Mr. Stephen Spayne (Hansard, 19 July 1995)

§ Mr. Tim Devlin (Stockton, South)

I know that it is highly unusual to raise the case of an individual in the House of Commons, but there appears to be little alternative. I have already raised the case with the leader of Cleveland county council and it has become clear that an investigation must come from outside the council. I also raise this matter because people should be told what goes on in their local municipal buildings and how their money is being spent. No one at the county council seems to be interested in tackling the issue properly, although I understand that this morning, an extensive press statement has been issued which attempts to explain the position.

I shall run through the situation. This case relates to my constituent, Stephen Spayne, who works as a shift supervisor in the computer department at Cleveland county council; he has been working there for 21 years. In 1988, Mr. Spayne discovered a rather suspicious document purporting to be an invoice from KN Consultants to a man called Ted Stafford at Rank Xerox. For ease of reference, I have the document here. It is dated 16 May 1988 and it is for £350 for two days' consultancy, travel, subsistence and incidental expenses.

Mr. Spayne noticed that KN Consultants happened to have the same address as his immediate superior, Mr. Kevin Narey, in the computer department. Mr. Spayne recalled the wording of the code of conduct which bans private work except in very exceptional circumstances. He went to see the chief executive of Cleveland county council to report what was prima facie evidence of corruption.

Mr. Spayne also took with him two further letters, which he has given to me. The first is a letter from Mr. Narey to Rank Xerox which says: I am returning the cheque which eventually arrived last week in the hope that you can have it amended for me. As you will see, it is made out to KN Consultants. I need to have it in my own name and hope that this can be arranged. If it is any use to you, I enclose a second invoice in my name only. Sorry for the inconvenience. The second piece of paper is from Mr. Kevin Narey of the same address. It is in respect of two days' consultancy, travel and subsistence and other expenses. Mr. Bruce Stevenson, the chief executive of the county council, who is also my constituent, assured Mr. Spayne that he would deal with the matter thoroughly and that he need not trouble him with it again. Mr. Spayne then received a visit from his union branch secretary. He was clearly told not to mention the matter outside the county council and specifically not to go to see me, his Member of Parliament.

Following this action by Mr. Spayne, his working environment rapidly deteriorated. Mr. Narey came to see him, accused him of shopping him and started to harass him at work. His life became difficult. He was, for instance, booked on to a management training course while Mr. Narey was away and he received a start date. On Mr. Narey's return, the course was cancelled. There were complaints about every aspect of his work, even about the way in which he parked his car and about a range of other matters.

Mr. Narey, meanwhile, was promoted to head of the computer department and Mr. Spayne's life became even more unpleasant. Finally, in September 1993, the situation 1633 culminated in Mr. Spayne being issued with a disciplinary notice for dereliction of duty. Understandably, Mr. Spayne appealed and refused to speak to the people who were harassing him without a union representative being present. A report was prepared for the appeal tribunal by an investigating officer who was appointed by Mr. Narey. The report did not, however, uphold the case for suspension and Mr. Narey sent it back for redrafting. Mr. Spayne's colleague at work was approached to give evidence against him and was asked, in effect, to lie about him. On 18 January 1994, Mr. Spayne was suspended from his post.

An independent inquiry was launched by a Mr. Dokes from the education department of the same county council. After a few weeks, my constituent was taken off suspension and put on leave of absence with pay. In May, he returned to work but was given menial tasks in another department, the printing department. From October last year, he went on sick leave as his new job was getting him down.

Meanwhile, Mr. Dokes had rapidly concluded his investigation and had written a 23-page report substantially supporting Mr. Spayne and drawing on the long history of events, going back to the discovery of the invoices in 1988. It was submitted to the chief executive, Mr. Stevenson, who apparently ordered it to be suppressed and another one to be written. Mr. Dokes said to a Mr. Slater of Unison of his first report: If anyone requests this report I shall deny even writing it, because I have my own position to think about. There were witnesses present who wrote those words down. A new report was written; it was heavily jargonised and it did not come out with clear conclusions.

