Audit (Miscellaneous Provisions) Bill

HC Deb 06 December 1995 vol 268 cc376-412

Order for Second Reading read.

3.46 pm

The Minister for Local Government, Housing and Urban Regeneration (Mr. David Curry)

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

It is with some trepidation that I suggest that this is genuinely a non-controversial measure, but I believe that to be the case. The Bill is a small but useful piece of legislation, which relates to the functions of the Audit Commission for England and Wales. Two of the provisions also relate to the functions of the Accounts Commission, the equivalent body in Scotland.

The three measures are as follows—to give the Audit Commission powers to work alongside the Department of Health's social services inspectorate on studies of the performance of local authority social service departments, a measure which will apply in England and Wales; to change the financial years of the two bodies, so that, instead of having a financial year which runs from 1 April every year, they will have a financial year which runs from 1 November; and to enable local authorities to publish annual information about their performance in a free newspaper. At the moment, they are only allowed to publish the information in a paid-for newspaper circulating in their areas. The last measure would apply to England, Scotland and Wales.

The Audit Commission's main function is to arrange external audits for local authorities and health service bodies in England and Wales, a task it carries out very well. The commission has established a reputation for professionalism and independence. When the Audit Commission was set up in 1982, it was also given a specific remit to carry out studies to promote value for money in the provision of local authority services.

Over the years, the Audit Commission has produced a number of excellent reports, such as "Tackling crime effectively" and "In the line of fire", a report dealing with the fire service. The commission has also covered social services issues, most recently in "Seen But Not Heard", about planning services for children in need and improving co-ordination between agencies on health and social services.

Much of the Audit Commission's work is naturally of interest to the Department of Health. But as the commission at present has no power to charge the Secretary of State for its work in this field, it cannot help with studies commissioned by the Secretary of State. The Bill will enable the Audit Commission to do that, and to be paid by the Secretary of State for the work it does. We believe that it would be useful to have an independent assessment of the performance of the whole of a social services department. The assessment should cover the department's efficiency, effectiveness and economy, together with its attention to service delivery and to systems for ensuring quality.

We think that the best way to achieve that is to bring together the complementary skills of the Audit Commission and the Department of Health's social services inspectorate. The Government are planning to introduce a rolling programme of studies covering England and Wales, and every local authority will be covered during a five-year period.

The second provision in the Bill—to change the financial years of the Audit Commission and the Accounts Commission—is a technical one. Both bodies organise their work programmes to run from November to October, because that is what fits in best with the annual cycling of auditing local authority and health service accounts. If the bodies line up their financial year with their operational year, it will be easier for them to budget and to plan their work. This is basically an efficiency measure. The Audit Commission would make the change during 1997 and the Accounts Commission would follow one year later, once it had dealt with the changes resulting from local government reorganisation in Scotland.

The third provision in the Bill relates to the publication of local authority performance indicators. Performance indicators tell people the basic facts about their local authority's performance. Equally importantly, they encourage local authorities to think about the standards they are setting themselves, and their performance in meeting those standards.

The Government wish to encourage people's interests in how their local authority performs. Public information must be readily available and easy to understand if it is to be useful. That is why we have accepted suggestions from the Audit Commission and from local government that the options for publication of performance indicators should be broadened.

The free newspaper industry has grown substantially in recent years, and for many people it is an important source of information. Free newspapers have the advantage that they are delivered directly into people's homes, and many authorities believe that they can reach a wider audience by publishing in them. The Bill will allow them to do so.

None of those measures can be regarded as controversial. They build on our existing policies in those areas, which centre on sound management, improving standards and promoting openness and accountability. In all cases, they will be welcomed by those most closely concerned, and I commend them to the House.

3.49 pm

Mr. Frank Dobson (Holborn and St. Pancras)

The Labour party broadly welcomes the intentions behind the Bill. We are deeply committed to having tough regulatory inspectorates to secure national standards from local authorities. That is why we would like the audit service's remit to be extended to provide for the establishment of a quality inspectorate in parallel with its investigations and reports on value for money.

However, we also want a rigorous audit service that protects public funds and combats fraud and wrongdoing, and it is our belief that, in many places, the audit service singularly fails to carry out that task. The basic problem with the Bill is that it does not go anything like far enough. First, I shall deal with what is in the Bill; as the Minister demonstrated when he introduced it, that will not take long. Then I shall tell the House what we believe should be in it.

The Bill's first provision is to make it possible for joint studies of council social services departments to be carried out by the Audit Commission and the social services inspectorate of the Department of Health. That is a welcome proposition, but we have reservations about it, which we shall pursue in Committee.

The Audit Commission is, at least relatively speaking, a body independent of the Government, whereas the social services inspectorate is not. It is a straightforward part of the Department of Health, controlled by Ministers, and there may therefore be conflict between an independent body and one that, ultimately, simply has to do what it is told by its ministerial bosses.

Furthermore, the social services inspectorate does not have an especially good record in doing its current job. Several times in the past, it has investigated a council or a particular service provided by a council's social services department and has pronounced it okay; something has then gone wrong, and the inspectorate has been among the first to jump in and denounce the department that it had just given a clean bill of health.

There are many examples, but I shall give just one. A few years ago, the social services inspectorate reviewed Kent county council's social services department, and in particular its registration and inspection unit, which was responsible for registering and inspecting private residential homes for the elderly. The inspectorate gave that unit a very clean bill of health, commending it on the way it was run and on the job it was doing.

No sooner had that happened than there was a great scandal in Thanet, involving a residential home in which there was virtually organised granny-bashing. The social services inspectorate immediately leaped to join in the criticism of Kent county council's registration and inspection of private residential homes.

Inspectorates should never have to take responsibility for what other people do wrong, but they must take responsibility for what they themselves do wrong. If the inspectorate gives something a clean bill of health, it has some explaining and apologising to do if anything then goes wrong. We must ensure that inspectorates behave responsibly, and do not try to shuffle off responsibility on to everybody else when things go wrong.

I know that what is proposed in the Bill is not a set of investigations of that type, but joint studies. Nevertheless, we need to pay attention both to the status and to the generally irresponsible approach of the social services inspectorate in the past.

The Bill also provides, as the Minister said, for councils to be allowed to publish performance indicator information in free sheets. That is obviously a sensible measure, for which people have been pressing for some time.

There is one other item. The Bill provides for changes in the accounting year of the Audit Commission. I should like a guarantee now from the Minister that the change in the audit year will not he used by either the Department or the Audit Commission to make it impossible to compare, year on year, the growing staff numbers, costs and top salaries in the Audit Commission.

We all know that, when businesses or other parts of the Government start changing the way in which they present financial information, it is usually to mislead and obfuscate. If the Audit Commission is to maintain its credibility, it is crucial that its own figures are beyond reproach in presentation and content. I hope that the Minister will either get up now and give that guarantee, or that it will be given at the end of the debate.

Mr. Curry

Without for a minute accepting the implications of the hon. Gentleman's remarks, the intention of the change is simply technical. I will ask the Audit Commission to undertake that whatever figures are produced are absolutely comparable, so that there is no question about their transparency.

Mr. Dobson

I thank the Minister for that undertaking.

That is all the Bill does, so it is now a question of what it should it do. All over the country, people feel that the audit service is not doing its work properly. It is not coping with the major scandals which have arisen in councils of all political persuasions. I am not making a party political point. It has not coped well with scandals in Labour, Tory and Liberal Democrat councils.

It is no good going on as we are. Not long ago, I listened to a former Environment Minister moaning on the radio about wrongdoing in Lambeth, which he was perfectly entitled to do. The interviewer then asked him what he was going to do about it, to which the former Minister replied that there was nothing he could do. There has been nothing they could do about Lambeth for a decade, or about Westminster for the past eight or nine years. There has been nothing they could do about wrongdoing in Wandsworth over the past few years, or in Brent over the past five years. "Nothing we can do about it" is no longer the answer.

If it is a truthful answer, it shows that the present law on auditing is not up to the job, because all the scandals have occurred under the present laws—laws that were introduced by the Government. Some of the major scandals have not even been dealt a glancing blow by the audit service.

Take the example of Lambeth council, which, until the last council election, was controlled by the Labour party. Its record was a disgrace, and what it did was damaging to the people of Lambeth. It now has a new chief executive, and, following the Appleby inquiry, and with a great deal of good will, generally speaking, from most councillors of all political persuasions, there is a commitment to sort things out. Some of that was done at the instigation of my hon. Friends the Members for Norwood (Mr. Fraser), for Vauxhall (Miss Hoey) and for Streatham (Mr. Hill). Things are being turned round, but the council needs a lot of help.

Let us consider the role of the audit service in relation to a decade or more of things going wrong in Lambeth. The audit service itself has a lot to answer for. I make no excuses for what the council did. There were financial scandals, incompetence and fraud. Most of it was committed by officials of the council or by private contractors who had relationships with the council, but it continued for over a decade, and the audit service did little about it.

Scarcely anybody had their collar felt as a result of the audit service's activities. It produced a number of public interest reports but, once they had been produced, under the current law the council was not required to do anything in response to them.

Under the present law, as I understand it, the Audit Commission could not step in and do anything to correct what was wrong. There were limited powers for the Secretary of State to step in if he decided that something was wrong, but it is not clear in the current law whether the auditor or the Audit Commission can ask the Secretary of State to step in. It would be useful to know whether any approaches were ever made to Ministers. We may never know whether approaches were made, because the Government prefer to make Tory propaganda out of the problems in Lambeth, rather than promote public propriety in that borough.

The history of what has happened in Lambeth, and the present system's incapacity to deal with what is going wrong, is one reason why we believe that substantial change is necessary. Our document on the future of local authorities, "Renewing Democracy, Rebuilding Communities"—which is usually mocked by the Secretary of State, if he can get to the Dispatch Box and if he does not rant on about something else—is committed to toughening up the audit service, so that it can deal with precisely the sort of situation that prevailed in Lambeth. Our document is also committed to tougher practices, and to giving the audit service more power.

All over the country, many hard-working councillors and council officials who are trying to promote public-private partnerships—which are, in theory, endorsed by the Government—find themselves obstructed at every turn by the district audit service, which ploughs through, asking them whether they have a statutory right to do this or that. While all that is happening, to the detriment of practically everybody, and at immense cost to local people and local businesses, the audit service performs poorly in picking up outright wrongdoing and fiddling, which is its primary purpose.

In future, councils should be required to publish plans for their services each year that set out cost and quality targets for each service. At the end of the year, councils would have to explain to the local people and to the audit service if they have not met the targets.

We suggest a new role for the audit service, if there are deplorable standards of service or things are persistehtly going deplorably wrong. Ministers cannot continue to say that there is nothing they can do. We believe that the law should be changed, so that, if the Audit Commission concludes that a service is continually and unjustifiably failing, it can require a council to prepare a plan to put things right, to set a timetable for them to be put right, to send in an advisory team to help the council to put matters right, and to check on the progress.

