HOUSING FINANCE (SPECIAL PROVISIONS) BILL

HL Deb 23 June 1975 vol 361 cc1209-61

2.50 p.m.

Lord SHEPHERD

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, that the House do now resolve itself into Committee.—(Lord Shepherd.)

On Question, Motion agreed to.

House in Committee accordingly.

[The Baroness Tweedsmuir of Belhelvie in the Chair]

Clause 1 [Surcharges arising out of Housing Finance Act 1972]:

On Question, Whether Clause 1 shall stand part of the Bill?

Lord HAILSHAM of SAINT MARYLEBONE

Before we part with Clause 1, I rise to say something which, rather than on any individual Amendment, probably I can say better on the Question, Whether the clause shall stand part; I do so for the purpose of facilitating business, not for the purpose of protracting it. It would be right to say that without the Amendments which I shall be proposing later, Clause 1 would be wholly unacceptable to my noble friends and myself, but it would be a mistake to regard the Amendments which I shall propose as in any way an attempt to wreck the Bill. Quite the contrary. If the Government were going to legislate about this, as I said on Second Reading, we should very much have preferred a change in the general law, the Local Government Act; but on the assumption that they are going to insist on their privilegium for a particular class of law breakers, then the Amendments which have been put down are intended to make use of the machinery of Clause 1 and to remove those features of it which undermine the rule of law. In order to achieve this we have deliberately kept within the Long Title of the Bill so far as possible and made use of this machinery.

There are two general points which I should like to make which are perhaps best made now. In his closing speech on Second Reading the noble Lord, Lord Shepherd, made two general points, which to some extent we have tried to meet. The first was that it really was unrealistic to impose on individual councillors, some of whom are comparatively devoid of material resources, figures like £100,000 or the £192,000 which probably would fall to the lot of the Clay Cross councillors to meet, and the joint and several liability in respect of which could very well operate unequally between one councillor and another, and also of course operate to the detriment of the creditors of the councillors. I accept this as a criticism, but I must point out that it is a point which must arise in relation to any councillors in modern times who are surcharged under the local government legislation, because local government officials and councillors have to deal with very large sums of money indeed, and perhaps the figure of nearly £200,000 in respect of this one council which we are discussing in detail is really on the small side rather than the large side. I should have thought that this was an additional reason for a general change in the law. However, it will be seen when we come to the individual Amendments that I have done my best to meet the point by applying a more generous treatment to the particular class of councillors involved.

The second general point of the noble Lord, Lord Shepherd, concerned legal costs. I do not myself agree that that point concerns a change in the general law. On the contrary, if somebody has to ask for the consequences of breaking the law to be disregarded or to be mitigated, it is right that he should go to an impartial tribunal and not to a politically motivated tribunal of any kind, especially to Parliament, which is necessarily dominated, in one House at least, by a Party majority.

None the less, I draw the attention of the Committee to the fact that, given that general approach—that the disadvantages of a politically motivated tribunal are far greater than the cost or inconvenience of going to the courts—I have done my best, within the limits, to mitigate that too, because I have provided that the initiative for going to the courts shall be with the district auditor, and therefore the expense will initially rest on local funds and not upon the individual councillors. Indeed, the individual councillors will, if so entitled, have the advantage of legal aid; and Parliament is in the course of passing the Litigants in Person (Costs and Expenses) Bill, so that all they would need to do is to appear in person and then they can recover the costs which that Bill will allow. In that respect they are in exactly the same position as a person who goes to the election court, for instance, asking for the mitigation of the consequences of breaking the election law, or indeed to anyone else who applies to the High Court or county court for some form of relief.

Having said that, I think that I have said all I wanted to say on the Question, Whether the clause shall stand part? Before we embark on the Amendment, perhaps I might make a suggestion to the Leader of the House as to the way in which we should deal with the new clause which stands in my name. The members of the Committee will notice that I have down a new clause which will be called next. The Liberals have about four or five amendments to it. In the ordinary course the Amendments would be discussed in advance of the debate on the clause if the Liberal Amendments were then called, and I would suggest that after I have done my best to explain the new clause the Committee would be wise to take the Liberal Amendments seriatim, and then I dare say a number of noble Lords, particularly on the opposite side of the Committee, would wish to criticise my new clause, whether as amended as it then might be, or in its original form. I think that a general debate might more conveniently take place after we have disposed of the Liberal Amendments. I do not know whether the Leader of the House or the noble Lord, Lord Wigoder, would approve of that suggestion.

Lord SHEPHERD

I am entirely in the hands of the Committee. May I first say to the noble and learned Lord and his friends on the Liberal Benches, that although we do not necessarily agree with what they are seeking to do, I think that one could say that they have made a constructive effort to improve the Bill. In regard to how we should conduct this Committee stage, I think that it would be best for the noble and learned Lord to move his Amendment and then, if the noble Lords on the Liberal Benches would wish to seek to amend the noble and learned Lord's Amendment, we could then have a general discussion on the merits of the noble and learned Lord's Amendment and also the proposed Amendments to it.

So far as I am concerned, what I shall have to say will apply fairly equally to the noble and learned Lord and to the Liberals. I would not wish to make two speeches, one on the Liberal Amendments and one on the Conservative Amendment; so I wonder whether we could take them as a whole, and then dispose of the Liberal Amendments, and then decide what we should do with the noble and learned Lord's Amendment.

Lord HALE

I apologise for being absent on Second Reading and I had expected that the noble and learned Lord, Lord Hailsham of Saint Marylebone, would make some reference to this issue because he had put down a Question about an intervention that I made in the earlier debate. I thank the noble and learned Lord for the courteous way in which he dealt with that in my absence; he did not say a word on that part with which I disagree. I had intended to bring forward the matter of raising this extremely unpleasant and difficult question into a high constitutional issue. My noble friend Lord Paget of Northampton, again in my absence, made a speech much better than any I could have made, in which he put forward that point of view. He expressed it much more briefly than I could, and in those circumstances I see no reason whatever to make any further intervention, other than to thank the noble Lord and to say that I feel that the debate on Second Reading was conducted with a moderation on both sides which, in the circumstances, was much more to be commended than some of the hysterical letters and comments that appeared in The Times.

Lord WIGODER

We on these Benches are entirely at the disposal of the Committee on this matter. I should have thought it might have made for simplicity of debate if, after the noble and learned Lord, Lord Hailsham of Saint Marylebone, had moved his Amendment, the first Amendment in the name of my noble friend Lord Byers and myself was called and debated on the narrow basis as to whether or not it was an improvement on the wording of the noble and learned Lord's Amendment. That is the only substantial matter which my noble friend and I wish to raise; the other subjects will be dealt with very shortly. I respectfully suggest that it may be more effective as a means of debate if, after the Liberal Amendments have been—I hesitate to say "disposed of"; the word rather prejudges the outcome of the discussion—debated and decided upon, a general debate on the noble and learned Lord's Amendment should then take place.

Clause 1 agreed to.

3.12 p.m.

Lord HAILSHAM of SAINT MARYLEBONE moved Amendment No. 1: After Clause 1, insert the following new clause:

Repayment and disqualification

(".—(1) In any case to which section 1 of this Act applies the district auditor shall at the same time as he makes the certificate referred to in subsection (2) thereof make a further certificate stating the sum or sums which and the person or persons whom he would have surcharged under each of paragraphs (b), (c) and (d) of section 228(1) of the Local Government Act 1933 but for this Act.

(2) Within 28 days of making the certificate required under subsection (1) above the district auditor shall apply to the court for such order or orders as the court may think fit to make as hereinafter provided in respect of the said certificate and against any person or persons named in it.

(3) On an application under subsection (2) above the court may confirm, vary or quash the said certificate and, if it confirms or varies it, may—

1. (a) order that any person named in the said certificate as confirmed or varied shall pay to the council which incurred the expenditure or suffered the loss or deficiency in question, or to its successor council, such part as the court thinks fit but not exceeding £1,000 of the sums for the expenditure or loss or deficiency of which such person was responsible as certified therein; and
2. (b) subject to subsection (4) hereof whether or not it makes an order for the payment of any part of such expenditure or loss or deficiency if the total thereof exceeds £2,000 and any person responsible for authorising or incurring it is or was at the time of his so doing a member of a local authority may order him to be disqualified for being a member or elected to a local authority for a specified period not exceeding five years and shall do so unless there are special circumstances connected with the relevant transactions to be specified by the court in making such an order which in the opinion of the court justify the remission of the whole or part of any such disqualification.

(4) The court shall not make an order under subsection (3)(a) or (b) above if the court is satisfied that the person authorising or incurring the expenditure, loss or deficiency in question acted reasonably or in the belief that his action was authorised by law, and in any other case, before making an order under subsection (3)(a) above, shall have regard to all the circumstances, including that person's means and ability to pay and the degree to which in the opinion of the court he was guilty of wilful default.

(5) Any person liable to be affected by any order made in proceedings under any of the foregoing provisions of this section shall be entitled to appear and be heard in such proceedings.

(6) The courts having jurisdiction for the purposes of this section shall be the High Court except that, if no sum specified in the certificate given under subsection (1) above exceeds the amount over which county courts have jurisdiction in actions founded on contract, the county court shall have concurrent jurisdiction with the High Court.

(7) Any expenses incurred by a district auditor in complying with the foregoing provisions of this section shall so far as not recovered from any other source be recoverable from the local authority from the audit of whose accounts such expenses arose or from the council which is the successor to that local authority.")

The noble and learned Lord said: This is the most complicated, in a sense, and equally the most important of the Amendments which I propose to move. My proposed new clause deals primarily with the financial liabilities to be incurred by defaulting councillors, although it deals secondarily with the question of disqualification. It follows generally the lines which I outlined on Second Reading and, with one important but minor exception, the lines of a Conservative Amendment to some extent discussed in another place. I need only, therefore, make a number of explanatory points by way of introduction. As I said a moment ago, it does not seek to disturb, but rather to make use of, the machinery of Clause 1.

Subsection (1) provides that where the auditor makes a rent loss certificate under Clause 1—that is to say, the particular device adopted by the Government in place of the surcharge—or, for that matter, where the rent loss certificate is deemed under Clause 1, he must state the sums for which he would otherwise have surcharged councillors and identify the persons concerned. That is the first point in the Amendment and I can see no objection to it. If the councillors concerned are proud at having broken the law they can have no objection to having their identities disclosed and the amounts for which they have defied the law. If they are ashamed of it, as they should be, I feel it is proper that the public, including their own voters, should know the facts.

After the identification of the amounts and the persons concerned, it then under subsection (2) becomes the duty of the district auditor to refer the question of what must be done to the court. This achieves the purpose of which I spoke a moment ago, of putting the initiative on the district auditor so as to avoid the councillor's having to go to the court for relief, which is what he would have to do under the existing law. Therefore it is more favourable to him than the existing law. It also deals, so far as I can deal with it, with the question of costs, because the district auditor will bear the costs out of local funds, recovering out of local funds in the first place, and then it is for the court to decide what is to be done; that is to say, it is an impartial tribunal. This is the device, incidentally, which Parliament has always thought it right to adopt in cases of this kind. It is what got rid of the long sequence of election petitions which used to succeed every General Election in Victorian days, so graphically described in Trollope's novels. It has proved wholly successful in relation to election law, and in relation to local government law it has been the rule at any rate since 1933.

