Westminster City Council

HC Deb 21 January 1998 vol 304 cc923-47

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Jamieson.]

9.34 am

Mr. Andrew Dismore (Hendon)

I am grateful for this opportunity to raise the issues of local government probity illustrated by the scandals of Westminster city council. The saga stretches back over 12 years and touches every Westminster resident. As Westminster Labour councillors, my hon. Friends the Members for Regent's Park and Kensington, North (Ms Buck) and for The Wrekin (Mr. Bradley) and I experienced the scandal directly and fought against it. It is a scandal of such spectacular scale that it rivals any work of political fiction—except that it is true.

I shall start by reminding the House of some of the key findings of the High Court on 19 December 1997. It found that Dame Shirley Porter and Councillor Weeks lied to the court as they had lied to the Auditor". That was because they had the ulterior purpose of altering the electorate". It further found that Targeting marginal wards was central to her political objectives and that

Their purpose throughout was to achieve unlawful electoral advantage. Knowledge of the unlawfulness and deliberate dressing-up both inevitably point to wilful misconduct. In so finding, the High Court surcharged Dame Shirley Porter and Councillor Weeks £27 million—the highest amount in local government history—and disqualified them from holding office. Language of such outstanding condemnation is more appropriate to the Old Bailey than to the High Court, but it shows how seriously the court viewed what has been described as the greatest act of corruption in local government history.

In the May 1986 council elections, Labour romped home in 12 marginal seats and came within 108 votes of winning the council. Lady Porter's greatest nightmare was coming true. "Imagine socialists running Buckingham palace!" she exclaimed. From that paranoia was hatched the long dark shadow of the Tory conspiracy that was to subvert democracy in the city of Westminster. From then on, elections were to be fought on a different basis.

As the few remaining decent Tories stood by, officers were bullied and intimidated and city hall was politicised. As Burke pointed out, It is necessary only for the good man to do nothing for evil to triumph. Never was a saying more appropriate than in Westminster council during the Porter years.

As the auditor said in his report on the infamous sale of the cemeteries for 15p, there was "a climate of fear" in city hall. Time and again, officers who refused to toe the line were sidelined, retired or sacked. Some 48 senior officers had left by 1988. The exodus culminated in the departure of the chief executive, Rodney Brooke, a highly thought of local government officer, who, after years of humiliation doing little more than the equivalent of counting paper clips, was given a £1 million pay-off.

The High Court exposed what it called The contemptuous state of mind towards officers and their views and The attitude of the majority party to the Westminster council officers, for whom it could not have been pleasant working at this time … such pressures may well have had an insidious effect on the officers, making them reluctant to speak out robustly. The politicisation of city hall was summarised in a nutshell by a margin note written by solicitor Matthew Ives on one of the many secret documents. He wrote: This paper should not have been written by an officer. Much more subtle approach required. This paper shows officers working for a Tory victory. City hall was infiltrated by a whole dramatis personae of shady right-wing characters advising Lady Porter. One became known throughout city hall as "the man with no name" and "the thing in the goods lift", because of his habit of sneaking in by the tradesman's entrance. We now know that he was Roger Rosewall, erstwhile Socialist Workers party activist, now Porter apologist and Daily Mail leader writer.

Property speculator Richard Loftus was also part of the clandestine city hall plot. While he paid for the Tories' poll tax campaign, he was also seeking permission for highly controversial developments in the west end, involving the partial demolition of some of the finest Georgian buildings in central London. He gained those permissions, leading to the destruction of a large part of London's architectural heritage. We believe that those permissions were obtained only because of his Tory party connections.

Not only was political campaigning conducted on the rates, but, from other sources, donations were illegally channelled through a bogus charity, the Foundation for Business Responsibility, which was run by Michael Ivens, a right-wing extremist and husband of Tory councillor Katy Ivens. There was a panoply of espionage, with Porter telling her associates to swallow documents in good spy fashion. Instructions were given to officers to book meeting rooms for Tories, using undercover names. The Toffler society was a favourite alias—much to the disapproval of the American right winger, Mr. Toffler. There was a complete dispensation with the normal democratic process. Decisions were taken not in committee but by a secret chairmen's group, whose minutes have still not been fully published. The reports that went to committee were misleading and incomplete.

However, activities went far beyond that. A dirty tricks squad was set up to discredit residents' groups that opposed Tory policies. Instructions were given to spy on Labour councillors' backgrounds in efforts to dig up dirt on us—unsuccessfully, I am pleased to say. Orders were carried out to lie to us, and to delay and obfuscate replies to Labour councillors' letters. As the High Court found, Mr. England, the director of housing, helped Phillips, the managing director, to provide the minority party with wholly misleading answers to what appeared to us to be understandable and wholly proper questions. Against that background, it is all too clear how the corruption of Westminster occurred.

In her interview with the auditor, disaffected Tory councillor, Patricia Kirwan, said that soon after the 1986 elections, one idea which came forward, following a meeting between Lady Porter and the Leader of Wandsworth Council"— who is now the hon. Member for Mole Valley (Sir P. Beresford)— was to sell all Council owned properties in key (marginal) wards as it was thought that owner occupiers were more likely to vote Conservative than Council tenants. By as early as June 1986, officers were recording that the Tories' objectives included Social engineering including housing", and Economic justification for G-mander on housing. From those roots developed the policy that was euphemistically called, "Building Stable Communities", which was anything but that. It was the smokescreen for gerrymandering.

The sale of council homes in the eight key marginal wards for the Conservative party's electoral advantage is now well-documented and recorded fact. The homes-for-votes scandal has left thousands of victims throughout Westminster, whose problems will be described by my hon. Friend the Member for Regent's Park and Kensington, North, should she catch your eye, Madam Speaker.

"Building Stable Communities" went way beyond homes for votes, affecting every council department, every evolving policy—even affecting electoral registration, which was made virtually impossible for those living in temporary accommodation and much more difficult for council estate tenants in marginal wards. Planning policy was fixed, discriminating against social housing and in favour of owner-occupation. Planning permission for owner-occupied housing in marginal wards was fast-tracked to meet the Tory voter targets. There was a plethora of environmental schemes—from fixing broken pavements to street cleaning, and even hanging flower baskets from lampposts—but they all had one key aim: to divert resources to favour marginal wards. A special task force, the ZIP squad, was set up to see it through.

Press and public relations activities were politicised, with special brochures, leaflets and newsletters for marginal wards. Everything was subject to an overarching policy of regular monitoring, with monthly reports supervised by Councillor Weeks and submitted to the chairmen's group.

Mr. Mike Gapes (Ilford, South)

Is my hon. Friend aware that, when the scandal developed, Westminster council employed somebody to act as a consultant to try to help it with its problems? That man was Geoff Price, who had retired as the chief executive of the London borough of Redbridge in 1993. It subsequently came out that Mr. Price was involved in another local government scandal, in my borough of Redbridge. As chief executive, he and the director of finance, Maurice Tilley, gave enhanced pension payments to 103 council employees, who were predominantly male, white and in the central secretariats of the council. Mr. Price enhanced his own pension by £63,000 in the two years before payments were stopped by the minority Labour administration, which was elected in 1994 and dealt with the scandal created by the Tories while they controlled my borough. Is not it interesting that there is a connection between the Tories in Westminster and the former Tory chief executive of Redbridge council?

Mr. Dismore

I am grateful to my hon. Friend for that intervention. Mr. Price was brought in to investigate another aspect of the scandal, which I shall be mentioning shortly. I am pleased to say that, once we brought the matter to the council's attention, he was sacked from the inquiry—although I regret to say that he did not choose to waive his fee.

