HL Deb 06 November 1974 vol 354 cc462-74

4.18 p.m.

LORD SHEPHERD

My Lords, with permission, I would like now to repeat a Statement which is being made by my right honourable friend the Secretary of State for the Environment in another place. His words are as follows:

"When my right honourable friend the Prime Minister made his Statement about Clay Cross on April 4, he undertook that recommendations would be brought before the House when the Government had reviewed the full extent of the problem of late implementation of the Act by other authorities.

"It is now clear that in many of these areas the councillors concerned will be able to establish that there were reasonable grounds for the delay. But there are perhaps a score or more of authorities where, in the process of audit, the district auditors may well conclude that the councillors concerned should be surcharged. I stress that decisions to surcharge would fall to be made only after the full processes of the law had been observed.

"But on the scale which now seems likely were surcharges to be made, a large number of councillors—perhaps some hundreds—who were holding office at the relevant times would be disqualified. And the sum involved is in most cases likely to be considerable—indeed the total may be between £1 million and £2 million—and it would be far beyond the means of the individuals concerned to meet them.

"This situation is, as far as I know, unprecedented though not, alas, unforeseen. I made my position clear during the Committee stage of the Bill. I said that, as a democratic socialist, profoundly committed to the rule of law, I could not condone, let alone encourage, defiance of the law; and I told the special Labour Party Conference in July 1972 that I could not support non-implementation. But I also said that democracy is a two-way bargain between government and governed, and that the Housing Finance Act infringed the tacit agreement as to what is permissible and what is not; by excluding a large group of our citizens from democratic protection, it offended our basic sense of natural justice. I added that, while I would in no way encourage a confrontation between democratic central and democratic local government, if it should come, I would hold the Conservative Government mainly responsible.

"The confrontation did occur, and we now face the question of how to deal with the late implementers. There are three possibilities:

"First, the putative surcharges—that is, the amount of rent income lost by late implementation—could become a charge on the central revenue and be met by the national taxpayer. I am adamantly opposed to this. If people deliberately disregard the law, they must not be bailed out by the national exchequer.

"Secondly, we could allow the District Audit process to proceed unchecked, with the full panoply of formal hearings, possible High Court actions, attachment of earnings, seizure of goods by bailiffs, and ultimate bankruptcy being brought to bear on large numbers of councillors up and down the country.

"This seems to me a foolish course of action. It would resurrect in an intensified form the bitterness and anger of those earlier days of social confrontation from which we surely want to move away.

"Moreover only a miniscule fraction of the lost rent income would in practice be recovered. The bad debts would eventually fall to be met by the community. We should have a lot of bankrupt councillors, but negligible recoveries. And this harsh approach would not in my view be morally justified. For we have to recall the circumstances under which late implementation occurred.

"The rent provisions of the Act did not come into force until well into August, 1972. But they required local authorities to operate new rent schemes from 1 October, 1972. During this period—this outrageously short period—local authorities were required to adjust themselves to the loss of their traditional freedom to fix rents for their own dwellings and to the task of implementing complicated provisions which were widely held to be repugnant. It is not surprising that many authorities encountered difficulties—not only of administration, but also genuine misunderstanding of the law. Many councillors thought they would be acting legally if they did nothing and waited for the Government to activate the provisions for the appointment of housing commissioners. Some authorities indeed invited this intervention.

"I therefore concur with the New Law Journal, which wrote editorially on 18th July that 'there does seem a case for not instigating draconian measures against these other local council members… . Justice ought always to be tempered with mercy and there are times when the exercise of compassionate judgment may have more long-term effect for good than a strict adherence to the absolute letter of the statutory provision'.

"We do not want to hound some hundreds of councillors into bankruptcy. Yet disregard of the law must not be allowed to place a charge on the taxpayer. So I propose the following. The lost rent income will be recovered by the local authorities concerned, and not by the process of surcharge. Local authorities will be empowered to make good the losses over a period of years out of future rents; alternatively they may decide that the losses shall be borne in whole or in part on the rates. Such rate payments would be excluded from Government rate support grant. Where late implementing authorities have, as a result of local government reorganisation, been absorbed into new and larger authorities, it will be for the new authorities to decide whether to recover the losses by means of differential rents or a differential rate levy applying solely to the areas of the former authorities. I emphasise that the point of a surcharge under the law is to recover monies; it is not a penalty or a fine. What is now required is to give the local authorities concerned a second chance to collect the money which they should have collected in the first place.

"The Clay Cross Council never implemented the Act at all; and a surcharge of some £7,000 has already been imposed on the former councillors and upheld by the High Court. The Government do not intend to rescind this surcharge retrospectively, nor to use public funds to discharge the financial liabilities incurred by those councillors. Any funds for this purpose must come from private subscriptions, organised by those associated with the decisions taken at the relevant Party Conferences.