Subsection (3) provides for the powers of the court. The existing powers of the court if the certificate is out of order—that is to say, if the district auditor's decision is wrong, either as a result of a mistake of fact or as a mistake of law—are retained; the certificate will be quashed just as the surcharge would be quashed under the existing law. But where the certificate is confirmed, then the court is given the complete duty to exonerate the councillor, as under the existing law, if he acted reasonably or if he acted in good faith, believing that what he did was in accordance with law. So his rights are completely preserved as they exist under the existing law. Then, if that is decided against the councillor, the court has the duty to specify the sum for which that councillor should be rendered personally liable; and there the councillor begins to be treated very much more favourably than he would be treated under the existing law, because the court has power to specify the sum, and a maximum of £1,000 is imposed on the court beyond which it has no power to charge any individual councillor. The result is that the court will be able to have regard to the councillor's means to pay and will also have what the present court has not got—power to consider the degree of culpability of which an individual has been guilty. So that is much more favourable treatment than under the existing law.

Then we come to the question of disqualification. There are two changes here under the proposed new clause. The first is that the total sum which triggers off liability to disqualification is increased from £500 to £2,000. This is designed to take into account the change in the value of money between 1933, when the law was enacted, and the present day. It corre- sponds to the figure of £2,000 which we inserted in the Local Government Act 1972 as triggering off disqualification, and which would have applied to these councillors had they not committed their defaults before the Act of 1972 came into effect. I explained this fully on Second Reading and, although the benefit which is thereby conferred on the defaulting councillors is retrospective, I do not feel that there should be any controversy about that.

The second respect in which the Amendment is more generous than the existing law needs a little further explanation. The existing law attaches an automatic disqualification to wilful default; that is to say, if the triggering sum—£500 under the existing law or £2,000 under the law of 1972 and the existing situation if the Amendment is carried—is found to have been incurred, disqualification is automatic and is for five years. My own feeling—and, so far as I can, I am talking now in general terms, because I have made it plain throughout that I have tried to embody in this limited privilege Bill the kind of Amendment which might have been made if we had been considering a change in the existing law—is that it is right to give the court a discretion whether or not to disqualify and for what period, and that is a change which the Amendment would bring about.

That is a very great concession to defaulting councillors and, owing to the Long Title of the Bill, it is of course confined to the councillors with whom the Bill is or may become concerned. It enables a disqualification to be prescribed at less than five years or to be withheld altogether. The only qualification to that is that the court is bound to exercise its power to disqualify, unless it finds that there are special circumstances which must of course be connected with the actual offence. This is much more generous than would be the case under the existing local government legislation. It is a little less generous than was proposed in another place but it is much more generous than, for instance, what was advocated in The Times' leading article when this Bill was first announced and published. That article said that disqualification should be automatic and should remain. I do not feel that anybody can say that I have acted unreasonably in this matter. It is the minimum I can think of which would vindicate the rule of law.

It is at this stage that the first Liberal Amendment comes into consideration. I shall express no opinion about it until I have heard the noble Lord, Lord Wigoder, speak to it. My first impression was that he was being more draconian than I should wish to be by imposing an automatic disqualification of five years, no less and no more, if so, I should, on the whole, stick to the more generous view I have taken, but I am told informally that this may be a misreading on my part of what is intended. Therefore, I express no view on that until we have heard the noble Lord. I shall not deal with the other Liberal Amendments until they are proposed but, with those words of explanation, I beg to move.

Lord Wigoder moved Amendment No. 2 as an Amendment to Amendment No. 1: In subsection (3)(b), line 6, leave out ("may") and insert ("shall").

The noble Lord said: The Amendment is a paving Amendment for Amendment No. 3, to which, with your Lordships' leave, I shall address my observations. As, unhappily, the Amendment of the noble and learned Lord, Lord Hailsham of Saint Marylebone, has no numbered lines on the Marshalled List, it is not entirely clear what would be the effect of the Amendments to which I am speaking. Therefore, I should like briefly to indicate what that would be. The substantive Amendment provides that a court may order a councillor to be disqualified for a specified period not exceeding five years and shall do so unless there are special circumstances which … justify the remission … of any such disqualification.

The effect of the Amendment is that the subsection will read that the court shall order a councillor to be disqualified, for a period of five years unless there are special circumstances … which in the opinion of the court justify the remission of the whole or part of any such disqualification. Those words will be specifically left in if the Amendment is carried. The desire in moving the Amendment is both to qualify the Amendment moved by the noble and learned Lord, Lord Hailsham, and to make it more effective. I should make it clear that noble Lords who heard the speeches on Second Reading will recognise that my noble friends on these Benches accept, support and welcome substantially all the Amendments which are down in the name of the noble and learned Lord. But we believe that the wording which we are proposing to the substantive Amendment makes it clear that this House is determined to see that the rule of law shall in this case be upheld.

Your Lordships will remember from Second Reading that we are dealing here with somewhere in the region of 400 councillors in some 20 councils, and that any councillor who can claim to have acted reasonably will find that the provisions do not apply to him. Therefore, we are concerned only with those who have quite deliberately defied the law, have done so over a substantial period of time and in the full knowledge of the penalties involved, and who—and I say this as a fact and not in order to be provocative—were clearly acting from political motives, expecting and hoping that in due course they would be absolved from the consequences of their defiance of the law by their own political Party when it became the Government.

Those consequences are two-fold. I must say a word about the surcharge provisions at this point. One of the consequences, as the noble and learned Lord, Lord Hailsham, made clear, was that by the 1933 Act the councillors would be surcharged to the extent of the deficit they had occasioned. It has been made clear on many occasions by various Ministers—quite properly, if I may say so—that the surcharge is not a punishment, a penalty or a fine. It is simply a recoupment of money which has been lost. I venture to think that important, because part of Amendment No. 1 deals with that issue of surcharge. It is recognised by the noble and learned Lord, Lord Hailsham, and by us that the surcharge amounts to something like £1½ million, that the sums involved are very large and that they vary by chance from area to area, depending on the number of councillors and the number of dwellings concerned. It is also recognised that, under the 1933 Act, the surcharge as a weapon was something of a blunt instrument, because there was no dis- cretion on anybody's part to waive any part of the amount owing.

Your Lordships will remember that the Government's Bill has sought to absolve all those councillors from every penny of that surcharge. We support the Amendment put forward by the noble and learned Lord, Lord Hailsham of Saint Marylebone, which suggests that in appropriate cases a modest part of what is due should be claimed from those councillors, depending on both their degree of default and their ability to pay. There is no desire to pursue them into bankruptcy or to be vengeful in any way. I stress this aspect of the matter—and it is relevant to the main purpose of the Amendment to which I am about to speak—to the extent that this part of the Bill deals with recoupment, not penalty. Therefore it is appropriate for your Lordships to take a practical and common sense view of the matter and, in the words of the noble and learned Lord, Lord Hailsham, "to be generous" about this aspect of the affair, because it deals only with recoupment.

It cannot be suggested that your Lordships' House would thereby be showing any weakness regarding the principles of the preservation of the rule of law or the sovereignty of Parliament. However, the situation is very different when one comes to the disqualification provision: that was the penalty that was provided by the 1933 Act, in that case where the sum exceeded £500. As your Lordships have been reminded, that penalty was for a fixed term of five years' disqualification. When the matter was reconsidered in 1972, by Section 161 of the Local Government Act of that year the same fixed penalty of five years' disqualification was again imposed although, as your Lordships have heard, on that occasion the financial limit was raised from £500 to £2,000.

I venture to suggest that against this background there are difficulties about the Amendment in the name of the noble and learned Lord, Lord Hailsham, which are resolved by the Amendment I am now moving. The first difficulty is that in its present form the substantive Amendment appears to contain two areas of discretion in the court which rather overlap, and one of which appears to be quite unnecessary. The present subsection 3(b) provides, first, that the court may disqualify for a specified period not exceeding five years; in other words, there is a discretion as to the length of time. Then it goes on to state that the court: shall do so unless there are special circumstances … which in the opinion of the court justify the remission of the whole or part of any such disqualification.

I find it difficult to see how that can be other than confusing to the court, which would have to decide what is the appropriate period at its entire discretion and then go on to consider whether there are special circumstances to ' justify the remission of the whole or part of any such disqualification. One of those areas of discretion is therefore superfluous.

Secondly, if the discretion is phrased in quite such wide terms as in the present subsection, there is a danger of a wide variation in the length of penalty that would be imposed by different courts when dealing with what are essentially similar cases. The Amendment I am now moving gives rather clearer guidance to the court as to what course it should take.

Thirdly, at this stage I fail to see that any real reason has been put forward—certainly not on Second Reading, nor, indeed, in the other place—as to why the ordinary consequences should not follow so far as these particular councillors are concerned; namely, the five-year period of disqualification imposed by the 1933 Act, repeated by the 1972 Act. I remind your Lordships that we are dealing with councillors where there is wilful misconduct. By definition we are dealing with councillors who are in precisely the same situation as were the Clay Cross councillors when their appeal was heard by the noble and learned Lord, Lord Denning, as Master of the Rolls. If I may say so, he is not the least reluctant of judges to stand up for the individual in his struggle against the Executive. Lord Denning described those councillors in words which are entirely applicable to these councillors. He said that each of them deliberately broke the solemn promise which he gave when he accepted office; each of them had flagrantly defied the law; they were not fit to be councillors; the sooner they were disqualified, the better; their disobedience could not be tolerated; they were disqualified; they must stand down; there must be elected in their place others who would fulfil the duties which those 11 had failed to do.

In those circumstances we venture to put forward this Amendment which provides, first, that the court shall disqualify for a period of five years because that follows the wording of the Act which these people deliberately broke. We have no more desire than the noble and learned Lord, Lord Hailsham, to be vindictive about this matter, and we are prepared to leave in the escape clause which is in the substantive Amendment, namely: unless there are special circumstances connected with the relevant transactions … which in the opinion of the court justify the remission of the whole or part of any such disqualification.

We suggest that the wording now proposed has the advantage over the wording proposed by the noble and learned Lord, Lord Hailsham, that it makes abundantly clear to the community as a whole, in a way which the present wording does not, that the rule of law is being upheld, and that those who broke the law, knowing what the penalty is, should thereby incur that penalty. I hope that it will not be suggested that any of my noble friends on these Benches is seeking his pound of flesh or is desiring in any way to gain revenge of any sort upon these councillors. I hope that it will also be agreed that the penalty provided by the law is not a harsh nor unconscionable one, but is one which for a particular period, prevents people who have manifestly failed to do their duty from serving in such a capacity.

Finally, I reiterate that our Amendment leaves the escape clause which is in the existing Amendment, and the practical effect is that if a councillor has, as he may well have, mitigating circumstances which justify leniency by the court, then the result will be the same either under the Amendment put forward by the noble and learned Lord, Lord Hailsham, or under the wording which we now propose. The result will be the same, because the court will decide that there are special circumstances which justify the remission of the whole or part of any such disqualification. No one on these Benches would seek to prevent mercy being administered by any court dealing with these councillors.

If there are no circumstances whatever which justify leniency in any direction, we suggest that it would be preferable, in the words of the Act, to have the words of a disqualification for five years, thus making it abundantly clear that at long last Parliament has made it apparent that the rule of law should be upheld in relation to these councillors. In those circumstances I beg to move.

3.29 p.m.

