HC Deb 16 April 2002 vol 383 cc550-6

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

10.2 pm

Mr. Patrick Hall (Bedford)

I am grateful to have secured this short debate on a matter that is of considerable importance to many of my constituents in Bedford and Kempstown and to other residents of the borough of Bedford, some of whom are represented by the hon. Member for North-East Bedfordshire (Alistair Burt), whom I am pleased to see in his place.

The matters that I wish to bring to the attention of the House arise from events that took place within Bedford borough council during and after the counting of the votes at the district council elections in May 2000. I do not wish to dwell on the detail, but it is necessary to outline the context before I come to the substantive issues.

Bedford borough council is a hung council—no party has had overall control for 15 years or so. For the past two years, councillors have failed to elect a leader of the council, which has inevitably led to a situation in which responsibility for decisions is not transparent, there is no clear accountability and little openness, the chief executive has developed a very powerful influence among councillors, and personalities rather than politics have become predominant.

After the declaration of the result for the Brickhill ward in Bedford at the May 2000 elections—a result that delivered a narrow victory for the Conservative candidate over the sitting Liberal Democrat councillor—it was discovered that 86 postal votes had not been opened and had therefore not been counted. The ballot papers were subsequently opened—the following day, I believe—by an officer of the council acting on the prior advice of the council's solicitor. Candidates and agents were not present, but were later told that the informally counted postal votes did not alter the result.

Ten days or so later, a Liberal Democrat councillor suggested to the chief executive and the council's solicitor that the council should, under rule 47 of the local election principal areas rules, ask the county court to order a recount of the ballot papers. The officers agreed to do that. The hearing took place on 23 and 24 May 2000. On both occasions, it was adjourned. At some point later the council discontinued its action.

Immediately after the hearings, the local Conservative party agent issued a news release, claiming maladministration by the borough council for pursuing a misconceived application under rule 47. That procedure is designed for election agents who represent candidates, not returning officers. The content of the news release contributed to the coverage of the Brickhill election count in a local weekly free newspaper called Bedfordshire on Sunday.

Three senior council officers—the chief executive, the council's solicitor and the council's employed lawyer—sued the Conservative agent and local Sunday newspapers for defamation. The complaints were about the Conservative party news release and two articles published by Bedfordshire on Sunday. The case was heard in the High Court in February before a leading libel judge, Mr. Justice Gray.

The council's solicitor and lawyer lost all their claims. The chief executive lost on two counts and won on two, and was awarded £27,000 damages because the judge ruled that the news release had wrongly alleged political bias on the chief executive's part. The claimants were ordered to pay 80 per cent. of the costs to the defendants. The amount is likely to be £400,000 to £450,000.

The important point is that the complaints were private actions that Bedford borough council supported and maintained from the start. The council's executive committee met on 7 June 2000 and, in private session, received a report from officers advising the committee that the council had to support and maintain the private libel actions under its duty of care to its employees. Councillors apparently considered legal advice to the effect that because the three officers were criticised for actions undertaken in the course of their duties, the council could face legal claims for dereliction of its duty of care if it did not agree to support them.

The all-party committee duly agreed to support the libel actions. It agreed that the costs of the intended claims should be financed from the contingency reserve. Furthermore, on 14 February 2001, the executive committee agreed to take out insurance of £50,000 to cover up to £250,000 costs should the private libel actions prove unsuccessful. Again, the public were excluded from the meeting. In the event, the council did not purchase the policy, and decided to self-insure out of the contingency reserve. The bill, as I said, will exceed £400,000.

On 6 March this year, the executive committee agreed to support and maintain the council's solicitor and lawyer if they were successful in seeking leave to appeal against the judgment. Full council has yet to endorse that position, but if an appeal is made, and if it is unsuccessful, the costs to the public purse in Bedford borough will naturally be substantially higher.

Bedford borough council has agreed to use public money to maintain private libel actions. It has also committed staff time and resources in support for many months. It has justified that under its duty of care to employees.

