HC Deb 04 July 2000 vol 353 cc271-9 '.—Where matters considered by an interim tribunal or a case tribunal are or become the subject of criminal proceedings in a court, it shall be open to that court, in considering any penalty resulting from a verdict of guilty, to apply a requirement, as part of any penalty, that a restitution order be made so that any loss to the local taxpayer is repaid.'.—[Mr. Loughton.]

Brought up, and read the First time.

Mr. Tim Loughton (East Worthing and Shoreham)

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

Mr. Deputy Speaker

With this it will be convenient to discuss the following: Amendment No. 34, in page 33, line 26, at end insert— '(5) The code of conduct shall also apply to councillors in their capacity as local authority-nominated representatives to outside bodies.'. Amendment No. 35, in page 33, leave out line 38.

Amendment No. 36, in page 33, line 40, after "authority", insert— '(referred to in this Part as an independent member)'. Amendment No. 37, in page 33, line 40, at end insert— '(4A) The membership of the Standards Committee shall be such that the number of independent members exceeds the number of members of the authority (if any).'. Amendment No. 39, in page 33, line 43, leave out from "leader" to end of line 44.

Amendment No. 38, in page 33, line 44, leave out— 'a member of the executive' and insert— 'any member or officer of that or any other relevant authority'. Amendment No. 40, in page 38, line 24, leave out from "three" and insert "five".

Amendment No. 41, in page 38, line 25, at end insert— '(2A) The Standards Board for England must be comprised of persons possessing such qualifications as may be determined by the Secretary of State. (2B) Qualifications under subsection (2A) shall include not less than four years' continuous service as either a member or officer of a relevant authority.'. Amendment No. 42, in page 40, line 17, leave out'— ', within the period of five years ending with that time,'. Amendment No. 43, in page 40, line 18, leave out "five" and insert "ten".

Government amendment No. 150.

Amendment No. 44, in page 44, line 5, after "investigation", insert— 'of the outcome of the investigation, and provide any such member with a copy of any report under this section before it is made available to any other person'. Government amendments Nos. 153, 154 and 155.

No. 45, in page 57, line 30, and insert— '( ) Pending the verdict of the High Court on any appeal under subsection (15), the appellant shall not be disqualified, other than in exceptional circumstances set out in writing by the Standards Board.'. Government amendment Nos. 209, 203 and 204.

Amendment No. 4, in page 91, leave out lines 20 and 21.

Government amendment No. 211.

Mr. Loughton

Having sat here for the past four and a half hours and seen trashed by the guillotine great lines of amendments for which I was responsible, it is a relief to be able to move and speak to new clause 3 and to some of the amendments in this group.

New clause 3, which deals with standards of conduct, was discussed briefly in those halcyon days when the Bill was considered in Committee. I think that the new clause's purpose is quite clear: to give protection to local taxpayers if the criminal actions of one or more councillors or officers results in costs to the authority as a whole. The effect of the new clause would be that, when a miscreant was found guilty of a criminal offence, it would be at the judge's discretion to impose a restitution order on the guilty party, to order him to pay a sum to a council to cover some or all of the costs resulting from his actions.

As we also discussed in Committee, there is a broad consensus that surcharging has passed its sell-by date. However, there is a sound principle behind surcharging—that local taxpayers should not have to foot the bill when a few rotten apples abuse the position of trust in which they have been placed.

As the new clause would apply only in cases in which there had been a successful criminal prosecution, a high standard of proof would be required before the axe could fall on individuals. The risk of unjust or unduly severe penalties would be minimised both by that fact and by the fact that the penalty would be at the discretion of the judge in the individual case, who, having heard all the evidence, beyond the straight guilty verdict, would be able to make an informed judgment on intent and degree of responsibility.

During the debate in Committee, the Under-Secretary said that she was sympathetic to the spirit of the new clause, but believed that the courts already had powers in that regard. However, an authority would have to pursue a separate action to recover its costs. The new clause would ensure that the same court considering the criminality of a person's actions would also be able to determine the penalty. That would mean that the courts would not become clogged, and that authorities would not have to gamble potentially large sums in lawyers' fees for further court action to recover relatively small amounts.

It is slightly disappointing that the Government have not chosen to follow up the idea, given the sympathy for the idea expressed in Committee. We feel that the proposal would reassure local council tax payers that councillors and officers who abused their positions would be sufficiently punished.

Amendment No. 34 deals with the duty to comply with the code of conduct. In Committee, I raised the potential problem of whether councillors should be covered by the model code of conduct for activities outside those involved in being council members. I gave the example of councillors who are appointed as school governors, as members of community health councils or of economic partnerships, and so on.