Lord SHEPHERD

I think that I should be frank with the Committee and say that I much prefer the approach adopted by the noble and learned Lord in relation to his Amendment to that adopted by the noble Lord, Lord Wigoder. He referred to the well-known phrased of the noble and learned Lord, Lord Denning in regard to the Clay Cross councillors. The Amendments we are now considering are Amendments which do not solely involve the Clay Cross councillors. We are dealing with possibly 400 councillors who may be involved in matters with the district auditor for failing to comply with the Housing Finance Act, and until the district auditor has carried out a full examination of the circumstances I do not think anyone, particularly the noble and learned Lord, Lord Denning, would wish his words in regard to the Clay Cross councillors to be attributed in any way to the 400 other councillors.

I acknowledge at the outset that the noble and learned Lord, Lord Hailsham of Saint Marylebone, has made a carefully constructed attempt to improve the Bill as he thinks it should be improved, and I am indeed pleased that he has sought to do it within the Long Title of the Bill. But there is one difference between this Committee stage and the Second Reading. All sides of the House and both the noble Lord, Lord Wigoder, and the noble and learned Lord, Lord Hailsham, recognise that something has to be done to resolve an extremely unsatisfactory state of affairs by mitigating the rigours of the existing law. I would suggest that our only differences lie in our judgment as to the remedy. It is the Government's belief that given the very sorry background to this affair the only satisfactory way is to wipe the slate clean so far as the individual councillors are concerned and to provide that the local communities recover the losses. That is the main purpose of the Bill.

The noble and learned Lord and the noble Lord, Lord Wigoder, take an opposite view. They do not believe it is right to wipe the slate clean. They stand on what is called the rule of law and no one, certainly not I, would question the paramount need for the rule of the law. On the other hand, one has to consider not only mitigation but also the need to look to the future, particularly in local authorities at the present time, and see how one can best ensure a proper development and the removal of past bitternesses. For myself, I believe that the Government are right. We feel that whatever may have been the circumstances—and none of us would wish in any way to absolve them from their responsibility—it would be right after all this time to wipe the slate clean and give these councillors and the new authorities in which they work an opportunity to deal with the situation they have created and to look more to the future than to the past.

On the basis of this different approach, noble Lords are proposing in this new clause a procedure which leans heavily on the audit provisions of the Local Government Act 1972. We do not quarrel so much with the procedure as with its objectives. Nevertheless, these proposals would mean a much more drawnout procedure, perhaps over years, than the Government's and that in itself would serve to prolong not only the bitterness but the uncertainty in local administration. I would ask the Committee to consider what would be involved. Courts would need to go over the same ground as the district auditor. They would need to assess the financial means of the persons concerned. There could then be appeals against the court's decision and thereafter the process of recovering these personal surcharges.

I agree that the Amendment proposed by the noble and learned Lord deals with the question of legal costs which was one of the matters which I had much in mind at Second Reading. Noble Lords opposite have suggested that the courts are an appropriate body to consider these questions. I have always had the highest possible respect for the courts and the impartial way in which they pass judgment on very many difficult cases. But I would say to the noble and learned Lord that I have a deep sense of unease about the proposition that the burden of decision should be passed to the courts in the way proposed in these Amendments. We are dealing with a situation which is both unique and politically coloured. The Amendments ask the courts to decide whether there are any circumstances which might justify any part of the disqualification being remitted, but the circumstances they would have to consider are political circumstances. Would it not virtually be asking learned judges to make an evaluation of actions taken on political grounds? If mitigation was given, could they fully appreciate the political strains that were placed upon these councillors?

We have spoken here as if these councillors were themselves the leaders; in some cases they undoubtedly were. But looking back over that period there is no doubt that they themselves were under severe political pressure. We, as politicians, can understand that, for all the time we share it with them. The difficulties of the courts would be magnified by the fact that there are few precedents or parallels to guide them. I am aware that there is case law dealing with appeals on previous surcharges. However, I have looked at the case law and have found nothing which I believe would help the courts here. Let me remind noble Lords how unique the situation is. During the past 20 years there have been about 250 cases of surcharge made on members and officers of local authorities—a very small number indeed considering the period and the number of local authority councillors and officials involved.

Until this extraordinary audit at Clay Cross, there was only one case in all those 20 years where the surcharge resulted in any way from a political decision. That was the case concerning the St. Pancras Borough Council in the late 1950s. In that case, where the amount of the surcharge was small, the court eventually decided that the councillors had acted in the belief that their action was authorised by law, and accordingly they removed the disqualification. May I say to the noble Lord, Lord Wigoder, that in one possible case at least there is serious doubt whether the advice that was given to the local councillors would justify surcharge and disqualification, particu- larly as, in a similar case in Scotland, much the same sort of action was considered justified. We just do not know what the District Auditor will decide.

For the reasons which I have given, the Government would much prefer to have a clear-cut decision of Parliament and wipe the slate clean. As I think the noble Lord, Lord Wigoder, has said, the real aim of the new clause is to recover the losses. To send it to the courts in the way that is suggested I believe would be seen not only by the councillors themselves but by local authorities as a whole as exacting a punishment. For the first time it would appear to be a punishment as opposed to what in the past has been the purpose of the surcharge; that is, the recovery of losses.

This is, if I may say so, a matter of judgment. There is nothing between us on any side of the Committee that some course is required. As I said on Second Reading, the 400 councillors—and we are not now dealing only with the Clay Cross councillors—are men and women who have given long years in public life and no doubt will wish to continue. No doubt, too, those who voted for them also would wish to see them continue in office. They have done nothing which in any way has given them benefit, financial or otherwise. I would suggest that in the circumstances it would be right not to lay a new formula for dealing with the situation, as is provided by the noble and learned Lord, but to wipe the slate clean, to forget this issue—at least to forget it in respect of the bitterness of that particular time. Do not let us underestimate the bitterness that there was at that time!

I would advocate this. While I would not in any way deviate from the noble and learned Lord about the need for the rule of law, I believe that the law is more likely to be respected if one deals humanely and sensibly with the very difficult problem that this Government found when they took Office. We think that the way we have in mind is the right way: that within this Bill. This is entirely a matter for judgment. Therefore I can only leave it to this Committee to decide.

Lord HAILSHAM of SAINT MARYLEBONE

I am grateful to the noble Lord for the moderate tone in which he spoke. Strictly speaking, we are discussing only the Liberal Amendment and I think we ought to come to a conclusion about that at this stage. Therefore, I will say relatively little about the noble Lord's speech; but there are one or two things that I think I ought to say to him as kindly as possible. His thesis was that there was nothing between us about the rule of law. I think there is something between us about the rule of law. We are not all agreed that anything of this sort ought to be done at all. If it were right to exonerate these councillors from the effects of what they have done, then it would be right to exonerate all councillors from the effects of what they have done. We have made, I think, an extraordinary concession, almost to fall over backwards to do precisely what we thought ought not to be done; that is to say, to make extremely generous concessions to these councillors as distinct from other councillors who may be similarly placed. I should have vastly preferred to see these proposals in my new Clause 1 put into a general change to the Local Government Act.

There is nothing special or unique about this case except that they are Labour councillors who defied a Conservative Act of Parliament. I do not think I find that unique at all. It could easily happen in reverse in the next Parliament when happily this Government is turned out of Office; so that it could easily happen in reverse. Should this happen, I hope that I should be a rather stauncher supporter of the rule of law in the sense that I have been arguing for it than either the Attorney General or the Lord Chancellor has proved to be.

Secondly, it is said that some of these 400 may have been acting on wrong advice. They might have been acting on wrong advice; then, under the existing law, without this Act at all they would be wholly exonerated because they could apply under Section 230 of the Local Government Act 1933 for complete exoneration. They also can be completely exonerated under the new clause that I have proposed. So wrong advice has no advantage in it at all. As regards the rest, we know nothing about them. We do not know whether there are 400; we do not know whether even one of the 400 will be in fact surcharged; we do not know whether even one of them would not be exonerated by the court. All we know is that this Bill and this Clause 1 is rendered necessary only for those who have in fact deliberately defied the law and acted unreasonably—otherwise they could be covered easily by the existing law.

Then it is said that the courts are unsuitable. I do not think the courts are unsuitable for this kind of thing, although I realise that it puts a heavy burden on them. Parliament in the end found it necessary to hand over Election petitions to the court. They are much more commonly politically charged than the kind of thing we are discussing today, where the case is reasonably plain. The courts have never found difficulty in handling Election petitions. They have dealt with them far more mercifully than did the old Select Committees of another place. Indeed, when one looks across the world to India one wonders whether an Election court might not be something for the Indian Constitution at the present time. So I do not think that is fair. They deal with the matter extremely expeditiously. In so far as the mitigation of penalty is a matter of discretion, appeals are difficult to pursue. That is all I want to say about the speech of the noble Lord, Lord Shepherd. I sympathise with his difficulties. I am not trying in any way to score points off him.

As regards the Amendment of the noble Lord, Lord Wigoder, I do not think there is a very great deal of difference that it makes. He did rather persuade me, as a matter of fact, that to have a fixed-term penalty which could be mitigated was probably a more easily manageable type of clause than to have no fixed-term penalty mentioned but an absolute discretion as to how long the disqualification should be, but still a direction that there should be some disqualification unless there were special circumstances. In other words, he persuaded me that his drafting was better than mine. I would say to the Government that if it were going to make all that difference; if it were going to make the whole difference in this Bill whether my original—and I think still slightly more generous—draft was in the Bill when it went back to another place rather than what I think is logically a better version of it proposed by Lord Wigoder, I would myself advise the Committee to stick to my draft. On the other hand, if it were not to make any difference at all to the attitude of the Government, then I think that Lord Wigoder's drafting is better. From the speech of the noble Lord, Lord Shepherd—and I say this not in order to embarrass but to elicit, if he feels inclined, any comment either as to my view of the drafting or any other matter—I inferred that his instructions from his colleagues were probably pretty tightly drawn and it would not make the slightest difference to the attitude of the Government in another place whether my version or the version of the noble Lord, Lord Wigoder, was accepted. If I am right in that, I would advise the Committee to accept Lord Wigoder's Amendment to my Amendment rather than the opposite; but if it were going to make all the difference I would stick to my more generous version.

Lord SHEPHERD

I will be frank. I have not got drafting instructions on the effect of the two drafts except that my reading initially was very much of the noble and learned Lord's. My position, whether it is tightly drawn or otherwise, is that there seems to be a disagreement on principle. Therefore, if the two noble Lords have still some doubts, there are other stages to the Bill and I would suggest, so that we do not have any unnecessary delay, that the two noble Lords might consider the noble Lord pressing his Amendment to see what the Committee does with it. If it were to be included in the Bill, then they might consider at Report stage whether there ought to be a fresh draft when the Bill is in front of them with the lines drawn—when it is often easier to consider its impact.

3.50 p.m.

Lord HAILSHAM of SAINT MARYLEBONE

If the noble Lord thinks that—and it is perfectly sensible, if I may say so without impertinence—then I advise my noble friends to support the noble Lord, Lord Wigoder, if this matter goes to a Division, or, if not, to support my Amendment. I do not know whether the noble Lord, Lord Wigoder, would like to withdraw his Amendment and move it again at the Report stage, when he has had time to consider this debate, or whether he wants to press the matter now. If he presses the matter now, I advise my noble friends to support him.

