§ 5.45 p.m.
§ Order of the Day for the Second Reading read.
§ LORD AUCKLAND
My Lords, I beg to move that this Bill be now read a second time. It is, as described in another place by my friend the honourable Member for Chelmsford, a modest measure. Indeed I suppose most Private Member's Bills can be described as modest measures. I myself have never served on a local authority or been a candidate in local government; so I approach this Bill from a dispassionate angle. It has been questioned whether a Bill of this kind is necessary. I think there is one justification for it: that is, that there are some people who are 896 rather tentative about going into local government, whether as councillors or as servants of a council, in case they break some small regulation by failing to declare a very small interest, under the terms of the Local Government Act, 1933. This Bill is primarily to amend Sections 76 and 123 of the Local Government Act, 1933 and Sections 52 and 90 of the London Government Act, 1939.
Subsection (1) of Clause 1 of the Bill is the most important. This removes from members of a local authority with a very remote interest in a subject which is being debated the duty of declaring that interest. There are a number of things which could be said to give meaning to this point; for example, if a councillor wants to plant trees in a suburban street, or if his house is going to be overlooked by a row of trees and he serves on, say, the allotments committee, there seems to be little reason why he should have to declare his interest. But as against that it is important to remember that a man or woman who serves on a local council and who is himself or herself a council house tenant can take part in a debate on a differential rent scheme only if he or she obtains permission from the Ministry of Housing and Local Government. That is a provision of the 1933 Act and it is not repealed by the present Bill.
The other important subsection of this Bill is subsection (4) of Clause 1, which increases the penalty under the 1933 Act from £50 to £200 for failing to disclose an interest in a matter which is not considered to be remote. This may seem a very complicated provision, and indeed it is perhaps one of the difficulties of local government. My interpretation of it is that a person who offers himself or herself for service with local government is of sufficient intelligence and integrity to be able reasonably to tell whether his or her interest is remote or otherwise. It is obvious, for example, that if a person has a six-figure interest in some property scheme it is not a remote interest, and he or she would therefore have to declare his or her interest if they wished to speak on a council matter relative to this point. By increasing the penalty to a maximum of £200, it brings it into line with other modern legislation which is making penalties more commensurate with present-day 897 finance. Therefore, the yardstick by which this Bill can be measured is, I think, as to whether a councillor or a local government officer knowingly goes beyond the reasonable bounds by which legislation faults him in this Bill.
There is one other point which could be mentioned in regard to the question of rating relief. A councillor who claims relief under the Rating (Interim Relief) Act would have to seek permission from the Minister before taking part in a debate of that nature. Clause 2 of the Bill applies to local government officers —town clerks and others practising in local government, and the penalties here are the same as in Clause 1. Clause 3 deals with repeals under the London Government Act, 1939, and when the London Government Act comes into force in April of next year new legislation will be brought in.
This Bill went through all its stages in another place without a Division. I think it is a useful measure. It will help to encourage people to go in for local government. I think it will be agreed on all sides that local government needs more young people, and more people who are at present, as I said earlier, under the 1933 Act, diffident about going into local government in case they infringe what are rather stringent proposals. I am not for one moment suggesting that declaring an interest should be brought to an end—far from it, because here and in another place if one has a financial interest, in hospitals or in anything else, one has to declare In actual fact, this Bill gives dispensation only to those who have marginal interests. One can think of quite a number of such people. I hope that in my brief explanation of this Bill I have given at least some reasons why, in a small measure, it is useful, and I ask your Lordships to give it a Second Reading.
§ Moved, That the Bill be now read 2a. —(Lord Auckland.)
§ 5.54 p.m.
§ LORD HOBSON
My Lords, I should like first of all to congratulate the noble Lord, Lord Auckland, upon the clear way in which he has explained the Bill. While it is quite true that it passed through all stages in the other place without opposition, I think there may well be some doubts in many noble Lords' 898 minds as to whether it should be opposed here. So far as we officially are concerned we regard this purely as a private measure. As the noble Lord has said, the Bill amends Section 76 and Section 123 of the Local Government Act, 1933; and on balance I myself think it is useful —and I speak with considerable local government experience. Evidently, it has the Government's blessing, or it would not have got so far. It did not start off in propitious circumstances; it received its Second Reading on Friday, the 13th, but it seems to have arrived safely here without Amendment.