The Minister assured the Committee that councillors nominated by their respective councils to outside bodies should be covered by the model code of conduct. However, the hon. Member for Bath (Mr. Foster) raised the subject of indemnification. He asked whether such councillors would be covered by their councils for any indemnities that they might have.

The question of indemnification has not been addressed by the Government, which is why we are relaunching the amendment today. I should be grateful for a response on that matter from the Under-Secretary of State.

Amendments No. 35 to 39 deal with standards committees. In Committee, we discussed this matter at some length, although the role of standards committees remained unclear. We appreciated some of the intentions behind the committees, but it was not clear how they would carry out the functions that had been described. The amendments would bolster the integrity of the members of the standards committee in the eyes of council tax payers and the electorate at large. They would therefore strengthen the Bill, rather than weaken it.

Councillors themselves have raised the points contained in the amendments. At present, the Bill requires that only one independent member must be appointed to a standards committee. We propose that standards committees should contain more than three people. In addition, we propose that, to be truly independent and to carry out properly their role of overseeing the conduct of councillors and the training and conduct of councillors referred to them, they should have a majority of independent members.

We also propose that standards committees should not be chaired by members of the executive, and that they should not even contain such members. We believe that a standards committee investigating questions of potential misconduct, or queries from the public involving members of the council executive, would be in an anomalous position under the Bill as it stands. The amendments would prevent possible conflicts of interest if standards committees have to deal with breaches of the code that involve members of the executive.

Some people have suggested that all the members of standards committees should be independent, others that they should consist of members of neighbouring authorities. That would allow them to play the sort of twinning, overseeing role that takes place at the moment, for example, when audits are conducted. Still others have suggested that several authorities should pool together for a single standards committee, as I gather already happens in west London. In that way, they could not only share best practice, but cut down on costs. That would seem a good, practical suggestion, but as the Bill stands, such a sensible procedure would not be permissible.

10 pm

The Minister was also vague about what powers will be available to members of the standards committee, in particular their role in those cases referred back to them by the national Standards Board for England. It was a feature of the report by the Joint Committee, which asked whether it was appropriate for members of the executive to be members of the standards committee as well.

In Committee, the hon. Lady accused me of being inconsistent and, now, prescriptive in making these suggestions. However, we are merely trying to maintain the integrity of the new committees that the measures are establishing. The hon. Lady also said that local authorities and their members should have ownership of the standards committees and their own code of conduct, although I cannot think of other areas, such as politics or financial services, in which the Government have been so keen on self-regulation. Does the Minister not think that our amendments would actually strengthen the role of the standards committees, and what is the point of them otherwise?

Amendments Nos. 40 and 41 deal with the standards boards. As presently constituted, they would have a minimum of three people. We propose that their membership should consist of at least five people and that those people should have appropriate qualifications. The new standards board is potentially immensely powerful; it will have the power to make or break the careers of councillors whose misdemeanours come before it. To have just three members of the national standards board also seems rather unfair; one has been designated as chairman, one as deputy chairman and the poor third one will be left out as an ordinary member.

There are other examples of committees fulfilling and overseeing scrutiny and disciplinary roles which have far more members. The Neill committee, for example, consists of 11 members. What was most bizarre when we discussed these measures in Committee was that, rather late in the day, the Minister for Local Government and the Regions suddenly said that it was not the Government's intention that those committees should consist of three people, but that the quorum was made up of three people. Nowhere in the Bill is that mentioned. It says quite clearly that the Standards Board for England is to consist of not less than three members.

We invited the Minister to make it clear in the Bill that the membership of the Standards Board for England would be rather greater than three, such as five or more. Alas, the Government have again failed to address this anomaly. It was absurd; we asked the Minister when was a quorum not a quorum—apparently when it is called a standards board. I genuinely think that this had not been thought through when the Bill was drafted. That is why our amendment is a sensible and strengthening measure.

As part of this group of amendments, we suggest that members of the standards board should have at least four years' experience as councillors or officers of local authorities. That, surely, is not demanding—four years is a normal term of office for a councillor. Because this is a new committee, with immense powers over many thousands of councillors up and down the country, it seems only appropriate that its members should have had some experience in the bodies that they are overseeing.

Amendments Nos. 42 and 43 deal with the conduct of investigation. This is where we discussed ethical standards officers who are potentially very powerful individuals. They have the power to instigate investigations of councillors, to suspend councillors and to recommend penalties against councillors.