Lord POPPLEWELL

May I ask a question of the noble and learned Lord? In cases which go before the courts there is a maximum penalty imposed. There is no statutory penalty normally, except as a result of drinking too much alcohol, where the person forfeits his licence or has to do so as a result of the "totting up" procedure. The word "shall" takes away any discretion from either the district auditor or the court and imposes the penalty of removing people from office for at least five years. Maybe it should be for a lesser period than five years, and the noble and learned Lord's Amendment, using the word "may", gives latitude. That enables the offence to be judged more on its merits than on the fixed position which would arise if Lord Wigoder's Amendment were agreed to with the word "shall "instead of" may ".

Lord HAILSHAM of SAINT MARYLEBONE

I speak subject to correction by the noble Lord, Lord Wigoder, or by the noble Lord the Leader of the House, but I think the noble Lord, Lord Popplewell, is wrong. This is exactly how I read the situation when I first saw Lord Wigoder's Amendment. I am not criticising the noble Lord, Lord Popplewell, for misunderstanding the Amendment. He is making the same mistake as I did when I first read the Amendment. If Lord Wigoder's Amendment were accepted, the position would be, prima facie, that the court would have to impose a five-year disqualification if the threshold were reached; but if there were special circumstances the court could mitigate the whole or part of that. My Amendment says that the court may impose a disqualification without specifying the length, except that the maximum is five years. It goes on to say that the court must impose some disqualification unless there are special circumstances. The difference is extremely narrow on either view. My own feeling, after listening to the noble Lord, Lord Wigoder, was that it was largely a question of drafting; probably he has been a slightly better draftsman than I am. I do not think I would put it higher than that. If it were going to make a great difference to the future progress of the Bill, I would stick to my Amendment as being slightly more generous; but I do not think it will make a great difference and I am persuaded that the noble Lord, Lord Wigoder, has just the edge on me on a drafting point.

Lord WIGODER

It is not for me to venture to disagree with any view of the noble and learned Lord, Lord Hailsham, as to the quality of anybody's draftsmanship. In the circumstances, I beg leave to press the Amendment to a Division.

Lord SHINWELL

Before we come to a Division on this important issue, would the noble Lord, Lord Wigoder, define what is meant by "special circumstances "? In the Clay Cross case it was assumed that there were special circumstances because there was a great deal of resentment about the imposition of increased rents. The noble Lord, Lord Wigoder, mentioned the special circumstances but he failed to define them.

Lord WIGODER

It would be impossible to define in advance what the special circumstances may or may not be. For example, those who took the lead in any particular area in defying the law might find it difficult to claim that there were special circumstances. Those who ventured to enter a protest against what was happening, who felt it was their duty to abide by local Party whips in supporting the decisions of their political leaders, might claim that in those circumstances there was a valid application for leniency to be shown to them. That is one of many sets of possible circumstances. It would be impracticable to define these matters in advance.

Lord SHINWELL

With great respect, I find that answer unsatisfactory. I listened with great interest to what the noble and learned Lord, Lord Hailsham of Saint Marylebone, said. He referred to mitigating circumstances on the assumption that a matter was referred to courts. What is meant by that? It might be a matter of whether the offending councillors were in possession of financial resources which would justify their making a substantial contribution to the demands of the district auditor. On the other hand, the mitigating circumstances might be that councillors were so impoverished that it was impossible for them to make any contribution at all. Before we decide on a matter that is bound to create a great deal of interest in the future, we should have a clear definition of what is meant by the terms which are used.

At the present time, it appears from reports in the Press that some ratepayers who find themselves offended because of the increase in rates—and I confess I have an interest in the matter because I dislike intensely the increase in rents, and I have no doubt many members of this Committee share that view—have threatened to refuse to pay the rate charges. In those circumstances, I assume that it would be for the local council to decide what action to take if rates were unpaid. I assume that they would he required to take the offenders before the courts. On the assumption that it might be a Conservative council, if those who threatened to refuse to pay belonged to the Conservative Party and were on the right wing in politics, it may well be that Conservative councillors, similarly placed regarding the increase in rates, and politically motivated, would decide not to take the offenders before the courts. What is to happen in those circumstances? What are the special circumstances then? Would it be possible for them to act conversely to the councillors in the Clay Cross case? They decided, largely for political purposes, and also for humanitarian reasons, not to impose the increased rents. They might find a Conservative council—politically motivated because of the impositions that are going to be charged to the ratepayers—coming to their assistance by refusing to take them to the courts.

Where are we in this matter? We have to listen to these learned lawyers in disputation—and of course we know the noble and learned Lord is a remarkable strategist in matters of this kind—but in spite of the disputation it will be noted that for tactical reasons the noble and learned Lord wants the Committee to divide. I can see the point quite clearly. He wants the support of the Liberal Party so that when this matter comes before the other place, as undoubtedly it will—I assume the Government may be defeated if there is a Division—then the Liberal Party will join with the Conservative Party. This is a very useful coalition in the circumstances in order to defeat the Government. It is a very clever trick, and I give the noble and learned Lord all credit for it. He is a past-master at this art. However, I hope that noble Lords on this side will have noticed what is happening.

In any event, in the absence of a definition of "special circumstances" and in view of my assumption that many other cases will emerge because of the increase in rates, and also perhaps in rents, in the future, I hope that your Lordships will be very careful over what is done. I agree with my noble friend the Leader of the House that we ought to dispose of this Clay Cross embroglio. It was a very unfortunate incident and one might condemn it or condone it. I prefer to remain neutral in the circumstances, and the best way to remain neutral is to dispose of the trouble at once.

On Question, Amendment agreed to.

Lord SHEPHERD

I suggest that Amendment No. 1 will now have to be put to the Committee, because it is an Amendment to the Amendment.

Lord HAILSHAM of SAINT MARYLEBONE

I think, with respect, the noble Lord may be wrong. All these Liberal Amendments are proposed Amendments to my new clause, and therefore they are taken seriatim. Amendment No. 3, as I understand it, is actually consequential on the one we have just agreed to.

Lord WIGODER: I beg to move Amendment No. 3.

Amendment moved— In subsection (3)(b), leave out line 8 and insert (" period of five years ").—(Lord Wigoder.)

On Question, Amendment agreed to.

Lord WIGODER moved Amendment No. 4: In subsection (3)(b), line 10, leave out (" in making such an order ").

The noble Lord said: This is purely a drafting Amendment. As your Lordships will see from the fourth line on page 2, the court has to specify what special circumstances are involved in making an order which justifies the remission of the whole or part of any such disqualification. The courts are left with

a discretion to remit the whole of the disqualification. They will therefore be left with a discretion not to make any order at all, and in those circumstances it would appear to be not entirely appropriate to include the words "in making such an order" if in fact the court is not going to make such an order but still wishes to state its reasons.

Lord HAILSHAM of SAINT MARYLEBONE

I regard this as a pure question of draftsmanship and therefore do not propose to take up any further time of the Committee upon it, but merely to accept what the noble Lord says.

Lord WIGODER moved Amendment No. 7: In subsection (5), line 1, leave out (" liable to be affected by any order ") and insert (" in relation to whom an order may be ").

The noble Lord said: This again is really a drafting Amendment. Subsection (5) provides at the moment that any person liable to be affected by any order shall be entitled to appear and to be heard in the proceedings. The point has been made that those words might be interpreted to cover tens of thousands of council tenants or ratepayers, who might find their financial contributions affected by a decision of the court as to surcharge. That, I think, was clearly not the intention of the Amendment. Therefore the Amendment now proposed will make it clear that the people entitled to appear and to be heard are those people in relation to whom an order may be made.

Lord HAILSHAM of SAINT MARYLEBONE

I regard this Amendment as another drafting improvement, and I propose to accept it, if your Lordships agree.

4.7 p.m.

On Question, whether Amendment No. 1, as amended, shall stand part of the Bill?

Their Lordships divided: Contents, 146; Not-Contents, 52.

CONTENTS
Aberdare, L.	Alport, L.	Balfour of Inchrye, L.
Airedale, L.	Amherst, E.	Barnby, L.
Allan of Kilmahew, L.	Amulree, L.	Beaumont of Whitley, L.
Allerton, L.	Auckland, L.	Belstead, L.
Berkeley, B.	Gore-Booth, L.	Newall, L.
Boothby, L.	Goschen, V.	Northchurch, B.
Bridgeman, V.	Gowrie, E.	Nunburnholme, L.
Brock, L.	Grantchester, L.	Ogmore, L.
Byers' L	Greenway, L.	O'Hagan, L.
Caccia L	Grenfell, L.	O'Neill of the Maine, L.
Campbell of Croy, L.	Gridley, L.	Onslow, E.
Carrington, L.	Grimston of Westbury, L.	Orr-Ewing, L.
Cathcart, E.	Grimthorpe, L.	Porritt, L.
Chelwood, L.	Hailsham of Saint Marylebone L.	Rankeillour, L.
Chorley, L.		Rathcaven, L.
Clitheroe, L.	Halsbury, E.	Reading, M.
Clwyd, L.	Hanworth, V.	Redesdale, L.
Cowley, E.	Harcourt, V.	Reigate, L.
Craigavon, V.	Hawke, L.	Renwick, L.
Crathorne, L.	Hereford, V.	Robbins, L.
Cullen of Ashbourne, L.	Home of Hirsel, L.	Rochester, L.
Daventry, V.	Hood, V.	St. Aldwyn, E.
de Clifford, L.	Hylton, L.	St. Helens, L.
Denbigh, E.	Hylton-Foster, B.	St. Just, L.
Denham, L. [Teller]	Jessel, L.	Saint Oswald, L.
Derwent, L.	Kemsley, V.	Sandys, L.
Digby, L.	Kinloss, Ly.	Savile, L.
Drogheda, E.	Kinnaird, L.	Scarborough, E.
Drumalbyn, L.	Lauderdale, E.	Seear, B.
Ebbisham, L.	Lindsey and Abingdon, E.	Sempill, Ly.
Effingham, E.	Long, V.	Somers, L.
Ellenborough, L.	Loudoun, C.	Stamp, L.
Elliot of Harwood, B.	Lovat, L.	Strathspey, L.
Elton, L.	Lyell, L.	Swaythling, L.
Emmet of Amberley, B.	Macleod of Borve, B.	Tanlaw, L.
Erroll of Hale, L	Macpherson of Drumochter, L.	Tenby, V.
Erskine of Rerrick, L.	Mansfield, E.	Terrington, L.
Falkland, V.	Maybray-King, L.	Tranmire, L.
Ferrers, E.	Merrivale, L.	Trevelyan, L.
Foot, L.	Mersey, V.	Vernon, L.
Forester, L.	Meston, L.	Verulam, E.
Fraser of Kilmorack, L.	Monck, V.	Vickers, B.
Gainford, L.	Monckton of Brenchley, V.	Vivian, L.
Garner, L.	Monsell, V.	Ward of North Tyneside, B.
Geoffrey-Lloyd, L.	Monson, L.	Ward of Witley, V.
George-Brown, L.	Mowbray and Stourton, L. [Teller]	Wigoder, L.
Gibson, L.		Windlesham, L.
Gisborough, L.	Moyne, L.	Wolverton, L.
Glendevon, L.	Nairne, Ly.	Young B.
NOT-CONTENTS
Ardwick, L.	Gordon-Walker, L.	Pargiter, L.
Bacon, B.	Greene of Harrow Weald, L.	Peddie, L.
Balogh, L.	Hale, L.	Pitt of Hampstead, L.
Birk, B.	Harris of Greenwich, L.	Popplewell, L.
Brockway, L.	Henderson, L.	Rusholme, L.
Bruce of Donington, L.	Jacques, L. [Teller]	Samuel, V.
Buckinghamshire, E.	Janner, L.	Shepherd L. (L. Privy Seal)
Burton of Coventry, B.	Leatherland, L.	Shinwell, L.
Caradon, L.	Lee of Newton, L.	Stewart of Alvechurch, B.
Castle, L.	Llewelyn-Davies of Hastoe, B. [Teller]	Strabolgi, L.
Champion, L.		Summerskill, B.
Crook, L.	Lloyd of Hampstead, L.	Taylor of Mansfield, L.
Davies of Leek, L.	Lovell-Davis, L.	Wallace of Coslany, L.
Douglass of Cleveland, L.	McLeavy, L.	White, B.
Elwyn-Jones, L. (L. Chancellor)	Maelor, L.	Winterbottom, L.
Evans of Hungershall, L.	Melchett, L.	Wootton of Abinger, B.
Feather, L.	Noel-Buxton, L.	Wynne-Jones, L.
Gaitskell, B.	Pannell, L.
Resolved in the affirmative, and Amendment agreed to accordingly

On Question, Amendment agreed to.