If the council is still failing, and if the Audit Commission recommends it to the Secretary of State, we believe that the Secretary of State should be empowered to appoint a management team to take over the service or services that are failing, and put them right. Far too frequently, the Government's answer to abominable management services is to put the services out to tender, thus endangering the jobs of the blue collar service workers, who are in no way responsible for the mismanagement that initially led to the problem. It is the management that needs to be sorted out.

It is not only in Lambeth that there have been persistent failures to do things properly and lawfully. Similar problems have been occurring in Brent for a long time. I shall leave it to my hon. Friends who represent that borough to spell out some of the things that have been happening there. Those improper practices have been unhampered by the audit service, because of the weakness of the present provisions in the law. It is worth while to draw to the attention of the House the fact that, under a Government who claim to be committed to open government, there has been a scandal in Brent involving the Ad Shop, as it is called, on which a report has finally been prepared.

I have in my hand a sheet of paper setting out the undertakings that an elected councillor in Brent must sign before they will be given a copy of that report on the scandal of what has happened to public money in Brent. It is scandalous. They must undertake that they will not disclose its contents to anyone else. They must undertake to return the document to the chief executive for disposal. They must undertake not to discuss it, reveal it or pass it on to anyone else. That is about a scandalous and corrupt misuse of public money, yet councillors who are elected to represent local people and bring people to book are expected by a Tory council to sign that disgraceful undertaking.

Mr. Ken Livingstone (Brent, East)

I have seen a copy.

Mr. Dobson

I believe that one or two copies have got about in spite of the undertakings, because, of course, fatuous undertakings are not binding on anyone; people should remember that.

Mr. Dennis Skinner (Bolsover)

We could achieve socialism with the aid of a few leaks and one or two photocopies.

Mr. Dobson

What has happened in Wandsworth? The auditor reported that the council had acted unlawfully in relation to some of its housing duties. Nothing has happened.

That brings me to Westminster, which is a spectacular example all of its own. It has now descended into the depths of scandal, for three reasons.

The first scandal, which I shall return to, is the scandal of the political fraud and corruption that has been inherent in that council for a long time, and has resulted in the district auditor—we are discussing the audit service—currently investigating the misapplication of £106 million by Westminster City council.

Secondly, there is a scandal that does not relate directly to the district audit service, but should relate to the Comptroller and Auditor General. That is the grotesque scandal by which Westminster City council receives enormous sums, far above those that are received by any other comparable area, all on the basis of that preposterous idea to which the Government subscribe—that Westminster is the fourth most deprived place in Britain. No one in their right mind believes that Westminster is the fourth most deprived place in Britain.

Mr. Skinner

The Audit Commission has never had sufficient money and resources to do the job properly, and has always attacked Labour authorities, in the main, that might spend a bit over the odds, rather than Tory authorities that spend underneath the odds. In addition, I have always believed that, since rate capping was introduced by the Tory Government, in many ways that has undermined the auditor's authority, because the Tory Government have decided on a political basis which councils should be hammered, with the result that the Audit Commission is not able to make the proper judgment, because it is clouded by the political actions of the Government.

Mr. Dobson

There is a great deal of truth in what my hon. Friend says.

To give some idea of the preposterous nature of the ranking by which Westminster is placed fourth in the scale of deprivation, Rotherham—which has suffered severely from steelwork closures and engineering work closures in the past few years—is 284th in that scale of deprivation, and it is obviously a preposterous and unjustifiable position. Not only members of the Labour party say that.

Ministers claim that the list was produced independently, but it was nothing of the sort. It is produced in the Department of the Environment. Ministers have claimed that it has been accepted by the local authority associations. It has been accepted by them because they have no alternative, but they do not believe that it is right. Above all, the chief executive of Westminster—except that he has some other fancy title—has acknowledged that Westminster gets £20 million more than it is entitled to.

Westminster gets special allowances for the number of visitors who come in each day, but it also gets in a year about £20 million from those self-same visitors by way of parking charges. For some reason, the parking charges are not offset against the extra grants the council receives because of the number of visitors. That is basically a racket. That leads to a third consequence, directly related to what the district auditor investigates.

According to the figures on the cost of providing services in Westminster, it is the most profligate, expensive and inefficient council in Britain. For example, refuse collection costs £53 per head in Westminster. I shall compare not Westminster with St. Helens or Scunthorpe, but with Camden, which is next door and is exposed to roughly the same inflation and higher costs that are incurred in central London. Camden's refuse collection costs £24 per head of population. Westminster spends £36 per head on street cleaning—the highest in the country. Camden spends £14.42.

Another matter of great importance is the administration of benefits. Westminster manages to pay housing benefit within 14 days to 66 per cent. of the people who apply, and that costs £226 per transaction in administrative costs. Camden, next door, manages to pay out within 14 days to 95 per cent. of the people who apply, at a cost of just £104 per transaction. Camden is 50 per cent. more efficient—at less than half the cost—than Westminster. That shows how profligate and inefficient Westminster is. All those matters concern the audit service, nationally or locally.

But I come back to the main issue of the scandals in Westminster. Far from taking action on the scandals in Westminster—the misapplication of £106 million—the Government have done nothing. Far from condemning the wrongdoing in Westminster, the Government have done nothing.

Mr. D. N. Campbell-Savours (Workington)

My hon. Friend might recall that I was the original objector in the late 1980s to the sale of the cemeteries by Westminster, and I went to the district auditor. One matter that concerns me arising out of the affair is the way that Mr. Magill was treated by elected councillors. Mr. Magill acted with great courage in the face of great adversity, and he was regularly insulted by councillors who obstructed him in every way. He must have been more than distressed on many occasions, but he clearly hid his distress and, one way or another, managed to produce a number of reports.

It would be good if we could enshrine in legislation some form of protection for public servants who diligently do a job even when they are faced with the kind of attacks that Mr. Magill suffered, particularly from Lady Porter.

Mr. Dobson

I entirely agree with my hon. Friend. In particular, I commend him for the distinguished part that he has played in attempting to bring Westminster council to book. As an objector, he may know that, far from toughening up the law and strengthening the hand of objectors to prevent a recurrence of what has happened in Westminster, the Government are excluding Westminster from their investigation of the role of objectors and the functions of the audit service. The Government are studying every council and every audit service in the country except Westminster.

Mr. Paul Boateng (Brent, South)

Bar one.

Mr. Dobson

As my hon. Friend says, they are investigating all bar one. Their official report says:

The study will exclude Westminster City Council which has already been the subject of a separate inquiry"— they can say that again—

following objections to the council's 'designated sales policy' in relation to housing. That is an inadequate description. There have been objectors and objections to about another 25 items of expenditure.

It continues:

The Department wishes to avoid the high profile and significant costs of this case from distorting the results of the current project, which will focus on the generality of cases.". I bet it will focus on the generality of cases. The last thing they want it to do is focus on what has gone wrong in Westminster when they have done nothing about it for so many years.

My hon. Friend the Member for Workington (Mr. Campbell-Savours) and other people who had to pay the poll tax or the council tax in Westminster raised formal objections. As I have explained, the district auditor is now investigating the wrongful misuse of more than £100 million of ordinary people's money.

It makes every other financial scandal that has ever occurred in English local government pale into total insignificance. Such figures have never been bandied about. What happened, the length of time it continued and the obstruction by officers and elected councillors in Westminster demonstrated just how much the audit service needs to be strengthened.

There have been five major scandals. In any other council, the other scandals would be major ones, but in Westminster there have been five major scandals. There was the "homes for votes" scandal in 1987-89. Originally, the district auditor said that it had cost £21 million. Lady Porter and her friends objected to the quantum of £21 million, and, having looked again at the matter, the district auditor agreed that £21 million was the wrong quantum, and that in fact £29 million had been lost.

The next item was the second part of the "homes for votes" scandal, between 1989 and 1994, involving losses of another £21 million. Then there was the council's failure to collect service charges and to bill many new leaseholders. It cost £13 million. Councillors knowingly did not collect service charges, because it might upset the voters. They knew that it was wrong. They were advised by their lawyers and finance officers that it was wrong, but they still persisted, and they are now being investigated.

There was also an indemnity and abatement scheme that was intended to help leaseholders, at a cost of £18 million. The district auditor is investigating whether the council even had the power to start an indemnity and abatement scheme.

The final scandal, which has cost a great deal of money and will cost more, was the absolutely scandalous decision to put homeless families into life-threatening, asbestos-ridden tower blocks. That was totally unjustified, and, once again, against the advice of the council officers.

In case anybody should think that is the sum total of the scandals in Westminster, I shall whizz through the others, as they would represent enormous sums of money for any other council. There was the scandal of the property disposal of Cheylesmore house—costing £3.5 million—and the Ambrosden hostel—costing £2.5 million; a scandal involving Monck street and Bishop's Bridge road cost another £1 million; the famous cemeteries reacquisition cost £3.5 million; MRS redundancy costs when Westminster privatised some of its services were £1.5 million; and what were described as "Quality of Life initiatives" and were probably unlawful cost £5 million. Some £1.5 million of local taxpayers' money was spent on propaganda in the run-up to the 1990 election, and another £400,000 was spent on consultants. Other capital grants, which may very well be unlawful, cost another £3.5 million.

On any other council, those would be absolutely momentous items of wrongdoing and misexpenditure, but they pale into insignificance compared with the really major scandals in Westminster.

One of the problems is that the inquiry has been extremely protracted. That is because the inquiry has been extremely obstructed, both by those who were charged with losses and by present councillors and council officers, who are trying to protect those who have been charged.

At one stage, the district auditor was told that some of the most important papers could not be found. They had been issued to a dozen or more people, but not one example of them could be found. The district auditor resorted to a dawn raid on some of the offices. Lo and behold, he found the papers. It was a bad mistake on the part of those who were trying to put him off, because he picked up as well many other papers that he did not know existed. I understand that the other papers were extremely illuminating, and put the council in an even worse light.

I am told that obstruction of the sort that I have described is not an offence under current law. If it is not, it clearly should be. I cannot believe that anyone disagrees with me on that.

It is clear also that both council members and officers have repeatedly lied to the district auditor during his investigations. It seems that, if individuals have said things that are plainly contrary to the written evidence of what happened at meetings or to written advice—for example, people saying that they were given legal advice that they could do something and that advice, when examined, revealing that they were told that they could not do what they wanted—that should also be an offence. There may be genuine difficulty in recollecting exactly what happened, but plain lying to the auditor should be an offence.

Enormous costs have accrued. The district auditor has had to run up an enormous bill in carrying out his work. The council is running up enormous bills in trying to obstruct him.

The obstruction has not stopped: as recently as 21 November, the district auditor complained to the council that it was not supplying him with material on the notorious cemeteries sale. He is investigating the council's decision to bring a legal action against its previous legal advisers on the sale. It claims that it has been wrongly advised by its legal advisers.

The decision to spend money trying to initiate a legal action against the council's previous legal advisers was against the legal advice of those advising the council when it took that decision—in other words, another lot of legal advisers. That is clearly a waste of public funds.