Given the immense powers that ethical standards officers will have—powers of investigation and to summon various documents—there should be better safeguards against such officers not having connections with the councils that they are investigating. In the amendment, we suggest that ethical standards officers should have had no link with councils that they are investigating, either as a councillor or an officer, for at least 10 years, rather than five. That seems a sensible period of time.

Mr. John Bercow (Buckingham)

To whom exactly will the ethical standards officers be accountable?

Mr. Loughton

That is an interesting question. Although, on the face of it, they will be accountable to the standards board, the exact terms of their operation are still to be defined. In Committee, we asked many times for a definition of their roles and powers and whether those powers could be capped. We were not given answers.

I served on the Standing Committee that dealt with the Financial Services and Markets Bill, which provides for similar regulatory officers with immense powers. In this Bill, we are setting up another phalanx of investigation officers, whose accountability is questionable. Certainly, the link between their accountability and the local electors has not been established.

Mr. Dafydd Wigley (Caernarfon)

The hon. Gentleman referred to the immense powers conferred in the Bill. Does he agree that the essential prerequisite is, therefore, an adequate appeals system? That is now a prerequisite under human rights legislation. To what extent does he feel that that aspect has been covered by the Bill?

Mr. Loughton

The right hon. Gentleman makes a good point. If he had been a member of the Standing Committee, he would have heard me mention the European convention, in particular article 6, and whether it applies to these activities. We are talking about a body that has the power to levy uncapped penalties—fines or suspension from a council role—and there are potential implications for conflict with the European convention on human rights. In Committee, I asked the Minister to clarify that matter, but she was unable to do so and promised to come back to me. I fear that she has not yet done so. The matter is as relevant today as it was then. The functioning of the regulatory procedure of ethical standards officers and the standards board—the powers of tribunals—could conflict with the ECHR, in which case the Bill will be undermined.

I am grateful to the right hon. Member for Caernarfon (Mr. Wigley) and I reiterate his question to me to the Minister. What is the role of these officers and of the other powers in the conduct of investigations as regards article 6 of the convention?

To get back to the point, a 10-year lapse is necessary because officers may have been with a council for many years before that. The world of local government is relatively small. Surely 10 years is the minimum safeguard. That is the basis of amendments Nos. 42 and 43.

Amendment No. 44 deals with reports from ethical standards officers. As it stands, they can inform virtually everyone about the outcome of an investigation and give them a copy of the report, other than the person against whom the investigation was launched. It would seem to be a grave injustice if the target of the report is the only person not to be able to see it. In Committee, the Minister for Local Government and the Regions described a similar Opposition amendment as a worthy ambition that would produce some difficulties. Again, she promised to come back to us on Report. I notice, however, that the Government have tabled no amendments on that subject.

The right hon. Lady offered the excuse that the report might contain sensitive information about the perpetrators of a complaint and that, if the matter was not referred further—if the person was cleared of any misdoing—it might damage the person who made the allegations. Surely, the person who was sneaked against—to put it mildly—is due some human rights protection from potentially vexatious complainants.

There is no detail about any compensation that might be due to someone who was the victim of such vexatious complaining. A person who was the subject of inquiry might even have been penalised along the way for not complying with the handover of documents and so on, even if it was found that there was no case to answer. It appears that there is a presumption of guilt until proven innocent. That too seems to breach the European convention.

The amendment provides that the ethical standards officer must inform the subject of the investigation of the outcome and that that person is entitled to see a copy of the report. In Committee, the right hon. Lady said that she would continue to consider the matter and that she would try to ensure that the framework was right. I should like to see some evidence of that, because it is not apparent in any of the 115 Government amendments before us.

Amendment No. 45 deals with the decisions of case tribunals and with appeals—a matter to which the right hon. Member for Caernarfon referred. When a councillor has been accused by the Standards Board, has taken the case to appeal—a facility added by the Government—and the case is pending, we suggest that the councillor should not be suspended, given that the period of suspension could be lengthy.

In Committee, the Under-Secretary of State for the Environment, Transport and the Regions, the hon. Member for Stretford and Urmston (Ms Hughes), said that the Government would introduce the right of appeal and that she was willing to reconsider the matter, given that a by-election could be triggered when councillors were disqualified from standing while an appeal was pending. While the appeal had still not been heard, a councillor could lose his or her place on the council; a by-election could be held and, as he or she would not be entitled to stand, someone else could take the seat. If the Court of Appeal found that the person was not guilty—that the charge did not stand up—there would be no compensation. That accused councillor would have lost his or her seat. Thus, it is only right that, while an appeal is pending, a councillor should not be disqualified. The amendment would provide that safeguard.