4.17 p.m.

Lord HAILSHAM of SAINT MARYLEBONE moved Amendment No. 8: After Clause 1, insert the following new clause:

Applications by persons surcharged

(" Any person who has been surcharged in respect of an item of account or a loss or deficiency attributable to a council's failure to implement the Housing Finance Act 1972 may make an application to the court in respect of the said surcharge and the provisions of section (Repayment and disqualification) above shall apply to the said application and to the powers and duties of the court in respect of it as if it were an application made under that section in respect of a certificate to which that section applies. ")

The noble and learned Lord said: The purpose of this Amendment is to remove a quite extraordinary anomaly from the Government Bill, and again the purpose of the Amendment is to enlarge the relief granted by the Bill. For some reason which I think I can understand but of which I do not approve, the Government Bill as it stands draws a distinction between those councillors who have deliberately defied the law and in respect of whom the auditors by reason of their expedition have made a surcharge, and those councillors who have defied the law but in respect of whom the auditors have been less expeditious, so that although their offence may have taken place as early or earlier than the first class they have not yet been surcharged. The axe falls on the first group and not on the second, although there can be no kind of proper distinction between them. We do not know who else may come into the category of those who will be or would have been surcharged in the future, but in my judgment, at least—and I invite the Committee to agree with me—the mere fact that the district auditors have not completed the work in one case offers no ground for treating more severely those in respect of whom the district auditors have been more expeditious.

The purpose of this Amendment is to put both classes exactly on the same footing, placing those upon whom the axe has already fallen in exactly the same position as those upon whom the axe has not yet fallen, even if it subsequently does. If I ask myself why the Government deliberately introduced this anomaly into the Bill—and I would say in justice, between two different groups. I see no followers—the only possible answer is that it was intended to act as a sort of a fig leaf to conceal the nakedness of the Attorney-General or, perhaps in this House, of the noble and learned Lord, the Lord Chancellor, so as to enable them to pretend that the Bill is not the constitutional outrage it undoubtedly is in its present form. As I pointed out on Second Reading, this anomaly manifestly fails in its object. One of the many advantages of the new clause which we have just passed, giving power of dispensation to the courts, is that it enables us to treat all offenders on the same footing, and not to make this absurd distinction between those in respect of whom the audit has been expeditious, and those in respect of whom it has not been expeditious. I beg to move.

Lord SHEPHERD

Once again, as on the first Amendment, nobody would deny that there is a degree of agreement between the noble and learned Lord, Lord Hailsham, and myself. I presume that the noble and learned Lord when moving Amendment No. 8 would be agreeable to speak to Amendment No. 17, which is to delete Clause 4, because Clause 4 as it is now in the Bill would clearly be out of place if Amendment No. 8 were passed. The burden of my case on Second Reading was that if one were dealing in a mitigating way with the 400 councillors, it would be right to be mitigating to the Clay Cross councillors who had been surcharged merely because of the extraordinary audit that had been required by the Secretary of State of the day.

Of course, the difference is that as the Clay Cross councillors had been surcharged, had gone to the courts, had appealed and had had their appeal rejected, we thought it wrong that legislation should be introduced under which they were to be relieved of a burden which the courts had laid upon them. I think the wrath of the noble and learned Lord would be very much greater if we had introduced a clause in the Bill which would have relieved the Clay Cross councillors both of the disqualification and of the responsibility for the surcharge. That is the reason why Clause 4 has been so drafted.

For the same reason I resist the deletion of Clause 4, because I believe that on grounds of consistency it ought to remain in the Bill. I believe that Parliament was not saying that the Clay Cross councillors should be treated differently from the other 400 councillors. There are many attractions to this, but I am certain that the noble and learned Lord must have considered that what he is proposing here is that the Clay Cross councillors, having been surcharged, having gone to the High Court, having had their case heard by the Court and having had it rejected, should now be allowed to go to a lower court and have the whole thing re-examined. Of course, Parliament can do what it wishes, but I wonder whether this is right. I should have thought, if one was having retrospective legislation, that one ought to have better grounds when dealing with this matter, particularly in the light of what the noble Lord, Lord Wigoder, said on an earlier Amendment.

I cannot accept Amendment No. 8. Although it goes some way to meeting some of the fears expressed about the amount surcharged on the Clay Cross councillors, I believe it is far too close in principle to Amendment No. 1 against which we voted. As I have said, we feel that the best way of dealing with this matter is to wipe clean the slate, both in terms of the 400 and in terms of the Clay Cross councillors, only so far as disqualification is concerned, but that the surcharge should remain and should be due from them. I acknowledge that the noble and learned Lord has gone some way in a constructive manner on this matter, but I could not ask my noble friends to support this Amendment if it were to be taken to a Division.

Lord HAILSHAM of SAINT MARYLEBONE

Since I have had such a frosty welcome, may I just answer the point of the noble Lord, Lord Shepherd, and then take the course which I shall presently disclose. First of all, it is nonsense to pretend that there would be nothing new for the court to discuss. What happened to these unfortunate characters is that either they did not appeal, or their appeals were dismissed under the existing law. We have just passed an enabling law to enable fresh grounds for mitigating the penalty to be allowed. However, the noble Lord considers that my Amendment infringes the law. Therefore, I beg leave to withdraw it.

Amendment, by leave, withdrawn.

Clause 2 [Recovery of certified amounts]:

4.25 p.m.

Lord SHEPHERD moved Amendment No. 9: Page 2, line 34, leave out from (" at ") to end of line 35 and insert (" the appropriate rate ").

The noble Lord said: I shall deal with the noble and learned Lord after Committee ! I beg to move Amendment No. 9 and with the leave of the Committee I shall speak also to Amendments Nos. 10 and 14. The purpose of these Amendments to Clauses 2 and 3 is to provide some flexibility in the commencement of the recovery period. As now drafted, the Bill requires this period to commence from the beginning of the financial year, following the date when the certificate becomes effective. If that date should occur in, say, March, it would be practically impossible for an authority either to make the appropriate rent increases from April—the normal time for putting up rents in most areas—because of the statutory four weeks' notice, or to charge it to the rates, as by then the authority will have fixed its rate for the coming year. While it is possible to defer a rent increase or to make special additional increases—or to levy a supplementary rate, neither of those courses would be welcomed by the local authorities.

Accordingly, we consider that this is a real defect in the Bill which should be corrected. As the estimated recovery amounts are so small outside Clay Cross, if spread over five years, we consider that this change warrants an automatic extension of the normal five-year recovery period. There is also provision in the Bill to extend the recovery period in exceptional circumstances. This is an Amendment for flexibility. I believe it has been welcomed by the Association of Local Authorities. I beg to move.

Lord HAILSHAM of SAINT MARYLEBONE

The noble Lord, Lord Shepherd, was courteous enough to give me prior notice that he was going, to move this Amendment. I do not profess to understand it all very well—I am quite sure that the Committee may not—but, true to the spirit of sweet reasonableness which characterises my every action, I suggest that we should agree to these Amendments.

Lord SHEPHERD: I beg to move Amendment No. 10:

Amendment moved—

Page 2, line 36, after ("above") insert— (" "the appropriate rate "means a rate of not less than one-fifth of the sum which it falls to the council to recover by the end of each year of the recovery period, except that, if the effective date of the rent loss certificate falls in February or March, the council shall not be obliged to recover one-fifth by the end of the first year; and ").—(Lord Shepherd.)

Lord HAILSHAM of SAINT MARYLEBONE moved Amendment No. 11:

Page 2, line 39, leave out subsection (3) and insert— ("( ) A council shall perform their duty under this section by a general increase of the rents of those of their housing revenue account dwellings in the part or parts of their area to which the certificate relates; and a council may mate any such increase notwithstanding section 111 of the Housing Act 1957 (charges for local authority's houses).").

The noble and learned Lord said: Amendment No. 11 is designed to make the point which was raised, I think from the Liberal Benches, on Second Reading, in order to ensure that the burden should be solely borne on the rent bill of those areas which benefited from the original default. The amounts payable over five years will be relatively small; indeed, perhaps trivial. Any tenants who find it hard to pay will be entitled to rebates, which we provided in the Housing Finance Act; rebates which the Labour Government, rather fraudulently, chose to retain when they purported to repeal the Act. Incidentally, part of the defiance of the law of which the Clay Cross councillors were guilty consisted in refusing to apply these rebates. So much for their claim to be actuated by good feeling for the poor. I beg to move.

Lord SHEPHERD

The only issue between the noble and learned Lord and myself is whether this should be decided by the local authority concerned. The Bill provides that if the local authority wishes it can increase rents over all the local authority houses within its area, or it can decide that the amount shall be recoverable solely within the area where the offence took place. As I say, the difference between the noble and learned Lord and myself is a matter of judgment. I take the view, and so do the Government, that local authorities are elected, that they have responsibilities to all the people within their area, that they should not be seen as mere agents of Central Government. We feel that they should be given this opportunity to decide how this amount of money should be recovered. I suggest that it is far better to leave it to the local authority, to local government which is responsible to the local electorate, to decide how this matter shall be dealt with. I hope the noble and learned Lord will see the power and persuasion of my few words.

Lord WIGODER

The difficulty one feels about leaving this matter to the discretion of local authorities, is that at least one local authority in Derbyshire has already indicated that if it has the power under this Bill it will seek to recover the deficit not from the area in which it occurred, but from the successor local government area which is very much wider. That means that people who had no part in electing the councillors originally, and who could not conceivably have gained anything from the misdeeds of those councillors, will have to contribute to the deficit. In those circumstances, to leave the matter to the discretion of the local authority may be a trifle rash at this stage, and it may be wiser to limit it in the way suggested by the Amendment.

Lord SHEPHERD

The noble Lord, Lord Wigoder, will agree that the larger authority to which he refers will be the authorising body. It cannot be dictated to by a lower authority. The authority which the noble Lord has in mind is responsible to the electorate of the whole area. If it feels that this is not popular, that it cannot answer to its electorate, then it will take a different view from the one expressed by the noble Lord. The issue on this Amendment is solely whether to leave this to the local authorities, who are responsible men and women, by and large, to decide. That is the difference between us, no other.

