shall not make any sensational statements. I shall not seek the protection which the House affords hon. Members who wish to make allegations which often cannot be substantiated.

It is significant that the associated amendments open up to the electorate a degree of inspection. It is important that we should recognise that those who have criticised the new clause, including my hon. Friend the Member for Dundee, West (Mr. Doig), have done so because of the loopholes which they claim exist.

I accept that there are obvious loopholes, but there have been no attempts to suggest alternative ways by which this serious problem could be handled. I hope that the Minister will concentrate on that matter when he replies.

The problem does not begin only when a councillor stands for election. Problems appear very often after a councillor has been elected and when he finds himself in a position of responsibility. A firm may then offer him a tempting job. In the process of his being offered that job, that firm may know that there is something to be gained by having that person, who now finds himself on the council, on the payroll as an employee.

There are serious defects which should not be ignored. There is a serious area of concern among the electorate, not only in Scotland but in England and Wales. When the Minister replies I hope that he will not ignore that concern. I believe that my hon. Friend the Member for Renfrew, West (Mr. Buchan), my hon. Friend the Member for South Ayrshire (Mr. Sillars) and myself have done the House a service by introducing the new clause, however many loopholes there may be, and by allowing discussion to take place. The matter has been brought out into the open. Let us hear the Government's thinking about how the problem is to be handled.

Mr. Younger

It is important that in setting up a new local government system we should do everything which we can to ensure that there is the minimum temptation to any form of corruption in the course of the activities of the councillors who may be elected. It is important that we should ensure that the public can see that such is the case.

I echo the words of those hon. Members who have made it clear that in the criticisms which we make about the new clause we do not mean—and I should not like it to be thought that this is what I mean—that here is widespread corruption in Scottish local government. In fact, it is remarkable how fortunate Scotland has been for many years; one has only to consider the high quality of the councillors who have been elected. We should not let the idea get about that there is corruption. That would be extremely offensive to the many excellent councillors whom many hon. Members know. I believe that by and large the great majority of councillors do a marvellously good job entirely honestly.

My right hon. Friend put down Amendments Nos. 66 and 81 to fulfil an undertaking I gave at the twenty-eighth sitting of the Committee to provide in the register for the pecuniary interests of members to be open to the inspection of all. I was pressed to do this and promised to look again at the matter. Amendment No. 67 would substitute the word "public" for the word "member". Although the objectives of the right hon. Member for Kilmarnock (Mr. Ross) and mine are exactly the same, I suggest that his wording might lead to some confusion and that the wording of Amendment No. 66 is clearer. I hope, therefore, that the House will accept our Amendments Nos. 66 and 81, which fulfil my undertaking, and that the right hon. Gentleman will accept my intention as being the same as his. I believe that our wording is rather more logical than his alternative, although I accept that it is a matter of opinion.

I do not think that I need dwell for long on new Clause 9, because it does not appear to have many friends anyway. My hon. Friend the Member for Perth and East Perthshire (Mr. MacArthur) and the hon. Member for Dundee, West (Mr. Doig) did a complete job of demonstrating some of its weaknesses. It refers to disclosures. At present a member needs to disclose on the general register of interests such interests as he would consider it necessary to give in a general notice to the local authority. He would disclose, of course, any other casual interest—that is to say, matters he would not have expected beforehand might come before the council—at the meeting at which such matter was to be considered.

The concrete and sound principle upon which we have worked is that interests should be known and that on a matter affected by an interest the member should not take part and use his vote. That is extremely important and clear and cannot be got round. The wording of the Bill and the amendments we propose will make it equally clear to the general public and enable it, in the person of any elector in the area, to see the information contained in the notice.

The second part of New Clause 9 attracted most criticism and the criticisms, although no doubt some may be more so than others, are all pretty telling. I will not comment in detail on the examples given by my hon. Friend the Member for Perth and East Perthshire, but some do raise very serious problems. As an example of the unsuitability of the new clause, I would point out that it appears to me that it would be possible for a councillor who might be particularly ill-disposed towards a particular company, for reasons which we might or might not understand, to buy a few shares in it and thereby prevent it from getting any business at all from the council of which he was a member. I am sure that that was not the intention of the hon. Member for Renfrew, West (Mr. Buchan) but it would be one of the effects.

My hon. Friend mentioned various companies. I would like to take the case of the shareholder in a co-operative society. Would New Clause 9 mean that the co-operative society would not be able to tender for any contracts from the local council because a councillor was one of its shareholders? I am sure that was not one of the hon. Gentleman's intentions. Nor am I certain about the position of one of the employees of the National Coal Board who happens to be a councillor. I am not certain whether the clause would apply to all employees of the National Coal Board but if some of them were members of councils would those councils not be permitted by the clause to buy coal? If so, I can see considerable difficulties.