Late last year, Mr. Spayne came to see me. I regard allegations of corrupt practices as extremely serious, especially when the chief executive is alleged to be covering them up. I went to see the leader of the Conservatives on the county council and she directed me to the leader of the council, Councillor Paul Harford. After going through the facts and discussing Mr. Stevenson's role in all this, Mr. Harford agreed with me that there should be an outside investigation. He asked the county secretary, David Ashton, to receive a report from Mr. Spayne and to set up the necessary action. Mr. Spayne saw Mr. Ashton in December. In January, Mr. Spayne was suddenly recalled to work. He had a two-minute meeting with Mr. Wright of Unison and Mr. Stevenson. Mr. Stevenson said that there was no reason why he should not return to work immediately in his old job. However, he refused to discuss why Mr. Spayne had been off work for nearly a year. My constituent then returned to work and wrote to the personnel department asking for written reasons why he had been away from work, but he was given none.

Following the meeting with Mr. Ashton, the county secretary wrote to Mr. Spayne and to me in April this year saying that the matters had been investigated. I am afraid that the explanations offered do not amount to very much. There is to be no outside investigation.

First, Mr. Ashton appears to believe from what has been said by Mr. Wright of Unison that my constituent's grievances were being pursued through the normal channels when that was patently not the case. They have not been pursued by anyone, let alone Unison which seems, incidentally, to act as an arm of the county council.

1634 After all, it was another union representative who informally offered Mr. Spayne £20,000 to leave the county's employment.

Secondly, Mr.Ashton has taken advantage of Mr. Spayne's understandable reluctance to speak to superior officers in his own council about his allegation to discern that Mr. Spayne does not allege misconduct on the part of the chief executive. Yet the reason why I went to see the leader of the council and asked for a proper outside investigation was precisely because such an allegation had been made. I do not believe that it is in the interests of my constituent, Mr. Stevenson or the county council simply to brush the matter aside. If senior officers can accept outside payments from companies dealing directly with the county and can then have the matter hushed up, the council tax payers in my constituency should know about it.

The explanation of the events leading a senior officer of the council to invoice Rank Xerox has no substance at all. The matter was apparently referred to an internal auditor who sent a report to the chief executive who decided to take no action. Mr. Ashton—another servant of the council—has apparently read the report and is happy with it, but he will not say what is in it. However, I understand that in the light of today's debate, a statement has been issued to the press which offers some explanation.

Mr. Ashton has said that the personnel director stated in 1974 that, from time to time, chief and senior officers were requested to give informal or formal talks on particular aspects of the work of council, and that expenses for travel and subsistence and a fee could be paid. So why was Mr. Narey not open and above board about it? What about the company called KN Consultants, which apparently disappeared overnight? Apparently, it was resolved by the council that permission could be given for such talks if the appropriate chief officer was consulted. But no suggestion has been made that anybody was consulted in this case.

Why was Mr. Narey so angry about being shopped? Why was Mr. Spayne hounded, nearly out of his job? Why was the report on Mr. Spayne's employment quashed and sent back for a redraft? If the matter was all in order and above board, why did not Mr. Stevenson just tell Mr. Spayne that? Why is Mr. Narey now telling my constituent that he has no chance of redeployment when the computer department moves over to the new unitary borough of Middlesbrough? Is Mr. Narey, along with other officers, free to accept payments from contractors and then harass his staff if they question his doing so?

I suppose that it is possible that there is a perfectly reasonable explanation for all this, but justice has not yet been done, nor has it been seen to be done. There are, I suspect, only two alternatives. Either something very shady is going on in the county council and there has been a cover-up for some reason, or it is just a very badly managed institution which treats its staff poorly and has terrible internal communications. Either way, I am not confident that Cleveland county council is the efficient organisation it has pretended to be to stave off its own abolition.

I hope that the Minister will use what powers he has to have Mr. Spayne's case properly investigated by an outside authority. I would also like to see an independent report on Mr. Narey's activities with regard to the dummy 1635 invoices, and a clear statement from Cleveland as to the circumstances in which officers' private arrangements with outside companies are deemed to be corrupt.

Since these events happened, Cleveland county council has revised its guidance on private work and general conduct for staff. Under the heading "General Conduct" in both the old and new versions, it says clearly: The Council must be in a position to rebut with confidence any allegation that the integrity of its administration is being impaired because of the leisure time activities of any of its staff. Implicit in this is the requirement that there must be no question of staff undertaking activities in circumstances which might lead to suspicion of undue or improper favour being granted, or undue or improper influence exercised, in relation to contracts or any kind of consent, permission, licence etc., which members of the public seek from the Council. That is a clear statement which, in the circumstances, I do not think Cleveland council can live up to today.