In other areas, Labour councillors had been told that, if they, against the advice of council officers, turn down applications for opencast coal mining against legal advice—this turns on certain principles that have been laid down in earlier cases—they will lay themselves open to surcharge. What is sauce for the Labour goose must be sauce for the Tory gander at Westminster.

The unique feature of the Westminster case has been the spending of public funds to mount political campaigns of vilification against the auditor, simply because he has been doing the job that Parliament gave him. The case is unique in another respect, because Members have been involved in it up to their ears from the start. That includes Cabinet Ministers, former Cabinet Ministers,*** current occupants of the Government Front Bench, Members who were on that Front Bench, and Back-Bench Members. They have all been involved as Members or councillors throughout the piece. That is one explanation why they are reluctant to criticise what has been going on.

For instance, councillors tried to get the official press officer of Westminster to plant hostile stories against the district auditor in the news media. They made a fatuous charge, and wanted to blame the district auditor for not stopping them not collecting the service charges. The problem with that charge is that the district auditor is on record repeatedly telling them that they were breaking the law in not collecting the service charges, so it is another lie.

It is quite clear, and it is becoming clearer, that that council knowingly moved homeless families into blocks that were known to be dangerously riddled with asbestos. The council has still produced no apologies. An independent inquiry was carried out, and a report is due to be published, but people familiar with Westminster council are becoming more and more concerned that the report may not be published.

The Minister here today has responsibility for housing—we know that he is excluded from all other things—in Westminster as well as the rest of the country, and this is a housing issue. I challenge him today to tell the House that he will insist on receiving a copy of the report, either as a Tory Member of Parliament or as Minister—I do not mind which—and to undertake to place it in the Library of the House, so that this wrongdoing and the official inquiry into it is not hidden away. I will give way if he is willing to get up and give that undertaking, but I can see that he is not giving any sign that he will do so—the usual thing.

It is a matter for the audit service and the Audit Commission, but I also think that it is a matter for the Health and Safety Commission, the police and the Director of Public Prosecutions. I have therefore written today to ask the DPP, the police and the Health and Safety Executive to investigate the scandal of people who knowingly moved children, women and men into places that were known to be dangerously contaminated with asbestos.

It is my view that, before the asbestos scandal arose, Westminster had dragged London politics into the gutter. It has now got it down into the septic tank. There is no excuse for anyone knowingly endangering the lives of other people's families. That is what it did.

Anyone with a degree of fairness would accept from what I have spelt out very briefly about all the scandals that have happened in Westminster in recent times that there is clearly something wrong with an audit service that cannot get a grip on this, deal with it quickly and get these people sorted out. That is why we are determined, as soon as there is a Labour Government, to strengthen the powers and practices of the audit service to sort out the fraudulent, to get rid of the wrongdoers, and to ensure that scandals are not allowed to drag on for decades, as they have been.

That is why we consider the Bill inadequate, and that is why my hon. Friends will be tabling amendments in Committee to strengthen it substantially. At the moment, it is a useful but trivial measure. We cannot make do with trivial measures. There are important matters that need to be sorted out.

4.29 pm

Mr. Tim Smith (Beaconsfield)

The hon. Member for Holborn and St. Pancras (Mr. Dobson) started his speech by saying that he did not want to be party political, and recognised that Labour as well as Conservative councils were guilty of fraud, corruption and inefficiency, but he then spent almost his entire speech criticising pretty well the only Conservative council that has had difficulties in recent times.

Mr. Boateng

Is the hon. Gentleman not aware of the appalling abuses of power that have occurred in the London borough of Brent, bringing local government generally into disrepute? To pretend that Westminster is the only borough affected by scandal is to live in cloud cuckoo land. Brent is certainly among those boroughs, and so is Wandsworth.

Mr. Smith

There is, however, a much longer list of Labour councils that have been guilty of fraud, dishonesty, corruption and gross inefficiency. If we were a little more objective, we might recognise the existence of faults and difficulties in councils of all complexions. We should be concerned with trying to establish a system that will get to grips with those problems. I agree with the hon. Member for Holborn and St. Pancras about that, but I do not agree with his contention that the Audit Commission, or the district audit service, has been at fault. I think that, when the investigation into the current series of scandals has been completed, we shall need to establish what is wrong with the system, but I think that the present system and the present law are inadequate. The hon. Gentleman recognised that. The present system is not based on the Local Government Finance Act 1982; it predates that considerably. I believe that the right of objection to local authority accounts goes back to the last century, and I doubt that the present system is capable of dealing with the complexity of inquiries such as the one that is going on now.

Local government expenditure accounts for 25 per cent. of all public spending, so large sums are involved. We shall need to examine all aspects of these matters. For example, I think it wrong that the district audit service can—as it did in Westminster—reach a preliminary conclusion, and effectively find councillors guilty before they have an opportunity to put their side of the case.

Mr. Dobson

That is not true.

Mr. Smith

It is true.

Mr. Dobson

Is the hon. Gentleman not aware that, before the district auditor reached his preliminary conclusion, he had innumerable meetings with those whom he subsequently accused of wasting money? They were heard, at enormous length—when they finally turned up in Britain to be heard.

Mr. Smith

I was aware of that, but I still consider the present arrangements inadequate. The findings were preliminary, but they were presented in a way that suggested that those councillors were guilty, period. The system is not satisfactory. A much more satisfactory system operates in relation to inquiries into companies: independent inspectors are appointed to whom, under the Maxwell rules, the case against those involved must be put on more than one occasion. It may not be appropriate to transfer that system in its entirety to local authorities; I am merely saying that I believe that the system requires thorough examination to establish what changes need to be made.

The hon. Member for Holborn and St Pancras did not seem to recognise the existence of a constitutional difficulty in relation to the independence, or autonomy, of local authorities. He advanced a series of proposals that might compromise that independence considerably. As it happens, I agree with what he said about the independence of the Audit Commission and the district auditor. It is important that that independence is preserved, and is not compromised by the provisions in the Bill which concern the social services inspectorate.

The fact that the Bill adds to the Audit Commission's obligations and duties is recognition of the fact that, since its establishment in 1982, the commission has done an extremely effective job. The district audit service has always conducted a regularity audit of local government accounts; it is the addition of a "value for money" element that has been so important. In 1982, for the first time, the Audit Commission was obliged to conduct value-for-money studies of local councils. It has done an enormous amount of good work and contributed substantially to the improvement in the quality of local government services.

In 1990, the health service was added to that. That was clear recognition by the Government that the Audit Commission had been doing valuable work in local government. Now the commission does a great deal of useful work in the national health service, examining what can be done to improve value for money, to establish performance indicators between one part of the service and another and between one hospital and another.

I pay tribute to the work of the first two Audit Commission controllers, Sir John Banham and his successor Howard Davies, both of whom went on to become director general of the Confederation of British Industry and both of whom came from Mckinsey and adopted a Mckinsey-type approach to the commission's management. That was important because the commission has no sanctions when it comes to trying to ensure that its recommendations are implemented. It was important therefore that it should have a high profile and obtain a lot of publicity for its recommendations. It has achieved that and succeeded in putting pressure on local councils to pick up the recommendations and implement them. There is no way in which it can require local authorities to do so. It must do so by force of persuasion.

I also pay tribute to Sir David Cooksey, who recently retired as Audit Commission chairman. His contribution to its work should not be underestimated either. Anyone who has read his valedictory report in the latest annual commission report will know that he had considerable command over the commission's work during the years that he served as its distinguished chairman.

The commission has brought an interesting and attractive new approach to value-for-money audit in government. Until its advent, we simply had the National Audit Office, which has a different approach. It tends to consider central Government from the top downwards, whereas the Audit Commission tends to consider local government from the bottom upwards, considering what goes on in individual local authorities and drawing its conclusion from many different examples.

I consider that to be an extremely constructive approach. It was well exemplified when, six or seven years ago, both bodies decided to investigate the management of police forces in England and Wales. The NAO concluded that yet more Home Office interference in the management of police forces was needed, that more obligations and more duties should be placed on Her Majesty's inspectorate of constabulary, and that that would ensure that the quality of management and of service to the public by local police forces improved.

The Audit Commission, considering precisely the same questions, came to precisely the opposite conclusion, which was that there was too much interference by the Home Office and that, instead of the Home Office telling each police force precisely how many constables it could employ each year and so on, we needed to give chief constables far more management autonomy, to tell them to get on with the job and to assess their performance against whatever targets were set subsequently. That is the path that the Government chose. The law has been reformed so that police grant is paid in that way, starting from 1 April last year. As time goes on, considerable improvements in value for money will take place in local police forces. That was directly as a result of an Audit Commission recommendation. There is a need for more co-operation between the National Audit Office and the Audit Commission. There tends to be rivalry, which is fine as long as it is healthy. The Public Accounts Committee recently considered an NAO report on the Metropolitan police's response to 999 calls.

It is anomalous that the PAC can investigate the Metropolitan police but no other police force in England and Wales simply because the Met is funded directly by the Home Office while other police forces are funded indirectly though local authorities. In this case there was some co-operation between the National Audit Office and the Audit Commission. Information was obtained from the Audit Commission about the response by other police forces to 999 calls. It could have gone further. The Audit Commission could have produced a report covering all other police forces at the same time, and that could have been considered simultaneously.

There is a question about parliamentary accountability of the Audit Commission. In an appendix to the Butler report on the commission it is stated that the commission is accountable to Parliament, and the appendix sets out various ways in which that occurs in practice. It would be a good idea for Parliament to take more interest in the commission's reports and to follow them up. We ensure that central Government is operating properly by allowing the PAC to investigate National Audit Office reports and to publish a report. The Treasury has to respond by saying what is being done to ensure that the recommendations are being implemented. In the context of the Audit Commission I am concerned that there is no similar mechanism.

For the reasons that I gave earlier relating to the independence of local councils, it would not be easy for Parliament to start investigating council matters. But we could make a start with the health service because there is no question of comparable local accountability. The Audit Commission produces excellent reports on the NHS and the Public Accounts Committee or some other committee could consider the reports and call the chief executive of the NHS management team to give evidence. It could produce a report and could try to ensure that some of the recommendations were implemented.

We should look at that, but before we do, perhaps the recommendations of the Nolan committee, which considered the whole question of audit, need to be followed up. I understand that the Treasury is carrying out a review in response to the Nolan committee's recommendation that arrangements for the external audit of public bodies should be reviewed with a view to applying the best practices to all. The Nolan committee seized on that point: that there is not the same automatic public scrutiny of the Audit Commission. It stated that that,

does seem to us to represent an anomaly. The committee said that it was good that there were now two audit bodies. To some extent the NAO is a sort of public monopoly, and it is beneficial to have a bit of healthy competition between the two. The committee stated:

We are not here recommending an extension of the NAO's role as auditor. The existence of two bodies supervising the audit of different public bodies provides a valuable creative tension which can only serve to raise standards. I certainly agree. When the review is complete the House should consider further how it follows up audit reports, whether they relate to central Government, local government or the national health service.

