§ Motion made and Question proposed, That this House do now adjourn.—[Mr. Hunt.]10.52 pm
§ Mr. George Cunningham (Islington, South and Finsbury)
My purpose in this debate is to draw attention to the improper use of public funds by Islington borough council, to ask the Secretary of State for the Environment to use his powers under the Local Government Act 1972 to order an extraordinary audit of the accounts of the council, and, failing that, to invite him to refer the evidence that I shall present tonight to the district auditor and the new Audit Commission so that they can initiate proceedings to compel Islington councillors to pay the cost of some of these improper expenditures out of their own pockets, in accordance with the law of local authority spending.
Because of the shortage of time, I shall stick closely to my notes in order to include as much material as possible. Islington council prides itself on being in the forefront of the movement for a more hard Left-wing dominance of the Labour party. It has taken over from the Lambeth Labour party in that respect. One of the Labour councillors told his colleagues that good housekeeping should not be an Islington council priority. It is in the forefront, too, in the hard Left-wing Labour move to suppress and cease to recognise the distinction between party activity and state or local authority activity. To them the two are fused, as they are in east Europe. This has led the council to use public funds for Labour party purposes, as I shall show. The fact that it has 51 of the 52 seats on the council, and that there will be no election for three years, has led it to spend prodigiously in accordance with its political inclinations without regard to propriety, due economy or the interests of residents and other ratepayers.
The council received an application from a body called the Islington News Co-operative, whose purpose is to produce a free give-away newspaper for distribution on a large scale in the borough. The group applying for financial assistance included one Labour councillor, one employee of the council and others of known Labour party active connections. Documents in my possession say that the editorial advisory board of the paper must include a representative of the local Labour party. Money has now been voted by Islington council for that purpose. The amount is uncertain because the council is being secretive, even towards the one SDP councillor in Islington, but it appears to be about £20,000.
In putting a request to the Department of the Environment for part of that sum to be financed under urban aid, the council broke the rules on urban aid that forbid politically connected projects. The council concealed the political connection when the request was made. The intention is that the Labour paper should be funded in the end by about £80,000 from Islington council and the GLC.
When my constituents want repairs done in their council flats, they often have to wait weeks or months. When the application was put in for money, for the Labour newspaper, it was dealt with more rapidly. I have a copy of an internal memorandum dated 6 September last year, marked "urgent and confidential", sayingThe enclosed application was delivered to me this morning. Could you please process it for tomorrow's Grants Sub-committee.813 That was signed by one of the chairmen of committees. The urgency is that the Labour party thinks that a free newspaper following the Labour line will be extremely handy in the coming general election.
The leader of the council has defended the provision of the money on the grounds that nine people will be employed on the newspaper. On that basis, I could decide that I want 10 agents in Islington operating for the SDP, and could justify the provision of public finds for that purpose.
The council is using money to help finance the London leaders group—that is, meetings of the leaders of Labour-controlled local authorities, plus the GLC and ILEA. In common with a dozen other London authorities, Islington decided to help itself to £2,000 of rates to finance the purely Labour party meetings, which will have £2,000 from each of the boroughs. The other boroughs were to hand their £2,000 each to Islington as the ringleader of the gang. Islington's £2,000 appears formally in its expenditure plans for next year as item BPP 10 in these words:London Labour Leaders-contribution towards one post in Finance Department and one in Borough Secretary's Department to provide support to the London Labour Leaders Group.The remainder or the cost of the two staff will I presume, come from the other Labour boroughs, but the House should note that the staff are to be employed on party work, financed by councils and to be based as officers in the councils. That appears in the expenditure papers for next year under the heading "Higher priority Extensions to Existing Services".