I am deeply disturbed by the situation, which has serious and wide-ranging implications. The obligations and responsibilities associated with the duty of care do not include maintaining private libel actions initiated by employees. Duty of care, as I understand it, covers matters such as safeguarding health and safety, dealing promptly with grievances, taking reasonable care, and acting in good faith.

I do not believe that any case law suggests that duty of care extends to funding private libel action. I do not believe that an employment tribunal in the land would consider any failure to sponsor such action to be a fundamental breach of the contract of employment. Councils can and do fund prosecutions when employees have been assaulted in the course of their duties, but there appears to be no duty of care to fund libel actions. However, given the contrary position adopted by Bedford borough council, I ask my hon. Friend the Minister to consider for the avoidance of doubt whether the Government's advice to local authorities on such matters should be reviewed.

I turn now to the maintenance by a local authority of libel actions. I strongly oppose that, because the use of public money to suppress public criticism would fundamentally undermine freedom of expression and, therefore, democracy itself. If a Government or a local council disagree with comments made, they have suitable avenues open to them to obtain a remedy without recourse to litigation. The normal and healthy response is to investigate the complaint, debate the issues openly and issue a rebuttal in the media.

Public criticism of an officer or councillor may sometimes be harsh and unfair, but that is an occupational hazard. The more senior the individual in an organisation, the better one would expect that to be understood. If a council considers a particular instance worthy of an investigation and a reasonable response, it has the means to pursue such a course of action; supporting and maintaining a defamation action is clearly beyond reasonable. That being the case, it is perhaps unsurprising that English local authorities have only twice sued for damages, in 1891 and 1972.

In 1993, in the case of Derbyshire county council v. Times Newspapers Ltd., the Law Lords held that: A local authority did not have the right to maintain an action for damages for defamation, as it would be contrary to the public interest for the organs of Government, whether central or local, to have that right. Not only was there no public interest favouring the right of Government organs to sue for libel but it was of the highest public importance that a governmental body should be open to uninhibited public criticism, and a right to sue for defamation would place an undesirable fetter on freedom of speech. Lord Keith of Kinkel, expressing his opinion en route to the ruling, made the following observation: I regard it as right for this House to lay down that not only is there no public interest favouring the right of organs of Government, whether central or local, to sue for libel, but that it is contrary to the public interest that they should have it, He also approved of the following statement made in a much earlier South African case: I have no doubt that it would involve a serious interference with the free expression of opinion hitherto enjoyed in this country if the wealth of the state, derived from the state's subjects, could be used to launch against those subjects actions for defamation because they have, falsely and unfairly it may be, criticised or condemned the management of the country. Not maintaining an action for damages surely means not doing so either directly on the local authority's own account, or indirectly, or by proxy by funding its employees to do so. Naturally, individuals enjoy the right to sue for damages, and that includes individual councillors and officers. It is the maintenance of such actions through public funds that is wrong. Bedford borough council has done just that. I believe it is wrong, and many of my constituents believe it to be wrong. They know that there are dozens of better ways of spending their money than through the irresponsible commitment of hundreds of thousands of pounds on legal costs. They know that this whole business represents a diversion of time and energy from the real tasks that should concern the council—those of promoting the borough and running effective services. I could not agree with them more, and I think that the people of the borough are owed an apology by the council. Whatever my constituents may think, however, events have unfolded in the way that they have. Despite the rather strong evidence that the council's actions ought to he ultra vires, there is a need to clarify the situation once and for all.

My hon. Friend the Minister knows that I have already tabled a parliamentary written question on these matters, and I see from his reply that the Government are thinking about local authorities having the power to provide indemnities to councillors and staff. I understand that the Government will want to go through the process properly. I must ask my hon. Friend, however, to give an indication of where he stands, given my immediate concerns and those of my constituents, given that Bedford borough council may, in the next few weeks, confirm its willingness to endorse its executive committee's recommendation that public funds be made available to maintain appeals by two council officials, and given also the wider public interest considerations that I have raised.