I certainly support the Bill, however modest its provisions, because it is further recognition of the Audit Commission's valuable work. That could be used to more effect by the House and by its Committees.

4.43 pm

Mr. Ken Livingstone (Brent, East)

I apologise in advance because I fear that I shall have to speak at some length. When I learned about this debate I realised that it gave me a chance to bring together several issues that I have raised, many of them when you, Madam Deputy Speaker, had the misfortune to be in the Chair. For that reason you may recognise some of the issues. Sadly, I cannot say that these matters have been resolved. I shall do my best to be brief, but hon. Members will see that I have a pile of papers about 9 in high from which I have extracted half an inch. If I were to go through my entire file on corruption in Brent council I fear that we would soon run out of time.

It is quite opportune that this debate is taking place today because yesterday members of Brent council were able to get round the most extraordinary conditions imposed on them, as reported by my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson). Of course, completely ignoring the nonsense of forbidding the council to talk to anybody else, I immediately met members of the council, asked to see the report and shall now report its conclusions to the House since every attempt is being made to prevent that from being done.

Before I start down that route, I should like to support the comments of the hon. Member for Beaconsfield (Mr. Smith). No one is suggesting that corruption solely concerns one party. There have been corrupt Labour councillors and corrupt Labour councils. There is corruption in all parties. The issue before the House is whether we are sufficiently engaged in rooting it out, not only among our opponents but on our own side, and whether we are interested in a district auditor having the powers to be able to react much more swiftly than has been the case.

Events surrounding occasions on which corruption has occurred—in both major parties—have tended to drag on for months. Now it is becoming the norm that they drag on for years—usually beyond the next election. The issues of corruption in Westminster between 1986 and 1990 may not be resolved until the next century. That is absolutely bizarre.

Therefore, in all that I say about Brent council—I am restricting myself to Brent council—I do not for one minute suggest that corruption is simply and solely a problem only of the Conservative party. I went to the Metropolitan fraud squad and asked it to investigate four Labour councillors on Brent council almost a decade ago. I regret the fact that the Metropolitan fraud squad was unable to find sufficient evidence to proceed, because I had not the slightest doubt that there was a real case to answer.

The problem with the Bill, as much as everyone welcomes it and will vote for it, is that it will not really help root out corruption. What I have discovered in endless sessions with Price Waterhouse and Co., the current auditors for Brent council, the district auditor, who was the council's auditor until recently, the Metropolitan police fraud squad, and in other communications with the charity commissioners and everybody else, is that there is not one body with which one can raise a concern which has the whole range of powers to get in there and sort it out quickly.

I have not the slightest doubt that corruption relating to public officials, whether councillors or Members of Parliament, and however small the sums of money, is more damaging than corruption in the private sector, because it corrupts the whole structure of government and the public perception of it. When people get away with corruption, the way is opened for people who want to get involved in politics in order to enrich themselves.

Therefore, I would like an audit service with almost a subsidiary police department that would be able to haul such people in for some pretty grim questioning and to keep them in custody, without any right of silence or legal representation, until the issue is resolved. A much tougher standard should apply to public figures than to the general public. When one volunteers to enter public life, one should be prepared to accept and work under such a constraint.

Given the amount of time that the Government spent investigating what went on at the Greater London council without ever finding any discrepancy or anything on which they could proceed, I make it clear that I had no objection to the work of the GLC being investigated and took considerable pride in the fact that nothing was ever produced to stain its 1981-85 administration.

I turn to the Ad Shop and the scandal on Brent council. I have tabled two early-day motions that summarise the report. It is a vast and bulky report which, in the way that it has been presented, has attempted to intimidate councillors and therefore prevent them from raising its contents. How bizarre!

The loss of £400,000 of public money by one small council department comes to light, and an independent police officer is appointed to investigate it. He conducts a detailed investigation and produces an enormous report—pretty much the size of a substantial English dictionary—yet it is not then given to councillors so that they can discuss it openly. Instead, the leader of council, Councillor Blackman, insists that it is dealt with in the closed session of the council meeting. He insisted that it was given to Securicor to distribute. Presumably, Securicor staff turned up with their helmets and batons in case the councillors turned nasty. Securicor was told by Councillor Blackman, "You cannot give it to the councillors until they have signed an undertaking that they will not talk about it to anybody"—including local Members of Parliament—"otherwise they will be at risk." There were all sorts of threats.

The report is printed on bright red paper so that it cannot be photocopied. To be doubly certain, every sheet of the report, which is several inches thick, has the name of the councillor receiving it woven into the paper. Can hon. Members imagine the cost of producing a report on that basis, in an attempt to suppress debate? It will not work because the report says that the allegations about corruption are true. It says that the Ad Shop, the semi-privatised section of Brent council that placed adverts and recruited staff, managed to lose £400,000. Why cannot the auditor investigate that? Why does Brent council have to go outside the normal audit service and, at additional expense, bring in a former police officer to investigate it?

Councillor Buckley, who was the chair of the Brent Business Board and therefore directly responsible for the Ad Shop, had what is now called "a clear and substantial non-pecuniary interest" in respect of Ruth Jackson, the officer concerned. I understand that, in Private Eye, it is to replace the concept of "Ugandan conversations".

The affair was reported to the chief executive—a change in local government procedure of which I was not aware. Apparently, when a councillor has an affair with a council officer it is one's duty, under the national code of conduct, to report that matter to the chief executive. The affair was reported to the chief executive in November 1993, a month after it began. Therefore, we must ask whether the chief executive told the leader of the council about the affair and whether he warned the councillor concerned that it would be unwise of him to chair meetings dealing with the particular area of council business where he had a personal involvement with a member of staff.

Now, the district auditor is to be called in. The former police officer, Derek Owen, says that he has found £23,800 of the expenditure—out of the £400,000 that has been lost—and which has been spent on alcohol, lunches and flying the entire department to Schiphol international airport, where it hired the VIP lounge for a one-hour business meeting of the department. We can only imagine what would have happened if Lambeth council had done that. Conservative Members would have been very unhappy. Of course, there could be no justification for any council doing that. I hope that the district auditor, even with the present limited powers, will investigate the matter and, if it is necessary, issue a surcharge.

The report shows that at every stage Councillor Buckley intervened to try to prevent the matter from coming to light. He had the support of the leader of the council, Councillor Blackman, who was complicit at every stage.

The final devastating point is that the report concludes that the problem arose because of the drive to privatise everything without proper thought and planning. I shall directly quote the report as it is another matter that should be investigated. It is clear that it has incurred considerable losses for the council, not just the Ad Shop. The report states that the drive to privatise Brent council into 170 separate business units was flawed by

the failure … to implement a sound infrastructure in support of the business units from inception, coupled to an almost total lack of positive or effective monitoring and that this

was the primary cause of the Ad Shop's demise and subsequent closure. I hope that, as the auditor begins his investigation, other hon. Members on both sides of the House will sign the early-day motion calling on Councillor Blackman to ensure that the matter is debated in public and that both he and Councillor Buckley do not vote on an issue for which they clearly have a direct responsibility.

Madam Deputy Speaker (Dame Janet Fookes)

Order. Before the hon. Gentleman continues, I should point out that we are debating the Second Reading of a Bill. The hon. Gentleman's comments are interesting and fascinating and while they may well have a bearing on the Bill, he has not established that for some time. Therefore, I ask him to relate his comments to the Bill.

Mr. Livingstone

I was about to refer to the Bill when I moved on to my second item, which is the range of investigations which are currently under way. I have seen the auditor, the old district auditor, Price Waterhouse and the Metropolitan police fraud squad. I have written to the Director of Public Prosecutions. I have been all over the place, and written to the charity commissioners and Her Majesty's Customs and Excise, because VAT fraud is involved. At every stage, people have passed the matter on to somebody else, or said that if I had information, I should give it to somebody else.

I would like to see amendments to the Bill—I hope that they will be tabled in Committee—which will give the audit system total power to get stuck in to these matters. I have had endless correspondence with the DPP and the police, and both have said that they have looked at different parts of the matter. But we need someone who is able to look at the totality of corrupt practices in local government and someone who has enhanced powers to deal with the problem.

Nowhere is that more necessary than in the case of Brent council. I shall give a list of the present problems in Brent. Police investigations have taken place into Councillor Bill Duffin, former councillor Leslie Winters, former councillor Nkechi Amalu Johnson and former councillor Judith Harper. These investigations are on different matters. The ombudsman is investigating Councillor Duffin again, and Councillor David Tobert. The district auditor is investigating the council leader Councillor Blackman, and Councillors Cormach Moore—the Conservative chief whip—Alan Wall, Jack Sayers and Richard Buckley. An internal council auditor is investigating Councillors Buckley, Blackman, Wall, Moore, Sayers and Carol Shaw.

This is nonsense. There should be one body or one individual to whom members of the public, councillors and Members of Parliament can go to make their complaints. Such an individual would be able to draw all the matters together and come to the right conclusions, because—at present—that is impossible. I estimate that I have spent an entire working week in the past 18 months in the company of Price Waterhouse, the district auditor and the fraud squad. How many members of the public can do that? How many councillors have that time?

I have been ably assisted by two diligent councillors from Brent, Steve Crabb and John Duffy, who have spent virtually their entire time on the council digging into the files. That is not going to happen in most areas, as most people do not have that sort of time. What we have discovered in all this is an endless series of multiple and overlapping examples of corruption.

I have referred to the case of Bill Duffin. Although the Metropolitan police fraud squad recommended prosecution to the Crown Prosecution Service, the CPS—quite unwisely—decided not to proceed. Mr. Duffin was in the ridiculous position of being chair of the housing committee while working for a local landlord specialising in bed-and-breakfast accommodation. Mr. Duffin took his employer to meet officials without revealing who he was. He did so to try to find out ways in which his employer could increase his take on housing benefit, a matter of immediate concern to the Government who are concerned about current housing benefit bills.

Fortunately, when the matter came to light—and despite the fact that the Crown Prosecution Service decided not to proceed against him—Mr. Duffin was removed from his position by the whole council. Individual Conservative councillors, to whom I pay my respects, voted to remove one of their colleagues because they felt that corruption had been sufficiently proved.

The most serious example of what has been going on—I know that you will remember it from some Adjournment debates on the subject, Madam Deputy Speaker—is the Irish centre. This is the most distressing case, and the case on which I spent virtually all of my working week spread over 18 months with the auditors and the fraud squad. I was desperately trying to push everyone in the same direction so that we could reach a conclusion.

The simple facts of the case are that a council grant of £231,000 was paid for building works to be done at the centre. Not all the works were done, and not all the money was spent. Three councillors—Councillors Wall, Moore and Sayers, to whom I have referred—sat on the management committee of the Irish centre. They were present when it was decided not to proceed with spending the grant for the purposes for which it was given—namely, to provide access for disabled persons and changing rooms for actors, singers and dancers. Instead, it was decided to spend the money on building a bigger bar.

