Orders of the Day — Local Government (Pecuniary Interests) Bill

– in the House of Commons at 12:00 am on 13th March 1964.

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Order for Second Reading read.

11.8 a.m.

Photo of Sir Hubert Ashton Sir Hubert Ashton , Chelmsford

I beg to move, That the Bill be now read a Second time.

The fact that this Bill is coming up on Friday, 13th March, and that I have emerged this morning from hospital after treatment for an ulcer on my left eye—the sinister eye—has, I trust, no superstitious significance.

The Bill seeks to amend certain provisions of the Local Government Act, 1933, and the similar provisions in the London Government Act, 1939. These govern the conduct of members of local authorities who have a pecuniary interest in a subject which is before the authority. It may be of help to the House if, first, I say something about the provisions as they now stand.

The principle which is reflected in these provisions is an important one and is common to other areas of local government law. This principle is that in local government a member of a public body shall not be put in a position where a conflict may arise between his private interest and his public duty, or where such a conflict may appear to arise. This, also, is important. Here is a field where justice must certainly not only be done, but must be seen to be done. It is necessary both for the general good name of local government and for public confidence in it that it should always be clear that a private interest ca 'mot be allowed to influence the management of public affairs.

The present law embodies this principle by requiring in Section 76 of the 1933 Act and Section 52 of the 1939 Act that a member of a local authority who is present at a meeting of the council or of a committee where a matter in which he has a pecuniary interest is to be discussed must disclose his interest and refrain from speaking or voting on the subject. I understand that quite a number of local authorities provide by way of their standing orders that a member who discloses an interest shall also withdraw from the meeting, but this is not required by the law itself.

The law also says that a member shall be held to have an interest in a matter in two ways; either directly where, in effect, his own pocket is or may be affected, or indirectly through his connection with a person or body which itself is directly affected. Some very widespread and common interests, such as interest as a ratepayer in the amount of the rates, are, however, excluded. The penalty for breach of these provisions is a fine of up to £50, and prosecution is in the hands of the Director of Public Prosecutions.

The principle underlying these provisions is, as I have said, an important one, and I do not think that anyone in the House would wish to erode it, but there are situations in which to insist on applying its full rigour would produce an absurdity. For instance, it may prove that so many of the members of an authority are barred by the principle from considering a subject which is before the council that it is virtually impossible for the council to do its work properly. Again, it may often happen that a member who has an interest in a subject is well qualified by knowledge and experience to give advice which would be valuable to the council.

Parliament has recognised that genuine situations like this require a certain degree of compromise between the full rigour of the principle and the need to do business effectively. It has, therefore, by subsection (8) of Section 76, given the Minister power to remove the disabilities in suitable cases. Successive Ministers have exercised this jurisdiction in a careful and consistent way, with the broad effect that a member is normally permitted to speak on a subject or on aspects of a subject which concerns him along with other members of the council but not on one which concerns him alone. A member may also be enabled to vote in these ways when the council would otherwise be in real practical difficulty in doing its work.

I believe that both these provisions of the 1933 Act and the Minister's exercise of his jurisdiction have the general support of responsible opinion in the local government world. Nevertheless, over the past few years, there has been some evidence that members of local authorities are worried and uncertain about the effect of the provisions upon them. Their difficulty is that the law places squarely on the councillor himself the responsibility for deciding in the first place whether he has a pecuniary interest in the matter to be discussed. In cases where the connection between the subject and the member is tenuous, remote or trivial, it is not always easy for him to make up his mind.

This difficulty which councillors feel was, possibly, accentuated as a result of some High Court decisions in the mid-1950s. I need not go into this here save to say that I do not believe that the increased apprehension was a necessary result of those judgments, since the court made quite clear that interests could exist which, under the present law, were too remote to be within the terms of the Section. But, whatever the cause, there can be no doubt that councillors do find it difficult to decide in marginal cases whether Section 76 applies, that there is an unfortunate amount of apprehension of being prosecuted for a technical breach of the provisions, and, indeed, that these difficulties can, and in some cases do, not only lead people to give up service in local government, but deter them—often people who can ill be spared—from entering the service.

I have no doubt that the Committee which my right hon. Friend has recently appointed, under the chairmanship of Sir John Maud, will be examining the whole question more thoroughly, and I for one look forward with interest to its conclusions.

The aim of the Bill is to help councillors to make up their minds more confidently on whether or not Section 76 applies in their case to a particular discussion or vote by making clear on the face of the Statute that it does not extend to remote or insignificant interests of a kind which no reasonable person would think could affect a member's view on the matter under discussion. Clause 1(1) is designed to achieve this purpose.

I think that I can best illustrate this type of interest by giving two actual examples, one of which was reported in The Times. The Times was good enough, a short time ago, to publish a short leading article about the Bill. The first case was of a councillor in a seaside town who declared an interest in a proposal to put up a new public convenience because he held shares in a company manufacturing rolls of toilet paper. The second was of a councillor in the Midlands who declared an interest in a proposal to buy a new car for the mayor because he was employed by a motor manufacturer.

There is analogous, though not identical, provision in the Local Government Act governing the pecuniary interests of officers of local authorities. The difference is that this provision is limited to an interest in a contract and does not extend to "other matters" as Section 76 does. The effect is that an officer who has an interest in a contract which involves the local authority must give notice of it to the authority. Because of the inherent differences between the respective positions of a member and an officer of a local authority, no question arises of a bar on speaking, and there is no power of dispensation. However, I feel that the two provisions are sufficiently close in principle and intention for it to be reasonable to apply the same exclusions to them both. This, then, is the purpose of Clause 2 of the Bill.