Lord HAILSHAM of SAINT MARYLEBONE

The noble Lord's approach to this matter made me gasp and stretch my eyes. After all, what we are dealing with is default by local authorities largely in areas where what is operating in local government is virtually a one-Party state. I developed this point in relation to Clay Cross and Derbyshire in the course of my Second Reading speech. The noble Lord now has the nerve to say that we must leave it to the local authorities to decide whether the

people who benefited by the original default must bear the burden, or somebody else who in no way benefited. I am content to leave it at that, and I shall press this Amendment.

4.35 p.m.

On Question, Whether the said Amendment (No. 11) shall be agreed to?

Their Lordships divided: Contents, 132; Not-Contents, 48.

CONTENTS
Aberdare, L.	Gainford, L.	Northchurch, B.
Airedale, L.	Geoffrey-Lloyd, L.	Norwich, V.
Aldenham, L.	George-Brown, L.	Ogmore, L.
Allerton, L.	Gibson, L.	O'Hagan, L.
Alport, L.	Gisborough, L.	O'Neill of the Maine, L.
Amherst, L.	Glendevon, L.	Onslow, E.
Amulree, L.	Gore-Booth, L.	Orr-Ewing, L.
Astor, V.	Goschen, V.	Porritt, L.
Balfour of Inchrye, L.	Gowrie, E.	Rankeillour, L.
Belstead, L.	Grantchester, L.	Reading, M.
Berkeley, B.	Greenway, L.	Redesdale, L.
Boothby, L.	Grenfell, L.	Reigate, L.
Bridgeman, V.	Gridley, L.	Renwick, L.
Byers, L.	Grimston of Westbury, L.	Robbins, L.
Caccia, L.	Hailsham of Saint Marylebone, L.	Roberthall, L.
Campbell, of Croy, L.		Rochester, L.
Carrington, L.	Halsbury, E.	St. Aldwyn, E.
Cathcart, E.	Hanworth, V.	St. Helens, L.
Chelwood, L.	Harcourt, V.	Saint Oswald, L.
Chorley, L.	Hawke, L.	Sandys, L.
Clitheroe, L.	Hereford, V.	Savile, L.
Clwyd, L.	Home of the Hirsel, L.	Scarborough, E.
Cowley, E.	Hood, V.	Selkirk, E.
Craigavon, V.	Howe, E.	Sempill, Ly.
Crathorne, L.	Hylton, L.	Somers, L.
Cullen of Ashbourne, L.	Hylton-Foster, B.	Stamp, L.
Daventry, V.	Kemsley, V.	Strange, L.
de Clifford, L.	Kinnaird, L.	Strathspey, L.
De Ramsey, L.	Lauderdale, E.	Swaythhng, L.
Denbigh, E.	Lindsey and Abingdon, E.	Tanlaw, L.
Denham, L. [Teller.]	Long, V.	Tenby, V.
Derwent, L.	Loudoun, C.	Terrington, L.
Drogheda, E.	Lyell, L.	Tranmire, L.
Drumalbyn, L.	Macleod of Borve, B.	Trevelyan, L.
Ebbisham, L.	Mansfield, E.	Vernon, L.
Effingham, E.	Merrivale, L.	Verulam, E.
Ellenborough, L.	Mersey, V.	Vickers B.
Elliot of Harwood, B.	Meston, L.	Vivian, L.
Elton, L.	Monck, V.	Wakefield of Kendal, L.
Emmet of Amberley, B.	Monckton of Brenchley, V.	Ward of Witley, V.
Erskine of Rerrick, L.	Monsell, V.	Wigoder, L.
Ferrers, E.	Mowbray and Stourton, L. [Teller]	Windlesnam, L.
Foot L.		Wolverton, L.
Forester, L.	Nairne, Ly.	Young, B.
Fraser of Kilmorack, L.	Newall, L.
NOT-CONTENTS
Ardwick, L.	Champion, L.	Hale, L.
Bacon, B.	Davies of Leek, L.	Harris of Greenwich, L.
Balogh L.	Douglas of Barloch, L.	Henderson, L.
Birk, B.	Douglass of Cleveland, L.	Jacques, L.
Blyton, L.	Elwyn-Jones, L. (L. Chancellor.)	Janner, L.
Brockway, L.	Feather, L.	Leatherland, L.
Bruce of Donington, L.	Gaitskell, B.	Lee of Newton, L.
Buckinghamshire, E.	Gordon-Walker, L.	Llewelyn-Davies of Hastoe, B.
Castle, L.	Greene of Harrow Weald, L.	Lovell-Davis, L. [Teller.]
McLeavy, L.	Popplewell, L.	Summerskill, B.
Maelor, L.	Rusholme, L.	Taylor of Mansfield, L.
Melchett, L. [Teller.]	Samuel, V.	Wallace of Coslany, L.
Pacet of Northampton, L.	Shepherd, L. (L. Privy Seal.)	White, B.
Pannell, L.	Shinwell, L.	Winterbottom, L.
Peddie, L.	Stewart of Alvechurch, B.	Wootton of Abinger, L.
Pitt of Hampstead, L.	Strabolgi, L.	Wynne-Jones, L.

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.

4.43 p.m.

Lord HAILSHAM of SAINT MARYLEBONE

I beg to move Amendment No. 12. It is consequential on the new clause.

Amendment moved— Page 3, line 19, after (" account of ") insert (" (a) ").—(Lord Hailsham of Saint Marylebone.)

Lord HAILSHAM of SAINT MARYLEBONE

I beg to move Amendment No. 13. It is also consequential.

Amendment moved—

Page 3, line 21, at end insert— ("; and (b) any sum or sums which the court may order to be paid to that council ").—(Lord Hailsham of Saint Marylebone.)

Clause 2, as amended, agreed to.

Clause 3 [Power to charge rates]:

Lord SHEPHERD

I beg to move Amendment No. 14. I spoke to this Amendment when moving Amendment No. 9.

Amendment moved— Page 3, line 33, leave out from (" in ") to end of line 34 and insert (" appropriate annual portions ").—(Lord Shepherd.)

Lord SHEPHERD

I beg to move Amendment No. 15. This is consequential to Amendments Nos. 9, 10 and 14, which have already been put into the Bill.

Amendment moved—

Page 3, line 37, at end insert— ("( ) In subsection (1) above "appropriate annual portions" means annual portions each of which is not less than one-fifth of the sum charged to the general rate fund, except that if the effective date of the rent loss certificate falls in February or March, the council shall not be obliged to charge any amount in respect of the year commencing on the 1st April following the effective date.")—(Lord Shepherd.)

On Question, Whether Clause 3, as amended, shall stand part of the Bill?

4.45 p.m.

Lord HAILSHAM of SAINT MARYLEBONE

I am moving in the negative, since Amendment No. 16, which is to leave out Clause 3, in our procedure means that I am opposing the Question, Whether the clause stand part of the Bill. In other words, I am proposing that we should say "Not-Content "to this Question. In my speech on Second Reading I outlined the necessity for this improvement to the Bill which would remove from the local authority the option to recover the consequences of the defaults from the rates. The case for this, if anything, is even stronger than that which supported the Amendment in relation to areas of tenants which we have just passed.

As I was taking up a great deal of the time of the House on Second Reading, I did not make full use of the article of Mr. Mitchell in the Political Quarterly which I had with me, but that article in effect made it quite clear that, quite apart from the deliberate defiance of the Housing Finance Act with which this measure is particularly concerned, the Clay Cross Council had been running its affairs not as a democracy—and I think I am quoting almost verbatim—but as "government of the tenants by the tenants, for the tenants, at the expense of the ratepayers." This is not difficult for a dishonest local authority. By "dishonest" I mean dishonest politically and not simply dishonest financially, having regard to the low polls in local elections and the way in which you can buy votes by operating favoured portions of the community who can easily be canvassed, in this case the tenants. In this case they did the same operation outside the scope of this Bill in respect of their employees.

When you have done this you are free to operate, as Clay Cross did, your" little Manor "as a rotten borough or, to use Mr. Bernard Levin's phrase, a miniature Soviet ". It really would be coming a bit far if they were now to be allowed to put on to the rates what they have already extracted from them for the benefit of the tenants as a result of their defiance. In our view this is not a matter which could be left to the disposition of the local authorities, old or new, where these one-Party Governments exist—which is virtually the case in all of the main places where this Bill will operate.

It may be that at Report we shall have to put in some consequential Amendments, because I have not dealt with the situation where the total to be recovered is not recovered at the end of five years from the rents, but I think this is highly unlikely as an event to happen owing to the minute increases in rents which the noble Lord the Leader of the House gave in our Second Reading debate. But if the Government take a different view it will be open to them to provide an additional Amendment on Report. If they do not like to sully their hands with anything consequential on what I have done, they can provide me with the draft of such an Amendment which I shall be happy to move myself. In the meantime, I oppose the standing part of this clause.

4.50 p.m.

Lord SHEPHERD

I am sorry that the noble and learned Lord takes that view in the light of the friendly way in which we have conducted this Committee stage so far. It seems that the noble and learned Lord forgets when he relies so much on Clay Cross that the Clay Cross Council has disappeared. In many cases one is now dealing with very different authorities, and I know that when he refers to a one-Party council he has very much in mind Clay Cross. But there are other all-Party local authorities, both Conservative and Labour, who behave quite impeccably and it is wrong therefore to cast the sort of aspersions that the noble and learned Lord has cast this afternoon.

The Bill does not compel any local authority to recover these amounts by rate increases. We believe that in this matter the local authority should have the freedom to choose the solution appropriate for its own area, and Clause 3 provides no easy option. It requires that if the rates are to be increased in order to recover this loss there has to be a specially convened meeting of the full council, and naturally this will mean the maximum publicity and the maximum opportunity for ratepayers to express their views.

Nor does the clause let tenants go scot-free. Listening to the noble and learned Lord one would imagine that no council house tenant pays rates. They are all ratepayers. It has been said that the alternatives provided by this clause would allow financial penalties to fall on those who in no way benefited from the council's defiance of the Act, but although it was the tenants of the defaulting area who paid less rent as a result of late implementation, I remind the noble and learned Lord that it was the general body of ratepayers there who elected the defaulting council, and councillors make their decisions as the elected representatives of the ratepayers.

The real issue here is like the one on the previous Amendment on which we voted. We on this side of the Committee put full confidence in the local authorities concerned. It is clear that the noble and learned Lord is not prepared to entrust this responsibility to the elected representatives. That is the deep divide between us. If the noble and learned Lord wishes to vote against this clause he does so in the knowledge that he is voting against the acknowledged responsibility of local elected representatives.

Lord HAILSHAM of SAINT MARYLEBONE

With great respect to the Leader of the House, I do not think that that argument is a worthy one. I was not casting aspersions on any other local council than Clay Cross. I was proposing this Amendment on a principle of justice: namely, that this Bill is designed to remove from certain councillors a personal obligation which they themselves incurred. The only other people who ought to bear that burden are those who benefited from the original default. This is a pure question of principle and nothing whatever to do with responsibility in local government. I shall press this Amendment.

On Question, Whether Clause 3, as amended, shall stand part of the Bill?

Their Lordships divided: Contents 52; Not-Contents, 140.