Those councillors felt no need to report that to the council. Instead they sat there and decided all sorts of other peculiar things. Although they were in receipt of public money they decided not to have a contract with a regular recognised builder, but to do a great big "on the lump" job, with people turning out day by day and being paid cash in hand without any real records or other checks.

I wrote to the leader, Councillor Blackman, asking what he intended to do about that, but I have never had a reply. Rather than trying to sort out what had been going on, Councillor Blackman had been trying to secure political support, and was prepared to pay out council tax payers' money for that purpose.

I have written to the present district auditor, and things are slowly trundling on. But we are talking about events that happened in 1992, 1993 and 1994, and I am still not in the happy position of being able to see a district auditor's report, because it is still being worked on.

Things are not yet as bad as in Westminster, which is the most serious case, but they are bad enough. We want a new set of powers to enable district auditors not only to proceed on such issues, but to move speedily, so that their investigations do not become almost historic. By the time the situation in Westminster involving Lady Porter is sorted out, she may well have died, in view of the length of time that it is taking. I see Conservative Members chuckling at that idea. Perhaps they are not fans of Lady Porter any more—although at the time they could not get enough of seeing her and advocating her cause.

What concerns me most is the length of time involved. Where there is a suspicion of fraud the issue should be resolved rapidly, so that even if the police decide that there is no case to take to court, and there will be no prosecution, the issue is resolved so that the public can make up their own minds. Even if there is no question of simple illegality, the issue is whether things have gone beyond the bounds of what is considered broadly acceptable.

I shall not go through all the details, because they have been the subject of various Adjournment debates. However, the key to the issue is the fact that when people started to raise concerns about the Brent Irish centre, rather than resolve the matter, Councillor Blackman covered it all up. When members of the public wrote to him saying that there was a problem and that things were going wrong, his supporters on the management committee voted to expel the people who were raising the concerns.

People have often come to me and said that they are unhappy about something being done by a Labour council or a Labour councillor, and my first response is to say, "Let me send the matter straight to the police. Let us call in the auditor." I do not have the resources to investigate such matters, and it seems bizarre that even with the new powers in the Bill there will be no real compulsion for a council leader to act decisively to bring matters forward. I hope that an amendment will be moved in Committee to give councillors a duty to go immediately to the appropriate authority, whether that be the auditor or the police, with any matter of concern. That duty should extend to Members of Parliament too.

The conclusion of the sorry tale of the Brent Irish centre is that while all that was going on, the 1994 elections hove into view. Brent would be a much sought-after jewel in the crown for either party. Brent elections always bring much welcome publicity for Front-Bench Members on both sides of the House, so it tends to be fairly bitterly contested. Clearly in 1994, with a hung council, that was going to be the case.

I have referred all the matters to the district auditor, but I am still waiting for him to resolve them. That is sad, but it is probably not his fault, but that of the present limited powers. As in Westminster, people have been tardy in agreeing to meet him, and it has been difficult to get responses from them.

In the run-up to the local elections, Councillor Blackman met the organiser of the Brent Irish centre privately, and on 17 March 1994 he agreed to give the centre another £70,000. Part of that money was to pay for the works that the council had already paid for, but which had not been carried out. I am not aware of any other example of a council paying twice a grant to do basic works, yet nobody raised a question. I would have expected the leader of the council to say, "Haven't we paid for this already squire?" But that does not seem to have crossed Councillor Blackman's mind. His only answer was, "How much do you want, and when can you take it?"

Another bizarre feature of the further £70,000 grant is that the application was too late. The council's cut-off date for new grant applications had passed, but an exception was made by Councillor Blackman and the deadline was overridden. What is more, when the grant was received the financial year had barely started. I often wait eight or 10 weeks for a reply from Brent council to a letter about a housing benefit case, yet here we have someone who asked for £70,000 in March and received it eight weeks later, with all the terms on which it was to be given changed without reference to a committee.

One aspect in particular depresses me, and we need to think about it in connection with the Bill. When I was in local government, as leader of the Greater London council, I could not move without a finance officer and a legal officer authorising every penny of expenditure by the council. If we wanted to spend money there had to be a report, and that report had to be seen by a lawyer. There had to be a concurrent report, and it had to have been seen by the treasurer, too.

Yet in Brent £70,000 was paid out, and the only monitoring was that the person who received it would tell the leader of the council what had happened to it. I am amazed that that is legal, and I hope that the Labour party will propose an amendment to the Bill to make it impossible. No council money should ever be spent until there has been an authorised report to a committee. I thought that that was already the law. Clearly there has been much damaging drift in the normal checks and balances in local government.

No sooner had Brent Irish centre received its £70,000 grant than an illegal leaflet—I have a copy of it here—was circulated in the main Irish areas of Brent saying, basically "Vote Conservative and defeat the Labour candidates". Lo and behold, the largest swing to the Conservative party anywhere in England took place in the wards where that leaflet was circulated, and control of the council hangs on the casting vote of the mayor. That was not simply a question of financial corruption, and the leader of the council bribing a community group for support. The corruption may even have determined the outcome of the election, so the case is very serious.

That was another issue that I raised with the auditor and the police. The police were very helpful, and made a report to the Director of Public Prosecutions, and I got back a nice letter saying that it had not been possible to identify who was actually behind it all. The DPP should have an overall report about the totality of the events, rather than the police investigating the narrow issue of who produced an illegal leaflet while the auditors investigate where the £70,000 has gone.

There should be one overall unit. Calling it the district audit service is meaningless to the public; it should be called the anti-corruption unit—a much more popular title, which people would understand and which would clearly define its remit. If one person had been overseeing the whole matter there would have been a firmer response.

I wrote to all the individuals concerned and raised the matter with Ministers, saying that I was worried because everybody was looking at separate little bits of the jigsaw and no one could see the influence of the Mr. Big, Councillor Blackman, who had been pulling all the strings.

I wrote to the councillors concerned—the three councillors on the management committee and Councillor Blackman—asking them a series of detailed questions. I shall not go through them all now, because I do not want to stretch your patience, Madam Deputy Speaker, but there were three pages containing 13 questions in all. I asked questions such as whether they remembered agreeing the expenditure, whether they remembered seeing the monitoring report, why they had not pointed out the discrepancy to council officers, and whether they had told the leader of the council. I also wrote asking the leader of the council what he had done about it all. Silence. Not a peep. In any new powers for the district auditor we should make certain that the power of prevarication is removed from corrupt officials, Members of Parliament and councillors. I want there to be somebody who can say, "I want those people in today," and they will come in—and if they do not, the police will feel their collars and bring them in.

The most obvious example is the delay by many members of Westminster council who wasted the district auditor's time month after month by finding reasons not to meet him. It is outrageous. We would not normally tolerate that. When people commit serious crimes, the police pick up them up and bring them in. Councillors should be grateful that they are invited in to meet the district auditor. Councillors should not have the right to negotiate about when they should meet the district auditor.

I have a letter from the Department of the Environment raising those issues. It says:

Ministers have no general powers to intervene. I have a letter from the Treasury Chambers. Customs and Excise had discovered that a lot of money had disappeared and there were irregularities. I asked for a meeting with Customs and Excise to find out where the money had gone. The letter said that, under its rules, Customs and Excise cannot discuss individual issues. That is fair enough in protecting the ordinary taxpayer or honest business from political intervention. However, when VAT fraud by Mr. Brendan Mulkere is part of an overall pattern of corruption, it should come within the district auditor's remit, which should not be narrowly defined.

I also have a letter from the Crown Prosecution Service about the leaflet, a copy of which I have here if anyone wishes to see it. The letter says that the CPS has decided not to proceed.

I did not, in the first instance, write to the chairman of the Conservative party but a resident in Brent did. That resident had been aware of what was going on with the fraud on the council and wrote to a Mr. Hanley, whom I assume to be the Minister of State, Foreign and Commonwealth Office, the right hon. Member for Richmond and Barnes (Mr. Hanley), on 15 March 1995 detailing £137,000 of grant that was being imaginatively recycled and a whole range of other problems. I shall not mention the constituent's name in case that person does not wish to be pestered by the media.

The reply was a letter from Tim Rycroft, special adviser to the party chairman, dated 22 March which said:

Thank you for your letter of 15th March 1995 on the subject of the London Borough of Brent. The Chairman has read it with interest"— he did not do anything about it though—

and asked me to thank you for taking the trouble to send it to him. Since the Chairman raised the issue of waste, bureaucracy, mismanagement and corruption in Labour-controlled councils we have received a great many letters on this subject. All are passed to our Research Department who will consider how we might use the information you have given us in our campaign. If I get a letter from a member of the public saying that there is corruption on the local council, I do not pass it to the Labour party and say, "Get a leaflet up about this." I send it on to the police. Why did not the right hon. Member for Richmond and Barnes pass all the allegations, which were clearly overwhelmingly about Labour councils, to the police immediately instead of holding them back for party advantage?

The letter concludes:

Although our priority during this local government election campaign remains the promotion of the positive case for voting Conservative, we do intend to continue to expose the lamentable record of our political opponents in local government. Your letter will help us to do so. This Mr. Rycroft was not even aware that he was talking about a Conservative council. He just thought, "It's another Labour council, let's bang out a leaflet." That is a complete negation of the responsibility of the right hon. Member for Richmond and Barnes to the law to pass damaging matters that have been communicated to him immediately to the proper authority.

Finally, I thank the House for having tolerated me. There is one last matter of interest, which I have also raised before: the role of the leader of the council, Councillor Blackman. By one of those accidental miracles that occasionally bring joy to politicians, Councillor Blackman asked if he could have a larger computer. It is right that councils should provide leaders of councils, and the leaders of the opposition groups on councils, with proper computer facilities so that they can conduct their business. No one objects to that.

At the same time the leader of the Labour group asked if his computer could be upgraded. One weekend, council officers came in, unaware that there might be a problem, and gave Councillor Blackman a new computer. His old one was so much bigger than the Labour group leader's computer that they decided that rather than waste the taxpayer's money—and I applaud that—they would give the old computer to the leader of the Labour group. It never occurred to them that anything dodgy was happening in the council, so they did not think that there was any point in deleting the files of leader of the council before passing the computer to the leader of the Labour group.

No one noticed anything for ages until someone touched the wrong key on the computer and a whole wad of the previous correspondence of Councillor Blackman suddenly spewed forth in great detail. I will not embarrass the Government by repeating that correspondence. Broadly, it was what you would expect: the leader of the council writing to the Secretary of State for the Environment and officials in No. 10 Downing street asking them to rig the rate support grant settlement because there might be a by-election in Brent and they did not want to lose the council. That is rather tasteless but it is not illegal, as I am the first to admit.

What was found afterwards was much more sinister—the transcript of a private conversation that a Labour councillor had held in his own home with a member of the public who had come to see him about the corruption at the Irish centre. It is clear that the leader of the council in Brent was worried that Councillors Duffy and Crabb—the people I worked with to expose this stuff—were getting close to exposing the corruption of Brent council and his corrupt use of council funds to bribe the electorate through the £70,000 paid to the Irish centre.