I do not think I need spend any more time on the clause except to say that the hon. Member had every right to propose it, but I suggest that the case made against it has been overwhelming.

Mr. Buchan

Would the Under-Secretary now deal with the principle of the thing? We all know that the wording is defective. I could deal with that with even more enthusiasm. Would not the hon. Gentleman deal with its inherent principle so that we would better know whether we should vote for it or not in the light of his view of the principle? May we know whether the hon. Gentleman accepts the principle or otherwise?

Mr. Younger

I must deal with the clause as put down. The hon. Member has had every opportunity to put in a better form. The principle he has in mind is very difficult to attain, considering all the difficulties which hon. Members on both sides have so well explained. The important thing here is that councillors' interests should be known acid be made clear and be known to the public and that councillors should not take part or vote on matters in which they have such personal interests. The Bill with the amendments we have proposed gives maximum freedom to councillors and local authorities to do their job and prevents what would be more or less a prohibition on a large section of the public from taking part in local government unless they gave up their jobs. That would be undesirable.

Mr. Ross

We are indebted to my hon. Friend the Member for Renfrew, West (Mr. Buchan) and to my other two hon. Friends for putting down this new clause. Let us not receive ourselves. If we had not discussed this subject we should have been failing in our duty. The new local authorities will deal with very much larger matters even than education or the construction industry and the rest. Had we not discussed this we should have been failing in our duty. That is why I deprecate the general tone of the speech of the hon. Member for Perth and East Perthshire (Mr. MacArthur).

The hon. Member for South Angus (Mr. Bruce-Gardyne) in his speech was a bit unfair to my hon. Friend—deliberately, I do not doubt—when he questioned his motives. As the hon. Member should know by this time, I have a habit of writing down phrases which people use and which I think interesting, and the question on which the hon. Member dwelt was that of motivation. If a person's motivation is not his motive, I do not know what it is. I hope the hon. Gentleman will not tell us he did not use the word "motivation". He questioned the motivation of the new clause.

Mr. Bruce-Gardyne

I was not casting aspersions on the motives of the hon. Member for Renfrew, West (Mr. Buchan). What I was saying was that the hon. Member had made it clear that in his thinking his motivation was that ideally the members of the new local authorities should perform a full time rôle without outside occupations. That was an objective with which I disagreed, but I did not suggest that there was anything improper about it. I simply said that that was the motivation which he ascribed, and which I did not share.

Mr. Ross

I am glad to have that explanation of this curious phrasing. The hon. Member used it at one point and he seemed to imply that my hon. Friend was determined to cut out of local government everyone with any connection with commerce or industry or anything else. That was not my hon. Friend's intention.

My hon. Friend said the clause is tough, but its toughness is related to the mood of the moment. I do not think any of us should be satisfied with the present position or plead, as some of my hon. Friends have suggested, that interests are declared or registered in a book, because, despite that, these things happen and are happening and are a slur on the great majority of members of local authorities who sacrifice a great deal to serve their communities. I am not worried about its being tough as long as it is fair, as long as it is right, and as long as it achieves its objectives.

8.45 p.m.

Under the Bill we do not allow a teacher to serve on the local authority which employs him. We do not allow a bus-driver or conductor to serve in Dundee—or a roadman or a fireman. Let us appreciate that we place on certain individuals not just inhibitions but complete bars upon service. Why? Because we think that they might use their influence and power to help themselves. Illogical as we are, we go out of our way to single out teachers at another point and bring them back, with the consent of everyone.

Here it is not just a question of the individual. Everyone is agreed that there should be a register. I thank the Under-Secretary for what he said about his two amendments and I accept that the register will be open to the public and will be widened to cover public as well as local authorities. The nub of the question is, what do we do about the firm which deliberately suborns someone as a representative to use the influence that can only be his?

It is not just a question of voting; it is a question of the influence that is wielded by a person in such a position. The suggestion is that we do not bring pressure upon the individual but upon the firm. I am sure that Conservative Members would agree that we should do this if we can find a fair way of doing it.

Mr. MacArthur

But the new clause does not do that.

Mr. Ross

I am coming to that. Consider the general run of people who have served on local authorities over the years, people in industry and commerce, who have never been anywhere near having contracts with the local authority. Let us not give the impression that this would cut everyone out. I do not think it would. But it might cut some people out. Someone opposed to a firm getting a contract has only to purchase a share in that firm. Obviously this would be wrong. In seeking to prevent undue influence being used we would be putting a weapon into someone's hands that would enable him to exert undue influence.