The penalties for offences under both these sets of provisions were fixed at a maximum of £50 in 1933, 31 years ago. We all know that £50 then went a good deal further than it does today. There is, therefore, a very good case for adjusting the penalty to a sum which is more realistic in the light of present values. But there is another and, perhaps, more important reason for making the adjustment. It is that, in a Bill designed to make quite clear that there are pecuniary interests which are too remote and insignificant to be caught by these provisions, we should also emphasise the seriousness of a real offence. For these two reasons, it is proposed, by Clause 1(4) and Clause 2(2), to raise the maximum penalties from £50 to £200.

Those are the main proposals in the Bill. The remainder are more appropriate for discussion in Committee than on Second Reading, but perhaps I may say a few words about them. Clause 1(2) refers to a proviso in Section 76 which excludes from the Section any in terest of a member which derives from his employment by a public body. Some doubt has been expressed on whether the bodies named in Clause 1(2) can be held to be public bodies for the purpose of the Section as it now stands, and the ()Eject of subsection (2) is to remove this doubt.

Clause 1(3) will enable a councillor who is, or whose spouse is, a tenant of council premises to give a general notice of the fact and so avoid the tiresome need for oral disclosure of a permanent interest at every meeting. Clause 1(5) enables the Minister to give his dispensation in suitable cases for periods longer than the three months which is the present practice and thus removes the need for a great deal of repetitive correspondence between local authorities and the Minister. Clause 1(6) is intended for the removal of doubt, to make clear that members who have an interest in a matter are not thereby precluded from voting on a resolution that a dispensation from the Minister be sought.

Clause 3 applies the amendments proposed in Clause 1 and 2 to the corresponding Provisions of the London Government Act, 1939. Those provisions will be repelled as from 1st April, 1965, by the London Government Act, 1963, which will apply the 1933 provisions to the new authorities in London.

I am grateful to all those who have been good enough to write to me about the Bill and to all those who assisted in its preparation. I received quite a lot of correspondence this morning. It has been difficult for me to deal with it before making my speech, but I assure the writers of those letters that the points which they make will be most carefully looked at.

I should like to quote from one of these letters from the Association of Municipal Corporations. It states: …the Association's view about amendments to Sections 76 and 123 of the Local Government Act, 1923, is that legislation is desirable to ease the position of members of local authorities without distracting from the strength of these Sections, the principles of which the Association considers to be sound. I believe that the Bill, if it becomes law, will achieve something along these desirable lines.

For 15 years, from 1946 to 1961, I was successively a councillor and alder man of Essex County Council and for three years its vice-chairman. I have, therefore, had an opportunity of seeing for myself the manner in which many thousands of men and women give up their time and devote themselves to these arduous and sometimes unrewarding duties. In my view, the Bill is an attempt to alleviate in some measure the present anxieties of a certain section of the community who deserve well by the nation.

I hope, therefore, that the amendment of the law which the Bill proposes will earn the approval both of this House and of all those men and women occupied either as members or officers of the vast and vital machine of local government.

11.23 a.m.

Photo of Mr John Bidgood Mr John Bidgood , Bury and Radcliffe

I am sure that every hon. Member who has served on a local authority or who serves on a local authority will welcome the Bill. I welcome it particularly because, while it does not open the door to any abuses of existing legislation, it tries to resolve many doubts that councillors and aldermen have had for a number of years.

It is about 30 years since the 1933 Act was placed on the Statute Book and very much has happened since then. For example, we have had a number of industries nationalised, and the Bill seeks to take care of those changed circumstances. Section 76(1) of the 1933 Act makes it quite clear that a pecuniary interest, direct or indirect, in any contract, proposed contract, or other matter must be declared.

The definition of pecuniary interest is: (a) if a councillor is a member of a company with which the contract is made; or (b) that he is a partner or employee of the person with whom the contract is made. The Bill seeks to provide a defence to the effect that a councillor will be acquitted if he satisfies the court that he acted in the reasonable belief that he had no pecuniary interest in the matter which was before the council.

The Bill will help two different sets of people. It will help those members of a local authority with very wide business interests and also help those with comparatively small business interests. With regard to the first category, it is clearly quite impossible for any councillor who is a director or a shareholder in a very great number of companies to know precisely the day-to-day activities of each of those companies, and the contracts for which they are tendering.

With regard to the second category—the small trader—I can give an example on the following lines. Take any local authority, which we will call "X". Almost weekly, contracts are being let for various civil and constructional engineering work. Usually, these inquiries are sent to large building contractors who, in turn, obtain estimates from smaller contractors, as for example painting contractors, and the final lump sum figure is then compiled.

There must be many painting contractors in town "X" who receive inquiries from large contractors for painting contracts without the destination of the site being exactly specified. Therefore, the House will realise how impossible it would be for a local councillor, who happened to be a painter, to know which of the contracts for which he was quoting was applicable to the local authority. Under the existing legislation it is quite conceivable that the painter may be convicted of a criminal offence.

I must say to my hon. Friend the Member for Chelmsford (Sir H. Ashton) that Clause 1(1) is, in my opinion, somewhat vague and could possibly be improved in Committee. I find it rather difficult to see how it would work in practice. It seems to me that it would result in every individual councillor disclosing an interest in virtually everything under the sun in order to make certain that he was not committing, a criminal offence. I am certain that that could be dealt with in Committee.

My hon. Friend has also explained to the House that Clause 1(2) is designed to deal with public bodies. I should like to give the House another example that does not seem to be covered by the Bill, and which I would commend to the consideration of my hon. Friend, because it is an example of what has happened to me personally in carrying out local authority work.