It was not all plain sailing for Lady Porter. The poll tax threatened to wipe out all her work, until it was conveniently fiddled by central Government to ensure that the predicted poll tax of more than £400 was halved to £195. More significantly, there was the problem of major works bills, which Mr. Price was brought in at a much later date to investigate. Many of those who bought gerrymandered flats were potentially liable for bills of tens of thousands of pounds, so under the instruction of Councillor Hartley, the chairman of the housing committee, no major works bills were sent out at all between 1987 and 1991, straddling the 1990 elections. The council is still trying to sort out the loss of millions of pounds that was left behind.

Those are just some examples of how all Westminster council's resources were diverted to one overriding aim: to win the council for the Tories in 1990, at whatever cost—a cost that we estimate overall to be more than £100 million. The issues that I have described are the subject of further complaints to the auditor.

It is of equal concern that not only did the gerrymandering work for the 1990 elections, but the Tories so nearly got clean away with it. If it had not been for Porter and Weeks's obsession with recording and monitoring progress in writing; if it had not been for the persistence of the objectors; if it had not been for the talents of John Ware of "Panorama", who investigated the issue; if it had not been for the handful of Tories who spilled the beans, such as Patricia Kirwan; and above all, if it had not been for the courageous tenacity of John Magill, the district auditor, the truth might never have come to light.

Dr. Julian Lewis (New Forest, East)

I note the hon. Gentleman's tribute to the courage and tenacity of the district auditor. Does that mean that he approves of the way in which the district auditor spun out his investigation for a period longer than the duration of the second world war, held a press conference halfway through the investigation to announce the guilt of the parties, and indicted 10 people, of whom all but two have either been cleared or—in one case—have committed suicide? Does he believe that that was a model of auditing, and if so, why was it condemned by the court?

Mr. Dismore

The hon. Gentleman should read the court judgment more thoroughly, because it made it absolutely clear that there was no reason to impeach the auditor's investigation. The auditor made it clear in his provisional report that the investigation had taken so long because of the obstruction of the Conservative party, through shredding documents and avoiding interviews. I shall deal with that shortly.

In the light of the court judgment, the Audit Commission must be encouraged to confirm that Mr. Magill is the right person to proceed with the outstanding inquiries, which must be completed as soon as possible.

There are, however, wider lessons to be learnt, many of which have been picked up by the Nolan report into local government. I have one concern about the Nolan report. Recommendation 15 proposes standards committees in each local authority. It is inevitable that the majority party of the council would have a majority on such a committee.

Had the misconduct of Lady Porter been subject to the scrutiny of such a standards committee during the years of her reign on Westminster council, I have little doubt that the allegation of wrongdoing would have been rejected, dismissed and swept under the carpet, thus not achieving the necessary objective examination that Nolan expects. However, I welcome the Nolan recommendation for a new criminal offence of misuse of public office, stretching beyond just financial loss to cover other areas of serious misconduct.

If I am asked one question above all others, it is, "When is Lady Porter going to gaol?" That is what people expect, and it is the one thing under the present system that cannot happen. We also need stronger powers of investigation for the auditor, and an offence of obstructing the auditor. As I said, in Mr. Magill's interim report, we read of how documents were destroyed and interviews avoided. Mr. Magill even had to carry out a dawn raid in his boiler suit to go through old archives hidden in the basement of city hall, because he was so afraid that they would end up in the shredder if he gave advance notice of his visit.

We need protection for whistleblowers. The private Member's Bill promoted by the hon. Member for Aldridge-Brownhills (Mr. Shepherd), which I understand the Government support, is a good start. We need openness in the disclosure of information and documentation.

A major difficulty with the present system is the requirement for an objector to prove his or her case. That is an extremely expensive business, especially for a private citizen. It is not fair to put citizens in such a position when attempting to enforce rights on behalf of the community. We must consider ways of giving them public support. We need to find ways in which to compensate the victims of such outrageous wrongdoing.

So far, there has been no word of condemnation by the Tory party of Westminster council, Dame Shirley Porter or any of her co-conspirators. So far, no action has been taken to recover the money from Dame Shirley. The council has not even sent her a bill.

At the time of Mr. Magill's report—

Mr. Dennis Skinner (Bolsover)

Will my hon. Friend bear in mind the fact that the Tory silence on that matter is in sharp contrast to what happened in 1972–74, when 11 Clay Cross councillors decided not to put up the rents in accordance with the edict by Ted Heath—or should I call him the former Tory Prime Minister—on the Housing Finance Act 1972?

The Tories were baying for blood then. Those councillors were 11 principled people. They were acting not in a covert fashion but openly, saying that they were contesting the law. Yet every day in the House the Tories demanded that heads should roll.

As a result, my brothers and their colleagues were, in some cases, made bankrupt. They had their cars towed away and their holiday money taken by the sequestrator, and they were kicked out of office for 14 years by the Tories voting in the House to ensure that the sanctions were applied.

The councillors were honourable people; they were not putting money in their own pockets, yet they were hounded by the Tory Government. Does not that stand in sharp contrast to the silence from the Tories now about the £27 million fraud by Lady Porter, who should be brought to book immediately?

Mr. Dismore

I am grateful to my hon. Friend for that intervention. He may be interested to know that I asked the Library to research the previous history of surcharge, and found that if all the surcharges previously made were added together and multiplied by 100, only then would the sum start to approach £27 million. I can also inform my hon. Friend that one of the people found guilty in the High Court, Councillor David Weeks, is still sitting as a Conservative councillor in Westminster.

Mr. Nick St. Aubyn (Guildford)

Will the hon. Gentleman give way?

Mr. Dismore

I have nearly finished now. No doubt the hon. Gentleman will speak later.

At the time of Mr. Magill's report, I suggested that the council should apply to the court to freeze Lady Porter's assets. That did not happen, and we now hear that Porter has transferred most of her money abroad, mainly to Israel and Florida. To quote forensic accountants KPMG, she has been "well advised". The council, in consultation with the auditor, must now take urgent steps to recover the missing millions.

Finally, a suggestion put forward by the Evening Standard editorial on the High Court judgment day expresses a desire shared by the 136 hon. Members who have so far signed early-day motion 630. Dame Shirley Porter received her DBE for services to local government. That award, we now know, was obtained under false pretences. She should be stripped of her title as a lesson to all would-be corrupt gerrymanderers. The Conservative party leadership must now bite the bullet, dissociate themselves from Dame Shirley and the others, condemn what they have done and expel them from the party.

9.52 am

Mr. Nick St. Aubyn (Guildford)

I begin by declaring an interest as a resident of Westminster when I work at the House. I have a home near here and I currently have an application with Westminster council to vary an existing valid planning consent. I have been advised by the officer concerned that the variation is non-controversial.

I also have a wider interest in speaking in the debate, because from 1982 to 1986 I was an elected member of Westminster council. When Dame Shirley Porter first stood for the leadership of the council, I was one of those who voted against her. I opposed her policy on the technology committee, of which I was a member, and as I had been so vociferous in my opposition, I was somewhat surprised when she asked me to become chairman of that committee. In all fairness, I must say that she was always prepared to listen to my advice, although it was not always the advice that she wanted to hear.

I make it clear that I have nothing to hide in connection with my period as a Westminster councillor, and I have nothing to gain by speaking in the debate. I simply hope to give a sense of balance and fairness to the conduct and proceedings of the House.

The hon. Member for Hendon (Mr. Dismore) mentioned the 1986 election. I was fortunate enough to be elected in 1982, beating the sitting Labour councillor with the largest swing in any London seat, and in 1986 I lost that seat only after seven recounts. In case anyone should think that an avaricious attitude towards getting votes out is confined to one side of the House, or the council, I can tell hon. Members that we later discovered a number of cases in which people who had voted had clearly not been resident in my ward for many years. That number was more than the number of votes by which I lost.