Finally, it is beholden upon Cleveland county council to apologise to my constituent for the appalling way in which he has been treated, and to offer some token compensation. Once again, we see evidence of how the internal dealings of Labour-controlled councils leave a lot to be desired, and how difficult it is to bring such circumstances out into the light.

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

My hon. Friend the Member for Stockton, South (Mr. Devlin) has classically presented his case with typical clarity. Those of us with an interest in these matters will wish to consider carefully what he has said and consider their response to his analysis of these issues. However, I am sure that he will appreciate that it is not for me to comment on the specific case or the specific allegations. As my hon. Friend is aware, Ministers have no direct role in such cases, nor do they have powers to intervene. Nevertheless, the Government condemn all forms of impropriety and corruption in public life, wherever it occurs. We have done much in the last 16 years to promote good conduct in local government. I can offer my hon. Friend some general comments and some general guidance on how he might take this matter forward.

Historically, local government in this country has been characterised by a tradition of propriety and public service. However, there is always the potential for misconduct or fraud and we must not be complacent. Central Government's role is to ensure that there is a framework in place to provide a safeguard against such misconduct. In 1982, the Government established the Audit Commission to arrange for the audit of local authorities. The Audit Commission oversees the work of councils' external auditors, who have an important role in the fight against fraud.

In 1985, the Government set up the Widdicombe committee of inquiry into the conduct of local authority business. We responded to the committee's report with legislation providing for a number of measures to ensure the good conduct of local authority business. In particular, we introduced a head of paid service, responsible for making reports on—among other things—the proper appointment and management of staff and the introduction of the role of the monitoring officer to make reports on the contravention of the law or maladministration.

1636 Other measures introduced by the Government since then have contributed to the improvement of the conduct of local government by encouraging authorities to root out waste and bureaucracy and to remove obstacles to the provision of efficient and effective services. I am thinking obviously of the disciplines imposed by the extension of compulsory competitive tendering to greater areas of local authority business and most recently the requirement to publish performance indicators.

However, the primary responsibility for the prevention and detection of fraud within their areas of operation rests with the local authorities themselves. As responsible employers, councils should uphold the highest standards of probity among their own employees. In the great majority of cases, they do. Where fraud is found, the authority should root it out. However, my hon. Friend is clearly dissatisfied with the response he has received from the council in this case. I would advise him that he, his constituent and others concerned about this case have two alternate avenues to explore.

In cases where there is a suspicion of criminal activity, the matter should be referred to the police and the Crown Prosecution Service. However, I am not aware that such allegations have been made in this case. Alternatively, matters relating to misconduct, fraud or the loss of public money can be referred to the council's external auditor. I am not in a position to say—nor should I comment—on whether the allegations referred to by my hon. Friend have some substance, but the nature of the allegations suggests to me that they are of the type which would fall within the remit of the district auditor. My hon. Friend may wish to consider this course of action, if indeed it has not already been done.

District auditors are independent of the councils which they audit, and they have significant powers to investigate allegations of wrongdoing and take action. Their powers extend wider than those of a commercial auditor. They not only audit the council's accounts, but advise on matters relating to value for money and good financial management. They guard against fraud, misconduct and the loss of money, and if they find transgressions they can surcharge those responsible for the repayment of money.

District auditors are overseen by the Audit Commission. Its statutory duties include the preparation of a code which prescribes what appears to the commission to be the best professional practice with respect to the standards, procedures and techniques to be adopted by auditors". The code is subject to approval by Parliament and hon. Members with an interest in these matters will know that a Standing Committee of the House considered and approved the latest version of the code only last week.

Auditors have a duty to comply with the code in carrying out their functions, and therefore it plays an important part in the fight against fraud. The code makes it clear that it is the responsibility of auditors to review the adequacy of the measures taken by councils to combat fraud, to test compliance with these measures and to draw attention to significant weaknesses or omissions which they may identify. According to the code, any person may at any time give information to auditors which concerns the accounts of the relevant councils or is otherwise relevant to the auditors' functions, and auditors must—I emphasise that—consider such information. The relevant auditor in the matters referred to by my hon. Friend would be obliged to consider information passed to him.

1637 Mr. Deputy Speaker, I sympathise with my hon. Friend's frustration in this case, and I hope he will not be disappointed that I have to say—in all fairness, I think he already realised this—that I cannot pursue the matter on his behalf. However, I have explained the framework within which local authorities and their external auditors must operate, and I have offered him some guidance on the future action he must take. I can do no more than wish him the best of luck.