It is well known that local authorities from time to time, usually through their watch committees, allocate flag days to various charitable organisations in the districts. I happen to be, and have been for some years, a trustee of a charitable organisation, and the watch committee of the town in question has been in the habit of allocating a flag day to this charitable organisation. Usually, this results in the organisation benefiting to the extent of between £1,500 to £2,000.

I have often wondered, on the occasions when the watch committee's minutes come before the council, whether I, as a trustee, was qualified to vote on those minutes by virtue of the fact that the association for which I was a trustee would benefit financially. If my hon. Friend could find, in Committee, a form of words to make my position quite clear, I think that it would clear up very many doubts.

The other slight criticism I have of the Bill—I assure my hon. Friend that this is a constructive criticism, because I welcome the Bill—is in connection with Clause 2. I suggest to my hon. Friend that he considers at the same time amending Section 123 of the 1933 Act, so that officers and servants of local authorities will be put in precisely the same position as councillors will be if the Bill becomes law, as I am sure it will. At the moment, it is possible for a councillor to register his various interests with the clerk, who duly notes them in a book provided for the purpose. Section 123 applies only to councillors and not to officers. If that facility is available to councillors, I believe that the position should be clarified equally for officers and servants of local authorities.

I hope that what I have said will be taken in the spirit in which it was intended and that the House will give the Bill an unopposed Second Reading.

11.31 a.m.

Photo of Mr Albert Evans Mr Albert Evans , Islington South West

I congratulate the hon. Member for Chelmsford (Sir H. Ashton), who spoke so convincingly in support of the Bill. He is attempting to tackle a troublesome matter, which many who work in local government come up against from time to time. His efforts to ease the difficulties of councillors, town clerks and local government officers are welcome by all who experience these difficulties.

When, from time to time, a conflict between the private interests of a councillor or an officer and that person's public duty arises, our experience is that we manage, in one way or another, to proceed quite properly by various devices and get round the difficulties that arise. As in so many aspects of public affairs, we work according to a basic common sense. Very often it is a human attitude to make things practical and—I do not say "to get round the law," but to work in accordance with the spirit of the law even if in some instances not in accordance with its exact letter.

The hon. Member for Bury and Radcliffe (Mr. Bidgood) spoke about a painter who was also a councillor and who had been asked to quote as a sub-contractor. We know that time after time the sensible course is taken and the councillor concerned remains quiet while that item is being discussed. It is simple enough. Most town clerks are legally qualified and are aware of these things. A word to the councillor who might be involved is sufficient to keep him silent whilst the item is considered. This is the sweet and human way in which we get over these difficulties.

The hon. Member for Chelmsford mentioned the categories of cases which arise. He spoke, first, about the case where a large number of members of an authority are involved. If they had to remain silent and not vote, the work of a council could not proceed. Such cases have arisen time after time. We manage to surmount the difficulty. Some years ago it was proposed that anybody who made purchases from co-operative shops and had a co-operative number and was, therefore, a member of the co-operative movement should be disbarred from talking and voting on any proposal affecting co-operative societies. It was a very fine point. It was surmounted quickly, because the Minister ruled that such members would be allowed to proceed about their business and not be disbarred by the law as contained in the 1933 and 1939 Acts.

A tremendous volume of work is done in local government. Without that work the country could not be governed. In practice, these hindrances have not been serious. Even so, I admire the endeavour of the promoters of the Bill to overcome the difficulties by a form of words. I wonder whether this is possible. The Bill hinges upon the phraseology in lines 9 to 16: any interest…which is so remote or insignificant that it cannot reasonably be regarded as likely to influence him"— that is, a councillor— in the consideration or discussion of, or in voting on, any question with respect to that contract or matter. The salient words are any interest…which is so remote or insignificant". Who is to judge? Is the clerk to decide whether the matter is "so remote or insignificant" that interested councillors should be allowed to vote? If the clerk gave his judgment that the matter was so remote, he could be challenged. When these matters arise there are certain interested parties involved—contractors, chambers of commerce, and so on. Somebody would have to give a ruling. Presumably it is not the intention of the promoters that every such case should be referred to the Minister for him to decide whether the matter "is so remote or insignificant" that the rule shall not apply.

As the main purpose of the Bill hinges on whether any interest…is so remote or insignificant as to be of no consequence, I do not believe that we are carried much further. The whole interpretation of the Bill will turn upon those words, which, in themselves, will have to be interpreted either by clerks or by the Minister.

Much as I admire and welcome the effort of the hon. Member for Chelmsford to find words to overcome the difficulties, I doubt whether the Bill as drafted will achieve the admirable object that he has in mind.

11.38 a.m.

Photo of Miss Joan Quennell Miss Joan Quennell , Petersfield

I join the hon. Member for Islington, South-West (Mr. A. Evans) in congratulating my hon. Friend the Member for Chelmsford (Sir H. Ashton) both on his courage in introducing a Bill which seeks to amend the most formidable of all legislation—the Local Government Act, 1933, which always daunts me when I look at it—and on the lucidity of his speech this morning. If he performs as well having just been discharged from hospital, I wonder how well he performs just before entering hospital. I sympathise with him because I have had some medication of a rather unfortunate nature this morning.

The Bill seeks to sort out a confused and difficult area in one sphere of local government. The hon. Member for Islington, South-West thought that the Bill was confused in certain respects, that it would be difficult for councillors to determine whether or not Section 76 of the 1933 Act would apply to them and that the determination of a pecuniary interest would be equally difficult to sort out.

Photo of Miss Joan Quennell Miss Joan Quennell , Petersfield

I apologise if I have misrepresented the hon. Member.