CONTENTS
Ardwick, L.	George-Brown, L.	Melchett, L. [Teller.]
Bacon, B.	Gordon-Walker, L.	Morris of Grasmere, L.
Balogh, L.	Greene of Harrow Weald, L.	Paget of Northampton, L.
Birk, B.	Greenwood of Rossendale, L.	Pannell, L.
Blyton, L.	Hale, L.	Pitt of Hampstead, L.
Brockway, L.	Harris of Greenwich, L.	Popplewell, L.
Bruce of Donington, L.	Henderson, L.	Rusholme, L.
Burton of Coventry, B.	Hughes, L.	Shepherd, L. (L. Privy Seal.)
Castle, L.	Jacques, L.	Shinwell, L.
Champion, L.	Janner, L.	Stewart of Alvechurch, B.
Davies of Leek, L.	Leatherland, L.	Strabolgi, L.
De Ramsey, L.	Lee of Newton, L.	Summerskill, B.
Douglas of Barloch, L.	Llewclyn-Davies of Hastoe, B.	Taylor of Mansfield, L.
Douglass of Cleveland, L.	Lloyd of Hampstead, L.	Wallace of Coslany, L .
Elwyn-Jones, L. (L. Chancellor.)	Lovell-Davis, L. [Teller.]	White, B.
	McLeavy, L.	Wootton of Abinger, B.
Feather, L.	Maelor, L.	Wynne-Jones, L.
Gaitskell, B.	Mais, L.

NOT CONTENTS
Aberdare, L.	Franks, L.	[Teller.]
Airedale, L.	Fraser of Kilmorack, L.	Nairne, Ly
Aldenham, L.	Gainsford, L.	Newall, L.
Allerton, L.	Garner, L.	Northchurch, B.
Alport, L.	Gisborough, L.	Norwich, V.
Amherst, E.	Gladwyn, L.	Ogmore, L.
Amulree, L.	Glendevon, L.	O'Hagan, L.
Astor, V.	Gore-Booth, L.	O'Neill of the Maine, L.
Auckland, L.	Goschen, V.	Onslow, E.
Balfour of Inchrye, L.	Gowrie, E.	Orr-Ewing, L.
Beaumont of Whitley, L.	Grantchester, L.	Platt, L.
Belstead, L.	Greenway, L.	Rankeillour, L.
Berkeley, B.	Grenfell, L.	Reading, M.
Bledisloe, V.	Gridley, L.	Redesdale, L.
Boothby, L.	Grimston of Westbury, L.	Reigate, L.
Bridgeman, V.	Hailsham of Saint Marylebone, L.	Renwick, L.
Byers, L.		Roberthall, L.
Caccia, L.	Halsbury, E.	Rochester, L.
Campbell of Croy, L.	Hanworth, V.	St. Aldwyn, E.
Carrington, L.	Harcourt, V.	St. Helens, L.
Cathcart, E.	Hawke, L.	St. Just, L.
Chelwood, L.	Hereford, V.	Saint Oswald, L.
Clitheroe, L.	Home of the Hirsel, L.	Sandford, L.
Cowley, E.	Hood, V.	Sandys, L.
Crathorne, L,	Hornsby-Smith, B.	Savile, L.
Crawshaw, L.	Howe, E.	Scarborough, E.
Cullen of Ashbourne, L.	Hylton, L.	Seear, B.
Daventry, V.	Hylton-Forster, B.	Selkirk, E.
de Clifford, L.	Ironside, L.	Sempill, Ly.
Denbigh, E.	Kemsley, V.	Somers, L.
Denham, L. [Teller.]	Kinnaird, L.	Stamp, L.
Derwent, L.	Lauderdale, E.	Strange, L.
Drogheda, E.	Lindsey and Abingdon, E.	Strathspey, L.
Drumalbyn, L.	Long, V.	Swaythling, L.
Ebbisham, L.	Loudoun, C.	Tanlaw, L.
Eccles, V.	Lyell, L.	Tenby, V.
Effingham, E.	Macleod of Borve, B.	Terrington, L.
Ellenborough, L.	Mansfield, E.	Teviot, L.
Elliot of Harwood, B.	Maybray-King, L.	Tranmire, L.
Elton, L.	Merrivale, L.	Trevelyan, L.
Emmet of Amberley, B.	Mersey, V.	Vernon, L.
Erskine of Rerrick, L.	Monck, V.	Verulam, E.
Falkland, V.	Monckton of Brenchley, V.	Vickers, B.
Ferrers, E.	Monsell, V.	Vivian, L.
Foot, L.	Monson, L.	Wakefield of Kendal, L.
Forester, L.	Mowbray and Stourton, L.

Ward of Whitley, V.	Windlesham, L.	Young, B.
Wigoder, L.	Wolverton, L.

Resolved in the negative, and Clause 3 disagreed to accordingly.

5.4 p.m.

Clause 4 [Termination of disqualifications for failure to implement Housing Finance Act 1972]:

On Question, Whether Clause 4 shall stand part of the Bill?

Lord HAILSHAM of SAINT MARYLEBONE

This rather nasty little clause removes the disqualification from the Clay Cross councillors in respect of their defiance of the Housing Finance Act ex post facto, for they are already disqualified. The noble Lord, Lord Shepherd. suggested, when he rejected with contumely my proposed new Clause 2—which I accordingly withdrew—that in order to be consistent we must not requalify those who have been disqualified, or rather he applied that to the financial penalty but not to the disqualification. So be it! Let Clause 4 be omitted. It is a farce as well as an outrage that it should be proposed at all, because, as the noble Lord well knows and as he disclosed in his Second Reading speech, these councillors are disqualified anyway because of the miniature Soviet which they have been running for years, first against the Labour Government, then against the Conservative Government and possibly even latterly against the new Labour Government, although I am not sure that they survived long enough. So this clause is really to ask us to violate our consciences for nothing. I propose that the clause be left out.

Lord SHEPHERD

I rest my case with complete confidence that the clause should remain in the Bill on what the noble and learned Lord, Lord Hailsham, made out in regard to Amendment No. 8. The Committee will remember that, against the advice of the Government, we have passed a new clause which provides that surcharges and disqualifications shall be matters to be considered by the court. The noble and learned Lord then moved Amendment No. 8, which provided that those who had already been surcharged should be treated in an identical way to those under the new clause which is to be inserted after Clause 1. The Gov- ernment have always taken the view that Clause 4 ought to be included on grounds of consistency.

I do not know what another place will do in regard to the earlier Amendments. Therefore I am not sure what it will do about the present clause if we delete it. However, I should just like to say that we have had a good-tempered debate. I have spoken harshly about these particular councillors. They not only acted unreasonably but they took their action well beyond the protest of many of the other councillors who eventually conceded and acknowledged the Housing Finance Act, much as that went against the grain.

I believe that it would be right that Clause 4 should remain in the Bill. I recognise, however, that it has little effect, other than on grounds of consistency, because, as the Committee will know. these councillors have recently been surcharged for a very large sum of money and they have not appealed. Therefore they have not only been surcharged: they are also disqualified for acts outside what they may have done against the Housing Finance Act. I cannot accept the case that has been made by the noble and learned Lord, Lord Hailsham. I feel that this is again a matter of judgment. I leave it entirely to the Committee to make up its mind, but I suggest that, on grounds of consistency, the clause ought to remain in the Bill.

Baroness BURTON of COVENTRY

I am sorry, but I am sure that my noble friend the Leader of the House realises that many of us on this side of the House have been placed in very great difficulties today. I feel that it is quite impossible to support the clause. I have not been happy about some of the other decisions, but it seems to me that the present clause is not only a question of differing upon political matters but is a matter of conscience. I truly believe that the clause is morally wrong, and if one believes that it is not enough merely to abstain.

I am sorry to add to the burdens of my noble friend the Leader of the House, and I am certainly not the spokesman for those on this side of the Committee who think as I do, but what is worrying me very much—and this has been referred to earlier—is, if I may put it colloquially, that what is sauce for the goose should be sauce for the gander. I am dismayed at the thought that Parliament should be asked to condone the breaking of the law. As a non-legal person, I am not concerned with whether it is a good law or a bad law. But if Parliament is asked to condone the breaking of it, then we are in very grave danger.

Furthermore, the Division lists will indicate that quite a number of us on this side of the Committee are unhappy about this matter. The problem is how far does one go, and does loyalty to one's Party take precedence over everything else? Where conscience is concerned, it just cannot. This is a wrong thing that we are being asked to do. I hope that my noble friend the Leader of the House will understand, but I regret that if the matter is put to the vote I shall support the deletion of Clause 4.

5.10 p.m.

Lord SHINWELL

I recognise that my noble friend Lady Burton of Coventry holds very genuine convictions about what happened at Clay Cross, and she is not peculiar in this respect. It was, on the whole, a regrettable episode. But, in my opinion, what I have witnessed in the course of the Committee stage this afternoon more than justifies supporting the Government. I shall tell the Committee why. With regard to what happened at Clay Cross, as I ventured to observe in the course of a few remarks this afternoon, I remain neutral; I neither condemn nor condone. I know that that is not a very sound geographical position to adopt, but I do so because it seems to me that no matter how regrettable, unfortunate and mistaken the episode was, a point is reached when it is better to let bygones be bygones. In my judgment, the Clay Cross councillors have been taught a salutary lesson. Any condoning in this Bill of their offence can never erase the unfortunate incident, nor how they must feel about it. After all, they did not receive unqualified support from the Labour movement in the United Kingdom. They may have expected it. If they did, their expectations were not realised.

But I come back to the point I have just mentioned; namely, what I have witnessed this afternoon. It was like the class war. There is a great deal of talk now about consensus, coalitions, coming together, erasing our political differences in the interests of our country. Those are fine, noble, unqualified sentiments with which I happen largely to agree. I wish it could be so. Indeed, on more than one occasion in the course of our debates, when Mr. Heath was Prime Minister and subsequently when Mr. Wilson became Prime Minister, I ventured to make suggestions of a consensus character. They were ignored, but that often happens. I wish it had not been so. Other people have picked up the idea and claimed credit for it. Any of us can claim credit for it, if our expectations are fulfilled. Unfortunately, that has not been so and we are now in a very unhappy economic and political situation which, whether we like it or not—whatever side we happen to be on—is regrettable. Whatever our differences may be, we are all fundamentally concerned about the welfare and the future of our country. I know that that is a cliché, but sometimes it is essential to indulge in clichés in order to remind ourselves of our traditions, our principles, and of what we believe is best in the interests of our country.

It would have been far better this afternoon—and I say this to the noble and learned Lord, Lord Hailsham of Saint Marylebone—if some compassion had been manifest; if there had been some understanding; and if he had sought to probe into the sentiments of those Clay Cross councillors. Most of them are unemployed and in an impoverished area. They believed that they were doing what was right in the interests of the population. A little more compassion would have been more useful and would have been more like the temper—the temper of consensus and coming together—that some people are trying to create in this country.

I have heard the noble and learned Lord, Lord Hailsham, on other matters and in another place, expressing strong opinions, and sometimes expressing opinions which were compassionate in an unqualified degree, for which he deserved credit. However, I hope he will forgive me for using language of severity—and there is nothing personal in this; it is just how one feels. But in this matter of the Clay Cross councillors he has been vicious, venomous, splenetic, biased, prejudiced and bigoted. I know that he will not like that latter term—bigoted—but I believe that what I am saying is right in this context. Generally, he is a man of humanity, compassion and understanding, but that has vanished. What are we left with—a victory? It remains to be seen. Another place will have some views to express on this matter. So what has the noble and learned Lord gained by it? Merely to be able to demonstrate the strength, influence and authority of the Conservative Opposition, backed, I regret to say, by Members of the Liberal Party from whom one would have expected better—

Lord BYERS

May I ask the noble Lord, if he is determined to let bygones be bygones, how does he propose to get respect for the rule of law?