Frankly, I doubt whether this Bill is really necessary, for two good reasons: first, because the Government are most conscious of the difficulties that arise in the definition of "pecuniary interests" as that phrase affects councillors and aldermen. They have set up a Committee, under Sir John Maude, to examine the whole question, and I think it is fair to assume that, whatever Party is in power, legislation will follow from that inquiry. The second reason is that there has been a Working Party dealing with this matter. I think it was the sponsor of the Bill in another place who said that he had not seen the findings of that Committee. I do not know whether the noble Lord, Lord Hastings, when he comes to speak, will mention what were their findings. It will be most interesting to know what they were. But in this Bill we are dealing piecemeal with a most important question affecting members of a local authority. I think it is rather unfortunate at this late stage of a Parliamentary Session—indeed, almost on the eve of a General Election —to have time given for a Private Member's Bill like this. I am afraid that I am rather cynical and take the view that it is because it cannot be deemed to be very effective.
The whole of this question deals with what are pecuniary interests. It deals, first of all, with a most important matter that I think we all ought to have in our minds when we are in local government, or, indeed, are Members of another place or of this House—namely, whether a person should abstain from voting on a matter in regard to which he has a pecuniary interest. The difficulty, of course, is to define what is a pecuniary interest. The noble Lord has endeavoured 899 to point out some of the difficulties, and I want to suggest that we ought to be exceedingly careful about eroding any part of this most important principle. We should be most careful about tampering with it, or making it easier for people who could be deemed to have a pecuniary interest to vote.
I personally should deplore any attempt to limit the moral obligation to disclose an interest to local authorities, however remote that interest may be. In practice, members of a local authority do not discount the views of a person who says that he has a pecuniary interest in a matter. Indeed, often they pay considerable attention to it; and at least they are in a position, in the light of the fact that they know he has a pecuniary interest, to assess the real value of what he is saying. That is a position which I think is most valuable in British local government. The whole of British local government has been singularly free from abuse of this character. I think we can say with modesty that we are the envy of the world in the conduct of our local affairs, so far as they affect one's personal interest. We are often told, as the noble Lord, Lord Auckland has reminded us, that because of the rigidity of the 1933 Act we are keeping able people out of local government. In my experience that is not so. I sat on a large local authority in the London area for many years. We had most able people. I do not think it is possible to argue that able people are kept off local authorities because of this question of a pecuniary involvement; I think it is purely that they have not the time.
Nevertheless, we must look at the other side of the coin. If we are going to make it easy for people not to declare their pecuniary interests and to proceed with a lot of amendments to the 1933 Act, we are going to make private and public duty, and indeed interest, almost synonymous. Therefore, we must proceed on this matter most carefully. Two rather important subjects in this regard are, first, the question of planning by a local authority; secondly, the question of contracting in public works. Therefore, we must be careful indeed about any amendment of existing legislation.
The Bill attempts to deal with the question of automatic dispensation in 900 certain previously undefined cases. This may be welcome. For instance, my reading of the Bill is that it clears for all time any doubt that a person working for an electricity board or for a generating authority would be perfectly free to vote without any dispensation whatsoever from Lord Hastings' Department—for example, if the question should arise whether heating in blocks of council flats should be by gas or electricity. He would be free to do that. Likewise, I assume that a person working for British Railways, in whatever capacity, will be perfectly free to express his views on matters affecting British Railways. I think that is the intention of the Bill. Whereas before, if the town clerk was in doubt, the town clerk would adopt the journalist's maxim, "When in doubt, leave out" and would apply to the Ministry to see whether dispensation would be granted. I remember a branch line being closed down in my constituency, and the railwaymen were precluded from voting until inquiries were made as to a dispensation. I think the town clerk was quite right to do that. Now, as a result of Clause 1 of this Bill, there will no longer be any difficulty in regard to that.
I want to raise two points on which I have doubts. What is the position of the man who works in a motor factory? This was raised in another place, but no clear answer was given. Suppose a person is working in a large motor manufacturers and the council want to buy a car for the mayor or vehicles for the public services from the firm in which the person is working. Will that person be entitled to vote? One might answer, "Well, if he is only a fitter or semiskilled, yes"; but what is the position if he holds a post of higher responsibility? These are matters which must be cleared up.