Islington's rate rise, decided this evening, is 30 per cent. Because of waste on other matters, to get the figure down to 30 per cent. from the earlier crazy notion of a 78 per cent. possible rise, the leading councillors proposed to cut out plans for improvements to homes for the elderly where there is a serious deficiency of staff, but the money for the Labour party meetings is included in the high priority category and gets through. In addition, Islington has acquired premises at 135 Upper Street to be made available to the Labour leaders group. Councillor Hyams of the SDP has asked for full information on funding this organisation but is having difficulty in getting it. There seem to be no minutes yet on the decisions taken.
Islington has expanded the staff in its press department, which is now, of course, called the campaigns department. To appreciate the significance of that we have only to read item 3 of the record of the secret meeting of Labour leaders on 7 December last year, when leaders agreed that they wouldensure that press and publicity staff participate fully in the campaign"—that is, a political campaign on rates run by the Labour party.
In Islington the campaigns department, which is headed at the moment by a council officer who is a prominent and active member of the London Labour briefing team, has taken to issuing dishonest press releases. One recently gave the impression that councillors were forgoing increases in their personal allowances when in fact they were considerably increasing them, including, it seems, allowing themselves to claim up to three times a week for just popping into the town hall for a discussion with an officer on this or that. Another suggested that the district 814 audtor had criticised the old SDP council when he had in fact criticised the new Labour council on the subject of the appropriate level of balances of local authorities.
Then there is the Baggshott Co-operative story. This is a group of ex-prisoners who set themselves up to do small building work. The council gave them £10,000. The business went bust, owing among other things £13,000 in unpaid PAYE money. The book-keeper, whose work was said to have been entirely unsupervised, walked off with £2,000. There had been other irregularities. Despite that, I have in my papers a record of a meeting, marked "strictly confidential", in which Councillor Chris Bromley, formerly chairman of the development committee—and, by the way, recently appointed to a high-level post in the GLC—is authorised to tell the co-op that they should liquidate themselves andreconstitute themselves as a new co-operative, preferably under another name",whereupon consideration might be given to giving them more money "towards setting up and rent".
Then there is the trip to Grenada. The hard- left-wing council in Islington has decided that the post-revolutionary government in Grenada, well-known for not holding elections and for ignoring human rights, is one with whom it wants to identify. It has twinned with Grenada. A project in Islington called the Ujima project, already given council money, has been given £3,250 more to finance trips to the island on the anniversary of the revolution by a dozen of its members and two staff. The Department told Islington that urban aid money could not be used for that purpose and that it would also be improper for Islington to use its own resources for it. So Islington gave a grant to the Commonwealth Youth Exchange Council and fixed it with that body that the money would be used to finance the trip. Well might the chairman of finance scrible at the bottom of the submission made to him, as I have seen with my own eyes, "Have we the power to do this?" It was done.
There was the trip to Italy by children in council care and the social workers, of course, in charge of them. The trip greatly exceeded the council's own guidelines for the cost of such holidays. An internal audit showed that there had been irregularities in money control in the home in question. The deposit for the trip was paid in cash and in spite of a committee decision that it should not take place the decision was overturned when the staff took the matter to the Labour group. The staff accompanying the children had the gall to claim hundreds of pounds in sleeping away allowance because they were in Italy looking after the children.
Last year, under pressure from social workers, the Labour party reopened at a cost of about £20,000 a tiny, and therefore extremely uneconomic, home for children in council care in Highbury New Park. I am told that at present there are only four children in that home.
The old Labour council, in 1982, negotiated a settlement on staff ratios at children's homes. The new Left-wing council has negotiated a new one which imposes a burden of £800,000 on the rates. The deal was negotiated in part by Councillor Victor McGeer, chairman of the personnel committee, and on the other side of the table was another Mr. McGeer, the first one's brother, who is a NALGO shop steward himself employed at one of the homes. No declaration of interest was made in accordance with standard Department of the Environment guidelines for proper behaviour by councillors.