However, we were not bad losers. We took it on the chin and went on to better things. But the House has already listened to a bad loser this morning, because whatever the hon. Member for Hendon may say about the conduct of Westminster council, he failed time and again to win control of it. How galling it must have been for him, as he heard of the fall of so many citadels of Conservative power in London and elsewhere, that he and his colleagues could not gain the glittering prize that he so clearly described.

Mr. Dismore

You fixed the elections.

Mr. St. Aubyn

There was something a little demeaning in the way in which the hon. Gentleman approached his subject this morning, because his speech was so one-sided. The judge was certainly forthright in his condemnation of Lady Porter and Councillor Weeks. It is not my job to defend them, but the judge also had harsh words to bestow all round.

The judgment reads as follows: in our judgment, the press conference which took place"— that is, the press conference held by the auditor— was ill-conceived and unfortunately executed. It would have been sufficient for a press statement to have been issued, preferably by the auditor's solicitor … Instead, a televised announcement was arranged at which the auditor himself appeared and, although he said that his views were provisional, he expressed them in florid language … There was a further feature of the events which should have had no place in the middle of quasi-judicial inquiry. A stack of ring binders on the desk at which the auditor sat, bearing the name of his firm for the benefit of the cameras was, ostensibly, under the protection of a security guard: unless it was being implied that the persons under investigation might wish to steal the documents, it is not clear what was the purpose of this posturing. That was the judgment of those who sat in the hearing from which the hon. Gentleman so selectively quoted.

There was more. Yes, it was found that the investigation was lied to by two of those who appeared before it, but, in the interests of a balanced judgment by the House, it is fair to record what the judges said in their findings as well. They refer to the huge lapse of time—10 or 11 years—since the crucial events, and … the period of nearly 4 years since the auditor announced his provisional findings", and remark: In such circumstances, it would be unsurprising if any of the appellants, however innocent of wrong-doing, had claimed any close relationship with … a policy which … was both unlawful … and might give rise to wilful misconduct.

Mr. Jim Fitzpatrick (Poplar and Canning Town)

Does not the hon. Gentleman agree that the judgment also contains the following passage? In the public hearing which followed the provisional findings there was, as it seems to us, ample and fair opportunity given for the appellants to make their case to the auditor. Although each chose not to give evidence, each made representations, DSP, E and P by counsel. Numerous contemporaneous documents chart the course of events. Accordingly, we are not persuaded that the auditor's final conclusions can be impeached on the grounds of unfairness. In any event, we are satisfied that the hearing which has taken place before this court has cured any possible unfairness to the appellants which could have arisen from the conduct of the auditor. Each has had the opportunity, after mature consideration of the objectors' complaints, the relevant documents and the auditor's findings, to put his or her case fully in evidence and submission by experienced counsel.

Mr. St. Aubyn

I am grateful to the hon. Gentleman for reminding the House, at some length, that the judges admitted the possibility of a need to cure mistakes and deficiencies in the process to which the accused had been subjected.

I shall quote one more time from the judgment. It says that in such cases one should select and concentrate on the points of real significance and … discard the rest as dross". I suggest that we do the same with the speech by the hon. Member for The Wrekin (Mr. Bradley). [Interruption.] No one would dispute the fact—

Mr. Peter Bradley (The Wrekin)

rose—

Mr. St. Aubyn

No, I have given way several times already.

Mr. Bradley

The hon. Gentleman just said that I had made a speech. I know that I speak quickly—and with great depth and breadth—but I have not yet uttered a syllable. If the hon. Gentleman can tell me what I am going to say when I do, he will save us all a good deal of time.

Mr. St. Aubyn

I apologise unreservedly to the hon. Gentleman. I was referring to the hon. Member for Hendon.

No one would dispute the fact that the former leader of Westminster council was wilful. Many politicians are wilful. The issue is one of misconduct, however, and I think that we should take a balanced view. One of the findings of the judgment from which we have all quoted was that the "quality of life" programme that was at the heart of the council's policy was, in itself, in no way improper. Yes, misconduct was found to have taken place, but it took place in the wider context of a policy that was validated time and again by Westminster's electors.

When I was a Westminster councillor, we had a real problem because of the large number of homeless people who had little connection with the borough, but who sought housing in it, often at the expense of people—and their children—who had lived there for many years and were also trying to get a foot on the expensive housing ladder.

We had an idea. We had some land in our land bank in the early 1980s. Instead of developing it for council housing, we transferred it, at no cost—all this was done entirely legitimately—to a builder, who built homes on it and sold them, at a reduced price, to the people on our housing list. That was known as the starter homes project, and it was so successful in creating new housing for those in genuine need that it was adopted throughout the country. There is clearly justification for a policy that gives preference to the sons and daughters of those who live in the area of a council—in this instance, Westminster—if that policy can be legitimised, even if it sometimes means not meeting the competing needs of homeless people.

No one should deny the seriousness of homelessness, and its seriousness in a city centre; but we should not ignore the effects on others of trying to cope with the problem. Rarely do I hold a surgery in my Guildford constituency at which people do not tell me of the problems that they experience with new neighbours on their housing estates—previously homeless people who are becoming a disruptive influence.

Mr. Bradley

The hon. Gentleman has told us that his tenure on Westminster council was between 1982 and 1986, before the events that we are discussing took place. I wonder whether his speech—interesting though it is—is relevant to the debate.

May I just point out that it was precisely the rights of sons and daughters in Westminster, and in long-established communities, that were denied and overturned by the hon. Gentleman's former colleagues on the council? His speech is very conceptual, and has nothing to do with the matter in hand.

Mr. St. Aubyn

The hon. Gentleman is quite wrong. The debate is about probity. In setting priorities for local government, we go to the heart of the matter: the needs of all local residents should be taken into account. There were sound principles behind some of the policies that were pursued by the council at that time, and are still being pursued today. That, above all, is why the council continues to enjoy the support of local residents in local elections.

As I said, the debate is about probity. It would have helped the speech of the hon. Member for Hendon if he had shown at least a semblance of balance when comparing the conduct of Westminster council with that of other councils. It would have helped if he had made some comment on one council's debt of £50 million, and the auditors' statement that its financial position has left it ripe for fraud and corruption and urgent action must be taken. It would have been right for him to mention the problems to which I refer—those of Islington council. Mr. Elliott, the district auditor, warned that widespread use of petty cash and overtime put it at risk of fraud. His latest damning report on Islington council highlights soaring rent arrears of more than £20 million, council tax arrears of more than £23 million, £5 million in overtime payments and £4 million in uncollected parking fines.

There are real problems on Islington council. It would be wrong to suppose that the problem of corruption is confined to one council in London or, indeed, in the country as a whole. We heard recently of the problems of Glasgow council. A senior Labour member of the council spoke of trips for votes, and even the promise of jobs for votes. Above all, we have heard of cases of personal gain on Labour councils. I must tell the hon. Member for Bolsover (Mr. Skinner), who intervened earlier, that in the course of the 11-year inquiry into Westminster council, I have seen no evidence that those who now stand accused of misconduct gained any personal financial advantage from their actions. I am not here to defend them, but, to be fair to them, their case is still subject to appeal. I challenge Labour Members to come up with any such evidence.

In the cases of Glasgow, Islington and—as we read recently in The Herald—Paisley, there is more than a suspicion that people obtained such personal gain. It is to the shame of the hon. Member for Hendon that he was not prepared to balance his comments about Westminster council's past with the present of Labour councils up and down the country.