Furthermore, what is the position of council house tenants? At present they cannot vote on any matters affecting council housing, except where such prohibition would affect a majority of the council, and each case for exemption for disqualification has to be submitted to, and agreed by, the Ministry of Housing. I want to know whether, as a result of this somewhat nebulous phrase in the Bill, it is proposed that there should be 901 any alteration. The phrase in Clause 1 ishaving a pecuniary interest which is so remote or insignificant that it cannot reasonably be regarded as likely to influence him in the consideration or discussion of, or in voting on, any question with respect to that contract or matter.We should like to know whether, assuming the Bill passes, the status quo ante would prevail. This is an important point.
Then there is the question of investment. I informed the noble Lord that I was going to raise this point. The question of unit trusts is an important one, for I feel that it is a more important consideration than giving exemption to people who are members of co-operative societies, which has already been dealt with in previous legislation. Considerable investments are held in unit trusts, which usually cover what are commonly known as "blue chips". "Blue chips" automatically include electric combines, insurance companies, banks and so on. The lists of investments held by unit trusts are made known on the dividend slip and on advertisements which are put out asking for new capital. What is to be the position in a large local authority when the question of insurance arises as between two different companies, for every local authority does not insure with the Municipal Mutual Insurance Company? A person could have considerable holdings in a unit trust—and in these matters one always has to deal with human nature as it is —and he may know full well that the unit trust in which he is interested has investments in one insurance company as opposed to another one, when companies are put up for consideration in relation to investments by the local authority.
These are rather important points which must be dealt with, and presumably they will be dealt with, if a satisfactory answer cannot be given to the points I have raised, when the Working Party which is to be set up considers the whole question. I should like to know the precise effect of Clause 1(b). I feel that it is important we should have a statement on that. From my own experience and from talking with colleagues, many of whom have had many years' experience in local government—indeed, I have had a word 902 with my noble friend Lord Morrison of Lambeth, who unfortunately has had to go away—I think that all are agreed that it is almost impossible to lay down in precise terms what pecuniary interest counts for dispensation. The more one tries to find words to make certain exceptions the more difficult the position becomes. As I have said, both Houses of Parliament have to be exceedingly careful in agreeing to amending legislation in order to deal with this important and vital point.
In regard to raising the fine from £50 to £200, one would argue that if we are going to make it easier for people with pecuniary interests to vote, then, when they do offend, the penalty ought to be higher. I think this automatically follows. This also applies to the provisions relating to officers. This puts them on parity with members of the local authority, the only difference being that the good local officer should often be seen and not heard when questions of this sort are being discussed, and we leave it to him. It is a very small Bill, and I do not want to be thought to be damning it with faint praise. At the present time I believe it is harmless, and to that extent I would not consider voting against it. I do not know what the views of my colleagues are on this matter, but I urge on your Lordships' House that we must be extremely careful indeed jealously to guard the integrity of our government, both local and national.
§ 6.9 p.m.
§ THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD HASTINGS)
My Lords, may I put in just a word on behalf of Her Majesty's Government to say what we feel about this Bill? I am pleased indeed to welcome it on behalf of my right honourable friend, and to congratulate the noble Lord, Lord Auckland, on introducing it to your Lordships' House. It is, of course, not the first time the noble Lord has put us in his debt in this way. I remember well a year ago he was responsible for another measure which, if I may say so without frivolity, was also concerned to remove unnecessary obstructions: I refer to the Public Lavatories (Turnstiles) Act, 1963.
In the time that I have been Joint Parliamentary Secretary at the Ministry 903 of Housing and Local Government I have seen at close quarters a good deal of the work of local authorities. I have had the opportunity to form views about the way in which this work is done and about the people who do it. The work is often time-consuming and exhausting. Indeed, the extraordinary fact emerges from a recent study published by the Acton Society Trust that heavy drinkers are the only people who spend as much time away from their families as councillors do. Of course, I hasten to add that there is no connection at all between the two. The first category is a matter of indulgence and the second is a matter of sacrifice in the public interest.
This work is by its nature quite often of a kind which many people regard as rather thankless. Yet it is done, in general, with reasonable efficiency and despatch: and, what is much more important, it is done impartially, honestly and without fear or favour. This is, in itself, a tribute to the character and quality of the people who do the work. These people are fairly closely bound in their activities by the law; and the law of local government is at once a reflection and a component of the high reputation for honesty, incorruptibility and public confidence which local government in this country enjoys. I think we can say, without immodesty or chauvinism, that this reputation is second to none in the world.