Mr. Bercow

Does my hon. Friend agree that, in arguing that case—with which his right hon. and hon. Friends will assuredly agree—he can invoke the precedent of experience in the House? The hon. Member for Newark (Mrs. Jones) was rightly able to prove at appeal her innocence, and thereby remain a Member of the House. That prevented a situation in which, otherwise, a by-election would have been triggered. She was properly able to exercise her rights. Councillors, too, should be afforded such rights.

Mr. Loughton

My hon. Friend offers an interesting and helpful example. I should be interested to hear the Under-Secretary's response. The ethical standards officers and the standards board seem to have been afforded heavy investigatory powers. Those powers suggest too great a presumption of guilt.

We were promised further information from the Minister and from the Under-Secretary, but it has not been forthcoming in the Government amendments tabled on Report. Will the Under-Secretary address those matters in the few minutes left for debate on this group?

10.15 pm
Ms Beverley Hughes

We have had a rehearsal of many of the issues that were raised in Committee. I shall deal with them as comprehensively as I can in the time that I have left for this section.

On new clause 3, it was made clear to the hon. Member for East Worthing and Shoreham (Mr. Loughton) in Committee that, although we were in sympathy with the spirit of what his new clause sought to achieve—that councils should be able to pursue losses arising to the authority from criminal misconduct by councillors—we felt that sufficient provision was already available to courts considering criminal cases that might arise from misconduct to issue a compensation order or provide for financial restitution. That still stands; we have not changed our view.

I can offer the hon. Gentleman reassurance on the particular point that he made. Separate action by a local authority will not be necessary to invoke any of the powers in cases involving a criminal conviction. The court hearing the criminal case can order that restitution be made to the local authority. So the Bill does not impose on the local authority the additional burden of seeking compensation or restitution. The courts have those powers available to them. There is therefore no need for any special provision for such cases other than that which already exists and is available to the criminal courts.

The hon. Member for East Worthing and Shoreham tabled a raft of amendments on the size and composition of local authority standards committees. We believe in striking a balance between setting appropriate parameters and allowing councils of different sizes and with different functions some flexibility in the composition of their standards committees. We think that the balance of representation between independent members and members of the council is about right. It is after all right that councils should have some discretion.

The hon. Gentleman reminded me that I had used the term "ownership". I make no apology for that. It is important that councils should own the local body that is entrusted with establishing its ethical framework and code of conduct. The hon. Gentleman is confused about the responsibility for the code of conduct, as opposed to the investigation of specific allegations. Local authority standard committees will not be responsible for investigations, so the hon. Gentleman's point that we are introducing self-regulation is not one that stands up to scrutiny. Local authorities will not be regulating themselves. The standards committees will have a different function. It is important that members of the council should own that function and be part of the apparatus that sets in place the code of conduct and ensures that the council's procedures for enforcing it are robust, but investigation of issues will be a matter for the ethical standards officers.

Mr. Loughton

I think that the phrase "self-regulation" was one that the Minister herself used in Committee. Given that time is running out, I should be grateful for her response on the European convention; she promised to come back on that point. Has her confusion been resolved?

Ms Hughes

I was not confused in Committee, and I am certainly not confused now. We are convinced that the provisions for appeal against the findings of a case tribunal, which are contained in clauses 75(10) and 76(15), are robust. It is our view and in line with the advice that we have received that the provisions in part III are compatible with the European convention on human rights. We are proceeding on that basis.

The hon. Gentleman tabled an amendment on the standards board. He is confused about the difference between a quorum and a constitution. The Bill sets in place the minimum for the board to function constitutionally. That is different from a quorum, which is the number needed to take a particular decision. That will be for the board itself to decide, in terms of its operational procedures. We have already told the hon. Gentleman that we envisage a standards board of five or six members.

In the few moments that I have left—

Mr. Bercow

Will the Minister give way?

Ms Hughes

No, I will not.

In relation to amendment No. 45, we have produced Government amendment 203—

It being five and one-quarter hours after the commencement of proceedings on the programme motion, MR. DEPUTY SPEAKER, pursuant to Order [this day], put forthwith the Question already proposed from the Chair.

Question put and negatived.

Mr. Deputy Speaker (Mr. Michael J. Martin)

The hon. Member for Buckingham (Mr. Bercow) should not have been talking while I was putting the question. It is not the done thing.

MR. DEPUTY SPEAKER then proceeded to put forthwith the Questions necessary for the disposal of the business to be concluded at that hour.

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