The best way to deal with these matters is to consider the background of integrity which local government has enjoyed throughout its history. We must consider the thousands of millions of pounds which have been expended by local authorities since they were established. We must also remember that when a scandal or pecuniary crisis of any kind arises it is still a matter for headline news. If we remember these things we begin to get into perspective our good fortune in having such a high standard of public integrity, both of the officers and members of our local authorities.

Not long ago a play entitled "Workhouse Donkey" was produced. It "knocked" the activities and types of people in local government. It was excellent entertainment and a splendid evening's outing, but no more than that. It rather reflected the national mood of "knocking" and denigrating nearly all our established institutions.

Local government expenditure will increase annually and progressively and more and more local authorities will find themselves handling greater and ever-growing volumes of money on a national basis. It is important, therefore, that we should try to get this business of financial or pecuniary interest sorted out because it badly needs sorting out. Further difficulties were caused by a circular which the Ministry sent out a few years ago. It reminded clerks of authorities of Section 76 of the 1933 Act and in some respects the reminder was unnecessary because it had some unfortunate effects.

Hon. Members have referred to incidents which have created difficulties for local authorities and I would like to recall the almost farcical circumstances which arose as a result of the indeterminate position in which local authority members and officers can find themselves. The Petersfield Rural District Council has a standing order under which, by the due process of proper warning and time, any member of the council can raise any subject he or she wishes. On the occasion I am recalling one member chose to take a motion under that standing order by which there was a discussion of Section 76 of the 1933 Act. Certain alterations were postulated and improvements suggested to that Section.

On that occasion the council was, in effect, discussing a matter over which it had no control. No council member had an interest in any contract or other matter, as the Act has it, and nothing they discussed could affect any ratepayer or inhabitant of the district. They were merely discussing a matter over which they had no power or influence. No matter what position they took, not one ratepayer could have been affected, not even the farmers in the area, because under that standing order the council was acting as a debating society and nothing more. Members could express opinions, but they could not be deemed to have any direct or indirect pecuniary interest.

However, the clerk, having regard to the advisory circular issued by the Ministry, advised council members that those with agricultural interests should not vote. Hon. Members will appreciate that in a farming community this was a considerable problem for the council. Unfortunately, Section 76 of the Local Government Act contains a rather odd subsection, which states: In the case of married persons living together the interest of one spouse shall, if known to the other, be deemed for the purposes of this section to be also an interest of that other spouse". This meant that farmers, their wives and, what with one thing and another by the time the Ministry's circular was heeded, landowners, their sons, daughters and farmworkers were effectively excluded from the discussion.

Nobody was sure what to do next, because there is no definition in the Local Government Act of a pecuniary interest. Advice was sought. My right hon. Friend properly said that it was not his job to determine a pecuniary interest under the act because that was the responsibility of the High Court. One had the vision of hundreds of councillors queueing up outside the High Court to have their position accurately defined.

The incident I have described led to complete confusion over local government activities in the area and had it not been for Section 76(8) of that Act, which gives carte blanche to enable my right hon. Friend or the Minister of the day to issue dispensations from the operation of the Act, I do not know what would have happened. He exercised his discretion and in June of last year, in another letter from his Ministry, my right hon. Friend said that he had …come to the conclusion that the Department ought to be ready to give dispensations to speak and vote where all that is in issue is a motion calling for some action at national level. Many council members were thankful for that ruling.

Photo of Mr Albert Evans Mr Albert Evans , Islington South West

It appears from the hon. Lady's remarks that on that occasion the clerk ruled that the matter came within the Section of the Act to which she has referred. What would have happened had the clerk ruled differently? In the case to which she referred there was no contract involved and the council members wished merely to express opinions on a matter which did not come within the competence of the authority. I fear that the sort of trouble that arose in her council will arise elsewhere because of the Bill, particularly if different interpretations are put on its provisions by different council clerks. Perhaps a lot depends on the knowledge of the clerk and on his contact with the Ministry, particularly when he must rule on the sort of case that she has described.

Photo of Miss Joan Quennell Miss Joan Quennell , Petersfield

The hon. Gentleman is correct in assuming that this was the interpretation made by the clerk, but the point is that the clerk of an adjacent council in a similar geographical and social area—the same sort of environment—made exactly the opposite ruling at almost the same time, yet both clerks were correct within the meaning of the Act. To my mind, it reduced the whole thing to sheer pantomime.

That is an extreme example, and I want now to turn to the actual wording of the Bill. Like the hon. Member for Islington, South-West, I think that some difficulty may arise in the interpretation of the words in Clause 1(1): …so remote or insignificant that it cannot reasonably be regarded as likely to influence him… This subsection will need some tidying up because reasonableness, unlike duty, does not lie in the eye of the beholder, but in the beheld.

Last night, I looked up the word "reasonable" in the Oxford English Dictionary and found that its first meaning is: …to be endowed with reason… though that is now, for some reason, shown to be rare: having sound judgment; sensible, sane, also not asking for too much"— but that is Middle English. Then, under (b) requiring the use of reason"— but that is Shakespearean: agreeable to reason; not irrational, absurd or ridiculous"— that is Middle English: not going beyond the limit assigned by reason; not extravagent or excessive"— again, Middle English: moderate in price, inexpensive. 1667: of such an amount, size, number, etc. as judged to be appropriate or suitable to the circumstances or purpose "— that seems to me to be the definition that would suit our needs here most conveniently, but that is shown to be "Middle English, circa 1350–1450."

So we come to the difficulties of what constitutes "reasonable". To my mind, I am always, in every circumstance, a most reasonable woman, but it seems to me most unreasonable when all my friends do not constantly hold the same view of me. I think it reasonable of my right hon. Friends to bring in a Bill to amend the law relating to resale price maintenance, but it would be most unreasonable of them to expect me to sit up all night debating it. What is likely to influence a man will vary from one man to another. The type of thing likely to influence me would hardly influence Mr. Gulbenkian.