Lord SHINWELL

I should be the last person in the world to offer any objection, opposition, or impediment to the operation of the rule of law. I recognise that it is impossible to have a civilised existence in a civilised country without the acceptance of the rule of law. That is obvious. Was it possible for me to say other than what I have just said? Of course not ! I would have condemned myself. That is my answer. But there are occasions when the exception is more important than the rule. I am no intellectual, no great scholar, but I have read of the history of this country over the centuries. I have read of its political history, its industrial history, its social history and—perhaps the noble and learned Lord, Lord Hailsham, will believe this—even its philosophical history, including metaphysics galore. I understand it. I have read of many incidents. I have learned of many episodes when progress would have been impeded in our country if it had not been for the courage, fortitude, endurance and sacrifice of some great men, many of whom went to the stake clinging to their principles. I have read it all. I have admired them; I should like to be like them, although I can never hope to be.

I regret what has happened this afternoon. I wish it had been otherwise and that a little compassion and understanding and sentiment of the right kind had been manifest. So I shall support the Government. But let me qualify what I have just said about supporting the Government. There are many occasions when I feel much more like condemning the Government than supporting them. Indeed, sometimes—and I hope your Lordships will forgive this personal note; I am not speaking in any sense of egotism—if it were not for the fact that I have been a Member of the independent Labour Party for seventy-two years I could almost resign from the Party because of many incidents that have occurred, and in particular the omissions which are even more fatal than the commissions. But if it is of any use to my noble friend the Leader of the House I am supporting the Government. Not that I expect that that decision will receive any high commendation from noble Lords on the other side of the House—but we shall just take what is coming to us.

Lord PAGET of NORTHAMPTON

I was just a little surprised to hear from the Liberal Benches unqualified support for the rule of law. I certainly would think that a number of the great heroes of Liberalism have been precisely those who knew the occasions when they should refute the rule of unjust laws—Thomas Jefferson, George Washington; one could make a very long list. But I do not think this clause comes anywhere near that at all.

I spent many years representing the constituency of a great iconoclast, Thomas Bradlaugh. Thomas Bradlaugh was disqualified, disenfranchised by the House, and indeed by the laws which the House made; and it made him—and I do not use this phrase in a pejorative sense at all—an immensely successful agitator. I do not think half of us would have heard of Thomas Bradlaugh had it not been for the attempt to disenfranchise him and disqualify him from being a democratic representative. These Clay Cross councillors—again I use it in no pejorative sense—are agitators, and to provide agitators with the kind of opportunity with which we provided Bradlaugh is unwise. What happens when they get themselves elected in defiance of disqualification? I do not know. What happens when electors refuse to recognise people who have been elected, contrary to their majority vote and because they want to disqualify them? One is asking for a lot of trouble.

This is not a question of principle at all; it is a question of convenience. You are inviting a lot of inconvenience if you leave grievances hanging around, available for display and exploitation by people who want to exploit them and people who want to use them in their education. I hope that on second thoughts the noble and learned Lord will feel that his opposition to this clause is indiscreet.

5.25 p.m.

Lord HAILSHAM of SAINT MARYLEBONE

I had assumed from what the noble Lord, Lord Shepherd, said on Second Reading that he would accept this Amendment, and I am rather surprised that he has not done so. The noble Lord, Lord Paget, who has just resumed his seat, does not seem to realise that the answer to his rhetorical question is rather a simple one. These people are disqualified already. They will remain disqualified because of their defiance of half a dozen other laws, because they have already been surcharged for a sum in excess of £500 and have not appealed against that surcharge. This Bill does nothing whatever to help them. All that this Bill and this nasty little clause does is to remove one disqualification out of a whole sequence of them, so there is no question of their getting elected in spite of this disqualification. The second disqualification is later in time than this one and will last longer. The noble Lord, Lord Paget, should study his facts before he takes up the time of the Committee. I deal now with the noble Lord, Lord Shinwell, who accused me of various vices which I do not think were fully endorsed by the noble Lord, the Leader of the House—

Lord SHEPHERD

Do not bring me in.

Lord HAILSHAM of SAINT MARYLEBONE

—who seemed to be rather more than usually complimentary during the more effective part of this debate. It is perfectly true that earlier in the debate in my new clause, which on his suggestion I withdrew, I offered to give these people a chance of going before the court and taking exactly the same chance as all the other 400 councillors who may have acted unreasonably and against the law. That chance was rejected and now we have to face the fact that these people have been surcharged. The noble Lord says that the surcharge must remain. I proposed to mitigate it, but he would not have it, and the Court of Appeal said that not only were they disqualified but deserved to be disqualified and were unfit to be councillors.

These particular people have been compared by the noble Lords, Lord Shinwell and Lord Paget, to George Washington, and various other martyrs and saints have been brought into this absurd discussion. But I must remind the noble Lord of what they did. They ran a "miniature Soviet "—the words are not mine. They threw out of their council by means of a Party caucus anybody who did not agree with them. Eight out of the original eleven suffered the fate of their consciences, because they were thrown into the outer darkness and their political careers terminated. They sacked any servant of the council who happened to protest that what they were doing was illegal, one in her absence when she was attending a conference. They tampered with the minutes of the council when their chief financial officer said that what they were doing was illegal and that "he was compelled under duress "—and I am quoting—" to acquiesce in what they were doing. "Having tampered with the minutes of their council they went on doing it, not only in respect of the Act with which alone this Bill is concerned, but right across the board of their council's activities.

These are the people whose disqualification we are asked to remove in defiance of our consciences as a gesture of compassion, although we know that it will do them not the slightest bit of good because they are disqualified for all their other misdemeanours and the Government are proposing to do nothing about it. I have heard the time of this House wasted time out of number in the 25 years that I have been a Member of it, but I have never heard such a waste of time as this, and I can only say that if nobody can put up a better case than that I agree with the noble Baroness, Lady Burton.

5.30 p.m.

On Question, Whether Clause 4 shall stand part of the Bill?

The Lordships divided: Contents, 41; Not-Contents, 148.
CONTENTS
Ardwick, L.	Greenwood of Rossendale, L.	Phillips, B.
Balogh, L.	Hale, L.	Pitt of Hampstead, L.
Birk, B.	Harris of Greenwich, L.	Popplewell, L.
Blyton, L.	Hughes, L.	Rusholme, L.
Brockway, L.	Jacques, L. [Teller.]	Shepherd, L. (L. Privy Seal.)
Bruce of Donington, L.	Janner, L.	Shinwell, L.
Castle, L.	Leatherland, L.	Steward of Alvechurch, B.
Champion, L.	Lee of Newton, L.	Strabolgi, L.
Davies of Leek, L.	Llewelyn-Davies of Hastoe, B.	Summerskill, B.
Douglas of Barloch, L.	Lovell-Davis, L. [Teller.]	Taylor of Mansfield, L.
Douglass of Cleveland, L.	McLeavy, L.	Wallace of Coslany, L.
Elywn-Jones, L. (L. Chancellor.)	Melchett, L.	Wootton of Abinger, B.
Feather, L.	Paget of Northampton, L.	Wynne-Jones, L.
Greene of Harrow Weald, L.	Pannell, L.

NOT-CONTENTS
Aberdare, L.	Forester, L.	Norwich, V.
Airedale, L.	Franks, L.	Nugent of Guildford, L.
Aldenham, L.	Fraser of Kilmorack, L.	Ogmore, L.
Allerton, L.	Gainford, L.	O'Hagan, L.
Alport, L.	Guisborough, L.	Onslow, E.
Amherst, E.	Gladwyn, L.	Pender, L.
Amulree, L.	Glendevon, L.	Porritt, L.
Astor, V.	Goschen, V.	Rankeillour, L.
Auckland, L.	Gowrie, E.	Reading, M.
Avebury, L.	Grantchester, L.	Redesdale, L.
Balfour of Inchrye, L.	Greenway, L.	Reigate, L.
Banks, L.	Grenfell, L.	Renwick, L.
Beaumont of Whitley, L.	Gridley, L.	Roberthall, L.
Belstead, L.	Grimston of Westbury, L.	Rochester, L.
Belstead, L.	Grimston of Westbury, L.	Rochester, L.
Berkeley, L.	Hailsham of Saint Marylebone, L.	St. Aldwyn, E.
Beldisloe, L.		St. Helens, L.
Boothby, L.	Halsbury, E.	St. Just, L.
Bridgeman, V.	Hansworth, V.	Sandford, L.
Byers, L.	Hawke, L.	Sandys, L.
Caccia, L.	Hereford, V.	Savile, L.
Campbell of Croy, L.	Home of the Hirsel, L.	Scarborough, E.
Carrington, L.	Hood, V.	Seear, B.
Cathcart, E.	Hornsby-Smith, B.	Selkirk, E.
Chelwood, L.	Howe, E.	Sempill, Ly.
Clitheroe, L.	Hylton, L.	Somers, L.
Colville of Culross, V.	Hylton-Foster, B.	Stamp, L.
Cowley, E.	Ironside, L.	Strange, L.
Crathorne, L.	Kemsley, V.	Strathcona and Mount Royal, L.
Crawshaw, L.	Kinnaird, L.
Cullen of Ashbourne, L.	Lauderdale, E.	Strathspey, L.
Daventry, V.	Lindsey and Abingdon, E.	Swaythling, L.
de Clifford, L.	Long, V.	Tanlaw,
De Ramsey, L.	Loudoun, C.	Tenby, V.
Denbigh, E.	Lucas of Chilworth, L.	Terrington, L.
Denham, L. [Teller.]	Lyell, L.	Teviot, L.
Derwent, L.	Macleod of Borve, B.	Tranmire, L.
Digby, L.	Mancroft, L.	Trevelyan, L.
Drogheda, E.	Mansefild, E.	Vernon, L.
Drumalbyn, L.	Mersey, L.	Verulam, E.
Ebbisham, L.	Meston, L.	Vickers, B.
Eccles, V.	Monck, V.	Vivian, L.
Effingham, E.	Monckton of Brenchley, V.	Wakefield of Kendal, L.
Ellenborough, L.	Monsell, V.	Walston, L.
Elliot of Harwood, B.	Monson, L.	Ward of North Tyneside, B.
Elton, L.	Mowbray and Stourton, L. [Teller.]	Ward of Witley, V.
Emmet of Amberley, B.		Wigoder, L.
Erskine of Rerrick, L.	Nairne, Ly.	Windlesham, L.
Falkland, V.	Newall, L.	Wolverton, L.
Ferrers, E.	Northchurch, B.	Young, B.
Foot, L.

Resolved in the negative, and Clause 4 disagreed to accordingly.

Remaining clauses agreed to.

5.39 p.m.

On Question, Whether the Title shall be agreed to?

Lord HAILSHAM of SAINT MARYLEBONE

May I say a word or two about this? I do not know if the noble Lord, Lord Shepherd, has considered whether what we have done affects the Title of the Bill. I think it does not, and I am so advised, except for one possible thing. Having removed Clause 4, the purpose contained in the Long Title:— to terminate any disqualification for election to a local authority arising from a surcharge … might be considered a supererogation. I do not want to pursue the matter. Perhaps the noble Lord could take a draftsman's advice before going on to the next stage.

Lord SHEPHERD

Without anticipating what another place will do, I suggest that the Title of the Bill be left as it was when the Bill came from another place. Therefore I hope that the Deputy Chairman will merely put the Question, That this be the Title of the Bill.

On Question, Motion agreed to.

House resumed: Bill reported with the Amendments.