HC Deb 27 February 1976 vol 906 cc876-86

4.1 p.m.

Mr. James Wellbeloved (Erith and Crayford)

I wish to raise on the Adjournment a matter which is causing grave concern in the London borough of Bexley about the state of local government in the area—

Mr. Russell Kerr (Feltham and Heston)

On a point of order, Mr. Deputy Speaker. Many of us have been waiting with rapt attention for this debate to begin. It is not fair to us that there should be this noise.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

At the moment I do not hear any noise.

Mr. Wellbeloved

May I express my thanks to my hon. Friend the Member for Feltham and Heston (Mr. Kerr) for his customary point of order at this stage of our proceedings?

The reputation of local government in the London borough of Bexley is almost at rock bottom. Over the past few months the national Press throughout the length and breadth of the country has carried numerous stories about various aspects of life on the local council, ranging from accurate reports of the policies being pursued by the council on such matters as refusing to operate the issue of bus passes unless a payment is made by pensioners, right through to the cutting down of meals for pensioners at luncheon clubs. So bad have been the policies of the council that the London borough of Bexley has been christened by the Press, quite rightly, the meanest borough in the land.

One tragedy which has followed from the policies which have been pursued by the council is that the loyal and dedicated officers and staff who work for the borough have reached the stage where if they go to a conference, stand up to make a contribution and start off by saying "Joe Bloggs, from the London borough of Bexley", an immediate titter goes round the assembly, so bad is the reputation of the borough.

I am especially sorry that it is necessary for me to raise this matter in Parliament because, as a former member of the local authority—indeed, the first leader of the council of the London borough of Bexley following reorganisation—I share the deep concern of people in the locality about the disrepute into which the fair name of Bexley has been dragged. The residents and ratepayers of Bexley and myself are indebted to my right hon. Friend the Minister for Planning and Local Government for being present to answer this debate. I am sure that that fact will be appreciated in the area as an indication of the seriousness with which the situation is being watched by the Department.

In November last year the district auditor found that he was unable to sign the report of the Council, and that was when the serious position of the finances of the borough first burst upon the community. The auditor, in the restrained language that auditors use, said that he was unable to complete the audit of accounts because the accounts were not in balance. In January this year he confirmed his continuing inability to certify the accounts. Therefore, the cat was out of the bag, because the Council had to be officially notified by the leadership, and the long-suffering citizens of Bexley found that they were saddled with a Council which had not only earned the area the title of the meanest borough but was well on the way to getting the twin award of being the meanest borough and the most incompetent borough in the history of modern local government.

It will be no surprise to hon. Members or to the people of Bexley to learn that the top leadership of the majority Conservative group in the borough is desperately seeking plausible excuses to pin the responsibility for this disgraceful state of affairs. There are two front-runners in the race for alibis. The first is illness in the finance department and a series of changes among top officials in the finance department; the second is the computer centre strike in 1974. Like all good cover stories, there is an element of truth in both alibis. The former borough treasurer of the London borough of Bexley—a most distinguished local government officer—tragically died in July 1974 after a very long illness, and it is true that a number of senior officers in the department either have retired or have left the service of the local authority.

There is no doubt that the Council was faced with a difficult situation with which it had to try to cope, but it is not unknown in local government circles for chief officers to die in office, for officers to move to other areas of employment or for serious difficulties to arise. Nor is it unknown for other large undertakings to be faced with similar problems. The difference in this case is that the political leadership of the local authority did not respond to the situation, and, consequently, what started as a serious difficulty has become a minor disaster for the area.

While the overworked and understaffed finance department struggled to cope without any direction from the leadership of the local authority, the leaders were failing to discharge their proper responsibilities and were expending their energies in such ways as cutting old people's meals and taking the front rank among the handful of local authorities fighting a last-ditch battle to preserve an outdated system of education.

