HL Deb 16 November 2004 vol 666 cc1419-22

9.5 p.m.

Lord Rooker rose to move, That the draft order laid before the House on 21 July be approved [28th Report from the Joint Committee].

The noble Lord said: My Lords, this order enables a relevant authority in England or a police authority in Wales to provide an indemnity to any of their members or officers out of public funds for personal liability arising from actions or decisions taken by them in the course of their official duties.

The background to the order is that this was an issue raised during the passage of the Local Government Act 2000. There was insufficient time to complete the necessary work during the passage of the Bill and this order-making power was conferred in order to permit the Secretary of State to specify when indemnities may be granted.

In the past there was uncertainty about the extent of the powers of authorities to indemnify their members and officers out of public funds for any personal liability arising from actions or decisions taken by them in the course of their official duties, in particular where individuals incur personal liability for their actions on external bodies. Given the importance that the Government attach to local authorities working in partnership with other bodies, and using their powers in innovative ways in order to ensure delivery of high-quality and cost-effective services, it is important that this matter should be clarified, which is the purpose of the order.

The order was subject to consultation and we received 576 responses. We have made several minor changes both to the proposals and to the order. There were also two more substantial changes relating to the code of conduct investigations and repayment of "upfront" indemnities.

The order applies to members and officers of relevant authorities. This definition is intentionally wide-ranging. We have made provision through regulations to make it absolutely clear that elected mayors are covered by the order. It states that no indemnity may be provided in relation to any action by, or failure to act by, any member or officer which constitutes a criminal offence, or is the result of fraud or other deliberate wrongdoing or recklessness on the part of that member or officer. Negligent actions, provided they meet the tests of not being criminal, fraudulent and so forth, are therefore capable of being covered.

An important feature of the new order is that it is intended to facilitate joint working between authorities and their partners. In relation to the code of conduct investigations, indemnities will be permitted only in circumstances where there is no finding of failure to comply with the code. This position is a change from the proposals consulted on which suggested that authorities would have discretion to provide indemnities where there was a breach of the code, but no action was taken. This provides a very clear dividing line which removes the possibility of accusations of bias, for example, depending on the party allegiances of the member involved.

The order makes clear that the terms on which any indemnity or guarantee is granted must require the repayment of any sums expended in the defence of a case where the defendant is later found guilty of a criminal offence or found to be in breach of the code of conduct. As a result of the responses to the consultation we have made provision in the order for sums expended, but which must be repaid to be recoverable as a civil debt.

I want to make a final point. The order is discretionary; it permits but does not oblige relevant authorities to provide indemnities for a member or officer. I commend the order to the House.

Moved, That the draft order laid before the House on 21 July be approved [28th Report from the Joint Committee].—(Lord Rooker.)

Baroness Hanham

My Lords, I rise briefly to welcome the order. This matter has been outstanding for some time and is something which has worried not only members of local authorities, but also the members of associated bodies. It is excellent that the Government have now brought forward the regulations. They will be well received.

Baroness Hamwee

My Lords, we also welcome the order and I thank the Minister for explaining it. I should like to ask one or two questions.

The first concerns the issue of retrospection. That was dealt with in the debate on the order held in the Commons, but not as extensively as I would have found helpful. Paragraph 1(2) provides for the order to, come into force on the day after that on which it is made". While I accept what the Minister said about discretion, can it apply to an action which is the subject of an indemnity where the action precedes the order? In other words, while the indemnity cannot be given until next week—for the sake of argument—can it relate back? If that is not the case, can the indemnity apply to costs incurred after the date of the order—and, obviously, after the date of the council resolution—even though the event occurred earlier?

As regards those who may be the subject of the indemnity, experience tells us that individuals can become caught up in standards board proceedings or criminal proceedings without being the accused, the subject matter of the proceedings or the complaint, but need to incur costs, such as appropriate legal costs, in order to protect themselves. Will such people subject to council resolutions be covered by an indemnity given pursuant to the order?

I would not make myself popular if I refer to a typo, so I will not do so. That cannot stay in Hansard.

In general terms, we welcome the order. I am sorry that I did not give the Minister notice of my questions. I hope that they are such obvious ones that he will be able to deal with them without problem today.

Lord Rooker

My Lords, I am not sure about the specific answers. Local authorities probably already have general indemnity policies. This is not new ground; it is not a clean sheet of paper. As to the noble Baroness's first question, I suspect that if there are insurance-based policies—there may not be but, generally speaking, I suspect that there will be—the indemnity will depend on the policy.

Local authorities have policies for indemnity in operation now. The order is designed to clarify matters and to be more modern. To that extent, it is not retrospective. In some ways it should not need to be because, although there is some uncertainty about the current process, it is not so unsatisfactory that it requires to be made retrospective. Parliament, of course, does not like retrospective legislation anyway.

Indemnities given by a local authority under previous legislation may still be valid. The order does not knock those out. Once an authority agrees to give an indemnity to officers or members, they are entitled to rely on that indemnity, whether it is for the issues, the standards board or whatever. There are several scenarios.

Essentially, the key thrust is that local authorities are persuaded and encouraged to work across the piece these days far more than they ever did in the past in relation to the police, the health service and other public bodies. I do not know of any cases where someone will be caught out in the sense that they were waiting for the order to come through Parliament. I asked for practical cases but I got only inventions, if you like, possible scenarios of what could or might happen. I am not aware of any case dependent on the order for the renewal of an indemnity. It is not retrospective and so it would not have been worth waiting for.

Baroness Hamwee

My Lords, is the Minister able to answer my second question about third parties? I appreciate that it may be difficult.

Lord Rooker

My Lords, I am sorry. Perhaps the noble Baroness will repeat the question.

Baroness Hamwee

My Lords, it is a question of whether the indemnity can extend to individuals who are not the subject of either criminal proceedings or a standards board complaint but get caught up in the case, feel the need to protect themselves and incur legal expenses in so doing.

Lord Rooker

My Lords, I shall take advice, but I think the answer is no. I do not see why it should. The order is specific to members and officers of authorities, and you are either a member or you are not. You are elected. It covers parish councils, officers and employees of authorities. By definition, one assumes that a third party is employed by someone else. He cannot be employed by an authority otherwise he would be an officer. He should look to his employer or insurance cover for indemnity.

Baroness Hamwee

My Lords, I have in mind also the possibility that the third party may be a member or an officer who is not the subject of a complaint. Given what the Minister has said, that may be a helpful answer.

Lord Rooker

My Lords, I have not got an answer to that. The noble Baroness said that she was assuming something and I left it at that.

There is also the question of former employees being subject to indemnities. One has to look at such issues on a policy and case basis. However, I want to be specific that the order covers members and officers of relevant authorities.

On Question, Motion agreed to.

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