815 Then there is the money being given to London Voice Limited, the company which publishes the magazine City Limits, based in Islington and supported by the council as well as by the GLC against its rival Time Out. London Voice has received at least £13,500 from Islington council and the DoE has been foolish enough, or careless enough, to accept this for financing under urban aid. The GLC has given about £180,000 in loans to the paper and the GLC's finance comptroller told the council formally:there is unlikely to be any repayment of the loan".Then there is the IDEAL project to set up a company called the Islington Development and Economic Agency Limited with directors appointed by the council to do things that the council would not be able to do in its own name. This has been approved by the leader's policy committee, and seven directors have been appointed. I understand that the legality of this move has been questioned by advisers to the council.
Islington council likes to claim that it is improving services for people in need. This year it has in fact slightly underspent its budget on homes for the elderly. Its budget for homes for the elderly in 1983–84 is less than 20 per cent. higher that that of two years ago. That is to be contrasted with the planned rise in spending on the council's so-called campaigns unit, the purpose of which is to push the council's political views. In 1981–82 expenditure on the predecessor of the campaigns unit was £81,000, in the present year the expenditure was doubled to £166,000 and in 1983–84 it will go up by 50 per cent. to £245,000—just under a quarter of a million pounds and a threefold increase since Labour took power. In the same period, the cost of the members secretariat, commonly referred to by watchers of Islington council as the Labour party minders, will rise from £30,000 to £84,000.
Another worrying fact is that a large part of Islington council's expenditure these days is authorised not by the relevant committee but by the chairman, allowing the chief officer to use his delegated power on grounds of alleged urgency. Since the Labour council took over last May, twice as such expenditure has been authorised under the heading of urgency on capital account as in the regular way—£10.7 million as against £5 million. On revenue account, chairmen have authorised £2.1 million as against just £400,000 in the regular way.
I have in my dossier a paper in which Islington's borough solicitor advises councillors not at that time to take a certain decision because they did not have the requisite facts before them and therefore any decision could be unlawful. Councillors ignored that legal advice and took the decision.
There is, therefore, the use of public funds for overtly party political purposes, the use of public funds to create and sustain a free newspaper with overt Labour party connections, suppression of facts when application was made to the DoE when those facts would have disqualified the application, waste of funds on councillors' pet projects with little of no relevance to the borough, lack of financial control over social workers in parts of the council complex and excessive payments for the kinds of purpose that I have listed.
I wrote to the leader of the Labour party asking whether he approved of this kind of use of public funds by Islington council, the GLC and other Labour-controlled authorities. In a reply dated 28 February he simply draws my attention 816 to the Local Government Act and says that ratepayers have a legal right to challenge expenditure. The Labour party has gone a long way down into the swamp of corruption when its national leader, on being given irrefutable proof of these abuses, refuses to use his authority to condemn them.
Ten years ago, talking about the Crown Agents, I told the House that there was a scandal in that organisation just waiting to blow. I was not believed, but we all know now that the outcome was hundreds of millions of pounds of public money down the drain, improperly spent. I hope that I shall be believed this time when I say that in Islington and in some other Labour-controlled authorities in London there is a new scandal waiting to blow, which needs immediate investigation, exposure and punishment.
My purpose is to secure that these matters are investigated. My view is that some of the expenditures that I have mentioned are irresponsible waste and that some are actually illegal. I do not want the hard-pressed residents of Islington, who face a 30 per cent. rate rise next month, to have to wait a year and more for the audit process to take its normally slow course. I therefore call on the district auditor and the new audit commission, to be set up next month, to investigate these cases without delay.
It is extremely unusual, I know, for the Secretary of State to order an extraordinary audit. It is right that he should be loth to use that power, but I believe that it is justified and I ask the Minister to say that he will give it serious consideration.
Islington councillors who have voted for these improper and wasteful expenditures should be made to pay for them out of their own pockets and should be debarred from holding office, in accordance with the provisions of the Local Government Act 1972.
The district auditor has the power to set those processes in motion and I look to both him and the Secretary of State to use their powers in the interests of my long-suffering constituents.