Mr. Geoffrey Finsberg (Hampstead)

My right hon. Friend the Member for Sidcup (Mr. Heath) and my hon. Friend the Member for Bexleyheath (Mr. Townsend) today have long-standing engagements and, therefore, could not be present in the House. Is it not fair to say that the problem about which we have read commenced in the autumn of 1973 and arose again in March 1974 when the Council was under the control of the Labour Party? That continued after the Conservative Party took control. It is fair to say that both parties when in control of the Council did not find it possible to recruit sufficient accountants. The accounts for 1973–74, which the auditor would not certify, were the accounts of the Labour-controlled council. The following year the Council was Conservative controlled.

Mr. Wellbeloved

I shall deal with that. I have no comment to make on the absence of the hon. Member for Bexleyheath (Mr. Townsend) and the right hon. Member for Sidcup (Mr. Heath). All Members of Parliament have duties outside the House. It is understandable that it is not always possible for hon. Members to be in the House, although there are some occasions when it is important that they should be present.

The point that has been made by the hon. Member for Hampstead (Mr. Finsberg) is basically factual. However, he omitted to say that if we consider the period to which he referred, on the best estimates that have been produced so far by the officers of the local authority—the period to which he referred when the Labour Administration was in control—when the accounts were handed over there was a balance in the books of £1,900,000. By any stretch of the imagination, I do not think that responsibility for the present disgraceful state of affairs can be pinned on the former Labour administration. The present Council and the present leadership have been in power for just under two years. I cannot go along with the hon. Gentleman if it is said that management can be excused of responsibility after presiding for so long over a disaster.

The local leadership had its political appetite titillated by its victory over the pensioners. It then turned the full weight of its intellectual resources to a dream that had been conceived by some of its leaders, a dream to jerk Bexley out of the traditional pattern of local government into big business. It was a dream that involved the creating of new management structures. Henceforth it was proudly claimed that it would not be the borough of Bexley, but Bexley Limited. There were to be executive directors, management groups, new offices and new salaries. All the time that the leadership's energies were expended on these other issues, the financial chaos of the borough was slowly engulfing the affairs of the council.

Bexley Limited, the dream of the Conservative leadership, is now exposed to the risk of becoming the first lame duck in the history of local government. It is in danger of appearing at the door of my right hon. Friend with a begging bowl.

The other alibi that has been put forward is the computer strike. Again, there is an element of truth in that abili. There was a strike at a computer centre that caters for two other local authorities—namely, Southwark and Greenwich. Why have those other authorities not been exposed to the disgrace of the district auditor being unable to certify their accounts? The neighbouring authority of Greenwich, which shares the computer with Bexley, has roundly repudiated the suggestion that it has been brought to its knees as well as Bexley. There is not a tittle of truth in that suggestion.

In the local Press yet another alibi is put forward—indeed the alibi which the hon. Member for Hampstead mentioned in his intervention. In the local paper this week the most worn-out excuse of all has been trotted out. The headline on the front page reads: 'It is not my fault', cries Conservative leader of the council. It is then claimed that it is all the fault of the previous Labour Council. I do not believe that that excuse will carry any weight in the locality. Excuse after excuse has been exposed.

The real responsibility is clear. It lies where it must always lie in a democracy—fairly and squarely on the shoulders of the present leadership of the Council. If there is to be criticism of the previous administration, I hope that the present leader of the local authority will make a statement forthwith telling the people of the area whether the auditor is prepared to certify the accounts for 1974–75 for which he has personal responsibility.

The purpose of this debate is to seek to clear the air by inviting the Minister to confirm one or two points. First, can he confirm that the district auditor has not found any evidence of fraud in his examination of the books? It is vital that this point should be made clear by a statement by the Minister.

Secondly, are the assets of the local authority sound, are the loans to the local authority secured adequately, and can my right hon. Friend join with me in assuring all those bodies and individuals who may have money invested with the local authority that they need have no fears whatever and that loans are secured against the authority's assets?

Thirdly, will my right hon. Friend give some assurance to the staff that if the unions, particularly NALGO, find that they have to make representations to him should the local authority seek to make yet another excuse by trying to blame the situation on the staff, he will listen carefully to those representations and take such steps as may be open to him to protect the staff from any unjustified allegations?