I hope that my hon. Friend will agree with me that local authorities should not maintain and support libel actions directly or indirectly. I hope that he will also agree that such actions cannot be in the public interest, that they would undermine freedom of speech in our country, that they form no part of duty of care, and that they must therefore be stopped once and for all.

10.14 pm
Alistair Burt (North-East Bedfordshire)

I am grateful to both the hon. Member for Bedford (Mr. Hall) and the Minister for allowing me a couple of minutes.

I am glad that the hon. Member for Bedford has raised a matter that is of great concern to his constituents and to mine, and I associate myself with what he has said. The whole thing appears to be a classic example of circumstances in which personality is allowed to cloud judgment, notwithstanding the seriousness of the allegations that are made. Words spoken or written in, or shortly after, the heat of an election battle are perhaps not always the wisest. My constituents are appalled that the matter has gone as far as it has, and appalled at the cost.

Bedford borough council is running out of time in which to re-establish credibility with its electorate, as was shown in a recent vote on the possibility of electing a mayor. It is time for the council to put aside the variety of personality issues that have beset it in recent years and damaged its effectiveness. It is time for serious thought about the council's good name, and its ability to serve properly residents who deserve rather better service than they have had in recent years from a council that has been hung and unable to perform its duties effectively. Perhaps this debate will fire a final warning shot over the bows. I look forward to hearing the Minister's response.

10.16 pm
The Parliamentary Under-Secretary of State for Transport, Local Government and the Regions (Dr. Alan Whitehead)

I am grateful to my hon. Friend the Member for Bedford (Mr. Hall) for giving us an opportunity to discuss this subject. The debate is timely: the issue is one that we in Government have been actively considering, albeit, as I shall explain, in a slightly different guise.

I must make it clear that I do not intend to comment on the case itself. As my hon. Friend will appreciate, it is currently before the courts, and I consider it inappropriate to comment in such circumstances. I am, however, happy to comment on the general principle of circumstances in which local authorities can and should indemnify their members and officers, using public funds, for any personal liability arising from actions or decisions made by them in the course of their official duties.

In the past, local authorities have relied on various statutory provisions to provide indemnities—provisions dating back even to the Public Health Act 1875—but doubts have been raised from time to time about the extent to which authorities can rely on those powers. Given the importance that the Government attach to modernising local government and to local authorities working in partnership with other bodies, it is important for those doubts to be removed. That is why, in section 101 of the Local Government Act 2000, the Government took order-making powers to allow the Secretary of State to enable authorities to indemnify their members and officers in respect of personal liabilities. The scope of that provision is deliberately wide. and permits the order made under section 101 to remove any doubts about the circumstances in which authorities can provide indemnities.

The next step is for central Government to consult on how we might give effect to such an order. I will now outline the ideas that we are minded to present in a consultation paper that we intend to issue this summer. We are minded to permit the indemnification of members and officers within certain bounds, but I want to make it clear that we are still considering those issues, within Government and with stakeholders, and that we will not make final decisions until we have received responses to the final consultation paper.

In the making of an order under section 101, the following questions need to be addressed. Which relevant authorities are to be allowed to provide indemnities? Who should authorities be able to indemnify? In what circumstances should indemnities apply? Should any restrictions be placed on authorities' ability to provide indemnities? I will say something about each of those questions.

First, there is the question of which authorities should be able to provide indemnities. Section 101 allows the Secretary of State to enable all relevant authorities in England, and police authorities in Wales, to provide them. Although the range of functions undertaken by the various authorities varies considerably, the Government see no reason to withhold the right to give indemnities from any relevant authority. Parish and town councils are as likely as other authorities to appoint members to serve on outside bodies such as charitable trusts. In such circumstances they need to be able, if they so wish, to indemnify those individuals against personal liabilities in the same way as other authorities.