§ The Under-Secretary of State for the Environment (Sir George Young)
The House will have listened with care, and I suspect with a sinking heart, to all that the hon. Member for Islington, South and Finsbury (Mr. Cunningham) has said. It is clear that those ratepayers in his constituency who are unhappy with their lot have a hard-fighting champion; and even clearer that the majority group of Islington borough council has a stern opponent. It is hardly surprising, against the background of what the hon. Gentleman has told us, that all three Islington Members left the Labour party. Perhaps I might congratulate the hon. Gentleman on the cogency and force with which he has put his case tonight. Indeed, I would expect nothing less.
The subject of the debate is the case for a special audit of the accounts of the London borough of Islington. From what I have heard tonight, and from what I have learnt previously about Islington, it seems exactly the sort of behaviour that is driving people in droves from the Labour party. I shall lose no sleep over that, but I regret that it is not just the Labour party but local government as a whole whose reputation suffers from the sort of behaviour about which we have heard tonight. My sympathy goes to the hard-pressed ratepayers who have to finance it and who will be reeling from the 30 per cent. increase for which Islington has apparently just voted.
817 Only last Friday I was reading in the London press about Left wingers on the council trying to bankrupt the borough, which apart from being ill advised is illegal. I understand that they were seeking a confrontation with Government. One councillor was reported as saying:These people are straight out of the Russian revolution.They seemed heedless of the fact that they were using other people's money; money paid by ordinary people and local businesses-the sort of undertakings which provide employment and can do so much to provide real help to the unemployed in the borough.
I shall leave the general question of Islington's Left and deal with the particular question of a special audit. The technical legal term is "extraordinary audit", and it might be helpful if I explain the legal and practical considerations that apply.
First, I deal with the law. Section 165 of the Local Government Act 1972 says that the Secretary of State may direct a district auditor to hold an extraordinary audit either on the application of a local government elector, or if it appears to him from an auditor's report to be desirable, or if it appears to be desirable for any other reason. There is no doubt that the Secretary of State has considerable scope in deciding whether or not to call for an extraordinary audit.
In practical terms, I should make it clear that an extraordinary audit is really just an ordinary audit at an extraordinary time; that is to say, the auditor has no more than his usual powers, which of course are quite wide ranging enough for him to do a thorough job. It needs to be borne in mind that an extraordinary audit is not a magic weapon; it does not give the auditor a special form of X-ray audit eye. It is essentially a matter of timing. Indeed, it is open to the auditor to take action at any time during the course of an audit. The islington audit for 1982–83 will be under way in the next couple of months, with the public inspection period in the autumn. So an extraordinary audit, for all its apparent drama, may not necessarily be essential for prompt action. This debate will serve to draw the issues of which the hon. Gentleman is complaining to the auditor's attention.
An extraordinary audit, of course, costs money. My right hon. Friend the Secretary of State will consider a request for an extraordinary audit carefully. He will want to consider whether it will achieve what an ordinary one will not and whether the costs and disruption will be justified. I make no apology for reserving my right hon. Friend's position, but I can give the hon. Gentleman the undertaking for which he asked towards the end of his remarks. My right hon. Friend will certainly consider seriously whether it is in the public interest for all to see quickly what has been going on in Islington.
One issue that the auditor will be considering in due course is the legality of the expenditure which the hon. Gentleman has complained about. Indeed, in deciding on the request for an extraordinary audit, the Secretary of State is bound to ask himself whether there is at least a prima facie case of illegal spending. It is not for me to pronounce here on what is, or is not, legal. That is for the auditor and the courts. I do not wish to become embroiled in a debate on what is a party political piece of spending and what is genuinely aimed at getting a better deal for Islington. But local authorities must act in accordance with the law and they must satisfy the auditors that their spending is lawful.