Fourthly, will my right hon. Friend give an undertaking that he will not hesitate to exercise his power to hold an extraordinary audit should future circumstances justify?

There are one or two other matters to which I should like to refer in passing, because if there are not changes in the direction of policy in Bexley, I may have to return to this matter on another occasion. My first question under this heading concerns secrecy. In my view, there is an attempt to deny full information to the people of the borough. The leadership has set up an organisation called the leaders conference. That means that no member of the opposition can sit on that body, and I understand that matters relating to the future of the borough are discussed there and do not reach the light of day.

The second item concerns access to documents. I understand that some members of the local authority have requested that documents be made available to them and have experienced difficulty in obtaining access to documents. Thirdly, I wish to draw the Minister's attention to the fact that the majority group has changed the Council's standing orders leading to an automatic truncation of debate so that matters of major importance go through "on the nod". Indeed, only this week at a Council meeting an increase in rents to tenants went through without debate because of the operation of these secretive, steam-rolling standing orders imposed by the majority party on the authority. These are matters to which I may have to return if there are no changes in the foreseeable future.

I end by appealing to the majority on the Bexley Council. I have always taken the view that men and women who offer themselves for public service do so because they have a genuine desire to serve the community. The majority group should recognise that it has made a hash of Bexley's affairs. It is useless for that group to call for action to deal with the situation unless it is prepared to make changes in the Council's policy and in the collective top leadership of the Council. For goodness sake, let them put their house in order.

To my fellow citizens of the borough, I say that they should not lose heart or pride in their local community. Let them remember that the Council is only the temporary custodian of the borough's affairs. A new day will dawn when under a new Council the reputation of Bexley will be restored. Bexley will once again be able to hold up its head as a worthy, competent and compassionate authority.

4.20 p.m.

The Minister for Planning and Local Government (Mr. John Silkin)

The test of a good constituency Member of Parliament is that he is prepared to draw to the attention of the appropriate Minister serious misgivings that he has concerning matters within his constituency. The second test is that he is prepared to look at these serious misgivings in the light of their effect upon national matters. In both these tests my hon. Friend the Member for Erith and Crayford (Mr. Well-beloved) has come out extremely well. He felt, and rightly so, that it was his duty to put these points to the House and to the appropirate Minister, and I am glad that he has done so. It was for that reason that I decided it would be as well if I answered this debate myself. I am grateful to my hon. Friend for his kind words.

My hon. Friend asked a number of questions, and before I deal with the general matters that he raised which relate to the borough of Bexley it might be appropriate to deal with those. First, my hon. Friend quite properly asked me to give an assurance that the assets of Bexley are secure and that lenders have no cause whatever to worry about payment of their interest or capital. I am glad to give that assurance. All the loans are by statute secured on all of the revenues of the authority. That is a matter of some importance. However, I am glad to tell him that he need have no worry.

My hon. Friend was also concerned about the protection of staff—that is to say, if the question arises whether members or officers are to blame for the affairs at Bexley, whose is the ultimate responsibility? It may fairly be said that the real responsibility must rest—as it must rest with the Minister in the similar case of difficulties arising in a Department—with the elected members of the Council, in other words with the Council. Section 151 of the Local Government Act 1972 states that every local authority shall make arrangements for the proper administration of their financial affairs and shall secure that one of their officers has responsibility for the administration of those affairs. My hon. Friend asked me to confirm—it is most important that I give a clear answer to this—that the district auditor has found no evidence of fraud at Bexley. I am happy to confirm that there is no suggestion whatever of fraud. That makes it all the more interesting to find out what has gone wrong at Bexley. What appears to be wrong at Bexley is that the work of the treasurer's department is woefully in arrears, so much so that, as my hon. Friend pointed out, the accounts for 1973–74 have not yet been closed, those for 1974–75 have not yet been balanced and those for 1975–76 have not been written up to date. Therefore, the authority cannot estimate what the rate fund balance at 31st March 1976 will be. As a result, it is having to provide a rate balance in case it has nothing in the "kitty". My hon. Friend asked whether in those circumstances—and these are important circumstances—I would be prepared to consider the possibility of an extraordinary audit.