Secondly, who should authorities be able to indemnify? The 2000 Act allows the Secretary of State to provide that authorities should be able to provide indemnities to some or all of their members and officers.

The Government believe that it should be for authorities themselves to determine which members and officers should be granted indemnities. Accordingly, our consultation will propose that the power should be widely drafted and not limit the class of member or officer to whom indemnities can be given. Instead, the power will permit authorities to grant indemnities to specific individuals, at the discretion of the authority. However, we also believe that the power to grant indemnities out of public funds should be limited to circumstances in which the member or officer acts in an official capacity.

Thirdly, what liabilities should authorities be able to indemnify? The Government believe that authorities should be permitted to indemnify individuals against any personal financial liability that they incur in the service of the authority.

Accordingly, authorities' powers should be wide enough to remove any doubts about their ability to indemnify individuals, including where an individual becomes personally responsible for the debts of a body to which they have been appointed by the authority; or where an individual incurs costs defending himself against legal proceedings brought by a third party—including any in which the member is co-joined with the authority.

Fourthly, should any restrictions be placed on authorities' power to provide indemnities? This is the crux of the concerns of my hon. Friend the Member for Bedford, and of the hon. Member for North-East Bedfordshire (Alistair Burt).

Again, the House will understand that I cannot comment on the detail of the Bedford case. However, I can say something about the Government's views on the principles of the use of public funds to meet costs of legal action for libel.

The Government believe that indemnity at public cost should not he used to allow individuals to avoid all personal responsibility for their actions. Accordingly, we intend to propose that members and officers should be able to rely on indemnities only if the action giving rise to the liability was taken in good faith, and was not unlawful or reckless.

We are therefore minded to propose to prohibit authorities from indemnifying members or officers for the cost of taking legal action for slander or libel. We are content that authorities should be able to provide indemnities to individuals against the costs of defending such actions, but we do not believe that individuals should be funded at public expense to bring proceedings against a third party. That would risk, among other things, an increase in litigation, and it could stifle legitimate public debate. My hon. Friend the Member for Bedford mentioned the comments of judges on that issue.

Of course, I must stress that none of that would prevent someone pursuing legal action for libel in a personal capacity. However, we are also minded to prohibit authorities from indemnifying members or officers in two further situations—when they provide guarantees or letters of comfort to third parties on behalf of the authority, and when they incur costs answering allegations that they have breached codes of conduct.

As a matter of principle, the Government do not believe that public money should be spent by members as part of the process of establishing whether or not they have behaved improperly. Moreover, the procedures to be adopted by the new standards board and adjudication panel should preclude the member from having to be legally represented by affording him or her a full opportunity to make their case without having to undertake the cost of additional legal representation.

Proposals on which the Government will shortly be consulting will give authorities a role to play in the investigation and determination of allegations of misconduct. In such circumstances, if authorities were also faced with having to meet members' legal costs, there would be a potential conflict of interest. Authorities would have a legitimate interest in minimising the potential cost to the authority, and in ensuring that allegations were properly investigated and dealt with. It is possible that, on occasion, those interests might conflict.

These are the ideas that we are likely to put forward in our forthcoming consultation paper. Before going out to consultation, we will discuss the issues further within Government and with the Local Government Association. We will also prepare a draft order so that consultees can see how we intend to give legal effect to our proposals.

In closing, I emphasise again that nothing is set in stone. We will consider carefully the responses that we receive from authorities and other interested stakeholders to our consultation paper, which we expect to issue in the summer. I shall ensure that my hon. Friend the Member for Bedford and the hon. Member for North-East Bedfordshire are sent a copy.

After we have considered the responses, we will consider the need for further changes. We will then lay the order before the House for debate under affirmative resolution procedures. I hope that the order, once laid, will provide the clarity concerning indemnities that does not exist at present.

I hope that this information is of some help to my hon. Friend, and thank him again for providing an important opportunity to discuss the issue.

Question put and agreed to.

Adjourned accordingly at twenty-five minutes past Ten o'clock.