Councillor Blackman was involved—I cannot say that he originated it but he was certainly in receipt of what resulted from it—in sending someone to interview Councillor Duffy. That person was wired up to make a clandestine recording, went to Councillor Duffy's house, had a long conversation and passed the tape recording to the leader of the council in Brent, who then no doubt used council staff to transcribe it on to his computer. Councillor Blackman then started a whispering campaign saying that Councillor Duffy might be sued about what he had said at the meeting.

I do not know about other hon. Members, but I find it hard to believe that any hon. Member would resort to wiring up members of the public to bug conversations in the homes of opponents. It is certainly not lawful to use council resources to transcribe, circulate and use such transcriptions.

I wrote immediately to Councillor Blackman asking for some justification. I have never had a reply. I am not normally one to invoke the Evening Standard in my defence, but it took up the matter up very well and ran a headline that stated:

Computer secrets land Tories in rigging row". That is an honest assessment of the situation.

After a long story, the article concluded:

Mr. Blackman was not available for comment today. Nor was he the day after or any other day since. Councillor Blackman has never once explained anything relating to the grants, the bugging of Labour councillors or his attempt to suppress the debate on the Ad Shop report.

I do not believe that corruption is a party issue. What has happened in Brent is that the corruption that people got away with in the last Labour council emboldened others to think that they could do the same. When that happens, people join the party to line their pockets. That has happened in my local party.

A local property developer who saw what was happening in Brent joined the local Labour party, signed up all his employees as members of the local branch, took it over and got two cronies selected to stand for the council. He then employed two Conservative councillors, and perhaps even a Liberal, and got them all on the planning committee so that he controlled it. In the time that he was effectively in control of the planning committee, 100 separate planning applications which the council officers had recommended against were granted. That caused some concern in the area.

That is why I say give us a district auditor with real powers, who can strike fear into the hearts of corrupt people in whatever party, and give him the powers so that those who abuse their public position cannot hide behind delaying techniques, such as the use of legal advice and so on, to avoid being held to account. Give the district auditor powers to seize documents and meet people immediately so that such matters can be dealt with in the financial year in which they take place, not after the books have been closed some years on down the road. Let us create an audit system with real powers which will mean that corrupt people will lie awake in their beds at night thinking that they may not get away with it.

At present, I fear, as what has happened in Brent demonstrates, that it is all too easy for corrupt local councillors to get away with corruption because those who investigate corruption are spread over so many different departments. I hope that by the time the Bill comes back for its Third Reading, we will have created a new national audit service with real teeth and strong police powers to get in there and sort things out a damned sight quicker than is happening at the moment.

5.19 pm

Mr. David Rendel (Newbury)

Hon. Members will be surprised to hear that my speech will not be about Brent but about the Bill, which contains some useful provisions and some measures that are, at the very worst, harmless. I have some concerns about the Bill that I wish to flag up. As the Minister has told us, the Bill falls into three main sections. I do not want to comment on the Bill's second section, which concerns the change to the financial year for the Audit Commission. That seems to be one of the more harmless parts of any Bill that I have seen since I was elected to the House.

I should like to make one or two comments on the third part of the Bill before I return to its heart, the first section. I welcome the third part of the Bill, which concerns the publication of performance indicators, and the fact that local councils now have some flexibility in how they publicise them. In so far as it goes, that measure is welcome. That is a comparatively minor change, however, and does not go far enough. I say that not so much because—as might have been expected—I am concerned about the possibility of local councils publicising their performance indicators in their publications as because I am concerned about the inflexible way in which those indicators will now be publicised in free newspapers.

The Bill allows publication in free newspapers so long as those newspapers are delivered to each dwelling in a local authority area. In some of our inner cities, in the more tightly bound urban areas, there may well be places where freebies genuinely are delivered to all the buildings and dwellings. But where a local authority has even a small area of rural countryside, freebies are unlikely to be delivered to each dwelling in that area. After all, it is unreasonable and unrealistic to expect the publisher of a free newspaper to spend money ensuring that his newspaper reaches every little farmstead, where a paperboy may take half an hour to cycle there and back. There are many areas of the country where the distribution of freebies does not extend to every house in the area, nor is it necessary that they should do so for our purposes.

Surely the important feature about the publication of performance indicators is that the greatest public breadth of distribution is achieved, the information provided is clear, the scope of the information is right, the information is relevant to local people, and that it is what they want to hear about. At present, we do not have a total distribution system. The problem with performance indicators being publicised only in newspapers that can be purchased is that, as is well known, not every household purchases the local newspaper. We do not have total distribution at present. Surely, we wish to enhance distribution to ensure that more dwellings—not necessarily every dwelling—receive the information. For that reason, this part of the Bill should be greeted with only a half cheer.

The heart of the Bill is contained in its first section: the extension of the Audit Commission's remit. The Liberal Democrats do not object to the principle of a commission, which is independent of government, examining the performance of local or national government for the purposes of a genuine audit. That would be valuable, and I support much of what has been said about the enhancement of the Audit Commission's powers. The commission is useful in helping local people to make judgments about the performance of their local authorities and in exposing corruption and general malpractice. We should enhance the commission's powers if possible as it also keeps local councillors on their toes.

I should like to criticise some of the aspects of the commission's enhanced role which have been introduced by the changes contained in the Bill. Let me start with a few specific criticisms that worry some of our local authorities now. Over the past few years, local authorities' financial resources have been cut severely. They often have too little money to fulfil even their statutory responsibilities, let alone their discretionary responsibilities. As local authorities have so little money—largely as the result of Government cuts in the money provided—they may be unable to do what they ought to do, let alone what they would like to do. They are concerned that they may, quite unfairly, be blamed for any such failures.

It is therefore reasonable that local authorities should, where possible, be given a right to reply to any audit criticisms that are published about them. There is a strong case to be made for any reports based on the new procedures contained in the Bill to be handed to local authorities in draft form before they are published. The authorities should have the right to comment on the reports and to publish their reply to any criticisms that they contain at the same time as they are published.

Secondly, there is concern about over-inspection. The Government are supposedly keen on deregulation and on removing the bureaucratic controls that harm the organisations in this country. They seem to be concerned about deregulation mainly where it affects businesses, but local authorities also need to maximise their income and minimise their expenditure. There is no doubt that the inspections in local authorities which are now taking place with ever-increasing frequency take up a great amount of the time of officers, particularly middle-management officers and the management tier that has been particularly hard hit by Government cuts in local authorities.

Thirdly, I do not yet believe that the Government have given us sufficient assurance that they understand the need for confidentiality over some of the material involve. That is particularly true in the social services sector, which contains some highly sensitive material which would be seen if an audit inspection was carried out. It is important that the confidentiality of that material should be properly safeguarded. I hope that when the Minister winds up the debate he will give us further assurances that he recognises the importance of the issue and has considered all the difficulties that it may entail. There are some more general criticisms of the Bill that need to be aired. The central principle underpinning the concept of auditing local government is that the auditors are independent of central Government and of the governing political philosophy of the day. That condition has not been satisfactorily met, even under the present arrangements; but the Government are clearly determined to tighten their grip still further on the Audit Commission, which is one of the Bill's dangers.

The Bill goes some way towards transforming the Audit Commission into an instrument of the centralised state, in confrontation with local government— a significant danger. But of course we have come to expect such measures from the Conservatives. They have taken every opportunity to centralise power around their governing clique; they have undermined democracy at every turn and they have even pulled the rug from under their own Back Benchers and the House. We no longer have even Cabinet government; we have bureaucratic government through quangos—that is the Conservatives' way and they now seem to be seeking to impose an ever-more centralised bureaucracy on local authorities.

It is interesting that the Labour party is now taking very much the same track. It also intends to bureaucratise local government in a way that might even make Conservative Members wince. The Labour party is convinced that it will soon be pulling the Whitehall strings and it finds centralised bureaucratic government all the more attractive now that it believes that it may have the pleasure of inflicting it. We all know why the Tory and Labour parties are so keen to increase central Government's control over local authorities: they are both terrified—we have seen examples of it this afternoon—of the way in which some of the councils in their control may carry out absurd policies that destroy their reputations as political parties. However, neither of those parties is prepared to set up a new democratic system for local authorities that could return real control to the local electorate and ensure that those councils were made properly accountable once again. That is what the Bill needs; it needs the local electorate to be in charge, not just the auditors.

The problem is that sober auditing of government at any level is all very well, but in the end the only real test of the performance of government or of local councils is the judgment of local people—the judgment of the electorate, expressed through the ballot box. That judgment can be properly expressed only if we use a fair and representative voting system. That is not nowadays self-interest from the Liberal Democrat point of view. Liberal Democrats benefit from the present voting system in local elections. It is the Conservatives who have been annihilated in local government, in spite of the fact that they retain a certain share of the vote.

I have no doubt that the over-representation of Liberal Democrat councillors at the expense of the Tories does produce better local government; nevertheless, it is unfair and reduces accountability—unfair, that is, to Tory voters.

I am sure that local people are better judges of the performance of their local authority than the local auditor. Arming people with properly audited information can only enhance local people's judgment. However, let us have the courage to ensure that, when people cast their vote, that vote counts and makes a real difference. That is what gives people control over wayward local authorities.

The Bill further shifts the balance of scrutiny of local authorities from local people to central Government, and that cannot be right. The Bill compromises the financial independence of the Audit Commission, and that cannot be right. The Bill changes the commission's reporting function so that it is an instrument of Ministers, destroying the arm's-length relationship that is intended to encourage impartiality, and that cannot be right. Those changes signify a fundamental shift in the role of the Audit Commission. They undermine the principle of local accountability. I do not expect many Labour or Conservative Members to give open support to that view, but they would be wise to contemplate what type of local democracy is being built. With no written constitution, local democracy depends on Members of the House exercising restraint in seeking to consolidate their grip of local government. Local government is not meant to be convenient for the governing party of the day. It is meant to serve local people and to reflect their wishes. Auditing has a role to play in that process, but the Bill carries with it the danger that it may be used to strengthen the powers of central Government at the expense of local government, and that is something that the Liberal Democratic party, at least, will do anything that it can to prevent.

5.32 pm

Mr. Paul Boateng (Brent, South)

The Bill is broadly to be welcomed, and I join my hon. Friends in doing so. However, I am worried that, unamended, the Bill does not tackle the significant problems that confront us in Brent in my constituency, alongside that of my hon. Friend the Member for Brent, East (Mr. Livingstone), or take into account the considerable anxiety that constituents throughout the country have about the quality and probity of local government.

In my borough, the well of local government has been poisoned by the ruling Conservative clique on the council. I very much hope that the Minister, in replying to the debate, does not seek to push to one side the anxieties expressed by my hon. Friend the Member for Brent, East on the basis that they are purely partisan and party political. To do so would be not to do justice to the significant worries among all decent people, whatever their party, about what is going on in Brent.