"I understand that a fund for this purpose is likely to be set up. In view of this, as my right honourable friend the Prime Minister already foreshadowed in the House, we shall end the disqualification already incurred by any councillors as a direct result of the aftermath of the Housing Finance Act. The loss of rent income in Clay Cross beyond the £7,000 already surcharged will fall to be recovered from local rent payers or ratepayers at the discretion of the new District Council. These proposals, which will be embodied in early legislation, accord with the crucially important need to maintain the observance of the law—even a law as offensive and provocative as the Housing Finance Act.

"They ensure that no burden is borne by the taxpayer as a result of non-implementation of the law. They provide for the responsibility to rest with the local councils concerned. The communities affected must themselves find the lost income; and how they do it is a matter for local democratic decision.

"I believe that these proposals are fair, humane and realistic, and will bring to a close an unhappy chapter in our social history."

My Lords, that is the end of the Statement.

4.15 p.m.

LORD HAILSHAM OF SAINT MARYLEBONE

My Lords, I am quite sure the House would wish me to thank the noble Lord the Leader of the House for repeating this Statement, but it would be idle to pretend that we on this side of the House do not see grave constitutional implications in what has now been decided. As I understand it—and the noble Lord will correct me if I am wrong—the law, by which I mean the general law and not the Rent Act, provides that where there is a deliberate breach of the law by local councillors two consequences are liable to flow. The first is that to the extent that the breach is deliberate there may be surcharge by a legal process; and the second is that if, in effect, the legal process decides that the breach was deliberate they can be—and, as has been the case in relation to the Clay Cross councillors, have been—disqualified from acting as local councillors. Those are the penalties which the rule of law imposes on councillors who deliberately defy the law.

As I understand it, the Government have decided to suspend this general law in regard to the process whereby it can be found whether further breaches were deliberate. I recognise of course that in some cases there may have been a genuine misunderstanding and I want to make full allowance for that. But the Government have decided to suspend the general law with regard to the process of ascertaining which of the breaches of it were deliberate, and which were due to a genuine misunderstanding. Secondly, in all cases, whether genuine or not, other than Clay Cross, the councillors who deliberately defied the law are to be exonerated from any financial consequences of their action and the ratepayers or rent payers will have to pay instead. Thirdly, in the case of Clay Cross, where the breach was deliberate and ascertained—and, indeed, notorious—the consequences to the councillors, already incurred, of disqualification are to be removed by Act of Parliament, directed not to changing the general law but to give a Privilegium or special law applicable to those who are guilty in this instance.

The question I want to put to the noble Lord the Leader of the House is this. Is it, or is it not, a fact that the present Attorney General (then the shadow Attorney General) gave the following advice to his colleagues: An Act of Indemnity passed for this purpose would, in my opinion, contravene all constitutional practice and would set a dangerous precedent. Moreover, the expression of an intention to pass such legislation in the event of such a Party being returned to power could only be construed as an incitement to those concerned to refuse to obey the law; such expression of intention would also therefore set a dangerous precedent. Is it not a fact that Mr. Silkin, the present Attorney General, gave that advice? Has not the case envisaged already happened as a result of the Statement just delivered?

How can it be pretended, as Mr. Crosland appears to have said in that Statement, that he is profoundly committed to the rule of law and that he could not condone, let alone encourage, defiance of the law? How can the Home Secretary claim, as he did during the Election, that he is committed to the rule of law in this country and remain in the Cabinet? How can the Attorney General who gave as I believe—and I ask the noble Lord to correct me if I am wrong—this advice remain Attorney General when his colleagues have acted in direct defiance of it? How can the noble and learned Lord the Lord Chancellor remain upon the Woolsack and remain a Member of this Government? These are the questions to which I should like an answer. May I also add that I assume from this that an Act of Parliament exonerating the councillors from the effects of the law will be required. May I assume that an early opportunity will be given to us to debate the whole subject and the rule of law in the light of this most devastating Statement?

4.21 p.m.

LORD WIGODER

My Lords, we on these Benches have heard with profound concern the Statement read to us by the noble Lord the Leader of the House. It appears to us also to embody a grave breach of the constitutional proprieties. It appears to us to bring nearer the day when there may be one law for the rich and no law at all for supporters of the Labour Party. This appears to be the inevitable implication of a situation in which the Clay Cross councillors deliberately defined the law, were fully aware of the penalties that would follow and have suffered those penalties. We are now faced with a situation where the Government are proposing legislation in order to remove part of those penalties—the disqualification—which the councillors so richly deserve.