Subsection (3) is a good one—it strengthens the original Act—and subsection (4) brings the Act into line with modern conditions and punitive powers—

Photo of Mr John Bidgood Mr John Bidgood , Bury and Radcliffe

My hon. Friend approves of subsection (3), but would she not agree that the Bill might be made somewhat better if the word "lodger" were included, in addition to tenants of corporation houses? There must be very many sons of tenants of corporation houses who are members of local authorities.

Photo of Miss Joan Quennell Miss Joan Quennell , Petersfield

That may be true, but we may have difficulty in defining "lodger"—there are so many stories of the lodger. However, the principle of that suggestion is quite a wise one, and could perhaps be discussed in Committee.

At some time or another my right hon. Friend's predecessor established a working party to explore the difficulties arising from Sections 76 and 95. Can my hon. Friend say whether that working party has reported, or whether it will? If it has reported, what does the report say? Or is it the fact, as I have a sneaking feeling it might well be, that the members of the working party have discovered that their own indirect pecuniary interest as householders has forever disbarred them from coming to a decision?

11.56 a.m.

Photo of Mr George Pargiter Mr George Pargiter , Southall

I support this modest Bill, which is designed to clarify what is recognised to be a difficult legal position—though we have to admit at once that the matter is incapable of precise interpretation because no one can decide the particular point at which an interest begins, whether it be large or small. To a large extent the decision must always be a matter of the common sense of the individuals concerned, but there are occasions when, quite inadvertently, a person may be called to account because of an interest of which he is hardly aware. The object of this Bill is to make that position easier.

The local authority associations have for some time been concerned to find more exact wording, but have not found it possible. Although this Measure will make the position a little better, in the last analysis the decision will rest on the interpretation of the court and, as has already been the case with other laws, two courts may well put two different interpretations on the wording.

Most hon. Members, and certainly most authorities, will welcome giving rather wider powers to the Minister to use a general dispensation as against individual requests for dispensation. One of tae bugbears of local authorities is that this question crops up quite suddenly, and the business is held up because of some perhaps relatively immaterial interest that makes dispensation necessary. While the Minister acts as speedily as is consistent with his duty, there are often frequent delays in business that should be disposed of quickly. Those in local government are often accused of being dilatory, and this Bill may make things a little better in one respect.

My own local authority association has written on this subject, and wants to see certain improvements made when the Bill is in Committee, though without altering its principles. We think that that can be done. Discussions I have had since publication of the Bill have satisfied me that, with certain Amendments, this can be a useful piece of legislation.

It might have been useful to make these provisions when we came to consolidate the main legislation, but it is hardly worth waiting for that when an hon. Member who has been fortunate in the Ballot is able to bring forward a Bill which will be of such benefit to local authorities everywhere.

12.1 p.m.

Dr. Man Glyn:

I join in congratulating my hon. Friend the Member for Chelmsford (Sir H. Ashton) on introducing the Bill and on making a brave new attack on the meaning of the peculiar phrase "pecuniary in terests." The country may regard this as a small Measure, but it calls the attention of the House to the important difficulty, which has always existed, of the extent to which local people should have control of local affairs or, in other words, how far their own pecuniary and local interests should preclude them from taking part in local government.

If we are to have local government it is essential that we should have people who have an interest in the locality, but we have to strike a balance between their general interest and the question whether they have such a particular interest in some aspect of local government work as to involve a financial effect upon themselves.

As my hon. Friend the Member for Petersfield (Miss Quennell) has said, we often see highlighted in the newspapers the heinous offences of certain members of a council. I join with her in saying that through out the long history of local government these offences are an exception to the general rule. The day-to-day work in council chambers is done decently and honestly. It is the rare cases that appear in the newspapers. Newspapers are reluctant to report adequately on the hard and diligent work done for a council, but they are only too ready to put their finger on an unfortunate incident.

Hon. Members have already pointed out that the difficulty we shall have with the Bill is in the matter of definition. The Bill is concerned with the question whether a member acted in the reasonable belief that he had no pecuniary interest. As our national life develops and become; more complex, as my hon. Friend the Member for Bury and Radcliffe (Mr. Bidgood) has said, this matter becomes more difficult. Someone who has three shares in I.C.I., for instance, might be said to have an interest in something which has been developed by one of the subsidiary companies of that enormous enterprise. A member of a council who was a shareholder could be easily involved in the question of pecuniary interest, however remote.

A council or might not be directly interested in a development in his area, but his own property might be enhanced in value simply as the result of that development. These however, are the wider issues and I would say that throughout the country councillors in general act on their own judgment as to whether or not their interests are affected by any measure which the council is advancing or debating.

We must be extremely careful to protect councillors. My hon. Friend the Member for Chelmsford said that many people might be frightened of seeking election or re-election to a local council because of their local interests. I hope that the Bill will enable them to be more certain about what pecuniary interests they should or should not declare. It would be a great tragedy for the country if some of the great local figures were to be deprived, or were to think that they were being deprived, of the opportunity to serve the community in local government because they believed that council activities might be interpreted as being in their own interest.

I am not quite clear about the definition of a public body, in Clause 1(2), and on Clause 3 there is a point on council tenants which I should like to be clarified. No doubt we can go into it in Committee. A different form of wording may be desirable here, perhaps "dwellers in council property", because it may not of necessity be the actual owner or tenant or the wife. There may also be children over 21 years of age, or a lodger. These could be covered by the expression "x' dweller".