I think that I ought to state the circumstances which in my view would justify an extraordinary audit. Those are cases which indicate fraud, loss or deficiency, unlawful expenditure and the like. I have to say that I do not regard a failure by a local authority to produce accounts promptly as something that would give rise to an extraordinary audit. I shall try to explain that shortly. But certainly, should circumstances justify it, should it be proved, or should there be any doubt at all, that circumstances would justify an extraordinary audit, within the framework that I have tried to enunciate, I can give my hon. Friend that undertaking.

When the affairs of a local authority such as the London borough of Bexley are in the sort of state that they are—though I am bound to say, thankfully, that it does not happen very often—it is natural to think in terms of an extraordinary audit. The position at present is this. The auditor is already at work. He is already dealing with the 1973–74 accounts, and he has started work on the 1974–75 accounts and is at present awaiting final accounts for that year. However, as the 1974–75 final accounts do not exist, this means that Bexley cannot estimate what balance it will have at the end of 1975–76, so it has to budget as if it has nothing at all. An extraordinary audit would be looking only into those years, and that is exactly what the district auditor is at present engaged in doing. In effect, therefore, an extraordinary audit on such a basis would be a nullity. It would add nothing whatever to what the district auditor is already dealing with.

I said a moment ago that the situation was somewhat unusual. I think that it may even be without precedent, although I am not certain about that. At any rate, it was sufficient for, as far as I can see, a vigilant local Press to consider and to be critical about. It has also reached the national Press, as my hon. Friend rightly pointed out, and the national Press has been extremely interested in the affairs in Bexley. Therefore, the question whether there should be an extraordinary audit requires a wider explanation rather than a purely technical explanation.

The first question is whether it is practical. Local authorities have a duty under the Local Government Act 1972, which really presents much the same provisions that were in the 1933 Act which preceded it, to do three things above all: first, to keep accounts—that is in Section 148; second, to make arrangements for the proper administration of their financial affairs—that is in Section 151; and third, as inevitably follows, to make up accounts yearly to 31st March—that is in Section 155.

The Accounts and Audit Regulations of 1974 require that the responsible financial officer shall ensure that all accounts are made up and balanced as soon as practicable after the date to which those accounts are required to be made up. The question I have to ask myself—it was perfectly fair of my hon. Friend to ask me the question—is what sort of guidance I would give to a responsible authority and how a responsible authority would behave. Exact views may vary. That is inevitable. However, I think most Ministers would agree that it would be helpful to have some idea of what is likely to be in the "kitty" at the end of a financial year before starting the next financial year.

My right hon. Friend the Secretary of State has no power whatever to force Bexley or any other borough or authority in the country to complete accounts. The words that I read were: all accounts are made up and balanced as soon as practicable after the date to which those accounts are required to be made up. There is no definition of "as soon as practicable", because, as I have said, I doubt whether the point has even arisen previously. It occurs to me that one day the courts—not, I imagine, in this instance—might have to rule upon what "as soon as practicable" means. But certainly it would be responsible that the accounts should be made up so that the benefits of knowing what those accounts are and of being able to budget for the following year are in existence as quickly as possible.

I have dealt so far with the practicalities. I should like now to deal with what I believe to be the principle which should govern the Minister's view of a situation such as the Bexley situation. My hon. Friend rightly put three points to me. The first was whether I did not think it wrong that the majority party should change the standing orders. He gave examples of what he felt to be wrong in the way that the standing orders were being treated. On this I would disagree with him. Standing orders are a matter for the local authority, and it is up to the majority party to make what decision it will upon this. Of course, what its judgment may be is another matter. On that, however, I think that my hon. Friend in his zeal goes a little too far.

On other matters that my hon. Friend has raised, I am not so sure. I have always been a great believer that local authorities should conduct their proceeding as openly as possible. When my hon. Friend uses the word "secrecy", I do not want to get involved——

The Question having been proposed after Four o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twenty-nine minutes to Five o'clock.