May I ask the noble Lord two questions, one of which is a rhetorical one. Is the noble Lord aware of the fact that many people in recent years have defied the laws of this country for political motives in which they honestly and sincerely believed? They range over a variety of political spectra, from the Committee of a Hundred, to Colin Jordan, to the Price sisters. Would the noble Lord be good enough to inform us whether the Government are now proposing to review all these cases in order to see whether some form of indemnity or pardon might be granted? If not, is there any other explanation of the Government's actions in this case, except that they are prepared to extend special treatment to a small group of people whose political sympathies happen to be those of supporters of the Government?

A dangerous doctrine is embodied in this Statement; it weakens yet further the rule of law, whose precarious existence is already at stake. We on these Benches venture to ask the noble Lord if he will invite the Government to reconsider that section of this Statement which will have such disastrous consequences.

LORD SHEPHERD

My Lords, may I say to the noble and learned Lord, Lord Hailsham of Saint Marylebone, and to the noble Lord, Lord Wigoder, that this is a matter to which my colleagues and I in the Cabinet have given—as I am certain the noble and learned Lord, Lord Hailsham of Saint Marylebone, will understand—very earnest and, on occasions, hard consideration in this matter. It was not an easy decision to which to come. To the noble Lord, Lord Wigoder, I want to say that the Cabinet did not reach the decision because these persons involved were members of the Labour Party. The Labour Party is a coalition of a very broad spectrum of views.

A NOBLE LORD

You can say that again !

LORD SHEPHERD

I suggest that the noble Lord should not display his ignorance of the situation. My Lords, there are in the Labour Party men who hold views very far from even the centre of the Party; but we were confronted with a very difficult situation. I should welcome the opportunity to debate this matter. The questions of surcharge and of disqualification are, as the noble and learned Lord will know, as a consequence of negligence or misconduct, and this is for the court itself to decide. I have no doubt in the case of Clay Cross, misconduct would be certainly proved.

Of the other many local authorities which have not yet been brought to that situation of a surcharge or disqualification, some may be and some may not. It will take many months, perhaps a number of years, before all those cases can be dealt with adequately, using the process of the law. This, in our view, is not right. What we have therefore decided, and what we have put forward in our Statement (and this will be subject to legislation) is that disqualification of these councillors—many hundreds of them, some of whom have given many years of loyal service to local authorities—should not take place, even if it was required. But they, as local authorities, should recover the money that is due democratically from those people from whom the rent was not raised at the particular time. If one decides that is right, that that is humane—as I suggest it is in these circumstances—one has the difficulty of Clay Cross.

We have suggested that the disqualification should be removed, but that the surcharge imposed should remain, and that the due processes of the collection of the surcharge should be proceeded with. This we believe is a humane approach to it. We will have an opportunity to discuss it when the legislation comes to your Lordships' House, or earlier if the noble and learned Lord wishes to have a debate. But I do not have to say to the noble and learned Lord—although he may tend sometimes, for reasons which we fully understand, to impugn otherwise to us on this side of the House—that we have as much regard for the rule of law as he has, although we may not talk about it so often.

4.28 p.m.

BARONESS YOUNG

My Lords, while I welcome the fact that we are to have another opportunity to discuss this important Statement, I should like to raise a particular point about local authorities. One of the most distressing elements of this situation is that this action will bring local government into disrepute. Everybody who enters local government soon learns, if they did not know it before, that local government acts within the law. When they take decisions in committee there will be law officers to advise them on all occasions. It may well be, as my noble and learned friend Lord Hailsham of Saint Marylebone said, some councillors were ignorant—although I find it exceedingly difficult to believe—in something which had gone on for such a long period of time. I have no recollection at all in my 15 years of local government of ever serving on a statutory committee in which there was not one law officer present to give advice on legal matters.

I should like to ask three questions: first, have Her Majesty's Government discussed with the Local Authority Associations their proposals in this Statement? If they have consulted them, what did the local authorities themselves have to say? Thirdly, how do the Government justify the fact that it is wrong for the taxpayers to pay money which is required but perfectly all right for the ratepayers to do so?

LORD SHEPHERD

My Lords, if the noble Baroness looks at the Statement with her usual and customary care she will see that the local authority has a choice as to how this money is to be recovered. It may be recovered through an increase in rents, either over the authority as a whole, or restricted solely to the area, like in Clay Cross, where the rents had not been raised as a consequence of the decision of councillors. There is this degree of flexibility: it can be done either by rents or by the rates. It is the local authority itself which has to make its democratic judgment. In regard to the first supplementary question, no, the local authority associations have not yet been consulted but it is our intention so to do.

LORD HALE

My Lords, does the noble Lord recall that time after time in the history of Parliament as I know it, since 1945, Members of Parliament have come to the House and found themselves disqualified by the operation of the rule of law and in every case a Bill has been introduced and passed to enable them not to be penalised and to keep their seats? Members of all Parties have benefited from this. Why, then, is it now said that to remove a similar disqualification from a local councillor is bringing the law into contempt and that the heavens may fall?