I imagine that when my hon. Friend the Member for Chelmsford proposed to raise the fine to £200 this was not because he wished to make this a more heinous offence, but it was because of the present-day value of money. I hope that the Parliamentary Secretary may have something to say on this. I hope, also, that he will say something about the position of the officers and how the Bill could be extended to cover them. This might readily be covered in an Amendment to this excellent Measure. Incidentally, I assume that Clause 3 covers existing local authorities in London, but will continue to cover the new authorities which will function after the reorganisation of local government is completed.

The debate has clearly illustrated how difficult, if not impossible, it is to write into the Bill exactly what we want. I wonder, for example, how "remote or necessary," the phrase mentioned by the hon. Member for Islington, South-West (Mr. A. Evans) would be interpeted. Whatever words we put in the Bill, we shall be faced with the same problem, because until those words have been tested in a court it will be difficult to say how a court might interpret them. As the hon. Member said, one court might give a different interpretation from another. We shall not know until the matter has been tested in the High Court, or on appeal, unless phrases of a similar nature have been the subject of judgment on previous occasions.

I congratulate my hon. Friend the Member for Chelmsford. I hope that the Bill will give members of local authorities a feeling of security on the question whether or not they should declare their interest. We want local people who know something about local government and local conditions to continue to serve the community locally. I am sure that the Bill will help towards that end.

12.9 p.m.

Photo of Mr James MacColl Mr James MacColl , Widnes

I feel a certain amount of jealousy of the hon. Member for Chelmsford (Sir H. Ashton), because I have never succeeded in obtaining a place in the Ballot. I therefore feel that, having been successful, the hon. Member ought to work for his living. I have also some sympathy for him, because it always happens that when an hon. Member introduces an interesting Bill those hon. Members who have not been successful in the Ballot, or, having won a place, think that they have a better Measure to put before the House, spend a happy time in Committee hacking the hon. Member's Bill and generally leaving it in such a state that we hardly recognise it as the original.

We are grateful to the hon. Member for having introduced the Bill, but I cannot say that I am as grateful as the general tone of speeches of other hon. Members has indicated they are. When the hon. Member for Clapham (Dr. Alan Glyn) described it as a brave and new attack, I thought that even in the hot atmosphere of a Friday morning those were rather highly charged words. I think that the Bill is a very moderate and timid attempt to tackle the problem. I am not sure whether, except in a few technical matters, it substantially improves the position. In the Bill we have a general phrase, referring to an interest which as so remote or insignificant that it cannot reasonably be regarded as likely to influence him. Does it really help?

There are many uncertainties about the position. First, nobody knows what the attitude of the Director of Public Prosecutions will be, whether or not he will authorise a prosecution. Even if one can persuade a town clerk to be sufficiently forthright to give one advice on a matter, not telling him that it is something for one's own judgment, one is not much further ahead because one does not know what attitude the Director will take.

I feel that it is simply writing into the Statute Book words which probably the Director uses when he is deciding whether or not to authorise a prosecution. He may say, "This is so remote as not to be realistic, and I will not prosecute". I should have thought that, in practice, the provision would not alter the position very much.

Another difficulty which faces us is that so many cases—that implies that there are a great many cases, but that is not so—take place either in magistrates' courts or in courts of quarter sessions which are not courts of record. Therefore, it is extremely difficult to know what the judicial interpretation of the law is. Comparatively few cases reach the Court of Appeal or Divisional Court on case stated, and it is difficult to find out what is and what is not within the law. In the case of an appeal which very much affects the average councillor, it is very important that it should be made clear for him precisely what is the law which he is supposed to purport to obey. I should have appreciated the Bill if it had tried to tackle that problem and give rather more firm guidance about what the law is.

Photo of Dr Alan Glyn Dr Alan Glyn , Wandsworth Clapham

Would not the hon. Gentleman agree that the real difficulty is that, no matter what words we choose, until a case is interpreted in the High Court we are unable to prejudge the issue?

Photo of Mr James MacColl Mr James MacColl , Widnes

Yes. I shall go on to say what I think might be done to help. However, I do not think that I have solved all the problems.

I am a little cynical about the Bill. For a very long time fingers of scorn have been pointed at members of the co-operative society and council tenants and smears have been uttered about their acting rather shadily when they take part in council business. Yet nobody has done anything about it. But once the pinch is felt by people affected by a planning scheme, or, as the hon. Member for Bury and Radcliffe (Mr. Bidgood) mentioned, shareholders in paint firms, somehow everybody becomes very much alive to the importance of the problem. The hon. Member for Clapham mentioned the unfortunate position of the small shareholder. But the small shareholder has already been covered by an amendment to Section 76; an attempt has been made to give him some protection.

Reference has already been made to the position of charities and trusts where councillors are members of committees or trustee. The hon. Member for Bury and Radcliffe referred to flag days. Another case is application for grant. When a local authority has a session, as it sometimes has at the end of the year, to dish out grants to voluntary bodies, practically every councillor may be connected in some way with some of the bodies which are hoping for help. It is right that they should be; if people are giving service to the community they should be associated with such bodies.

I am connected with the Family Service Unit and the Citizens' Advice Bureau in Paddington. I am chairman of the advisory committee of our Citizens' Advice Bureau, and I am on the executive of the Family Service Unit. If, in the general purposes committee, a remark is made which I know is incorrect, should I say, "You are wrong. Miss Buggins has left and Miss Bloomfield has taken her place", or am I liable to find myself prosecuted?

Photo of Mr James MacColl Mr James MacColl , Widnes

My hon. Friend says "Nonsense", but Sir Norris Kenyon, my predecessor in a good many of the jobs that I do in Paddington, had very strong views about it and flatly refused to take any part in it. He was a man of exceptionally high principles, and I do not pretend to follow him in having as high principles.