Mr. David Heath (Somerton and Frome)

I am fascinated by what the hon. Gentleman is saying. If he believes that probity in local government is important—and I hope that every hon. Member agrees that it is—and if he considers the audit process important, will he not take this opportunity to commend Mr. Magill for the difficult work that he did over many years and in the face of many obstructions? I know about that, having been involved in the process myself. Will not the hon. Gentleman commend that work and that audit process, rather than trying to exonerate those who have been found guilty?

Mr. St. Aubyn

I am not here to exonerate anyone. That is for the courts to do, and, indeed, what they have done in the case of all but two of those accused by Mr. Magill. In the light of their findings, it is hard to give an unqualified endorsement of Mr. Magill's actions. He certainly received no such endorsement from the three judges who examined the case.

We must now look to the future. We must consider how we can ensure probity in councils such as Glasgow, Islington and Paisley, and in other parts of the country. Such councils should adopt a new code of practice. They should read what Nolan has to say, and take account of his suggestion that they should emphasise the qualities of selflessness, integrity, objectivity, accountability, openness, honesty and, above all, leadership that should characterise a code of conduct for every council in the country. I commend the pioneering work of the one council that has already adopted such a code: I refer, of course, to Westminster council.

I am proud of my time as a Westminster councillor. I know that my father-in-law, Councillor Brook, was proud of his time as a Westminster councillor, and I know that my wife's grandfather, Councillor Marshall, was proud of his time as a Westminster councillor. It is an outstanding council with an excellent record. That is why it has been given the endorsement of the local electorate time and again.

The hon. Member for Hendon failed in his attempt, because he was seen to be demeaning not only the actions of the few but the interests and the wider aspirations of the many. The people of Westminster will not forget the fact that, when he came back to Westminster, to the House, to take advantage of his privileged position to slag off most of those who live in Westminster in one way or another, by imputation, for not voting for him, he again let the side down.

Hon. Members should try to be more objective and fair in their analysis of a problem that stretches across the country.

10.10 am

Ms Karen Buck (Regent's Park and Kensington, North)

The hon. Member for Guildford (Mr. St. Aubyn) mentioned balance. The critical fact is that the Labour party acts when there is wrongdoing or substantial allegations: we suspend the members under investigation. We have not hesitated to condemn and criticise those who are found guilty. The difference is that Conservative Members have not uttered one word of condemnation or criticism of the behaviour of Dame Shirley Porter and her colleagues, who have been found guilty by the courts. How dare Conservative Members talk about balance, when they have not begun to address the issue? Dame Shirley Porter is guilty of the worst offence possible for someone in public office—betraying the very people whom it was her duty to serve. Housing is one of local government's most important responsibilities, and for it to be abused is morally and politically squalid. Those are not my words, but those of the London Evening Standard on 9 May 1997, following the publication of the district auditor's final report. They are important words, because they demonstrate the fact that the wider world understood the nature of the breach of probity in local government that occurred in Westminster.

Sadly, some of the Westminster Conservatives' apologists, from some of whom we have heard this morning, have done their best to promote what happened as a victimless crime, saying that it may have been arrogance or wrongheadedness but that no one got hurt and, in any case, everyone does it. In fact, it was the single greatest act of electoral corruption in British political history, and thousands of ordinary people suffered and continue to suffer.

The council tax payers of Westminster have lost £27 million, regardless of whether that money has gone into someone's pocket, which is not in dispute. This spring alone, the council will cut £500,000 from the classroom budget for our schools. Over the years since the investigations began, millions of pounds have been removed from the budgets of the social services and education departments, hitting services for the elderly and the chronically sick and disabled.

That £27 million is worth £130 a year on everyone's council tax, and the interest forgone alone is worth £30. The absolute and overriding priority, as my hon. Friend the Member for Hendon (Mr. Dismore) said, must be the return of the money. The council must seek to have the money paid into court, pending an appeal, and work with the district auditor to pursue what is rightfully due to the people of Westminster.

Where did the money go? It went on capital grants to induce tenants to vacate council buildings and to purchase non-council property. No doubt that was a success in some cases, but the inducement contributed to the 1,000 repossessions a week that were happening at the height of the housing crisis in the early 1990s.

Millions of pounds were spent on keeping buildings empty, with expenses ranging from security and the Sitex doors that went up on properties throughout the borough to the cost of rent forgone. The largest expense was the additional cost of homelessness, condemning hundreds, if not thousands, to the misery of bed-and-breakfast accommodation.

In March 1988, 9,000 properties were included in the designated list and, by March 1989, 702 dwellings had been set aside for sale. One of the most appalling aspects of the story is the fact that, when those properties had been set aside, they were allowed to remain empty for long periods. The total number of weeks empty in the period investigated by Mr. Magill was 27,567.

Think of what that meant to families in bed and breakfast, and indeed for sons and daughters—the very people of whom the hon. Member for Guildford spoke earlier—who were trapped in grossly overcrowded accommodation in their home borough while a metal door was fixed to the neighbouring property, which was being held for sale.

Mr. St. Aubyn

Does the hon. Lady not realise that the sons and daughters to whom we have referred would not have been entitled to enter those homes, and that others, who were unintentionally homeless, would jump to the top of the queue and pre-empt them? That goes to the heart of current housing policy in many councils.

Ms Buck

I disagree. The issue is entirely one of housing priority. Permanent accommodation was allocated on the basis of housing priority, whether for homeless people or for Westminster residents of long standing in chronic housing need, perhaps because of statutory overcrowding. It is also a fundamental mistake to assume that homelessness is a problem which is entirely external to the host borough. Throughout the relevant period, a substantial proportion, if not the majority, of those accepted as homeless had connections with the borough of Westminster.

In the aftermath of the period of frenzied selling occasioned by the designated sales programme, the number of homeless households rose to 871. It would be nice to be able to say that homeless families and people in housing need were simply the forgotten casualties of the episode. In fact, it would be closer to the truth to say that they were treated as the enemy. Notes from the chairman's group of September 1986 contain instructions to be mean and nasty to the homeless and to determine if more can be exported".

Mr. Gapes

On the subject of exporting, is my hon. Friend aware that one of the boroughs to which homeless families from Westminster were exported was Redbridge, where Peabody built a new housing estate in the early 1990s? For example, people with young children were forced to move to a borough many miles away, on the other side of London, with which they had no connections whatever. Many of them were single parents, refugees or people with medical or other problems, who needed to be close to the area that they knew, with the facilities that they had made use of, yet they were moved to my borough, which lacked the facilities, in the schools and other areas of demand from local people, to cope with the influx.

Ms Buck

I absolutely agree. A great deal of human misery was caused. There is no doubt that out-of-borough housing developments can be negotiated to everyone's benefit, but in the history of the gerrymandering scandal there was an aggressive policy of exporting homeless families without the appropriate negotiation with the boroughs on which they were dumped.

Other enemies of the council included the tenant-led groups seeking to take control of their estate in the Harrow road area, ironically making use of the Conservatives' tenants' choice legislation. As the Conservatives needed to marginalise Westminster's homeless into wards that they were unlikely to win, any campaign that would reduce access to the relevant stock was absolutely unacceptable; so there was a sustained smear campaign against those residents.

Against that background, the council moved homeless families into 200 homes in appalling condition in two tower blocks that had been intended for emptying and asbestos removal on the estate that the tenants sought to take over. The original decision was reversed, and 100 families passed through those asbestos-ridden flats. I hope that we may hear more about that later.