The weakness is the shareholder part of it. Had the reference been to a substantial shareholding, that might have been better. It would have pleased me a little more. I do not think we shall ever be able to wipe out this entirely, particularly if we subject people to financial pressures in carrying out their business. In the old days it used to be the licensing committee. Now it is not the licensing committee. Nowadays a decision made by the planning committee can mean someone getting a fortune.

Let there be less sneering. Let us appreciate that the number of people who fall by the wayside are few. The only way in which this can be done is by putting pressure not on the individual but on the people who use the individual. That is the reason for the toughness. The Minister, who was concerned about other aspects, did not properly appreciate that. I should like the Government to accept that principle. If the Minister will do so it will go a long way with my hon. Friends. If the clause is not accepted we shall need to pursue this matter.

A purpose has been served by airing our concern and our appreciation that the sphere of concern is narrow, but there is still a gap which will have to be plugged. I hope that the Under-Secretary of State will take the general feeling of the House and, when the Bill goes to another place, see whether it can be given this additional dimension of toughness not in relation to the councillor but in relation to those who would use him in a particular way.

Mr. Buchan

This has been an interesting debate. I was particularly interested in the Freudian reaction from hon. Gentlemen on the Government Benches as soon as "shareholder" was mentioned—they rose like gnats.

There is no problem about people being excluded. Vast numbers of people who work for the council on a weekly wage are excluded. Why should not one or two shareholders be excluded? The shareholders and the firm have a choice. My heart does not bleed because Wimpey or MacAlpine cannot get a particular contract. My heart bleeds a lot more for the people on a weekly wage.

The House has been given an excellent illustration of how to avoid a declaration of principle by talking about loopholes. The Minister even failed to think of a denunciation of the principle. The hon. Member for South Angus (Mr. BruceGardyne)—the sea-green incorruptible of the Right—was able to take a principled attitude. The difference between us is that he rejects the unacceptable face of capitalism and I reject the acceptable face of capitalism. The principle is crystal clear and should be carried out in practice. If the Minister accepted the principle we would be prepared to help the Government to reach a more perfect form of words.

Clause 41 mentions a nominal shareholding of £1,000. If that could be written into the clause the loopholes could be avoided. The blockbuster problem was raised of a firm buying a few shares in a competing firm. That is the unacceptable face of capitalism. What a morality, that a provision designed to deal with corruption should be used in that way! I did not think of that. The party of Lonrho thinks of these things. The Conservative Party's first reaction is to ask "How do we get round it?"

Mr. Younger

The hon. Gentleman will have forgotten that his right hon. Friend the Member for Kilmarnock (Mr. Ross) thought of it too.

Mr. Buchan

Yes, my right hon. Friend works on a double level. He has had such vast experience of the Conservative Party that he asks himself how the party will react and how he will deal with it. We have already said there is a massive form of enforcement in the Bill, but if a person becomes involved in the situation I have described his company might not enter into a contract. That is a pretty massive penalty. If the Conservative hon. Members are really enthusiastic let them write in a financial penalty for the failure to disclose in full the register of interest. That section of the clause deals with the right to know.

If someone signed the register of interest and had not disclosed to the full his interest, the effect, when that failure emerged, would be more devastating than writing in a fine. The great error that the Minister of State in the Scottish Office made—and the Prime Minister too—when the question of oil shares in his possession came to public notice was not in saying "We accept and discard" but in trying to say twice "this does not really matter." Ministers, like Caesar's wife, should be above suspicion. I thought that was a deplorable, petulant letter we had from the Prime Minister.

Mr. Gordon Campbell

I am sure that the hon. Member does not wish unwittingly to mislead the House. My noble Friend did not have any oil shares; it was a holding in an investment trust.

Mr. Buchan

We accept that, but the basic point remains. The question of the spouse is dealt with in the Bill and is not a problem. We can deal with it, and once it is accepted by the Conservative Party we can write in various exclusions in the form of a schedule. The milk round would continue.

The present situation is that unless we in this House at least indicate firmly—a number of Members on the Labour side have indicated firmly that they recognise the problem we face—we shall not be able to deal with some of the malaise I have described. The fight on this will continue. It must continue because it has to be cleaned up. I agree that the clause is only part of the fight, the part that can help in the meantime to protect the innocent while we can deal with some of the guilty that emerge in another form. The recognition of the paid councillor and the full-time paid regional councillor in an area such as Strathclyde is necessary. That was the second prong of a double-pronged amendment.

Now the 64,000 dollar question: in view of the total lack of assurances that I have received from the Minister should I withdraw the amendment? Yes, I will I hope the Government will have learned a lesson from today. I will withdraw it because we shall not carry it and because the Government apparently regard themselves as incapable of knocking a correct principle into correct drafting shape.

Motion, and clause, by leave, withdrawn.