Another case which I remember concerned a member of a gas board. The question of fuel contracts arose, and that member was able to provide a certain amount of information about shortages of coke, and so on, which he had acquired in his capacity as a member of the gas board, and the board would not have been at that time directly concerned with the contract. Was that member entitled to give factual information or information about what he thought was likely to be the future of fuel supplies? I should have thought it useful, because it will be helping the local authority to be a rather more effective body than it could otherwise hope to be.

My personal feeling about this, which does not bind anyone else, or, indeed, myself, is that there are three stages in the operation—to disclose, to discuss, and to vote. I cannot see any reason for limiting the duty of disclosure. We have a convention in the House that we disclose, over a very wide area, our interests in matters which might affect the weight attached to what we say. It goes a great deal beyond pecuniary interests. That is a good rule and one which generally should be applied widely in local authorities. I should hate to feel that the effect of this debate was to limit that moral obligation—indeed, the word "disclose" appears in the Act. Publicity is a very healthy ventilation and should not be restricted.

It ought to be the duty of any member of a local authority who has an interest in any matter—using the word "interest" in the widest possible sense—to tell his colleagues and the public that he has that interest. Once that is done, one knows how much weight to attach to his views. In the House we do not, generally speaking, discount the views of a Member because he has an interest. Indeed, we sometimes attach rather more importance to his views. If he says that he has spent many years, for instance, running a building society, we then listen to his views about the practical problems of running building societies with rather more interest. It is ludicrous to say that he should be debarred because of his interest from taking part in our discussions.

I have spoken about the member of a gas board. There are other cases where people have special interests. Provided that they disclose their interest, and the public know about it, it seems to me that they ought to be fairly free. When we come to the question of discussing, I would think that in many cases a member should take part in the discussion unless he really has a very direct interest in the matter under consideration.

One of the cases of which I am thinking was of a builder who opposed the institution of a direct labour force by the local authority. He had no intention of ever tendering for building work for the council. Therefore, to say that because there was the remote possibility he might do so was pushing the thing much too far. On the other hand, had he been in a firm which was likely to tender for contracts, it is questionable whether he should take part in trying to influence a decision on a matter of that sort—although, even then, provided that people know of the cloven hoof, and see it, I do not think that great harm is done.

Then we come to the question of voting, in which we ought, on the whole, not to be too quick to weaken the position. We are already extending it to cover some of the obviously difficult questions. The council tenant who takes part in voting on a general scheme of rents, although there is a distinction in the Statute between the two things, is really in the same position as somebody who takes part in a vote on whether the rates should go up. In practice, although one is something which he shares in common with the whole community and the other he shares only in common with people on the council housing estates, they are both large groups of people and both discussions are about public policy.

Therefore, where something is clearly a matter of general policy, such as general council rents, as opposed to individual council rents, and of general planning problems, one ought to handle the position fairly sympathetically. Where, however, it is a question of a direct contract or somebody's direct financial advancement, one has to be a little cautious. That raises the difficult cases of things like planning.

Consider, for example, a vote on whether there should be urban renewal in a town. Where can we draw the line and say that certain people are affected by it immediately, but that others are affected by it so indirectly that it should not be taken into account? By repercussion, that will affect indirectly the people who are a long way out of the renewal scheme almost as much, perhaps, as it will affect the people who are actually in it. On the other hand, it would be taking things a little too far and it would be bad for local government if one got the impression that people who were very much financially involved in matters were voting and taking part in deciding matters affecting planning.

Some hon. Members have said that people were driven out of local government because they could not take part in it because of their interests. The converse will be true if things are made too easy. We do not want the position that …wheresoever the carcase is, there will the eagles be gathered together. I remember very well that when I first went on to my local authority the chairman of the public health committee was an undertaker. I naturally used all possible opportunities to point this out. I do not know really that the fact that we had the highest infantile mortality in London was due to his financial interests in his undertaking business. Probably I got more votes for the Labour Party for pointing it out than damage was done.

We do not, however, want the situation, as sometimes happens in local authorities, that the housing committee is run by an estate agent, the public health committee by undertakers and the works committee by builders. When one gets that kind of element coming too much into local government, public confidence in it is lost.

Therefore, my feeling on this matter is that the Bill is a gesture and I hope that it will go through. I cannot feel that it will help very much because of the difficulty of knowing which way the Director of Public Prosecutions will jump on prosecutions, which way the magistrates will jump, and, finally, in the case of those who have the financial resources to ask for a case stated and go to the Divisional Court, what way it will jump. There are so many un- certainties that, in practice, I cannot feel that such a vague definition as is given in Clause 1(1) will be sufficient.

However, it is a little ungenerous to say this to the hon. Member for Chelmsford, because we should be grateful to him in using his success in the Ballot to produce a Bill which will be helpful to local government, however narrowly.

12.25 p.m.

Photo of Mr Godfrey Lagden Mr Godfrey Lagden , Hornchurch

I congratulate my hon. Friend the Member for Chelmsford (Sir H. Ashton) on having the foresight to introduce the Bill and I congratulate him also upon his good luck. As my name appears as a supporter of the Bill, I should, perhaps, intervene briefly.

I take this opportunity, also, of congratulating my hon. Friend the Joint Parliamentary Secretary on being present on the Government Front Bench two Friday mornings running. It must give him great satisfaction—

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

May I correct my hon. Friend? It is five times, not two.