Along with council tax payers and those in housing need, the third group of victims was the leaseholders—pawns in the Conservative party game. There was an aggressive home selling campaign, and a lack of real information about what leaseholders' liabilities would be. Many people were trapped in flats that were unmortgageable and unsellable. The building societies red lined some of the designated estates and, as my hon. Friend the Member for Hendon said earlier, the residents were subject to huge unforeseen service charges and major works bills. That is despite the fact that senior Conservatives had seen officers' warnings prior to the sales programme about the dangers on those estates, especially on the Lisson Green estate.

Leaseholders form one of the largest constituency groups coming to my surgeries with cases of hardship. For example, an 80-year-old woman has been presented with bills dating back to 1990. A disabled man in his 50s has had his home repossessed because he was completely unable to maintain payments on the service charges. Young adults—the very people mentioned earlier by the hon. Member for Guildford—whose parents are long-standing Westminster residents and who bought flats have had them repossessed because they were unable to pay service charges and major works bills. They have been left completely homeless. I welcome the fact that the new Government have sympathy for the predicament of those leaseholders and will consider specific schemes to help them.

The homes for votes scheme included ways to make risky home ownership more attractive, through what was called the abatement scheme. That scheme was later found to be ultra vires and had to be withdrawn. It was an intrinsic part of the gerrymandering programme. The council's internal auditors showed that counsel's advice that a general scheme to waive service charges should not be applied was ignored. Some Maida Vale lessees saw bills rocket from £300 to, in some cases, £5,000, following the withdrawal of the abatement scheme. The whole gerrymandering saga was compounded by administrative and management failures, but it was driven by a hidden political agenda. The delays in billing for political reasons have added to the chronic uncertainty that has destroyed people's lives. The internal audit report on the leaseholder scandal in 1995 found that no accurate bills had been sent out for seven years and £20 million worth of work had not been charged for.

My hon. Friend the Member for Hendon referred to the campaign against the auditor John Magill, who has endured and, as is clear from today's debate, is still enduring, a campaign of vilification against him. He was charged with bias, his office was picketed and suggestions were made that his investigation was motivated by personal gain. That campaign was not carried out only by Dame Shirley's supporters, but involved the use of council resources, with publicly funded efforts to prove that Magill was responsible for, for example, the council's failure to collect service charges. The district auditor scheme has weaknesses—that is why it is being reviewed. However, as my hon. Friend the Member for Bolsover (Mr. Skinner) pointed out earlier, mention is never made of the weaknesses of the auditor scheme when Labour councils are in the firing line. In any case, the High Court judgment exonerated Mr. Magill from the fundamental charge of unfairness.

Conservative Members have drawn attention to the length of the investigation. Some of my hon. Friends and I, when we were members of Westminster council, often sought additional resources for the district auditor's office to expedite completion of the inquiry. Time and again, we were blocked by Westminster council and, no doubt, by the then Government who had no willingness whatever to see Mr. Magill complete his investigations. Therefore, it is complete nonsense to blame Mr. Magill alone for the length of the investigation.

Dr. Julian Lewis

The hon. Lady mentioned the length of the investigation. For the sake of the record, I wish to emphasise that it took seven years. Has any comparable time ever been taken by an auditor in an investigation of the wrongdoing of a Labour council?

Mr. Dismore

There has been no comparable wrongdoing.

Ms Buck

As my hon. Friend says, there has never needed to be an investigation on a comparable scale into such electoral wrongdoing. As I have said, we asked time and again for additional resources for the auditor's office to bring about a speedy completion of the investigation. The length of the inquiry was not helped by the fact that documents were shredded and deliberate attempts were made to undermine, block and delay the process.

Key movers of the policy remain in place and, in some cases, in important positions on Westminster council. David Weeks, one of those found guilty by the High Court and erstwhile deputy to Dame Shirley and leader of the council in his own right, continues to sit as a councillor. He may even seek to be re-elected in this year's local elections. He has not been suspended by the Conservative party. Why not? After all, he has been found guilty in the High Court. He has not been condemned by the Conservatives and he has not had the decency or good taste to resign his seat.

Councillor Alex Segal, who was not on the final list of those investigated, remains as the chair of social services and as chief whip. He produced a paper, in January 1987, that drew attention to the likelihood that home owners would be more likely to vote Conservative. It stated: The short term objective must be to target marginal wards and redress the imbalance of tenure. The High Court judgment states: After the production of the Segal paper, the direction of the designated sales policy was clearly targeted at marginal wards. Councillor Segal was also part of the chairmen's group involved in deciding to locate tenants in the asbestos-ridden tower blocks. The inquiry into that decision stated: No one involved in the debate can be excused for not insisting on a thorough evaluation of the tower blocks. Angela Killick, the former chair of social services, has said that Alex Segal was the driving force behind the policy … part of the clique with Porter and Legg. In a story worthy of Richard Littlejohn's "You couldn't make it up" column, Alex Segal and Councillor Miles Young have even sought public money to offset their costs in a claim for immunity.

Senior Conservatives have sought to create an image of themselves as victims who have been wrongly accused, harmed and persecuted. They are not the victims: the victims are the residents of the City of Westminster, especially the thousands of vulnerable homeless, those in housing need and the leaseholders who await redress. We await an apology from the Conservative party and its condemnation of those involved. Above all, we await the money.

10.25 am

Mr. Paul Burstow (Sutton and Cheam)

Before I start, I wish to offer my apologies to the hon. Member for Hendon (Mr. Dismore) for not being in my place at the beginning of his remarks, although I managed to hear most of them. I also apologise to you, Mr. Deputy Speaker, for my lateness and the resultant discourtesy to the House.

Before commenting on the Westminster case, I wish to set my remarks in the context of local government as a whole. It is important to stress that local government in this country is generally free from corruption and fraud. In evidence to the Nolan committee on standards in public life for the third report on local government, the Audit Commission stated: The Audit Commission appoints auditors to 469 local authorities. These authorities spend over £50 billion per year. Over 20,000 councillors serve on them and 2 million people work for them. In 1995/96 there were 1,475 proven cases of fraud and 21 proven cases of corruption involving councillors or local government officers. The Audit Commission also told Lord Nolan and his committee that 99 per cent. of fraud in local government was committed against local authorities by people from outside. That evidence, with submissions from a wide range of other interests, led the Nolan committee to conclude that the systems in place to deal with probity in local government are generally effective. That fact makes the Westminster case all the more shocking.

The systematic abuse of power—and its financial consequences—by Dame Shirley Porter and David Weeks, as leader and deputy leader of the Conservative majority on Westminster council, is in a league of its own in the annals of local government misconduct and surcharge. The traditional independence of local government officers was undermined by the climate of fear engendered by the intolerant attitude of the Conservative majority on the council. Details of that intolerance are given in the High Court judgment, and I urge some Conservative Members to read it in its entirety, instead of relying on the selective quotes that have been used so far.

Local government officers, unlike civil servants, work for the whole council and not just for the ruling party. That is not a fiction but a practical reality, which informs the culture of most councils, and a vital safeguard of the transparency of decision making in local government, which the House should not lightly discard. On Westminster council, the dividing line—even the grey area—between public purpose and party political purpose was not just blurred: it was totally ignored. Power was concentrated in a few hands and dissent was stifled. In effect, the Conservative leadership took on executive power. That is a warning of what can happen when powerful executive politicians are without adequate checks or balances.

Admittedly, much could be done to modernise the local government committee structure and many hon. Members who have come from local government know how the system works. However, the legal requirement that decision-making committees reflect the political balance of the council is an important safeguard for the public and for minority parties. The other place is considering a Bill that would allow one-party decision-making committees and the concentration of executive power in the hands of individual councillors or elected mayors.