LORD SHEPHERD

My Lords, the noble Lord is of course quite accurate. This has been a continuing process from time to time in Parliament. I only want to say once again that we are dealing with a number of probably 200 to 300 councillors; most of them, if not all, have rendered very long service to local authority on a voluntary basis. We are indeed indebted to them and their like. Right or wrong—in my view, wrong—they took a particular course of action. I cannot believe, despite whatever feelings there may be on the other side, taking into account the services these people have rendered, that the House would feel it right that we should place such a surcharge upon them that there inevitably would flow bankruptcy and all its consequences.

LORD HAILSHAM OF SAINT MARYLEBONE

My Lords, I know the noble Lord does not wish to mislead the House. Would he therefore under take to circulate in Hansard the alleged precedents, stating in each case to what extent the breach of the law was deliberate, and in which case inadvertent?

LORD MOLSON

My Lords, the Lord Privy Seal, in answer to my noble friend Lady Young, said that the recovery of the money due on the rents that were not charged would be raised either from the rents or from the rates and that that matter would be left to the democratic decision of the local authority. In view of the fact that the money is due and the Government have decided that it should not be paid by the taxpayer, is it not unreasonable that it should be payable by the ratepayers if the local authority so decides? In view of the fact that this is a case where the Government propose that Parliament should intervene to suspend the ordinary operation of the law in order that the money should be recovered otherwise than by the councillors who refused to implement the law, is it not illogical and wrong that the decision as to where the money should be raised should be left to a different local authority to decide and that they may decide that it should be raised from the ratepayers? Assuming that this legislation goes through, would it not be more reasonable and equitable if the money were raised from the rent-payers whose rent was not raised and that no discretion should be left to the local authority to raise it through the general rates?

LORD SHEPHERD

My Lords, I always hesitate to see legislation passed—and this was one of our deep criticisms of the Housing Finance Act—which gives no latitude, no discretion, to a local authority. I would therefore hesitate to accept the suggestion of the noble Lord, but this is a point we could consider in detail when the legislation is before us. I believe the legislation would be so drafted that such an Amendment would not be precluded from consideration. But, having said that, I would not wish to say that I accept the premise of the noble Lord.

THE EARL OF BALFOUR

My Lords, I wonder whether I may stress the last point a little further. Many housing associations put up their rents when the Housing Act was introduced. The next-door neighbours of those affected, being in council houses, were saved rent increases because of the action of the councillors. It appears to me that those living in housing association houses—I am thinking particularly of those occupying Scottish housing association houses—had their rents put up, but their next-door neighbours in council flats did not. The problem is that they are paying more rent now, and they will have to pay more rates to meet the housing deficit. This is the point I would ask the noble Lord the Leader of the House to take into consideration.

LORD SHEPHERD

My Lords, I think I am right in saying that the point the noble Earl has just made is very similar to the point of the noble Lord, Lord Molson. Therefore, I would not in any way deviate, if I were to reply in detail to the noble Earl, from what I said to the noble Lord, Lord Molson. I will however look to see whether there is any difference of approach, but I again think that this is a matter we could discuss when legislation is before us. It is always difficult as Leader of the House in dealing with matters to suggest that we move on, but we have been on this matter now for thirty minutes. I make no complaint of that, but we have some 32 speakers on agriculture and I wonder whether we should not close this discussion and proceed to the debate before the House.

LORD ROBBINS

My Lords, might I make an intervention, not from either of the conflicting Party Benches. Is the noble Lord aware that I think that in the minds of many of us his Statement will have aroused very deep perplexity. The subject of the relation between national and local government is always to me something of a headache, and I am prepared to believe that even in circumstances of this kind it is quite possible for reasonable people to take two views. My perplexity, if I may explain it, arises simply from the fact that it seems to be proposed not only that there be financial rearrangements (about which, as I say, I can easily conceive two views) but that where, as in the case of Clay Cross, the law has been deliberately flouted legislation should be contemplated which in effect certainly would damage the rule of law.

LORD SHEPHERD

My Lords, again this is something which in some respects it would be interesting to debate—not just the question of whether the Government are right or wrong but councillors' allegiance to those who have elected them. This is something which would be not only interesting but worthy of discussion. But I hope the noble Lord will accept that what we are seeking to do is to relieve in the first instance many hundreds of good councillors from the risk, and a long risk, of disqualification. If we are to do that, then it would be inequitable, I suggest, not to include the Clay Cross councillors whose only difference is that they themselves (shall we say?) have been before the court and have had the award made against them. If the usual channels would wish to have a discussion of this matter, certainly I shall be happy to respond to any suggestion.