Brent is truly a scandalous borough. We need the auditors to start work in the town hall as soon as possible, with a full range of powers, but Brent is a diabolical borough—diabolical almost in the literal sense—and there are some ways in which Brent town hall has as much need of an exorcist as it does of an auditor. It is as though, like something out of a movie by John Carpenter, a fog has descended on Brent town hall, and within that place all sorts of murky goings-on and doings occur, the fallout of which descends on the hapless people who are under its auspices and who dwell in the borough and rely on services under its control.

The stories relayed by my hon. Friend the Member for Brent, East all have a basis in fact and all are a cause of concern, but the deepest on-going public scandal in Brent is the crisis in public services that affects each and every one of my constituents.

I shall simply outline that crisis in respect of one matter of genuine concern to all the people of Brent, South—a matter that should not be the subject of party political controversy, because, apparently, hon. Members on both sides of the House agree about it. Indeed, if the Prime Minister is to be believed in relation to that subject—nursery education—it is as much a priority for the Minister and Conservative Members as it is for Labour Members, because the Prime Minister made great play of his commitment to nursery education for three and four-year-olds in speeches that he has made this year.

However, in Brent, nursery education has been the subject of a massive continuing scandal. We are entitled to ask ourselves whether, if the Bill were in place, it would enable the citizens of Brent—those men and women worried about their children and about what happens to the nurseries that they attend—to be satisfied that the Secretary of State has given the Audit Commission the power to end the crisis that afflicts Brent nursery education.

The one great flaw in the Bill is the extent to which it relies on the willingness of the Secretary of State to make the referral to the Audit Commission—to make the request of the Audit Commission that is referred to in clause 1—before the Audit Commission is empowered and able to carry out the works necessary to produce a report on the condition of that aspect of social service provision. It requires the Secretary of State to be satisfied; it requires an act of will on the part of the Secretary of State for the Audit Commission to become involved.

My constituents are worried because they have little confidence in the Secretary of State. They have little confidence in his willingness to take account of their worries when that would require a criticism of a council controlled by members of the same party. In Brent, we live with, on one hand, a Conservative Government, albeit one supposedly committed to nursery education, and, on the other, a Conservative council whose actions threaten every voluntary nursery in Brent—every voluntary nursery in my constituency—with closure as a result of the cuts that are to be imposed by the council on the voluntary sector.

Young children are currently receiving high-quality nursery education within the voluntary sector. I received an anguished letter from a parent of a child at Stonebridge community nursery, in one of the most deprived areas of my constituency. It is so deprived that a housing action trust has been established on the local estate. Unless the Secretary of State for the Environment is prepared to intervene, parents and children from that nursery are faced with a cut of some £625,000 in the budget of the 12 voluntary sector nurseries in the borough of Brent. That cut will reduce the provision from the council to zero. With a cut of more than £500,000, there is no way that the voluntary nursery sector in Brent will be able to continue. People simply are unable to afford nursery education without the commitment of the local authority to its provision.

The council has received deputations and petitions. The Stonebridge community nursery had a tea party outside the town hall, with tuna sandwiches and orange squash—not perhaps the most appealing fare, but it tasted good on that particular occasion because the cause was a good one. Some Labour councillors turned up, but not one Tory councillor came to that tea party. Maybe the diet was not rich enough for them. Not one turned up, but those councillors know what the impact of their policies will be on voluntary nursery sector in my constituency. What they do, they do not because they do not know the consequences: what they do, they do because they are playing a nasty, political game.

The Tories are cutting the budget of the voluntary sector, with a view to setting a council tax figure that will act as a bribe—they believe—to the electorate in Brent to return them at the next local council elections. In that, they are sorely mistaken. People are not fools, and they will not be deceived. Nevertheless, the game is being played, and it makes nonsense of the Government's commitment to nursery education.

The citizens of Brent want to know that their interests and their children's interests will be protected by legislation that does not rely on the Secretary of State's willingness to bring in the Audit Commission. They want legislation that creates a sufficiently robust, independent and vigorous process of audit which can highlight the sort of scandal and neglect of basic social service provision represented by that reckless budget cut. That assurance is simply not in the Bill.

The Opposition want the people themselves to be empowered. I want those mums who brought their kids to that nursery tea party outside the town hall to know that they do not have to rely on the Secretary of State to bring in the Audit Commission, or on me to request—as I do now—the Under-Secretary to ensure that the Secretary of State intervenes in the case of the scandalous attack on nursery provision in Brent. Those mums, of their own volition as citizens and electors, should be able to bring in the Audit Commission to expose the scandal. We need the sort of robust and vigorous inquiry that the Audit Commission is capable of applying to such a crisis.

Clause I recognizes

the importance of improving the economy, efficiency, effectiveness and quality of performance in the discharge of social services functions by local authorities. That is all that those parents want from nursery provision. They want efficient and effective nursery provision, and they want voluntary nurseries to be able to continue to provide high-quality nursery provision to their kids. They want the means themselves to be able to ensure that that happens.

My plea today is for the Under-Secretary to do two things, and I hope that he will respond specifically in his reply. First, I want him to agree to meet a deputation of parents from the nursery sector in Brent, with all the Members of Parliament for the London borough of Brent—Conservative and Labour alike. At such a meeting, we could discuss the crisis in provision that affects Brent's nursery education—the threat to the funding of the voluntary sector, and also the pressure on the local authority sector. That is a simple request, and it is one to which the Minister, if there is a genuine commitment on the part of Government to nursery education, should be willing to accede.

Many months ago at the start of this crisis, I asked the Conservative chairman of social services in Brent, Councillor Irwin Van Colle, to join a deputation to Ministers. He refused. I made that request in a totally non-partisan spirit to explore—[Interruption.] I see the Under-Secretary, the hon. Member for Croydon, Central (Sir P. Beresford), chuckling. There are people who are willing and prepared to act in a non-partisan way. Very many parents, and workers in the voluntary sector, give their time voluntarily to provide nursery education. Their concerns should not be met by a chuckle from the Under-Secretary, the former leader of Wandsworth council.

We know how partisan the hon. Gentleman is, and what he did to Wandsworth. We know how he traduced local government. Just because he is temporarily the Under-Secretary, he should not believe that everybody in local government—of any or all parties—behaves in the same way in which he and his cronies behaved in Wandsworth and in Westminster and the way in which we see them behave in Brent. The Tory party in certain, but not all, of its aspects has made a mockery of local government. The reason why the Tory party is so riven and so split is that there are many good Conservatives who are sickened by what some Conservatives have done to local government. Let us have no more chuckles from the Under-Secretary. He should try to treat this issue with the seriousness that it deserves.

That is the first thing that I ask. The second is that careful thought should be given in Committee to the need to ensure that the Audit Commission is empowered and enabled to act at the behest not just of the Secretary of State but of the council tax payers. They have a vested interest in local government and the quality of services and we should be in the business of enabling and empowering the people whom we represent. That is the business of the House and I hope that, in considering the Bill, it performs that business with the interests of the consumer of local government services at heart, rather than those of the political masters who, all too often, in town halls throughout Britain where problems have arisen have acted in a way that is quite contrary to the interests of the people whom they supposedly represent.

5.50 pm

Ms Hilary Armstrong (North-West Durham)

We have had an interesting debate, which I suspect has been more wide ranging than the Government were expecting. However, it should not surprise anyone in the House that Opposition Members are concerned to find means of tackling corruption at every level wherever it may occur, in whatever party or local authority. As my hon. Friend the Member for Brent, South (Mr. Boateng) said, corruption and fraud undermine public service and politicians, so it is in all our interests to take whatever measures are possible to tackle them.

Opposition Members have raised some concerns about aspects of the Bill, but on Second Reading our main concern is that the Bill misses the opportunity to tackle problems in ways for which we have been calling for many a long day. The gaps in the Bill are serious and, in Committee, we shall table amendments to address those failures.

Clause 1, as the Minister explained, enables joint studies between the Audit Commission and social service inspectorate into individual authority's social services departments. The principle of that is to be applauded, but there are concerns about changing the role of the Audit Commission, which other hon. Members have expressed and which again we will want to explore in Committee.

It is interesting that the Department of the Environment's press release should tell us that the clause fulfils a manifesto commitment—a rare event in this Parliament on which the Minister should be congratulated. It would be niggardly of me to fail to recognise that it is good for Ministers occasionally to fulfil a manifesto commitment. I was last in the shadow Treasury team and we spent most of our time identifying a number of manifesto commitments, particularly with regard to tax, that had been broken. Therefore, I welcome the fact that the Government are at last addressing this matter, albeit that it is a small manifesto commitment.

If such joint initiatives between the Audit Commission and the social services inspectorate are to succeed, joint underlying principles need to be behind such work. Not least, client carers and the local authority need to feel ownership of the process. Unless that happens, there will not be any real change or response to ideas generated by such an inspection. That has been a major problem with the reorganisation of the education inspectorate. The reorganisation addressed by the Bill should give the people involved a real feeling of ownership.

The outcome of the study in which the Government are engaged should assist in focusing on effectiveness and quality as much as on economy and efficiency. That is particularly relevant when we are considering some of the newer areas of social services responsibility and some of local government's new community care responsibilities. However, as my hon. Friend the Member for Brent, South said—I am not a Londoner so I may confuse bits of Brent—with regard to education, it is not just economy of the service that is important but quality of opportunity and quality of the service. If economies undermine the value and quality of the service, we shall pay the price for many years to come.

The social services inspectorate and the Audit Commission should be able to work across the plethora of agencies involved. The role of the private and voluntary sectors in the delivery of service is important throughout local authority services. The Bill should provide much greater clarity on how that will work.

I think that most people agree that clauses 3 and 4 are technical changes. We welcome the Minister's response earlier to my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) with regard to ensuring that the transition to a new accounting year is transparent and does not hide any problems.

We have some concerns about clause 5, particularly those of us who live in rural areas where no newspaper covers the whole area. That is an issue that we shall take up in Committee. Again, it is dogma that is stopping the Government allowing or examining other means of ensuring that performance indicators are properly and widely distributed.

As I say, the Bill is a lost opportunity. The Government could have confronted the legitimate public concern that there are gaps and weaknesses within the current system which mean that allegations of maladministration, corruption and serious incompetence within local authorities are either not properly investigated or are investigated only after exceptional diligence on the part of individual councils and citizens.

When undertaking lengthy investigations, the district audit service has insufficient local resources and powers. Even when reports are written, leading councillors and officers have considerable power to prevent information from coming into the open. In that regard, I disagree with the hon. Member for Newbury (Mr. Rendel). There is a relationship between the centre and local government. It is important that we shore up and bolster local democratic accountability. That is why the Labour party has addressed in a document the importance of annual elections, of increasing the number of people who vote and of examining how local democracy can be made more effective so that local people feel that they have more influence on what is going on.

In addition, there should be the assurance that the relationship with the Government and external organisations, such as the Audit Commission and the district auditor, is such that when local people have a legitimate complaint which has not been properly addressed and which they do not have the power or the means to investigate, the power and the means exist for their complaints to be properly addressed.