The Bill undermines the strong legal framework that governs access to information and provides for experiments. Westminster was a laboratory where such experiments were allowed to run out of control. The purpose of Westminster Conservative councillors is now clear: they sought to gerrymander the 1990 local elections. In the High Court judgment, Lord Justice Rose said: Their purpose throughout was to achieve unlawful electoral advantage. As the hon. Member for Hendon said, there has been no compensation for those harmed by that decision. Figures supplied by the House of Commons Library suggest that the £27 million surcharge confirmed by the Court of Appeal dwarfs all previous surcharges put together.

Mrs. Teresa Gorman (Billericay)

I am sure that, in the interests of accuracy, the hon. Gentleman would want to note that of the 10 accused, eight have been exonerated and that the two people found guilty intend to appeal. The matter is therefore not complete.

Mr. Burstow

If it is a matter of appeal, we shall have to see what comes next. The hon. Lady will accept that a detailed reading of the Court of Appeal judgment shows that those people acted wilfully, committed misconduct and incurred substantial financial loss. I accept that the court said that two people were involved, but they are two very senior members of the Conservative majority on Westminster council, who led that council in an entirely improper and inappropriate direction for many years.

When Lord Nolan reported to the Prime Minister last July, he made some important recommendations to rebuild public confidence and strengthen the ethical framework of local government. I hope that we shall soon have an opportunity to debate that report in detail and that the Minister can confirm today that there will be a new statutory provision for misuse of public office, which would have a far wider effect than the blunt instrument of surcharge.

Westminster is an extreme and extraordinary case, but the circumstances that made it possible are more likely to be fostered by long periods of uninterrupted one-party rule. Although I would never argue that electoral reform is a cure all, I believe that a proportional voting system would bring a long-overdue gust of fresh air into our town and county halls.

Several hon. Members

rose—

Mr. Burstow

I thought that that comment might bring one or two people to their feet, but, in view of the time available, I shall take no interventions.

Such a change would strengthen opposition party representation on many councils where one party has enjoyed unfettered power with little scrutiny for far too many years. Allied to measures to boost turnout, such as a rolling register, PR would make a difference to the quality and effectiveness of local government.

In 1996, the right hon. Member for Suffolk, Coastal (Mr. Gummer), the then Secretary of State for the Environment, told the House in answer to a private notice question: If decisions in respect of Westminster are upheld by the courts, I shall not hesitate to condemn those responsible".—[Official Report, 9 May 1996; Vol. 277, c. 367.] The Conservative party must now publicly condemn that gross abuse of power and set in motion its own inquiry into what went wrong in Westminster. If it will not put its house in order, I urge the Government to investigate what happened in Westminster. Dame Shirley Porter and her deputy leader, David Weeks, subverted Westminster city council for party-political purposes. Their aim was to create a Tory rotten borough at the heart of our capital. I hope that we shall hear from Conservative Front-Bench Members today a clear and unequivocal condemnation of that corrupt administration's actions over many years.

10.32 am

Mr. Peter Bradley (The Wrekin)

It is impossible to underplay the importance and impact of this scandal on the thousands of victims in Westminster, on the reputation of local government and on the Conservative party. An eminent local government QC, Andrew Arden, said that, in his experience, this was the greatest act of corruption in the history of local government, not financial corruption in the conventional sense, but corruption of the machinery of the authority itself, given over to party political gain, in a way—and to an extent—that is absolutely without precedent … Nothing prepared me for such a naked abuse of power, people and resources; I would have said it was unthinkable". No amount of cavilling by Conservative Members about the time it took to elicit the truth from recalcitrant Conservatives, or diversions into the defaults of other local authorities, reduces the depth of the scandal or the scale of the guilt of those involved.

Dr. Julian Lewis

Will the hon. Gentleman give way?

Mr. Bradley

No, I shall not give way. Time is pressing. The hon. Gentleman has had his say and it was very interesting.

We are talking not just about political corruption but about one of the crimes of the century—£27 million of public money misapplied on the gerrymandering of Westminster. That is £11 million more than the fraud perpetrated by Peter Clowes, who received a sentence of 10 years for it. It is more than last year's entire annual budget of no fewer than 271 local authorities, including Wrekin, whose budget was a mere £17 million, Basildon, Brighton, Derby, Luton, Milton Keynes, Portsmouth and Southampton. By the time the auditor has finished his investigation, we confidently expect that surcharge to rise to £102 million.

Conservatives in Westminster left not a stone unturned. They broke the law on designated sales. If they were prepared to break the law for votes in one dimension of council activities, it is hardly surprising that they were equally prepared to break the law in others. They shipped thousands of homeless people out of the borough. At one point, they even offered local authorities in the north of England a £400 bounty to take families—and they were roundly rebuked and rebuffed. They subverted the objectives of charities such as the Peabody Trust, which built a 300-unit housing estate for Westminster residents—not in Westminster, but in Hillingdon.

The only interest of Conservatives in city hall was to get people out of the borough and off the electoral register. They used public money to target vote-catching environmental improvements in marginal seats. They subverted the planning process, which was far more likely to yield a result than fiddling with housing at the margins. They encouraged private development as part of office planning consents, and they resisted the development of social housing.

In the 11 years between 1982, when the hon. Member for Guildford (Mr. St. Aubyn) was a member, and 1993, Westminster secured as planning gain just 24 units of social housing. Those who say that there is no development land in Westminster should take a trip to Paddington Basin or go round the corner to Westminster hospital. They should look at the planning consents to see how many units of social housing to meet local need have received consent. It is a round figure. Conservative council members corrupted the development plan to pursue their aim.

It is inconceivable that all that could have happened without the Conservative Government's acquiescence. It is more likely that it had their active connivance. Labour Members and others made a catalogue of requests for Government action and made inquiries into, for example, the sale of a cemetery, sold for 15 pence and recovered for £4.25 million of public money. No public inquiry was held into those unresolved issues, the gerrymandering of Westminster or the corruption of the unitary development plan. All the claims were rejected by a who's who of Ministers: the late Nicholas Ridley when he was Secretary of State for the Environment; the right hon. Member for Henley (Mr. Heseltine); the former right hon. Member for Bath—Chris Patten—and the right hon. Member for Suffolk, Coastal (Mr. Gummer) all protected their colleagues at city hall.

What of the role of others? We have heard references to the hon. Member for Mole Valley (Sir P. Beresford) and the precious advice that he gave to Dame Shirley Porter just days after her scare in 1986.

Sir Paul Beresford (Mole Valley)

The hon. Gentleman should be aware that I and others on Wandsworth council—officers and members—have given advice to many councils. Whether they took the advice is down to individual councils, but I could list them: Camden, next door to Westminster; Lewisham, which took my advice by the truckload; and Crawley, which took not only advice but assistance from financial staff of Wandsworth council. Any attempt to smear is wrong and incorrect. If the hon. Gentleman continues with that, he should do so outside the House.

Mr. Bradley

The hon. Member is obviously sensitive on that point. I have not suggested that he has acted improperly; indeed, I am assured that he is honourable. I am sure that other local authorities have listened to his words even if they have not taken his advice. I refer him to the transcript of interviews given by former Conservative colleagues of his, including Patricia Kirwan, on that very point. I am sure that he has read that transcript. There were others, too—Members of this House.

Sir Paul Beresford

Will the hon. Gentleman give way?

Mr. Bradley

No, I must make progress, because I am anxious to hear the Minister's reply. The hon. Gentleman has had his say.