§ Mr. George Cunningham
I hope that the Minister will not make the distinction between party political interest and something that is thought to be in the interests of residents. I believe that my political party is in the interest of residents. That would not justify me in using public funds for it.
§ Sir George Young
The point is that local authorities have a certain amount of discretion in their spending powers. They will undoubtedly argue that some of the things that the hon. Gentleman has mentioned were in the interests of a better deal for Islington. At the end of the day, it wll be for the auditor and the courts to decide who is right.
The district auditor is independent by law and has to form his own view of the merits of any particular case he comes across. The hon. Gentleman has a perfect right to ask me what I personally think about this sort of behaviour by a local authority. I hope that I have given that view in my opening comments. If the comments were not clear enough, I say once more that I deplore the attitude of Islington and other Labour authorities like them. It is not just a question of party politics. Everyone knows that Islington takes a different political line from the Westminster Government. It has that right. What we are talking about is waste of other people's money—waste on fatuous projects like "Save London from Heseltine week". Who except the committed Lefties ever knew that was happening? There is waste on contributions to trendy newspapers. I wish that Islington councillors had the sense to see that the real way to help the unemployed is to stop piling rates on industry.
As the hon. Gentleman knows, I replied to him on 28 February on the spending on the Labour council leaders' meetings. I told him that the Secretary of State would refer to the appropriate district auditors the decision of the leaders of the Labour councils and of the GLC to use council funds to finance the administrative costs to which he has referred. On the Baggshot building co-operative, I wrote to Councillor Hyams on 21 February asking him to consider sending the papers to the metropolitan district auditor who would then investigate any item of the local authority's accounts. In view of the possibility of police involvement, I said that it would not be appropriate for me to comment at that stage on the paper's contents.
The hon. Gentleman mentioned several topics relating to the Islington partnership and the way the council is operating the urban programme regime. As I think he knows, I am looking into the matters that he has raised with me and I am in touch with the council on some of their policies in this sphere. I shall be pursuing any aspects that seem to be misconceived or wrong in other ways. The very essence of partnership is that the Government, local authorities and other parties should work together to achieve agreed objectives to assist the deprived inner areas. The Government are providing money to schemes which we believe are supportive of the agreed partnership objectives and partnership money must be used only in that way.
From what the hon. Gentleman has said and, indeed, from other information which has come to my knowledge, it would appear that Islington is not fully accepting its duty to operate wholly within the guidelines laid down and the spirit of partnership. If that is, in fact, the case and governmental partnership money granted has been used for the support of schemes unacceptable to the Government, 819 we shall take steps to redress the position. As chairman of that partnership, I am taking a close interest in the situation locally and I can assure the House that I shall not shrink from taking prompt and effective action if it should sadly prove to be necessary.
I am conscious that the hon. Gentleman will have wanted a quick decision from me tonight. I hope that I have explained why I do not think it would be right to make a snap judgment, but I can promise him that my colleagues and I will consider everything that he has said, and we will consider it all the more carefully because of the force with which he has said it and the evidence that he has produced to sustain it.
Before I conclude, I wish to acknowledge once again the efforts the hon. Gentleman is making on an issue where he clearly feels very strongly indeed; and I should also mention the hon. Member for Islington, Central (Mr. 820 Grant) who has also been in touch with my colleagues and myself on a number of audit issues in recent months. They have done a lot to alert the public and the auditor.
Very recently my noble Friend the Minister of State for Local Government, Lord Bellwin, has undertaken to draw the auditor's attention to certain matters which the hon. Gentleman recently raised in this House in a rather noisy application for a debate under Standing Order No. 9. I can promise him that, whatever the Secretary of State's decision on an extraordinary audit, the matters which have been raised here and elsewhere will be put to the district auditor. Therefore, the spending to which the hon. Member for Islington, South and Finsbury so objects—and I sympathise—will indeed be carefully examined as part of the audit procedure.
Question put and agreed to.
Adjourned accordingly at twenty minutes past Eleven o' clock.