Photo of Mr Godfrey Lagden Mr Godfrey Lagden , Hornchurch

I am grateful for that correction—five! It illustrates even more my point of how obviously interested tine House is in the work of my hon. Friend's Department. I hope that his figure of five as against my two will bear great weight and that we shall all benefit from what my hon. Friend hears us say in this important matter of local government.

Anything which can be done to attract into local government, or even back to it, the desirable and intelligent type of person will be all to the good. My hon. Friend the Member for Chelmsford has done a great service and I hope that his Bill speedily becomes law.

12.27 p.m.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

I start by adding my congratulations to my hon. Friend the Member for Chelmsford (Sir H. Ashton), not only on bringing in the Bill but on the manner in which he introduced it. It has been generally welcomed all round, as has my hon. Friend's speedy and, we hope, permanent return from hospital.

As my hon. Friend said in his opening remarks—and everybody who has spoken has underlined this—the principle with which we are dealing is an important one in our public life and one which, we all feel, it would be wrong to erode except with considerable safeguards and after great thought.

The hon. Member for Widnes (Mr. MacColl), in expressing his views on the three stages of disclosure, discussion and voting, gave a fairly accurate summing-up of the principles with which my right hon. Friend the Minister approaches the question of dispensation. We do, indeed, take a fairly liberal view, if that is the right word, with regard to discussion, but a considerably more rigid one with regard to voting. The distinction which the hon. Member drew between discussion on general policy on council house rents, and a particular rent increase affecting a rather small class of people, of whom a councillor may be one, is something which we take into account when considering the question of dispensation. Normally, we grant a dispensation to vote only when, otherwise, there would be difficulty in conducting business or an upset of the party balance in the council.

I do not think that my hon. Friend or anybody else would claim that this was more than a very modest Measure. As the hon. Member for Southall (Mr. Pargiter) remarked, this is a matter on which we cannot be precise. It would be almost impossible to draft a Bill laying down in precise terms what interests counted in a given set of circumstances. Clearly, an interest may be remote in some circumstances and near the borderline in others.

I very much endorse what my hon. Friend the Member for Petersfield (Miss Quennell) said. The very fact that a scandal in local government hits the headlines as being something sensational and unusual, although perhaps only a negative tribute, must be borne in mind. I do not think that local government is riddled with these vices, which, as the hon. Member for Widnes said, are all too easily poked at when something goes wrong. On the other hand, I think that everyone would agree that it is right to maintain this principle and to make it clear that when there is a bad breach, for example, when a definite vested interest has been withheld or covered up, society regards it with a considerable degree of condemnation.

Therefore, I think that this is a secondary reason why it is right to increase the penalty. The primary reason, of course, is that the value of money has changed enormously since the original penalty of £50. But if we are considering a Bill in which there is, at any rate, a suggestion that the general principle is being weakened a little, it is right that in serious cases society should regard them as serious and that the penalty should reflect their seriousness.

The hon. Member for Widnes referred to the classic case of the builder who was held to have had an interest notwithstanding the fact that his firm, as a matter of policy, did not tender for local authority contracts. That was the case of Rands v. Oldroyd. That case, as well as the case of Brown and others v. the Director of Public Prosecutions, has given rise to some of the apprehensions in local government with which we were anxious to deal in the working party to which my hon. Friend the Member for Petersfield referred. I believe that, to a large extent, those apprehensions are misplaced. Probably the lesson of those cases is not that the interests were so remote, but that an interest could arise even though it was not necessarily advantageous. I think that in both cases the court put in the qualification that there might be interests so remote as not to create a disability, and in neither case could the interest involved have been described as remote.

My hon. Friend the Member for Bury and Radcliffe (Mr. Bidgood) commented on the two types of people whom the Bill would help—the people with large professional interests, and the small businessman. I was surprised that he left out the professional man, because the difficulty of the solicitor knowing not only all his clients and their interests but all his partner's clients and their interests is greater than that of the man who holds shares in a number of companies or unit trusts. It is helpful to clarify the position that something which is remote and which a reasonable man would not regard as affecting his interests would constitute a defence.

I am authorised by my right hon. and learned Friend the Attorney-General to state that it is the practice of the Director of Public Prosecutions to withhold his consent to prosecute when he is satisfied that the member did not know the facts from which the disqualifying interest arose. It is important that that should be known and borne in mind, because, with due respect to the hon. Member for Islington, South-West (Mr. A. Evans), the final determination of what words mean and whether a particular interest comes within them is for the courts. A town clerk or district clerk can only advise. No doubt some are more cautious than others.

My hon. Friend the Member for Petersfield mentioned the case in which the clerk to the authority felt that farmers would be debarred from discussing the possibility of rerating agricultural land notwithstanding the fact that the council had no powers to do so and was operating merely as a debating society. In that sort of case, in which the clerk was, perhaps, overcautious, I can assure my hon. Friend that dispensation will be given not only readily but, I am sure, rapidly.

I believe that the Bill will be welcomed in local authority circles. I think that it meets most of the points worrying local authorities and which came to light in the working party, the report of which was confidential and was net published. It will help to clarify the position, although I should be the first to admit that we have not progressed a long way down the road of precision. No doubt hon. Members will suggest in Committee how the Bill can be improved. I am sure that the basic problem is to preserve the principle and, as the hon. Member for Islington, South-West put it, to continue what I hope will always be a British characteristic and to apply it with common sense.

We should always remember, as the hon. Member for Widnes indicated, that when in doubt the maximum disclosure of an interest must be not only in the interests of the public, but of the individual. It seldom detracts from the weight which one gives to the views of the person. I think that this is useful throughout our public life and I have no doubt that it will be maintained.

I congratulate my hon. Friend the Member for Chelmsford on introducing the Bill.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 [Committee of Bills].