I come to the role of Members of Parliament: the former right hon. Member for Westminster, North—Sir John Wheeler—and the right hon. Member for Cities of London and Westminster (Mr. Brooke), both of whom were present when some of the strategy papers were unveiled by their colleagues from city hall. The right hon. Member—he is an honourable Member—for Cities of London and Westminster said—

Mr. Deputy Speaker (Sir Alan Haselhurst)

Order.

Mr. Bradley

—immediately after the provisional—

Mr. Deputy Speaker

Order. The hon. Gentleman must resume his seat when I am on my feet. I remind him that all hon. Members of this House are honourable Members. He should remember that.

Mr. Bradley

I apologise; I was simply emphasising the respect in which the right hon. Member for Cities of London and Westminster is held. He said in 1994 that he was aware of the political dimension in these matters, so I wonder why, when he was chairman of the Conservative party, he did not think to blow the whistle.

We believe that the scandal goes right to the doors of No. 10. We know that, in 1987, Shirley Porter wrote to the then Prime Minister, Mrs. Thatcher, as follows: We in Westminster are trying to gentrify the City. We must protect our electoral position which is being seriously eroded by the number of homeless that we have been forced to house … I feel that the problem is now so serious that you should look at it yourself. Could I suggest that one of your Policy Advisors spends some time with my officers looking at the problem in detail? I am afraid that unless something can be done, it will be very difficult for us to keep Westminster Conservative! The clincher was not the gerrymandering of Westminster; it was the poll tax dodge in 1990. In autumn 1989, Westminster was faced with a poll tax of £429—similar to that of other London boroughs. We know that, after representations were made to the right hon. Member for Suffolk, Coastal, then the Minister for Local Government, and to other Ministers, that figure magically became £195—a vote-winning, election-clinching result.

If we had time, we could spend the whole day going through the scandals that attended Westminster, but, as my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck) said, the most staggering aspect in recent days of this monumental scandal is the lack of response from Conservative Members. There has been a deafening silence. When wrongdoing on a far smaller scale has been alleged in Labour-run authorities, we have moved quickly—in Doncaster, Glasgow, Hull and Hackney—yet in 10 years we have not heard one word of condemnation in respect of Westminster from Conservative Members. Indeed, they seem keener to savage their current leader in the letter columns of national newspapers than to condemn Shirley Porter's wrongdoing. The early-day motion condemning Shirley Porter has been signed by 136 Members of Parliament, not one of them a Conservative Member and, as has been said, David Weeks, who stands accused not only by the auditor, but by three High Court judges, still sits as a member of Westminster city council.

On 9 May 1996, when the auditor confirmed his findings, the then Secretary of State for the Environment, the right hon. Member for Suffolk, Coastal, said: I have made it clear that I would condemn utterly any failure to meet the highest standards of propriety, whenever it is found and whoever is found guilty. If the decisions in respect of Westminster are upheld by the courts, I shall not hesitate to condemn those responsible". He went on to say: The only honourable way to deal with an issue of this kind is to say that, if someone is found by the courts of law to be guilty, one condemns unreservedly and without question—whoever that person is, however close one is to them, and for whatever party they happen to stand."—[Official Report, 9 May 1996; Vol. 277, c. 367–69.] In resisting invitations to condemn, the Prime Minister of the day, the right hon. Member for Huntingdon (Mr. Major), said: I am quite prepared to condemn cases of proven malpractice and those who have been found guilty in a court of law."—[Official Report, 9 May 1996; Vol. 277, c. 362.] We are still waiting for the right hon. Members for Huntingdon and for Suffolk, Coastal to deliver that pledge.

Another former Prime Minister, the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), said in 1994: It is not a question of individual moral behaviour, but of an allegedly highly organised policy by a political group in local government. If true"— it has now been seen to be true—

it is the heaviest blow the Conservatives have had to take in living memory … The Prime Minister has declared that if proven it will receive the utmost condemnation. For the Conservative party in Parliament, it would be wise to display to the country the seriousness with which we view this report. It is time the truth was told. The audit system has failed. It was brought in by the Local Government Finance Act 1992 to act as a stick with which to beat Labour authorities. But there has been no redress for or recompense to victims.

The truth matters and justice matters. I ask my hon. Friend the Minister for an investigation of the Conservative Government's record in aiding and abetting the corruption at Westminster city council. I ask her to ensure that outstanding inquiries are expedited and that Westminster city council—whose role in this saga has not been entirely blameless—takes urgent steps to recover the £27 million of public money owed to the people of Westminster. I ask for an expeditious review of the audit system so that in future we can be assured that the citizen, not the corrupt politician, is at the centre of local democracy.

10.44 am

Mr. Richard Ottaway (Croydon, South)

I start by offering the apologies of my right hon. Friend the Member for Cities of London and Westminster (Mr. Brooke), who would have liked to be present at today's debate, but who is leading the Northern Ireland Affairs Committee to Northern Ireland at this difficult time.

Today's debate has focused on the events of 10 years ago. As my hon. Friend the Member for Guildford (Mr. St. Aubyn) observed in his excellent speech—the only speech by a Conservative Member—this is not the first time that the hon. Member for Hendon (Mr. Dismore) has sought to make political capital out of this saga. He was the fairly undistinguished leader of the Labour group on Westminster council in 1994 when, armed with the auditor's provisional report, he led his party to a glorious defeat, despite having constantly raised the issue, as he seeks to do again today.

In the short time available, I wish to make three points. First, the Conservative party is in favour of the highest possible standards in public life: we condemn wrongdoing in any quarter and will do so if the decisions in respect of Westminster are upheld by the court. Secondly, I believe in justice: all the individuals involved in this matter have the right of appeal and, until the legal process is exhausted, any sensible and cautious person would be wise to await the outcome before making a judgment. Thirdly, given the trail of waste, inefficiency and corruption in Labour-controlled councils throughout the country, Labour Members are in no position to lecture anybody.

The original findings of the district auditor in his provisional report were against 10 councillors and officers. Of those 10, one committed suicide and the auditor decided not to uphold the objections in respect of another three. Of the remaining six named in the auditor's final report, the judges have quashed the surcharge relating to three officers; the fourth officer is receiving treatment after suffering a nervous breakdown and the auditor has dropped the action against him. The remaining two have the right of appeal. All those people have been through a traumatic experience and, for most of them, there was no just reason for it.

Mr. Peter Bradley

Will the hon. Gentleman give way?

Mr. Ottaway

No, because the hon. Gentleman far exceeded the amount of time that would have left me with enough time to reply to the debate.

We extend our sympathy to the friends and relatives of Dr. Michael Dun, who was driven to take his own life by the pressures of the accusations made against him. The nature of the inquiry has not escaped comment. In the judgment of the court, the judges stated: whether Parliament contemplated so gigantic an investigation by an auditor into an objection to local authority accounts we very much doubt. In our judgment, in any future investigation of this kind, it will be essential for the auditor to exercise a sense of proportion and to balance, on the one hand, the need for adequate scrutiny of the accounts and the objections to them and, on the other, the need to avoid a prolonged and inordinately expensive inquiry. Despite that, the district auditor has decided to appeal against one of the findings.

Lord Nolan clearly found the whole process unsatisfactory. In the third report of the Committee on Standards in Public Life, which dealt with local government and involved taking evidence from Westminster, he wrote: we have been persuaded by the evidence put to us by many witnesses that the concept of surcharge of councillors is unsatisfactory. We believe it is particularly unsatisfactory to have a procedure in England and Wales in which the district auditor formally can prosecute a case against individual councillors, judges guilt or innocence, and determines the penalty on the basis of his own calculation of financial loss. We believe that the concept of surcharge itself is now outdated. It should be abolished and replaced by the direct involvement of the courts in judging guilt or innocence and the appropriate penalty. I invite the Minister to say whether the Government agree with Lord Nolan.