One of the principles of local government law is that there shall be a clear and visible separation between the public duties of the member and his private and personal interests, as the noble Lord, Lord Hobson, has insisted upon. This principle is reflected in those provisions of the Acts of 1933 and 1939 which this Bill seeks to amend. I think it is generally agreed that we should not lightly do anything which might erode either the principle itself or the effect of these provisions. However, as my noble friend has explained, there is evidence that the provisions as they stand can cause unnecessary nervousness and inhibition for councillors whose work in local government is of such great value; and it is right that we should try to mitigate that.
904 The noble Lord, Lord Hobson, asked me about the Working Party which was set up to investigate this matter—I think it started its work in 1959. The report was actually an informal document not intended for publication, but, certainly, there is no objection at all to telling the noble Lord that the Bill substantially reflects the Working Party's views. So this is the main purpose of the present Bill, and I hope very much that it will achieve its purpose. It will also make the penalties for real abuse more realistic in to-day's terms, and will make possible some very welcome simplifying of the administration of these provisions, both for the Department which I represent and for local authorities; and that touches upon the point which the noble Lord, Lord Hobson, put as to administrative changes. It will save quite a lot of work in the Department and on the part of the local authorities.
If I may, I will turn to one or two points which the noble Lord put, as I think that, although this is a Private Member's Bill which is being sponsored by the noble Lord, Lord Auckland, it will not be out of place for some explanation of these points to be given by the Government's spokesman, without exceeding his authority in doing so. Of course, the noble Lord is quite right about public bodies, about the employees of the Central Electricity Generating Board and of British Railways. It is quite clear that there is no objection to their discussing, or voting on, matters affecting those interests. When it comes to the employee of a motor manufacturer, this is in fact an example of what might be considered a remote or insignificant interest. Under the Bill such a councillor will be free to vote; it is only an interest of a general nature and not a specific one.
The question of councillor-tenants is, of course, a very important matter, and the position of the councillor-tenant under this Bill is exactly as before, except that if this Bill becomes law he may now be given a dispensation for longer than three months—which is the present practice based on the Minister's legal advice. Such a member could be given dispensation indefinitely under this Bill. He could, of course, give general notice now of an interest arising from his employment, but he will be able to give it, also, 905 in respect of his interest as a council tenant under Clause 1(3) of this Bill. So, really, the position of the councilor-tenant is hardly changed—certainly, not changed in principle—by this Bill.
Then I turn to the matter of holdings in unit trusts. That again, I think, is clearly a remote interest. Of course, if the holder of such a trust is ignorant of the subsidiary holdings of the unit trust, he is naturally not to blame; but there is a limiting factor in any case, and that is the holding of up to £500 worth of stocks or shares in a company, provided that it is not over one-hundredth of the nominal share capital. A member would not in any case have to declare that interest if it did not exceed those limits, and the holding in a unit trust would certainly come under the provision of a remote or insignificant interest. I do not feel that we are, in fact, relaxing the standards too much, and I hope that your Lordships will feel that it is possible to give this Bill a Second Reading. I commend it to your Lordships as a useful Bill which will go some way to making the onerous duties of local councillors somewhat less nerve-wracking, without in any way reducing the standards of integrity and honesty to which they are accustomed.
§ 6.18 p.m.
§ LORD AUCKLAND
My Lords, by leave of the House I should like to thank the noble Lord, Lord Hobson, for a very fair speech. Of course, he has had a distinguished record in Parliament and in local government, and in that respect he has a slight advantage over me in that he knows the working of the machine. I think he made a very fair speech and made some cogent points. I think the report of the Working Party may well answer a number of the questions which he has quite rightly raised. I would certainly agree with him when he says that our local government is the envy of the world. I think that is quite apparent, even through the eyes of one who has not served in local government but who, nevertheless, has a great interest in local government. I think, too, that we should be careful not to make Bills of this kind too easy-going, although I believe the provisions of this Bill will be stringent enough to discourage the small minority of local authorities who might try to "pull a fast one". I should like to thank my 906 noble friend Lord Hastings for his help in this Bill, and for his clear explanation of some of the points raised. With those few comments, I ask your Lordships to give this Bill a Second Reading.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.