We have heard some shocking examples of how the system has simply failed. I have been involved in local government for many years and I have disagreed with the actions of several councils. When I was on the national executive of my own party, I was involved in making sure that any concerns in the party or in Labour-controlled local authorities were investigated and addressed. I have always taken that view.

However, having recently become local government spokesperson, I have been shocked by the documents concerning the scandals that have been aired in the Chamber this afternoon. They reveal guile and obfuscation, and attempts to ensure that people do not find out about what is happening. Councillors have said, "Yes, I was at the meeting, I even chaired the meeting, but I did not hear the aspects that were discussed when the decision was taken to send homeless families into an asbestos-ridden property." Those scandals beggar belief.

Ministers had access to the same documents and did nothing. It is beyond my understanding that they decided to wait. They said, "We cannot do anything, we must put it off and we shall not ask any difficult questions about why this has occurred."

We all suffer when such scandals are allowed to continue without being brought to public account. We have seen what has happened in the House in the past year. People outside say, "If one of them is at it, they must all be at it", particularly when Ministers, who must have the right to intervene, decide not to do so.

We believe that the district auditor, as an external, independent officer, should have the opportunity properly to investigate and pursue allegations of corruption, fraud and maladministration. The Bill gave the Government the opportunity to pursue them much more vigorously.

We have heard examples in Westminster, in Lambeth and in Brent that do nobody any good and are a matter of shame for everyone in public life. That is why those of us who are in public life and who want high standards in public life are determined that there should be mechanisms for external independent assessment that can be followed up by action. The Government have dragged their feet and have neglected to give the Audit Commission or district auditors the power that they need.

The stories that we have heard about Westminster councillors being supported by their local Members of Parliament in vilifying the district auditor and the Audit Commission are a disgrace. The Minister should say today that such behaviour is not acceptable.

My hon. Friend the Member for Holborn and St. Pancras asked the Minister whether he would guarantee that the report on asbestos and sending homeless families into those two contaminated blocks would be published in the House so that we could make sure that it was available for scrutiny by the electors of Westminster. The Minister did not give that assurance earlier. I hope that he will do so now because there is every indication that the council does not intend to publish that report. That in itself is a scandal, and if it is true I hope that the Government will put it right. The Minister has an opportunity to do so today. My hon. Friend the Member for Brent, East (Mr. Livingstone) mentioned the lack of openness in response to two reports. The first deals with the Brent Irish centre. Brent council intends that the district auditor's report, which includes the report on the Brent Irish centre, will go to a sub-committee that about eight councillors are entitled to attend.

In the past, Labour councillors have been refused the right to ask questions or raise issues concerning reports. They were told that they have that right only at full council meetings. The district auditor's report will go to a sub-committee on 20 December. It is clearly intended that it will disappear or nobody will notice it. Subsequently, it will have to be considered by the full council, although on past experience, because it will have been discussed by a so-called sub-committee, attempts may be made to say that the report or part of it has been agreed and therefore cannot be discussed by the full council.

No Minister would want to uphold that position. Therefore, I seek an assurance that the Minister will say that the district auditor's report should not be considered in that way and that he will promise to do what he can to ensure that it is considered openly and can be discussed.

The second report discussed by my hon. Friend the Member for Brent, East is the subject of an external report by an ex-police officer. That report is now available, but is not intended to be made public. It will be discussed by a sub-committee, but great efforts have been made to ensure that councillors are intimidated and feel unable to discuss it, even with the people they represent. It appears that one of the main people named in the report—the chairman of the business committee—may well turn up at the meeting to defend himself, although the report makes it clear that he has a direct interest in the matter and should take no part in any discussion or decision. He has insisted, however, that the relevant part of the report be taken below the line although the advice from council officers is that it should be taken above the line. That is local government jargon for whether that part of the report is considered in secret, in closed session, or in open session. I believe that it should be taken in open session. It relates to serious allegations and concerns about the spending of public money in the borough. The electors of Brent have a right to know what has been found. They have the right to know what is set out in the report.

I hope that the Minister will say that he believes that the report should be discussed in public and that the electors of Brent have the right to know what is contained in its findings. I hope that the Minister will take the opportunity to support what the Prime Minister has said about the citizens charter and the free availability of information, especially when it relates to the public sector.

In many senses the Bill seems innocuous. In reality, however, it raises incredibly difficult problems and issues for us all in determining the probity of public office and what Parliament should do to ensure that public probity is upheld at every step of the way and that fraud and corruption are tackled seriously at every turn.

The Government and the Minister have the opportunity to demonstrate their commitment to upholding the public service and probity within it. I hope that they will begin to show this evening that they will work with us, the Opposition, during the Bill's passage to ensure that everybody knows that we, hon. Members on both sides of the House, are determined that no one who is in public office will be colluded with or given the opportunity to wriggle, squirm or anything else. We must give the Audit Commission and district auditors every power to ensure that they are able properly to tackle any abuses.

6.12 pm

The Parliamentary Under-Secretary of State for the Environment (Sir Paul Beresford)

As everyone is aware, it is a short Bill. During the debate I suddenly recognised that it was seasonal and was turning into a Christmas tree. When a plea was attached to it for proportional representation I thought that we had reached the pits. To use the phrase of the hon. Member for Durham, North-East (Ms Armstrong)—

Ms Armstrong

Durham, North-West.

Sir Paul Beresford

Retaliation has struck home early. I have in mind the hon. Lady's phrase "the bits of Brent".

I was intrigued by the points made by the hon. Member for Brent, South (Mr. Boateng). If we followed his suggested procedure, the auditor would be a policy maker.

The hon. Member for Brent, East (Mr. Livingstone) made a spectacular range of accusations. I hope and anticipate that my right hon. Friend the Member for Richmond and Barnes (Mr. Hanley), the Minister of State, Foreign and Commonwealth Office, was notified of the accusations and the fact that his name would be mentioned. I assume that that is the position.

Mr. Livingstone

I overlooked that and I apologise to the House. I was dealing with the letter that was read out.

Sir Paul Beresford

I shall leave my right hon. Friend to respond to that. It is sad that the usual courtesies were overlooked in the light of the comments that have been made.

Much has been said about quality. It forms part of the drive of local authorities and the auditor and it is reflected in the various restrictions and pressures that are applied by Government upon local authorities. I was intrigued when the hon. Member for Holborn and St. Pancras (Mr. Dobson) talked in one breath about quality and then about differences in costs for various services between Camden and Westminster.

I suspect that the hon. Gentleman's figures are wrong. If he checks them—I have yet to make a check—I suspect that he will find that there is a difference between collection on one side and collection and disposal on the other. If he examines quality of service, he will learn how often bin service and street cleaning goes round Westminster, especially some areas of it, compared with those services in Camden. It is a matter of paying appropriately for quality.

Mr. Dobson

The figures that I quoted were from the indicators of performance published by the Audit Commission. The Minister should not question them. If he has other figures, they cannot be right, or else the Audit Commission is wrong.

Sir Paul Beresford

The hon. Gentleman's intervention shows a lack of understanding. There is a difference between collection and collection and disposal. Some constructive points have been made. Two of them were introduced by the hon. Member for Newbury (Mr. Rendel) and reiterated by the hon. Member for Durham, North-West. They were related to the distribution of a newspaper. There is a reference in the Bill to "all reasonable steps". That is one of the provisions that we may have to consider in Committee.

The district auditor system, which is an attachment, as it were, that provides rations to the Audit Commission, the police, the fraud squad and the monitoring officer, has had considerable success in reducing corruption, improving quality and bringing some of the malcontents or difficult people who have broken the law before the courts.

Perhaps the most obvious example would be Preston, which is a fairly well-known Labour authority where there was marked corruption by a combination of officers and Labour members. The proper forces took action. People were fined and others went to gaol. I understand that one gentleman is still being sought. He is in India. The authorities there are looking after him because he has been involved in drugs and drug importation.

I shall be succinct, bearing in mind the time that we have been discussing the Bill. Three measures were outlined by my hon. Friend the Minister of State. First, the Audit Commission should have powers to work alongside the social services inspectorate of the Department of Health. I think that everybody understands that. There is an independence of that inspectorate that has not been recognised to date by Opposition Members. I think that the power to work alongside will be generally welcomed.

Secondly, there is the change in the financial year. I think that that change is a correct one and is understood. An awkward question was asked, to which there was a response.

Thirdly, local authorities, as they have asked, will have greater freedom to publish annual information in the form of statistics in alternative free newspapers. We shall certainly reflect on what has been said about that.

In conclusion—

Mr. Boateng

Will the Minister give way?

Sir Paul Beresford

No, I shall not give way. The Bill is not a Christmas tree.

Mr. Livingstone

On a point of order, Madam Deputy Speaker. Will you intervene to inform the Minister that many of the issues raised during the debate are worthy of consideration and that he should respond to them?

Madam Deputy Speaker

That is not a point of order for the Chair. The Chair is not responsible for the content of speeches.

Mr. Boateng

On a further point of order, Madam Deputy Speaker.

Madam Deputy Speaker

I hope that it is a different point of order.

Mr. Boateng

It is, Madam Deputy Speaker. My point of order relates to the usual customs and courtesies of the House, of which you, Madam Deputy Speaker, are the sole arbiter.

We have been debating the Bill for about two-and-a-half hours. Important and detailed questions have been asked about specific clauses. I raised a question in relation to clause 1 about the independence of the Audit Commission and its right in publishing the figures that it produced recently on the funding of education in boroughs—

Madam Deputy Speaker

Order. The hon. Gentleman must come to the point of order.

Mr. Boateng

I raised a specific point in relation to the Bill, arising from the Minister's opening speech and from other matters that were raised during the two and a half hour debate. Is it in accordance with the usual customs and courtesies of the House, with which the Minister must surely be acquainted by now, to ignore completely those points in summing up, and to proceed willy-nilly without any reference to the debate that has taken place? Is not that treating the proceedings of the House with contempt, and should not that be deplored?

Madam Deputy Speaker

That is the same point of order as before, because the Chair is not responsible for the content of speeches. I point out to the hon. Gentleman that if the Bill receives its Second Reading there will be ample opportunity in Committee to deal with more detailed points.

Sir Paul Beresford

I was trying to keep to the Bill—

Mr. Boateng

Then deal with clause 1, will you?

Madam Deputy Speaker

Order. No seated interventions. I know that the hon. Member for Brent, South is very keen to observe the courtesies and conventions of the House, and that is one of them.

Sir Paul Beresford

There is no doubt about the independence of the Audit Commission and the social services inspectorate, and its equivalent in Scotland. Its independence is quite clear, and I think that every hon. Member in the House sees and accepts that.

Local authorities need clarity in preparing the performance information for 1995-96. The Bill will help that. As I said, it looks as though it will become a Christmas tree, with extra additions, which should make its Committee stage somewhat more interesting than it might otherwise have been.

In general, I think that everyone in the House accepts that the clauses as outlined are for the betterment of the people of this country in relationship to the Audit Commission's role in producing a good quality service through local government.

Question put and agreed to.

Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 61 (Committal of Bills).