This case illustrates the danger of jumping to conclusions and condemning people before the judicial process is completed. On 9 May 1996, the then Leader of the Opposition, now the Prime Minister, said—

Mr. Peter Bradley

On a point of order, Mr. Deputy Speaker. Is it in order for the hon. Gentleman to mislead the House? On 19 December, the High Court judges refused the right of appeal to Shirley Porter and David Weeks. The legal process is at an end and they are guilty. Will the hon. Gentleman acknowledge that?

Mr. Deputy Speaker

The hon. Gentleman must not accuse another hon. Member of misleading the House about something that is purely a matter of debate. I remind right hon. and hon. Members that the sub judice rule applies when notice of appeal is given. As I understand it, leave to appeal is being sought, so the House's rule does not apply now. As it remains possible that the rule may once more be brought into play, it is probably advisable, even on such a serious subject about which hon. Members have strong feelings, to use moderate language.

Mr. Ottaway

I am not seeking to hide behind the sub judice rule. I am simply stating the facts.

On 9 May 1996, the then Leader of the Opposition invited my right hon. Friend the Member for Huntingdon (Mr. Major), then the Prime Minister, to condemn the conduct of those named in the auditor's report as "disgraceful and improper." Bearing in mind the fact that, since then, the case against three of those named has been quashed by the High Court, such a precipitate demand from the right hon. Gentleman illustrates the serious danger of making premature accusations before the wheels of justice have turned and those responsible have contemplated their inquiry. I am sure that all hon. Members present would invite the Prime Minister to correct the implication of his remarks in May 1996.

What is unbelievable today is the sheer hypocrisy of a party that has such a catalogue of ropy practices in local government. Thirty Labour councils are under investigation following allegations of corruption, impropriety—including the acceptance of bribes—fiddling expenses, failure to declare financial interests and gerrymandering. Frankly, what we have heard today is the pot trying to call the kettle black.

Against that background, the Government's approach to Westminster council gives rise to the greatest concern. Their decision to cut the council's SSA illustrates their embarrassment at Westminster's success in keeping its council tax at such a competitively low level. It costs Westminster £33 million to provide services for non-residents. Its SSA allowance for that is £18 million, so there is a shortfall of £15 million.

Westminster is a world-class city that takes great pride in caring for its environment and protecting our heritage. Some 71 million visitors visit Westminster every year and that poses particular problems connected with density and cleanliness. The Government, looking for excuses to reduce the SSA, say that those visitors do not cause such problems. To argue that density is not a problem for Westminster council by quoting fatuous examples of people staying at the Ritz is disingenuous and short-changes the residents of Westminster.

A report prepared by KPMG demonstrates that density is relevant to the costs of providing services for businesses and commuters, but the Government have rejected that report. To her credit, I was pleased to note that the hon. Member for Regent's Park and Kensington, North (Ms Buck) said that she accepted the basic conclusions of that report. We look forward to welcoming her in the Lobby when we vote on the revenue support grant.

Westminster city council has a proud record. On housing, it has the best record in inner London of keeping the number of empty properties to a minimum—in contrast to the efforts of Islington and Hackney. It has the cleanest streets in London and has won many prizes for that. It is the greenest borough in London, with many well-kept parks and gardens. It also has the cleanest refuse fleet in the world. On education, it leads the way. The pupil-teacher ratio is 18 in primary schools and 15 in secondary schools. The Labour party talks about low class sizes, but Conservative Westminster delivers them.

Westminster is a borough which protects the vulnerable. While Labour has been cutting expenditure, it has been increasing spending on social services. It spent £337 per head on social services—it has increased by 15 per cent.—in the past three years. It is a borough which believes in competitive tendering and its programmes have saved every resident £200 a year on his council tax bill. It is now a pioneering borough in the use of the private finance initiative. It is a borough which takes pride in the provision of its services by providing one-stop centres that are open in the evenings and on Saturday mornings—when the public need them.

Despite that high quality of service, the borough is also able to provide the lowest council tax in the country. That is what irritates the heck out of the Labour party and explains why it is falling over itself to cut the borough's SSA.

Westminster is a borough which has a right to be proud of itself. The Conservative party is proud of it and we believe that the public are also proud of it. That is why they will re-elect a Conservative administration in May, as they did in 1994, to carry on the good work.

10.54 am

The Minister for Local Government and Housing (Ms Hilary Armstrong)

We have heard a sorry tale this morning that does none of local government any good. Those of us who care about local government and that local people should be able to feel that it is working for and with them can only feel extremely sad about what we have heard and the response from the Opposition spokesman, hon. Member for Croydon, South (Mr. Ottaway).

I am grateful to my hon. Friend the Member for Hendon (Mr. Dismore) for raising this important issue, which provides me with an opportunity to set out the Government's proposals to improve standards in local government. A former member of Westminster city council, my hon. Friend is well qualified to introduce the debate because he was one of those who played an important part in bringing its discredited homes for votes policy to the attention of the district auditor.

My hon. Friend will appreciate that, in view of the likelihood of further appeals, I cannot comment on the Westminster case in detail, but he and my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck) are right to remind the House that the saga has been grossly unfair to people who live within the boundaries of Westminster city council. We have a duty to be concerned about those people.

Those who have been waiting to be rehoused have had to suffer unsatisfactory accommodation for longer than necessary, with no means of redress, while the council tax payers of Westminster have had to meet the additional housing costs arising from the council's decision to keep perfectly good properties vacant, thus incurring high temporary accommodation costs.

The issues raised by the Westminster case will be tackled by the Government. In our manifesto, we set out a range of measures to ensure good local government. We believe that that matters not only because it provides and supports many of our services and spends huge sums of money in doing so, but because it is the one government institution that empowers the citizen through the ballot box and other means to influence the way in which local issues are dealt with on their behalf.

The Government are determined to ensure that the integrity and credibility of the local democratic process are upheld and not further undermined by authorities that ignore or in some cases work against the needs of their communities.

The number of such authorities is small, but the damage that they cause to the morale of many dedicated local government members and officers and to the standing of local government in the eyes of the public is considerable. Probity in local government is essential: without the highest standards of probity, local government cannot gain the confidence of the people or the legitimacy that it needs to play a proper role in our country.

We have said all along that wrongdoing in local government should be investigated and dealt with accordingly. When the Nolan committee recommendations on local government conduct were published last year, the Prime Minister stressed the Government's determination to improve standards. We want to establish a new ethical framework for local government that will let members and officers know exactly where they stand and provide clear and equitable penalties for misbehaviour.

We will lay a good deal of the responsibility for the rehabilitation of local government on authorities, but we will also put in place procedures for monitoring what happens to ensure that complaints are properly investigated and that the appropriate action is taken. We are now considering the recommendations of the Nolan committee and we will announce our proposals for consultation in a few weeks.

One of Nolan's most prominent recommendations was that surcharge should be abolished and that a new offence of misuse of public office should be introduced across the public sector. We have heard much comment about the current system from Opposition Members. They seem to forget that they introduced it and continued to support and defend it throughout their period of office. Should we decide to abolish surcharge, we shall need to ensure that there is a workable alternative. However, we are clear that there must be an effective deterrent against financial wrongdoing and that, when it occurs, there must be an effective way of dealing with it. As hon. Members know, we are considering the offence of misuse of public office wherever people are represented.

The auditor is the financial watchdog for local authorities and is ideally placed to identify possible misconduct involving financial loss.

Mr. Deputy Speaker

Order. We must move on to the next debate.